The decline in circumstances of workers in the United States goes back to long before the Great Recession–to capital’s concern over the upsurge of labor militancy following the Second World War, specifically a wave of strikes in 1946. Some 4.5 million workers went on strike during that year–from the Hawaiian sugar plantations to Oakland (a general strike) to General Motors to the railroad, steel, and coal industries. The Taft-Hartley Act, passed by a Republican Congress with some Democratic support in 1947 over President Truman’s veto, was a clear offensive against labor. Workers and unions had been given a boost by the Depression-era National Labor Relations Act (1936), which restricted a number of anti-union employer practices such as interfering with workers trying to form a union. Taft-Hartley, however, placed severe restrictions on labor–for example, outlawing very effective sympathy strikes and boycotts. It also required union leaders to submit affidavits indicating that they were were neither Communist Party members nor had any connection with what were considered to be subversive organizations, thereby excluding some of the most militant leaders.
Taft-Hartley commenced a new phase of the class war of capital against labor, which was interrupted briefly in the 1960s, but was ramped up again with the economic slowdown of the 1970s. A full-scale, organized class war against the U.S. working class and against all progressive government policies was unleashed beginning on August 23, 1971, with corporate lawyer Lewis Powell’s confidential memorandum to the U.S. Chamber of Commerce (only two months before he was nominated by President Nixon to the U.S. Supreme Court) calling on corporations and their CEOs to organize a concerted attack on labor, the left academy, and the liberal media–and to use their financial leverage to dominate government. The memo, which came to light only after Powell’s Supreme Court appointment, galvanized business and the wealthy, leading to what Jacob Hacker and Paul Pierson in Winner-Take-All Politics described as a ‘domestic version of Shock and Awe.’ As Bill Moyers has written, “we look back on it now as a call to arms for class war waged from the top down.’ It inspired the establishment of the powerful Business Roundtable (which has only CEOs as members), the American Legislative Council (ALEC), the Heritage Foundation, the Cato Institute, and Citizens for a Sound Economy (the forerunner of Americans for Prosperity). Within a decade the number of firms with lobbyists with lobbyists expanded by almost fifteen-fold. Corporate PACs quadrupled in number between 1976 and the mid-1980s.
Next to Powell the most influential figure in initiating the new corporate-based assault on workers during the 1970s was William E. Simon, Treasury Secretary in the Nixon and Ford administrations and a former top executive at Salomon Brothers. Simons’s 1978 book, ‘A Time for Truth’ included a preface by Milton Freidman and a foreward by Friedrich von Hayek, and called for a business crusade against labor, environmentalists and the left. Simon insisted that ‘multimillions’ of dollars were needed for conservative causes to overthrow the legacy of the New Deal. These attacks set the stage for President Carter’s sharp turn to the right in 1979, marked by the appointment of Paul as Chairman of the Federal Reserve Board.
President Reagan’ 1981 breaking of the PATCO (air traffic controllers) strike contributed a major blow to the prestige and power of organized labor. National Labor Relations Board and court appointees became more favorable to the view of capital and less inclined to adopt event the appearance of neutrality. Other aspects of the class war today include the attack on pensions of public workers at the city and state level and the decline in workplace safety enforcement. At present Occupational Safety and Health Administration inspectors are estimated to be able to visit each workplace in the United States once every ninety-nine years. It had been more than a quarter of century since inspectors made their last visit to the Texas fertilizer plant where an April 2013 explosion killed fourteen and injured over two hundred.
In the aftermath of the Great Financial Crisis, and the rise of the Tea Party as a right-wing adjunct to the Republican Party, the assault on workers intensified still further. A report by the Economic Policy Institute that reviewed state-level legislative changes in labor policy and labor standards since 2010 found that “the changes undermine the wages, working conditions, legal protections, or bargaining power of either organized or unorganized employees…. The consequence of this legislative agenda is to undermine the ability of workers to earn middle-class wages and to enhance the power of employers in the labor market. These changes did not just happen but were the results of an intentional and persistent political campaign by business groups.”
John Bellamy Foster, “The Plight of U.S. Workers, Monthly Review, January 2014, pp. 3-5.
A strangely provocative role reversal has developed between two friendly rivals in the global economy. In the past, it was usually the United States that lectured other nations on how they should be more like America. This time, it is a German industrial giant that wants to make the US economy more like Germany’s. Can this happen? Maybe—if American workers agree that the German approach is better.
The issue is labor relations. The German system is more democratic and far more respectful of worker rights. Instead of the relentless unionbusting and virulent anti-labor propaganda common in US industry, German labor law requires consultation and collaboration with workers in the Betriebsrat, or works council—people directly elected by the employees, blue-collar and white-collar alike. At a minimum, German workers are guaranteed a voice in corporate decision-making. The works council is what the Germans proposed for a Volkswagen plant in Chattanooga.
Volkswagen did not want to export this German version of labor law to Tennessee for sentimental reasons. VW operates more than 100 car factories around the world in the German manner. The cooperative approach, the company has found, allows more flexible management and more productive assembly lines. Who would be against that?
VW partnered with the UAW and put the question to a vote by its Chattanooga workers. (The dozen or so “foreign transplants” that now produce 30 percent of US car sales are all nonunion and mostly spread across the South.) The usual anti-labor forces were inflamed by the precedent that Volkswagen’s initiative might create for American workers. Republican politicians and right-wing ideologues like Grover Norquist rushed in with lots of money to demonize the project and the UAW. Senator Bob Corker, who as Chattanooga’s mayor had campaigned to attract the VW plant, warned that company officials had told him that the new line of SUV production wouldn’t come to the Tennessee plant if the union won. Corker was lying; the company refuted the claim.
In the end, the reform experiment was narrowly rejected by workers, 712 to 626. It’s difficult to know exactly what led them to vote no after a majority had signed cards calling for the vote. In addition to Republican scaremongering, some workers were alarmed by the neutrality agreement VW had worked out with the union. Was the UAW selling them out? Union officials did a poor job of responding to the doubters, whose skepticism was more about the union than VW’s proposed works council.
* * *
In other circumstances, that defeat would be the end of the story, or rather a variant of the same old story: “Big” Labor loses again and will get still smaller. But this time may be different because other players are involved, and they have global leverage. The potential consequences for the losers are not confined to the stagnant backwaters of American politics.
