Talkin’ (Policy) Shop: Worker-Run Benefits

November 3, 2022 - Labor
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Policy in Brief

On this episode of Policy in Brief, Oren Cass is joined as always by American Compass policy director Chris Griswold to discuss a proposal to allow workers to administer their own employee benefits through organizations they control. This would be an American version of the Ghent system, a successful European model that improves benefit provision because it’s more accountable than either government or employers.

Further Reading:
American Compass policy brief: Worker-Run Benefits
A Better Bargain: Worker Solidarity and Mutual Support (Wells King, American Compass)
Not What They Bargained For: A Survey of American Workers (American Compass)

Talkin’ (Policy) Shop: The Workforce Training Grant

September 12, 2022 - Education
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On the inaugural episode of Policy in Brief, American Compass executive director Oren Cass is joined by policy director Chris Griswold to discuss the Workforce Training Grant, a proposal to create a meaningful alternative pathway to college for the majority of young Americans who are being left behind by the current “college-for-all” model. They discuss the failings of our current system, how a program connecting trainees with employers would work, and the bill recently introduced by Senator Cotton that was modeled off of this proposal.

Further reading:

Why National Conservatism Needs Worker Power

Oren Cass November 25, 2021 - Labor
Reverse Class Psychology
C-SPAN’s Washington Journal: Oren Cass on Challenges Facing the U.S. Workforce
Where Are the Secure Jobs?

Watch Cardus’s Brian Dijkema on Reviving the Roots of the American Labor Movement

Watch North America’s Building Trades Unions president Sean McGarvey on the State of Unions in the U.S.

Watch at National Conservatism
Oren Cass
Oren Cass is the executive director at American Compass.
Recommended Reading
Reverse Class Psychology

Reagan convinced workers to care about business, but who will teach business owners that labor matters too?

C-SPAN’s Washington Journal: Oren Cass on Challenges Facing the U.S. Workforce
Where Are the Secure Jobs?

In the American Conservative, Oren Cass discusses how the American labor market’s failure to produce family-supporting jobs is fundamental to the nation’s problems.

Critics Corner with Vinnie Vernuccio

October 7, 2021 - Labor
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Critics Corner

Today’s public policy debates consist primarily of people conversing within their own echo chambers while tuning out disagreement. To make progress on contentious issues, we need to better understand opposing perspectives, clarify points of agreement and disagreement, and collaborate on finding a constructive path forward. American Compass has no shortage of critics, so we figured, let’s have them on a show.

Critics Corner brings together those who disagree—whether on fundamental questions or specific policies—in the spirit of American Compass’s commitment to combining intellectual combat with personal civility. Neither debate nor interview, it’s a conversation between people eager to identify the source of their disagreements and the potential for common ground.

In this episode, Vinnie Vernuccio joins Oren in the Critics Corner to discuss issues with labor policy today, debating whether American workers would benefit more from collective action or individual flexibility. Vinnie is the president of the Institute for the American Worker and a senior fellow at the Mackinac Center for Public Policy.


Oren Cass: Vinnie, thanks so much for joining us on Critics Corner.

Vinnie Vernuccio: Oren, hey! Thanks again for having me.

Oren Cass: I think this is going to be a fun discussion. We’ve had chances to talk in other contexts as well, and I’ve always found it really interesting to sort of exchange views on issues related to organized labor, where I think we have a bunch of points of agreement and some of the disagreement that I would love to dig into further. I guess it’s probably worth just saying at the outset that the place where we probably agree most is big labor as it’s operating today is quite dysfunctional and not something we should be looking to prop up or emulate further. But then, I think there are a lot of questions of, well, “Where do we go from there?”

And American compass has put out a lot of work arguing that, at least in principle, a strong labor movement, more opportunities for worker representation and voice in the workplace in bargaining collectively with employers, in playing a role in civil society, could be incredibly important and valuable, and that to get there is going to require policy reform and legal infrastructure that supports workers in doing that. But why don’t you sort of start us off with a general sense of what your views are here, what you’d want to see and what also concerns you.

Vinnie Vernuccio: Yeah. Hey, thanks, Oren. And once again, thanks to you and thanks to American Compass for giving me this opportunity. I do think that we have a lot of overlap, whether it’s the work I do with the Mackinac Center or as president of the Institute for the American Worker, that the current labor law is stale. It was designed for a one-size-fits-all type of collective bargaining that was at the height of the industrial revolution and unions have adapted to make that their model. And I think that, and I think you would agree that that is antiquated and has to be changed, where I think we come to disagreement is where it goes from here. At the heart of our views is that unions should be voluntary professional service organizations, they couldn’t provide great value for workers, they can also provide great value for employers, but if they’re voluntary and if they’re focused on essentially workplace harmony, individual customized contracts, that aren’t one-size-fits-all. So I’m really excited to get into this with you and chat about where we have similarities, but also where I think we might be able to go differently.

Oren Cass: Great. So let’s talk about the sort of voluntary union and what it means for kind of individualized contracts versus collective bargaining. It seems to me that collective action, on the part of workers, is incredibly important if they’re going to, essentially exert any power, and be on a sort of equal playing field with the employers that they’re bargaining with. And this is sort of, at least one vein of thinking in labor economics, that goes all the way back to Adam Smith and John Stuart Mill, who emphasized that the isolated worker is at a real disadvantage in bargaining with an employer. And so, in my mind, actually having that essentially collective mechanism, which means solving a collective action problem, telling the employer, “No, you have to deal with these workers, as a unit in a sense.” Is incredibly important to creating that worker power. Is your view that we can have the worker power without it, or that the costs outweigh the benefits? How would you want to see it playing out?

Vinnie Vernuccio: Yeah. I think you’re absolutely correct in saying that a lot of where labor law in this collective action is based is, off of thinkers that were hundreds of years old and essentially created for the 1930s Industrial Revolution. I would disagree and say that today workers were more independent, and they want to be treated independently and rewarded for how hard they work or how productive they are, how much they can help their employer. No, that’s not to say that there can’t be units or there shouldn’t be units, but the problem is when you treat all workers like they’re interchangeable cogs on an assembly line, which is essentially what current labor law was designed to do, that is kind of not being able to be responsive to the current modern workforce. So that, in conjunction with forcing representation on workers that may not want it, forcing negotiation on employers that don’t want it.

And frankly, even forcing unions to represent workers that don’t want to pay or don’t want to accept that representation, that’s the problem. And the question is where do we go from here? And I think there are models that dip their toe in the water now, like entertainment unions or sports unions that have a base contract, but then you can go above and beyond that with increased pay or specific types of work rules. But that’s not where the unions are going, and that’s not where the one-size-fits-all collective bargaining ideas are going. It’s actually going to expand collective bargaining to even more workers that may not want it through in things like sectorial bargaining. So unions acting as professional service organizations, where everything is voluntary, can represent large swaths of workers. But the difference, I think, between where American Compass or you come at it and where I come at it, is that unions should be providing these services that employers want to work with them and employees want to pay for. And if they do that, that’s how they stem their decline and expand in the future.

Oren Cass: Right. It’s interesting that you start with the examples of say entertainers and sports, because of course, actors and athletes are quite unique in the extent to which that they truly are kind of individual personalities, in many cases earning hundreds of thousands, millions of dollars a year. And I certainly see your point that in that context, the sort of voluntary, very flexible case-by-case arrangement makes sense, but let’s say we’re talking about janitors in New York City and we’re concerned or interested in the wages that those janitors earn. If thinking about kind of all the different ways that those wages could be set. At one extreme, you have sort of just individuals in the marketplace, so janitors can take or not take jobs offered or ask for raises or not, and employers offer what they want.

