Turning the Corner on the Two-Tier Economy

Mark Weisbrot
Houston Chronicle, August 8, 1997
Pittsburgh Post-Gazette, August 10, 1997
The Record,
August 11, 1997

The Detroit News,
August 14, 1997

The teamsters' victory against UPS is being hailed as a watershed in American labor relations, a reverse image of President Reagan's mass firing of striking air traffic controllers in 1981. It may well turn out to be just that-- and not just because the company ended up conceding most of what the union asked for. What was won in the hearts and minds of the American public may prove to be even more valuable than the gains in wages and full-time employment.

The American labor movement has had a public relations problem that dates back more than a century, when all the force of its adversaries-- including large scale employer and state-sponsored violence-- was used to demonize, terrorize, and ostracize workers who dared to join a union. The 1935 Wagner Act first established the legal right of most employees to organize and bargain collectively, but in recent decades that right has been eroded to the point where it exists mainly on paper. The proportion of workers in unions has fallen from its peak of 35% in the 1940s to less than 15% today.

Given this past and recent history, it is all too easy to portray organized labor as a "special interest" that represents its own narrow membership pitted against the public interest. Since this is the image of unions that the richest and most powerful people in our society would like to project, it is not surprising that it is always with us.

The American people saw another image of organized labor over the past two weeks, and they mostly empathized with what they saw. It was a picture of ordinary men and women of all ages and races, struggling to extract a living wage from a powerful and highly profitable company. Polls showed that the public favored the workers over the company by a two to one margin.

The teamsters focussed on the issue of part-time work, which found great resonance in a labor force that is increasingly insecure about its employment. This was countered by conservative think tanks who argued that the percentage of part-time employment in the U.S. hasn't really increased in the last 15 years, and that most part-time workers don't want to work full-time. Their response got a good deal of press, but the public kept its eye on the ball: the hiring of part-time labor by UPS was merely an instrument to keep their wages at less than half the level of the full-time drivers.

It is exactly these kinds of practices that will have to be reversed if the majority of employees are to begin sharing in the gains from economic growth. For decades now employers have been using two-tiered wage structures, outsourcing, threats of plant closing, as well as outright union-busting to prevent most workers from capturing any of the gains from increasing productivity.

The result has been 25 years of declining real wages-- not just for manufacturing workers, or "certain groups of unskilled workers," as it is often blithely pronounced by pundits, but for the overwhelming majority of Americans. Although the actual gains for UPS workers were modest-- some 2000 new full-time jobs per year over the five year contract-- it is the reversal of a trend, and the public's perceiving the unfairness of that trend, that make this a potentially historic victory.

Perhaps most important of all, the majority of the labor force who are not in unions got a glimpse of what solidarity means in practice. This concept is often dismissed as an empty slogan, since it lies outside the traditional dichotomy between self-interest and altruism. Solidarity is a recognition of a common interest, expressed in the old labor adage that "an injury to one is an injury to all." The drivers who risked losing $20.00-an-hour full time jobs, the AFL-CIO's pledge of $10 million a week in strike fund support, the thousands of non-UPS, non-Teamster, and non-union people who showed up at rallies and picket lines-- these are some of the examples of solidarity that emerged during the strike. There is no doubt that they helped move UPS away from its "last, best, and final offer." The settlement, too, was an example of the "solidaristic wage bargaining" long practiced in Europe, with the part-timers' wages increasing by 37% over five years, as compared to 15% for full-time workers.

The major economic impact of the settlement is not so much on UPS employees, or even the course of upcoming labor negotiations in other industries. Its real significance is what it means politically for labor. In a poll taken last year, 44 percent of Americans chose labor, versus 24 percent for management, when asked which side they generally supported in a labor dispute. This compares to 45 percent for management and 34 percent for labor in 1984.

If this reversal represents a growing public recognition that labor is fighting for their interests-- almost everyone's-- when it takes to the picket lines, we might well be on the way to reversing the long slide into inequality that has gripped the American economy.

Mark Weisbrot is co-director of the Center for Economic and Policy Research, in Washington, D.C. He is also president of Just Foreign Policy