A Clean Slate for Labor Reform

As divided as we have become as a country, we arrived at this Labor Day with a shared national understanding: both economic and political power are wildly out of balance, with dire consequences for the vast majority of Americans who find themselves on the losing end of this imbalance. Wherever we live, and however we vote, Americans know that both wealth and political influence are now radically concentrated in the hands of a tiny few.

What does economic inequality look like in 2018 America? Here’s an illustration: The average Amazon worker makes about $29,000 per year, while Jeff Bezos, the Amazon CEO, has a net worth of $150 billion. This means it would take an Amazon worker 5 million years, working full time, to earn what Bezos now possesses.

With respect to political inequality, the data is just as stark. Political scientists have shown that the preferences of the vast majority of Americans simply no longer have any impact on what happens in Washington. In fact, when the rich disagree wth the poor and middle class, the path our government takes has nothing to do with what anyone but the rich want.

Why is it important to consider this crisis of inequality on the day we set aside to honor labor?  Because the evisceration of the labor movement is in large measure what got us here, and resuscitating the collective power of workers is what will get us out of this mess.  The more we learn about inequality – both economic and political – the clearer it becomes that the strength of the labor movement is intimately connected with the equality of our nation. Sustain a strong labor movement and you can count on a more equal society. Kill labor and you kill equality.

The question on this Labor Day therefore must be how, in 2018, can we create a new labor movement, one that can unite the interests of a sufficient number of lower and middle income Americans so that they have the power to restore balance to our economy and politics.

Answering that question may not be easy, but one principle is clear: any successful strategy must include a complete rewriting of our national labor laws in order to establish new rules of the road for organizing and collective bargaining. This is because we are living with a labor law, drafted originally in 1935, that fundamentally fails to achieve its purpose of empowering workers.  The transformation of work – including the fissuring of the employment relationship through subcontracting and franchising, the growth of the gig economy, and the transformation of the labor force – means that core aspects of the way we’ve done labor law for eight decades no longer adequately positions workers to organize and bargain.

So we need to rebuild labor law from a clean slate to meet the challenges of the new economy. To provide a blueprint for that kind of reform, we have launched a new project at Harvard Law School: Rebalancing Economic and Political Power: A Clean Slate for the Future of Labor Law.  This summer, we kicked off the Clean Slate project with a convening aimed at identifying the core elements of a successful 21^st Century labor law. With the help of over eighty participants, we identified the key tasks:

We need to reimagine collective bargaining  – Since 1935, collective bargaining has largely taken place at the level of the firm, between unions and single employers. When the firm looked like General Motors, this kind of bargaining made obvious sense: one contract covered thousands of workers and could effectively set standards across an industry. But as employment disaggregates through techniques like subcontracting and franchising, firm level collective bargaining may no longer be sufficient. Instead, it is time to also consider bargaining at the sectoral or industrial level.

Think about it this way:  Requiring unions to bargain over wages and working conditions at each individual McDonalds, Wendys and Burger King would be both impossible and ineffective. Individual franschisees don’t have the power to set working conditions or the financial resources to meaningfully change pay structures. Rather than firm level bargaining, therefore, unions and fast food firms might more productively sit down and determine the basic contours of a national fast food employment agreement. This could have several virtues. Primarily, it could allow unions to negotiate with the corporate entities that actually control both the finances and conditions of work and thus allow genuine improvements in working conditions and significant transfers of wealth. But it also could be vastly more efficient for both unions and employers, and it could mean that unionization no longer put individual firms at a competitive disadvantage.

We have to expand the kinds of organizations workers can join, and we have to make it easier for workers to join them – Traditional unions have been the key organization for worker voice at work, in the economy, and in politics. We need to reform the law so that we can strengthen these unions, including by making it easier for workers to form and join them. Additionally, as a means of reviving worker economic and political voice, we should explore legal support for other worker institutions that can be more flexible in meeting workers’ needs. Doing so could enable these institutions to garner broader support from workers and their communities and allow them to rebuild stronger, louder economic and political voices.  These organizations may look like more like works councils that exist in other advanced capitalist countries, or members-only unions that represent just those workers who want representation, or worker centers that address the range of challenges facing workers and their communities, like the need for language instruction, immigration services, and skills training, as well advocacy on the job. Key to this undertaking, and with respect to all forms of worker organization, will be designing workable revenue models that can sustain these institutions across time.

We must ensure that collective action leverages power – The number of significant strikes in the U.S. has fallen to almost none.  That’s because the law puts up so many hurdles and obstacles – it severely limits where, when, and how workers can act together.  Instead of maximizing power, the law diminishes it.  We need to rewrite the law to allow workers to analyze power relationships and exercise collective power strategically.  For example, when companies fissure their functions into separate firms connected by subcontracts, we could allow workers to treat those connected firms as one for the purpose of strikes, pickets and boycotts.

We should consider using employment benefits and employment standards enforcement to strengthen worker organizations – The transformation of work has produced two other well-known problems: one, many workers can no longer rely on stable employment to provide them with benefits like retirement, vacation, or insurance, and, two, it is increasingly difficult to enforce basic laws like minimum wage and overtime pay. Instead of leaving benefits and enforcement to the government (or to private firms) we could entrust them to organizations that represent the workers for whom these benefits are made available.  For example, unions and other worker organizations could partner with government agencies to monitor compliance with worker rights laws.  Or, new portable benefits programs could be administered by worker organizations, to give workers a say in how the money that funds those benefits is invested.  These approaches make sense as an efficient and effective way to deliver benefits and enforce laws since they tap the energies and know-how of the people whose lives are directly impacted. But, like the other changes we recommend, giving worker organizations these roles would build the power of those organizations and hence enable them to develop stronger economic and political voices.

We need to empower labor law reform by updating other legal regimes – Labor law does not, of course, exist in a vaccum. Rather it is deeply interconnected with other systems of law. A fundamental rewrite of labor law accordingly calls for us to think carefully about those interconnections and perhaps to propose adjustments to these other legal regimes. For example, if we believe that certain workers currently classified as independent contractors ought to have collective bargaining rights, that move might necessitate amendments to the antitrust laws, which currently prohibit independent contractors from acting concertedly. If workers are to secure representation rights on corporate boards, that could require changes to corporate law. And expanding political representation for workers might invite us to rethink certain aspects of voting and campaign finance law.

We have to address persistent, historical inequities – Rewriting labor law on a clean slate is not about nostalgia for the past.  It is an opportunity to address problems that the labor movement at best took too long to recognize and at worst contributed to.  A new labor law regime must tackle persistent racial and gender disparities in economics and politics to make sure that we build worker power in a way that is responsive to these inequities.

Rebalancing our economy and politics is an ambitious goal, but it is also critical to the continued vitality of our democracy. We can make significant progress in this direction by reviving the counterveiling power of workers, and thereby ensuring that ordinary Americans regain a voice in both the economy and in politics. We can only do this, however, by letting go of the old labor law and embracing fundamentally new thinking about where to go from here. That’s why Labor Day 2018 should mark the point at which we commit to acting boldly and rewriting American labor policy on a clean slate. We welcome your input as we undertake this important work.

Originally published by OnLabor.