The Conservative Movement Shouldn’t Embrace Unions

Eric Cunningham

Eric Cunningham is the editor-in-chief of Elections Daily. He is a lifelong resident of western North Carolina and graduated from Appalachian State University. You can follow him on Twitter at @decunningham2. @decunningham2.

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139 Responses

  1. Jaybird says:

    I tend to think that corporations that end up with unions did so because they deserve it.

    If you enjoy ironic dark comedy, you can see what happened after Think Progress unionized. If you want something that is easier to break down, you can look at the recent Hostess debacle (wait, that was 2012? IMPOSSIBLE… anyway, you can see what we got up to in the comments here… I mixed up Public-Sector and Private-Sector unions! How embarrassing!).

    When it comes to Public Sector Unions, you can see the lay of the land for whether someone immediately starts talking about Teacher Unions and questions the motives of those who want to talk about Police Unions versus whether they immediately start talking about Police Unions and question the motives of those who want to talk about Teacher Unions. (By the way, Rubber Rooms are now called “Reassignment Centers” so anyone who complains about Rubber Rooms is not talking about something that exists anymore and, besides, only a few places still have them.)

    Brother Avi had a lovely insight on the twitters with regards to the Minimum Wage (and I think it applies to unions as well):


    • As a journalist, media unions are some of the most self-defeating organizations I’ve ever seen. You want to try and unionize a decaying media sphere? Good luck with that, I guess.Report

      • Remember when Vox went on strike a year ago? Good times.

        I mean, I understand what unions are going for… but I keep noticing that stuff like California’s AB5 and all of the workers that this law was supposed to protect keep asking to be exempted from this law protecting them.

        I suppose unions have the benefit of actually having people who are doing the work calling for a union…Report

  2. Marchmaine says:

    Labor Unions aren’t bad because collective bargaining is bad, they are bad because they aren’t bargaining for the right things in a financialized market economy. The way companies operate (especially new economy companies) are all about equity, not wages. Labor Unions (and socialist redistribution schemes) that do not address equity distribution are either useless or duplicitous.

    Conservative support for Labor that co-opts the Unions is simply a transference of loyalties in exchange for fees/dues that mark the duplicitous aspect of Unions. That’s simply continuing the grift under new patronage protection.

    A Conservative labor movement, however, most assuredly will *not* be any of warmed over libertarian hash suggested in the article, it will focus on equitable distribution of productivity gains via equity and the value of the corporate enterprise in its entirety – for those sectors of the market where this is the driving economic principle. There are multiple types of economic activity that require different relationships between labor and management but all of them need to revisit the relationships between labor, wages, productivity and gains. That’s the fundamental failings of Labor Unions, the failure to update their own models.Report

    • InMD in reply to Marchmaine says:

      Most importantly, and hand in hand with abandoning the warmed over libertarianism, is a willingness to look at solutions for problems that actually exist for regular people. We took a lot on this blog about progressive blind-spots to reality. I would say this is the issue where conservatives are most blind. No one who has been trying to scrape by on COLA raises and avoiding the hole between ACA and Medicaid gives two damns about Jimmy Hoffa or high level union politics. Focusing on those things is at best non responsive, and at worst answers a request for assistance with ‘I don’t care.’Report

      • Marchmaine in reply to InMD says:

        Right… there’s a conservative case for ending the distortions for Social Security (Labor Tax) and Employer subsidized Healthcare which would change the dynamic of the labor market. Funds would still need raising, but the goal is to incrementally change bad incentives and (ideally) reorient over time.

        Most conservative folks I know who run smaller enterprises would support a tax to fund a Healthcare program (of whatever type) that gets them out of the business of managing and coordinating healthcare… at this point, it isn’t really a perq, it’s now a moat against small businesses hiring talent that large enterprises like.

        There are ways to navigate these reorientations in conservative circles that would be broadly popular and benefit labor (and management)… But entrepreneurship and individual agency aren’t it. God, its sounds so ’90s and dated… and I’m the 50-yr old who lived through the Reagan era.Report

        • InMD in reply to Marchmaine says:

          I don’t think it’s dated, the world has just changed over the last 40 years. I’m in healthcare and one of the things you notice the deeper you dive is how many systems take for granted the existence of a Big Industry economy. We have done a lot to free the capital but not much of anything to empower individuals to operate within the new environment.Report

          • Marchmaine in reply to InMD says:

            In fairness to me, “I don’t think it’s dated, the world has just changed over the last 40 years.” is kinda what I mean by sounding dated.

            But yes, I’m agreeing with you that at a fundamental level, a modern labor movement would provide greater flexibility for labor to manoeuvre within the system. I think that for the system to perform for both labor and management, it has to be market oriented, but gains have to be more broadly distributed (not necessarily as profit) via fractional equity stakes that labor earns independent of and separate from wages and which are guaranteed in the corporate charter.

            And, to clarify, I don’t have a specified preference for Healthcare, other than it be decoupled from the employer. I’m open to ideas, and could support a moon shot or incremental paths.Report

    • Oscar Gordon in reply to Marchmaine says:

      The failure to negotiate for equity over wages has always baffled me regarding unions.Report

      • Marchmaine in reply to Oscar Gordon says:

        Yeah; I’d put it maybe as an example of why they’ve slid into lesser relevance for new labor movements. But I’d also recognize that some of the old labor they represent isn’t in extremely financialized sectors. Any sort of New Labor movement will have to bridge these differences… but that’s where solidarity helps both hands.Report

    • LeeEsq in reply to Marchmaine says:

      Most people on the liberal-left side of politics are very skeptical about equity and modern financial markets. I’m not sure whether things can be restored to the way they were in the past but many of my cohort want to reign in financial markets. They don’t like the idea of bitcoin and other crypto-currencies either. Our opponents see this as us wanting to control everything but we see it as wanting a peaceful and orderly society.Report

      • Marchmaine in reply to LeeEsq says:

        This opponent sees you as wanting to sell labor short for self-gain as the managerial class that negotiates with Equity for your place in exchange for bad deals for your clients.

        Just to be clear on what your opponents see you as wanting. 🙂Report

  3. InMD says:

    This essay strikes me as a dodge of the fundamental issue, which is wage stagnation and loss of benefits. The skepticism of public sector labor unions is warranted but the conservative movement has no answer to the problems that led to their creation in the first place. If you want to make unions obsolete do it by making a more attractive system and safety net based around the individual. As long as the conservative movement’s answer, as effectuated by the GOP, is total hostility to even tepid reforms on that work to the benefits of workers, not the supply side, you can expect this to fall on deaf ears.

    For example, the best thing that could be done to kill unions would be universal health insurance coverage, paid leave mandates, higher minimum wage, etc. But no mainstream conservative politicians support any of that, at least not at the federal level.Report

    • Eric Cunningham in reply to InMD says:

      We don’t need to make unions obsolete – they’ve already done it themselves. The rate in union membership continues to sharply decline, and as I said in the article, it’s really not a result of policy. It’s a result of their failure to adjust.Report

      • InMD in reply to Eric Cunningham says:

        Yea but the entire argument of this post is that conservatives shouldn’t get in bed with them, right? Fair enough. What you don’t address are the economic challenges that might tempt parts of the conservative coalition to do so. Put yourself in the position of someone who thinks he or she might benefit from a union, then ask if any of those reasons have been answered.Report

        • Jaybird in reply to InMD says:

          I asked myself “would *I* benefit from a union?” and the answer was “no”. Then I jumped back through various jobs I’ve held in the past and the previous one… no. The 5-6 before that were the ones that got outsourced to Singapore.

          Would a union have benefitted me when my job was being outsourced to Singapore?

          My emotional response is to say “yes”.
          My intellectual response is to snort and ask “how? You’re already being outsourced!”Report

          • InMD in reply to Jaybird says:

            Sure, and as a white collar corporate lawyer I have no interest in unionization whatsoever. Hell, I think their time of value in this country has mostly passed and they increasingly bring a lot of bad to the public sector.

            But the important question I think is ‘if not unions, then what..?’ My head starts going to a bunch of Yang-gang ideas about human centered capitalism but I can see how actual conservatives (i.e. not me) might have other ideas about how this could look. Nevertheless when you’re talking about economic insecurity unions are an answer and if the royal we think there’s a better answer it’s our burden to provide it.Report

            • Jaybird in reply to InMD says:

              The criticism that “unions are corrupt!” is one of those criticisms that, while true, misunderstands the dynamic.

