Labor Day 2021: Prospects for Workers amid a Hedge Fund Economy

Photo by Patrick Perkins on Unsplash

This past Monday was Labor Day. Labor Day in the US is a bit of an odd holiday. As I noted last year, most countries celebrate it on May 1^st to honor workers in Chicago who were marching in 1886 for an eight-hour workday; Congress and President Grover Cleveland chose to not acknowledge those workers and selected the first Monday in September instead. Nonetheless, Labor Day provides an opportunity to reflect on workers amid COVID-19, labor unions, and how workers can organize effectively in an economy increasingly dominated by hedge funds and private equity. 

COVID-19, US Workers, and the Nation’s Growing Wealth Divide

From the standpoint of economic justice, the pandemic has greatly accelerated a pre-pandemic trend of growing wealth and income inequality. Back in mid-March 2020, after an early stock market tumble that reduced stock values by about 30 percent, the wealth of the nation’s 614 billionaires totaled a mere $2.948 trillion. By mid-August 2021, the number of US billionaires had increased to 708 and collectively their wealth had climbed to $4.766 trillion, far exceeding pre-pandemic levels.

As for workers themselves, while wages are now modestly rising, worker gains are nothing like those of billionaires. Federal wage figures can be complicated to read. At first, average wages rose during the pandemic, but this is deceptive, an outcome stemming from the fact that 40 percent of workers earning less than $40,000 had lost their jobs. Fewer low-wage workers meant the average wage went up, but what was really occurring was depression-level unemployment.

The point would seem to be obvious, but some media outlets misreport the data anyway. In July, for instance, CNBC wrote that workers’ wages fell two percent after adjusting for inflation, but only because it compared June 2021 figures with June 2020—a time, of course, when millions of low-wage workers remained unemployed.

Looked at properly—that is, comparing wages now with pre-pandemic levels—one finds wages increased by 2.5 percent. Hospitality workers, long underpaid, have seen their wages rise from $15.68 an hour in February 2020 (in today’s dollars) to $16.47 an hour in July 2021, a five-percent increase. Restaurant and grocery workers have seen average wages this summer rise above $15 an hour for the first time (up from a pre-pandemic average of $14 an hour). At the start of this month, Walmart announced a $1-an-hour raise for its 565,000 employees.

A lot has been written too about what Heather Long of the Washington Post has termed a “great reassessment” of work. This shifting of workers—early retirements for some, a choice to go back to school for others, with others (mainly women) forced out of the workforce by a lack of childcare support—has clearly increased the bargaining leverage of those that remain in the labor force and is a major reason wages have gone up in many fields.

But we shouldn’t lose sight of the fact that the total employment remains 5.3 million below pre-pandemic levels. In the nonprofit sector, the number of employed workers remains 615,000 lower than when the pandemic began. There are other signs of continued worker distress. For example, in the August 2021 federal jobs report, women’s labor force participation was 57.4 percent, well below the pre-pandemic level of 59.2 percent and lower that at any time pre-pandemic since December 1988. Additionally, this week’s withdrawal of federal unemployment support will cause nearly 7.5 million workers—specifically, those who are long-term unemployed or unemployed gig workers—to lose their benefits entirely, while reducing benefits by $300 a week for three million who retain benefits. 

The State of Labor Unions

Often, unions and “the labor movement” are treated as synonyms. They are not, but unions are clearly a very important part of the labor movement. As NPQ has noted, US unions have been declining for decades. This decline, in turn, helps explain why, over the past two decades, labor’s share of income fell by six percentage points. If that money were to shift back, a McKinsey Global Institute team estimates that workers’ earners would climb $3,000 per capita.

Is a revival of unions possible? There are some positive signs. For example, if Gallup polls are to be believed, labor unions enjoy more public support today than in over a half-century, with 68 percent of Americans saying they approve of labor unions, the highest number found by Gallup since 1965. By contrast, a dozen years ago, in 2009, only 48 percent of Americans expressed a positive view of unions.

Yet while unions clearly have gained in popularity, union membership remains low. In 2020, union membership fell by 321,000 people to 14.3 million, with membership split almost 50-50 between the private and public sector (7.2 million in the public sector and 7.1 million in the private sector). However, due to COVID-19, overall employment fell more rapidly. As a result, unions membership as a percentage of the workforce climbed in 2020 from 10.3 to 10.8 percent. While this remains a far cry from the mid-20^th century peak union membership level of over a third of all workers nationwide, it still marks the highest percentage of US workers in unions since 2015.

Today’s efforts to revive unions come amid an unexpected leadership change, with Liz Shuler becoming the first woman to head the AFL-CIO (American Federation of Labor-Congress of Industrial Organizations), the nation’s largest union federation. Last month, Richard Trumka, who had led the AFL-CIO for the past dozen years, died suddenly of a heart attack. Shuler, who had been the federation’s secretary-treasurer (the group’s number-two position) since 2009, was named president just weeks afterward.

