Economic and Political Bargaining Both Depend on Trust

Dear Oren,

I agree: the real question is what forms of labor law and worker organization make desirable economic outcomes more likely.

The real question is not whether workers will organize.  Of course they will – as will businesses, congregations, sports leagues, political parties, etc. – humans are social animals and require cooperation to solve complex problems.  In recent years we have seen fast-food workers striking for $15 wages, teachers organizing strikes from the bottom up without the encouragement of state union officials, public employee unions in much of the country remaining strong despite the Janus decision,  non-union grocery workers striking in defense of their company’s ousted management, and non-union Amazon and Google employees walking off the job to protest climate change and gender inequity (the latter examples would have been wholly unimaginable to the framers of the Wagner Act).  Globally, workers organize even when threatened with imprisonment or worse by right-wing paramilitaries and communist dictators.

So the question isn’t whether workers will organize, but rather which legal regime for organization leads to the outcomes I think we both want: a strong economy, family financial security, dignified work, etc.

Options and Outcomes

At the risk of being reductive, from a policy perspective the U.S. basically has three options: the status quo, trying to rebuild enterprise bargaining, or reengineering our labor law system for sectoral bargaining.

The status quo is easiest to understand.  For the reasons I described in my first letter, fewer and fewer private sector workers will be covered by union contracts, wages and other forms of compensation will stay low, the middle class will keep shrinking, families will continue to struggle with financial health, our economy will become more unequal, and economic growth will ultimately be impeded by low levels of demand.

The second option – trying to prop up the old enterprise bargaining system – was and in many ways remains the U.S. labor movement’s preferred labor law reform.  Despite the strategy’s obvious limits, this remains the closest thing to consensus on the left-of-center, as evidenced by support for the PRO Act.  To be clear, of course I believe it would be somewhat better if somewhat more workers were represented by unions under the Wagner system.  But for all of the reasons we’ve discussed, the U.S. model is intrinsically weak, inaccessible, and produces perverse incentives for labor and management alike.  Tweaking the Wagner model to allow for faster and fairer certification elections doesn’t change the fact that the system tends to lead to its own demise.

Option number three is some version of sectoral bargaining.  Support for this option is growing among labor leaders, but is far from universal.  I doubt there is any perfect system, but from the perspective of someone who has spent his adult life and career working within the limits and contortions of the current U.S. system, this option has by far more appeal for the reasons we’ve discussed – it covers more workers, creates far-better economic outcomes, creates fewer incentives for a race-to-the-bottom, focuses conflict on periodic macro-level national or regional bargains rather than on the shop floor, and allows greater avenues for labor-management partnership.

How could this actually happen?

In a perfect world, there probably would be a 1500-page federal law scrapping most of the NLRA and instituting a broad new system of sectoral bargaining in one fell swoop, and I’m not willing to give up all hope for that in the long run.  But the federal government isn’t famous for domestic policy innovations that haven’t first been prototyped by cities and states, or in specific industries. Even the Wagner framework itself can trace its roots to late 19^th century railway legislation, the 1912-15 U.S. Commission on Industrial Relations, the World War I-era War Labor Board, and the 1926 Railway Labor Act.

As you point out, there are several avenues for experimentation, learning, and progress short of a comprehensive federal reform.  Your three examples are all apt.

States (or in some cases home-rule cities) could experiment with bi- or tri-partite industrial standard setting.  One state might create a sectoral bargaining framework for a specific industry with persistently low wages or dangerous work that lawmakers believe needs addressing.  The existing union(s) or alternative worker groups that meet a threshold of legitimacy and the employer-representatives (probably a trade association) might negotiate directly, with a public representative or arbitrator empowered as a “tie-breaker,” and the resulting agreement could be binding at least as a set of minimum standards on the industry.

This path has some limits – it seems unlikely that without a federally-enacted framework the resulting “bargains” could be incredibly prescriptive over some employment terms without running afoul of NLRA preemption.  It also seems more likely to succeed in place-based service industries where firms don’t have a credible threat to flee across state lines seeking less stringent labor standards.  But this path has already shown promise with state and local wage boards, some based in statute and others politically constructed.   And in many cities and states, existing laws for awarding public construction contracts help create de-facto sectoral bargaining in the commercial construction industry (an industry also notable for high levels of labor-management partnership around apprenticeship and training programs, retirement plans, and health insurance).

States and cities have a lot more freedom to experiment where workers are excluded from the NLRA to begin with – notably independent contractors and gig workers, but also including domestic workers and agricultural workers.  We can see the beginning of this with various efforts to establish standards-setting boards of industry stakeholders for domestic workers in Philadelphia and Seattle, and to regulate the earnings of transportation-network-company drivers in New York.

Employment law flexibility and waivers – allowing industries and sector-wide unions to negotiate alternative regulatory approaches from a one-size-fits-all set of legal minimum standards – could also hold promise if there were sufficient safeguards to disallow the equivalent of sectoral-company-unions or “paper locals” that operated in the interest of employers instead of workers.  Perhaps, like Medicaid waivers, such bargains would need federal review to certify that they met certain public policy goals, such as improving compensation, job security, on-the-job safety, productivity, etc.

Within any of these frameworks, and especially within a comprehensive new federal framework, there are important questions to be asked, as you’ve also pointed out: Who bargains with whom? How do competing unions within a sector relate to each other?  What factors or process grants legitimacy to one organization claiming to speak on behalf of workers or employers, and not to others?  How are disputes resolved if no deal is reached (or none appears reach-able) at the bargaining table?  These are all system design questions that would need to be worked out.

