Everyone knows by now that the state of Michigan, one of the strongholds of American labor, on Wednesday passed a “right to work” law—meaning that non-union workers can work in jobs that are protected by union efforts, but without having to join the union that protects them. The new law was rushed through in a lame-duck session of the legislature by a solid block of Republicans, many of whom lost their seats in the recent election. The Repugs knew that if they didn’t pass the law now, they’d probably never get it through the new legislature. They also knew that their governor, Rick Snyder, elected two years ago as a ‘moderate,’ would sign the bill despite his promises not to. Michigan thereby joined 23 other states with ‘right to work’ laws—a movement that seriously threatens the very existence of unions in the United States.
What is the result of leaving workers without union help? A story in the Dec. 12, 2012 Bloomberg News (reprinted on Yahoo News) by Leslie Patton provides some indication. The story, comparing the salaries of a McDonald’s line worker with a McDonald’s CEO, focuses on the life of Chicago native Tyree Johnson. In his 40s, Johnson works at two McDonald’s in Chicago (he needs the two jobs to try to make ends meet) as a fry cook for the princely sum of $8.25 an hour. McDonald’s CEO until July, Jim Skinner, meantime, earned $8.75 million per year (580 times what Johnson, a 20-year employee, makes). This means, as Patton points out, that Tyree Johnson would need to work about a million hours—more than a century of work—to equal the yearly pay of his boss, Skinner. This is consistent with what we’ve been hearing for years now: that the pay of America’s CEOs and other “winners” in the economic lottery has been skyrocketing (when Johnson started at McDonald’s 20 years ago, the CEO ‘only’ made 230 times his pay), especially compared to the earnings of middle and lower class Americans. And it’s gotten worse since the economic collapse of 2008-09. Patton points out that the ‘recovery,’ such as it is, has been the most uneven in recent history: the top 1% saw their earnings increase by 5.5%, while those in the bottom 80% saw their earnings fall by 1.7%. And that doesn’t even count the top 0.1% who are really raking it in. But for the likes of the bottom fifth like Tyree Johnson—whose ranks are increasing due to the downturn, with the numbers
employed in fast-food restaurants and retail giants like Wal-Mart expanding exponentially, all at minimum wages, while the net income of their employers (McDonald’s, Yum [owners of Pizza Hut, Taco Bell, and Kentucky Fried Chicken] and Wal-Mart) has increased by a whopping 22% since the downturn—life just keeps getting harder. Just to pay his single-occupancy hotel rent of $320 a month, Johnson needs both of his McDonald’s jobs. As to buying the $99 computer he found online (Johnson actually trained for a year and a half at a computer school), forget about it. This is one of the reasons he is attending meetings of a Workers Organizing Committee of low-wage employees hoping to get a $15/hour wage in Chicago—but it has to be done beneath the radar. McDonald’s fires workers who even hint about unions or organizing. They actually have a hit squad of skilled union busters whom they fly in to areas where union talk gets started.
And that is the key link between Johnson and Michigan’s new law. Without unions, low-wage workers are in precisely the position factory workers were in at the end of the 19th century (and workers in Bangladesh are in now). Any one worker trying to fight the power of a corporation with money to burn and power to match was helpless. Only if workers banded together and thus wielded the power of numbers and the threat of a strike could they begin to get some traction in the struggle for better wages and better working conditions. But it wasn’t easy. Trying to organize a union could get you at least fired, and perhaps killed. But over the 20th century, conditions improved. American workers could earn a living wage sufficient to support their families, move to a decent dwelling, even send their kids to college. And most important, they had a kind of job security. Not anymore. Employers have grown increasingly bold about firing workers who try to organize—a number that has increased dramatically over the last thirty years, according to Dorothy Sue Cobble of Rutgers University. Because if workers had union protection, a corporation like Applebee’s wouldn’t be able to get away with paying some of its workers $4.95 an hour—the wage allowed for waiters and others who get tips—when they were actually washing dishes and mopping floors. Without a union, it took years, and a class action lawsuit by four workers to finally get a ruling in their favor.
What’s hard to understand is how workers became so powerless. Workers are, after all, the most numerous group in any nation. They are the ones who turn the wheels of industry, of farming, of construction. How did it happen in a government 'of the people' that a few legislators could pass a law that eviscerates the last vestiges of people power?
This is the story that economists Jacob Hacker and Paul Pierson tell in their 2010 book, Winner Take-All Politics: How Washington Made the Rich Richer—And Turned its Back on the Middle Class. It is not a pretty story. Basically, it is the story of money and how the conservatives with money—corporations, Wall St. financiers, professionals like doctors and lawyers—decided in the late 1960s and early 1970s that they needed to act, and soon, to organize, organize, organize and use their power to influence the legislative process. A key memo from Lewis Powell, then a corporate lawyer and soon to be a Supreme Court Justice, sounded the alarm and was passed to virtually every boardroom in the country. It urged corporations and businesses to use their money and power to turn the legislative process in their favor and away from unions and workers—mainly by means of intensive organizing and lobbying. It urged the formation of foundations to provide the intellectual propaganda to promote the glories of business and capital and “free” enterprise allegedly ‘free’ from government interference—foundations like the Heritage Foundation, the American Enterprise Institute, and countless others.