Volkswagen has strong obligations to German labor, too. IG Metall, Germany’s large and powerful metalworkers union, is a hardball presence in corporate affairs. The union has been a powerful influence in VW decisions on where the company could locate overseas production. It was IG Metall, consulting closely with the UAW’s American leaders, that pushed the company to undertake the reform venture in Chattanooga.
Volkswagen is likewise obliged to listen respectfully to its works council back in the home country. A works council usually doesn’t have veto power over corporate decisions, but its objections can discourage policy ideas that workers think are wrongheaded. That sets the stage for ongoing consultations. In Germany, union representatives also sit on the powerful supervisory board that makes VW’s major decisions (a practice unheard of in US boardrooms).
German labor struck back swiftly after the American workers rejected VW’s proposition. Two days later, Bernd Osterloh, chair of VW’s works council and a member of the company’s supervisory board, threatened to block any further investments in the American South if the workers were not able to unionize. “I can imagine fairly well,” Osterloh said, “that another VW factory in the United States, provided that one more should still be set up there, does not necessarily have to be assigned to the South again.” That might give pause to those right-wing Americans promoting union-free factories. What if the foreign investors insist upon having one?
“Osterloh’s threat is not idle,” says Stephen Silvia of American University, an authority on the German economy and its very different operating culture. “Investment decisions need to be run by the works council, and if the council says no, it makes it difficult for the company to ignore it.”
So Germany may have more influence on America’s future development than Southern politicians realize. And VW’s deal with the UAW can change the larger landscape for social reform in the global marketplace (the UAW vows to try again). If a union and works council are established at VW, then IG Metall can pressure the other German car companies—Daimler (which owns Mercedes) and BMW—to do the same at their transplants. Japanese manufacturers are a different case, but they too will feel pressured to change. For that matter, so will other US companies and unions. If workers in Tennessee can elect representatives to talk directly with management, why can’t General Electric workers in Connecticut? Or mill workers in South Carolina?
In these ways, social values can reinforce sound business practice. Silvia explains: “In Germany, the workplaces are able to function with much more flexibility through the works council. Things can just be worked out through a dialogue. But the biggest reason VW has worked out a lot of decisions about where they are locating factories with the works council people is it really helped them keep the peace within the company. It provides voice and encourages relations.”
Many US managers are not much interested in “relations,” at least not with lower-level employees. In the Chattanooga situation, top German managers were fine with the reforms, Silvia observes. “It’s the lower-level managers—American good ol’ boys who are anti-union—who really worked against the agreement. They saw the works council as a threat to their authoritarian management. They’re used to having their way, no questions asked by any workers.”
But how did Germany develop this different perspective on labor relations, which is so contrary to the American stereotype of stern Germanic commanders? Silvia provides the answer: “Because World War II happened.” Never again, the Germans told themselves. “The Nazis were seen as an excess of ideological extremism, and one of the ways to deal with that is to end this nasty class conflict and try to make a society where everyone can participate and everyone is given a share,” he adds. “Capitalism can’t just be brutal. It has to be inclusive, because if it’s not, those people are going to organize themselves in revolutionary or reactionary parties.”
Germans might say that America has not yet absorbed the social lesson. Perhaps the labor skirmish in Tennessee can become a teaching opportunity, a chance for Americans to examine other approaches, like Germany’s “social market” capitalism, and provoke a more energetic discussion of our possibilities. For now, US politics seems motionless, unimaginative and self-absorbed. Retrograde Republicans react predictably, but where is the so-called party of working people? Democrats remain silent, when they could be rallying support for the bold reform that Volkswagen and the UAW are seeking.
“The United States has to think about providing that German-style relationship,” Silvia says wishfully. “If you could just get the people out of their trenches and start to interact.” He does not sound especially confident.
Can We have a Liberal America Without Unions? History Says No.’ – The Right-to-Work Coup in Michigan
Trent Mauk (L), of the Plumbers and Pipefitters union, faces a line of police wearing riot gear, who are preventing people from entering the state building with the office of Michigan Governor Rick Snyder in Lansing, Michigan December 11, 2012.
Short answer: Yes.
The question is posed by an exchange launched by Evan Soltas at Bloomberg View, and answered by Michael Wasser of the workers rights organization Jobs for Justice. Soltas has defended himself against Wasser’s response, so this could go on for a while.
The discussion was inspired by the recent defeat of a United Auto Workers drive at the Chattanooga, Tenn., plant of Volkswagen, which we discuss here. The case has inspired lots of commentary about the long-term decline of industrial unions in the U.S. and the role of that trend in the increasing of income inequality. The two trends coincide, so there really is no question that the decline of workers’ voice and worker rights resulting from the decline of unions has played an important role in the rising power of the shareholding and managerial class.
One hates to say of a writer as fluent as Soltas that his analysis lacks the depth that would come from experience, but Wasser is certainly correct in arguing that Soltas’ argument that the U.S. is better off without unions and “unions can’t be saved” reflects the limitations of textbook-learning. A few specific issues:
To think that federal labor law has had “little to do” with union decline, as Soltas puts it, is hopelessly naive. He’s misled by the fact that union membership has fallen even though we have laws guaranteeing the right to collective bargaining, and by the failure to recognize how inadequately those laws are enforced.
“Soltas doesn’t even consider the ramifications of broken labor law,” Wasser observes, and he’s right. “Without any real penalties to fear, employers have an economic incentive to violate federal labor law. Research shows that indeed they regularly do, using a variety of often unlawful tactics to coerce and intimidate workers during union organizing campaigns.”
When the employers don’t do so, political representatives of the capital-holding class will, as was seen in Chattanooga, where politicians used the threat of the withdrawal of government subsidies, and the impact that would have on the workforce, as a weapon against the union.
Over the years, employers have developed an exquisite arsenal against union organizing. For a succinct description of how the war is waged, Soltas needs to examine “Confessions of a Union Buster,” the heartfelt memoir Martin Jay Levitt published in 1993.
