Leo W. Gerard

President’s Perspective

Leo W. Gerard USW International President

The PRO Act: Pathway to Power for Workers

Photo by Fibonacci Blue on FlickrAbigail Disney, granddaughter of the co-founder of the Walt Disney Co., called out the family business’ current CEO last month for making what’s supposed to be the happiest place on earth pretty darn miserable for its workers.

All of the company profits shouldn’t be going into executives’ pockets, she said in a Washington Post column. The workers whose labor makes those profits should not live in abject poverty.

This is what labor leaders have said for two centuries. But Disney executives and bank executives and oil company executives don’t play well with others. They won’t give workers more unless workers force them to. And the only way to do that is with collective bargaining – that is, the power of concerted action.

The United States recognized this in the 1930s and gave Americans the right to organize labor unions under the National Labor Relations Act (NRLA). The increase in unionization encouraged by the law significantly diminished income inequality over the next forty years. American workers prospered as a result of having a voice in the workplace.

But right-wing politicians, at the beck and call of CEOs, have chiseled large chunks out of labor organizing rights, diminishing unions and breeding vast economic disparities.

The decline in union density accounts for one-third of the rise in income inequality among men and one-fifth among women, Economic Policy Institute researchers found.

The solution, of course, is the same as it was in 1935. In order to restore balance to an astronomically uneven economy, Congress must restore workers’ power to organize. Democrats took a first step last week toward accomplishing that when they introduced the Protect the Right to Organize (PRO) Act in the U.S. House and Senate. It would give back to workers the power they need to demand their fair share of the profits created by the sweat of their brows.

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Fighting inequality is key to preparing for the next recession

By Heather Boushey and Somin Park

The failure to make a serious dent in high levels of economic inequality in recent years will make responding effectively to the next inevitable recession more difficult, both economically and politically.

Rising income and wealth inequality, combined with financial deregulation and the expanding financialization of the U.S. economy, led to the credit boom and crash that substantially deepened the resulting economic crisis in 2008. Fiscal stimulus during the Great Recession prevented the economy from collapsing completely but was still insufficient and phased out too soon. What’s more, instead of taking lessons from our experiences a decade ago and strengthening our recession-fighting tools, recent policies passed by Congress have focused on cutting taxes, reduced the perceived space we have to increase spending in a downturn and exacerbated income and wealth disparities in the United States.

First, let’s zoom out. Recessions aren’t just one-offs. They are part of the economic cycle. Aggregate demand in the economy expands and contracts over time and recessions occur during prolonged contractions, which are more likely when economic inequality distorts consumption and savings. Inequality also affects the time it takes to recover from recessions because it subverts our institutions and makes our political system ineffective. Lifting the economy out of a downturn requires decisive government action to boost spending and aggregate demand, which often runs counter to the primary interests of those with economic and political power. As entrenched interests continually hamstring the government’s capacity to respond to a recession, policymakers should act now to prepare for the next one by addressing inequality in the United States.

Inequality makes recessions more likely

The U.S. economy is amid what will be the longest recovery in history if it lasts past June 2019. While no one can predict the next recession, it will happen. And, evidence from around the world indicates that our high inequality makes that even more likely.

Economists are examining how higher inequality is associated with slower income gains among those lower down the income and wealth ladder.1 The question has been most prominently explored by Jonathan Ostry and a group of his colleagues at the International Monetary Fund. In a book released early in 2019, Ostry and fellow IMF economists Prakash Loungani and Andrew Berg showed that inequality was associated with more frequent economic downturns.2 Growth may happen, but if inequality is high then the economic gains are more likely to be destroyed by the recession—or depression—that follows, with the economic pain all-too-often compounded for those at the lower end of the income spectrum.

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Pushing back gently but firmly on Michael Strain’s non-stagnation argument

Jared Bernstein

Jared Bernstein Senior Fellow, Center on Budget and Policy Priorities

A few folks have asked me about my friend Michael Strain’s recent Bloomberg piece where he argues against wage stagnation (it’s “more wrong than right”). It’s an old argument but one worth having, and Michael makes some important points and misses some big ones too (5, to be precise).

Larry Mishel and I counter a much shorter-term version of Michael’s case here but similar issues pertain. Certainly, the evidence he presents doesn’t change the basic wage story that I and many others carry around in our heads.

I think Michael’s most germane point is that nobody defines “stagnation.” If you think stagnation means real wages for low-wage workers have never gone up in the past four decades, you’re wrong. The figure below, from a recent piece I published (one I’ll get back to re a key point Michael misses), shows real wages for low and moderate wage workers stagnated through the 1970s, 80s, and 2000s.

 

But, in periods of very tight labor markets—the latter 1990s and now—they grew at a decent clip. This is key insight #1about real wage growth for too many workers. It’s not that they’ve never grown. It’s that their growth periods in recent decades have been few and far between. And it’s largely dependent of achieving persistent full employment, a condition that’s also been too rare in recent years (see this exciting new paper on precisely this point!).