              The *SYSTEM* is corrupt. A union, ideally, would be corrupt in the service of the workers. A corrupt counter-balance.

              When you notice how corrupt unions are, you may be tempted to get rid of them because they are corrupt. Hurray! We’ve mostly succeeded in getting rid of unions!

              Well, shit. The system is still corrupt.

              And you’re right.

              If not unions, then what?

              Well, unions were formalized solidarity. Unions worked because of the informal solidarity that happened to exist at the time. And I’m not just talking about among the potentially unionizable. I’m talking about between workers and management. (Sure, there wasn’t a *TON*… but there was *SOME*.)

              Do we have informal solidarity? If we don’t, unions wouldn’t work even if we established them.

              So, if not unions, then what?

              Well, seems to me that we have a cultural problem. We no longer have informal solidarity.Report

              • InMD in reply to Jaybird says:

                I think the lack of solidarity is why the mission needs to be ‘figure out what’s workable in a post solidarity world.’ Because wherever it went it ain’t coming back.

                See also my conversation below with Lee. We can’t just become Germany and proposals of that nature IMO aren’t real.Report

              • DensityDuck in reply to Jaybird says:

                “We no longer have informal solidarity.”

                Well, it’s hard to have solidarity when you don’t have a lot of trust and there isn’t a lot of collaboration between people…Report

            • Marchmaine in reply to InMD says:

              Interesting… the higher I’ve moved up the white collar scale, and the more my compensation has been adjusted to get a “taste” of what the hidden compensation looks like? The more I’ve realized how much is left on the table.

              But yeah, that doesn’t make me think, we need a ‘union’ so much as we’re not really even in the game and I’m not sure how we get there individually.Report

              • InMD in reply to Marchmaine says:

                Oh I can certainly see the case for it. I think the way there is to get the state negotiating or otherwise engineering the minimal terms in a way that actually reflects how the modern economy works today. Not the economy during the 30s or even 60s-70s.

                And for clarity the first part of the comment was about me personally, the second was more general. I don’t need a union because I’m already a member of a professional guild i.e. the state bar. Not that there isn’t plenty of dysfunction with that, but it isn’t where most people are operating!Report

          • Marchmaine in reply to Jaybird says:

            A modern Labor movement would make sure that some of the gains realized from offshoring were captured by the labor that made the company profitable such that it could do that.

            That’s one of the purposes of fractional equity… if the company benefits but you eventually lose your job, you still have your earned equity in the future productivity of a more efficient company. Plus, as (minority) stakeholders, the overall value of the project would have to account for all shareholder value (as we’re constantly told).

            It isn’t a veto power, it’s making sure that the gains are distributed more broadly, even if the gains don’t completely offset (hopefully) temporary individual losses.Report

            • Jaybird in reply to Marchmaine says:

              We no longer have enough cultural solidarity to see offshoring as similar to allowing scabs to cross a picket line.

              If you asked “who is harmed by a temporary worker crossing a picket line?”, I’m sure that you’d get a bunch of pro-union people explaining how this hurts *ALL* workers.

              When you discuss offshoring, suddenly, I start hearing a lot of “well, you have to understand…”

              (And that’s on top of how “I only buy Made In The USA!” statements are coded culturally.)Report

              • Marchmaine in reply to Jaybird says:

                That’s the old labor model… strike if the jobs go away.

                I’m suggesting, poorly obviously, that the new labor model captures some of the benefits of the jobs going away. It’s a little counter-intuitive, sure, but that’s the shift. The person losing their job of 10-months sees a lot less than the person losing their job of 10-yrs, but that’s also part of the model that builds solidarity. Over time. Nothing solves anything in the the short term.

                Now, there’s a secondary discussion to be had about global solidarity and how we value “raising up third world workers” vs. “labor arbitrage exploiting third world workers without our laws and benefits” but I think that’s also manageable on a business metric basis. But that’s a second order question.Report

              • Jaybird in reply to Marchmaine says:

                It’s not that you’re suggesting it poorly, it’s that I’m not understanding how the dynamic works at that point.

                The company is already in Singapore. The defection is already done. You’ve already been walked to the door.Report

              • Oscar Gordon in reply to Jaybird says:

                Sure, but in the process of getting walked to the door, you have leave with an equity stake in the company commensurate with your time in service. So if you’ve been there 10 years, you walk out with 10,000 non-voting, dividend paying shares. If the company really does better for sending work to Vietnam, so do you.Report

              • George Turner in reply to Oscar Gordon says:

                A ton of tech workers went bankrupt on the stock options thing. When they were paid “in stock”, instead of money, they owed money on the value of the stocks at the end of the year, which was income. Then their companies’ stock prices plummeted and they were on the hook for a tax bill that was bigger than their entire net worth.Report

              • Marchmaine in reply to George Turner says:

                This isn’t that. I’ve lived through the Tech bust.

                Wages are paid and nothing in this is in lieu of wages; a percentage of the company’s equity is owned by labor as denoted by the corporate charter. That portion is fractionally diluted by workers and work.

                Labor is a partner by charter. If you want 100% ownership and control, don’t incorporate.Report

              • Oscar Gordon in reply to George Turner says:

                Seems like that is something government could help with. Like any company stock you get for being an employee is tax deferred. You pay taxes on dividends, and if you sell it, you could pay income tax rates on the base value, and capital gains on any profit.Report

              • Marchmaine in reply to Oscar Gordon says:

                This captures it in a nutshell. Thanks.

                It also plays out with Automation and is related to your question about low employment high-value companies… in which case, we want to particularly vigilant against equity/wealth centralization. The smaller the company that goes big, the bigger the distribution to individual contributors (owing to the smaller dilution).

                I wouldn’t restrict the shares to Non-voting… would rather have a real Labor voting block than ‘pretend’ Labor Board Members.

                It’s still a market based economy, we’re just realigning incentives at the least intrusive level… the corporate charter. After that, create and build away.Report

              • Jaybird in reply to Marchmaine says:

                As much as I like this idea, I have no idea how to get to there from here.

                Like, the closest I’ve seen is the tech boom/bust where employees were paid in shares of the company and we’ve already established that this ain’t that.

                So with tax deferred, this would be a 401k, but for your own company’s stock?Report

              • Oscar Gordon in reply to Jaybird says:

                Sure, if you assume that the employees are getting penny-ante quantities of stock.

                What if, hypothetically, that 45% of the voting stock issued by the company must be held by current employees?Report

              • Jaybird in reply to Oscar Gordon says:

                So it’s not penny-ante quantities. It’s, like, real amounts of stock.

                I’m still not seeing how this would avoid, say, Enrons and, with tax deferred and stuff, it’d be like a 401k, but for non-penny-ante amounts of stock?Report

              • Marchmaine in reply to Jaybird says:

                You can’t avoid companies that go bankrupt… sometimes your equity share ends up being $0. Sometimes companies are sold for parts… in which case you don’t win the equity lottery, but you would get a check when your company folds… which is better than simply getting laid off.

                But it’s not a substitute for Wages or retirement plans… it has nothing to do with wages or retirement.

                Think of it as additive sweat equity… you get it in addition to wages by virtue of the work itself… you’re ‘entitled’ to it the same way someone who trades money for ownership is entitled to the shares.

                Regarding taxes, I’ve seen it mostly treated as deferred until a liquidity event – for the reasons you note above… if the value goes to $0, there’s no reason to have paid for the paper value that was never realized. But there are all sorts of tax maths we could do to avoid bizarre compensation loopholes.Report

              • Marchmaine in reply to Jaybird says:

                No, not a 401k… you’d still have that (if your company offers one). This isn’t a perq the company offers; its structural to how companies allocate shares of equity.

                Technically it would be a repricing event… a dilution of capital shares by bringing on new investors (in this case the workers)… over what time period? As of some future moment? As of, say, 3 years ago (the current reporting period for which employee records must be kept)? As of a date that ADP has records?Depends on the political path forward. But repricing/dilution happens all the time.

                Honestly, its only possible since the digital accounting period that started approx 30 years ago. The ability to track employees, employers, hours and equity require systems that didn’t exist until somewhat recently. But now that they do, it’s technically trivial.

                To be sure, lots of details that would need hammering out… are the shares protected and/or a special class? Voting or non-voting? Can they be bought/sold on the open market or only retired and/or transacted during an equity event? And about a million other details.Report

              • Swami in reply to Marchmaine says:

                So, are you suggesting that Unions should be pursuing some kind of offshoring insurance in their contracts?