“I come from a very dirty business,” Levitt told a carpenters union audience (after his conversion). As he described it, “the enemy was the collective spirit. I got hold of that spirit while it was still a seedling; I poisoned it, choked it, bludgeoned it if I had to, anything to be sure it would never blossom into a united work force, the dreaded foe of any corporate tyrant.”
One simply can’t explain the decline of union representation without acknowledging the role of employer opposition and its empowerment by government policy, as outlined in this 2009 report from the Economic Policy Institute. The government role includes not merely the behavior of the Tennessee GOP, but “right to work” laws, and the enfeeblement of the National Labor Relations Board and its intimidation by members of Congress.
It’s also important to understand two additional factors that make union organizing difficult, and which can’t be absorbed from college textbooks or academic papers: fear and complacency. Fear reigns during periods of slack employment and job growth, when workers perceive that the surfeit of replacement labor makes it costless for employers to sack them for any reason at all, including labor organizing. Lax enforcement of labor law plays into this in a big way.
Complacency reigns during periods of tight labor supply and prosperity, when the workforce figures, why siphon off part of my paycheck in union dues, since I’m already well-paid and reasonably secure? To a certain extent this was a factor in Chattanooga, where workers considered themselves well-paid and well-treated, and therefore couldn’t fully comprehend what more union membership would get them.
Fear has been the dominant factor over the last decade or so of economic underperformance, but they’re both obstacles to union growth.
Yet we must ask why employers would so assiduously fight unions if not for fear of their effectiveness? Soltas’ take on the union’s role in the workplace is by far the most naive element of his original piece. He cites a judgment by two academic economists that unions balance power between employers and workers, and that this role is important but not entirely positive. “They’re right,” he concludes. Although union power “helps union members, it’s inefficient and bad for the economy as a whole, and it’s especially bad for nonunion workers.”
Soltas cites no authority for these statements. That’s unsurprising because they’re nonsensical. The only vantage point from which union power can be seen as inefficient and bad for the economy is that of rent-seeking management, which is far more inefficient and bad for the economy–that’s exactly what has led to income inequality and the stagnation of economic growth that is its consequence. As Brad DeLong of UC Berkeley wrote recently, “Tell me, if you can do so with a straight face, that any aspect of the large upward leap in inequality we have experienced has paid any benefits at all in terms of true … human material welfare-enhancing economic growth. I don’t think you can.”
As for the benefits unions have brought to nonunion workers, they’re legion: progressive workplace laws including safety and child labor regulations, overall higher wages, retirement and healthcare benefits. The decline of all these features of the American workplace has coincided exactly with the decline of unions. That should tell you something.
Soltas argues that the answer to the decline of unions is to “stop businesses from abusing labor laws by classifying their employees as independent contractors.” We should institute “monetary and fiscal policies aimed at full employment,” he says.
Where does he think the impetus for these advances will come from, if not the labor movement? He may not have noticed, but Congress today is in the grip of the employer class. They’re not agitating for tighter enforcement of labor laws, and they’re not speaking up for full employment, either–that just means they’d have to pay higher wages, and who needs that?
By Carl Finamore, www.counterpunch.org
March 3rd, 2014
Above photo: A protester demanding single-payer health insurance outside the Masonic Auditorium. (Vanessa Guerra / CALIFORNIA BEAT)
It’s a national epidemic finally getting some long overdue attention. To put rising costs in perspective, a dozen oranges today would cost $134 if adjusted at the same rate of price inflation that we’ve seen in healthcare since 1945.
And, it’s only getting worse. California health insurance premiums soared 185% since 2002. But we’ve heard these complaints before, it’s not new.
What is new is that the largest unions in San Francisco are doing something to reign in price gouging by insurers like California-based Kaiser Permanente, the nation’s largest HMO with 9.1 million subscribers.
For UNITE-HERE Local 2, one of the city’s largest unions representing 13,000 employees of restaurants and hotels in and around San Francisco, it has become a necessity.
The union’s senior research analyst, Ian Lewis, told me that his members were confronted with an average increase in health charges of 10% each and every year for the last ten years.
During this time, Local 2 was forced to take action. They had a strike/lockout in 2004, a number of strikes in 2009-2010 and a strike last summer by food and beverage concession workers at AT&T Giant’s Park.
In each and every case, Lewis said, healthcare was a major issue.
In fact, he emphasized, “rising healthcare costs has been the major issue in almost every labor dispute I’ve observed throughout the country during the last ten years. Rising costs have to be dealt with or working people will continue falling behind.”
Local 2’s experience is not an exception.
SEIU 1021 represents 54,000 members in northern California and has lent its considerable influence to a labor campaign supported by the San Francisco Labor Council that seeks to hold all California insurers accountable for their price increases.
The union argues on its website that “health insurance premiums and out of pocket health costs are eating up our paychecks and straining family budgets. Last year, San Francisco’s government Health Service System (HSS) estimates that from 2010 to 2012, one health care provider [Kaiser] charged $87 million above the true cost of care.
“We estimate the City will try to shift extra healthcare costs to city workers and our families. In one example, the cost for the Kaiser option — an employee plus one — will rise to $1,200 more a year,” wrote SEIU 1021 Vice President of Representation Karen Joubert.
Furthermore, the union indicates, the city’s HSS analysis shows “per member per month” costs from Kaiser soared between 31%-54% during the past seven-year period despite an actual overall decline in members using Kaiser services.
The union is currently negotiating for its 12,000 San Francisco city workers so their concerns are gaining more attention.
Sally Covington, staff member of SEIU 1021 with expertise in healthcare policy and benefits, painted a similar picture at a Feb. 24 healthcare forum sponsored by the San Francisco Labor Council.
“Costs are passed on to us year after year with little accountability or explanation,” Covington told the audience of 85 labor delegates. “Why do we allow insurers to bill us for their undisclosed mistakes? We are no longer going to be an ATM for an industry that resists accountability and transparency.”
She explained that Kaiser refused to budge from its 5% price increase for city workers in 2014, running out the clock until the City was forced by administrative deadlines to approve the Kaiser rate increase, adding $15 million to the premium even though HSS’s data analysis, as cited earlier, showed decreasing utilization of health services by workers.
“This $15 million increase that went into Kaiser’s pockets represented a potential 2% wage increase for each of our 12,000 city workers,” Covington stated during our interview.
