What Happened Today: August 29, 2023
Biden and Trump vie for auto union; Gofundme freezes Grayzone money; Wine demand dropping
The Big Story
With President Joe Biden and former president Donald Trump both vying for a coveted endorsement from the United Auto Workers (UAW) ahead of the 2024 election, the Treasury Department has debuted an usual report that argues unions definitively boost the middle class and strengthen the economy. In a first-of-its-kind analysis of how organized labor affects the economy, the Treasury said that unions raise member wages by as much as 15%, while Hispanic union workers, a key voting demographic, could outearn non-union workers by as much as 35%. Treasury Secretary Janet Yellen said on a call with reporters that “Union workers have been the backbone of America’s middle class, and yet for too long, the contributions of union workers have not been fully appreciated.”
The Treasury report comes amid the highest level of support by Americans for unions since 1965, according to a Gallup poll last year. Yet union membership has long been in decline, with only 10% of all wage-earning workers enrolled in unions in 2022, about half of what it was in 1983. The report makes the case that the Biden administration has gone to great lengths to try to reverse the trend, noting, for example, an increase to the budget of the National Labor Relations Board. Yet, when asked by reporters how the Treasury Department will enact “changes to the tax code to discourage anti-union campaigning,” department staff declined to elaborate with specifics.
On the campaign trail, Biden has positioned himself as the most pro-labor president to ever serve in the White House, though his aggressive intervention against organized labor in a nationwide freight-rail strike earlier this year and ongoing attempts to move automakers entirely toward electric vehicles has irked union members. While 17 unions joined the AFL-CIO federation to back Biden’s White House bid at a rally earlier this summer, UAW President Shawn Fain has warned that the union’s endorsement may be contingent on how much Democrats support the fight for higher wages at electric vehicle plants. At the moment, Fain is leading a contentious negotiation with three large automakers that could lead to a UAW strike after its current contract expires Sept. 14.
In The Back Pages: Labor’s Lost
The Rest
→ The crowdsourcing site GoFundMe froze a campaign to support the independent left-wing media outlet The Grayzone with little explanation beyond “some external concerns,” according to emails from the platform sent to the publication. The sudden seizure of $90,000 pledged by at least 1,100 donors to The Grayzone comes after PayPal and Venmo deactivated the personal accounts of Grayzone’s managing editor, Wyatt Reed, “after he reported on the Ukrainian military’s targeting of civilians from the separatist side of the Donbas region,” according to the publication. GoFundMe has previously frozen funds raised by campaigns that offer political and activist narratives that contradict those espoused by governments in power, including the platform’s 2022 seizure of almost 10 million Canadian dollars donated to Canadian Freedom Convoy, which protested vaccine travel mandates for truck drivers at the border.
→ While boarding a flight to Israel from Dubai, Yoseph Haddad, an Arab citizen of Israel, was berated by two men who recognized the pro-Israel activist, with one saying, “Here is the traitor, the dog,” before the other allegedly knocked Haddad’s phone to the ground when he tried to film the tirade. Police escorted Haddad and his family, along with the assailants, off the plane. In subsequent interviews with news outlets, Haddad accused Arab-Israeli Knesset members Aida Touma-Suleiman and Sami Abu Shehadeh of inciting the incident. “They’ve made violence against me fair game,” Haddad told a reporter.
→ Following the arrival of more than 110 boats and 4,200 migrants over the weekend to the island of Lampedusa, Italy’s southernmost outpost otherwise home to less than 7,000 people, Italian Prime Minister Giorgia Meloni said Monday that she would convene a national security panel to address the ongoing flood of migrants onto Italian shores. For much of her career, Meloni has positioned herself as a hawk to reduce illegal immigration, but the record number arriving to Lampedusa has local officials scrambling. Italian authorities have recently impounded three charity ships for efforts to rescue migrants and have instructed other operators to take migrants to ports in other nations. The pushback on the arrivals comes as Italy struggles to fill labor shortages amid a shrinking population, particularly in rural areas of the nation.
→ Rapper Eminem sent a cease-and-desist letter to former biotech executive turned Republican presidential candidate Vivek Ramaswamy after a series of viral video clips showed Ramaswamy rapping to Eminem’s “Lose Yourself” in recent weeks. The request from BMI, a performing rights organization, was initiated by Eminem himself, who seemingly does not want to be associated with the nascent politician slowly rising up the polls. Ramaswamy’s campaign staff have said they’ll comply with the rapper’s request.
