The Future of Work in America: Policies to Empower American Workers and Secure Prosperity for All

Mar 25, 2014Richard Kirsch

Download the report (PDF) by Richard Kirsch

Download the report (PDF) by Richard Kirsch

The Future of Work is bringing together thought and action leaders from multiple fields to re-imagine a 21st century social contract that expands workers’ rights and increases the number of living wage jobs. The Future of Work is focusing on three areas: promoting new and innovative strategies for worker organizing and representation; raising the floor of labor market standards and strengthening enforcement of labor laws and standards; and assuring access to good jobs for women and workers of color.

Under the sponsorship of the Roosevelt Institute, the Future of Work is a collaboration between the Roosevelt Institute and the Columbia Program on Labor Law and Policy. The project is organizing a series of meetings, policy papers, and a conference, that aim at generating, debating, and communicating multiple approaches to empowering American workers to build an economy of broadly shared prosperity.

This report, Policies to Empower American Workers and Secure Prosperity for All, is an introduction to the first area: policies to invigorate worker organizing. The paper is in four parts:

  • A history of how organized workers fueled America’s broadly shared prosperity;
  • A history of how the weakening of American labor led to the shrinking of America’s middle class;
  • A primer on American labor law;
  • Policy ideas to reform and transform worker organizing.

Read "The Future of Work in America: Policies to Empower American Workers and Secure Prosperity for All," by Roosevelt Institute Senior Fellow Richard Kirsch.

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The New Deal Launched Unions as Key to Building Middle Class

Mar 25, 2014Richard Kirsch

This is the first in a series of posts summarizing a new Roosevelt Institute report by Senior Fellow Richard Kirsch, entitled "The Future of Work in America: Policies to Empower American Workers and Ensure Prosperity for All." The report provides a short history of how the rise and decline of unions and then explores reforms in labor policy to empower American workers to organize unions and rebuild the middle class.

This is the first in a series of posts summarizing a new Roosevelt Institute report by Senior Fellow Richard Kirsch, entitled "The Future of Work in America: Policies to Empower American Workers and Ensure Prosperity for All." The report provides a short history of how the rise and decline of unions and then explores reforms in labor policy to empower American workers to organize unions and rebuild the middle class. Today's post describes how union organizing before and after World War II led to the broadest shared prosperity in modern American history.

Americans are split and confused about the role of unions in our economy and society. On the question of the role of unions in the economy, the most recent poll in 2011 found that 45% saw unions as generally helping the economy, while 49% thought unions hurt the economy. As more and more Americans see their hopes for the future dimmed, and as income inequality becomes a defining issue, it is essential that Americans understand how workers organizing unions to demand a fair share of the wealth we generate is essential to rebuilding the middle-class, the key driver of our economy.

For that understanding, we need a history lesson. Before and after World War II, organized workers built a powerful middle class by taking direct action and advocating for government policies to give workers a fair share of economic wealth. But over the past four decades, this pattern was reversed as corporate owners and managers have taken an increasing share of America’s wealth rather than sharing it with workers. As a result, the American economy has sputtered, and more and more Americans are struggling to meet their basic needs.

The Roosevelt Institute draws inspiration from the New Deal and Franklin Roosevelt's achievements in responding to a harsh industrial economy and an immediate economic crisis by building the foundations of a very different economy. The Roosevelt era fundamentally transformed the nature and conditions of work in America, from one in which workers had virtually no voice, power, job security or personal safety to a robust social contract, cemented by law and social norms.

New Deal labor law provided legal protections that enabled workers to organize unions and to negotiate for higher wages and benefits and for safe working conditions. New Deal legislation put a floor under labor standards, establishing a minimum wage and overtime protections that lifted the incomes of workers across the wage spectrum. The New Deal’s social insurance programs, including Social Security, unemployment insurance, government guarantees for home mortgages, and financial support for poor families with children, worked hand in hand with labor organizing and wage standards to build a broad middle class.