Plus, added SEIU 1021 San Francisco COPE (political education) co-chair, Ed Kinchley, “It is not OK for city costs to go up like this. Funds are taken from services that many people in the community need and reduced services also jeopardize our jobs. It’s a lose, lose situation for working people of San Francisco.”
This was a theme repeated several time during the Feb, 24 Labor Council healthcare forum as expressed by elected leaders from San Francisco building trades’ unions and from both public and private sector unions.
They described hard choices made during contract negotiations the last several years just to keep their health benefits intact. The list included wage freezes, reduced pension contributions and delayed health coverage for new employees. All agreed things had to change.
And, thus, a statewide union coalition is forming to demand pricing accountability from insurers. There has already been some success.
For example, as a result of insurers refusing all requests by unions for documented cost analysis, the city of San Francisco agreed to conduct its own independent analysis and produced data that ultimately exposed unjustified higher costs.
Finally, union leaders say, there was undisputed evidence revealing what had long been suspected: higher prices being charged for fewer health services actually provided to city workers who were generally younger and healthier than previous years.
As a result, the San Francisco Board of Supervisors issued a blistering resolution in 2013 criticizing Kaiser. It is actually quite remarkable for its candor. It reads more like an indictment.
“WHEREAS, Utilization of healthcare services by City Health Service System (HSS) members enrolled in Kaiser has declined each year for the past seven years, while Kaiser has increased the charges paid by HSS in each of the same seven years; and
“WHEREAS, Hospitalizations for HSS Members enrolled in Kaiser have declined by more than a third over that period of time, while Kaiser has increased its charges per hospitalization by nearly 90%, all without presenting any data to support these increases;
“WHEREAS, Kaiser has made profits of more than $8 billion since January 2009;
“WHEREAS, Kaiser is making a profit of at least 15% from the City and County of San Francisco, and is likely making similar profits from other large San Francisco employers;
“FURTHER RESOLVED, That Kaiser provide specific documentation on the drivers of healthcare costs among HSS members, and commit to a plan for controlling these healthcare cost drivers and sharing with HSS the benefit of the resulting cost reductions.” [partial text of the full resolution]
Under mounting pressure from the forming union coalition, a resolution calling for accountability and transparency was also passed by the hugely influential California Public Employees Retirement System (CALPERS). It provides health benefits to over 1.4 million public employees, retirees and dependents.
Another union-backed resolution is working its way through the state legislature after being approved by the state Assembly.
What’s Wrong with this System?
Tom Moore, Jr. has over 30 years’ experience in health policy, having held major federal and state government positions including the Director of California Department of Social Welfare and Director of the Office of Legislation for the U.S. Public Health Service.
He has lots of experience with insurance companies and frankly explained to me the mystery of how and why prices increase. “Why have prices gone up?” Moore asked rhetorically.
“The answer is, because they can. Kaiser wanted to reach revenue goals. So, with fewer hospitalizations, less use of emergency care and less use of other categories of care as documented by San Francisco in 2014, Kaiser saw its revenue from city workers reduced.
Their response: create new billing charges without explanation and just hand them to the city.” Only this time, they got caught due to the vigilance of frustrated and angry San Francisco unionists.
Every person interviewed for this article supports a Single Payer government healthcare system that eliminates gouging by private insurers. This includes veteran organizer Don Bechler, director of Single Payer Now.
With his organization’s emphasis on having a national healthcare system minus insurance companies, he stresses support for the California Universal Healthcare Act and pending national legislation, HR 676, the Expanded and Improved Medicare for All Act.
Bechler also reminds us that “In 2008, the AFL-CIO State Federation of Labor came to the conclusion that the insurance industry is beyond regulation and should be removed from our lives.”
This same point was made at the Feb. 24 Labor Council healthcare forum where I observed a new resolve to campaign for Single Payer. The sense of urgency was palpable.
For example, UNITE-HERE Local 2 leader Mike Casey, who is also Labor Council president, made a special plea at the meeting urging unions to campaign for Single Payer with renewed energy.
As Kinchley expressed to me: “When you hear a president of the Labor Council, who is also head of the most dynamic union in our city, come out and strongly urge all unions to get more serious about putting Single Payer at the top of our priorities, well, that is something new and something real.”
A few days later, the topic was mentioned again in a conversation with Tim Paulson, executive director of the Labor Council, who told me he was taking personal responsibility for directing the Council’s Single Payer efforts and “proud to have been elected to the Campaign for a Healthy California (CHC) steering committee. This is a priority of the San Francisco Labor Council.”
Local 2’s Lewis agrees. It is a practical question, he told me, we cannot keep going the way we are, dependent on profiteers, “the costs will overwhelm us.”
He explained his view that Californians deserve a cost analysis from insurers, which is the immediate purpose of the current statewide transparency campaign, and perhaps, he told me, this will lead to state regulation of the industry.
“But, ultimately,” Lewis underscored, “healthcare has to be separated out from employment. From a health perspective, our state would be better off if there was one single purchaser of health care services like Medicare is for seniors. We need Single-Payer!”
It’s true, revitalizing labor’s commitment for a government healthcare system is essential or we risk the peril of being overwhelmed by an ever increasing cost structure imposed by private insurers “just because they can.”
San Francisco unions deserve credit for recognizing reality, acting to dramatically reshape it for the general good and encouraging by example others to respond similarly to the same dangerous trends.
Carl Finamore is Machinist Lodge 1781 delegate to the San Francisco Labor Council, AFL-CIO. He can be reached firstname.lastname@example.org
‘Permatemping’ cases highlight lack of U.S. protections for temp workers. Other countries limit the length of temp jobs, guarantee equal pay and restrict dangerous work.
by Michael Grabbell ProPublica, Feb. 24, 2014, 10:48 a.m.
For nearly six years, Limber Herrera has toiled as a temp worker doing the same work for the same company in Mira Loma, Calif. About 40 hours a week, he unloads shipping containers for NFI—one of the largest freight distribution firms in America—moving goods that will eventually stock the shelves of Walmart and Sam’s Club.
Herrera, 30, has been a temp so long that he’s outlasted the agency that hired him. But that mattered little. One day in late 2012 he was called into the break room to fill out some paperwork. Then he went back to work—only now employed by the temp agency that took over the contract.
