Labor Unions and Wealth Inequality


     


"MM: What have been the trends of wealth inequality over the last 25 years?

"Wolff: We have had a fairly sharp increase in wealth inequality dating back to 1975 or 1976. Prior to that, there was a protracted period when wealth inequality fell in this country, going back almost to 1929. So you have this fairly continuous downward trend from 1929, which of course was the peak of the stock market before it crashed, until just about the mid-1970s. Since then, things have really turned around, and the level of wealth inequality today is almost double what it was in the mid-1970s. . . . The top 5 percent own more than half of all wealth"

Multinatinal Monitor, May 2003

"While unions were doing battle with liberals on several issues, the corporate-conservative coalition carried out its counteroffensive against unions through appointments to the National Labor Relations Board. . . . This counteroffensive, in combination with the movement of some American factories overseas and increasing automobile and steel imports from Germany and Japan, led to the large decline of industrial unions after 1975."

G. William Domhoff, Who Rules America

"Unions now represent less than 10 percent of the workforce in the private sector in the United States. Yet they still represent the single best means for workers to improve their economic conditions. . . . The single fact of belonging to a union raises the average worker's wage more than 28% — and it is far higher in the area of benefits. But even reference to the dramatic wage premium understates the importance of unions. Union power is collective power."

Multinational Monitor, May 2003

 

There's a tremendous, and rapidly growing, gap in the distribution of wealth in American society. While there will always be some gap in any meritocratic society, most of the current yawning chasm isn't due to differences in merit between the ultrawealthy and the middle class and poor. Rather, it's due to an ever-increasing imbalance of political and economic power, which has dramatically shifted since the mid-70s to favor the wealthy. Secondarily, it's due to the capture of almost the entirety of the media by the ultrawealthy, and its transformation in their hands into an incredibly effective instrument of propaganda on their own behalf. If you doubt this assertion, then at least ask yourself this: how would you know? Who would tell you, except the media in question?

What to do?

If we had our way, there would be a relative handful of large corporations — those for which economies of scale are truly essential — and there would be much larger numbers of small and medium-sized corporations. Moreover, these smaller corporations would be effectively chartered, and organized as entirely different beasts.

Most would be organized as Mondragon cooperatives, owned by employees (the exception here being industries where large-scale capitalization needs might preclude this type of organization). Our reasons for this preference are laid out elsewhere at the site, but we might just say this here: few in America today truly prosper by working hard for somebody else. This should come as no surprise. Working for someone else is a fool's game, as all of the equity goes to management and shareholders (for the most part those who are already wealthy). The difference between working for somebody else and working for yourself is something like the difference between renting a home and owning one. Because they own, home owners build equity in their homes. Renters build somebody else's equity instead, to their own loss.

All real prosperity (and unfortunately much political power) is associated with business ownership. That's why we'd like to see it made as easy as possible to attain moderate wealth — and made impossible to attain immense, Bill Gates scale, wealth. (Why? Well, not from the politics of envy. Unfortunately, immense wealth inevitably and inescapably promotes political corruption, and provides tremendous incentives to class warfare. History has shown us conclusively that there's just no getting around this. Moreover, immense wealth does the immensely wealthy little real good — immense wealth being all about power and ego — and it deprives the genuinely needful of seed money.)

By comparison with the Mondragon model, unions are a much less attractive option. Much time and effort is expended in labor/management conflict, while in the Mondragon model this conflict goes away because labor is management — which is, of course, the way it ought to be. Too, unions are prone to all of the same problems as big corporations and big government: unaccountability, corruption, waste, bureacracy, counterproductive power politics, and so on. (Big really is bad, and really big is really bad.)

The reality, however, is that we are very far indeed from the goal of restructuring corporations, and therefore the economy, along the lines of the Mondragon model.

Indeed, the trend right now is precisely the reverse of what it ought to be. Corporations that are already far too large and far too politically powerful are doing what they do best — corrupting the political process— and paving the way for still further mergers, while the wealth gap in consequence widens dramatically.

For now, increased unionization is mandatory if US wealth is to be shared out on a more equitable basis. Only if union muscle grows will salaries grow appreciably, because only unions can exercise enough leverage in the ongoing class war that middle class and poor Americans are losing so dramatically.

The American plutocracy, of course, hates the idea on increased unionization with a real passion. (That's why you've never heard anything good about unions, the media, after all, being owned by the wealthy.) Why this intense hatred? Well, there's that power and ego thing, we mentioned earlier; but it's mainly because of the effectiveness of unions in winning a bigger, and fairer, slice of the pie for workers. Management feels that all that profit ought to be theirs: they stole it for themselves fair and square. Labor is just a cost of doing business, a cost to be kept as low as possible — but that doesn't apply to their own labor, of course. CEOs, whose compensation has bloated beyond any conceivable relationship with performance, would like their compensation to bloat still farther. Multi-millionaires aspire to be billionaires, while billionaires aspire to be multi-billionaires.

Even if there was some correspondence between managerial compensation and performance, even if wealth was unlimited, this kind of monomaniacal obsession with wealth betrays an undeveloped personality; but the truth is wealth isn't unlimited, and a law of diminishing returns applies instead. While it makes little difference whether a Bill Gates has 600 billion or 601 billion, it makes all the difference in the world whether a worker is making $20,000 a year or $30,000 a year.

There's also an issue of fairness here. Wealth, after all, is generated primarily by labor. Managers might steer the ship, but the cargo was created by working people.

So, until we've addressed the root problem of corporate misorganization, and get farther down the road with the Mondragon solution, we suggest that you do whatever you can to support your local union. They need all the help they can get.

The real war underway right now isn't being fought with terrorists. It's being waged by the wealthy on the middle class and poor.

The Editor
Progressive Living

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