Trade unions seem to be making a come-back in the U.S. Frances Cowell asks if American trade unions are becoming more European.

A New York Times opinion piece on Monday, 4 January this year reports that more than 200 Alphabet employees formed a trade union, saying they want to ensure employees work at a fair wage without fear of abuse, retaliation or discrimination. The action was apparently prompted by reports that the company had paid tens of millions of dollars to two executives who had been accused of sexual misconduct toward their co-workers, staying silent about the alleged abuse and letting them walk away with no consequences.

The fact that their statement mentioned “a fair wage” and followed large payments to a few executives, suggests it is not only about fear of abuse, retaliation and discrimination, but also fairness itself. This is not unlike the demands of early trade unions 100 years or so ago, when trade unions pushed for big improvements in working conditions, as well as fair wages and other reforms in companies run by mega-wealthy oligarchs.

The Alphabet employees’ move is may seem odd in view of how much better off most people are now compared to the turn of the twentieth century. But now, as then, economic upheaval associated with technology and communications revolutions have led to an unconscionable and unfair gap between the ultra-wealthy few and ordinary folk. The Gini coefficient, a measure of inequality, where 0.0 means everyone has exactly the same wealth, and 1.0, where one person owns everything, was 0.408 in 1913, following anti-trust legislation enacted a decade earlier to address inequality and unfair competition – and the earliest for which data are available. Then from 0.345 in 1979, it rose sharply in the 1980s and 1990s, reaching .405 in 1997, and thence to 0.411 in 2016. For comparison, the latest figures for France, Germany and Sweden are 0.316, 0.319 and 0.288. South Africa, the most unequal country for which data are available, stands at 0.630, while the most equal country for which data are available is Slovenia, with a Gini coefficient of 0.242.

In her recent book The Hour of Fate, Susan Berfield writes:

P23:   “By the turn of the (twentieth) century … the country was now industrialising…”, pushing and pulling people from their farms and towns into factories, into cities … with automobiles … electric lights and telephones … the American standard of living was improving. But many were also confused, uprooted, and surrounded by the unfamiliar.”

“…the new rules and rhythms seemed determined by distant and abstract forces: technology controlled by private corporations, capital controlled by Wall Street, wages and prices controlled by industrialists. Those who left for the factories joined an industrial world where their … safety (was) often disregarded. If they were cheated or hurt, their options for recourse were scant.”

“Between 1895 and 1900,18 ten families with fortunes from mining and manufacturing … together … were worth tens, maybe hundreds, of millions of dollars.”

“Few people could avoid everyday encounters with monopolies: the companies that traded in oil, salt, meat, whiskey, starch, coal, tin, copper, lead, oil cloth, rope, school slate, envelopes, and paper bags were pooled, combined, controlled.”

Trusts, operating as effective monopolies, kept prices of basic goods artificially high and tied workers to one of a few prospective employers, artificially depressing their wages and allowing their rights to be disregarded with impunity. Adding to the pressure on pay and conditions of the worst paid was the arrival, in 1901 alone, of one million poor immigrants arrived. African Americans, whose post-reconstruction promise of a fair deal remained unfulfilled, and women, paid considerably less than men, were all regarded as just another source of cheap labour. For most people, there was no route of escape from virtual serfdom.

Trade unions formed and unsurprisingly enjoyed broad popular support, in turn making them politically important. Over the ensuing decades, they helped workers achieve a fair wage, reduced the standard working day from ten or more hours to eight and eliminated child labour. But in time the unions seemed to outlive their usefulness.

What happened to the trade unions?

The demise, from the 1970s onward, of the big industrial unions is often attributed to the reforming, free-market zeal of people like Margaret Thatcher and Ronald Reagan. Doubtless they were part of the story, but in truth, the unions’ decline probably had more to do with their failure to adapt to changing economic reality. China and other east Asian countries were opening their economies and their low-cost labour attracted manufacturing, large and small, from developed economies. Domestic firms seeking to compete with cheap Asian imports responded by automating and cutting their local work-forces.