                Is this also what you mean when you suggest unions should pursue equity? Or is this referring to equity in pay scales across the company or something?Report

              • Marchmaine in reply to Swami says:

                No, not insurance… workers by working earn a fractional share of equity in the company. This is in addition to wages… not options, not incentives, not in lieu of anything. It’s a charter level change of the corporate protections that the Market is granted via Govt. intervention.

                Oscar captures it above.Report

              • Swami in reply to Marchmaine says:

                OK. Thanks. The companies I worked for all offered various retirement contributions paid in company stock.

                But wages really are set by supply and demand. Thus anything which Increases benefits such as ownership shares will come out of reductions in either other benefits or wages. There is no way around this in a competitive market.

                Thus the question is whether increasing the share of wages paid in stock (a not risk-free proposition) is superior than what companies are doing now.

                I certainly support a company doing this, or a union negotiating for this. Pretty sure lots of tech companies do so already. Not sure most employees will prefer it, at least over the short run.Report

              • Oscar Gordon in reply to Swami says:

                You are still thinking of this in terms of a benefit, or some manner of regular compensation.

                It’s not, it’s an ownership stake in the company that you earn through time in service. It’s a (to use a term I hate) paradigm shift when it comes to thinking about how companies are structured when they become public.

                What this would mean is that when a company makes an IPO, a certain percentage of the stock is earmarked for the current employees. Not enough to give them control of the company, but enough such that if they vote all their shares as a block, they can impact company decisions*.

                The thing is, this stock that is controlled by the employees is not something that can simply be liquidated like a common stock award can be, so it doesn’t act like a compensation, per se. When you leave a company, you could convert the stock to common stock at 1:1 (or some other ratio) and the company would either grant the equity stock to an incoming employee, or if the position was not being filled, the stock would be distributed among existing employees.

                *If the employees control such a block, we could change things such that, if I am an outside stockholder, when it comes time to vote my shares, I could opt to allow the board to vote my shares in proxy, or I could allow the employees to do so.Report

              • Swami in reply to Oscar Gordon says:

                But that IS a benefit, and thus would enter into any issue of supply and demand for jobs.

                Really. A job paying $15 per hour without this feature is less remunerative than one with it as a perq.

                This entire scenario is based upon a windfall of compensation magically falling from the heavens which does not affect supply and demand and wage rates. In other words, a fairy tale.Report

              • Oscar Gordon in reply to Swami says:

                To a certain degree, yes. But how much?

                Let’s say you start at a company that does this. Fresh face, working the line for $15. You walk in the door and you are handed 10,000 shares of company stock.

                You can’t sell the stock, because it’s part of the employee block. Whether or not you get paid a dividend is up to the board (are they paying dividends this year?), so it’s maybe considered a bonus, if dividends are paid out. Any kind of separation is a question of vesting. Remember, this is meant to be a kind of sweat equity, so time in service is key. You can’t walk out the door 2 weeks after you start and expect to leave with 10K shares of common stock (and there is no reason a severance has to be a 1:1 conversion). How that works could be a question for regulation, or it could be spelled out in the corporate charter.

                The ultimate goal is not to provide an extra level of compensation, it’s to give the employees the ability to influence corporate decisions through a formal channel. If all the employees vote their shares as a block, they can impact executive compensation, they can impact strategic decisions, etc.

                Strikes might not be a thing of the past, but they would be way less common because there would be a less disruptive way to impact things. And on the flip side, employees would have a strong incentive to keep an eye on corporate health beyond paychecks and pensions. When the employees have an actual, legal ownership stake, you tend to see different behaviors from the employees, and the executives.

                Also, if the company decides to do something like off-shoring, the people who lose their jobs were A) a party to that decision by dint of how their shares were voted, and B) don’t walk away with nothing. The cost of offshoring will have to include the cost of converting the employee equity to common stock.Report

              • Marchmaine in reply to Oscar Gordon says:

                Well put.Report

              • Oscar Gordon in reply to Marchmaine says:

                I think you and I are on the same page with this, with maybe some difference in the details.Report

              • Marchmaine in reply to Oscar Gordon says:

                Yeah… lot’s of potential paths this could go down, so I’m not wed to any particular specifics at this point.Report

              • Marchmaine in reply to Swami says:

                Fascinating how ideas stick in peoples minds.

                First, it is a terrible practice to *substitute* cash you’ve earned for company stock as wages or retirement. Full stop. Don’t do this if offered, and I’m on the fence as to whether it should be illegal. This seems to be 99% of what people think is happening here.

                If you want to take post-tax dollars you’ve earned and invest that in your company… then great, do that. If you are granted Options (pshaw, no one takes options anymore) or RSU’s as a bonus… fine take them. But that’s typically not in your employment contract and not a substitution for base wages. Generally, even in tech, it is not a substitution for bonuses and/or MBO’s… it’s typically on top of those things. So there’s no need to conflate an option to buy your company’s stock at a discount with your own $$ (ESOP) or Stock Grants as retention other type of bonus on top of your existing salary.

                Imagine this… today you make $55k working for company X … with all the benefits (or lack thereof) they include. Tomorrow, we wave a magic wand and you make $55k plus your benefits, but a repricing event has occurred where you’ve become a stakeholder in this company with, let’s say, 300 shares. That’s it… the company still pays the President his salary (and by the way, he was already getting the bulk of his compensation as RSU shares) and you still get yours… the operating expenses of the organization are not changed or impacted. Existing shareowners definitely experience a dilution event… but even that doesn’t necessarily result in a loss of investment as dilution events can increase shareholder value – which potentially this might – especially broadly done. And especially as part of a program to broaden shareholders to include the labor stakeholders.

                Basically you were granted a fraction of the equity allocated to labor… the company still pays wages, it still does what it does… but it can’t alter the charter that continues to allocate equity to work as its performed.

                Maximizing shareholder value is still the name of the game… we’ve just updated the ground rules for shareholder allocation.

                To be sure there would be follow-on effects… but while this seems radical, it’s really not because this is what joint stock companies do all the time – we’re using the path dependent mechanics of the existing system with the goal of broadly distributing the gains of productivity… not in an attempt to direct the market.

                The interesting thing will be if, say, DunderMifflen has to pay a 5% wage premium to attract workers… I’m less worried about wage discounts because the previous gains of, say, Amazon, are not granted to new workers. That is, the moment you join giant Amazon is the moment you start to accrue equity… so there’s no future guaranty of value that would be immediately available to you to offset wages. Would you take a $50k warehouse job at Amazon in 2020 vs. a $60k warehouse job at DunderMifflen? Something like that I could see playing out. But not a simple substitution because there’s not enough fractional equity on Day 1 to be meaningful.

                Like any reform idea, the specifics are ironed out along paths of possibility… the key here is to recognize that the good we’re reforming towards is broader stakeholding in capitalism. To borrow from Chesterton, the problem with capitalism isn’t too many capitalists, but too few.Report

              • Swami in reply to Marchmaine says:

                If the shares have value over time they are a benefit, regardless of whether that is your main point or not. Thus they effect supply and demand and will work themselves into the going wage rate. All else equal, wages will fall over time as supply and demand work themselves out.

                If you are talking about worthless shares that only give voting rights, but cannot be sold or collect dividends, then that would be another thing. An easier alternative would be to just put a labor rep or two on the board.

                This shifts the conversation over to whether adding an added element of rent seekers onto the board would be good for us all long term. I am skeptical. I fully support your right to run a company that way though, or invest in one, or work for one, or buy products from them.

                I believe offshoring is better for global consumers and much better for foreign workers (the true global poor), and should not be discouraged based upon rich country incumbent employee rent seeking.*

                Thus my argument is primarily utilitarian, though I would add there is a strong element of fairness to it.

                * Workers in the US are in the top one or two percent of incomes globally. They are the global 1%.Report

              • Oscar Gordon in reply to Swami says:

                Shares would be RSUs that are limited to voting rights only. You can’t have employees taking such shares and selling them. They would only have value after an employee is vested and only when they choose to leave the company and take the conversion. Ergo, you can not honestly work their value into compensation, as they have no value until a vested employee leaves, and even then, the value is fluid and highly dependent upon when the employee chooses to sell the shares.

                Alternatively, you could come up with some other schema granting equity (reps on the board), but shares are a simple way to do it. They also include incentives not inherent in other schemas.