If Herrera worked in South Korea, his temporary assignment would be limited to two years, after which the company would have to hire him as a regular employee. If he worked in Germany, he would be guaranteed the same wages and working conditions as employees hired directly by the company. And if he worked in Chile, his temp agency could be shut down if it failed to pay him his wages or put him in harm’s way.
But Herrera works in the United States, which has some of the weakest labor protections for temp workers in the developed world, according to data compiled by the Organization for Economic Cooperation and Development (OECD), which produces research on behalf of 34 of the world’s industrialized nations.
Since the 2007-09 recession, temp work has been one of the fastest growing segments of the economy. But a ProPublica investigation into this burgeoning industry over the past year has documented an array of problems. Temps have worked for the same company for as long as 11 years, never getting hired on full-time. Companies have assigned temps to the most dangerous jobs. In several states, data showed that temps are three times more likely than regular workers to suffer amputations on the job. And even some of the country’s largest companies have relied on immigrant labor brokers and fly-by-night temp agencies that have cheated workers out of their wages.
In contrast, countries around the globe have responded to similar abuses by adopting laws to protect the growing number of temps in their workforces. These include limiting the length of temp assignments, guaranteeing equal pay for equal work and restricting companies from hiring temps for hazardous tasks.
“The lack of basic protections for temporary workers in this country is shameful,” Rep. George Miller, the ranking Democrat on the House Education and Workforce Committee, said in a statement. “It is important that the U.S. examine some of these provisions and consider whether they can serve as models for statutes to help protect American workers.”
Herrera’s is an extreme case of “permatemping,” hiring a temp for years to do the same job permanent employees do, but without the benefits and protections. A former construction worker during the housing boom, he desperately needs the work to support his family, but believes the practice is exploitive.
“I think that workers, everyone, deserves to have a good job hired directly by a company with good benefits,” said Herrera, who has a 5-year-old daughter and 3-year-old son.
Having strong labor laws on the books doesn’t necessarily mean they’re enforced. For example, Brazil has some of the world’s strictest temp worker regulations. But it also has an enormous underground economy in which workers are paid informally and abuses go unchecked. And a country’s protections for its temp workers may not apply to guest workers brought in from other countries for major construction projects or domestic work.
Still, the OECD statistics – which rank the United States 41st among 43 developed and emerging economies – show the types of legislation available for protecting temp workers who federal and state officials say are among the most vulnerable.
Even worldwide leaders in the temp business acknowledge that reforms are needed to rein in practices that have given their industry a bad name.
Denis Pennel, managing director of the International Confederation of Private Employment Agencies, cautioned that too much regulation can backfire. But his organization—which represents temp trade groups from 47 countries—has supported reforms such as equal pay and licensing for agencies. The group, he said, is also open to limiting the length of temp jobs.
“Usually the maximum length of assignment is about two years,” Pennel said. “I would say we can live with that.”
The international group’s view stands in contrast to decades of resistance from the American business community. While popular with the public, new labor protections have faced an uphill battle in Washington since the 1970s. In fact, the last time a bill to protect private-sector temp workers got a hearing in Congress was in 1971. That bill, which didn’t go anywhere, would have required temp agencies to be licensed by the U.S. Labor Department and guaranteed certain benefits for temp workers. It was sponsored by Chicago congressman Abner Mikva, who went on to become a federal judge, White House counsel and a mentor to a young law school graduate named Barack Obama.
The global divide on temp worker protections comes down to legal and cultural differences, economists and former Labor Department officials said. Historically, the U.S. economy has been based on free-market, at-will employment while European countries emphasize universal benefits and strictly enforced employment contracts.
“There’s a very strong strain of economic thought in the United States that one of the reasons why we are as productive and successful economically as we are is that there’s so much flexibility in the labor markets,” said Seth D. Harris, who was deputy labor secretary until last month.
But that view is not necessarily accurate, he said. Economies certainly suffer when companies can’t get rid of employees who aren’t productive, but they also suffer when employers don’t invest in training or pay living wages.
“There’s a need to find a balance,” Harris said. One of the “tragedies of the temp workers’ situation” is that it treats “workers as disposable inputs rather than valuable assets for their companies,” he said.
Carl Camden, chief executive officer of Kelly Services, one of the largest temp agencies in the United States, said that permatemping in general is a “bad concept.” But the wide range of industries that now rely on temps often require work that may be too complex for arbitrary time limits, he said. A pharmaceutical company, for example, may need staff for a clinical trial that could fail in its early stages or go on for years, he said.
In addition, the rise of just-in-time manufacturing and online shopping means companies often don’t know how many orders they will have – and how many workers they will need to fill them – until that very morning, others in the temp industry said.
“The rules have to make sense for the changing nature of work,” Camden said. “There is a secular shift in how people wish to work and how companies wish for people to work.”
‘Temporary is Forever’
Almost half of the 43 countries that the OECD collects data on restrict the duration of temp assignments. In Brazil, assignments are limited to three months unless the ministry of labor grants an extension. In Japan and Italy, the limit is three years. In the Czech Republic, it’s 12 months.
In the United States, temp workers often hold such jobs without recourse for years. Guadalupe Rangel, 45, was a temp at a Walmart warehouse in Mira Loma, Calif., for eight-and-a-half years until he was hired amid a federal lawsuit he and others filed over wages. His experience highlights the differences between the lot of a temp worker and that of a permanent employee.
When Rangel started working at the Walmart warehouse for Impact Logistics in 2005, he was paid piece-rate by the number of trucks he unloaded, he said, taking home $150 to $400 a week. As time passed, instead of getting a raise, he said, his rate per truck went down, dropping his weekly take to $100 to $300. Still, seven days a week, he said, he showed up in the morning to see if the warehouse needed him or not. If they didn’t, he went home unpaid.
Guadalupe Rangel stands for a portrait at his home in Bloomington, Calif. Rangel is suing Impact Logistics for unpaid wages under a system in which they were paid by the number of trucks they unloaded rather than by hour. (Patrick T. Fallon for ProPublica)
“It was very stressful, not knowing whether we were going to have work or not,” he said.