And what to do with the archeological scraps of the Wagner model that still pock the industrial relations landscape?  I tend to agree with you – until it’s possible to pass a national sectoral bargaining law it’s probably easier to leave the old system in place except where amendments are necessary to foster the growth of sector-wide bargaining (e.g., empowering states to establish robust sectoral bargaining laws, or waivers, or better labor-management partnerships, or unbundling of union services, etc.). My hope is that workers and employers would then vote with their feet and embrace a sector-wide approach.

Politics and Tradeoffs

You raise a fair question: within the existing politics of the U.S., what’s in this for the right-of-center?  What trade-offs would labor or the left-of-center be willing to make for a more powerful and inclusive labor law that had a far better shot at creating broadly shared prosperity?

I don’t see a future where labor leaders and left-of-center policymakers will agree with your assessment of public sector unions.  I don’t agree with you either.  If anything, I would trust the judgments of our teachers, firefighters, and public-health nurses in each of their crafts far more than I trust those of their politician-employers.  I’ve heard the FDR quote before, but he was also wrong about balancing the federal budget in 1936, snubbing Jesse Owens after the ’36 Olympics by inviting only white athletes to the White House, and incarcerating U.S. citizens of Japanese ancestry during World War II.  But I do agree that the problems we’re trying to solve with sectoral bargaining are principally private sector problems.

You didn’t bring up so-called “right to work” laws, so I will.  Within the U.S. context, “right to work” laws are justifiably anathema to labor and progressives: there has never been a right-to-work law the principal goal of which hasn’t been to weaken union bargaining power and union political power.  If unions’ legal obligations under U.S. labor law are to represent 100% of the employees in the 10% of workplaces that are unionized, and a state legislature removes the ability for unions to be paid for 100% of those services, unions become smaller and weaker and can’t perform as well, at least in most circumstances, which can lead to eroding support among workers, still lower revenue, and less strength when bargaining with employers or acting politically.

Yet union leaders throughout Europe generally accept and even embrace voluntary membership models.  Their collective bargaining model is secure enough and has broad enough political and societal support that even if not every worker joins the union that represents them, the model is sustainable.  When speaking privately to their European counterparts, at least a few national U.S. labor leaders acknowledge that they’d trade our current model for one that included more universal coverage and some form of voluntary membership.

Un-bundling the “collective bargaining” and “political voice” functions of unions could also be interesting to explore, and has ample precedent in other types of U.S. non-profit organizations, where affiliated but separately incorporated entities serve different charitable, social, and political functions.   I’m not aware of any completely apolitical labor movements in the world, but it’s certainly true that we’re pretty unique in the U.S. in aligning labor interests with a single party within a two-party system.

A strong, geographically representative, and healthy labor movement would hold politicians of both political parties accountable to the tenets that workers are valuable, work should be dignified, families should be financially secure, and prosperity should be broadly shared.  Republican and Democratic politicians should be competing for union support.  There should be union activists running for office in Republican primaries, not just Democratic ones.  A differently-constructed labor movement might have internal caucuses for Republican, Democratic, and independent members, just as some unions now have internal structures that speak for members in different regions or crafts, or of different races or genders.  Or, in a sectoral system where multiple unions had to bargain at the same bargaining table with multiple employers, one could imagine unions that choose to align themselves with a political party or a religious faith as what differentiates them from other union “competitors.”

Such constructs are very difficult to imagine today. In part that’s because in our national partisan alignment, labor and employers have each been cast as part of a political tribe which polices its own behavioral and social norms.  But it’s hard to imagine a more cross-partisan workers movement if the only remaining strong worker organizations are in blue cities, and if further eroding worker power is on every newly-minted conservative officeholder’s to-do-list.  Even though I’m a dyed-in-the-wool progressive, I can see clearly that the labor movement has not benefited from this: we now have one political party that can safely write us off, while the other can too often take us for granted.  Meanwhile unions get smaller and weaker every year and workers get worse off.

As someone experienced in both labor negotiations and legislative negotiations, I feel like the questions of politics and tradeoffs are hard to answer in the abstract: would labor give away X if conservatives gave away Y?  You only know what you’re willing to trade once you’re faced with real choices in real life.  But it’s certainly easier to trade with a trusted negotiating partner, and very hard to trade with a counterpart when you’re pretty sure they’re just trying to kill you.

What comes next?

One of the reasons I admire your work is your departure from market fundamentalist orthodoxy in search of a pro-worker conservatism.  Another is your willingness to entertain serious dialogue with thinkers from sharply different philosophical traditions.  The country needs a lot more courage and a lot more dialogue if we’re going to confront the consequences of nearly five decades of that market fundamentalism.

So, “what are the immediate, concrete steps we could take” and where would we start?  Since you and I first talked about it a year or more ago, I have felt like the benefits of a sectoral bargaining system should hold appeal both to progressives like me and conservatives like you, because the real question is precisely as you put it: what kind of labor law and labor movement will make desirable economic outcomes more likely?

Should there be a bipartisan blue-ribbon commission on sectoral bargaining? A bipartisan bill in Congress to support and even fund state and local experiments around sectoral strategies? A White House Summit?  Perhaps a red-state governor partnering with state-level labor and business leaders on a sector-specific strategy in a low-wage industry?

Honestly, I’d prefer much bigger, bolder action than that, because the hour is getting late for American workers and our middle class, and correspondingly for our economy and our civil society.  But in building trust and collaboration, perhaps sometimes baby steps come first.

I’m eager to hear your thoughts.  Especially: what are your own best ideas for actionable next steps that hold any hope for cross-partisan and truly national appeal?

In Unity & Strength,

David Rolf