The rebirth of industrial democracy
BERKELEY — The shutdown is over for now, but for five weeks 800,000 federal employees and 1.5 million federal contract workers were pawns in Trump’s game of brinksmanship, and they may be so again.
Trump has also frozen federal workers’ pay for 2019, stopping the automatic 2.1 percent cost-of-living increase all civilian workers would have received under federal pay laws.
It’s hardly the first time American workers have been pawns in larger power games.
It happens all the time in the private sector.
A private-equity firm gains control and eliminates a sizable portion of a company’s jobs. A merger generates a frenzy of payroll cuts. New management threatens to ship jobs offshore if workers don’t accept wage cuts.
American capitalism has become more arbitrary and autocratic than at any time in modern history.
Not only have most paychecks stopped rising, but economic security has vanished. Few working people feel any sense of control over their lives.
This has happened for several reasons. Capital markets are more demanding. Wall Street is insisting that corporations squeeze out every ounce of profit quarter by quarter.
It’s easier than ever to outsource jobs to contractors, foreign-based workers, or automated machines, all of which will do them more cheaply.
Economic power has become more concentrated in a relative handful of large corporations that can keep a lid on wages even in a tight labor market.
Meanwhile, labor union membership has declined precipitously. Most workers no longer have a way to fight back.
In the 1950s, over a third of all U.S. private-sector workers were unionized; today, fewer than 7 percent are. Unionization in the public sector is also dropping, from 38.7 percent in 1994 to less than 35 percent today.
All of which may explain why, as America begins ramping up to the 2020 presidential election, candidates are talking about empowering workers.
Ohio Senator Sherrod Brown has embarked on a “dignity of work” tour of key voting states ahead of a potential run for the Democratic presidential nomination — along with producing a 77-page economic plan to reverse “the declining value of work” and “make life better for all workers.”
Vermont Senator Bernie Sanders, who may run again, has introduced new bills encouraging employee ownership.
California’s Senator Kamala Harris, who recently declared her candidacy, has demanded that tech giant Amazon “be subject to oversight that protects the dignity of workers.”
Massachusetts Senator Elizabeth Warren, who has also declared her candidacy, has come up with the most detailed proposals to date. She wants any corporation with revenue over $1 billion to obtain a federal charter of corporate citizenship requiring company directors to consider the interests of all relevant stakeholders — including customers, employees, and the communities in which the company operates.
Warren’s “Accountable Capitalism Act” also requires that 40 percent of the boards of such corporations be elected by employees.
As the Democratic race heats up, expect more proposals to give workers greater say — including tripartite wage boards, sectoral bargaining, and independent works councils (similar to those that the United States occupying force wrote for Germany in 1946).
Candidates will also seek to make it harder for companies to reclassify employees as contract workers, and easier for contract workers to establish associations that can bargain for better pay and improved working conditions (are you listening, Uber?).
There will also be proposals to give workers more say over how their retirement savings are invested, and end conflicts of interest by giant asset managers that push companies to buy their own pension products.
All told, we may be witnessing a rebirth of the early 20th century movement toward “industrial democracy,” which held that the best way to rectify the imbalance of power between workers and business was to make corporations more democratic and give workers greater say.
Industrial democracy was a direct response to the Gilded Age — an era of gross inequality, unparalleled wealth, searing poverty, powerful monopolies, and political corruption, in which workers toiled for a pittance within often unsafe workplaces.
For a time, the idea of industrial democracy was widely popular. Even conservative Republican Calvin Coolidge, when governor of Massachusetts in 1919, signed a law allowing corporations to nominate and elect employees to their boards of directors. By 1922, employees of Boston’s famous clothing store, Filene’s, had chosen four of its 11 board members.
But the industrial democracy movement waned in the 1950s and 1960s, as postwar prosperity lifted almost all workers’ paychecks.
Now that America is back to a New Gilded Age of rabid inequality and arbitrary management, it seems fitting that industrial democracy is back on the table.
American workers don’t only need better wages. They also need to be respected. And they must be heard.
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Robert Reich, former U.S. Secretary of Labor, is professor of public policy at the University of California at Berkeley and the author of “Aftershock: The Next Economy and America’s Future.” He blogs at www.robertreich.org.)