Corporate benevolence did not hand working people good wages. It took a massive movement of striking workers, who faced decades of government suppression, to win the right to organize in 1935. After government spending on World War II finally ended the Depression by creating a full-employment economy, it took another massive wave of strikes to secure agreement from some of the nation’s largest corporations to share post-war industry profits with workers.

With the United States standing alone with a strong economy after World War II, and with pent up demand at home and huge needs to meet in a devastated world, many large corporations reached a truce with unions, enforced by the continued strikes, in which the profits from the surging economy were shared with shareholders and workers. From 1947 through the early 1970’s, worker income rose in lockstep with productivity. As the value of output produced by workers increased, so did their compensation. Hourly wages grew steadily until 1972. The share of employers who provided health coverage increased to more than 70%. Pensions became a standard practice in larger corporations.

Outside of the South, there was a public consensus in favor of unions. Republican President Dwight Eisenhower once said, “Only a fool would try to deprive working men and working women of their right to join the union of their choice.” In this context, millions of teachers and local, state, and federal workers joined unions alongside workers who labored in private industries. In 1956, three-out-of four Americans had favorable views of unions.

The higher wages and better benefits won by unions boosted wages at non-unionized companies as well. The wages of workers at non-union firms got a 7.5% boost when at least one-fourth of the workers in that industry belonged to unions.

The New Deal reforms were far from perfect. They left out broad swaths of the American public, largely along lines of race and gender. Domestic workers and farm workers – jobs held widely by African Americans and women in the 1930s – were excluded from the new federal labor rights, from most minimum standards, and from Social Security. New Deal rights were even further restricted in the 1940s, when a major roll-back of labor law enabled states to put up legal walls against increased unionization. These walls were primarily adopted by Southern states, which had the highest proportions of African American workers.

Even with these flaws, unions played a major role in increasing the economic security of women, people of color and the poor. Many unions – although not all –were major backers of the New Deal’s social insurance programs and the anti-poverty programs of the 1960s, including Medicare and Medicaid. As African American workers began to join unions in larger numbers, many were finally able to join the middle class. Even today, union membership boosts the wages of African-Americans by 12%. Other groups who have traditionally suffered from lower wages also benefit from union membership with boosted wages: women by 11%, and Latinos by 18%.

These higher wages and better benefits helped to build a huge middle class in the United States and to level income inequality. When union membership reached its peak between 1943 and 1958, income inequality dropped, as you can see in the chart below. The share of income that went to the wealthiest ten percent of Americans dropped to near 30%. But as the proportion of union members fell, the share of income taken by the wealthiest began to rise again. By 2010, the wealthiest were taking home almost 50% of the nation’s income.

The story of how we got from unions representing one-third of American workers to barely one-in-ten, is told in the next post.

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Daily Digest - March 25: Organizing Towards Shared Prosperity

Mar 25, 2014Rachel Goldfarb

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The New Deal Launched Unions as Key to Building Middle Class (Next New Deal)

Click here to receive the Daily Digest via email.

The New Deal Launched Unions as Key to Building Middle Class (Next New Deal)

In the first of a series of posts summarizing his new report, which explores possibilities for labor-organizing reform, Roosevelt Institute Senior Fellow Richard Kirsch looks at the history of union organizing as a source of shared prosperity.

The Next Health-Care Debate (WaPo)

The Affordable Care Act's success will prove that government is indispensable in fighting widespread inequality, writes E.J. Dionne, who sources Roosevelt Institute Fellow Mike Konczal's work on why charity can't tackle the problem.

The U.S. Cities Where the Poor Are Most Segregated From Everyone Else (The Atlantic Cities)

Noting that "moral cynicism" is among the corrosive "neighborhood effects" of grinding poverty, Richard Florida looks at the data concerning the segregation and concentration poor people, which is greater in large, dense metro areas and where wages are higher.  

