We need to address the root causes of workers’ frustration and their economic decline.
By Thomas Kochan
Professor of Management, MIT Sloan School of Management
The Conversation, March 24, 2016 —
The presidential campaigns deserve some credit for finally voicing some of the deep frustrations and anger felt by American workers who have lived for decades in an economy that works for those at the top but not for them and their families.
Thirty years of wage stagnation, the loss of one-third of the nation’s manufacturing jobs since 1970, a failure to generate enough quality jobs and career opportunities for young workers and unacceptable levels of income inequality are now coming home to roost.
It is not surprising that the angriest voices are coming from working-class men and young people who have entered the workforce in the last decade, the two groups that have lost the most ground and feel they have no one standing up for them and no control over their future.
And one of the main reasons for these trends is largely missing from the campaign trail: the loss of bargaining power and any means of having a voice at work.
Unions now represent only about seven percent of the private sector workforce, and recent attacks on public sector unions are now leading to their decline as well. The Supreme Court will soon decide whether or not to further weaken public employee unions by eliminating rules requiring nonmembers to pay their fair share of the costs to represent them.
But angry rhetoric will not put the economy on a path that works for the disaffected and disenfranchised. Instead we need to address the root causes of workers’ frustration and their economic decline. And to do that, I would argue, we need to fix our broken labor policy.
Decline of unions
Recent studies estimate that 20 percent or more of the current wage inequality is due to the decline of unions and worker bargaining power.
But perhaps because of the public’s ambivalence toward unions, none of the candidates has laid out a strong and positive vision or strategy for rebuilding workers’ bargaining power in ways that fit what they want now or that can be successful in today’s economy.
Any strategy for rebuilding bargaining power has to start with fixing a broken labor law that no longer provides workers access to collective bargaining. Today, if management resists worker efforts to organize (and they nearly always do), less than one in 10 union organizing efforts results in a collective bargaining agreement.
The odds are so stacked against workers and unions that few see trying to organize as a viable option.
The ways to fix this aspect of labor law are well-known: strengthening penalties against employers or unions that violate the law, shortening the time required to hold an election to determine if a majority votes for union representation and having a neutral arbitrator set the terms of the first contract if one party or the other stonewalls the process.
Labor management partnership
But these reforms have been impossible to get through Congress in the past, and as stand-alone proposals will be equally difficult in the future.
They need to be combined with provisions that promote the forms of worker-management relations that have demonstrated their value in generating and fairly sharing productivity and economic growth. It’s also important that they support the new ways workers are finding a voice.
The labor-management partnership in place for nearly two decades at health care provider Kaiser Permanente, for example, is a model for the type of modern labor management relationship. It both promotes improvements in patient care and organizational performance and ensures workers share fairly in the economic savings they help generate.
Our research group tracked the evolution of this partnership from its inception. We found that Kaiser Permanente is a leader in use of union-management sponsored front-line teams that focus on improving health care delivery, a leader in use of electronic medical records to keep people healthy and out of hospitals, and pays industry leading wage and benefits.
Ford, the only U.S. car company that avoided a government bailout, has a similar partnership, which helped it recover from losing US$17 billion in 2006 to making $7.4 billion and paying each union member $9,300 in profit sharing in 2015.
A modernized labor policy should encourage such partnerships fitted to the needs of different industries and occupations.
Modernizing labor law also will require extending protections against discrimination and opening it up to people working in the diverse array of organizational settings today, not just the nonsupervisory employees in traditional employment relationships currently covered by the 1935 vintage labor law.
A growing number of workers are employed in subcontractor or franchised arrangements (think McDonald’s) in which the employer who controls their work and future is unreachable. Those classified as independent contractors in the so-called platform or “gig” economy (think Uber drivers) are likewise excluded and have no legally protected means of organizing or engaging the executives who set their fares and control their access to customers.
All these groups need protection from discrimination if they try to mobilize and seek to negotiate with whoever sets their terms and conditions of employment.
Keeping up with the times
A forward-looking labor policy will also need to recognize and support the many innovative initiatives under way that are attempting to help workers who prefer to move to a better employer when faced with unfair or unacceptable practices at their current workplace.
Indeed, a growing number of “apps” are coming along that support worker mobility. Examples include those being incubated through the Workers Lab, Turkopticon for those choosing who to work for on Amazon’s Mechanical Turk and Sherpashare and other groups providing drivers comparative information on earnings opportunities at Uber, Lyft and other platforms.
Further experimentation with these innovative efforts will test the viability of using information and transparency as new sources of worker power. Those experimenting with these new approaches deserve to be protected from discrimination for raising their voice.
I would go further and open up the law to encourage experimentation and evaluation of these emerging efforts. Let these worker entrepreneurs show us new ways to harness technology in support of today’s workforce.
Shaping the future of work
I believe that American workers are thirsty for a positive vision and strategy that restores workers’ ability to have a constructive voice at work and that provides enough real power to regain a voice in shaping their future.
So it is time for those who seek their support to abandon the divisive and negative rhetoric that feeds their frustration and instead propose a viable way forward. Perhaps the best way to invent the next generation labor policy is to listen to workers themselves talk about what they want, need and are trying to do to regain control of their destiny at work.
So let me end with an invitation: we will be taking up these and other issues in how to Shape the Future of Work in an MITx online course starting next week. Join us in this course and see what real workers – young, midcareer and beyond – are saying about their visions for the future of work and the future of worker representation.
This is just one way we can deliver their message to the candidates desperate to gain their support.