→ Alabama is making moves to become the first state in the nation that executes prisoners by forcing them to breathe in pure nitrogen, inducing a form of hypoxia that opponents say is entirely experimental and could lead to painful complications during an execution. After first authorizing the use of nitrogen hypoxia in 2018 because of an ongoing shortage of chemicals used for lethal drug injections, Alabama now appears closer to putting the method to the test after the state’s attorney general’s office petitioned the state’s Supreme Court to set an execution for a death-row inmate with the novel nitrogen method. Alabama has had a history of botched execution attempts in recent years, with the governor, Kay Ivey, pausing executions to conduct an internal review.
→ For the first time, the government-run Medicare program will be able to negotiate prices on 10 medications in 2026 under the aegis of the Inflation Reduction Act, though it remains to be seen exactly if lower prices for the government will be passed along to consumers. The policy change, which includes stroke prevention and diabetes medications, will become a major talking point for President Joe Biden on the campaign trail, even as pharma companies are expected to challenge the effort in court.
→ A “tidal wave” of heart disease could soon hit Britain, and it’s largely because of ultra-processed foods, says a major new study from the European Society of Cardiology.
More than any other country in Europe, the average British diet is dominated with highly processed food items, with more than half of the daily intake coming from frozen foods, sweets, and baked products.
Studying the diets and health stats of 325,000 participants, researchers say the British are at significantly high risk of heart attacks and strokes because the foods not only are low in fiber and high in salt and sugar but also require more effort from the body to be digested.
“This is one of the first studies to suggest the harm caused by ultra-processed food may be more than just because of the high fat, sugar and salt content of the products,” said Henry Dimbleby, a researcher who’s advised the British government’s food policy. “Given that ultra-processed food represents 55 percent of our diet that should be a wake-up call. Food companies should not be selling people foods that are actively killing them.”
→ Wine drinkers in China are popping fewer bottles these days as the International Organisation of Vine and Wine reported that total consumption fell in 2022 by more than half compared to its peak year of 2017. Some of the slowdown can be attributed to the decline in sales that haven’t bounced back yet since the strict pandemic-era lockdowns, though China isn’t the only nation knocking back fewer glasses. France is set to destroy enough wine to fill 100 Olympic-sized swimming pools, a haul of almost 80 million gallons of vino worth $216 million that French wineries cannot sell to wine drinkers as demand in France continues to dwindle. The winemakers will use subsidies from the government to turn the money into pure alcohol for products like perfume and cleaning supplies, as officials hope to thwart a collapse in wine prices while providing winemakers some sources of revenue.
TODAY IN TABLET:
Jews and Joe by Orge Castellano
From European streets to Manhattan’s Lower East Side, Jews have been deeply involved in the history of coffee and the café scene
About Those Amy Winehouse Paintings by Jeremy Sigler
An aging art critic educates Gen Z on Jimi Hendrix, the pleasures of Adderall, and the mystery of Gerald Laing, the forgotten pioneer of pop art
This piece was originally published in Tablet, December 2022
Labor’s Lost
In America today, we have informal labor cartels for the college-educated elite, while private sector unions for the working class are all but annihilated
By Michael Lind
What was called “the Labor Question” a century ago has returned to the forefront of public debate, thanks to highly publicized attempts to unionize companies as varied as Amazon and The New York Times, and in spite of the efforts of the flacks of the neoliberal left and libertarian right (and the billionaires and corporations who fund them) to keep public attention focused on the culture war instead of the class war.
According to Gallup, 71% of the public approves of labor unions—the highest percentage since 1965—with 90% support among Democrats, 66% among independents, and 47% among Republicans. But because of partisanship and class interests, these views are not translated by the Democratic and Republican parties into support for organized labor. This is largely a result of the increasingly elitist nature of American politics. Both parties have superrich donors who are more or less libertarian—socially liberal and economically libertarian. The Silicon Valley and Hollywood elites who fund the Democrats are as hostile to organized labor as Republican-leaning agribusiness and logistics industries.
The social base of the Democrats now consists of upscale, mostly white, college-educated voters for whom abortion, subsidized solar and wind power, and the imposition of race and gender quotas in all areas of American society are more urgent priorities than organizing warehouse workers or raising the minimum wage, even if cultural progressives pay lip service to organized labor. Meanwhile, even though most Republican voters of all races are working class, the most influential group within the GOP is the mostly affluent minority of the population—fewer than 10% of Americans—who are self-employed owners of small businesses that hire workers. Portraying themselves as victims squeezed between big business above and the working class below, most small business owners are and always have been ferociously hostile to any reform that increases the ability of their employees to bargain for higher wages, benefits, or better working conditions.
