Federal Employees News Digest

The big picture on how unions rose in power

This week, Nathan Abse speaks with University of Utah economic historian Peter Philips. Philips looks back at the twentieth century up to the present day—and traces the rise and fall of labor organizations as they struggled to represent workers, including federal employees and their unions. Philips sees a growing list of setbacks for American labor over the decades—and yet the prospect of a new rebirth promised by growing interest labor unions as not only offering the best deal for employees—but also mechanisms for easing problems in our economic system.

Q & A with Peter W. Philips

What do you think about the claim by some who represent federal employees as union leaders that their tactics helping hold the line against further cuts proposed on Capitol Hill?

I think it is likely that their efforts do help, yes. But, these days no one union or group of unions alone can get much done, as a long-term prospect. Public-sector unions, only in combination with other private-sector unions and broader social movements, together can change the conversation—and actually get somewhere long-term on pressing labor and compensation issues. There are a lot of instabilities and antagonisms with the current administration. But one of the things the administration says that I think makes some sense is that the old argument between left and right is breaking up—and may be really ending. As the administration has pointed out, and again I can see, is that this moment is a point of great opportunity for creative restructuring of the political conversation in the United States, and public-sector unions can play a role in that. For them to do that effectively, they have to be both good at what they do—and lucky.

What will enable public-sector unions to play this role?

Well, on the lucky side, they can’t do it alone. They have to hitch their wagons to other trains of efforts to change the public discourse, of how we develop our American economy and politics. Other movements, other allies. Unions also have to be both good and smart. That is, they have play the long game. They have to think strategically. They have to see beyond the next election, the next bill. Public-sector unions have to see beyond their parochial interests, especially those of each single organization. They have to face and be involved in wider-economy big questions and big answers. We need union leaders to think and act in a big way. If they focus too much on collective bargaining alone, the problem is they will end up only altering what I call the “little picture.” It will take some visionary leadership within the labor movement to get solutions going forward.

You note a need for visionary leadership—but to solve which huge pressing problems?

The biggest problems today? They are very big. The economy is quite threatened, longer haul. The general principal is that capitalism, our industrial system, has to deliver the goods, to producers when they put on their hats as consumers. Historically, that has always gone through the channel of remuneration—getting paid—for work. The labor movements in advanced capitalist countries are geared to try to get that to happen, as best possible, for workers. But there is a problem now, that the whole system, of having work and getting paid for it properly, is happening less effectively. Now, conceptually, the goods produced by our industries could get delivered by means other than rewards for work. Fixes for this problem—of growing automation and fewer well-paying jobs, notably—could come about through various means, ideas, that are currently in play. For example, minimal national income, expenditures on public goods that people can join in enjoying, or through income tax credits, and so on.   Let’s step back. Payment for work is an incentive for work. And for jobs that people aren’t going to do for free, leaders have to figure out a way to keep people wanting to do that work. My wife and I are volunteers at Grand Teton National Park every summer—but that’s because this sort of work is so inherently rewarding we do it for free, happily. Usually, you have to pay people somehow, of course, for work. And because there is plenty of work that isn’t fun—or isn’t always fun—there’s just a functionality to it that requires pay. In short, there will have to be new and stronger institutions that provide adequate rewards for work. And it’s not clear how that will be managed as more jobs are automated—and yet plenty of less desirable work, needing people to do it, will likely remain. This is what I see as a big problem in the near future.  

How did we get here—the big picture on unions rise and more recent fall?

Unionization in the United States peaked in the early 1950s, and it has been slowly declining ever since. That decline accelerated notably in the last years of the Carter administration and the beginning of the Reagan administration, by the early 1980s. The underlying reasons for this rise and fall are explainable. The big picture: Unionization before the 1930s was actually pretty limited. In the Great Depression, laws were passed that helped which basically supported American labor—and brought more friendly regulations favoring American workers and less international trade. That trade had fallen off because of the Depression itself, lowered economic activity, and the Smoot-Hawley tariff. You can look that up. Then, World War II accelerated and strengthened unionization. Why? Because employers became as interested as government in peace with labor. This led to more collective bargaining and unionization. It’s true that in 1946, there came a Republican-led Congress and an alliance with some Democrats that passed the Taft-Hartley Act—a law that brought government less friendly toward the union movement. But even that law was in a context where American manufacturing was on a roll—one that assisted by the huge demand for goods during and after WWII, and further assisted by the fact that after the war other advanced capitalist countries were in ruins.

