Our guest author today is David Madland, Senior Fellow and the Senior Adviser to the American Worker Project at the Center for American Progress. This post is part of a series of posts by speakers at our 2016 conference, "The Challenge of Precarious Labor," videos of which can be found here.
My goal is to provide a long-term vision of how we can address the fundamental economic and democratic challenges faced by our country, as well as to discuss some realistic steps for state and local governments to take to move us toward this vision.
Today’s economy does not work very well for most people. Wages have been stagnant for decades and inequality is near record highs. Many voters blame politicians for these problems – for doing the bidding of CEOs while leaving workers with too little power to get their fair share. Voter anger and the politicians fortified by it have put our democracy in real trouble.
There are of numerous reforms necessary to ensure that workers have sufficient power to raise wages, reduce inequality, and make democracy work for all Americans – including those that reduce the influence of money in politics and that promote full employment. But among the most important reforms are those that give workers a way to band together and have a strong collective voice. Collective voice enables workers to negotiate with CEOs on a relatively even footing and to hold politicians accountable. When workers have a strong collective voice, not only can they increase their own wages, but also improve labor standards across the economy and provide a key counterbalance to wealthy special interests, making politicians more responsive to the concerns of ordinary Americans.
But we need new and better ways for workers to achieve that strong collective voice. Fewer than 7 percent of workers in the private sector are members of a union – meaning that 93 percent are left out of the current system.
In the wake of the financial crisis that began in 2007, as well as the subsequent recession, there has been a great deal of attention paid to income inequality. Specifically, there was a pervasive argument among many Americans that the discrepancies in income between the top and bottom are too large, and that the fruits of economic growth are predominantly going to the highest earners (the so-called “one percent”).
Among those who believe that income inequality is too high, the solutions might include policies such as more progressive taxation, stronger regulation, and more generous policies to help lower income families. That is, they might generally support some increased role for government in addressing this issue. Insofar as individuals’ attitudes tend to respond to changes in their own circumstances (e.g., Owens and Pedulla 2013), as well as to overall economic conditions, one would possibly expect an increase in support for government efforts to reduce inequality during and after the financial crisis.
We might take a look at this proposition using a General Social Survey (GSS) question asking respondents to characterize their support (on a scale of 1-7) for the statement that the government should reduce income differences between the rich and poor. The graph below presents the average value of this scale between 1986 and 2014. Note that higher values in the graph represent greater support for government action.
Taxes, particularly income taxes, are among the most divisive and controversial issues in any nation, and this makes perfect sense – people care about how much they pay and how it is spent. Yet most of the constant, heated debate about taxation focuses almost entirely on federal taxes, with state and local taxes receiving far less attention.
Periodically, the Institute on Taxation and Economic Policy (ITEP) releases an important and interesting analysis of who pays state and local taxes – that is, the tax burdens among households with different incomes. The latest version of this report was published last year. The findings are worth knowing for anyone interested in public sector services, including education.
ITEP reports that state and local taxes overall are highly regressive, which means that poorer households pay a larger share of their income in state and local taxes than do higher income households. This finding is summarized in the figure below, which is taken directly from the report (note that these are national averages, and that the breakdown varies by state).
This is the second of two posts on the political dimensions of the Friedrichs case. The first post can be read here.
Before Justice Scalia’s sudden death, it appeared that, through the Friedrichs case, the Supreme Court’s conservative majority would succeed in imposing “right to work” status on public sector working people across the nation. As discussed in a previous post, there were signs that this conservative bloc was looking to deliver its decision in time to sideline the four largest public employee unions – the American Federation of State, County and Municipal Employees (AFSCME), the American Federation of Teachers (AFT), the National Education Association (NEA) and the Service Employees International Union (SEIU) – from the 2016 elections. Not coincidentally, these are also the unions that have the strongest political operations in the American labor. If Scalia had not died and these intentions were realized, what would have been the impact on the 2016 election and beyond?