Thanks to the indifference of Democrats and the hostility of Republicans, union membership among private sector workers in the U.S. has collapsed from around a third of the population in the 1950s to around 6% today—lower than it was during the presidency of Herbert Hoover, before Franklin Roosevelt’s pro-labor New Deal.
For more than half a century, American employers have used a variety of methods to annihilate organized labor in the American private sector. One method has been geographic labor arbitrage—transferring production from unionized sites in pro-labor states to nonunion workforces in anti-labor, right-to-work states in the American South or West, or to countries with poor and repressed workers like Mexico and China. The flip side of geographic labor arbitrage is immigration arbitrage, replacing unionized workers with immigrants who are not unionized and, in the case of illegal immigrants and guest workers, are easily bullied and exploited by employers. The outsourcing of jobs formerly done in the firm by unionized workers to nonunion contractors is another tool used by corporate America to crush private sector worker power in the U.S.
Not content with annihilating collective bargaining, lobbyists for American employers and their political allies have weakened the power of individual, nonunionized workers using legal devices like noncompete contracts, by which workers sign away their right to work for rivals of their employer if they quit, no-poaching/no-hiring agreements among firms in the same industry, and other unethical but sometimes legal anti-worker schemes.
Libertarian ideologues believe that all of this is to the good. Unions are labor cartels and all cartels are bad because they might raise consumer prices above their supposed free market rate. The marginal revenue product (MRP) theory of compensation holds that in a free market, workers will be paid on the basis of their exact contribution to the profitable enterprise (which—surprise!—just happens to be what any particular employer prefers to pay). According to this extreme theory, any government interventions in the U.S. labor market, including minimum wages and limits on immigration of workers from other countries, in addition to pro-union laws, can only backfire to the detriment of consumers—the one group that matters.
Most of the champions of the free market who make these arguments in public derive their income not from selling goods or services in the marketplace but from the gifts of donors as professors, think tank fellows, or journalists at money-losing publications subsidized by rich libertarians.
Often they equate their radical libertarianism with “classical liberalism.” But the actual classical liberals of the 18th and 19th centuries had far more nuanced views about labor. Adam Smith noted that in bargaining for wages, employers had a good deal more power than employees. Two of the leading classical liberal economists of 19th-century Britain, J.S. Mill and Alfred Marshall, believed that trade unions were necessary to balance the excessive power of employers in wage negotiations.
Once we recognize that wages are not set automatically by a mystical market equilibrium, but result from the relative bargaining power of the two sides in wage negotiations, the libertarian theory of the labor market collapses. To be sure, there are limits on what firms—and government agencies and nonprofit organizations—can pay their workers, from the janitor to the CEO. But most profitable firms have some discretion in how they divide their profits among shareholders, managers, and workers, after other costs have been paid. Excessive pay for workers can ruin a profitable firm, but so can excessive pay to managers or excessive payouts to shareholders.
A majority of Americans in the private sector work for firms with more than 500 employees, notwithstanding nonsense about small business being the backbone of America. The inconsistent ideologues of the free market right tell us that it is perfectly acceptable for the numerous managers and shareholders running these large companies to combine and act as a single unit in negotiating wages with employees, and yet somehow it is unacceptable for workers to team up and bargain as a unit on the other side of the table. The idea that a janitor can somehow bargain with the pooled, collective force of the managers and owners of a large corporation is so absurd that only libertarians or academic economists could believe it.
If organized labor in the private sector is so weak, why are there any well-paid workers in the U.S. at all? The answer is that unions are not the only kinds of labor cartels that boost the incomes of their members. Professional associations and trade associations seek to limit the number of practitioners in their occupations, thus increasing the prices of goods and services—preferably by means of government licensing laws, with safety invoked as a rationale. This dynamic explains why, as union membership has declined, there has been an explosion of licensing requirements in occupations like florists. The public must be protected from accidentally lethal bouquets! The American Medical Association (AMA) has been more successful in limiting the number of practitioners in the U.S. than their equivalents in the law and the academy, where surplus J.D.s and Ph.D.s have driven down incomes and reduced employment prospects for lawyers and professors.