                As for rent seeking, that is the whole point of making the employees share holders. Or are you claiming that any executive who is granted a stock option or award of shares just for taking the job is somehow a rent seeker?

                Although honestly, I’m good with that, since a lot of executives act exactly like rent seekers.Report

              • Swami in reply to Oscar Gordon says:


                If they have value after being vested they are a benefit. By definition. I think we can stop debating this.

                Yes you could come up with another scheme such as employee reps on the board or water down current ownership rights by deeming them to employees.

                Yes, I am claiming that senior executives are rent seekers in corporations. That is a well known Agency problem since the start of corporations.

                I am glad you are embracing that this proposal is specifically being designed to create a new empowered class of rent seekers. It at least allows us to frame it accurately.

                I believe it would lower economic vitality and Long term global living standards. But I could be wrong, as these things are complex.Report

              • Oscar Gordon in reply to Swami says:

                I guess if you consider VLOs or severance packages* to be benefits, then sure, it’s a benefit. But it’s one whose value is highly fluid, and thus it is extremely difficult to factor into compensation packages. So I suspect that your concern regarding the impact on wages to be over-blown. But you are right, these things are complex, we could both be wrong in new and exciting ways.

                But yes, it’s creating a new class of rent seekers. Why should executives get all the rents?

                I.e. payments made at the end of the employment that were not guaranteed by contract at the time of hiring.Report

              • Swami in reply to Oscar Gordon says:

                Because rent seeking lowers overall economic prosperity. Two wrongs don’t make a right.

                That is my take on it, at least. I think I do understand why you guys want it though.Report

              • Marchmaine in reply to Swami says:

                I just want to state that buying equity or earning equity in an ongoing concern is the strangest definition of Rent Seeking I’ve ever seen.

                If you are risking capital or earning shares via contributing labor… these actions are literally the opposite of Rent Seeking:

                “Rent seeking (or rent-seeking) is an economic concept that occurs when an entity seeks to gain added wealth without any reciprocal contribution of productivity.”

                Y’all have taken a wrong turn somewhere.Report

              • Oscar Gordon in reply to Marchmaine says:

                It makes sense if you consider wages to really be all an employee is owed, and any kind of ownership interest that isn’t paid for by the party that wants the interest is rent. Ergo, that is why executives are rent seekers, since they are often granted stock and/or options.

                Personally, I think granting employees some measure of ownership interest, at any level, is a good idea. I think we make a mistake when we allow executives to liquidate stock while still employed, or shortly after they leave, in that it smacks of acting upon insider knowledge*.

                *Not that I have too much of a problem with that, but rules are rules, and if no one else can act on insider knowledge, we should be especially critical of employees quickly liquidating the stock they hold in a company they still work for, or that they just left.Report

              • Swami in reply to Marchmaine says:

                You Guys are “Motte and Baileying” now. When I say it is a form of compensation, you guys deny it because you know that if it is, all else equal, it will lead to reductions in the share of income coming from wages. And you know that is a marginal idea at best.

                When I attack it as a form of power to override decisions of corporate efficiency with no marginal effects on compensation, you say it isn’t rent seeking because they are earning shares by contributing labor. Certainly they are contributing labor, but they are also already being paid for that labor.

                The stock is above and beyond what they are being paid, and you guys are expressly setting it up so that they can be paid for offshoring decisions (Effectively an insurance like benefit), or that they can use this power to overrride offshoring. This would be rent seeking.

                “In public choice theory, as well as in economics, rent-seeking means seeking to increase one’s share of existing wealth without creating new wealth. Rent-seeking results in reduced economic efficiency through misallocation of resources…”

                To the extent employees used their power to stop a company from efficiently relocating a factory or employing an offshore vendor they are rent seeking. They are misallocating resources at the expense of consumers, potential foreign workers and stock holders. They are making the Global economy less efficient.

                It is certainly OK for you guys to recommend doing this because you prefer incumbent wealthy-country employees over poor third world folks and global consumers. But do say it out loud.

                Those of us who believe that globalism helps more people than it harms on net are not exactly popular at parties. But I believe it just the same. I just avoid parties.Report

              • Oscar Gordon in reply to Swami says:

                ‘Efficient’ is doing a lot of work for your complaint here.

                Let’s say a corporate board decides to reallocate a factory from the US to SEA, because the claim is SEA is more cost effective. In doing so, the C-suite will enjoy a significant set of bonuses and probably a bump in the stock price that they get to take advantage of. The factory employees get laid off. If they are lucky, they get some kind of severance.

                If the employees have ownership interest, they can A) have a say in the move. Might not be enough to stop the move (at no point did I say that the employee voting block should be large enough to always carry the day), but at least they get to be part of the decision. And B) if the move goes forward, the employees also get to enjoy the financial benefit of such an act (which might be enough to cause employees to actually vote for the move).

                This is, IMHO, key here. Executives get to make decisions that impact employee lives, and they get to handsomely profit from those decisions while employees do not. Executives don’t make those decisions solely ‘for the good of the company’, they are very much made also ‘for the good of executive bank accounts’.

                I’m just saying, level the playing field. If the C-suite gets to profit, so do the employees. After all, they helped build the company as much, if not more, than the executives. If the executives get to enjoy compensation above and beyond their salary, so should the rest of the employees.

                And getting more of that money into more hands boosts economic activity.Report

              • Oscar Gordon in reply to Swami says:

                True, but when you have two groups of rent seekers in direct competition with each other, plus the rest of the shareholders who are not employed by the company, you can create a stasis where economic prosperity increases solely because no one group can play robber baron to the corporate coffers without perpetuating a fraud upon the others.

                Especially if we hold to the idea that corporate officers are beholden to share holders.

                Right now, the Board and the C-suite get to have all the say over what compensation is paid to employees. Stands to reason that the employees should have a say regarding executive compensation. And both have to pay some kind of attention to what the market says about such compensations.

                I mean, this is the whole point regarding markets and competition, that everyone’s desire to extract wealth will be in a constant tension with everyone else’s similar desires, and that will help alleviate the worst of the abuses of capitalism.Report

              • Swami in reply to Oscar Gordon says:

                I kind of disagree, but checks and balances certainly have a good side. I especially like the influences that employees might have on limiting excesses of CEO pay.

                Still not a fan of the idea, but I would love to see a few companies give it a whirl.Report

              • DavidTC in reply to Swami says:

                If I’m actually reading this discussion correctly, Swami, are you arguing that _all_ corporate ownership is rent-seeking and thus bad?

                If so, what exactly are you proposing to replace corporate ownership with?

                I have not been reading you as a socialist, so I’m really interesting in where you are going with that logic.Report

              • Swami in reply to DavidTC says:

                I am just pointing out that corporations, being real world human organizations have various problems. One is the agency problem where management manages it at least somewhat more for their benefit than that of the stockholders.

                My take on Oscar’s point is that one potential benefit of employee co-ownership might be a check on this power. I intuitively see it as the introduction of a second problem more than a fixing of the first.

                Thus I recommend trying it on a limited basis to see. But I am not suggesting eliminating management at corporations.Report

              • Slade the Leveller in reply to Swami says:

                United Airlines tried employee ownership in the ’90s, and it didn’t go well for them. The impulse to actually be owners, rather than just employees is a tough duality.Report

              • Oscar Gordon in reply to Slade the Leveller says:

                Let me just say that there is a difference between employee ownership and employees being non-minority stakeholders.Report

              • DavidTC in reply to Swami says:

                I am just pointing out that corporations, being real world human organizations have various problems. One is the agency problem where management manages it at least somewhat more for their benefit than that of the stockholders.

                Umm…that really isn’t related to what I said at all. Or what you said. In fact, it’s almost the opposite. You just said it was a problem when corporate management worked for their benefit instead of the benefit of the stockholders…the stockholders you just called rent-seeking. Huh?

                Please state clearly: To whose benefit should a company be operating? Because at this point you’ve eliminated the rent-seeking stockholders, any hypothetical ‘rent-seeking employees’ and now the management!

                You seem to be trying to argue companies are benefiting the global economy. So let’s work from there…you literally just pointed out that owners and manager are rent-seeking, so at minimum _their rent-seeking_ is harming the global economy, under your own premise.

                If their employment of 2000 people in China at 1500 a year helps the global economy, for a total of 3 million a year, and their CEO’s annual salary is 8,000,000. Shouldn’t we demand that company pay those people three times as much money and take 6 million from his salary, to ‘help the global economy’?