At the other extreme, of course you would have just federal regulation or state city regulation, and you would just have a law saying, “You must pay everybody X.” And then, in between, we start to get these gradations where I take it, you’re saying, “Well, you could have a voluntary union that janitors could sign up for if they want.” You could have something like traditional unions we have today. You could have what I’ve described in terms of sectoral bargaining, where the janitors, there would be a representative or janitors negotiating with a representative for employers of janitors. In the voluntary model, if an employer says, “Well, I’m not engaged in that bargaining. I’m just going to offer X.” How does that work for the janitors? So janitors can choose to be in a union that’s going… I guess, I’m just trying to make it concrete, how does the bargaining actually happen if voluntary union construct?

Vinnie Vernuccio: Absolutely, and before we get there, janitors are a good example, but I don’t know if janitors are the future of the workforce. Obviously, there will always be janitors and there will always be the need for that traditional type of workforce, but where we’re vastly seeing expansion and changes or things like independent contracting, like the gig economy where, frankly, I think those, and the emerging workforce now of millennials and the generation after millennials, want to be treated more like sports or entertainment. They see their own value, and they see that as an individual, they want a customized set of work rules, or they want to be rewarded for how productive they are. So I would say, if you’re looking at the future of work, it’s probably closer to that customized sports entertainment worker as it is to your mid-20th century or early 20th-century factory worker.

Oren Cass: Well, actually, before we go to janitors, let’s dive in on that because that’s a really interesting point that I think obviously swerving, if we have different assumptions about that, we’re obviously going to have sort of then land in different places on the framework for it. I’m struggling to reconcile that sort of very aspirational description of the future of the labor market with what I see in the actual data, which is two things. One, we just did a big survey of worker attitudes at American Compass and people say generally… Yes, absolutely, there are some who like the independent contractor or gig economy model, but the vast majority say that they would prefer a more traditional full-time or part-time arrangement. And then, when I look at just where job growth, certainly where the jobs are, but even where the job growth is, it’s in things like, it’s certainly in the service sector, it’s in things like restaurant service work, healthcare service, home health aids, janitorial services.

And so, just thinking about kind of, particularly if I were to define workers about whom we might be concerned, given their economic outcomes today, say those without a college degree. In a lot of cases, it seems to me that, forget 80, 20, maybe 90, 95% are still going to be, that the jobs that exist for them, the skills that they’re likely to have, in the next few decades, at least, and what they say they want is overwhelmingly more the janitor model than the athlete model. So I guess I’d just be curious, what are the examples for that segment of the labor market that are actually going to look more like the entertainer or the athlete?

Vinnie Vernuccio: Well, I think you’re seeing that with independent contract. And you look at the surveys that talk about independent contractors and gig economy workers, and by large, they say that, this is one of the largest growing segments of the workforce. And one of the main things that those contractors or those freelancers or gig economy workers say they value most of all is flexibility. And that is one of the chief issues that you have with this one-size-fits-all bargaining is that, there are exceptions and I’m not going to say it’s a blanket rule, but for the most part, collective bargaining agreements are one-size-fits-all.

That’s, here’s your set of work rules, here is what you have to accept as a worker. And this is as an employer what you also have to provide, no greater, no lower. Many collective bargaining agreements, not only have a floor on wages, but they also have a ceiling. That’s why you have, senators like Senator Rubio that have introduced the RAISE act to say, “No, there shouldn’t be a ceiling on collective bargaining agreements.” So, you’re talking about one of the fastest-growing segments of the workforce, and they’re constantly saying, “Well, the reason that we like this arrangement is because of flexibility.” And I think that is a stark departure of what we saw last century and where collective bargaining is from last century.

Oren Cass: But, let’s be concrete. So are we talking about Uber drivers? What is this burgeoning class of happy, flexible, independent contractors?

Vinnie Vernuccio: You are talking about the gig economy, which does include Uber drivers. It’s definitely not by and large exclusive to Uber drivers. You’re talking about freelance writers, consultants, you’re talking about gig economy workers–

Oren Cass: I really want to focus on the sort of less than a college degree, majority of the workforce. So maybe there are some freelance writers and consultants there, but I think that would certainly be the outlier.

Vinnie Vernuccio: You look at where California, with AB5, really harmed independent contract. Now there’s carve-outs everywhere, including the ballot proposal, that’s still under litigation, but for a lot of people that were affected, especially before the carve-outs, and frankly, you can look at the long list that even the bill sponsor supported for those carve-outs. A lot of those were with college degrees or we’re kind of those more intellectual workers, by large, no, we’re not talking exclusively about workers with a college degree, and I completely agree with you if that’s where you’re going, that for a lot of very good-paying jobs, you probably don’t need a college degree, but that might be a conversation for another time.

But what I am saying is that, college degree or not, workers today value that type of flexibility. And that’s just not what we’re seeing with the 20th century, early 20th-century union model. And, that’s where I see this eventually migrating over, and it’s not just one-size-fits-all, moving to customized contracts. It’s also having unions be professional service organizations that are moving away from that adversarial relationship, but providing a good service that employers want and employees want to pay for. So it’s more workplace harmony.

Oren Cass: Yeah. No, I think that’s a great point about the services and certainly having those kinds of organizations that can provide them is a huge part of what’s missing today. And I think we agree, we want to see more of. I’m tempted either to go back to the janitor example now or talk Uber drivers further. I don’t know, where should we go?

Vinnie Vernuccio: I would love to go back to the janitor example, because frankly, or at full disclosure, I don’t think I answered that fully yet. And I would love to go back there and have a back and forth with you.

Oren Cass: Yeah. Okay, so let’s talk about the janitor example. If you were to describe your ideal, how do you want to see the labor market operating for janitors in New York City and what sorts of collective action or bargaining should or shouldn’t be available to them or ideally would be operating or not?

Vinnie Vernuccio: Yeah, absolutely. And I’m going to take a prerogative and before I do, I will admit it may be unfair to look at the job market right now, because there is a very high demand side, and the supply side in the job market, as we’re speaking, is very low. But let’s look at the job market right now. Employers are absolutely desperate for workers and you see worker shortages across the country. You’re also seeing runaway inflation where, the Fight For 15 and the $15 minimum wage movement, is basically making itself moot because inflation is going well past that, and employers are desperate to get workers and you see sign-on bonuses and you see them raising wages to try to attract workers because that demand is so high. So let’s take New York, for example, call it a 21st-century unionism approach for janitors.

Vinnie Vernuccio: Employers are desperate for workers. They know they can go to, let’s say the UFCW or, name your union here and say, “Okay, we have a shortage. We know that you have a lot of contacts. We know that you have a lot of union members or workers that you can provide us. So we want to go to you for the one-stop-shop.” So what’s the value for the employer? Let’s say the employer doesn’t want to provide health insurance, or they don’t want to deal with retirement plans. They could essentially use the union as an HR shop, if they want to do so voluntarily. But once again, it’s not saying you have to, the UFCW’s general push towards corporate campaigns of forcing an employer in, it’s simply, “Hey, we have a good product. We have good workers. Use us.”

Now, when it comes to the individual janitor, let’s say that janitor is a UFCW member, UFCW calls, “Hey, there is company X, Y, or Z that needs work. Are you interested?” Now, once again, UFCW is acting like a professional service organization, getting that janitor work and they value that and they value the protection that UFCW gives them as far as services provided such as insurance or health insurance. I know one of the things we may talk about is the Ghent model of unemployment insurance, and they’re willing to pay for that. So from an employer standpoint, you have the employer essentially using the union as a voluntary HR arm.