Freelancers Piece Together a Living in the Temp Economy (NYT)

Planning for the future in an age of job insecurity is nearly impossible, writes Adriene Hill. She reports on a Las Vegas woman who knows her current assortment of appearance-based gigs can't last forever.

Forces of Divergence (The New Yorker)

John Cassidy reviews Thomas Pikkety's Capital in the Twenty-first Century, which considers the swing back towards capital accumulation over wages in today's economy. Cassidy deems it a must-read for anyone interested in inequality.

The NLRB Must Restore Democracy in Chattanooga (Truthout)

John Logan calls on the National Labor Relations Board to overturn the recent United Auto Workers vote in Tennessee, because otherwise the NLRB will set a precedent that accepts outside interference.

The Law That Could Sink Birth Control Coverage (MSNBC)

In the context of today's Supreme Court hearing on the contraception mandate in the Affordable Care Act, Adam Serwer and Irin Carmon explain the history of the 1993 Religious Freedom Restoration Act.

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Daily Digest - March 21: When Long-Term Unemployment Becomes Permanent

Mar 21, 2014Rachel Goldfarb

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Unemployed? You Might Never Work Again (NYT)

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Unemployed? You Might Never Work Again (NYT)

Binyamin Appelbaum reports on a new study from three Princeton economists, which looks at the relationship between inflation and unemployment. They conclude that prospects for the unemployed diminish rapidly.

Income Inequality isn’t About the Rich — it’s about the rest of us (WaPo)

Catherine Rampell writes that Americans are less concerned about inequality when they also experience upward mobility. So if the 1 percent are tired of being vilified, she notes some policies they could support.

An 87 Percent Vote for a $15-an-Hour Wage (The Nation)

In an advisory referendum, Chicago voters showed overwhelming support for a high minimum wage for large employers, reports John Nichols. Now it's a question for the Chicago City Council and the Illinois gubernatorial candidates.

Pixel and Dimed: On (Not) Getting By in the Gig Economy (Fast Company)

Sarah Kessler writes about her attempts to let work come to her through smartphone apps offering paid-by-the-gig opportunities. This form of "entrepreneurship," as the companies like to call it, turns out to be less than viable.

How public sector layoffs add to the racial income gap (MSNBC)

Recent layoffs in the public sector disproportionately affected black communities, writes Ned Resnikoff, with a "probability of displacement," or likelihood of getting fired, 2.8 percent higher for blacks than whites.

Learn to Love This Loophole (U.S. News & World Report)

Programs that qualify people for heating assistance and food stamps at once have new requirements, but some governors are just raising heat aid to match, reports Pat Garofalo. Boehner calls that cheating instead of feeding the hungry.

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Daily Digest - March 20: The Safety Net - Government = ?

Mar 20, 2014Rachel Goldfarb

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The Voluntarism Fantasy (The Majority Report)

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The Voluntarism Fantasy (The Majority Report)

Sam Seder speaks with Roosevelt Institute Fellow Mike Konczal about Mike's new piece in Democracy Journal. Mike says the social safety net has always depended on the government.

The Tyranny of the On-Call Schedule: Hourly Injustice in Retail Labor (The Nation)

Michelle Chen explains the ways that retail scheduling has harmed workers' ability to plan their lives. On-call schedules mean not knowing how much you'll make or when you'll work, ever.

Journalists’ and Activists’ Strange Approach to Low-Wage Workers (WaPo)

Sarah Jaffe calls out the habit of representing low-wage workers as poor, unfortunate Others in need of our help. Any one of us could share the concerns and needs of low-wage workers.

Why Not Peg EITC Benefits to the Local Cost of Living? (PolicyShop)

David Callahan suggests President Obama could do better than simply increasing the earned income tax credit. For low-income workers living in high-cost areas, it would make a big difference.

Janet Yellen's Rookie Mistake: Speaking Too Clearly (Bloomberg Businessweek)

Janet Yellen, the new Federal Reserve Chair, needs to speak with less specificity, writes Peter Coy. Attaching a six-month timeframe to a vague written statement set off a market selloff.