Many affluent Americans in the private sector benefit from working for large corporations. The more successful firms possess the market power to set prices higher than they would be able to in conditions of hypothetical pure competition thanks to their status as natural monopolies or oligopolies. These surplus profits or “rents” can be used not only to enrich CEOs but to shower money on middle managers and other well-paid if often unproductive employees of the “email caste.”
In most large organizations of the private, public, and nonprofit sectors, compensation is determined by “salary bands.” The highest wage permitted in the salary band for a receptionist will be lower than the lowest wage in the salary band for a vice president, even if the company depends on the receptionist and the vice president is a bumbling incompetent. Under antitrust law, firms cannot collude with one another to fix the wages they pay, but in practice this is precisely what most large-scale employers in the U.S. do. Although salary bands reflect the logic of an anti-worker cartel among similar firms, agencies, or nonprofits, those in the well-paid salary bands naturally do not protest their comfortable oppression.
The myth of meritocracy—the global market rewards educated workers with high skills—usefully camouflages the quasi-feudal reality of salary bands, in which compensation is based on status and job definition, rather than an employee’s contribution to the organization. The better-paid, higher-status jobs tend to require employees with more expensive and time-consuming college credentials, whether skills learned in college are used on the job or not. In the real world, your pay is largely determined by your place in the organized hierarchy—by your “band”—and not by your personal talents or education. The same person with the same skills might make vastly more money as a corporate vice president in a large, oligopolistic firm, than as an outsourced consultant, just as a unionized janitor working as an employee of a unionized firm could make much more than a nonunion employee of an outsourced janitorial services contractor.
In short, most wages in the U.S. and similar countries are rigged, directly or indirectly, by law and custom. In some occupations they are rigged in favor of workers, in others they are rigged against workers. What has happened in the last half century is not the emergence of a free labor market as a result of the decline of labor unions. While one kind of labor cartel, the trade union, has declined, other labor cartels flourish—the licensing cartels that inflate the pay of doctors, lawyers, and professors, and the pro-employer, price-fixing, salary band cartels formed by oligopolistic firms that share their high profits with the CEOs and their well-paid subordinates. In America today, we have informal labor cartels for fortunate members of the college-educated managerial and professional elite, while labor cartels in the form of trade unions for members of the private sector working class have been all but annihilated.
It gets worse. Millions of Americans—particularly in low-wage service sectors like fast food and house-cleaning—are paid too little to live on as individuals, much less to provide for their families. Because most Americans are not libertarian sociopaths, our society will not allow great numbers of American workers to starve to death or go without medical care. To make up the gap between the poverty wage paid by employers and a minimally decent income and access to benefits, American taxpayers—generous to a fault—subsidize a variety of welfare programs, from the Earned Income Tax Credit (a cash subsidy for underpaid workers) to food stamps, housing vouchers, and Medicaid. These are benefits not just for those who are unemployed for various reasons but for millions of Americans who work full time but are still poor because their employers pay so little. This low-wage/high-welfare system succeeds in eliminating extreme poverty—but at the price of shifting the burden of paying the costs of survival for low-wage workers from their employers, and the consumers of the goods and services they produce, to taxpayers. Much of the American welfare state functions as an indirect subsidy to cheap-labor employees in fast-food restaurants, warehouses, and agricultural plants.
Suppose that the U.S., like Switzerland, had federal referendums. Suppose that a referendum asked, “Should every employer be required to pay a wage sufficient to keep workers and their families out of poverty, with no need for them to rely on welfare programs?” The hypothetical referendum would probably pass by an overwhelming majority.
But as we have seen, both national parties in the U.S. are controlled by different factions of the overclass. The progressive professionals of the left-overclass benefit from low wages for household servants and urban service workers, with the taxpayers picking up the rest of the tab. At the same time, many small business owners on the Republican right can pay poverty wages to their workers, knowing that the workers and their children won’t starve thanks to the generosity of government safety nets. The professionals of the left and the small business owners of the right furthermore agree with each other, and disagree with most Americans of all races, that immigration is too low in the U.S. The overclass left wants an immigration-fed buyer’s market in low-wage, nonunion maids and nannies and gardeners and the overclass right wants an immigration-fed buyer’s market of low-wage, nonunion factory and field workers.
Both the elite left and the elite right prefer the hysterics of the culture war to the politics of class war. Identity politics allows progressives to feel good about demanding more nonwhite and female and nonbinary representation on corporate boards, even as they quietly pay their illegal immigrant maids and nannies off the books. Culture war politics allows conservatives to pose as champions of the working class by defending working-class social values, even as conservative politicians oppose any attempt to improve the wages or benefits or workplace bargaining power of working-class voters.