                I mean, if that’s how we make rules about how corporations operate based on the goal of ‘helping the global economy’, we should do that, right?Report

            • LeeEsq in reply to Marchmaine says:

              I think that most companies do not want to share equity with the lowest level of workers. The ride shares aren’t going to give equity to the drivers. Equity is reserved for the programmers and above.Report

              • Marchmaine in reply to LeeEsq says:

                I’m absolutely certain that companies do not want to share equity. That’s the point.

                The pitch isn’t to companies to share, it’s to workers to insist on a reorientation of the gains owing to productivity. Neither side get’s all; it’s better for workers as they will get a larger share (in the aggregate) than redistribution plans that rely on taxation. Companies prefer taxation as that’s a negotiation on what they get to keep.Report

              • Chip Daniels in reply to Marchmaine says:

                I’m liking this idea very much, but only note that it relies upon having a solid political majority that controls all three branches of government.

                Which I favor also very much!Report

              • Marchmaine in reply to Chip Daniels says:

                Well now with your vote and my family’s … the American Solidarity Party is probably close to a dozen all told. So, soon.Report

              • Oscar Gordon in reply to Chip Daniels says:

                I’m all for it. I mean, if I ever started a company and employed people, even if we weren’t public, I’d offer equity shares in the company (with vesting, etc.) as a hedge against a Union.

                If everyone has an equity share, then everyone has a voice.Report

              • Swami in reply to Marchmaine says:

                I am absolutely sure that employees don’t want too much of their current income tied up in non-transferable shares of a risky asset.

                This idea only works in large scale (40% of shares?) by assuming the shares are on top of current wages and benefits. Thus the central premise violates what James K refers to as an “iron law of economics”. Certainly it can work on the margin, but again, most large companies already do a version of this with tax advantages in their retirement plans.

                A $15 per hour wage would be significantly reduced with a significant share of equities.

                The other obvious problem is that we are creating an additional rent-seeking entity within organizations. This one would be concentrating on working against economic efficiency and dynamism. Companies which were not hampered by this would be able to compete more effectively. Thus the employees’ shares would become riskier and more likely to go bad over time.

                Overall, I don’t think this is a good idea en masse. I think it is a great idea on the margin, but then again, so does every company I ever worked for, as they all did it on the margin.Report

              • Marchmaine in reply to Swami says:

                None of your income is tied to an asset.Report

              • Swami in reply to Marchmaine says:

                Yes it will be if there is a value to the shares as per my above comment.

                “…the American Solidarity Party”

                Maybe you guys could come up with a polarizing slogan like “Worker Lives Matter” and start riots and looting to get everyone behind the idea.

                BTW, am I the only one who is having trouble posting comments? It takes a minute to take my comments, then I get a time out message, then I try to repost it then it tells me it is a duplicate then I refresh the page and my comment finally posts.Report

              • Oscar Gordon in reply to Swami says:

                It’s not just you, either WP or the site is having issues.Report

              • Swami in reply to Oscar Gordon says:

                Thanks. Good to know.Report

              • Marchmaine in reply to Swami says:

                American Solidarity Party: “We’re here to save you from false consciousness”

                It’s not testing as well as I would have thought in our focus groups.Report

    • LeeEsq in reply to InMD says:

      Most European welfare states have some rather large and activist unions despite having universal health insurance coverage,e paid leave mandates, higher minimum wage, etc. American conservatives do not want either unions or welfare state measures because they believe everybody should get these things for themselves by individual negotiation. The most positive spin on this is that they don’t believe in welfare state measures because they believe what would be good for one employee would be bad for another. My more cynical take is that conservatives know that most people are going to lack the ability to negotiate for an individual contract on their own.Report

      • InMD in reply to LeeEsq says:

        I think it depends on what country you’re talking about. I’m most familiar with Germany and I just don’t think unions there give us anything remotely like an apples to apples comparison for a host of reasons. Maybe a little closer in France, but they’re still integrated as official parts of a larger ‘system’ in a way I’m not sure I think is the case with collective bargaining in the US.Report

        • LeeEsq in reply to InMD says:

          I think this is a cop out. Unions in France and Germany were able to become part of the system because of the fought for this right and because the populations of those countries don’t have a really big anti-union mentality. In Germany, every corporation has a union representative on its Board of Directors. This would be regarded as heresy in the United States because the Directors represent the shareholders alone. French and German labor unions are still unions. In fact, the German labor unions fought for the unionization of German car factories operating in the United States.Report

          • InMD in reply to LeeEsq says:

            In Germany unions are expressly protected in the constitution and have roots going back centuries, some to before the US even existed. To me the cop out is assuming we can just import critical social and economic infrastructure from x European country/culture and put it here. It’s a neat thought experiment but it isn’t a real solution.Report

      • Swami in reply to LeeEsq says:

        And yet unemployment rates in Europe tend to be significantly higher than the US, average PPP wages are significantly lower and economic dynamism is almost a contradiction in terms within Europe with virtually no new large start up companies that revolutionize industries. Google, Amazon, Tesla, etc.

        You guys are basically arguing for making the US as stagnant as Europe. This is an idea which will both hurt the typical worker in America, and consumers (everyone) in Europe, as the rest of the world drafts on the the innovativeness of the US economy.

        I know I won’t convince you guys of anything. Just sayin”.Report

  4. LeeEsq says:

    Unions didn’t make themselves obsolete. They were rendered so by anti-union laws and policies and culture war against them that tried to tie even moderate unionism with communism. The reason for collective bargaining is that most people unless they are really desirable are going to have a rather difficult time negotiating with a massive private or public organization for fair wages and benefits as individuals. As a unit that can pool resources and higher lawyers, their ability to negotiate increases and this makes getting a better deal easier.Report

    • Eric Cunningham in reply to LeeEsq says:

      Unions have been in decline since the 50s. That’s not because of laws. It’s because they can’t get out of a frankly antiquated view of labor relations that dates to the industrial revolution.Report

      • As opposed to an antiquated view of labor relations that dates to Reagan-era wholesale adoption of the Friedman doctrine.Report

      • greginak in reply to Eric Cunningham says:

        How can you ignore the impact of the anti union laws that have been passed since Reagan? Maybe that isn’t the only reason for the decline in unions, but it seems impossible to ignore that. You even propose changes to weaken unions.

        I’m not really sure about an “antiquated view of labor relations.” I once heard in an anti union casino that businesses get the unions they deserve. That casino made a point of always treating worked well and paying them better then the union shops. That worked for them, but of course without a union to compete with that wouldn’t work as well for their employees. In that case even the non union workers benefited from the union.Report

        • Unions are so loathed that they couldn’t even win an election in Chatanooga where Volkswagen actually wanted the union.Report

          • greginak in reply to Eric Cunningham says:

            Yeah. That doesn’t answer the general questions though. Plenty of unions seems popular with their workers so i don’t see how VW proves unions are “loathed.”Report

            • What percentage of union employees have ever voted for their union?

              7%. (

              • Yeah, but if I take a union job, does that mean I “voted for” the union, or “didn’t vote for” it, since it was already there when I came?Report

              • Marchmaine in reply to Eric Cunningham says:

                I clicked through the link, and then clicked through the link there (broken, by the way) but there was no qualifier for that number.

                The reason I ask is because I’m not sure what it means; for example, my family has run a Union Painting company in Chicago for 100-years… I don’t think anyone alive has *ever* voted for the Chicago Painter’s union… but tens (hundreds?) of thousands of folks have worked as union painters.

                They vote *in* the Painter’s Union for stuff… but I’m not sure that the 7.3% number tells a story at all.

                Am I missing some significant context for why that’s important? Are we thinking that Unions should have a charter that expires after, say, 10-years then the members vote again on the Charter? I wouldn’t oppose that out of principle… but I’m not sure what we’re after here. I mean, from personal experience representing management (and, as youth, working as a painter) the Union would win with 90% votes – going back to the 1890’s when it was formed.Report

              • Oscar Gordon in reply to Marchmaine says:

                I’d put it up for a vote right before every contract ends. Say, 90 days before the contract is up, the union holds a recert vote, and if it passes, it starts negotiating the next contract.Report

              • Marchmaine in reply to Oscar Gordon says:

                Sure, though I think I’d prefer a term based on the length of a typical contract… so, 6- or 9-years if the typical contract is 3-yrs. I think you’d potentially put the union at a negotiating disadvantage if it had to re-cert on every contract vs. regularly re-cert after a time.Report

              • Oscar Gordon in reply to Marchmaine says:

                Yeah, I could see that. And perhaps it would need to be 6 months ahead of the end of the contract.