And, let’s go a step up from janitors or even staying with janitors, if UFCW has those janitors bonded and insured, and let’s say it’s a special type of janitor where they need special type training that UFCW is providing, it’s that one-stop shop voluntarily for the employer, from the janitors. And they’re getting those protections, they’re getting the job connections, and they’re getting that representation. So that, would be kind of the ideal. And frankly, right now, it’s something that would be very useful for employers. And then both for workers to say, “Okay, our workers are starting at X wage, but if they want to negotiate a contract, here’s the baseline.” But they can earn more if they do more or they’re more productive and they can also have more flexibility. So it’s not that one-size-fits-all.

Oren Cass: No, I think that’s a great point about the labor market today and underscores the reality that, to the extent, we like the idea of worker power, there’s nothing like a tight labor market to ensure that workers have that power in the labor market. I guess, what if we fast forward, say three or four years, and we’re into the next economic downturn, it doesn’t need to be a great financial crisis. We’re just, there’s a business cycle and we’re on the other side of the business cycle. What happens to that janitor band, and the employer says, “All right, we’re laying off X percent or just, sorry, we’re going to have to cut everybody’s pay 20%.”

Vinnie Vernuccio: Well, let’s go to the example of, let’s say teachers’ unions there and-

Oren Cass: Well, that’s public sector though. So let’s say private sector.

Vinnie Vernuccio: Okay. Well, what I was doing, I was going to last in, first out.

Oren Cass: Okay.

Vinnie Vernuccio: So, if there is a downturn and this is, once again, where those individualized contracts and the unions as professional service organizations would come into play. And frankly, I think one of the big mistakes that is in a lot of collective bargaining agreements now, which is the rigid seniority system. And teachers unions, it is public sector, but I think it gives the perfect example where you have the teacher of the year let go in a layoff, because there’s budget cuts, in exchange for somebody that simply has been there longer, whether or not they’re a better teacher or not. So if there is a downturn, those individual employees, if they’re doing a good job, if they are productive, should not have to worry.

Well, I’ve only had two months on the job and no matter how hard I work, no matter what I do, I’m going to be laid off because of budget cuts, because I’m under a union seniority contract. Now, if you want to go back to the insurance issue, maybe that is another example of where unions could provide value, could provide voluntary value if they’re doing things like providing that unemployment insurance or things like that. So yeah, it works both when there’s a huge demand side of the economy, but it also works if there’s a larger supply side where you still have workers that know that, the harder I work, the better I do, the more I’m going to be rewarded, and I’m not going to have to worry about losing my job because the collective bargaining agreement says so.

Oren Cass: Yeah. It’s interesting. I guess one sort of partly factual question is, to what extent, in relatively lower-wage jobs in the service sector, are people recognized for free individual performance and pay differentially and so forth? One thing we were struck by in the survey, that we did recently, is the extent to which people say that they have essentially never negotiated any term or condition of employment with their employer on an individual basis. And so, is it your sense that, that actually is happening a lot or that employers are taking the prerogative to differentiate janitorial productivity and pay differently accordingly?

Vinnie Vernuccio: Yeah. There’s no universal answer, but I think by large, employers know which employees are doing a really good job and who they will definitely fight for and make sure they want to keep versus those that are kind of just skating by. And, I wouldn’t want to sell employers short saying that, no, they look at their entire workforce as a one-size-fits-all monolith, and every janitor is producing exactly the same or is cleaning exactly the same. And it’s giving employers that opportunity to say, “You’re doing a really good job. I want to make sure that you are rewarded for it.” And that is key. And maybe that is something where a voluntary union can come into play, where the union doesn’t have to represent, have to organize 50% plus one, but a good janitor or a good employee or worker can say, “Well, you know what, I want you to go to my employer and get me those negotiated contracts.”

And if the employee is doing a good job and especially in today’s labor market, employers will say, “Okay, I voluntarily want to work with you.” But unlike today, there isn’t that mandate of, I have to, there isn’t that exclusive representation, that duty to bargain in good faith and all the other things that come-

Oren Cass: Right.

Vinnie Vernuccio: … from the labor laws of the last century. So it really does come down to providing value and voluntary services that all boats rise together, increase workplace harmony, and have customized contracts or customized collective bargaining.

Oren Cass: Yeah. And so if we’re in that looser labor market, would we expect employers at that point to say, “Well, I’m not going to hire you if you’re part of the voluntary union.” It’s one thing if they’re desperate for workers, but in a more sort of typical labor market, what is the employer incentive, if any, to choose to hire through this union that might come with additional constraints on them or higher pay over just saying, “Well, I’m only going to hire people who are not in the union?”

Vinnie Vernuccio: Oh, I’ll give you a perfect example. So I’m changing it a little bit. The IBEW, the Electrical Workers Union. When I was working on this study for the Mackinac Center, 21st Century Unionism, I was actually able to go down there and tour their facility, outside of Detroit, Michigan. And this thing was top-notch state of the art. The IBEW members were doing “earn while you learn” so they weren’t going into, six-figure college debt, but they were getting an education and know that they could get a really good job coming out of the IBEW training. And frankly, while they were apprentices, they also got paid to do that work and also to learn and be on the job and assist master electricians. Now from an employer standpoint, electricity is dangerous, and you want someone that knows what they’re doing, knows how to operate.

And you know that the training that the IBEW provided their members, means that their members are working and creating things and building those electrical outlets, grids, in a safe and secure manner. So you’re able to go to the IBEW and say, “Okay, I want someone that is licensed, they are insured, they know what they’re doing, and I can feel confident that we’re not going to have an electrical fire because we hired someone that doesn’t have the hours, or there’s no one standing behind them.” So from an employer standpoint, it’s being able to, once again, use the union as an HR arm, or as basically, the good housekeeping seal of approval saying, “Our members have gone through X amount of training. We stand behind them. We know that they know what they’re doing, and you can rest assured, especially if they’re doing dangerous work, like working with electricity, that you can feel safe.”

Oren Cass: No, that makes total sense. And I think the building trades are the quintessential example of where this works well. Exactly because as you just said, it’s dangerous. Those are our very skilled trades. But it seems to me, obviously, that is saying that does not exist today for less-skilled service work, janitor, let’s say, fast food. So in that context, is the idea that the voluntary janitor union is going to provide sort of higher levels of training and value that employers, therefore, are going to want to pay more for? I guess, I could see it. It’s just, it’s certainly not something that exists today, although it could, right? We sort of have the empirical evidence that yes, people do that, when it comes to electricians because it’s important and no, people don’t do it when it comes to janitors. So why would that change?

Vinnie Vernuccio: Well, it’s not just training, but it’s also once again, the HR arm, especially right now with the need for workers being able to go to a one-stop shop and saying, “Hey, could you provide us…” Almost like a recruiting firm, “Could you provide us with employees that can do, whether is janitorial services or working in fast food.” But once again, the difference between the way we’re looking at collective bargaining today is one-size-fits-all. And it’s, this employee is part of a union, if we hire this employee, we have to deal with a union.

Where I think unions can thrive and change is that no, the worker is part of the union and maybe getting services from the union, but the employer does not have to deal with a union if they don’t want to. So going back to your “what if there is a downturn to the economy,” you have a fast-food worker or a janitor, maybe they’re paying into the union insurance. The employer says, “I don’t want to negotiate with this union.” It doesn’t mean that the worker can’t be part of the union or can’t get those services from the union. It just means that they can’t force the employer to negotiate.

Oren Cass: And so, in that context, where we don’t have a very tight labor market, where is the worker power coming from?