With much manufacturing now exported, western economies shifted toward service sectors, notably retail and hospitality, but also health care and associated services, which were expanding to cater to aging populations. The old unions were notoriously bad at serving the servers, many of whom were part-time and/or women entering the workforce for the first time. Private sector unions that had catered to a world of metal-bashing and assembly lines found themselves with a much-diminished constituency.

Déjà vu

Some of the conditions that gave unions their raison d’être 100 years ago are evident again today: technological change leading to massive dislocation for many people as they struggle to adapt to labour markets that demand skills they may not have, a shrinking number of prospective employers that shifts bargaining power from workers to bosses.

A few mega-wealthy firms and individuals are again going largely unchallenged in a winner-takes-all environment, behaving like monopolies as they squash competition and stifle innovation. Vast payments to bosses that are disproportionate to the value they add make the income and wealth gap between the haves and the have-nots seemingly unbreachable – and certainly unfair. An education system reinforces that gap by favouring those who can afford the best schools and universities, while failing ordinary people needing to acquire the new skills demanded in the new economy.

An army of “precariats”, mostly gig workers, eke out a living with little prospect of escaping their rut.

Regulation and protections for workers and consumers contrived in a world of fair competition and near-equal opportunities for all lag this economic reality and Alphabet, Facebook, Apple, Microsoft and their peers look more and more like the robber barons who, a century ago, controlled much of the economy.

The difference now is that workers’ demands have evolved and the new unions have different and arguably more robust opportunities to organise.

A hundred years ago, union organisers went around large foundries and factories to rally workers to their cause. This became much harder once those workers’ jobs had been mechanised or dispersed to other countries, and most workers were women toiling part-time in smaller, disparate service organisations. Until now, as modern communications, including Alphabet’s stable of social media platforms, dispense with the necessity for union organisers to be physically present in work-places. All that is needed nowadays is a common theme and some igniting issue.

There are plenty to choose from, ranging from fairness and inequality of opportunity, big organisations’ responsibilities to society, the planet, racism and gender equality.

Unlike their parents and grandparents, employees and their unions now dare to concern themselves with how employers make money, objecting, as Alphabet’s employees do, to business that is ethically dubious, such as their protesting collaboration with repressive governments, furnishing artificial intelligence technology for use by the Department of Defence and accepting advertising fees from hate groups.

What happened next?

A hundred years ago, Carnegie, Rockefeller, Vanderbilt, Morgan et al found that dominating an industry made them targets of popular ire. So too, Alphabet, Twitter, Facebook, Amazon and their peers are resented by many people because they so dominate their markets. In theory of course, there are any number of competitors, but without the scale that sets those giants apart, real competition is elusive. The internet giants are thus perceived as monopolies, hindering fair competition and stifling innovation – like the robber barons of 100 years ago, they are seen less as vibrant entreprises or even national champions than as utilities delivering services that they themselves made indispensable to their users, who now ask if they should not be regulated as such.

What now for unions?

Governments now grapple with the problem of how to regulate technology and other giants who behave like monopolies, while popular resentment of the power and abuses of mega-corporations and their bosses feed the appetite of workers to organise to protect themselves.

Two ways in which modern unions can – and are – demonstrating their usefulness is in reaching and organising those workers who have been largely unrepresented until now. Gig workers and those not happy just getting by (or not) in precarious employment at the whim of giant monopolies could see their prospects transformed by effective unionisation. That is big news.

Also big news is how workers’ demands have changed in 100 or so years. As the Alphabet episode shows, employees want a say in corporate decisions – not just about their own working conditions, but also about how their employers conduct themselves: do they take their social responsibilities seriously? Do they respect the planet? Do they make sure their suppliers do so as well, and do they avoid serving clients who don’t behave responsibly?

Some of this is familiar: workers and their unions in Germany and other European countries have long had their say, through co-determination on Supervisory boards, in how their employers conduct business, and what businesses they conduct.

This raises an intriguing question: Are American unions becoming more European?

Frances Cowell
Australian-born and European by adoption, Frances Cowell writes and speaks at conferences about investment risk and governance, financial market stability and business ethics in financial markets – and the implications for the wider political economy. She believes Europe must urgently assume the lead in protecting and preserving liberal democracy, the rule of law and the multi-lateral institutions and alliances that it depends on.

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