                Basically, if the Union has been a total useless ass lately, a failed recert could clean the local leadership out and give the membership a chance to join a different national union or form their own before the contract terminates.Report

              • What percentage of Americans have ever voted to ratify the Constitution?Report

    • Brandon Berg in reply to LeeEsq says:

      One problem with “anti-union policy” as an explanation for the decline in unionization is that union membership is highest in government jobs, where you would expect policymakers to have the most control over unionization. The real reason is that the economic conditions that made unions viable ceased to exist. Unions are really only viable in industries insulated from competition. Unions just can’t do that much when employers don’t have monopoly rents to siphon off—raising the cost of employment requires increasing prices, and then the non-union competition eats your lunch.

      Quoting from the January BLS report on union membership:

      The unionization rate for public-sector
      workers was little changed over the year at 33.6 percent, and remained substantially above that
      of the private sector. Within the public sector, the union membership rate was highest in local
      government (39.4 percent), which employs many workers in heavily unionized occupations, such as
      police officers, firefighters, and teachers. Private-sector industries with high unionization
      rates included utilities (23.4 percent), transportation and warehousing (16.1 percent), and
      telecommunications (14.1 percent). Low unionization rates occurred in finance (1.1 percent),
      insurance (1.4 percent), professional and technical services (1.4 percent), and food services and
      drinking places (1.4 percent).

      Lots of regulated monopolies in the high-union industries, exactly what you would expect from the competition hypothesis. It is interesting that tech doesn’t have higher unionization rates, as many tech companies have a substantial degree of monopoly pricing power due to patents and network effects. But tech workers are already paid extremely well; maybe that’s another factor influencing unionization rates. Competition from foreign workers may be an issue as well.Report

      • Brandon Berg in reply to Brandon Berg says:

        Also, it’s pretty rich to suggest that the US actually has anti-union legislation. There are some laws in place to limit unions’ abuse of the privileges given to them by labor law, but on net, labor law is pro-union. Companies can’t fire workers for unionization, i.e. actively working against their employers’ interests. They can’t fire workers for refusing to do their jobs, as long as it’s sanctioned by the union. Think about how nuts this would sound if you weren’t already a huge fan of unions. If a majority of workers vote to unionize, management has to accept it and bargain with the union. I believe that it’s also illegal to pay non-union employees a premium in mixed shops. These privileges are critical to the viability of unionization efforts.

        I get that losing privilege feels like oppression, but it isn’t.Report

    • Swami in reply to LeeEsq says:

      Unions do absolutely make themselves obsolete. I can supply papers which summarize the effect of you are interested in the issue. From memory, I believe the data shows that unions increase average wages about 10 to 15% above market rates and that this leads to lower growth rates due to higher costs and lower dynamism. Over time companies and industries and locales which are unionized are replaced with those that resist unionization. Thus they make themselves obsolete.

      Again, I can supply links if anyone is actually interested in data on the issue.Report

  5. Aaron David says:

    Unionism is one of the building blocks of populism. And as the Left has cast aside that aspect of politics in its climb to cultural hegemony, the hegemony once owned by the Right in America, it is only natural that labor/unions will flow to the populist side, currently held by the right.

    You have to cast aside the preconceived notions of what is and is not the right/left divide in politics and see them as waxing and waning power bases more than anything. Yes, the principles of the labor movement once aligned with liberalism. But, as laws replicating most of the supposed needs of these groups were codified and have become the norm, the needs of the union must reflect the needs of the worker, if it is to survive. And as you half-correctly remark, the current President is broadly in support of US workers on the labor side.

    Talk of “movement conservatism” is as hollow as any claims of “right side of history” by the left. Both sides simply take their place on the battlefield of modern politics, assemble the forces they have, and realign the messages that they have seemingly always held.Report

  6. Jaybird says:

    Over and over and over again, I compare stuff like GM to Facebook.

    What’s GM’s market cap? How many people do they employ?

    What’s Facebook’s market cap? How many people do they employ?

    Heck, looking at Amazon and how many people Amazon employs, at least Amazon is doing the heavy lifting when it comes to employing people. (Now we just have to address the whole issue of “not having time to pee” issue of warehouse workers and the whole “not being able to charge time for standing in line at the Shrink Security Station waiting to leave to go home” issue.)

    The new modern behemoth companies don’t employ enough people.

    But how in the heck do you make a company hire more people?Report

    • LeeEsq in reply to Jaybird says:

      One way that modern companies get around having a lot of employees is by using independent contractors instead. Think of the rideshare apps. In the past, the drivers would most definitely be employees. These days the drivers are independent contractors while the employees are the white collar staff. You couldn’t treat the physical laborers as independent contractors in the past but now you can. Companies would also have their own janitorial staff for cleaning up the officers rather than outsourcing it. Same with company cafeteria staff if the office had a cafeteria.Report

      • Jaybird in reply to LeeEsq says:

        Oh, I remember the whole transition to “Managed Services” well. (I gave one “permatemp” rant here.)

        But even if we’re not counting companies using managed services instead of employees for services that they still need done, the New Economy Megacorporations are still hiring an order of magnitude fewer people less than the Old Economy Megacorporations did.Report

      • Jaybird in reply to LeeEsq says:

        And if we want to talk about AB5 for a moment, I saw a great tweet that asked something to the effect of “how come so many workers want to be excepted from this law that protects them?”

        Of course, I can’t find it.

        So instead I’ll point out that this quotation is an insightful quotation:


      • Brandon Berg in reply to LeeEsq says:

        A question that isn’t asked nearly enough is why this distinction matters. Why is the government imposing so many restrictions on and penalties for hiring employees that it makes economic sense to switch to an independent contractor model and spend huge amounts of money on lawyers to convince the government that they shouldn’t be called employees? You need work done, you pay someone to do the work. It’s pretty simple. Impose a minimum wage if you must, but there’s no reason for government to micromanage this.Report

        • Chip Daniels in reply to Brandon Berg says:

          The flip side of your question is, why is it so easy to find workers who are willing to work without the benefits of being employees?
          Why aren’t companies competing with each other to provide the best wage, and lavishing benefits on their precious workforce?

          My answer of course is that there is a surplus army of labor, and a declining need for it in any form.Report

          • Swami in reply to Chip Daniels says:

            I paid independent contractors outrageous amounts of money. Some several hundred thousand dollars per quarter. In my case, I tended to do it because the company, being a giant bureaucracy, had limits on hiring. In part, their hiring restrictions were because they also had trouble firing when need arose (if the individual was no longer needed). But it was also a bureaucratic way to avoid Parkinson’s law of bureaucratic bloat.

            In other words, I contracted extremely well paid professionals for their flexibility. And I paid them handsomely for that flexibility. (We designed and built new financial products and figured out how to market and launch them). I don’t think any of my employees actually left just to make more as contractors, but some talked about it. As did I.

            The 4% unemployment rate and the well known inability of employers to fill slots up through last year argues against your surplus army metaphor.Report

            • Chip Daniels in reply to Swami says:

              Unemployment is only one measure of jobs.

              Wage growth has been sluggish for ten years, and not everyone’s wages have risen equally:


              • Chip Daniels in reply to Chip Daniels says:

                Too many links – comment in moderation.Report

              • Swami in reply to Chip Daniels says:

                Your initial comment was about some mythical army of unneeded labor. When I disagree you pivot to real wage growth has been slower than we saw in the 20th C and that not everyone’s went up equally. In other words you have already backed off your claim pretty much completely.

                In reviewing the links, I definitely could have written a more accurate summary of the situation than either of those two. Here are just the most obvious retorts.

                1). Why on earth would anyone familiar with economics expect or desire to see wages increase equally across the board? Wages are considered a price for labor and prices act as signals and incentives to adjust supply and demand. If a market is even working half assed, one would expect jobs and professions in demand and scarce to see wage increases, and those in less demand or greater supply to see decreases or low growth rates. Of course that is exactly what we do see, specifically highly cognitive jobs, which are in demand are being paid much more, while those jobs which can be outsourced or filled by the one billion people entering the market in the last generation (lower skilled labor) seeing modest increases. IOW, the market is doing what it is supposed to but is being spun by those who are clueless as a problem.

