If Unions Are So Popular, Why Aren't There More of Them?

It's a sad fact that union density is going nowhere in this country--that is, nowhere good. Yet, as just-released Gallup polling shows, they are actually pretty popular, with the latest poll reading (61 percent approval) the highest since 2003. 

So why do we have so few unions these days? The simple answer is there's been a a concerted effort by business and conservative political forces to get rid of them. But why has this effort been so successful? Part of the reason lies within the economics profession: the conservative counter-revolution in economics, starting in the 1970's, disparaged the role of unions and mainstream liberal economists lost interest in them about the same time. That left unions' effort to push back against a tilted playing field through labor law reform without a lot of policy street cred. They were easily portrayed as just an interest group out to help themselves.

That's why Larry Summers' latest Financial Times column, in which he forthrightly calls for more policy support for unions and worker power, is arguably more important than the Gallup poll result. Summers is a reliable barometer of the left-of-center conventional wisdom so his views represent more than just the personal opinion of one very influential economist. They suggest that a good chunk of the economics profession--the non-market fundamentalist part--is now ready to see policies that promote unions and labor organization as an important part of the solution to our economic problems. That means the Overton window of "responsible" policy discourse is shifting. And that's a very good thing.

Here's what Summers had to say:

The central issue in American politics is the economic security of the middle class and their sense of opportunity for their children. A pervasive sense of vulnerability and missing opportunity leads to dissatisfaction, reduces faith in government and institutions, diminishes willingness to support the least fortunate, increases resentment towards members of other ethnic groups and fuels truculence towards other nations.

As long as a substantial majority of American adults believe that their children will not live as well as they did our politics will remain bitter and divisive. Middle class anxiety is surely also fed by the slow growth of wages even in the ninth year of economic recovery with unemployment at historic low levels. The Phillips curve — the view that tighter labour markets spur an acceleration of wage growth — appears to have broken down. The Bureau of Labor Statistics just reported that average hourly earnings last month rose by all of 3 cents or little more than 0.1 per cent. For the last year, they rose by only 2.5 per cent. In contrast profits of the S&P 500 are rising at a 16 per cent annual rate.

What is going on?....I suspect the most important factor explaining what is happening is that the bargaining power of employers has increased and that of workers has decreased. Bargaining power depends on alternative options. Technology has given employers more scope for replacing Americans with foreign workers, or with technology, or by drawing on the gig economy. So their leverage to hold down wages has increased…..

On this Labor Day we would do well to remember that unions have long played a crucial role in the American economy in evening out the bargaining power between employers and employees. They win higher wages, better working conditions and more protection from unjust employer treatment for their members. More broadly they provide crucial support in the political process for broad measures such as Social Security and Medicare, which benefit members and non-members alike. Both were at their inception passionately opposed by major corporations….

What can be done? This is surely not the moment for policy to tilt further to strengthening the hand of large employers. Sooner or later labour law reform that gives organisers a chance by seriously punishing employers who engage in illegal reprisals should be back on the agenda. Union efforts to organise non-traditional groups in non-traditional ways need to be encouraged. And policy support needs to be given to institutions where workers have a chance to share in profits and in corporate governance. (emphasis added)

OK, I grant you, he's not exactly singing "Solidarity Forever". But in the world of people who shape policy discourse, this is pretty hot stuff.