Law Professor on Bush 2.0 Labor Board Decisions

Professor Anne Marie Lofaso, of West Virginia University – College of Law, has posted a law review article to be published in the Maine Law Review on SSRN in which she discusses the decisions of the Bush II labor board interpreting and enforcing federal labor law.  In the article, she concludes that

notwithstanding the fundamentally progressive nature of Section 7’s protection of the workers’ right to self-organize and to band together for mutual aid or protection—rights that are guaranteed by the correlative duty on employers to recognize unions—the Bush II Board’s decisions can be placed in the context of a larger trend among the other government branches to disempower workers.  In particular, government action has narrowed the definition of employee, shrunk the contours of Section 7, diluted employees’ economic weapons, and weakened the NLRA’s remedial framework.

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No Economic Recovery for Workers

Radical economist Rick Wolff has a post on MR Zine examining recently released economic data and questioning whether the economy can really be said to be recovering if we look at the issue from the point of view of workers rather than capitalists.  He starts with those workers lucky enough to still have a job:

The first set of numbers came from the US Department of Labor’s Bureau of Labor Statistics.  They showed some remarkable facts about (1) US workers’ productivity — the physical quantity of goods and services produced per employed worker, (2) the compensation paid to US workers, and (3) the hours they actually worked.  These numbers showed how the economy had changed from the first quarter (January-March) to the second (April-June) of 2009.  The average number of paid hours worked per employee fell by 7.6 per cent, but the total output fell only 1.7 per cent.  That was because the workers who had not (yet) lost their jobs were fearful, so they worked harder and faster doing some of the jobs previously done by laid-off workers.  With fewer employed workers doing more, the BLS reported a gain of 6.4 per cent in the productivity of US labor.

For their harder, faster, and thus 6.4 per cent more productive labor, those still employed saw their money wages rise by only 0.2 percent from the first to the second quarter of 2009.  When the BLS took into account the rising prices workers had to pay, their real wages (the goods and services they could actually buy) fell by 1.1 per cent.  Taken together, these numbers show that employers got a huge increase in output from each employee, while what they paid to their employees imposed on them a decrease in the goods and services they could afford.

Speed up, reduced wages.  What about the unemployed?  How is the economy doing in terms of putting the fifteen million unemployed back to work? 

The second set of numbers was collected and published by the US Federal Reserve; that set concerns “capacity utilization.”  Roughly, these numbers measure the proportion of the nation’s capacity to produce that is actually being used for production.  In July 2009, the US capacity utilization proportion in all manufacturing was 65.4, or roughly two thirds.  Over one third of the tools, machines, equipment, factory and office space, etc. in manufacturing was idle.  By comparison, the average rate of manufacturing capacity utilization from 1972 through 2009 was 79.6.  The crisis is thus increasing our economic system’s huge waste — failure to make use — of a very significant portion of our nation’s productive resources.  Idle capacity usually means deteriorating capacity.  And this after a year of Bush and Obama “economic stimulus packages.”

Consider the meaning of this waste.  Side by side with today’s 15 million unemployed people (not to speak of the underemployed), we have one third of our industrial capacity unemployed as well.  Meanwhile massive social needs go unmet (rebuilding center cities, providing daycare, healthcare, and eldercare to millions, repairing decades of damage to the environment, and so on).  The way this economic system works, we are supposed to wait until private enterprises see profits from rehiring the unemployed and utilizing the available capacity.  Until then, we are supposed to watch and accept this system’s inability to combine unemployed people with unemployed resources to meet obvious social needs.

The Decline of Manufacturing and the Jobless Recovery

Labor journalist Dan Labotz has a detailed post on MRZine about the collapse of the manufacturing sector of the U.S. economy and its implications for the working class.

Labotz notes that there has been a long-term reduction in employment in manufacturing:

In 1960 out of a total non-farm workforce of 54,274,000, there were 15,687,000 manufacturing workers representing 29 percent of the total.  By 2009 out of a total of 134,333,000 non-farm workers, there were only 12,640,000 manufacturing, representing just 9 percent of the total.  That is, industrial workers fell in the last fifty years from almost one-third of all workers to less than 10 percent.

