Income Inequality: Are Unions the Answer?

Joshua M. Javits,
Arbitrator and Mediator, is Former Chairman of the National Mediation Board.

If income inequality is the problem; are unions the answer? The middle class is being pushed into poverty at an alarming rate. Four out of five Americans will experience poverty at some point in their lifetimes – up from 4 in 10 only a few years ago. America’s top 1% now owns 35% of the nation’s wealth, leaving the bottom 80% to share only 11% of the pie. The “middle” has seen a $6, 218 decline in median household income over the last decade. As the gap continues to widen, the social fabric rends and a substantial portion of the population is relegated to desperation and despair. The great American “middle” class is at best “working” class — if they are lucky enough to have a job at all.


Unions feature prominently in the debate over solutions to our nation’s economic woes, alternately positioned by politicians as powerful tools for delivering a decent quality of life, or as ossified relics that impede economic growth and siphon off undue benefits to a minority of workers. This dichotomy belies labor’s rich contributions to our country’s economic stability and success, and sidelines the pressing challenges now before us.


The contributions of labor unions to the American workplace and economy are many, from strong compensation, pensions, and healthcare plans to broadly accepted protective legislation, including child labor laws and minimum wage and overtime pay. By securing decent wages and benefits, unions have played a pivotal role in building the strong consumer base necessary to purchase American goods and services. Unions steer the nation towards a reasonable distribution of the country’s wealth.


Today, unions are vilified for their success in bringing a measure of income security and fair working conditions to their members, and to workers generally through the “threat” of unionization. Critics characterize unions as reaping gains at the expense of others: in the public sector, at the expense of the taxpayer; in the private sector, at the expense of corporate flexibility and profitability.


Much of the anti-union animus reveals a lack of understanding of precisely what unions do. Obviously, unions negotiate on behalf of their members with employers. But negotiations are a two-way street. Coercion is not a dominant factor in contract negotiations, and companies and public officials do not have to agree to union proposals. Indeed, the vast majority of negotiations result in voluntary agreements that accommodate the interests of both labor and management without resort to economic weapons such as strikes and lockouts.


Employers fear they will become uncompetitive if they are unionized and will lose out to low priced non-union or foreign production. Many employees also believe that high union wages and union-initiated work rules have led to the outsourcing of jobs overseas. This persistent fear flies in the face of the reality that unionized industries have in fact flourished over the last century which marked a period of strong unionization (as high as 35% as opposed to 12% today). Increased labor costs actually push companies to become more efficient in both production and use of technology. Nor are employers using their historic high profits to expand or become more competitive, but instead are hoarding their wealth. The share of profits going to capital at the expense of labor is thus unjustified, since it does not benefit the economy as a whole. In fact, if a higher percent went to employees, it would go far in addressing the cause of the current economic malaise, the paucity of consumer spending.


Enlightened unions do not wish to kill corporate America’s prosperous goose which lays the golden egg of good wages and benefits. It is in both sides’ interests for companies to remain competitive, create profits and generate good wages and benefits. Determining labor’s proper share of the pie is a problem-solving exercise, not a political test of wills.


As a mediator and arbitrator dealing with mechanics, teachers, pilots, firefighters, welders, and baseball players, I see countless conflicts that needlessly escalate. Festering problems and entrenched positions, coupled with structural barriers to meaningful negotiation, engender lasting disputes and mistrust on all sides.


Current American labor laws frustrate the adoption of cooperative and adaptive approaches to addressing new economic and workplace realities by, for example, restricting bargaining to a limited set of issues, retaining rigid divisions between supervisors and workers, and requiring negotiation to impasse in situations that demand quick action. Policy changes should be explored to prioritize collaboration over conflict. While labor and management can advance these goals, to fully realize this vision, our nation’s leaders must embrace reforms that usher in a new era of cooperation and flexibility in labor relations.


With experience as our teacher, let us abandon rhetoric that antagonizes and undermines labor and its advocates. Instead, let us direct our energies to forging a constructive relationship among labor, management, and government that promotes both fairness and competitiveness in meeting the very real demands facing our nation

                        author

Joshua Javits

Joshua M. Javits is a neutral mediator and arbitrator. He is a member of the National Academy of Arbitrators, on the rosters of the AAA, FMCS, NMB, and serves on numerous permanent arbitration panels. He served on four railroad Presidential Emergency Boards. He was Chairman and Member of the National… MORE >

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