Public Policy: Why What Happens in Wisconsin Matters in Nebraska
Written by: John Kretzschmar
Published by: Prairie Fire
Date: May 2011
The writer is director of the William Brennan Institute for Labor Studies at the University of Nebraska at Omaha.
Protests in Madison, Wisconsin, during February and March over removing many collective bargaining rights from public sector employees in Wisconsin has reacquainted many Americans to what unions are, why they are necessary to protect workplace rights and how they go about accomplishing that task.
Even with that renewed acquaintance, labor unions remain controversial, and when it comes to the issue of unions, it's hard to find any "neutrals."
Most of the recent union coverage has focused on what's happening in Wisconsin. Is the Wisconsin debate relevant to Nebraskans? Can something happening in a state hundreds of miles away affect what we fondly refer to as "the good life"?
Some historical framing is required to better understand the situation. Thanks to the Great Recession, created by the best, brightest minds on Wall Street and the too-big-to-fail financial institutions operating in an under-regulated economy (www.fcic.gov/report), 40 of the 50 U.S. states have faced a series of annual budget shortfalls. Rather than address the root of the problem, states have chosen to balance budgets by cutting public service funding and by attacking public sector workers and their unions.
Meanwhile, roughly 90 percent of Nebraskans earn a living selling their expertise, experience and strength to an employer in order to earn a living. That employer/employee relationship directly and indirectly affects the employee's quality of life, their family's quality of life and the quality of life in the community in which they live, as well.
Today's employer/employee relationship has its roots in the master/servant and master/slave relationships. In both of those older relationships, the master had total control over the workplace. In the U.S. prior to the 1930s, labor unions were often seen by employers, their allies in elected office and the judiciary as some form of "unlawful conspiracies."
As a result, the judicial system, as early as 1806, believed that the employer "owned" the jobs that he created. To be clear, the employees were not servants or slaves, but the employer had the legal right to control how many workers he hired, who he hired and fired, the wages and working conditions, and employee behavior at work and in the community. The courts, applying the common law of the day, granted employers the unilateral right to make every decision about what happened in the workplace. One of the ways employers kept labor costs low was the "reverse auction." In a reverse auction the lowest bidder is the winner. In the employment context, the employer hired the lowest bidder who was capable of performing the task at an acceptable level of competence. Unemployed workers competed vigorously for available jobs, constantly underbidding each other and creating a "race to the bottom" where they were working long hours in dangerous workplaces and earning barely enough to keep their families alive.
State legislatures soon enacted laws codifying various aspects of the "unions as unlawful conspiracies." Employees were permitted no legal right to a collective voice in the workplace. Not only that, but employees also had a legal obligation to be "loyal" to their employer—an obligation that was not reciprocal. The only legal right an employee had was the right to quit and look for better work elsewhere. In reality, an employee's right to quit was even more circumscribed. Employers freely shared their opinions of "poor workers" or "troublemakers" with each other. An employee labeled a "quitter" often had a hard time finding work elsewhere in the same industry or in the same region.
Employees first formed labor unions to introduce a limited form of democracy into the workplace. They realized that, individually, they were no match for their employers. Just as England's 13 North American colonies found strength in numbers, so did employees find strength in the workplace. Employees united to create the power needed to gain a meaningful voice and jointly determine their future with the employer.
By 1935 the U.S. Congress had passed the National Labor Relations Act (NLRA). At that point, unions were thought to serve the public good. Employers and their allies quickly challenged the constitutionality of this law. To their dismay in 1937 the U.S. Supreme Court found the NLRA constitutional. The court's decision contains an important rationale justifying the existence of unions:
"Long ago we stated the reason for labor organizations. We said that they were organized out of the necessities of the situation; that a single employee was helpless in dealing with an employer; that he was dependent ordinarily on his daily wage for the maintenance of himself and his family; that if the employer refused to pay him the wages he thought fair, he was nevertheless unable to leave the employ and resist arbitrary and unfair treatment; that union was essential to give laborers opportunity to deal on an equality with their employer."
That rationale, while applied to the private sector, also pertained to public sector workers. Being a public sector employee made you no more free "to leave the employ and resist arbitrary and unfair treatment" than if you worked in the private sector of our economy.
In the late 1940s Nebraska's Unicameral Legislature granted certain public sector employees the right to organize. Public sector employees found unions and collective bargaining helpful in their efforts to gain a fair shot at achieving the American Dream. Not many people remember that, when he was assassinated in 1968, Dr. Martin Luther King, Jr. was in Memphis to help public sector workers achieve a union and collective bargaining rights. In fact the growth of public sector worker unions across the nation, in many ways, paralleled the growth of the Civil Rights movement in the U.S.