In August 2013, he and several other temps were hired directly by Walmart’s warehouse contractor, Schneider Logistics. Rangel said he now receives $13.80 an hour, health insurance, paid holidays and two weeks’ vacation.
“It just feels much better, more secure,” he said. “I can go out to restaurants because I know that money is going to come in next week, and before, I didn’t do that.”
Schneider declined to comment, as did NFI, the company where Herrera works. Walmart’s spokespeople did not return phone calls or emails.
David Hamilton, the chief executive officer of Impact, insisted that his company was not a temp agency but rather “a logistics provider specializing in people.” His company, like a temp agency, provides workers to load and unload trucks for warehouses and adjusts the number of workers daily to meet a company’s needs. But Hamilton drew a distinction.
“A temp agency doesn’t manage their people, doesn’t train those people,” he said. Those responsibilities are handled by the worksite company. “When we go into a facility, we manage them,” he said.
Hamilton noted the company’s guiding principles include practicing “honesty, integrity and fairness in everything we do.”
In 2011, California regulators fined Impact for failing to provide employees with paystubs that displayed how their wages were calculated under the piece-rate system so that they could assess whether they had been fully paid for their work.
In most of the developed world, temp workers like Rangel would not face a disparity in wages and benefits. Fearing that companies were replacing employees with temps to reduce costs, the European Union in 2008 mandated that temp workers receive equal pay and working conditions to employees hired directly by the company. Many of the countries with the largest economies in Asia and South America have similar rules.
Such a provision would also help white-collar temps in the United States, who are often denied the benefits that professionals with academic degrees have come to expect, including sick days and paid holidays.
Philippe Boucher, who has worked as a temp reviewing apps for Microsoft for more than two years, has been pushing for such equality on his blog PaidHolidays.org. On Christmas, regular workers at Microsoft and other tech companies, he said, enjoy a paid day off when their employers close down for the holiday. But for temps, Christmas amounts to a cut in pay. “You don’t work, you don’t get paid,” he said.
Microsoft said in a statement that it wasn’t responsible for benefits provided or not provided to permatemps by its contractors.
“What does the definition of ‘temporary’ mean when temporary doesn’t end?” asked Boucher. “It looks like ‘temporary’ is forever.”
Other Countries Do More
Day Davis, 21, was sent by his temp agency to work at a Bacardi bottling factory in Jacksonville, Fla., in August 2012. He didn’t make it to his first break on his first day. As a conveyor belt jammed and bottles of rum crashed to the floor, Davis was sent to sweep glass from under a giant machine that stacked cases onto pallets. His coworkers didn’t realize he was still under the machine when they turned it back on. He was crushed to death.
U.S. safety investigators found that Bacardi didn’t train temps because it didn’t think of them as their employees. Bacardi is “production, product and profits oriented,” one investigator wrote. “They do not want to slow down production and spend funds on temporary employees who may not be in their facility day-to-day.”
Temp injuries aren’t rare. Nor is it rare for companies to do little to train them. In December, ProPublica reported that temps in several of the largest states face a significantly greater risk of injury than regular workers, especially in blue-collar jobs. Temp workers nationwide have been repeatedly pulled into machines they didn’t know how to use or killed by fumes while cleaning the inside of chemical tanks.
In many other countries, temp workers would never face such risks. At least 12 countries have banned companies from hiring temps in dangerous industries or to do hazardous work. In Argentina, South Korea and Japan, for example, temp workers are prohibited in the construction industry. In Poland, the restrictions are even more specific: Temp workers can’t be assigned to work at heights, in confined spaces such as tanks or containers, inside machines or with hazardous materials.
“The main reason was the protection of the workers,” said Agnieszka Zielińska, head of Polskie Forum HR, the Polish temp agency association. The country recently reviewed the policy, she said, but officials worried that lifting it could be dangerous because “most accidents that happen, happen with workers who are just starting.”
In the United States, companies often use temps in traditional ways such as supplementing their workforce during peak periods. But many others temp out entire segments of their core business, such as warehouse work or cleaning hotel rooms, so that they have to pay only the number of employees they need for a particular day. Other companies follow the “try before you buy” motto of the temp industry as a way of screening applicants who get hired on three months, six months or, sometimes, several years later if they excel.
Countries such as France and Bulgaria restrict temp assignments to temporary situations such as filling in for absent workers or when companies have sudden increases in work. Others, like South Africa, cap the number of temps companies can hire to 30 percent of their workforce.
Other countries also do more to monitor temp agencies. Unlike the United States, about three-quarters of the countries tracked by OECD require temp agencies to register or become licensed before they can begin sending out workers.
At least 20 large countries call for financial guarantees to protect workers’ wages if the company goes out of business. When a U.S. temp agency goes bankrupt, workers are often left unpaid and must seek their wages in court or from the company to which they were assigned.
Slovenia, a country the size of New Jersey that split from Yugoslavia in 1991, has perhaps the strictest licensing rules. It requires temp agency managers to have a college degree, at least two years of experience and to have passed a professional exam before the agency can be licensed.
“It’s because you have a lot of precarious agencies,” said Denis Stok of ZdruženjeAgencijzaZaposlovanje, the Slovenian temp agency association. “If there are any irregularities that were found, they would just close down a company and start somewhere else. That’s why they have made it more difficult to start a company.”
Such rules are a rarity in America, where every day, thousands of workers, many of them immigrants, are picked up on street corners by temp agency vans, whose drivers charge them exorbitant fees for the ride without telling them where they’re going to work.
In response to such abuses in recent years, Massachusetts, New Jersey and Illinois passed laws requiring temp agencies to register with state authorities. The new laws also limit the fees agencies can charge. And in Illinois, Massachusetts and California, agencies must give workers notice of where they’re going to work and how much they’ll be paid.
Carlos Dubon worked as a temp for a recycling plant in New Bedford, Mass., for 11 years, never receiving a raise above the state’s minimum wage. When advocates began working on the temp worker right-to-know law, he pitched in to protest what he saw as unfair and unsafe conditions.
Now that the law has passed, Dubon said state and local authorities need to be vigilant or temp agencies will continue to abuse workers.
“The law is good if they follow it, but they are not following the law. They do whatever they want,” he said. “They are taking advantage of immigrants because they know we cannot ask for our rights.”