Key insight #2 is that, sure, switching to a slower-growing deflator leads to faster wage growth and there are good arguments for various choices (see Mishel/Bivens’ cautions re Michael’s choice of using the PCE for wages). But it doesn’t wipe out long periods of stagnation. Here’s the real 20th percentile wage (2018 $’s) using both the CPI-RS (used in the figure above) and the PCE. Just like the above figure: periods of growth, but longer periods of stagnation.

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Infrastructure Push Starts, But Hits Roadblock: Dollars

Mark Gruenberg

Mark Gruenberg Editor, Press Associates Union News

The U.S. needs $2 trillion to bring its crumbling roads, creaky railroads, aging airports, 100-year-old water pipes and crowded subways up to snuff. It needs $2.5 trillion more to get ahead of the game and build projects to handle people, business and growth in the 21st century, studies calculate.

But whether it will get the cash, much of it from the federal government, and spend it, is largely up to one man: GOP President Donald Trump.

 If he says “yes” to raising money for construction, legislation to rebuild the U.S. infrastructure measure goes through Capitol Hill lickety-split, with Democratic, Republican, labor and business support, the speakers at a May 13 conference declared.

If he doesn’t, it doesn’t go through at all.

That was the conclusion, both implicitly and explicitly, of many speakers at the half-day confab to kick off the 7th annual National Infrastructure Week. The week will see more than 100 events elsewhere nationwide and lobbying by unions, businesses and state and county officials on Capitol Hill. A 52-group coalition, including the AFL-CIO and building trades unions, is sponsoring it.

“We need a major infusion by the federal government to do a massive infrastructure rebuild and build out,” which would also produce tens of thousands of well-paying construction jobs, said Sean McGarvey, the president of North America’s Building Trades Unions, and one of three union speakers at the D.C. confab.

And those jobs, which, once young people complete apprenticeships – without heavy college debt and with just a high school diploma along with the specialized training building trades provide – would pay each of them $60,000-$80,000 and provide a road into the middle class, added McGarvey.

“If we can do a massive infrastructure bill with the president, we’ll lift hundreds of thousands of people into the middle class,” he stated.

“Infrastructure is an amazing virtuous circle where you’re creating middle-class jobs and making things” – roads, bridges, airports, subways – “people need. So why are we not actually getting it done?”  Teachers President Randi Weingarten asked rhetorically during her panel discussion.

 

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Murdered Trade Unionists: The Truth Behind Colombia’s Trade Agreement

Cathy Feingold

Cathy Feingold Director of the International Department, AFL-CIO

Any mention of Latin America has become a synonym of mass migration, autocratic governments and unstable economies. Yet, Colombia continues to shine as the exception. This week marks the seventh anniversary since the United States-Colombia Trade Promotion Agreement (TPA) entered into force. It can be argued that during these years this South American nation has become a haven of economic and social stability. Or not.

One only has to look behind all the fanfare and a “parallel reality” appears. Violence in Colombia is still harrowing. From the oil to the sugar to the flower sector, workers and trade unionists report a deterioration of their rights at the workplace, continued labor intermediation that weakens the power of workers, and an increase in the culture of violence and impunity. From January 2016 through April 2019, 681 social leaders and human rights defenders have been murdered; and between 2016 and 2018, 70 trade unionists have been killed. In fact, from the year the TPA went into force until today, 172 trade unionists have been murdered.

When the United States and Colombia began negotiating their trade agreement, we already saw the negative effects of the original NAFTA—from mass migration and a spike in violence in Mexico to widening inequality in the United States. After pressure from labor and human rights organizations, in April 2011, the U.S. and Colombian governments agreed to an “Action Plan Related to Labor Rights” (Labor Action Plan) that outlined specific steps to be taken by the Colombian government within a concrete timeline.

Colombia made commitments, both under the trade agreement and in other global fora, to improve worker rights, end attacks and murders of trade unionists, and bring perpetrators of violence to justice. The country also signed a peace accord with the FARC that committed to ending the conflict and addressing many of the core factors that continue to lead to high levels of inequality and violence.

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Union Matters

A Few Hundred Million Good Reasons Not to Care

Sam Pizzigati

Sam Pizzigati Editor, Too Much online magazine

Millions of American families are still reeling from the aftershocks of the financial crash a dozen years ago. But a key architect of that debacle, Countrywide Financial CEO Angelo Mozilo, is feeling no pain — and no remorse either. In the decade before the crash, Mozilo took $650 million out of Countrywide, a hefty chunk of that just before the subprime mortgage scam Countrywide exploited started to implode. Earlier this month, Angelo described Countrywide as a “great company” at a conference appearance and declared subprimes as “not the cause at all” of the nation’s 2007-2008 financial wreckage. Added Mozilo: “Somehow — for some unknown reason — I got blamed.” The former CEO is acknowledging that all the blame did at one point bother him. And now? The famously always tanned Mozilo notes simply: “I don’t care.” 

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Every Worker's Right

Every Worker's Right