The Key Question for Yellen: Is This Economy As Good As It Gets? (FiveThirtyEight)

Andrew Flowers considers the ways to measure economic potential, and what the Federal Reserve ought to do if we agree that the U.S. is still falling short.

Do We Need to Force People to Live in the Homes They Own? (Pacific Standard)

Real estate that isn't actually lived in may be a good investment, but it isn't good for a city, writes Kyle Chayka. He suggests that residency requirements could control rising rents.

New on Next New Deal

There's More to Fixing the Minimum Wage Than Just Raising It

Azi Hussain, Roosevelt Institute | Campus Network Senior Fellow for Economic Development, says that instead of tying the minimum wage to annual inflation, we should peg it to inflation over the business cycle to ensure flexibility.

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There's More to Fixing the Minimum Wage Than Just Raising It

Mar 19, 2014Azi Hussain

Increasing the minimum wage on a sporadic basis isn't the right way to help low-income workers or the economy.

Increasing the minimum wage on a sporadic basis isn't the right way to help low-income workers or the economy.

Support for a minimum wage increase is running high. What’s more is that there is strong support to tie the minimum wage to inflation, which is good news. Inflation has slowly chipped away at the value of the minimum wage since the late 1960s, so tying the minimum wage to inflation will ensure that its real value is kept constant.

Tying the minimum wage to inflation has another advantage. Currently, the minimum wage is increased sporadically and rarely, resulting in larger increases that are more harmful to employment. By tying the minimum wage to inflation, increases are smaller, regular, and predictable, and therefore less harmful.

However, tying the minimum wage directly to inflation is a bit crude. It means the minimum wage will increase every year by at least 1-2% (approximately the same rate as inflation). There are at least two situations where this could be problematic. The first is that during a recession, businesses would have to deal not only with decreasing demand and poor economic conditions, but also a rising wage. A minimum wage increase along with a recession would hurt employment above and beyond that of just a recession. On the other hand, during good times the minimum wage would still only increase by 1-2%, whereas the economy may very well be able to absorb a larger increase.

How can we design the minimum wage so that inflation doesn’t chip away at its value over time, while still giving it enough flexibility in increases to accommodate current economic conditions? The best way would be to tie the minimum wage to inflation over the business cycle instead of on an annual basis. The idea is that the minimum wage would increase during booms and would stay constant or may even decrease during busts. Over the course of a business cycle, the increases would offset the decreases enough so that the minimum wage would keep up with total inflation during that cycle. A good example of a similarly designed policy is Sweden’s balanced budget rule, which requires the government to run a budget surplus over the course of a business cycle. This allows the Swedish government to spend more than tax revenue during busts, but forces it to spend less than tax revenue during booms, so that the net result is a budget surplus.

Yet having flexibility in choosing an annual minimum wage means someone will need to decide how much it should increase or decrease. That “someone” should not include politicians. Rather, an independent board should be set up to make the annual decision. A great example of this in practice is the UK’s Low Pay Commission, an independent body that conducts research and makes the recommendation for the annual minimum wage change. This board could be set up with a mandate to tie the minimum wage to inflation over the business cycle.

Too often, great ideas are rendered less effective or even harmful as they are designed as policy. The upcoming minimum wage legislation, an important tool in the fight against rising inequality, could end becoming one of these policies. But designing it right could mean long-term success, for the betterment of low-income workers and our economy.

Azi Hussain is the Roosevelt Institute | Campus Network Senior Fellow for Economic DevelopmentHe is a junior in the School of Foreign Service at Georgetown University majoring in International Political Economy.

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Daily Digest - March 14: The Golden Arches Get Served

Mar 14, 2014Rachel Goldfarb

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Breaking: McDonald’s Workers Mount Class Action Suits in Three States (Salon)

The workers are alleging different forms of wage theft, such as unpaid overtime, in California, Michigan, and New York, at both corporate locations and franchises, reports Josh Eidelson.

