Why I love the new labor movement

The new service class needed a voice. Now it has one.

A lot of Americans are focused on disasters and threats these days — terror attacks, Supreme Court decisions, war, or the threat of disputed elections. Sometimes the parade of dire news can make it seem like everything is going wrong in the country. But there are some bright spots if you look for them. One of these is the new labor movement.

Starbucks is leading the charge. Unionization at the iconic coffee chain started with a store in Buffalo and is quickly spreading nationwide. About 70 stores are now unionized.

Steven Greenhouse @greenhousenyt

Last December the 1st of Starbucks' 9,000+ company-owned U.S. stores was unionized Who would've thought that 5 months later workers at 70 Starbucks would have unionized, with the union winning 70 of 79 elections Plus, workers at ∼180 more Sbucks have asked for union elections

Steven Greenhouse @greenhousenyt

Breaking >> A 70th Starbucks has been unionized as workers at a Starbucks in Greenville, S.C. (the I-85 & Pelham Parkway store) vote 8 to 1 in favor of unionizing, becoming the first unionized Starbucks in South Carolina

Here’s a good story about how they did it. Now the Starbucks workers are inspiring workers at other retail outlets to unionize as well — most prominently, workers at Amazon warehouses. Significantly, the movement seems to have captured the imaginations of young workers. It’s even spawning fashion trends:

Dripped Out Trade Unionists @UnionDrip

Chris Smalls, President of the Amazon Labor Union

It’s going to be a long while before this budding movement moves the needle on unionization rates in the American workforce as a whole. Those rates have been falling for decades.

But the new movement is significant, because it focuses on a sector that isn’t very unionized — retail. As I’ll explain in a later section, local services like retail have long been the industries most in need of unions.

Before I explain why that is, however, I want to address some of the doubts that many of my readers are likely to have about unions. I’m not dogmatically pro-union, and I think there are many cases in which organized labor has been counterproductive. But it’s important to understand why those problems occurred, so that we can know when unions are and aren’t a good idea.

The two failure modes of unions — and why neither applies here

As I see it, there are two basic ways that unions can be counterproductive:

1. When there are few or no real checks on union power

2. When unions face foreign competition that can’t be unionized

The first failure mode is the well-known public sector union problem. De-unionization of the U.S. private sector means that government unions now largely dominate organized labor. But this is not a good thing.

When a private-sector union forces its employer to make a bad business decision, the company is naturally punished by the market. This tends to align the interests of labor and management in the private sector to some degree — nobody wants to see the company go down.

But when a government union screws up and makes public services worse, there’s no competition to keep them honest. Because there’s only one government, the union can simply threaten to stop providing needed public services, like education or policing. That forces a horrible choice on elected leaders and their voters — either fire the unionized workers wholesale and suffer a long period of crappy public services while they rebuild, or knuckle under to the union’s unreasonable demands. This can be seen most vividly in the resistance of police unions to reform efforts and efforts to prosecute bad cops, and also in teachers’ unions resistance to best practices in the educational space. This is one why many progressives, including FDR, have been traditionally wary of public-sector unions.

Freedom from competition can also allow unions to hold back productivity in order to protect their jobs in the short term. A great example is how longshore unions in the U.S. often resist port automation, which has contributed to recent supply chain snarls. (Side note: This is the main danger of sectoral bargaining, an approach to unionization that Pete Buttigieg supported during the 2020 primary campaign. A way to circumvent this problem is to use Australian-style wage boards that focus bargaining narrowly on wages.)

The second failure mode is when unions in tradable industries — especially manufacturing — make bad short-term decisions that put their U.S. employers at a long-term competitive disadvantage against foreign rivals. Countries like China that suppress labor organizing naturally have a cost advantage against countries that want to give their workers a better life. That unfortunate fact sometimes requires unions to make wage sacrifices in order to stay competitive and keep industries in the U.S. If they don’t do that, the result can be steady offshoring and degradation of manufacturing unions themselves. Evidence suggests that this effect is modest but real.

Note that neither of these failure modes is written in the stars. Swedish unions embrace new technology eagerly:

James Medlock @jdcmedlock

Swedish unions have the right take on technological unemployment nytimes.com/2017/12/27/bus…

And Germany unions often exercise wage restraint, a far-sighted sacrifice that allows German manufacturing exporters to maintain global market share.

But more importantly, local service industries like Starbucks stores and Amazon warehouses are not subject to either of these failure modes. Starbucks and Amazon are not essential public services. If workers at these companies resist the introduction of new productivity-enhancing technology, it’ll ultimately put the companies at a competitive disadvantage and result in the loss of jobs; thus, the unions will have incentives to boost productivity to maintain market share. And of course local services like Starbucks stores and Amazon warehouses aren’t competing against cutthroat foreign rivals; they are located near their customers, here in America.

Thus, unionization in the local service industry is just inherently a lot safer than public-sector unions or unions in export manufacturing.