Vinnie Vernuccio: The worker power is once again, coming from their individuality, what they can provide to the employer. Just like it works in the 87% of the economy today that’s not represented by a union. The problem is that, once you start doubling down on the old ways of the past, and I think that’s what we’re seeing with sectoral bargaining and some of the other proposals that are out there, that you’re starting to hamstring yourself into that one-size-fits-all bargaining that employers are again, not rail against resist, unfortunately, and I would hate to see this happen, actually move companies offshore because they don’t want to deal with the rigid work rules of a collective bargaining agreement, regardless of how good the workers are. So it’s about putting the worker as the centerpiece and the union providing either the worker or the employer voluntary services, as opposed to having the collective bargaining agreement or the union as the centerpiece.

Oren Cass: Right. I guess, yeah. My concern with that is just that it seems to have… It essentially seems to reject the idea of labor or a union as a provider of worker power. That is, you’re saying in the current environment, where we have a very tight labor market and workers have a lot of power, then yes, they will have some of that power, and looser labor market where workers tend to have less power, it’s important that the union not provide them any greater power.

And so, I take your point about the upsides and downsides of one-size-fits-all. And probably why employers wouldn’t like that. I guess, I’m left to wonder, is there anything else that we can provide workers or that you would want to provide workers that gives them more power when the business cycle isn’t? That is that, if we say, there’s something we like about the current environment with a tight labor market, do we want to create that same effect for workers all the time? Or do we want to say, “Well, on other parts of the business cycle, we want to make sure that the worker power sort of ebbs as well?”

Vinnie Vernuccio: Within the tight labor market, I think flexibility is also key. Flexibility, not just for the employer, but for the employee. And unfortunately, what you see, and this is at the heart of many collective bargaining agreements, is defined benefit pensions, where you have to vest, give your 20, 30 years to what may be a vastly underfunded pension plan. And, I’m thinking of pension plans like the Teamsters pension plan, which just needed a massive taxpayer bailout. But the problem is, if you leave the Teamsters represented workforce, and you haven’t put your 30 in or your 20 in or whatever the vesting is, you’re going to lose that. So if you’re talking about, even in a downturn can help workers, I’m not looking at it from a massive collective, one-size-fits-all.

I’m thinking of the individual worker, and for them flexibility is key and saying, “Okay, now they have…” Maybe it is a union-provided annuity or 401k plan, defined contribution plan, where they can take that with them from job to job. Frankly, like we see in some of the building trades, which may be more on the DB plan, but still have that flexible arrangement. So it is coming down to that flexibility, which unfortunately is the antithesis of what we’ve seen with most collective bargaining agreements, and which is vastly different than what we saw in the early 20th century when all these labor laws were enacted where you had workers that essentially took a job and knew they were going to be there for the next 20 to 30 years.

Oren Cass: Yeah. No, I think the flexibility point is a good one. We are running out of time, so I guess I’ll put one final question to you thinking about what any of this would mean in terms of actual policy reform. I think there are obviously those parts of the existing labor law that you don’t like, that you see as inflexible, that you would want to see sort of opened up or relaxed in various ways. Are there any things that you would want to see, any particular proposal that you would say sort of shifts the balance of power from employers towards workers?

Vinnie Vernuccio: There’s a lot there that give workers input and would create more voluntary types of unionism. Right now, unions can do a lot of what we were just talking about with members-only agreements, the catch is that they lose the compulsion and they lose exclusive representation and they don’t have the one-size-fits-all and they can’t force employers to negotiate with them. But a lot of this could be embraced on a members-only aspect, but with one caveat, that what we’re seeing with members-only is things like the advent of worker centers, which are being used to essentially pressure companies into traditional unionization through within called corporate campaigns. But what aspects do I see that could change? There’s a concept that I’ve been working on called workers choice that essentially lets workers opt out of union representation, opt out of that exclusive representation.

And do what we’re talking about, work with them, work with employers themselves and act like the vast majority of the rest of the economy that is not under union representation. That could be done for public employees at a state level. It would have to be done, but at a federal level, through Congress for private-sector employers. I think there’s a lot of opportunities to have employee involvement committees, as long as they’re not mandatory. I know that there are things like the TEAM act, which was passed in the 1990s. I know there’s been some discussion on recently giving employees that opportunity to work with employers, but once again, on a completely voluntary basis, as opposed to the structured one-size-fits-all basis that we’re seeing with unionization. So I know we’re running out of time, but there’s more examples, happy to get some more ideas, but don’t want to filibuster you.

Oren Cass: No, that’s great. I guess, just to sort of put a finer point on it, are any of those things that you see as sort of shifting power from employers toward workers or really boosting worker power vis-a-vis employers?

Vinnie Vernuccio: They are, the individual being able to negotiate their own contract, giving employees input. I do want to just kind of address the concept that it’s an either, or. It’s either employer power or employee power. As corporations do better, as businesses do better, as job creators do better, that’s better for their employees. So I think it is a little bit of a misnomer to say it’s either, or. It’s either the employers have all the power or the employees have all the power. And I think, the beauty of where the kind of the right comes at this in the free market is that, as job creators do better, there’s more opportunity for employees.

And frankly, if you’re working for an employer that is not giving you benefits or is not rewarding you for how hard you work, the idea is to make sure that the economy is expanding enough, where you can go to another job. And if we’re talking about portable benefits, we’re talking about things that unions may be able to provide. If we start getting away from that 20th-century model, that empowers employees, but it’s definitely not either-or employers do well or employees do well, all boats can lift together.

Oren Cass: All right, we will leave it there. Vinnie Vernuccio, thank you so much for joining us and for all the work that you are doing on this topic, looking forward to many more discussions to come.

Vinnie Vernuccio: Okay, Oren. Thank you again for having me and look forward to continuing the discussion.

Fulfillment: A Conversation on Amazon and Regional Inequality with Alec MacGillis

April 8, 2021 - Financialization
Apple Podcasts Spotify Stitcher

Fulfillment author Alec MacGillis joins American Compass research director Wells King for a conversation exploring what the growth of Amazon means for the future of inequality in the U.S., the pros and cons of “one-click America,” and how policymakers and consumers should respond.


Wells King: Hello everyone, and thank you for tuning into this American Compass event. I’m Wells King, the research director of American Compass. And I am delighted to be joined today by Alec MacGillis, a reporter at ProPublica and author of the new book, Fulfillment: Winning and Losing in One-Click America. Alec, welcome and congratulations on the book.

Alec MacGillis: Thanks very much. Thanks for having me. It’s really, really good to be here.

Wells King: Well, it’s great to have you, and it’s a really impressive book. You’ve covered just a tremendous amount of ground, both figuratively and literally, in Fulfillment. You cover several cities and regions, several decades at different levels and altitudes, too, from macro trends to individual narratives. It really is an impressive portrait of American life.

But Fulfillment is also a book about Amazon and about the America that enabled Amazon to grow into a colossus, to transform the American economy and society. As you write at one point, “Over time in its astonishing proliferation, Amazon had segmented the country into different sorts of places, each with their assigned rank, income, and purpose. It had not only altered the national landscape itself, but also the landscape of opportunity in America, the options that lay before people, what they could aspire to do with their lives.” So Alec, what is “one-click America” and why is Amazon so critical to understanding it?

Alec MacGillis: This book actually started out not about Amazon, but about these enormous disparities that I was seeing around the country when I would go around as a reporter. Probably even goes back to my growing up in Pittsfield, Massachusetts, a former GE town in Western Mass, that just has fallen a long way from its peak in the mid 20th century. It’s now lagging so badly behind metro Boston. I saw it as I was growing up, and I was very bothered by it. And then again, as I traveled around the country as a reporter for the Washington Post and others in the Great Recession years, the early Obama years, seeing these incredible divides between Midwestern cities and coming back to Washington, DC, and seeing this incredible prosperity and complacency disconnected with what was happening out in the rest of the country. I wanted to capture that in a book, especially after Trump’s election.