The bad news is that the power of the American working class in the private sector is lower than it has been since before the New Deal. The good news is that, having hit bottom, worker power in the U.S. has nowhere to go but up.
What would an agenda for rebuilding worker power in America after half a century of employer assaults and bipartisan neglect look like? To begin with, a successful coalition in favor of restoring power to American workers would have to be nonpartisan. The near-total identification of America’s moribund legacy unions with the Democratic Party machine is incompatible with that goal. In the private and public sectors alike, organized labor in whatever form it may take should focus solely on wages, working conditions, and benefits, should welcome workers of all parties or no party, and should leave other subjects to other organizations.
Rebuilding worker power in America requires rebuilding collective bargaining in some form. Even if anti-worker legal devices like noncompete clauses or at-will employment were outlawed, most Americans in the private sector cannot realistically bargain over wages and benefits on an individual basis with the large firms they work for.
But collective bargaining need not follow the site-by-site, enterprise-based unionization system that is the legacy of the 1935 National Labor Relations Act (the Wagner Act). One reason that employers have been more successful in destroying private sector unions in the U.S. than in similar industrial democracies is the difficulty of enterprise-based collective bargaining, which sees labor organizers struggling to unionize one Amazon warehouse at a time. Sectoral bargaining, in contrast, which compels all of the firms in a given industry or occupation to negotiate wages and benefits with all of the relevant unions in that sector, is common in other democracies, but less so in the United States, with the notable exception of railway and transit workers and airline employees under the Railway Labor Act of 1926.
It is possible to have sectorwide collective bargaining coverage, even with low levels of union membership. In France, few workers belong to trade unions, but most workers are covered by industrywide agreements negotiated between unions and employers. Given the near-extinction of unions among private sector workers in the U.S., the priority of pro-worker reform should be to expand collective bargaining coverage rather than union membership.
In occupations with many dispersed and hard-to-unionize workers, wage boards or worker standards boards provide an alternative to traditional collective bargaining between employers. These are commissions with representatives of labor, business, government, and sometimes consumers, which are empowered by law to set or recommend wages, working hours, and benefits in a particular low-wage field. The state of New York has used the wage board system to raise wages for fast-food workers.
Some progressives might argue that it would be easier simply to legislate high wages and universal benefits and good working conditions, rather than try to rebuild worker power in the United States. But if such pro-worker reforms were politically possible in the absenceof institutions representing labor in the private sector, they would have happened already.
Won’t Republicans oppose any effort to restore worker power in America? As we have seen, the rich libertarian donors and anti-labor small business owners who control the machinery of the Republican Party do not represent either the values or interests of the majority of Republican voters, who are increasingly members of the working class of all races. The faction of the GOP that is not hostile in principle to organized labor is limited for now to a small number of intellectuals and journalists and a few elected Republicans like Josh Hawley and Marco Rubio. But that faction may grow, thanks to the out-migration of country-club Republicans to the increasingly upscale Democrats and the influx of former working-class Democrats into the GOP.
As a philosophical matter, conservatism and libertarianism have distinct views of the Labor Question. British One-Nation Tories, French Gaullists and German Christian Democrats have not automatically sided with businesses against trade unions or rejected government intervention on behalf of national working classes. It is difficult to be a nationalist—even an inclusive “civic” nationalist—while opposing reforms that benefit the vast majority of the adults of a modern nation, who are workers compelled by necessity to sell their labor to employers in order to avoid either poverty or humiliating reliance on public welfare. Nor is it a coincidence that the Christian and Jewish traditions have often criticized bad employers and championed the interests of workers and the poor, while the leading intellectuals of the libertarian right have been atheists like Ayn Rand.
It took half a century for organized business to destroy organized labor in the American private sector. It will take at least that long to rebuild worker power in America. The sooner we begin, the sooner we can replace class war in the United States with class peace.
Best analysis of how the American labor system operates
Plus a clear path forward
Well done
"In a first-of-its-kind analysis of how organized labor affects the economy, the Treasury said that unions raise member wages by as much as 15%, while Hispanic union workers, a key voting demographic, could outearn non-union workers by as much as 35%."
This means that unions **cost** the American economy 15% higher fees for union labor. Can you imagine if the pharmaceutical industry bragged about raising drug prices for consumers? Or airlines bragged about adding fees?