Why we needed a new labor movement

So now we come to the main question: Why do we need a new labor movement at all? Well, the answer is simple: To reduce inequality and create a broad-based middle class in which most of the American populace feels that society affords them dignity.

Income inequality in the U.S. has gotten very high, and much of this is due to wage inequality. Unions tend to reduce inequality by compressing the distribution of wages — by redistributing income within companies from higher-paid workers to lower-paid ones. Farber, Herbst, Kuziemko, and Naidu (2018) find:

A combination of low-skill composition, compression, and a large union income premium made mid-century unions a powerful force for equalizing the income distribution. We show that unions were a major force in the Great Compression, above and beyond what can be accounted for by the direct effect of unions on union members. We…find that [the Wagner Act and War Labor Board had] large effects on inequality as measured by the labor share or the top income share, further providing evidence that unions affect…the income distribution…Our results push the body of evidence towards the conclusion that institutions can have substantial and lasting effects on the income distribution[.]

Many Americans pine for the days when good manufacturing jobs created a broad middle class — a class that could stand up and be proud of their work and their skills, and who could afford houses and cars and lifestyles that were at least somewhat similar to that afforded by the educated upper class. But in a 2016 post, Ben Casselman (then of FiveThirtyEight) argued persuasively that unions were a big part of what made manufacturing jobs good. Factory jobs were low-paid and involved horrific conditions in the early Industrial Age; only once unions took over did factory work transform into the dignified, well-paid sort of job that we now associate with the mid-20th-century middle class.

Since the turn of the century, retail and warehousing jobs have eclipsed manufacturing in terms of total employment:

When you add in other local services like leisure and hospitality and health care, the disparity will be even greater. The average American worker is no longer one who puts things together — it’s someone who helps customers.

Now, I definitely want to re-shore manufacturing industries to the U.S. But I recognize that this will require a lot of automation; the manufacturing of the future will be more like a tech industry and less of a source of mass employment.

So if we’re going to build a broad middle class through the creation of huge numbers of good middle-class jobs, those jobs are simply going to have to be in local services. And that means that we must transform employment at Starbucks and Amazon from low-paid, unstable fallback jobs into the kind of jobs people wouldn’t mind growing up and doing for a living.

That means higher wages, sure. But it also means better working conditions. Investigations by muckraking journalists have found that Amazon workers have often been forced to endure awful hardships:

Other stories tell of workers in Amazon warehouses being forced to work in freezing conditions, bullied by management, and forced to maintain a grueling pace. Remember that about 1 out of 153 Americans is employed by this company.

That American workers have to live like this, day in and day out, is a tragedy. That they have to do it in exchange for low wages — the average salary for Amazon warehouse workers is just $30-35k a year — is nothing short of a national disgrace. This huge, downtrodden local service class is the new proletariat, and if the U.S. doesn’t change its system to give these people a decent life, it will fuel unrest and erode people’s trust and belief in the nation.

The new labor movement at Starbucks, Amazon, and other retail outlets is still small, but if it continues to build — and to get support from elected leaders and appointed bureaucrats — it has the chance to transform America’s broad local-service class into a middle class.

What if the workers just get replaced with robots?

Of course, opponents of unionization argue that if we unionize this vast American service class, that we’ll simply be setting them up for unemployment. Instead of raising wages, they say, Starbucks and Amazon simply replace unionized workers with coffee dispensing machines and shelf-stocking robots. So I suppose I should say a little about this argument.

First of all, this is really a case of “don’t threaten me with a good time”. Automation is what we want; it’s what drives productivity upward. In fact, one of the leading theories of why the Industrial Revolution happened in the first place was that Britain’s unusually high wages forced a wave of labor-saving innovation that ultimately gave rise to industrialization. So to worry that unions would lead to an inefficiently high number of robots is hand-wringing over nothing — if anything, this is a way to speed the march of technology.

But second, if you really believe that Americans are inherently such low-productivity workers — that the only way for America’s vast local-service class to stay employed in any kind of a job whatsoever is to accept borderline-poverty wages and work in freezing conditions and pee in bottles — then the days of mass human employment are numbered. If our workers are already balanced on the knife-edge of total obsolescence, then it’ll only be a few years before the robots put them all out of a job anyway. Might as well get that over with, and transition to universal basic income or whatever.

Personally, I don’t believe that Americans are so unproductive and useless. I believe that automation will result in productivity gains and wage gains, as it has in the past, and that essentially all humans will find more useful things to do with their labor. But even if I’m wrong, it’s not worth keeping untold millions of Americans in downtrodden working conditions just to stave off the supposed rise of the robots for a little longer.

So if you care about America’s vast, underpaid, overworked service class — a modern proletariat searching for a life of dignity — then you should probably be happy about the new labor movement. Unions are far from perfect, but in this case they’re pushing in the right direction. That’s one small trend to be cheerful about in these troubled times.

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