I decided to focus or frame the book through Amazon for two reasons that I sort of settled on, that one-click America as a frame for what was happening. One was just that Amazon is now so extraordinarily ubiquitous in our country that it’s just a handy thread to take you around the country because it is everywhere and it’s everywhere in different ways. And it just is a very good metaphor for what we’re becoming as a country because it is so omnipresent. But it’s also a frame for talking about these disparities because it is itself contributing to them. The tech giants have, through their concentration of so much of our economy, in a handful of companies are helping concentrate wealth and prosperity in certain places. So that’s how I got from regional inequality, regional disparities to Amazon as the frame for telling a story.

Wells King: You spend a lot of time in the book in two particular winner-take-all cities, the two Washingtons: Seattle and DC, or as Amazon would call them, HQ1 and HQ2. Both have been transformed by the company, but in different ways. Can you just describe a little bit the ways that they really made Seattle and Washington what they are today and the power and influence they’ve used?

Alec MacGillis: Sure. Actually, I picked Washington, DC, as the second winner-take-all city in the book to feature before Amazon chose it for HQ2, so that was serendipitous, I guess. Seattle, it’s just astonishing what’s happened to that city, a city that was very much kind of a middle-class town. It started out, of course, as really more like a natural resource outpost, the place that you brought the timber down from points north and east to ship off to San Francisco. When I first came to Seattle in 2004 or so, I was just so struck that it still felt like a national resource outpost with big rail yards and the harbor and all that.

Now it just completely transformed, principally by Amazon, which now has 45,000 people working there in the headquarters—even more now, I think. It’s just been turned into this hyper-prosperous city where you have some of the highest housing costs, the highest housing cost increases in the country, really second only to San Francisco. Very few children. It’s the second lowest rate of children of any city in the country after San Francisco. Huge homelessness problem. What I focus on partly in the book is the complete displacement of Seattle’s historically Black neighborhood, the Central District. This once very vital Black community that produced all these great musicians, and really just a complete change of the character of the city.

Then in Washington, DC, you have a city that has, over the last couple decades, even before Amazon arrived, became essentially the wealthiest city in the country. If you’re looking at the full metro area, five or six or ten of the wealthiest counties in the country, principally through the growth of first the lobbying industry, huge growth in the influence industry, and then the growth of the whole Homeland Security complex after 9/11. Now in the crucial winner-take-all moment, the rich get richer moment, is Amazon’s deciding to put a second headquarters there, despite the fact that the city is so crowded and expensive already. They decided that they want to be there.

Their public reason for that, of course, is that there’s just a very skilled workforce. You have all these tech guys already there, tech guys and women, who were there already because of that IT contractor universe. So they want to be there to be able to get some of that talent for their second headquarters.

But the other reason, of course, for them wanting to be there is that it’s the seat of the federal government. And right now the largest threat to Amazon is not so much other companies, but it’s the threat of federal intervention, some attempt to rein them in. So it’s useful for them to build up their presence there in town. And they’ve been doing that, of course, well before HQ2. Bezos bought the Washington Post, bought the biggest mansion in town, renovated it, total price tag of $35 million to turn it into sort of a salon. Greatly increased their lobbying spending to the point where they’re pretty much the biggest lobbying spenders. Tons of federal contracts that they’re getting for their cloud side, and now 25,000 jobs in a massive investment over in Arlington. So the presence of Amazon in DC is just extraordinary right now.

Wells King: Well, the influence in government, I’m glad you pointed that out. I mean, you described that Amazon’s vision is really commerce at its freest and most frictionless.

Alec MacGillis: Right.

Wells King: And you talk about really when Bezos has professed his belief in free markets and entrepreneurship. But you spend, I think, a lot of time really trying to focus in on the ways that Amazon hasn’t just disrupted old models and been a tech company, but the extent to which it’s actually used influence in government to accelerate its growth and to really become the behemoth that it is. You talk about the Swiss Army knife approach to this. What exactly is Amazon’s relationship to government, and to what extent is it actually an embodiment of free and frictionless markets? Or is it more a product of government subsidy?

Alec MacGillis: Well, the Swiss Army knife was a metaphor I used for just all the different forms of, essentially, tax avoidance that the company has prospered from and benefited from, going all the way back to its founding when its initial competitive advantage had a lot to do with the fact that it did not have to assess sales taxes on sales, like brick-and-mortar bookstores had to. Its initial decision to put the company in Seattle had a lot to do with that exact point. The general rule was if you had a physical presence in a state, you had to assess sales taxes in that place.

So, they didn’t want to be in California where most of the other tech companies were, because then they would’ve had to assess sales taxes on the biggest market in the country. So instead they go to a smaller state, like Washington state, where that’s not as much of an issue. And then for all the years following, they kept… Even as they were growing, and even as it would have been helpful to have warehouses in big states where most of their buyers were, their customers were, they often avoided putting warehouses into big states because that would, again, have meant they would have had to assess sales taxes there.

That goes on, on, and on for years. They didn’t get to Ohio, for instance, one of the biggest states in the country, until not long ago with warehouses because they didn’t want to have to assess the taxes there. So you have that whole tax avoidance game, and then of course you have, at the top level, federal income taxes. They’ve been incredibly successful in avoiding paying taxes there through claiming very large losses, through the Luxembourg game. Just a couple of years ago they paid zero federal income taxes at all. Last couple years, it’s been more like a billion a year, which is nothing as a percentage of what they’re bringing in.

But then the key thing that I spend a lot of time in the book talking about, the other part of the Swiss Army knife, is this aggressive pursuit of subsidies from local governments. When you’re coming in, offering to build a warehouse or data center, just this incredibly aggressive pursuit of those subsidies along with demands of secrecy. I got a lot of emails back and forth showing all that kind of pressure, those demands. It really is, if you think about it, just kind of a twofold undermining of government, in the sense that you’re both denying the revenues needed for basic services, services that you’re going to be demanding as your trucks are going on the roads and as your workers are falling ill in the warehouses. You’re reducing the revenues and then you’re also reducing any kind of accountability and transparency through your demand of total secrecy from local officials.

Wells King: Yeah, it really is a striking pattern and strategy for economic development. I like the way you juxtapose it with the past, right? Your treatment, for example, of Dayton, Ohio, and how it evolved from really an innovation hub in sort of the Silicon Valley of its own day, into this post-industrial logistics hub that produces cardboard and sends it elsewhere. Is this winner-take-all pattern of development, is this really a novelty? And how does it differ from past patterns of development and corporate behavior that you note?

Alec MacGillis: What we can say is that, first of all, we’ve always of course had wealthy parts of the country and less wealthy, poorer parts of the country, of course. But those gaps have just gotten a lot bigger in recent decades. Similar to the way that the gaps have grown so starkly on our income ladder between individuals, it’s happened in places, too. There are two striking ways of thinking about this. One is that as recently as in the mid-1960s, the wealthiest 25 cities in the country by median income included all sorts of cities in the Midwest, including Cleveland, Milwaukee, De Moines, and my favorite, Rockford, Illinois. Which now, when you go to Rockford, Illinois, it just breaks your heart and you think that this city was once top 25. Now only a small handful of the top 25 cities are not on the coast.

But then another way of looking at it that’s even starker is that in 1980, only small parts of the country had median income that were 20% above the norm, above the average or above that. Only the Deep South and Appalachia basically had median incomes that were 20% below the average or below that. Now huge swaths of the country are above or below those extremes. The entire Midwest, most of the Great Plains are 20% below or lower.

