How the Defeat of Trade Unionism Gave Rise to Low-Wage Jobs

Leo Panitch: Giant corporations like Walmart actively suppress unionization among workers.

TRANSCRIPT:

JAISAL NOOR, TRNN PRODUCER: Welcome to The Real News Network. I’m Jaisal Noor in Baltimore.

Fast food workers are preparing to strike across the country Thursday, demanding an increase of pay to $15 an hour. Thursday’s major day of action—organizers say 100 cities will take part—comes just six days after more than 100 people were arrested nationwide at Black Friday protests against major retail outlets.

It’s also important to note that while it’s commonly believed that the vast majority of low-wage workers are teenagers, their average age is actually 35. More than a quarter have children, and more than half work full-time, those numbers courtesy of the Economic Policy Institute.

Now joining us to give some context to these latest strikes is Leo Panitch. He’s the Canada Research Chair in Comparative Political Economy and a distinguished research professor of political science at York University in Toronto, author of many books, including The Making of Global Capitalism: The Political Economy of American Empire.

Thank you so much for joining us.

LEO PANITCH, PROF. POLITICAL SCIENCE, YORK UNIVERSITY: Glad to be here.

NOOR: So we wanted to give you a chance to kind of give some context to the increasing use of low-wage workers across America and other countries and the protest against that trend. And a big, a major driving force for these protests—and it’s been—this has been used to kind of criticize them as well—are major unions like SEIU. But major unions weren’t always interested in organizing these low-wage workers. What’s brought about this change?

PANITCH: Well, you know, I think people are missing, in all the attention that’s being paid to the vastly growing inequality in the United States and other Western capitalist countries, that the fundamental reason for it is not some shift in taxes, but the fundamental reason for it has been the defeat of trade unionism in the United States and elsewhere, at least since the early 1980s. Insofar as there was a tendency to the equalization of incomes—and it by no means went all that far in the postwar period—it was because for a few decades after 1945, trade unions were strong vis-à-vis their employers. And that had to do with some legal rights they’d won. It also had to do with the wage militancy of those unions and their ability to coerce corporations to pay workers higher wages, better benefits, give them more secure employment. And the reason that CEOs didn’t pay themselves the astronomical amounts they pay themselves today was precisely because of the bad example it set in terms of the next collective bargaining round.

Now, what has happened everywhere, although especially in the United States, is that unions have been defeated. That was a concerted effort on the part of employers through the 1970s and 1980s. It was aided by the Federal Reserve’s very high interest rate policy, which purposely drove up unemployment. And in driving up unemployment, it gave the unions a loss of nerve.

And it was added to by such actions by the Reagan administration as the ending of the PATCO strike, the strike of the air traffic controllers, and the imprisonment of their members. And this was a union that had voted Republican in 1980. It voted for Reagan in 1980. And it had to do with a shift of a good deal of industry to the American South, to those states where there were so-called right-to-work provisions, i.e., right to not belong to a union—right of employers to prevent you joining a union is what it really means. And then it had to do with the fact that so much of the enormous growth in retail services in the United States—and elsewhere, but especially the United States—has taken place in jurisdictions where it is difficult to unionize, especially, again, in the American South. And that then has spread like wildfire around the country and capitalism more broadly. That’s the fundamental reason for the growth in inequality.

The tax system only tinkers with the incomes we get in the labor market. It can adjust those. It can make some slight—have some effect on them, whether taxation is more or less progressive. But the main fundamental reason has to do with the incomes that people get in the labor market.

And what has happened increasingly is that even in those industries where there used to be well-paid workers, increasingly unions have been forced to engage in concession bargaining, and such new employees as are taken in are taken in at half or two-thirds of the wages of those who’d been employed there for a long time, with much worse benefits.

NOOR: Now, Leo, I wanted to just interrupt briefly and talk about the issue of these millions of low-wage workers that obviously are contributing to inequality in this country.