To grasp the full impact of a negative Friedrichs decision, had the conservative justices been successful in their plans, it is necessary to gauge the effect that public employee unions have on the political activism of their members. Ironically, insight into this question can be gleaned from an essay that exhibits a critical attitude toward public sector unions and collective bargaining, Patrick Flavin’s and Michael Hartney’s “When Government Subsidizes Its Own: Collective Bargaining Laws as Agents of Political Mobilization.”1 (Hereafter, F&H.) While not without analytical flaws, a number of which will be discussed below, F&H contributes to the literature with a new way of measuring the effect of teacher unions on teacher political activism and engagement, above and beyond voting. (Teachers have always voted at consistently high rates, with over 90 percent turnout in presidential elections and over 80 percent in mid-term elections.) Consequently, F&H places in relief the union contribution to member political activism that was targeted by the SCOTUS conservatives.
When the Supreme Court of the United States (SCOTUS) delivered its March 29 ruling in Friedrichs v. California Teachers Association, the announcement of a 4 to 4 deadlock was something of an anticlimax. Ever since the sudden February 12 death of conservative Justice Antonin Scalia, SCOTUS watchers had anticipated just such an impasse. Based on Scalia’s questions when the case was argued before the Court a month before his passing, the late justice appeared to be the fifth vote for a decision that would have overturned 40 years of precedent – in effect, imposing “right to work” status on all those working in the public sector and eviscerating their unions. Without this vote, the four remaining conservative justices failed to constitute a majority.
In the days following this decision, observers across the political spectrum described the judicial deadlock in Friedrichs as a victory for public sector workers and their unions (at least for the moment). A more definitive resolution of the issue awaits Senate confirmation of Scalia’s successor, whether President Obama’s pick, Judge Merrick Garland, or someone yet to be named by the next president.
But, so far, what has been missing from most media commentaries is a recognition of the immediate political import of the Court’s impasse, and most especially, its impact on the 2016 election campaign. To understand the full political dimensions of Friedrichs – how the Court’s conservative majority seem to have been prepared to use the case to sway the election – a brief review of the case is necessary.
In this New York Times piece, which was published on March 9, 1986, Al Shanker discusses a study suggesting that union-district partnership, not confrontation, is the best way to enact and implement reforms that will improve schools.
In the last 25 years, teachers' unions have grown in size and influence. In the minds of many they represent an establishment just as much as the local board of education and the superintendent of schools. Many critics of our schools have been eager to portray teacher unions as supporters of educationally undesirable rules and procedures, such as seniority, which were borrowed from the industrial sector. They view teacher unions as fighting for these rules at any cost and using their bargaining powers to shoot down constructive change whenever it threatens to infringe on teachers' vested interests.
But an interesting new study gives us quite a different picture of the impact that teacher unions and collective bargaining have on the reform process. In preparing Teacher Unions, School Staffing and Reform, a Harvard Graduate School of Education research team led by Susan Moore Johnson analyzed 155 contracts chosen at random from a variety of school districts around the country. And, from June of 1984 to February, 1985, they did extensive, in-depth field work in 5 of the districts, where they examined documents, sat in on meetings and interviewed 187 teachers, principals, union leaders and central office administrators.
What emerges is a valuable insight into the dynamics and complexity of the reform process, why some proposals work and why others fall flat. Though new programs tend to be formulated in legislative chambers or in governors' mansions, the key to success, the authors conclude, is what happens on the district level, within the individual collective bargaining unit. And some interesting patterns emerge.
Our guest author today is David Cay Johnston, a distinguished visiting lecturer at the Syracuse University College of Law and a former Pulitzer prize-winning financial reporter at The New York Times. This article is adapted from his remarks to an ASI-sponsored conversation on the topic in March, which also included remarks from Chad Aldeman, Teresa Ghilarducci, and Dan Pedrotty. A video of this event can be found here.
So the question is whether there is a pension crisis. The answer is yes, absolutely. It’s just not the one that politicians always talk about.
Contrary to that you hear about on TV, in market economics, defined benefit pensions are the second most efficient way to provide for income in old age. The most effective way would be a national program that spreads risks to everyone. The least efficient way to do it is through defined contribution plans.
