A New Rallying Cry

By Frank F. Islam, August 30, 2019

On August 19, the Business Roundtable (Roundtable), an organization comprised of America’s largest corporations redefined its statement of purpose. The statement was revised from placing primacy on shareholders to promoting “an economy that serves all Americans.”

This new focus expanded the Roundtable’s scope of stakeholders from a universe of one to include: customers, suppliers, communities, and employees. For the employee stakeholder, the statement called for “Investing in our employees. This starts with compensating them fairly and providing them important benefits.”

Could this mean — as we approach this Labor Day — that, in the near future, American workers should expect increased wages and benefits and unions will be welcomed to negotiate on their behalf?

No. That’s because the statement was at best symbolic and at worst disingenuous. (We’ll have more to say on this in our next blog.)

The one thing that the Roundtable was absolutely correct about in issuing its new statement is that there is a critical need to improve the status and power of American workers. Steven Greenhouse makes this case compellingly in his recently released bookBeaten Down, Worked Up. Time Magazine’s cover story for the week for September 2–9, titled “The Left Behind Economy,” reinforces the criticality of that need.

In a New York Times op ed essay adapted from his book, Greenhouse offers the following telling points:

  • America’s income inequality is soaring in the 21st century, and the only time it narrowed substantially in the 20th century was from the 1940s through the 1970s.
  • According to an Organization for Economic Cooperation and Development report, the U.S. has the lowest minimum wage as a percent of the median wage of any of the three dozen countries surveyed.
  • In the past several decades, corporations have adopted practices that were quite unusual in the preceding several decades, such as: requiring employees to work 60 to 70 hours a week; forcing employees to go to arbitration rather than suing a company; and making employees sign noncompete clauses preventing them going to work for a competitor.

The Time article, written by Alana Samuels and Malcolm Burnley, focuses on the 4.4 million American workers — two thirds of them women — who “live on tips.” Key points from their piece include:

  • The tipped minimum wage for these workers ranges from a low of $2.13 (which is the federal minimum) to a high of $9.35 in Hawaii. The wage in 36 states is under $5.00 an hour.
  • Until 1991, the tipped federal minimum wage was 50% of the federal minimum wage. By contrast, today that difference stands at 71%, as the federal minimum wage has gone up since ’91 but the federal tipped wage has not.
  • There is a much higher poverty rate for tipped workers — 14.8% — in the 43 states that have a two-tiered system of wages than in those 7 states that have the same minimum for tipped and non-tipped jobs, where the rate in poverty is 11.7%.

The economic conditions of the American worker have been deteriorating and they could continue to deteriorate even further going forward. As Samuels and Burnley note in in their piece, much of the job growth for the next decade or so is projected to be service jobs that have “low pay, few benefits and no raises.” Combine this with the size of the so-called gig economy (comprised of independent and contingent workers), which, according to a Gallup poll in 2018, was 36% of the American workforce, and the future indicators are not positive.

What is required and who could take the lead in reversing this situation? One might think this is an opportunity for re-emergence of organized labor. We do not believe that will happen. As we wrote in an earlier Labor Day blog,

…we do not expect to see an overwhelming renaissance of the traditional union movement…What we do expect is for a whole new brand of ‘representation’ to emerge to advance the concerns and causes of workers.

This new form of representation is at the heart of Steven Greenhouse’s new book, which started as a history of the labor movement but then migrated to become a prescription for creating the movement’s future. That prescription provides a variety of ways to increase worker power which has been in decline for some time.

In his New York Times op ed, Greenhouse states:

There are myriad proposals to restore some balance, including having workers elect representatives to corporate boards, making it easier for workers to unionize, expanding public financing of political campaigns to prevent wealthy and corporate donors from often dominating.

As reported in Greenhouse’s book, some of these proposals are based on success stories in engaging low-wage workers, even if they are not union members. These include the Fight for $15 movement funded by the Service Employees International Union to raise pay, which produced results benefitting 22 million American workers, and teacher strikes in red states. A success that was union-based is that of the Las Vegas Culinary Workers Union, which grew from 18,000 to 60,000 members by bringing together hotel housekeepers, dishwashers, waiters, and casino employees in strikes and other actions that significantly improved their employment contracts.

The most compelling story that Greenhouse tells is that of the Los Angeles Alliance for a new Economy (LAANE). LAANE was established by two labor organizers after the 1992 riots in Los Angeles. They forged an alliance among unions, community groups, environmentalists, immigrant advocates, and clergy to produce outstanding results. The outcomes achieved included a living wage law, raised pay and benefits for approximately 120,000 workers — from hotel maids to construction laborers, and forcing big developers to hire locally as well as build low-income housing.

Greenhouse’s proposal for “public financing of political campaigns” will not be implemented before the 2020 national elections or any time soon. It is instructive to note, however, how who is in office shapes public policy and the power of workers.

One of the factors that helped Donald Trump win the presidency in 2016 was the vote of many in the working class who believed his promises that he would help them. Since his election, Trump has not delivered on those promises. In fact, his administration’s actions, ranging from eliminating job safety regulations to rolling back overtime pay for millions of workers to lobbying the Supreme Court to limit workers’ class action suits, have been consistently pro-business and anti-worker.

This may be why in 2018, working class voters helped Democrats who campaigned on ‘bread and butter issues’ to win in congressional swing districts. Those wins enabled the Democrats to take back control of the U.S. House. In July, the House passed the Raise the Wage Act, which would eliminate the tipped minimum wage nationwide by 2027, and over time bring all low-wage workers to a minimum of $15 per hour.

This bill most probably will not see the light of day in the Republican-controlled Senate. It does illustrate, though, the impact that who is in power can have in policy. It causes one to speculate what might happen if the 2020 national elections produced a Democratic President with a Democratically controlled House and Senate.

It could result in the passage of policies such those outlined by Mark Muro, Robert Maxim, and Jacob Whitman in a recent article for the Brookings Institution titled “Instead of bemoaning wealth work, make it better.” Those policies for low-income workers could include expanding the Earned Income Tax Credit, ensuring Medicaid health care coverage, enhancing their bargaining power, protecting them against abuse and harassment, and include some type of universal basic adjustment benefit.

While it is impossible to predict specific outcomes, it is easy to say that the Democrats controlling all three branches could bring more power to workers. Indeed, that should be the message for this Labor Day.

As the rallying cry for organizing various constituencies in the 1960’s became Power to the People, the rallying cry in the 2020’s could be Power to the Workers. Increasing this power is essential to strengthening and restoring not only workers’ rights and equality but also the belief in the American Dream, and the vitality and vibrancy of the American democracy itself.