Not what it was.

Photographer: Mandel Ngan/AFP/Getty Images

U.S. Labor May Be Lifting Its Head

Albert R. Hunt is a Bloomberg View columnist. He was the executive editor of Bloomberg News, before which he was a reporter, bureau chief and executive Washington editor at the Wall Street Journal.
Read More.
a | A

On the surface, this Labor Day holiday caps another dark year for U.S. unions and many working-class Americans.

Union membership in the private sector is 6.6 percent; it was 16.8 percent 30 years ago. Union members account for 35.7 percent of public sector workers, down slightly from a decade earlier.

QuickTake Income Inequality

Wages for middle- and working-class Americans continue to stagnate, and income inequality has worsened. Labor's clout in Washington is a shadow of what it used to be: Both houses of Congress voted to give President Barack Obama greater authority to negotiate trade agreements, in defiance of labor opposition, and initiatives such as raising the national minimum wage are stalled. 

Moreover, right-to-work laws have been passed in recent years in former union strongholds such as Michigan and Wisconsin. Wages in right-to-work states are 3 percent lower than in other states, according to the liberal Economic Policy Institute.

There are signs of change, however. Obama has issued several employee-friendly executive orders, including one that enables salaried workers to qualify for more overtime pay. And the president's appointees on the National Labor Relations Board voted to give workers more bargaining power.

Presidential candidates, mainly Democrats but some Republicans, too, are talking about addressing wage stagnation and income inequality. A recent Gallup poll shows rising support for unions, though the levels remain considerably lower than 40 years ago.

There also has been a flourishing of smaller-scale ideas for addressing these issues. "There is more innovation inside and outside the labor movement than I've seen in a long time," says Thomas Kochan, a professor of industrial relations, work and employment at the Massachusetts Institute of Technology.

More technology is available to assist workers; there is more accessible data about compensation for similar jobs, and the Securities and Exchange Commission is requiring publicly held companies to disclose how pay for top executives compares to that of other employees within a company. Many cities and states are raising the minimum wage.

And Pope Francis will give powerful voice to struggling workers, as well as the poor, when he visits the U.S. later this month.

Larry Summers -- the former Treasury secretary who is a pillar, along with his predecessor Bob Rubin, of the Democrats' Wall-Street-friendly wing -- is now a champion of stronger unions and more workers' rights. He was co-author of a report for the liberal Center for American Progress that suggested more union power was a central component of real wage growth. This week, he will present another CAP report, with the economist Richard Freeman, which suggests that policies making it easier for workers to form unions and bargain collectively are essential to increasing intergenerational mobility.

A few prominent business leaders, including Starbucks' Howard Schultz, are calling for corporate reforms to address wage stagnation and income inequality. The consequences of inaction, this still-small contingent of business executives warns, could be severe.

"The gap between the wealthiest and the poorest will be closed," said the hedge fund billionaire Paul Tudor Jones, citing metrics showing greater income inequality in the U.S. than in other major industrial nations. "It typically happens in one of three ways: either through revolution, higher taxes or wars."

If corporate America wishes to avoid this type of outcome, he cautions, it must spread the spoils of prosperity more broadly.  

Similarly, Nick Hanauer, a venture capitalist who was an early investor in Amazon, warns that the U.S. "is rapidly becoming less a capitalist society and more a feudal society." He has a message for his "fellow filthy rich, for all of us who live in our gated bubble world: wake up: It won't last."

If any progress is to be made -- a big if -- labor will have to change, too. Unions will need to focus less on restrictive or protective work rules and more on wages and collaborating with management to enhance productivity. 

Kochan pointed out that, since 1980, wages have increased only about 8 percent as productivity has risen 63 percent. The national goal should be to bring these two metrics more in sync.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Albert R. Hunt at ahunt1@bloomberg.net

To contact the editor responsible for this story:
Max Berley at mberley@bloomberg.net