There is abundant evidence for this. Defined contribution plans work very well, but only as supplements for prosperous people such as me and my wife, who is a public charity CEO, they are not at all effective for most people. That’s be because defined contribution plans violate specialization, one of the most basic tenets of market economics as taught to us by Adam Smith, the man who first explained market economics.
On September 17, 2013, the U.S. Department of Labor (DOL) announced the Home Care Final Rule, which extends the Fair Labor Standards Act’s (FLSA) minimum wage and overtime protections to domestic workers who provide home care assistance to the elderly, the infirm, and the disabled. The Home Care Final Rule is essential to improving the lives of two million domestic workers who, unlike other U.S. workers, are in many states not protected by the FLSA regarding minimum wage, overtime, sick leave, and vacation. Domestic work differs from other jobs in that the work takes place inside other people’s homes, which often puts domestic workers’ wellbeing at the mercy of their employers.
The exclusion of domestic workers from the FLSA was a concession to Southern politicians in the early 1900’s. It had left many homecare aides vulnerable to abuse and mistreatment by their employers. The rule was scheduled to go into effect on January 1, 2015. However, lawsuits filed by homecare corporations have hindered the change and served as an excuse for states to postpone implementation. For example, in Home Care Association of America v. Weil, U.S. District Court Judge Richard Leon vacated the portion of the Rule that prevents third-party home care providers from using the companionship services exemption, and later vacated the revised definition of companionship services.
As of July 2015, only five states have passed the Domestic Workers Bill of Rights: New York; Hawaii; California; Massachusetts; and Oregon. New York was the first state to pass the law (in July 2010) after six years of efforts by domestic workers, unions, employers, clergy and community organizations. The bill was introduced in two other states, Connecticut and Illinois, but has yet to be passed.
The following are the texts of the two speeches from the opening session of our recent two-day conference, “In Defense of the Public Square,” which was held on May 1-2 at Georgetown University in Washington, D.C. The introduction was delivered by Leo Casey and the keynote address was delivered by Randi Weingarten. The video of the full event will be available soon here.
Remarks by Leo Casey
We meet here today in “defense of the public square.”
The public square is the place where Americans come together as a people and establish common goals in pursuit of our common good.
The public square is the place where Americans – in all of our rich diversity – promote the general welfare, achieving as a community what we never could do as private individuals.
The public square is the place where Americans weave together our ideal of political equality and our solidarity with community in a democratic political culture, as de Tocqueville saw so well.
A robust and vibrant public square is an essential foundation of democracy. It is the place where the important public issues of the day are subject to free and open debate, and where our ideas of what is in the public interest take shape. It is the ground upon which communities and associations are organized to advocate for policies that promote that public interest. It is the site for the provision of essential public goods, from education and healthcare to safety and mass transportation. It is the terrain upon which the centralizing and homogenizing power of both the state and the market are checked and balanced. It is the economic arena with the means to control the market’s tendencies toward polarizing economic inequality and cycles of boom and bust. It is the site of economic opportunity for historically excluded groups such as African-Americans and Latinos.
And yet in America today, the public square is under extraordinary attack. A flood of unregulated, unaccountable money in our politics and media threatens to drown public debate and ravage our civic life, overwhelming authentic conceptions of the public interest. Decades of growing economic inequality menaces the very public institutions with the capacity to promote greater economic and social equality. Unprecedented efforts to privatize essential public goods and public services are underway. Teachers, nurses and other public servants who deliver those public goods are the object of vilification from the political right, and their rights in the workplace are in danger. Legislative and judicial efforts designed to eviscerate public sector unions are ongoing.
In response to these developments, a consortium of seven organizations—the Albert Shanker Institute; the American Federation of State, County and Municipal Employees; the American Federation of Teachers; the American Prospect; Dissent; Georgetown University’s Kalmanovitz Initiative for Labor and the Working Poor; and the Service Employees International Union—has organized a to bring together prominent elected officials, public intellectuals, and union, business and civil rights leaders “in defense of the public square.”