This concentration of wealth in regional terms has grown much, much more dramatic. What is not unprecedented, of course, in our country, is the concentration of wealth, of the economy in certain companies. We are, in a sense, kind of returning to a gilded age moment, 1910, 1915, pick your date in terms of that level of concentration. We’re back to our own Standard Oil in a sense. And the question is whether we’re going to respond as we did back then.

Wells King: Right. And certain structures and certain ethics too, you note, like sort of a sense of corporate responsibility guided some actors in the past, but Amazon, you note, is somewhat different, at least in terms of the way it thinks about its responsibility to its workers and the communities in which it operates. How is Amazon so different and how does it consistently get away with the types of activities that it does, even at the most local level?

Alec MacGillis: That’s such a good point about that contrast. In Dayton, for instance, I talk about just the way that the industrialists that made that city what it was just took such incredible responsibility for the city as a whole. After Dayton suffered a terrible flood, just a really horrific flood of the Great Miami River, it was essentially the recovery effort was really led principally by the local corporate fathers.

So such a stark contrast with Amazon and, say, Seattle, where the whole chapter of the book focuses on Amazon’s very aggressive and successful fight to repeal a local tax that had been passed to address that city’s terrible homelessness and housing crisis. What was so striking about that was that the company had actually agreed to a compromised tax amount, a lower amount that they kind of negotiated the mayor down to, the council down to. They got it done, they signed it, and then just two days later the company launches, heavily funds a referendum repeal effort, and is successful, just completely outmatches the opposition with their spending to get that law repealed, the tax repealed. So just a much different conception of what corporate citizenship means.

Wells King: And also the action of citizens themselves. You, I think, make some really interesting points about the ways that it’s actually shaped political incentives at the local and national level. Could you talk a little bit about the ways that it’s shaping political attitudes, the extent to which the attitudes of Amazon consumers who tend to be suburban, high net worth, in and around the metros, how they now have a different set of incentives, at least when it comes to Amazon, compared to, say, the workers in the exurbs and in the warehouses?

Alec MacGillis: Right. This was one reason that Amazon was successful in getting that tax repealed in Seattle. They had managed to, even though Seattle is very, very liberal—90% voted against Trump in 2016—Amazon managed to tap into really an unpleasant kind of anti-government, almost Tea Party-ish, leftist Tea Party-ish feeling that whatever money will be raised by this tax, the government will probably just waste it anyway. They won’t really be effective in addressing homelessness.

And also a sort of conflicted feeling on Amazon, where in theory they let the people in Seattle know that the company is not good in all sorts of ways, and has brought Seattle worse traffic and all that and has kind of changed the character of the city. But at the same time, also a feeling that they’ve also made me more prosperous. My home, my little house that I bought for 200,000, it’s now worth a million bucks. There’s a pride in the golden goose that was Amazon and a reluctance to take it on. And you see that more broadly on the left as well.

I mean, the key thing about Amazon is that Amazon’s biggest demographic, its strongest demographic, it’s universal, but its strongest demographic is the upper middle class, urban, mostly liberal consumer. That’s why you see boxes stacked outside apartment buildings in Manhattan that doormen don’t know what to do with. There is a deep affinity for the company among liberal Democrats who would otherwise be sort of wary of the big corporation. Amazon is the most trusted entity in America among Democrats, according to one poll.

That affinity has gotten so much stronger this past year, of course. That reliance, that cultural, deep cultural reliance on the one-click life got even stronger in blue America than it did in red America this past year because blue America had a strikingly different risk assessment about the coronavirus. It was even more insistent on adopting a one-click approach to daily life.

Wells King: Right. And now we’re seeing, or have seen, a pretty aggressive organizing campaign in a red state, in Alabama. To what extent are these concerns and this push for a re-invigorated organized labor movement at Amazon warehouses, to what extent does that show some promise, and to what extent do you think that’ll potentially shape the future of a public relations with Amazon, the way that we think about the winners and the losers that Amazon creates?

Alec MacGillis: It’s hard to say because we don’t know what’s… So much depends actually on what’s going to happen. The stakes are enormous. I think of it kind of in grand historical terms that this has become, the warehouse has become the mass employment option now in our country. They’re hiring so many people, the warehouses are growing so fast, proliferating so fast, this is where you go if you’ve got to get a job at a given moment. The way you used to go down to the mill.

Those mill jobs were uplifted through organizing. They were really low paid, really tough jobs that became middle-class jobs largely through unionization. So the question now is will these warehouse jobs also be somehow uplifted in years to come from something that’s just a $15-an-hour thing that you kind of pass through when you really need a job, but you don’t stay long. Or that it becomes something that can actually sustain some kind of a middle-class family lifestyle.

But as far as how it’s going to affect our attitude or our view of them, I mean, the fact is that even short of unionization, even when we, in theory, know that these jobs are really tough and are not being paid enough and are really grueling and rudimentary and isolating, we as consumers, that has not kept us from…

Wells King: Right. Certainly not during the COVID period where we’ve seen just a surge in online shopping. What do you see as being the future of one-click America as we move on from the COVID-19 pandemic, as we’re awaiting the results of the union vote in Alabama, potentially at an Amazon warehouse there? What do you see as being the future of one-click America, the public’s attitudes and critiques and distrust of Amazon potentially, and the way that we think about trying to bridge these regional divides that Amazon and largely the one-click economy have created?

Alec MacGillis: In addition to the organizing, I see really two main strands right now. One is the antitrust fight in Washington. So much is going to depend on how much reform happens there. And that’s going to be fascinating because it’s largely an intra-Democratic fight between the general affinity for big tech among Democrats, the revolving door from the Obama administration, to Silicon Valley. Then specific voices now on the left, like Lina Khan and Warren, who are trying to do something about this. And whether the Biden administration is willing to break from the Obama laxness toward big tech will be very interesting to watch.

The other strand is us, is the American citizen and consumer, and whether we are going to be willing to… Not go cold turkey, not somehow just… But in some way, re-engage with the physical world around us after this year, and not just in our shopping, but in all sorts of ways. Going back to the theater after having gotten addicted to Netflix, and somehow getting back into the communities around us, the physical world around us. Because if we don’t, then they’re going to continue to wither. The book is really meant partly as a goad to all of us, to some degree, just re-engage in our physical space, our physical place that we live in, our towns and our cities, because they need us.

Wells King: Yes, you spend a lot of time doing interviews and documenting the stories and biographies of Amazon workers and people who have interacted with the one-click America economy on the ground. Do you get a sense, from your experience with them, that things will turn around? Do you see some glimmers of hope? The book does end on a pretty pessimistic note, so where do you see the glimmers of hope beyond Washington and in individual consumer behavior?

Alec MacGillis: I’ve got to say, I have been discouraged this past year by the alacrity with which people… How eager we seem to be to take the permission that we had from the authorities to kind of just to close in. I really do hope that it passes. I find there are people in the book who definitely do give me hope, and I think give readers hope too. They’re small business owners who are still trying to find their way, fight off the goliath. This young man in Southeast Ohio who came back home from Washington to try to help rebuild his very struggling Appalachian town in Southeast Ohio. He’s still at it out there. He’s an amazing young man. He’s in the book. He gives me hope.

I still think that there’s something in all of us that knows that this is not really a good way for us to exist with each other. I do hope that we can find our way forward from this moment and just get back to some kind of a more human way of living our daily life.

Wells King: Well, it certainly is an eye-opening book in that regard, I think in really exposing the underlying facts and features of American life today. Ones that we don’t immediately notice, be it here in Washington or elsewhere. So thanks for writing it. With that, we are out of time, but thank you so much for joining me, Alec. And again, congratulations on the book.