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Breaking: McDonald’s Workers Mount Class Action Suits in Three States (Salon)

The workers are alleging different forms of wage theft, such as unpaid overtime, in California, Michigan, and New York, at both corporate locations and franchises, reports Josh Eidelson.

A Business Upside to Obama’s Overtime Move (WaPo)

Jena McGregor writes that since productivity starts to drop as workers put in more than 40 hours a week, employers who hire more staff instead of paying overtime should see productivity increase.

The Secret Benefits Of Paid Sick Days For All (ThinkProgress)

Bryce Covert looks at some of the less obvious changes that come with paid sick leave, such as increased employer trust in employees, employee retention, and morale and productivity boosts.

How We Built the Ghettos (The Daily Beast)

In response to Paul Ryan's recent comments on inner city poverty, Jamelle Bouie explains how housing policies in the mid-20th century, which excluded black homebuyers, created today's racial wealth gap.

UAW Appeals to NLRB Board to Keep 'Outside Groups' out of Decision on New Union Vote (Chattanooga Times Free Press)

Dave Flessner reports that United Auto Workers is pressing to keep the National Right to Work Legal Foundation and Southern Momentum out of upcoming arguments, and Volkswagen agrees.

  • Roosevelt Take: Roosevelt Institute Senior Fellow Richard Kirsch looks at why UAW's efforts in Chattanooga failed despite VW's support, and what that says about U.S. labor law.

The Battle for Chattanooga: Southern Masculinity and the Anti-Union Campaign at Volkswagen (In These Times)

Some of the union supporters at the VW plant in Chattanooga hoped a union would change the culture of self-reliance and working through pain that led to injuries on the job, says Mike Elk.

Some Jobless Facing Eviction After Loss Of Benefits (HuffPo)

Andrew Perez and Arthur Delaney report that organizations tracking stories from the unemployed have seen an increase in evictions since Congress failed to extend long-term unemployment benefits.

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Daily Digest - March 12: Political Influence Carries a Price Tag

Mar 12, 2014Rachel Goldfarb

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Ready for a Surprise? Money DOES Equal Access in Washington (WaPo)

Matea Gold reports on a randomized field study that proves the long-held belief that campaign donations buy attention from legislators and their staff.

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Ready for a Surprise? Money DOES Equal Access in Washington (WaPo)

Matea Gold reports on a randomized field study that proves the long-held belief that campaign donations buy attention from legislators and their staff.

Obama Will Seek Broad Expansion of Overtime Pay (NYT)

Michael D. Shear and Steven Greenhouse report that the president plans to use his executive authority to alter who is eligible for overtime according to their job classification, as well as the salary threshold.

A Modern Day ‘Harvest of Shame’ (ProPublica)

The 1960 CBS documentary showed the plight of migrant farm workers. Michael Grabell says that today, blue collar temp laborers are facing many of the same terrible working conditions.

Nowhere Close: The Long March from Here to Full Employment (EPI)

Josh Bivens explains how low demand is keeping the U.S. economy away from full employment. He also has suggestions for how to boost demand, including increased public spending and net exports.

Plan for Mortgage Giants Takes Shape (WSJ)

Nick Timiraos reports on a bipartisan plan to replace Fannie Mae and Freddie Mac with a system of federally insured mortgage securities. The Senate Banking Committee's liberal Democrats hold the power to move this forward or stop it.

A Conservative Meme On School Lunches: Work For It, Kids! (TPM)

What's wrong with free school lunches? Sahil Kapur says that the opposition combines the idea that people are mooching off the government with the claim that liberals don't value the dignity of work.

New on Next New Deal

The Story of Atalissa Highlights America's Long-Term Care Problem

Sarah Galli responds to The New York Times’s story about the abuse of Iowan men with intellectual disabilities by considering the nation's lack of options for long-term care for adults with disabilities.