PANITCH: [inaud.] McDonald’s workers. People who used to earn good wages as steel or autoworkers are now McDonald’s workers or Walmart workers; or at least steelworkers and autoworkers who used to be able to get their sons or daughters or nephews or nieces into steel or auto plants are now Walmart workers, etc.

So, you know, this isn’t some other category. This isn’t some group from Mars that suddenly has arrived with the label “low-paid workers” on their foreheads. This is the same working class. And that applies whether they’re black Americans or Latinos or whatever. In fact, black Americans in the auto industry were precisely the ones who benefited most from unionization, and they’re the ones and their children are the ones who have suffered most from the defeat of unionization. So, yes, there’s been this growth of low-wage workers, but it is a growth that comes out of a working-class which previously had a chance of becoming a high-wage working-class.

NOOR: So, traditionally unions didn’t try to unionize these sectors.

PANITCH: That’s kind of the myth. Of course, these are very difficult industries to organize. Do you know that Walmart employs an army of 200 lawyers and public relations officials whose only job it is when there’s any attempt at unionization is to send in firefighters into any store to prevent it happening? Do you know the number of times since Walmart’s existence that they have conducted what in any jurisdiction would be considered unfair bargaining to prevent unionization? These are very, very committed antiunion employers.

NOOR: I’m not doubting that at all. But can you talk about this recent push to unionize, or even for these workers to come together and protest and demand a higher wage and demand better working conditions?

PANITCH: [inaud.] a push than it is. There’s no question that the fight for 15, which is led by the SEIU, is impressive—or at least SEIU is behind it. There’s no question that our Walmart or the Walmart warehouse workers campaigns are supported by some unions, such as the United Electrical Workers union. But the amount that’s been put into this is miniscule, and the number of organizers who are spending most of their time on this is miniscule compared to the people who in the 1930s organized the CIO unions, the Canadian Auto Workers, the American autoworkers, or the Steelworkers, or what have you.

NOOR: I wanted to kind of address some of the arguments against raising the wages for these workers. For example, the argument goes that it’ll create inflation, that while wages may go up, prices will go up, too. Higher wages will make it harder for the U.S. to compete internationally with the developing world.

PANITCH: [inaud.] question that the growth of globalization, the spread of global capitalism, the extent to which working classes have been created in so many developing countries at such a quick pace, whether it’s China or Brazil or what have you, certainly has an effect in terms of pulling down and making less bold the unions in the advanced capitalist countries.

But this has also been an explicit strategy on the part of the multinational corporations in question, not least corporations like Walmart. So this isn’t just happening all of itself.

Now, insofar as it would have consequences, in terms of inflation the evidence is that the Fed and the Treasury are much more worried about deflation. Interest rates are so low, as in any other circumstance, to induce inflation. And the reason that the Fed is so confident that it can keep interest rates so low—and this is true not only in the United States but elsewhere, in Canada and Europe, as well—is because precisely workers are so defeated, are so beaten down, unions are so incapable of getting wage increases for their members.

Were they able to do so and it were to produce some inflationary pressures, that would be a bloody good thing. In fact, the Fed is very worried that despite its very low interest rates, inflation is not getting anywhere near its target of 2 percent a year, which is considered healthy. And the reason it isn’t is because there isn’t the consumer demand for capitalists to invest, despite very low interest rates. And the reason there isn’t consumer demand is that people don’t have enough income to buy this stuff, especially after the financial crash made credit more difficult or made people very worried about paying off their debt.

NOOR: We’re going to wrap up this part of our discussion, and we’re going to continue this just in a moment, and we’re going to post this, both parts, at TheRealNews.com. We’re going to talk about what the labor movement can do, what the working class can do to address these problems in just a moment.

Thank you so much for joining us for part one, Leo.

PANITCH: Happy to be here.

NOOR: You can follow us on Twitter @therealnews, Tweet me questions and story ideas @jaisalnoor.

Thank you so much for joining us.