Today, public sector workers are our neighbors. They are public servants who act as the glue that binds our government together. They protect and serve, they teach our children, they maintain our streets and much more, all for middle-of-the-road wages.
At its peak in the early to mid-1950s, the American labor movement represented a little over one of every three workers who had the right to form a union. There was a brief period following World War II to the mid- to late 1970s, which parallels the strongest point of the American labor movement, when the real income for the U.S. workforce doubled. What was amazing about this period is that the poorest 20 percent of American families saw the largest growth of 116 percent, while the wealthiest quintile saw the smallest growth of 99 percent (www.economiajusta.org/files/pdf/DivDec.pdf). A report on a 2010 study done by Benjamin Radcliff of Notre Dame and Alexander Pacek of Texas A&M examined 14 modern industrialized nations (www.newsguild.org/index.php?ID=9816), and they found a correlation between union density and how a modern industrialized nation's citizens view their quality of life. The report found that the higher the level of union density, the "happier" the (unionized and nonunionized) citizens.
In the U.S., unions became the tool that ordinary work-a-day employees used to join the middle class. It is no wonder that conservative columnist George Will once commented, "I think American labor unions get a large share of the credit for making us a middle-class country."
Today, for a number of reasons, the percentage of unionized employees has shrunk to a little less than one in eight workers. When examined more closely, union density in the private sector has shrunk to roughly 7 percent, while the public sector remains a robust 36 percent. As U.S. union density declined, so did the take-home pay for the average employee when adjusted for inflation. The decrease led to the increase in two-breadwinner families.
For the first time in history, the number of public sector union members now outnumbers those represented by unions in the private sector. The orchestrated attacks on public sector workers in Wisconsin and elsewhere are happening precisely because that is where the labor movement now finds its strength.
Why the attacks? Because these public sector employees have a meaningful, independent voice in their workplace and in the community. They have created the myth of the overcompensated public employee. The myth persists despite of well-constructed studies that prove the opposite. First, a study done by the Center for State and Local Government Excellence and the National Institute on Retirement Security (www.slge.org) says public sector workers are underpaid when compared to their private sector counterparts; likewise a study by the Economic Policy Institute in 2011.
There is also an underreported cost to attacking public sector employees. Steven Pitts, an economist with the University of California's Center for Labor Education and Research, notes that a higher percentage of women and African Americans are employed in the public sector of the economy than the private sector. The other aspect is that wage differentials for women and people of color in the public sector are smaller than typically found in the private sector. As a result, the attacks on public sector employees and their unions will have a disproportional negative effect on these two populations (www.npr.org/2011/03/10/134424606/Unions-Rights-Affect-Black-Workers-More-Than-Others).
America still needs unions. They remain the primary tool for everyday workers to gain a pathway to achieving the American Dream. Where they exist, labor unions help establish stable and healthy communities. The U.S. has had a love affair with the idea of democracy for more than 230 years. It seems the only place that popular culture does not value democracy is in the workplace!
Wisconsin is on the cutting edge of an organized attempt to drive democracy out of the public sector workplaces. Wisconsin's Gov. Walker never campaigned on curtailing collective bargaining. Columnist Paul Krugman and former Secretary of Labor Robert Reich have said that the proposal had nothing to do with fixing the budget. They note Wisconsin's public sector unions had made the money concessions he requested. Both believe it is an overreach to limit the political voice of organized labor.
There is another level of concern relating to Wisconsin. If Gov. Walker achieves his goal to seriously hamstring public sector bargaining rights without any significant repercussions, other states will follow suit. Is this just the first step in a long-range strategy to return to the 1890s? If public sector union and bargaining laws are struck down, what is next: the repeal of the Equal Pay Act, ending the right to organize in the private sector or possibly the deregulation of child labor?
If successful, the resulting diminution of wages, workplace rights and the end result—reduced middle-class purchasing power—will be felt across the nation. If such a thing would happen in this state, "The Good Life" will be seriously diminished.
Neither Wisconsin's nor Nebraska's economic problems were caused by our public sector workers. Taking a Wisconsin-type approach, we will not address the cause of our misery. Wisconsin's Gov. Scott Walker has awakened a sleeping middle class. It is not just the ranks of organized labor who have been rallying in Wisconsin week after week. Representatives from the faith community, senior citizens, family farmers and ranchers, women's groups, as well as people of color have all been uniting in a broad-based reaction to what is happening.
It is only by problem-solving at the source of the trouble that a common-sense solution can be fashioned to solve our state's long-term budget picture. The question remains, "Who's going to pay for the mess that was created by Wall Street's excess?" Nebraskans have a lot to learn from what is going on in Wisconsin. Let's hope we take home the proper lessons.