Trumka was well respected as a leader in the labor movement. His greatest achievement, however, came decades before he led the AFL-CIO. Back in 1989 and 1990, Trumka, then president of the United Mine Workers (UMW), had led a strike of 1,500 Pittston coal miners. It was a strike the union should have lost, but it acted creatively, refusing to be hemmed in by picketing rules and embracing civil disobedience instead. Judges ordered the union to pay fines of $64 million, but the union prevailed. Ultimately, the US Supreme Court reversed most of the fines, and miners’ health benefits were preserved. The victory at Pittston boosted labor union morale after a string of searing defeats in the preceding decade.

Alas, Trumka’s efforts at the AFL-CIO to revive unions did not have the same level of success, which is not to deny some important recent union victories. These include a string of successful #RedForEd teacher strikes in many states and cities during 2018 and 2019, as well as organizing victories among nonprofit professionals and art museum workers during the pandemic.

Still, major union organizing victories at large workplaces are conspicuous in their absence. A high-profile election at an Amazon warehouse in Bessemer, Alabama, for example, ended in union defeat. While a National Labor Relations Board report issued last month calls for throwing out those results, making a rerun election in 2022 likely, prospects for a union victory the second time around remain uncertain.

Not long ago, ACORN (Association of Community Organizations for Reform Now) founder Wade Rathke noted that, regardless of what one thinks of the pro-union campaign at Bessemer, “The old problem, simply put, is that unions have not successfully organized a single mass employer with more than 100,000 workers in the US in the last 50 years. Or 50,000 workers. Or 30,000 workers.”

Nonetheless, it’s possible that the nation’s long union organizing losing streak may be nearing its end. The fact that the Bessemer election, held at an Amazon warehouse facility with thousands of workers, occurred at all in 2021 is a positive sign in that regard.

There is also legislation pending in Congress that could make a difference. Most obviously, the Protecting the Right to Organize (PRO) Act, which passed the US House of Representatives in March but has been held up due to filibuster rules in the US Senate, would even the scales considerably—for instance, by banning employers from forcing their employees to attend anti-union “informational” sessions (often known as “captive audience meetings”) during union election campaigns. 

Labor in the Hedge Fund Economy

One effect of traditional union organizing being blocked by pro-employer labor laws has been to encourage the pursuit in past decades of worker representation by other means. The growing movement energy behind worker cooperatives and employee ownership is one route. In this case, workers take ownership of their own companies, shedding dependency on employers altogether. Another strategy involves the development of advocacy campaigns and community-based worker centers.

This search for alternatives is not surprising. If one looks at the most significant labor movement of our time—the Fight for $15 campaign to raise the minimum wage—the support of labor unions has been critical. But the focus of activity has centered on political action, not collective bargaining.

Recently, The American Prospect cohosted a webinar with the Ford Foundation, Open Society Foundations, and the Center for Urban Economic Development at the University of Illinois, Chicago. The event began with a focus on worker centers, but more broadly examined the changing structure of corporate power—and how that requires different worker organizing responses (including worker centers). Among the worker center leaders who spoke were National Day Laborer Organizing Network (NDLON) director Pablo Alvarado; National Domestic Worker Alliance (NDWA) director Ai-Jen Poo; and Lola Smallwood-Cuevas, founder of the Los Angeles Black Workers Center and a board member of the National Black Worker Center.

The centers aim to empower immigrant workers, Black workers, and workers of color in the face of a union movement that often ignored them—or, in the case of immigrant workers, even opposed them. But the centers also offer new pathways for power building, and increasingly these are critical. In a follow-on panel, Andrea Dehlendorf of United for Respect emphasized how growing corporate concentration and financializaton alter the nature of bargaining. Traditionally, a union negotiates with management, but that only works if management has the authority to concede to union demands. Now hedge-fund owners often call the shots; Dehlendorf estimates one-third of the hotel industry is owned by private equity firms. This requires new tactics.

Erica Smiley, who directs Jobs with Justice, emphasized the need to “bargain with the ultimate profiteer.” This requires a broader community-based approach extending beyond the workplace. The ultimate point of labor organizing, Smiley noted, is not simply negotiation, important as those union contracts are, but “to talk about what it would take to actualize democracy in the economic arena.” In this context, the fact that worker centers “operate from a community perspective and standpoint” has enabled them “to see the opportunities of how to negotiate with capital” in ways that would be difficult to carry out within traditional collective bargaining.

Hedge funds’ influence extends beyond the sectors they directly control. Indeed, market demand for the domestic workers and day laborers NDLON and NDWA strive to organize is linked to the wealth divide that private equity has deepened. Again, for workers, this requires new tactics—beginning, notes Poo, by helping workers “to break out of the isolation of this work.” In Seattle, this has involved creating a table of worker, employee, and city representatives to set common standards.

Worker centers help connect workers to community, but achieving economic democracy, Alvarado insists, requires both unions and worker centers. Alvarado recalls that at one time, “many in foundations and academia were writing about how the labor movement was dying and declining, and how worker centers were the new hot thing in town, and unions need to learn from worker centers.… I think it’s the other way around. Worker centers need to emulate unions. More specifically, we need to emulate the unions that started the labor movement. Those unions who were truthful to the theory and practice of bottom-up change as opposed to top-down change. We need to emulate those unions who never gave up their commitment to self-determination, that believed that workers speak for themselves, not be spoken for.”