Week 4: Extending Union Benefits to Entire Sectors

Continuing with my theme of income inequality — but diverging a bit from the gig economy — I wanted to share this piece about the creation of national wage boards. It seems especially timely for Andy Stern’s visit to the class, considering he spent much of his career working to expand union membership and the benefits that come with it.

In a nutshell, labor unions are in crisis, with 6.4 percent of private sector workers belonging to a union. As the piece notes (and Stern more or less implies the same in the early chapters of his book):

The future for traditional unions looks so bleak that a growing number of labor scholars and activists are coming to the conclusion that the US model, which relies on individual workers in individual workplaces getting together and organizing on their own, is dead and can’t be revived. What’s needed, they argue, is a more national or industry-wide approach to supplement or replace the old model of individual workplace-level organizing.

The solution, according to a new report from the Center for American Progress, is replacing our current enterprise-level organizing system (i.e., the employees of a company make the decision to unionize) with bargaining at the sector level, (i.e, a wage board decides wages and conditions for an entire industry). Proponents point to existing systems in European countries, as well as New York state’s “Fight for 15” effort to give all fast food workers a $15 minimum wage as a starting point for this system in the United States.

As the authors state:

But workers in most European countries, and some other rich countries outside the US, have figured out an ingenious way around this. Unions there bargain not at the company level but at the sector level — negotiating for all workers in an entire industry rather than just one company or workplace.

In Sweden, for example, bargaining takes place at three levels: nationally for all industries, between the national union confederations and an association representing all employers; nationally, for specific industries, between the relevant unions and employers; and locally among individual companies. For the vast majority of workers, wages are set at a combination of the three levels, with only very few having deals set primarily at the company level.

Because every company covered by the national deals has to abide by the same pay and benefit rules regardless of how many of their employees are union members, those companies have less incentive to discourage union membership among their workforce. Firms with more union members don’t have any competitive disadvantage relative to firms with fewer: They’re all paying the same wages and offering the same benefits.

With income inequality rising with no end in sight and union membership declining, this is certainly a proposal that would give a boost to the middle class. While its chances of being implemented under this administration are slim, this is a platform that candidates could run on in upcoming elections.

Of course, the rise of the gig economy will make this less relevant — but more on that in a future post.

One thought on “Week 4: Extending Union Benefits to Entire Sectors”

  1. that’s a big one, the idea of union organizing at the sector level rather than individual businesses. Let’s bring that up for discussion with Andy. I don’t fully get yet how we define a sector, since it seems they would change so frequently. (when fastfood workers are using automation, are they still fastfood workers??). look forward to discussing.

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