The corporations succeeded beyond anything they could have imagined. The surprising part is that money began to corrupt the legislative process not with Ronald Reagan, though it did then as well, but with the Carter Administration. In 1978, a major labor law reform bill to restore some rights of workers was a top priority of unions, and seemed to have the votes to pass Congress. But a delaying effort by Republicans and southern Democrats stalled the bill in the Senate by means of a filibuster. The bill faltered, and then failed. The message was clear to all: business now had the upper hand in Washington. With Ronald Reagan’s success in firing Air Traffic Controllers when they tried to strike, thus breaking their union, the power shift was almost complete. Violations of the National Labor Relations Act rose; strikes plummeted; more and more factories moved to the non-union states of the South. The results have been catastrophic for average American workers and a bonanza for upper management. In 1965, average CEO pay was about 24 times the pay of an average worker. By 2007, it was 300 times the pay of an average worker, at about $12 million per year. Nor is this just the result of a global trend, for American CEO’s earn more than twice the average for other rich nations. And when you get to the real mandarins, the hedge fund managers, the rise has been obscene: as Hacker and Pierson point out, in 2002 a hedge fund manager had to earn $30 million a year to be one of the top twenty-five managers; by 2007, a hedge manager had to make $360 million/year to make that level, and the top three managers were each earning $3 billion per year!
Now the myth has always been: well, this is what can happen in a free-market economy. Brilliant entrepreneurs can drive the economy to ever new heights, and the government has little or nothing to do with it. Hacker and Pierson say this is nonsense. They say it very plainly: “The winner-take-all economy was made, in substantial part, in Washington (i.e. by government).” How? In three simple ways. By the way government treats unions; by the way it regulates executive pay; and by its policing (or non-policing) of financial markets. What Hacker and Pierson do is to lay out, chapter and verse, how this is done. Sometimes it is done with the passage of specific legislation, such as the passage of the Commodity Futures Modernization Act of 2000. This bill, cleverly inserted into a budget bill, essentially prohibited any regulation of derivatives trading. And it was the pet legislative project of Senator Phil Gramm, the Republican chair of the Senate Banking Committee (who made his wife, Wendy, the head of the new Commodity Futures Trading Commission). This was the bill that allowed the wild derivatives trading that essentially brought down the economy in 2008. By that time, of course, Gramm and his wife had left the government (she to become a board member of Enron, with salary and stock income of around $1.8 million), he to the board of UBS (the Swiss-based global financial giant), which needed a massive bailout when the financial sector nearly crashed in 2008.
That’s right. There is always a payoff to those in government who do the bidding of the corporate giants. This is mainly done through PACs, or political action committees. The growth of corporate PACs compared to labor PACs is instructive: in 1976, there were 224 labor PACs, while in 1986, there were 261. Modest growth. Corporate PACs, though, exploded: in 1976 there were 922; by 1986, there were 2,182, outspending labor by two or three to one. This of course had its effects, and not just in reducing the power of labor unions. It also had positive effects for the top earners. First, when Jimmy Carter tried to reform the tax code by instituting more progressive taxes—especially a hike in the capital gains tax—he was met with a major offensive from business interests: they had their bought-off reps insert an amendment that not only did not raise capital gains taxes, but cut the capital gains tax rate in half. And Carter’s own Democratic Congress passed it, reducing the rate from 48% to 28%. Reagan followed with his so-called Economic Recovery and Tax Act of 1981, which reduced capital gains once again, cut the highest tax rate from 70% to 50%, and substantially reduced the estate tax (benefiting mainly the wealthy). As Hacker and Pierson summarize it, “Both parties were now locked in a struggle to show who could shower more benefits on those at the top.”
As to the 2001 tax cuts now at issue in the struggle between President Obama and the Repugs, “more than a third went to the richest 1% of Americans—a staggering $38,500 per household per year when all took effect” (the Repugs cleverly delayed the full effects of this tax cut to the wealthy: they gave an average $600 rebate to middle income earners right away, but delayed the full benefit for their upper income cronies—7% of benefits the first year, but 51% ten years later!) And as everyone knows, people like Mitt Romney and Lloyd Blankfein now pay only 15% on their capital gains.
Again, the key to all this has been the greater organizational money and power of the corporate and financial barons, and the reduction in organizational power on the progressive side, mainly with the demise of unions—the only organizations that used to be able to curb corporate power. Now it becomes clear why corporate-funded organizations like ALEC and all the PACs supported by the Koch Brothers and their cronies always try to initiate legislation in state houses to limit or outlaw unions—as in Michigan, Wisconsin, and so on. With unions marginalized, there is no power in the nation that can compete with corporate money and organization. The middle and poorer classes simply have no organization. And when they do manage to get something going—as with the Occupy movement of last year—they are viciously attacked both externally, by police, and internally (by agents provocateurs urging mindless violence).
The key here, as always, is understanding. The corporations and financiers know what’s at stake, they know they’re at war, and they take appropriate, deadly action.
What about you?