You have sketched the unions rise—but what happened next?

By the early 1950s, American manufacturing ruled the world. And manufacturing activity is fertile ground for further unionization. Now, by the early 1950s, the political winds, as I mentioned in Taft-Hartley, were not as strong on the side of unionization. But the economic winds were still on the side of unionization. This included all kinds of heavy industry—automobiles, glass, rubber and steel—all forms of manufacturing, especially in the areas we now call the rust belt states. This was good for unions and manufacturers. But American manufacturers overestimated how long their competitive advantages would last in the global economy, and in that context the government launched a policy of free trade that would come back to bite them in the butt.

Can you explain how free trade helped the U.S. economy, and—at least for a time—it hurt it?

Yes, but remember—free trade helped for a long time. The negative part didn’t happen for another couple of decades. Through the 1950s and well into the 1960s, the American economy thrived on its growing internal markets, but also on the expansion of international trade and investments of American capital overseas. Finally, though, by the late 1960s, that system was beginning to unravel. I was born in 1947—I remember the introduction of the Volkswagen bug and some very small cars from Japan. I can tell you many thought these cars are so small and tinny, no one would want them. Often there was no imagination by American companies, that the formerly vibrant economies in Europe and Japan could become competitive again. The point is, while we were asleep here, the American economy became increasingly uncompetitive overseas—in part because our policy of free trade was to say we would be open to foreign goods and services, which were increasingly better than ours. By the 1970s, growth rates in the U.S. begin to slow down. The oil crisis hit in 1973, and a spike in prices that came with it, altering the nature of the auto industry. Consumers wanted the smaller cars. Domestic industry was slow to respond. There was a weakening in the U.S. and a strengthening in Japan and Europe.

How did these trends hurt unions, which had strengthened from the 1930s to the 1960s?

The weakening of the U.S. economy was centered on the weakening of the heartland areas of economic activity—especially in union-heavy manufacturing, not service-sector activity, in which unions were weak. Regarding federal employee unions, remember they lagged these trends. In fact their heyday began later—beginning with the Kennedy administration, in the early 60s, there were executive orders allowing federal employee unions to engage in collective bargaining. By the end of the 60s, there was a large, illegal Postal Workers strike—but the Nixon administration did not clamp down on workers, because the policy was to try to negotiate. So, feds were still holding on. But in the wider economy, things were starting to move against the private-sector unions. The Business Roundtable held a meeting where company leaders considered how to make U.S. industry more competitive—and their answer was to aim to substantially weaken the American labor movement. This was a big moment, because with some exceptions industry had worked with labor for decades to accommodate it. This was in the early 1970s, I think 1973—the same year of the oil crisis, and the biggest recession since WWII. It was also an inflection point where economic growth rates begin to be much slower, and adjusted wages stopped increasing with productivity.

So by the early 1970s, the future for unions looked bad?

Yes. And around this time industrial peace between unions and companies begins to unravel. Various skirmishes and strikes came to culmination in 1981, with the federal workers strike—PATCO, the now-defunct Professional Air Traffic Controllers Organization—and a private-sector strike that began in 1983 against the Phelps Dodge copper company, in Arizona. In both of these cases, for the first time since the Great Depression, management—in PATCO’s case, President Ronald Reagan—ran strikebreakers. Federal employers under the president, and the private company, both did this. This was a huge change. You just did not have this since before WWII, and really large-scale use of them had not occurred since the 1930s. It was a clarion call to employers to take a combative attitude toward unions. To do so as a means of addressing the erosion of their competitiveness. From then on, you no longer see productivity bargaining by unions—which had happened for three decades after WWII. Productivity bargaining had been a standard practice. With it, as productivity rose, workers shared in the resulting revenue. That stopped happening.

Where do federal employees fit in this sketch of the union movement since the 1930s?