For Mikva, the former congressman who pushed federal legislation in the 1970s, protecting temp workers remains “one of the many causes that I left unsatisfied.”
“I still think it’s terrible and I still think that it’s one of these areas with an absolutely voiceless constituency,” he said from his home in Florida. “Squeaky wheels get the oil, and these wheels have no squeak at all.”
February 21, 2014 / Katie Ashmore and Monica Kamen
Demonstrators played sick to show the need for paid sick days for D.C. restaurant workers, 80 percent of whom were excluded by a 2008 law. Now tipped workers are included and they’re all covered after working 90 days. Photo: Jews United for Justice.
In December lawmakers in Washington, D.C. and two neighboring Maryland counties voted to raise the minimum wage to $11.50 per hour in all three jurisdictions. It was a regional cooperation unprecedented in this country. Too often, minimum wage increases are defeated when opponents argue that businesses will flee across city or state lines. In D.C., the increase was indexed to the Consumer Price Index, so the minimum wage will increase every year. The same day, the D.C. City Council also voted to strengthen its paid sick leave law to ensure that all workers are covered and the law is better enforced. And raising wages in Montgomery and Prince George’s Counties gave a boost to the red-hot fight for a higher statewide minimum in Maryland. In short, December saw the biggest wins in recent memory for workers in the D.C. metro area. Though the bills moved quickly, the groundwork for victory had been laid long before—through fights we lost. After the D.C. mayor vetoed last year’s effort to force big-box retailers like Walmart to pay a living wage, organizers responded by thinking bigger, not smaller. We set our sights on a citywide minimum wage hike. We flipped the opposition’s message so the momentum from the lost campaign would work in our favor. And we jumped on a chance to pitch our umbrella wider, joining forces with groups that had been pushing for paid sick days in D.C. and for minimum wage boosts in the nearby Maryland counties. YEAR OF LOW-WAGE WORKERS Community and labor groups had been organizing for years to keep Walmart from opening six stores within D.C. city limits (we lost) and to make it pay fair wages. Years of work culminated in a 2013 bill that would have forced big retailers to pay a living wage of $12.50 an hour. But the mayor vetoed it in August. How We Kept the Pressure Up Coordinated call-in days. In the last month of the campaigns, the coalitions in Montgomery County and D.C. planned a series of call-in days. Using a web service, Slottr.com, we had constituents sign up to call at a designated time. The calls came in to the council offices every five or 10 minutes during the work day. We also signed up for a texting service called OhDontForget.com. Ten minutes before the caller was scheduled to call the councilmember, she would receive a text message with the phone number and a link to a call script. We generated thousands of calls this way. Coordinated testimony. During the hearings, the two coalitions coordinated their messages to present a strong united front. This meant everyone who testified mentioned their support for both bills, and everyone hammered home the most important talking points, including refuting the other side. Confronted councilmembers in public at every opportunity. Volunteers tracked where councilmembers were making public appearances and arrived with a group of people wearing stickers about the bills. When election season started, this meant showing up at candidate forums to ask questions about our issues. We raised our profile and got councilmembers on record voicing their support. By the end of the campaign, the coalition scheduled visits to all the city councilmembers almost daily. Groups of workers would go prepared to tell personal stories about why a minimum wage increase and paid sick days would benefit their families. Of course, momentum was building that year for a wage increase for all low-wage workers, not just those at big-box stores. The Walmart strikes and fast food strikes caught everyone’s attention, including politicians’. In D.C. the strikers were low-wage employees of federal contractors, such as Smithsonian museum workers. Meanwhile, for two years a coalition of labor and community groups had been building the case for a higher state minimum in Maryland. City and county councils including Montgomery County’s passed resolutions for such an increase. Groups in D.C. had also started organizing to bolster D.C.’s 2008 sick leave act, which guaranteed some workers up to seven paid sick days. Unfortunately, the law excluded tipped restaurant workers and anyone working their first year on the job—and it was poorly enforced, leaving close to 80 percent of restaurant workers without a single paid sick day. So the goals were to expand the law to cover everyone, and to step up enforcement. REGIONAL APPROACH Recognizing the momentum for higher wages on both sides of the border, Councilmember Mark Elrich of Montgomery County met with the chairs of the Prince George’s County Council and the D.C. Council to envision a regional approach. They decided to push the legislation in all three jurisdictions, to eliminate any argument that businesses would flee to neighboring counties. They agreed on an increase to $11.50 per hour. Out of what could have been a great loss came a great opportunity. The same August day as the mayor’s big-box veto, four councilmembers introduced bills that would raise the minimum wage for all D.C. workers and strengthen the sick leave law. For the next three months, groups in all three jurisdictions lobbied their city and county councils. Our coalitions included local unions of grocery and government workers, worker centers, local chapters of the NAACP and National Organization for Women, Jews United for Justice, and many other groups. The regional deal was crucial—in both Maryland counties, some councilmembers would vote to move the bills forward only once they knew the other jurisdictions were on board, too. In D.C. we were present at the council building daily, asking community members to call councilmembers to ensure neither bill was weakened. The calls made sure that the paid sick days bill moved on the same timeline as the minimum wage and that no amendments were introduced. In Montgomery County, through calls we forced the council to abandon a compromise that would have pushed the $11.50 raise back to 2020. One lesson learned: take advantage of political moments and opportunities. The organizing across the country had brought the minimum wage issue to the fore and created an urgency we were able to use locally. Also, D.C. election season was beginning in fall 2013—the majority of councilmembers were running for reelection (or for mayor), making them more vulnerable to our pressure. Working as a coalition, with groups on both sides of the border and groups working for both issues, proved essential. We coordinated testimony. We enjoyed increased staff capacity and resources. Our turnout efforts doubled when we planned actions together. Katie Ashmore and Monica Kamen are community organizers with Jews United for Justice. A version of this article appeared in Labor Notes #420, March 2014. Don’t miss an issue, subscribe today. – See more at: http://www.labornotes.org/2014/02/activists-win-coordinated-wage-boost-dc-nearby-counties#sthash.NqbpG0Fg.LRSOLtIe.dpuf
Andrea Gabor February 18, 2014 12:00PM ET
The obvious loser in last week’s failed bid to unionize the Volkswagen auto plant in Chattanooga, Tenn., was the United Auto Workers. The union was counting on a victory at the German-owned plant, which stayed officially neutral in the unionizing effort but hinted it welcomed a platform for organizing other plants in the South.