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Daily Digest - March 7: Holding Banks to a Higher Standard

Mar 7, 2014Rachel Goldfarb

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What's the Deal: How to Make the Financial System Safer for Everyone with Mike Konczal (YouTube)

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What's the Deal: How to Make the Financial System Safer for Everyone with Mike Konczal (YouTube)

Roosevelt Institute Fellow Mike Konczal explains why banks need higher capital standards to prevent another collapse and discusses the economic reform issues that the Roosevelt Institute will be working on throughout 2014.

Obama's Budget and the Politics of Poverty (To The Point)

Mike Konczal speaks with Warren Olney about how the parties aim to split the budget for anti-poverty programs. The GOP would increase funding for some programs, but at the cost of others.

Paul Ryan Accidentally Makes the Case Against Means-Testing (MSNBC)

When Paul Ryan brings up a child who feels unloved because he gets free lunch instead of a brown-bag lunch, Ned Resnikoff sees an opening for giving all students free lunch.

Together, New Haven Activists and Leaders Strike Back Against Wage Theft (In These Times)

For the first time, local police brought larceny charges against an employer who shortchanged his workers. Melinda Tuhus says these steps will help to protect low-wage workers, including undocumented workers.

Unions and Job Security (PolicyShop)

Matt Bruenig counters a recent argument that unions can't provide real job security anymore. He says the point isn't absolute job security anyway, but safety from firing without cause.

The Foreclosure Nightmare Isn’t Over Yet (MSNBC)

Suzy Khimm reports on one family's five-year fight against foreclosure in Maryland. Policies requiring mediation have kept them in limbo, as have the mortgage servicer's repeated runarounds.

Democrat Says CFTC's Low Budget 'Sucks' (The Hill)

Rep. Sam Farr (D-CA) says that the Commodity Futures Trading Commission's lack of sufficient funding could be very dangerous if it handicaps enforcement, reports Tim Devaney.

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Daily Digest - March 6: Washington State Points the Way on Wages

Mar 6, 2014Rachel Goldfarb

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Highest Minimum-Wage State Washington Beats U.S. Job Growth (Bloomberg)

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Highest Minimum-Wage State Washington Beats U.S. Job Growth (Bloomberg)

Victoria Stilwell, Peter Robison, and William Selway report that Washington hasn't just shown higher job growth – it also has lower poverty rates, and the supposedly vulnerable service industry is growing.

Minimum Wage Raise Would Reduce Food Stamp Spending By $46 Billion Over Decade: Report (HuffPo)

A new report from the Center for American Progress analyzes how higher wages would reduce need, writes Dave Jamieson. Raising the minimum wage would decrease the "culture of dependency" that Republicans decry.

The U.S. Economy's Big Baby Problem (The Atlantic)

The American birthrate has hit a new record low. That wouldn't be a big deal, writes Derek Thompson, if our economy didn't rely so heavily on families' consumer spending.

Over 2 Million People Now Without Unemployment Benefits (MSNBC)

The number of long-term unemployed workers in the U.S. keeps growing, and Ned Resnikoff says it's looking less and less likely that Congress will reauthorize their extended unemployment insurance.

When Regulation Threatens, Bankers Predict Doom For Main Street (ProPublica)

Jesse Eisinger explains how banks are trying to chip away at financial reform by negotiating behind the scenes on little-known issues. Going after collateralized loan obligation rules doesn't get much public scrutiny.

Does America Need a Robin Hood Tax? (Pacific Standard)

Kyle Chayka says a financial transactions tax could raise enough money to fight many social problems. Focusing such a tax on high-frequency trading would also curtail the banks' worst excesses.

It’s Still Paul Ryan’s Party (WaPo)

Greg Sargent calls out Ryan's hypocrisy in claiming the president's budget contains no attempt at compromise. Ryan's budget seeks even less common ground, with absolutely no funds for Democratic priorities.

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