How ‘Janus’ Will Boost Income Inequality in America

Sam Pizzigati

Sam Pizzigati Editor, Too Much online magazine

The U.S. Supreme Court’s decision against workers in the Janus vs. AFSCME case surprised no one who pays attention to America’s highest judicial panel. Every analyst following the case expected the Supremes to rule against America’s public sector unions. And that’s exactly what the high court, by a 5-4 margin, did.

The impact from this decision? That will surprise no one who pays attention to how modern economies work: The Supreme Court’s decision in Janus will leave the United States still more unequal.

The five justices who decided Janus never, of course, mentioned anything about inequality in their ruling that public sector unions cannot collect representational fees from the nonmembers they are legally required to represent. The Janus majority justices talked instead about protecting First Amendment rights. But that lofty philosophizing merely served as a convenient cover for our right wing’s continuing assault on the basic human right to justice on the job.

This assault — an effort bankrolled over the years by a relentless gang of fiercely anti-union deep pockets — has been remarkably effective.

Back in the 1950s, over a third of America’s workers belonged to unions. And that statistic underplayed the actual extent of the nation’s trade union presence. In the private sector, outside the South, unions represented over half the workforce in the decades right after World War II.

The workers unions didn’t represent in those years directly benefited from this heavy trade union “density.” Nonunion employers simply couldn’t hire and keep workers unless they improved what they had to offer in pay and benefits.

The business pushback against this union influence stated picking up considerable momentum in the 1970s, then achieved critical mass in the 1980s with Ronald Reagan in the White House.

In 1981, Reagan fired and permanently replaced striking air traffic controllers. Two major private sector employers, Phelps Dodge and International Paper, would soon follow Reagan’s example with their own striking unions. Other employers quickly took note.

This willingness to replace striking workers, historian Joseph McCartin has written, would reshape “the world of the modern workplace.” Strikes would now almost totally disappear from American labor relations. Strikes had given workers leverage. Without them, unions simply couldn’t effectively “pressure employers to increase wages as productivity rises.”

Other assaults on worker rights aggravated labor’s growing marginality in America’s workplaces. The nation’s labor laws — statutes meant to protect workers’ right to join a union and bargain collectively with their employer — essentially became a dead letter. Employers who violated these statutes seldom faced any significant or timely legal liability.

The assaults took a toll. By 1983, union membership had dropped to 20.1 percent of America’s nonsupervisory workforce. In 2017, the federal Bureau of Labor Statistics reported earlier this year, only 10.7 percent of the nation’s employees carried union cards.

And these stats overplay the actual extent — in the private sector — of the trade union presence in 21st-century American life. In the mid-20th century, most all union members worked in the private sector. Today union members make up 34.4 percent of the public sector workforce and only 6.5 percent of workers in the private sector.

Nine states now have overall union member rates under 5 percent. In other words, over vast swatches of the American economic landscape, unions today barely exist at all.

What does exist in the United States today: a level of income and wealth inequality not seen since the 1920s, another era of minimal union influence. The history of America’s past century paints a vividly clear picture: Inequality in America has increased in the years when unions have been at their weakest and decreased in the years when unions have been at their strongest.

Mainstream economists have been slow to acknowledge that connection. The conventional economic wisdom has blamed our contemporary inequality on irreversible trends like advancing technologies and globalization. But more recent mainstream research has emphasized how crucial a role union density plays in income and wealth distribution.

Researchers from the International Monetary Fund have examined the economic experiences of 20 developed nations between 1980 and 2010. Most all of these nations showed a declining union presence over the course of these years, with that decline severe in some nations — like the United States — and much less severe in others.

The researchers — Florence Jaumotte and Carolina Osorio Buitron — found declining union density “strongly associated” with the growing share of national income going, within each nation, to the richest 10 percent of the population.

“The decline in union density,” this IMF research indicates, “explains about 40 percent of the average increase in the top 10 percent of income share in our sample countries.”

Part of that growing income share of the already affluent reflects the lower wages of workers in nonunion workplaces. The de-unionization that “weakens earnings of middle- and low-income workers,” the IMF researchers explain, “necessarily increases” the income share of corporate executives and shareholders.

Another part of that growing top 10 percent income share reflects the loss of influence over basic public policy decisions that average wage earners wield when unions grow weaker. That shrinking influence leaves “dominant groups,” the IMF researchers observe, better able to “control the economic and political system in their favor.”

Other global economic bodies — like the OECD, the official economic research agency of the developed world — have concluded that our current high levels of inequality do no society any good.

“By not addressing inequality,” as OECD Secretary-General Angel Gurría has pronounced, “governments are cutting into the social fabric of their countries and hurting their long-term economic growth.”

Last year, trade union leaders from around the world descended on an OECD Ministerial Council Meeting in Paris to make the case that significant progress against inequality will only come when workers have the bargaining power to “benefit from structural and technological change.”

The U.S. Supreme Court has totally ignored that union warning with its Janus decision. Come to think of it, the U.S. Supreme Court has totally ignored growing economic inequality. The rest of us? We can’t afford to.

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Reposted from Our Future

Sam Pizzigati edits Too Much, the online weekly on excess and inequality. He is an associate fellow at the Institute for Policy Studies in Washington, D.C. Last year, he played an active role on the team that generated The Nation magazine special issue on extreme inequality. That issue recently won the 2009 Hillman Prize for magazine journalism. Pizzigati’s latest book, Greed and Good: Understanding and Overcoming the Inequality that Limits Our Lives (Apex Press, 2004), won an “outstanding title” of the year ranking from the American Library Association’s Choice book review journal.

Posted In: Allied Approaches, From Campaign for America's Future

Union Matters

Federal Minimum Wage Reaches Disappointing Milestone

By Kathleen Mackey
USW Intern

A disgraceful milestone occurred last Sunday, June 16.

That date officially marked the longest period that the United States has gone without increasing federal the minimum wage.

That means Congress has denied raises for a decade to 1.8 million American workers, that is, those workers who earn $7.25 an hour or less. These 1.8 million Americans have watched in frustration as Congress not only denied them wages increases, but used their tax dollars to raise Congressional pay. They continued to watch in disappointment as the Trump administration failed to keep its promise that the 2017 tax cut law would increase every worker’s pay by $4,000 per year.

More than 12 years ago, in May 2007, Congress passed legislation to raise the minimum wage to $7.25 per hour. It took effect two years later. Congress has failed to act since then, so it has, in effect, now imposed a decade-long wage freeze on the nation’s lowest income workers.

To combat this unjust situation, minimum wage workers could rally and call their lawmakers to demand action, but they’re typically working more than one job just to get by, so few have the energy or patience.

The Economic Policy Institute points out in a recent report on the federal minimum wage that as the cost of living rose over the past 10 years, Congress’ inaction cut the take-home pay of working families.  

At the current dismal rate, full-time workers receiving minimum wage earn $15,080 a year. It was virtually impossible to scrape by on $15,080 a decade ago, let alone support a family. But with the cost of living having risen 18% over that time, the situation now is far worse for the working poor. The current federal minimum wage is not a living wage. And no full-time worker should live in poverty.

While ignoring the needs of low-income workers, members of Congress, who taxpayers pay at least $174,000 a year, are scheduled to receive an automatic $4,500 cost-of-living raise this year. Congress increased its own pay from $169,300 to $174,000 in 2009, in the middle of the Great Recession when low income people across the country were out of work and losing their homes. While Congress has frozen its own pay since then, that’s little consolation to minimum wage workers who take home less than a tenth of Congressional salaries.

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