Alec MacGillis: Thank you.

Wells King: Again, the book is Fulfillment: Winning and Losing in One-Click America.

Alec MacGillis: Thanks so much. Thanks for having me.

Q&A with Freelancers Union Founder Sara Horowitz

Oren Cass September 15, 2020

Labor law has failed to evolve alongside a changing labor market. Some labor leaders have been moving ahead anyway.

Reverse Class Psychology
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The Freelancers Union is a non-profit organization 500,000 members nationwide. Sara Horowitz founded the union in 1995 and led its growth until 2018. Rafael Spinal became executive director earlier this year. She is the author of the forthcoming book, Mutualism: A New Social Contract for a New Economy (RandomHouse, February 2021). American Compass executive director Oren Cass asked her a few questions about lessons learned creating a different kind of union and what the future could hold for worker organizations.

Oren Cass: Tell us a little bit more about what drew you to the Freelancers Union concept and what it became.

Sara Horowitz: I’ve come to realize how much my family’s background influenced my thinking, though I think I realize it now much more than I did when I was building up the Freelancers Union. I come from a labor tradition that was of the 1920s, where unions built housing and insurance companies and banks, and it was very entrepreneurial. Instead of being focused on a kind of extractive-profit-seeking model, it really was about building things that workers needed.

I’ve been working for unions since I was 18. Then I myself was made an independent contractor when I was a lawyer in the early 1990s. That experience really made me think, “Wow. We have to start to think about what this next world is going to look like.” And instead of just thinking about it, I really wanted to be a doer and to start to build out the Freelancers Union. So I just started it and went from there.

OC: The Freelancers Union does so many things, but what would you say are the two or three core functions that have proven to be most valuable and important?

SH: If people take away one thing about labor, I think the most important thing is that unions have to have their own independent source of revenue. It can’t be foundation-funded entirely, nor can it be government-funded entirely, nor can it be employer-funded. People have forgotten this notion of independent financing. Of course, in the case of unions, that’s through dues. What I think is so important about what the Freelancers Union did was it said in this next era, people are going to be working for so many different employers, we have to think about the kind of economic model it can operate on. So the Freelancers Union did that through services. I would say that was the most important thing.

It’s also important because in the social sector now it has become common to build political models first and not to think about the economic model, but I think that fails to ground us in the everyday, which is vital for more mature and complex politics. By building the economic base first you have some staying power. You can marinate, you can learn, you can watch, and then you build your political base.

OC: That really highlights this foundational element of American labor, where everything is tied to the workplace and the election. Organizing is a political task, and if you succeed then the dues just follow. Whereas in Europe, unions are things people have to sign up for. To what extent do you think the freelancer-type model, which is really just that of an independent labor organization, is something that could be equally attractive to non-freelancers? Call it the Non-Freelancer Union—essentially what the Freelancers Union is, just for people with regular jobs.

SH: It’s funny, because when people look at the Freelancers Union model, they’ll often say, “It could be like AARP, but for workers,” or something like that. But it has to have solidarity. People have to have some connection to one another based on their craft, or their field, or their profession or their job. And I think faith in an AARP-type model has gotten organizers into trouble in some ways because it leads to think about things very transactionally. You get a set of services, you pay for it, it does some generalized political work for you.

AARP has been amazing in preserving social security through many, many different administrations, most of which were not so favorable. So hats off to them. But I do think that there’s a realization right now that we need each other more. That we really don’t trust our institutions, which feel far away from us. And that if we can feel that connection to other people, I think that’s going to be the winning way.

Freelancers Union has a really interesting on-the-ground program called SPARK, which is in about 20 cities run by Freelancer leaders. So pretty much every major area that has a lot of freelancers has a Freelancers Union presence where people come and meet and have meals together, that kind of thing.

“It has to have solidarity. People have to have some connection to one another based on their craft, or their field, or their profession or their job.”

OC: That was going to be my next question—How do you promote solidarity? Because in a sense, an emphasis on an economic model and an emphasis on solidarity are very different. The first is, “Send us your money and we send you something of value.” Solidarity’s obviously more than that. So what has been the key to actually achieving solidarity within the Freelancers Union?

SH: I think that solidarity has two critical elements. One is economic interconnection, and the second is something spiritual—something greater than yourself. When people are sitting down and having a meal or solving a problem together, or enjoying something together, that’s where the solidarity develops. When we started building out the Freelancers Union, we had many different ways that people could get together. But SPARK, to me, has been the model for how you can have distributed networks so that people can get together in their local community, and at the same time those local community leaders are also embedded in deep networks in their local area.

OC: Was the Freelancers Union able to take any collective action, either in terms of bargaining or otherwise, or has it been entirely benefits-focused?

SH: Well first, benefits provision is a form of collective action—you could often even call it collective bargaining, though not in the traditional labor relations terminology—because you’re going collectively into the market to buy services that individuals could not otherwise access. But another example is that the Freelancers Union had a really interesting campaign that we won called, “Freelance Isn’t Free.” One of the biggest problems facing freelancers is that they do work and they don’t get paid. I’m sure small businesses have the same issue, but it’s a really huge problem for freelancers who just don’t have other kinds of stabilizing income, and who aren’t eligible for unemployment insurance typically.

We put together this amazing coalition of low-wage workers and professional workers to advance a bill that would protect freelancers—really strong unions like SEIU’s 32BJ, the teachers union, and one of the Chambers of Commerce came out in support. It passed the New York City Council unanimously with Republicans and Democrats both supporting it, because it was kind of a no-brainer. Who on earth thinks it’s okay for people routinely not to be paid? And it really had teeth. It still exists. It’s double damages and attorney’s fees and a fine if you don’t have a contract.

For me, it really showed that we are at a crossroads when we look at labor right now. We have one option of retrofitting the New Deal, looking back and seeing how to just kind of shoehorn ourselves into those protections. Or, we can say we really are in a new era and we really need a new infrastructure. But the second one doesn’t mean that you do away with the first. I think the American labor movement would be completely supportive of a new-era set of benefits if there were a transition plan that supported all workers. But instead we get into this really difficult situation where we can’t move forward and we keep looking back, and we’ve been doing that for like 50 years now.

OC: Let’s talk about the infrastructure. I’m curious to what extent you found the existing legal framework constructive, irrelevant, or an obstacle to what something like the Freelancers Union does? And what do you see as the key reforms we should be pursuing to adapt the broader system to modern realities?

SH: I think the real issue is what we mean when we say “pro-worker.” To me, that means pro-Institution-of-the-Worker. We got that from the New Deal and we got it right. We can’t just keep making people atomized individuals. They have to be part of their union. The future agenda has to further that realization that at the core of this is an institution, and the institution itself has to adapt. We had craft work in the 1800s, we had industrial work in the 1900s, and now we have new and different kinds of work. You don’t get rid of the safety net of the past, but you have to provide the safety net of the future. That’s what brings us to the conversation about misclassification and independent contractors.

“The real issue is what we mean when we say ‘pro-worker.’ To me, that means pro-Institution-of-the-Worker. We can’t just keep making people atomized individuals. They have to be part of their union.”

We just have to start to say, “No, it’s all workers.” And we have to have protections that are completely portable, and the worker has to be able to dock on to the institution that she or he belongs to and cares about. So number one, we have to enable people to group together. Those groupings have to be mission-based. Some people might say, “Well, that sounds like association health plans. That would be great.” But I don’t think it should be groups driven by that kind of profit motive. I think it should be nonprofit and social-sector actors, and they should be held to a really high standard. And in return for meeting that high standard, they should be able to get patient capital that’s privileged by the tax code.