                2). These studies that segment income into classes misses (or intentionally misrepresents) that people constantly move between classes. When we say that In the top increased significantly more than those at the bottom (for the reasons listed in #1) we are basically laying out that the height of the escalator is increasing. It says NOTHING about what actual individuals made over time. When we do look at studies of actual income changes by family what is revealed is that those at the bottom in the starting period tend to see larger percent increases than those families starting at the top. This reflects that people gain experience and skills as they age thus moving up the escalator to higher income quintiles.

                3). When using the correct inflation rate (PCE not CPI) and adjusting for family size (includes number of workers) and benefits, wages have increased significantly faster. If we add the influx of millions of immigrants, who bring down the average even as they personally see the largest family gains over time, the numbers are even more extreme. That said, I agree growth rates are lower in the developed world in the 21st C. Explanations are off topic if the topic is this mythical army of surplus labor.Report

              • Chip Daniels in reply to Swami says:

                When price is stagnant, doesn’t that signal that there is too much supply relative to demand?

                And don’t we see it right here, when we talk about increasing the minimum wage, the response is simply that those jobs will be outsourced, or automated?

                In other words, the labor for the lower end jobs simply has too many easily sourced replacements. An army, if you will, of replacements.Report

              • Swami in reply to Chip Daniels says:

                No, too much supply would result in decreasing price and/or an increasing rate of unemployment all else equal. Neither of which have been happening.

                A stagnating price in wealthy countries for low skill labor combined with dramatically rising wages in developing nations and a dramatically rising employment base indicates that new jobs are being created or redirected as fast as needed.

                Not only is the market working marvelously, it is also increasing total human prosperity, especially in those poorer countries where it is needed the most. We have seen more people exit poverty globally in the last generation than ever before, and at a faster pace.Report

    • Brandon Berg in reply to Jaybird says:

      The new modern behemoth companies don’t employ enough people.

      We’re in a weird time now, but in late 2019, the unemployment rate was a 50-year low. And it wasn’t just crummy, low-wage jobs—real median family income has been rising for decades. It doesn’t matter that Facebook isn’t hiring as many employees as GM, since clearly someone else is making up the difference.Report

      • Swami in reply to Brandon Berg says:

        “…the unemployment rate was a 50-year low.”

        And yet a reformed libertarian is now arguing that the problem with the new economy is that the new companies don’t hire enough people. Maybe he was asking rhetorically.Report

      • Swami in reply to Brandon Berg says:

        “…the unemployment rate was a 50-year low.”

        And yet a reformed libertarian is now arguing that the problem with the new economy is that the new companies don’t hire enough people. Maybe he was asking rhetorically.Report

  7. Chip Daniels says:

    One of the reasons unions are not seen as necessary is that a lot of the advances they fought for are encoded into law.
    The three day holiday weekend we all just enjoyed didn’t “just happen”, the minimum wage didn’t “just happen”, all those safety guards and overtime requirements and health insurance benefits didn’t “just happen”, they were first staked out by unions then eventually written into law for all workers.

    We could continue this, and just have the government act as a bargaining unit for all workers, writing wage and workplace conditions into law.Report

    • Swami in reply to Chip Daniels says:

      Actually higher wages, safer work places, paid vacations and so on did “just happen” as companies competed for productive employees. Certainly regulations pushed some of these along.

      “We could continue this, and just have the government act as a bargaining unit for all workers, writing wage and workplace conditions into law.”

      Can we also put our knee on the necks of those employees not wanting to comply (Preferring more hours to more vacation etc) , thus choking them to death? Working Lives Matter.Report

      • LeeEsq in reply to Swami says:

        Bull. Companies fought tooth, claw, and nail to avoid higher wages, safety regulations, and better work conditions when they could have easily afforded them.Report

        • Swami in reply to LeeEsq says:

          Double dog bull back at you.

          Let’s take wages, for simplicity.

          I worked for 35 years and pretty much got a raise or promotion every year. Pretty much all of these were based upon the company choosing to reward me based on the concept of supply and demand. As I gained experience, my marginal productivity went up, and they needed to pay me more to avoid my going to other companies seeking my talents. Personally, I always said I would have done my job for less. Of course I loved my jobs.

          Second, over my career I am sure I employed over a thousand employees in one capacity or another. I would guess I gave 99% of them a raise or promo every year, with most Well above the rate of inflation. Why? Because we did not want to lose these valuable resources to our competitors (though some left anyways, again somehow getting more compensation without government decree or union assistance).

          Third, even a casual review of the US economy reveals that compensation has increased about 30X over the past two centuries. This was the greatest increase in prosperity in the history of the human race. Most of the employees were not unionized, and most made way more than minimum wage.

          I could go over all the various things my company did to make it a better, safer environment too. They were well aware that employees are attracted to places with a good and safe working environment. We used to stress this when we hired.

          Voted one of 10 best minority employers! Selected by Latina magazine in 2020 as one of the best employers for females! Etc etc.

          I understand there are still benefits in supplementing individual “invisible hand” mechanisms with government decree. Most companies understand this as well. But, attributing all or even most increases in employee compensation, benefits and safety to unions and government decree is ahistorical and shows a misunderstanding of complex adaptive systems.Report

          • The question in reply to Swami says:

            companies didn’t stop using child labor until it was literally illegal for them to do so I don’t know why you think they wouldn’t fight everything else tooth and nailReport

            • Swami in reply to The question says:

              I just explained it. Try dealing with what I wrote rather than trying to shift the subject. Go ahead. Address my arguments on why companies raise wages. It is pretty much basic economics with competition for scarce resources and rising marginal productivity.

              But for those interested, my initial point still applies to child labor as well, though the driving force was probably more from parents than companies (iow, based more on supply than demand). Declining Child labor rates did “just happen.” They were not caused primarily by labor laws (though as per my initial comment I am sure laws helped the trend along). Here is a quote from the Economic History Association on the topic

              “Most economic historians conclude that this legislation was not the primary reason for the reduction and virtual elimination of child labor between 1880 and 1940. Instead they point out that industrialization and economic growth brought rising incomes, which allowed parents the luxury of keeping their children out of the work force. In addition, child labor rates have been linked to the expansion of schooling, high rates of return from education, and a decrease in the demand for child labor due to technological changes which increased the skills required in some jobs and allowed machines to take jobs previously filled by children. Moehling (1999) finds that the employment rate of 13-year olds around the beginning of the twentieth century did decline in states that enacted age minimums of 14, but so did the rates for 13-year olds not covered by the restrictions. Overall she finds that state laws are linked to only a small fraction – if any – of the decline in child labor. It may be that states experiencing declines were therefore more likely to pass legislation, which was largely symbolic.”

              A couple of years ago I got in a similar debate with someone on this site on the issue of unions and wages. I provided a survey of economic historians which revealed they strongly opposed the view that wage increases were primarily driven by unions. I don’t remember the source now though.Report

  8. The conservative movement has been embracing Trump for the last four years, so I agree that it shouldn’t embrace anything else without taking a blood test first.Report

  9. Kazzy says:

    “It’s worth noting that the very concept of collective bargaining isn’t conservative. Collective bargaining means you cede the right to control anything relating to your employment.”

    This implies that the voluntary ceding of any right is inconsistent with conservative ideology. I do not think that computes.Report

    • Chip Daniels in reply to Kazzy says:

      “You are all individuals! You are free to make your own choices!”

      “OK, we talked it over and held a vote and we wanna bargain as a unit.”

      “NOT LIKE THAT!”Report

      • Kazzy in reply to Chip Daniels says:

        My general take is that unions should hold no special privileges nor any special restrictions.

        If a group wants to band together and attempt to negotiate as a unit, let them. If the employer wants no part of that, it can opt to refuse to negotiate with the unit.

        This view will likely anger both pro- and anti-union folks, which is sometimes a good sign you are in the right place.

        I’ll note that I don’t apply this view to public sector unions because they function very differently. I haven’t quite carved out how to think about them though.Report

        • Chip Daniels in reply to Kazzy says:

          The whole idea of a corporate charter, and government-recognized labor union, is that they both get special privileges and special restrictions.

          They are special entities recognized by law and are shielded from other laws, and given boundaries under which they must operate.Report

  10. Rufus F. says:

    I don’t disagree with any of this because I don’t see any particular reason the conservative movement should ally with labor unions either.