But the vote — and the forces that had arrayed themselves against the UAW — could also represent a setback for the economy and blue- and white-collar employees, a number of auto-industry and economic experts suggested.
U.S. management and labor organizations have battled each other —with both sides wasting resources in the process — ever since Frederick Winslow Taylor used his “scientific” methods a century ago to de-skill and control production workers, explained James P. Womack, founder of the Lean Enterprise Institute in Cambridge, Mass., and a co-author of “The Machine That Changed The World.” For Womack, the acrimonious fight and vote in Chattanooga was part of a historical continuum that has often hobbled U.S. industry, especially in the face of international competitors who embraced much more collaborative approaches to management.
The vote was “shocking,” added Kenneth Dau-Schmidt, a professor of labor and employment law at Indiana University. The fundamental question that the workers faced was “simple: ‘Would you like to participate in these committees on workplace management and safety?’”
The bigger concern, argued Dau-Schmidt in a recent Marquette Law Review article, is that the U.S. “system of labor relations is yielding declining benefits for workers and undermining the position of the American economy as a whole.” Although there are several factors that contribute to the problems faced by American employees, including stagnating wages and growing wealth disparities, Dau-Schmidt said, “there is at least one underlying cause — the underrepresentation of employee voice in the American economy.”
Nor are these problems confined to hourly workers. In his book “Why Good People Can’t Get Jobs,” Michael Cappelli, a management professor at the University of Pennsylvania’s Wharton School, described a “Home Depot view” of the U.S. employment process in which companies hire new employees the way consumers buy a replacement part for a washing machine. Whether they are seeking software engineers or auto workers, companies want to hire precisely the skill set they need in a given moment and get rid of employees when the product lines change.
Cappelli and Dau-Schmidt agree that a workplace culture based on short-term flexibility and the ability to hire and fire employees at will has created an economy that favors disposable employees, while giving short shrift to employee development and training.
In the process, companies and policymakers are fostering what experts say are a number of myths. These include the “skills gap,” which holds that the American education system is producing workers who can’t meet the demands of a competitive marketplace. Cappelli, by contrast, argues that what the American workplace lacks is not so much skilled workers as a willingness by companies to invest in their employees by training, or retraining, them when needs change.
Similarly, at least one reason some workers in Tennessee voted “no” to the union is that they believed union opponents, including local and national policymakers, that the UAW was a chief culprit in the decades-long decline of Detroit and the auto industry — a rewriting of history, according to a broad range of experts.
Prominent local Republicans not only threatened to withhold subsidies for a future VW expansion if the union prevailed, they warned that a successful unionization effort would hurt the plant’s competitiveness and drive business away from the state. In several local op-ed pieces, including one that compared the UAW to the invading Union army and another headlined the “UAW ate Detroit; Chattanooga could be its next meal,” Matt Patterson, an anti-union advocate financed by Grover Norquist, an anti-tax crusader based in Washington, D.C., charged that the UAW had “cannibalized” the auto industry, laying blame for the loss of 200,000 jobs at the feet of the union.
In fact, the U.S. auto industry has long recognized that its declining market share had more to do with sclerotic management than with the union. For example, Don Petersen, the CEO of Ford Motor Co. during the early 1980s, hired W. Edwards Deming, the renowned quality guru who riled many executives by charging that in Detroit “85 percent of the problem is management” and arguing that the only way to improve quality was to collaborate with those “closest to the system,” i.e. hourly workers. Back then, Deming’s participative improvement methods were widely credited with helping to turnaround an ailing Ford.
Similarly, General Motors teamed up with Toyota, in 1984, to reopen a shuttered auto plant in Fremont, Calif., as a way to learn the Japanese company’s fabled collaborative production system, which produced higher quality cars at lower cost. (The joint venture — known as NUMMI, for New United Motor Manufacturing Inc. — helped Toyota win its first manufacturing site in the U.S.) The plant rehired its old GM workers, who had once been known as the “worst workforce” in the auto industry, and retrained them in the Toyota production system. The plant, operating under a UAW contract, produced, among others, Chevrolet Novas and Toyota Corollas for the next 26 years. At the time, both labor and management credited the emphasis on quality and teamwork as a key to the plant’s success.
“What is being painted in Chattanooga is not entirely accurate,” said Kristin Dziczek, director of the industry and labor group at the Center for Automotive Research in Ann Arbor, Mich. Dziczek noted that, in the decades since Detroit confronted its first competitiveness crisis in the late 1970s and early 1980s, closer collaboration between management and labor has “closed the gap on productivity and safety.” Today, the quality between American plants and those of their foreign competitors “is almost indistinguishable,” said Dziczek.
Behind today’s pro- and anti-union rhetoric is a battle over two very different visions of economic development. Germany, with its unions and works councils — white- and blue-collar workplace advisory groups, which VW hoped to establish in Chattanooga with union support — is banking on its ability to market ever more sophisticated, high quality precision products that only a highly trained, collaborative workforce can produce.
Indeed, after the dust settles in Chattanooga, VW is expected to approach either The International Brotherhood of Electrical Workers or the International Association of Machinists and Aerospace workers to launch another organizing effort, according to Autoline Daily, a respected industry webcast.
By contrast, many U.S. companies are betting that they can stay a step ahead of low-cost producers by relying on a mobile, often transient workforce, with less and less training.
But the costs of a disposable workplace for American companies, as well as for its employees, are high. Apprenticeship programs, which were once ubiquitous in the U.S. manufacturing sector, have virtually disappeared.
The result, according to Cappelli, quoting one manufacturing expert, is “less preventative maintenance, more emergency breakdowns, and lower skilled workers.”
A decade ago, in Harvard Business Review, Peter F. Drucker, a leading management theorist, warned that the “attenuation of the relationship between people and the organizations they work for represents a grave danger to business … Developing talent is business’ most important task — the sine qua non of competition in a knowledge economy.”
Andrea Gabor is the Bloomberg professor of business journalism at Baruch College/CUNY and the author of “The Capitalist Philosophers.”