OC: To your earlier point, the economic model needs to rely on funding from the members themselves. But then say a little bit more about the patient capital concept. How does that fit in?

SH: My book, Mutualism, is really about the idea for this structure. It’s not just a nonprofit because we have plenty of charities out there and we have nonprofit advocacy groups, but that’s really different than the provision of the safety net. What we have to do is have groups that demonstrate that they have members or that they serve a community, that they are institutions and have a board and bylaws, and that they have some economic resources through dues from their community of interest. These can be co-operatives, businesses that are run by faith-based organizations, mutual aid societies, and of course, unions.

Unions are in a perfect position to fit in this institutional framework because they already have Taft-Hartley funds and benefit funds. That’s what can make this the next big idea because the second you say this—you can just imagine the ERISA lawyers out there kind of pulling out their hair at all the different permutations this could have. And I say, bring it on. Now’s the time. We have to evolve and pivot. We don’t have to do it in one fell swoop, we can do these in a series of pilots and start to learn and see how it goes.

Eventually, the idea of mutualism is that we could have a whole sector in the economy that’s focused on these kinds of cooperatives, which mutual-aid and faith-based groups could look to for delivery of the safety net. It will take the kind of imagination that building the New Deal and the progressive era took, but that’s really going to be where we start to build the next safety net that makes it so that workers in America do well again.

OC: When you think about the functions of these organizations, whether we call them unions or otherwise, there’s a solidarity and mutual-aid function and then there’s a benefits function. It seems like what’s potentially missing is the actual collective-bargaining function. Thinking about your priorities and what is most important from a policy perspective, do you see a mechanism by which these kinds of organizations can also play a collective-bargaining role? Or does it feel to you like the 21st-century model is just going to be less about bargaining and more about support for workers outside of the employment relationship?

SH: The really important point about collective bargaining is that when we invested unions with the ability to engage in collective bargaining, we also said that they would not be in violation of antitrust laws. So the moment that you let these new groups have that same ability and let unions bring in new kinds of workers, I think you would start to see (a) bargaining becomes a priority, and (b) it can’t just be with a particular employer. I would love to see the day when we could have sectoral bargaining. But I think that we have to think carefully about the mechanism because we’re talking about different kinds of workers. Job tenure is going to be shorter. Some freelancers are in the gig economy, which means they’re drivers for Uber and Lyft. Others are professional freelancers who work on a variety of jobs and gigs. You have some employees and some independent contractors.

But there’s another element when talk about solidarity and collective bargaining, and that’s the check on corporate power. One of the most important roles that the trade-union movement plays is it has a sophisticated mindset about what’s happening in the economy. When I think about the heyday of labor, it was clear that the trade unions of that generation towered above the leaders of the companies that they went against. When you have a really excellent trade-union movement that’s empowered and isn’t always fighting for its life, it actually can be in a position to make the right kinds of arguments.

One of the things I’ve come to think a lot about is that we are so crazed over free trade versus protectionism, but I think we have to pick some industries that we’re going to be promoting that can really pay a certain amount of money for workers. And that’s the kind of thing that unions have a lot of opinions about and where they can play a constructive balancing role.

Oren Cass
Oren Cass is the executive director at American Compass.
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In the American Conservative, Oren Cass discusses how the American labor market’s failure to produce family-supporting jobs is fundamental to the nation’s problems.

Would Sectoral Bargaining Provide a Better Framework for American Labor Law?

David Rolf, Oren Cass September 14, 2020

Labor leader David Rolf and American Compass's Oren Cass discuss the potential for sectoral bargaining in America.

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Most Americans take for granted that our enterprise-based system of organized labor is simply the way collective bargaining works: employees at a worksite vote on whether to unionize; if the union wins, it bargains with the employer. This in fact represents an outlier among advanced economies, most of which use a system of “sectoral bargaining” that requires industry-wide representatives for workers and employers to bargain over industry-wide standards. As Michael Lind argues in his essay, The Once and Future American Labor Law:

The present U.S. labor law system is based on decentralized, enterprise-based bargaining that offers few real advantages to workers but grants employers many opportunities to resist coming to the bargaining table. While industries governed by multi-employer contracts have created stable employment, established living wages, and resisted arbitrage, those that fall within the [current American] framework have witnessed a near-extinction of organized labor and left workers with only the minimal, standardized government safety net.

But sectoral bargaining is not a panacea. In the United States, where industry-wide agreements have been struck (e.g., among the “big three” automakers and the United Autoworkers), the result has sometimes been an uncompetitive sclerosis that led to stagnation and decline benefiting neither firms nor workers. The nationwide agreements reached in small European countries may not be practical in America’s larger and more diverse economy, but allowing separate agreements at the state level could trigger the same “race to the bottom” that has afflicted the current regime.

In this exchange, labor leader David Rolf and American Compass’s executive director Oren Cass discuss the case for and against sectoral bargaining and the potential for adopting it in America.

Begin reading with David Rolf’s opening entry.

All Entries

David Rolf
David Rolf is founder and President Emeritus of SEIU 775 and a former International Vice President of SEIU. He is the author of The Fight for Fifteen: The Right Wage for a Working America and A Roadmap for Rebuilding Worker Power.
Oren Cass
Oren Cass is the executive director at American Compass.
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Where Are the Secure Jobs?

In the American Conservative, Oren Cass discusses how the American labor market’s failure to produce family-supporting jobs is fundamental to the nation’s problems.

The Conservative Case for Organized Labor

September 8, 2020 - Labor
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C-SPAN’s Washington Journal: Oren Cass on Challenges Facing the U.S. Workforce
Where Are the Secure Jobs?

Over the past five years, many on the right have called for the GOP to become a â€śworkers’ party.” Almost all of these proposals have been tales told by demagogues, full of sound and fury, signifying nothing.

In 2016, Donald Trump often played the role of proletariat’s advocate. But once in the White House, the billionaire comported himself as a protector of plutocracy. The president has, among other things, showered shareholders in tax breaks, restored Wall Street’s God-given right to rip off its clients, and denied guaranteed overtime pay to 12.5 million workers, effectively transferring $1.2 billion from their paychecks to their bosses’ bank accounts.

Other purported proponents of working-class conservatism have proven similarly fraudulent. And while many socially conservative intellectuals will acknowledge the tension between Republican economic orthodoxy and their own communitarian ideals, the chasm between their stated ambition (to make it possible for working-class families to get by on a single breadwinner’s salary) and their proposed solutions (“Let them eat slightly more generous child tax credits”) casts doubt on their sincerity.

But Oren Cass is an exception. A former adviser to Mitt Romney’s 2008 and 2012 presidential campaigns, Cass and his newly founded think tank American Compass have spent the Trump era trying to develop an agenda for a genuinely pro-worker conservative party. At the heart of Cass’s vision is a call for providing collective-bargaining rights to virtually all U.S. workers. On Labor Day, American Compass released a more modest proposal: a resolution calling on conservatives to adopt the general goal of reforming and reinvigorating “the laws that govern organizing and collective bargaining” because “strong worker representation can make America stronger.” Florida senator Marco Rubio and an array of conservative thinkers have signed on to this statement.

Continue Reading at New York Magazine
Recommended Reading
Reverse Class Psychology

Reagan convinced workers to care about business, but who will teach business owners that labor matters too?

C-SPAN’s Washington Journal: Oren Cass on Challenges Facing the U.S. Workforce
Where Are the Secure Jobs?

In the American Conservative, Oren Cass discusses how the American labor market’s failure to produce family-supporting jobs is fundamental to the nation’s problems.