Philips: Federal employees, by and large, have experienced many of these factors—the rise and the fall, but they have lagged in this process. In part, that’s because government is different. In part it’s because they are not exposed to foreign competition in the same way as private-sector activity is. Over time, we did see some federal and state work get exposed to competition. For example, in the Postal Service, electronic readers of addressed envelopes were developed a couple of decades ago. The remaining manual reading of addresses was offshored in a sense, to cheaper workers. Where all these trends came to bite government workers was not so much in the offshoring of work, but in an emerging crisis of funding government work—at federal and state levels. That originated in a slowdown in American economy, leading to a slowdown in corporate profits and family income. Politicians veered toward the idea of lowering taxes to address these problems. It lowered costs for some taxpayers, but it created deficits.

How were these trends manifested on the ground, and how has it affected feds?

In the regions of the U.S. growing the slowest, conservative political movements got moving—ultimately in an antagonistic attitude toward collective bargaining for state and local workers. Anti-union attitudes flourished. Meanwhile the real action—the better economic growth rates—happened in or near major cities. Houston, Boston, Washington, D.C.—these places did better than rural manufacturing locales, by far. So, there was less economic trouble in these megalopolises. As a result, we have inherited a widespread but unevenly distributed antagonism toward government workers and their unions. Overall, the pressures of the globalized economy really bit into blue-collar unionized workers first—and then later white- collar unionized workers, and only later still do the trends cause trouble for government employees. And of those, really the federal employees got hit harder only last. Why? In large part, in my and many other people’s reading, it’s as that saying goes: the nail that sticks up gets pounded down. Since federal employees were left standing up, relatively unscathed, not surprisingly, they are the nail that sticks up and that is getting pounded. Unionized federal employees are that nail, after all that has occurred out there in the wider economy, you see? In this new world where workers have fewer protections, have fewer benefits, and are more on their own and not under collective protection, many people look at feds and say they have a pension, job protection, and all sorts of things others don’t—anymore. That creates a cultural basis for political scene unfavorable to collective bargaining at the federal level.

So, envy is really part of the picture that led to where we are now?

Yes.

Finally, what is going to happen next, as you see it, to economies and to unions?

The story I have pretty much summarized here is the story of globalization, and how it created competitive pressures that ultimately undercut collective bargaining and unionization in an uneven manner, geographically and with respect to different sectors of the economy. Globalization, once a booming feature of many economies, has its own contradictions, however, that appear to be leading to a slowdown in the growth rates of the advanced capitalist countries—and even also in China and, possibly, even in more newly developing countries like India and Brazil. As I said at the outset of this interview, the underlying problem is that the people who are assigned to do manufacturing work, who make the many products that make up much of the world’s economic output, are not paid enough to be able to buy what they produce. And the people abroad and in the U.S. who are expected to be consumers, and expected to buy these things, are also increasingly unable to buy them—except through dicey credit. Really, for the last 15 years, some economists like me see evidence that globalization is on a kind of sugar high, mostly by advancing consumer credit. That’s the same activity, followed by crash in consumer credit—reaching a limit—that led to the Great Recession in the advanced capitalist countries, less than a decade ago. The Great Recession is itself a key economic point, and the current political scene is largely a product of all this. The new “conservative politics” would not be recognizable to the Business Roundtable back in the 1970s. In fact, our current president has appealed to labor dismay—the upset of what many have called the “white working class,” or wider working class. Actually, broad segments of the American working class have experienced the failure of the system to deliver the goods to them. In fact, both the left and the right now have elements trying to address just this constituency and this problem. What all this tells me is there is a potential for a functional, and inclusive, labor movement to resurrect itself as a real spokesperson again, for productivity-bargaining and buttressing the income of the blue-collar middle class and white collar middle class. Success at this could offset the older conservative ideology of “we have to cut costs at every point on the line because we must remain competitive.” The future of the American labor movement is rooted in whether it can present itself effectively as part of the solution to a growing slowdown and global stagnation, based on the problem of the increasing inability of globalized workers to buy the products and services that they create.

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Edward A. Zurndorfer Certified Financial Planner
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