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Labor Day, unions, and concentration of wealth

Today is the traditional “last day of summer.” When I was a child, it was a sweet-and-sour holiday because it was marked by a large communal bonfire, fireworks display, and marshmallow roast to celebrate Labor Day on the beach at Laurence Harbor, New Jersey, but it was also a harbinger of the start of another school year.


At the time, I’d never heard of economic theory, and I doubt that any of the adults in my world did, either. Of course, some people were well aware of the labor movement of the early 20th century, and many of them benefited from its fruits. Unfortunately, nobody in my direct family line belonged to a union.


Times were so different then that it’s hard to explain the zeitgeist of post-war America. Unions, especially in the northern states, were powerful, and factory workers benefited from negotiations. Of course, that was primarily true if the worker was white and not otherwise subject to discrimination. For example, the electronics factory for which my father worked would not promote workers beyond the assembly line if they were of Italian ancestry.


After Dad legally changed our family name from Sciortino (an Italian-origin surname) to Glynn (probably an Irish-origin surname, and not the smartest choice), he eventually moved into management, was transferred to Palo Alto, headed the production department of a small subsidiary electronics firm, and was on the ground floor of what was to become Silicon Valley.

 

Sharing the wealth


Labor-union membership in the private sector of the economy was at its peak from the end of World War II until the 1960s. During those years, the concentration of wealth in the top 1 percent of the population actually declined significantly. It is not coincidental that the nation experienced a growth in suburbs during the same period, as factory workers — for the first time in history — could afford to buy homes of their own.


But, a gradual decline in union representation in the private sector occurred in the early 1960s and accelerated during the 1970s. The United Automobile Workers (UAW) union is a good example. In 1970, it claimed 1,619,000 active members. That declined to 1,446,000 a decade later (1980): 952,000 in 1990; 634,000 in 2000; and 377,000 in 2010. Similarly, the United Mine Workers (UMW) had 800,000 members in the late 1930s, but only 35,000 in 2014.


Union workers were able to negotiate for compensation that was significantly above the minimum wage, as well as medical benefits and pensions. This last point becomes especially relevant when we consider that the UAW now has far more retired members than active members, and the UMW remains responsible for 40,000 retired miners and 50,000 spouses and dependents.

 

Public labor unions


During the New Deal era, efforts were made to unionize certain government workers, like those employed by the Works Progress Administration (WPA). But President Roosevelt opposed the effort, saying that government employees “should realize that the process of collective bargaining, as usually understood, cannot be transplanted into the public service … The very nature and purposes of government make it impossible for administrative officials to represent fully or to bind the employer in mutual discussions with government employee organizations.”


However, in 1958 New York mayor Robert Wagner issued the “Wagner Act,” also known as the “Little New Deal.” This executive order gave unions the exclusive right to speak for all city workers. As we moved into the 1960s, unions switched their focus from the private sector where it met with highly organized and government-backed opposition to public-sector employees.


Once collective bargaining acts passed in the mid-1970s, public-sector unionization flourished, increasing earnings and benefits for law enforcement officers, firefighters, teachers, and certain civic employees. After the 1960s, public employee labor unions quadrupled their memberships from 4 million in 1950 to 12 million in 1976. That year, California approved collective bargaining for teachers, and union membership jumped to 16.6 million by 2009.


Because distribution of income has been seen as a zero-sum game, meaning that someone’s gain is somebody else’s loss, the new labor movement came at the expense of factory workers. Teaching, nursing, policing, and serving the public became well-paid occupations, while factories laid off workers, eliminated some benefits, and froze wages. But, results of the 2010 mid-term elections began to plague public labor unions. In states like Wisconsin, Ohio, and Indiana, newly-elected officials argued that public sector unions were too powerful, were overly generous with their pension plans, and were a drain on state budgets.

 

Concentrating wealth


During the same time period, greater proportions of wealth became concentrated, once again, in the top 1 percent of the population. William Domhoff, author of “Who Rules America,” maintains a website at the University of California, Santa Cruz, which — although he is retired — he updates on a regular basis. His calculations show that the top 1 percent held 44.2 percent of all the wealth in the nation in 1929 (the year of the stock market crash). But, by 1976, that bundle had decreased to just 19.9 percent. This “sharing of the wealth,“ coupled with the G.I. Bill, which helped veterans attend college and purchase housing, is largely credited with the growth of the middle class in America.


Beginning in the late 1970s, concentration has been reoccurring, so that by 2013 (the last year for which complete data are available), the top 1 percent holds 36.7 percent of the nation’s wealth. Another 33 percent of the wealth is held by the next 9 percent. Simple math reveals that 90 percent of the U.S. population gets only about 30 percent of the wealth, and that is not evenly distributed.


According to Domhoff, this extreme concentration of wealth at the top of society is due, in good part, to tax cuts for the wealthy and the defeat of labor unions. The only industrialized country that exceeds this lopsided picture is Switzerland, where the top 10 percent own 71.3 percent of the wealth.


In modern society, there seems to be no solution to this problem. Each new technology tends to eliminate workers. For example, if drones will soon be delivering retail goods from Amazon.com, how long will it be until drones replace postal carriers? At some point, we are going to have to engage in serious public discussion about how to take care of a population in a society that cannot provide jobs, a society with a few fabulously wealthy families and a swelling pool of low-paid or unemployed people.