This reduction in the size of the industrial working class has been driven by the competitive weakness of U.S. automakers and the machine tool industry.  Since the decline of the U.S. automakers is well known, Labotz focuses on the machine tool industry:

Even more disturbing perhaps than the decline of the auto industry is the decline of the machine tool industry, an industry that stands at the heart of any industrial economy.  The machine tool industry is made up of the machines that make machines.  Every other industry depends on machine tools in order to conduct its manufacturing operations.  There are about 7,000 such companies — Hardinge, Kennametal, Thermadyne, and Ingersoll are among the largest — with combined annual revenue of $25 billion.  Machine tool companies produce dies, molds, cutting tools, and machining centers, some of this high-tech automated equipment, created in complexes that contain specialized foundries and machine shops.  Working for these companies are engineers and high-skilled workers whose know-how represents an invaluable human capital.

Since the early 1980s, the machine tool industry has been on the decline, a descent which has become precipitous.  During the 1980s and 1990s the U.S. machine tools lost out in world competition not only to Japan and Germany.

Labotz goes on to present a host of data demonstrating the loss of international competitveness of the U.S. machine tool industry relative to Europe and Japan and the consequent decline in output and loss of jobs.

The ongoing crisis in U.S. manufacturing competitiveness is likely to exacerbate the current economic downturn and lead to a jobless recovery.

But, as Louis Uchitelle observed recently in a perceptive article in the New York Times, in the past economic recuperation was driven by manufacturing, at the center of which stood the auto industry.  The auto industry — which includes both the Big Three and foreign-owned assembly companies employing 309,000 autoworkers, as well as the 4,000 auto parts companies employing 450,000 parts workers — had been key to economic recovery in past recessions.  With the closing of many auto assembly and parts plants, the car companies are not leading that recovery, and no other industry is playing its historic role.  

The consequences of the decline of U.S. manufacturing, both in auto and machine tools, for the labor movemnet are stark. 

The decline of manufacturing generally and of the machine tool industry in particular suggests a weakening of the American industrial working class.  This is not simply a question of numbers, but also of the character of the work and kind of social organizations to which it gave rise.  Factory workers, because employers brought them together in large numbers and put them in charge of machines that produced commodities for the market, discovered that they had the power — through slowdowns and strikes — to affect production and therefore profits.  When industrial workers struck and organized, they also became a political power, even if the unions’ conservative officials failed to turn that into an independent force.

The machine tool industry in particular assembled around itself the engineers, machinists, electricians, and other highly skilled workers who often stood at the center of their communities and of the labor unions in their plants.  While often seen as the elite of the industrial world, it was tool-and-die makers and other such skilled workers who often formed the core of early organizing efforts.  German and British immigrants among them brought trade-union and socialist traditions to the machine tool industry and the auto plants of the United States.

Myths About U.S. Capitalism

Economist Mark Weisbrot published a column, originally in the Guardian newspaper but distributed online by MRZine, challenging several “Myths about the U.S. Economic Model”:  

This month my CEPR colleagues John Schmitt and Nathan Lane showed that the United States is not the nation of small businesses that it is regularly dressed up to be for electoral campaign speeches and editorials.  If we look at what percentage of our overall labor force is self-employed, or what percentage of manufacturing workers or high-tech workers are employed in small businesses — well, the U.S. ranks at or near the bottom among high-income countries.

. . .

A number of other alleged advantages of America’s “economic dynamism” are also mythical.  Most people think that there is more economic mobility in America than in Europe.  Guess again: we’re also near the bottom of rich countries in this category, for example as measured by the percentage of low-income households that escape from this status each year.  The idea that the United States is more “internationally competitive” has been without economic foundation for decades, as measured by the most obvious indicator: our trade deficit, which peaked at 6 percent of GDP in 2006.  (It has fallen sharply from its peak during this recession but will rebound strongly when the economy recovers).  And of course the idea that our less regulated, more “market-friendly,” financial system was more innovative and efficient — widely held by our leading experts and policy-makers such as Alan Greenspan, until recently — collapsed along with our $8 trillion housing bubble.
On the other hand, most Americans pay a high price for the institutional arrangements that bring us these mythical successes.  We have the dubious honor of being the only “no-vacation nation,” i.e. no legally required paid time off and of course some weeks fewer actual days off per year than our European counterparts enjoy.  We have a broken health care system that costs about twice as much per capita as that of our peer nations and delivers worse outcomes, as measured by life expectancy or infant mortality.  We are near the top in terms of inequality among high-income countries; and at the bottom for parental leave policies and paid sick days.  The list is a long one.