    I wouldn’t exactly fight against labor unions; rather remain neutral. I’m sure there are other folks like my father, who has been a Reagan Republican since, well probably before Reagan actually; and he worked for 25 years at a union job and generally has good feelings about that. The way he looks at it is he made a good life for his family with that job. So, were I to say to him “Hey, you know that collective bargaining limits your freedom, right?” he’d likely say “I don’t know anything about that. Eat your lobster.” (He lives in Maine)Report

  11. Chip Daniels says:

    Just another day of life in America, living at the peak of affluence in all of human history:
    The pandemic had heaped crisis on top of crisis. The 2008 housing collapse and recession had caused the tourist market to tank at the exact moment the foreclosure crisis was forcing thousands of homeowners and overburdened renters from their homes. Struggling motel owners began renting rooms to the only customers they could find, those who had no place else to go.

    In the decade that followed, the tourists returned to Orlando by the millions. Executive salaries at companies such as Disney and Universal soared. So did local real estate prices, buoyed by a booming market for gated, luxury vacation homes.

    But almost nothing was done to address the reality that many service workers had emerged from the recession saddled with stagnant wages, bad credit or eviction records that made it nearly impossible for them to rent an apartment and return to a normal life. Many spent much of the past decade stuck in motels with restful names — the Paradise, the Palm, the Shining Light, the Star, the Magic Castle — that belied an increasingly grim reality for both the owners and tenants who found themselves trapped together.

    I’m quite certain that someone could study any one of the people profiled, and describe in detail what bad coices they made in life and why it is their own fault.

    But that only raises a disturbing question. Why are scenes like this more prevalent now, and in America?
    This large and growing population of desperately poor and hopeless people isn’t the norm throughout the developed world, but resembles the 3rd World in its systemic dysfunction.

    What the article describes is how none of the institutions of America- Churches, local governments, civic organizations, schools- are unable to work together to prevent or solve it. They each make stabs at it, but are overwhelmed by its scale and scope.

    Because we see this in nearly every city and state across America. The markers of social breakdown and dysfunction are all going in the wrong direction.Report

    • Swami in reply to Chip Daniels says:

      My one and a half cents…

      1). People who own property have figured out how to abuse the system (rent seeking) to increase the value of their property by reducing the supply of new building, especially multi unit. The tricks are well known.
      2). Officials have figured out how to increase property taxes to fund special interests, thus raising rents and ownership costs above what is generated in number 1. (Not sure if this applies in Fl or Ca, but it did in Illinois)
      3). I would add that there seems to be something which keeps locales from building cots/tents/Quonset huts and porta potties etc for the otherwise homeless or at risk of being homeless. Seems like an obvious thing to do, especially with all the billions some areas (such as Ca) have earmarked for the homeless. Instead they build half million dollar homes. WTF? Sounds like graft to me.
      4). Incumbent owners have found ways to use building codes/HOAs to prevent Cheap garage conversions and granny flats from being built.
      5). Welfare payments chain people to their current city or state when they should be moving to where the jobs are.

      That said, other than during the recessions, poverty has not been rising in the US, indeed, when you adjust for transfer payments, poverty is down. And this still doesn’t adjust for the trillions in black market earnings — I know people who live off Craig’s list sales — and the millions of immigrants who pull down income stats.

      I certainly agree though that the housing market is FUBAR in many parts of the country.Report

    • Swami in reply to Chip Daniels says:

      As for social breakdown, I would suggest reading Charles Murray’s take on the situation. I am sure you are a fan.

      By the way, is there something wrong with motels renting rooms by the night?Report

      • Chip Danielsm in reply to Swami says:

        The responses to an assertion like mine (that we are experiencing a breakdown of civic institutions) can be of two types:
        1. This is not really a problem or ;
        2. This is a real problem.

        If your assertion (as you’ve made elsewhere) is that we are living in the peak of human prosperity, then we need to look long and hard at this group of people all across the country and conclude this is what “peak prosperity” looks like.

        If you want to say its a real problem, and cite Murray then we need to interrogate his line of logic and see what policy suggestions it leads to.

        As best I recall, his book about Coming Apart was that the upper class practices better lifestyle habits and should “preach what they practice”.

        What sort of government policy would flow from that? How would this social engineering be done more effectively than previous attempts?

        Remember, I’ve repeatedly called for a new etiquette, a set of social norms and mores which make certain things taboo and others sacred so I’m not hostile to Murray’s concept.

        But I also have seen how norms, even simple ones like “wear a got-dam mask” provokes a furious, even violent reaction.Report

        • Swami in reply to Chip Danielsm says:

          Yes, any broad historic review shows that the US is pretty much at the pinnacle of human prosperity today. Certainly at the pinnacle of large, diverse countries with tens of millions of recent immigrants (who come to enjoy the greatness and benefit by doing so even as they pull down the averages). When you compare countries such as Finland, the US, Canada and Singapore to the history of the human race, it is like comparing the Himalayan peaks to each other rather than to the long ten thousand years and ten thousand societies stuck fooling around in the Sahara desert.

          Certainly we can argue over which peak is higher on which dimension which year. We could even argue whether that peak is growing or shrinking over recent history. And that is a useful discussion. But the point is that for 99.9% of the time for 100% of the societies the standards of living were lifespans of about 35years, with about a third of all kids not making it to teenage, and living standards equal to about what would be $3 a day. In other words, extreme poverty, widespread slavery, and with no freedom, healthcare, dental plan, welfare, unemployment insurance, vaccinations and so on.

          So yes, we (the US and other modern developed nations) are several miles above the long term human standards of living. This is as good as it has ever been, broadly.

          Do I agree that social norms and mores and civil decency are declining? Heck yea.

          I can give recommendations if you want them, and Murray gave several. The recommendations from him or me would probably not focus on government social engineering, indeed we would both point out how the mere thought that top down government social engineering is the solution is part of the problem.Report

          • Chip Daniels in reply to Swami says:

            If you think this is the [economic] pinnacle and that we aren’t slipping down, wouldn’t a logical proposal just be “Let’s keep doing what we’re doing”?

            Obviously whatever we’re doing with the economy is working splendidly.

            And sure, let’s hear your proposals for moral and social norms.Report

            • Swami in reply to Chip Daniels says:

              Well, actually I said we are at or near the pinnacle and that we could argue whether we are slipping or gaining over recent years on various dimensions and that THIS discussion would be useful.

              But as a starting point, you are damn right I think, as a general rule, we should keep doing what we have been doing, because we have been doing things so freakishly, outlandishly effectively for the past two hundred years (In the “west”) compared to every other society ever.

              Failure to grasp this point is the demise of modernity and a death sentence for billions of people.

              Now certainly we could do things even better, and we are doing some things worse now that we shouldn’t have done. But before we “start a lootin’ and a burnin’ tonight”, we should first recognize how far we did rise and why. And no, it wasn’t government mandates on incomes, those are as old as government itself and just as ineffective now as ever.

              Maybe I can address moral and social norms tomorrow. Big topic.Report

    • Brandon Berg in reply to Chip Daniels says:

      But that only raises a disturbing question. Why are scenes like this more prevalent now, and in America?

      How do you know that they are? I don’t know how many times I have to say this, but the news is not the real world. It’s a curated set of anecdotes selected to tell a particular story. The fact that reporters are writing this kind of story more often tells you more about what kind of story reporters want to tell than about what’s actually happening in the world.

      If you’re rely on the news to tell you what’s going on, you know nothing. You need to be looking at big-picture stats, and you need to know how to interpret them.Report

      • Chip Daniels in reply to Brandon Berg says:

        Well then you need to develop an alternate theory and support it with some empirical evidence and observations.

        And in order to persuade people your evidence and observations need to correlate with their own evidence and observations.Report

  12. Chip Daniels says:

    This should be a wake-up call: New data suggest that the United States is one of just a few countries worldwide that is slipping backward.

    The newest Social Progress Index, shared with me before its official release Thursday morning, finds that out of 163 countries assessed worldwide, the United States, Brazil and Hungary are the only ones in which people are worse off than when the index began in 2011. And the declines in Brazil and Hungary were smaller than America’s.

    The Social Progress Index finds that Americans have health statistics similar to those of people in Chile, Jordan and Albania, while kids in the United States get an education roughly on par with what children get in Uzbekistan and Mongolia. A majority of countries have lower homicide rates, and most other advanced countries have lower traffic fatality rates and better sanitation and internet access.

    Yes, our educational level is on par with Uzbeki-beki-bekistan.