by Philip Dray
Even for full-time employees, rights and security have sharply eroded, including the issue that historically was most dearly fought for—reasonable hours of work, so that laboring people would have a life beyond factory walls. This is not due solely to the disappearance of the union shop steward who kept an eye on the clock, but by the pressures of the contemporary workplace and its supposed conveniences of voice mail, e-mail, and laptop computers—an “electronic collar” that holds workers accountable twenty-four hours a day, seven days a week.
The deterioration of pensions and retirement health care has also been a significant problem. First offered by stagecoach operator American Express in 1875, pensions became a common feature of the welfare capitalist employment landscape of the 1920s, were reflected in the old-age and unemployment guarantees of the New Deal, then grew rapidly in popularity during the Second World War, when government wage controls made them an attractive wage-alternative to lure employees. By 1949, inspired by the decision of a Federal District Court the previous year in the case of Inland Steel Co. v. National Labor Relations Board, which had affirmed that the right to bargain for work conditions under Wagner included the right to bargain for retirement benefits, pension and benefits packages were won in steel, coal, and the auto industry, and the expectation of a comfortable retirement as a reward for one’s working life became a staple of American culture. In the 1949 case W. W. Cross & Co. v. National Labor Relations Board similar bargaining rights were secured for health benefits. Employers lowered their own tax burden through pension contributions, and employees also got a tax break by having some of their income deferred to retirement, when they’d have less income overall. The Taft-Hartley Act, in order to limit the investing clout of unions, had directed that the responsibility for employee pension funds remain with management, although the act allowed for some joint union-employer control, an option that Thomas Geoghegan suggests unions erred in not pursuing more vigorously, as such oversight would have greatly empowered labor organizations financially.113
The notion of corporate-managed pensions went awry in 1963, when automaker Studebaker suddenly went broke, stranding the company’s forty-one hundred workers with only 15 percent of their retirement funds. Alarm spread nationwide about the possible fallibility of the system, leading to the passage in 1974 of the Employee Retirement Income Security Act (ERISA), which mandated that firms have enough money on hand to cover their pension obligations. ERISA also established the Pension Benefit Guaranty Corporation (PBGC) to back up worker pensions where firms went belly-up, although the PBGC could guarantee only a certain percentage on the dollar, meaning long-term employees caught in a corporate bankruptcy would be the losers.
The crisis first glimpsed at Studebaker proved the start of what by the 1980s became determined corporate backpedaling away from pension management. In the tightening global economy, CEOs had come to see that the obligation of making monthly payments to retirees over many years in what was known as the defined-benefit system, which is based on years of employee service and other factors, would be financially ruinous, particularly as the average life span of former employees and their spouses lengthened. United Airlines, US Airways, and Bethlehem Steel all dumped their costly pension burdens on the PBGC and the federal government, and the number of traditional pension arrangements held by U.S. companies overall fell from 115,000 in 1985 to 31,000 in 2005, as corporations pursued what New York Times labor reporter Steven Greenhouse termed “an unhealthy race to the bottom on retirement benefits.”114 Other firms disappointed older workers by reconfiguring their defined-benefits programs, changing over to what is known as a “cash-balance” system, calculating retirement benefits on an employee’s entire length of service, rather than allowing greater benefits to accrue more steeply in a worker’s final years, as had previously been the case. The cash-balance formula in some instances reduced the employee’s retirement pension by as much as half, thus seriously altering expectations and retirement planning. To some it meant that full retirement was no longer an option.
The 1990s bull market proved an ideal time to sell employees on another retirement innovation, the 401(k) account, which allowed the employer to shift responsibility to what is called a defined-contribution plan in which both employer and employee contribute to investment funds that are essentially managed by the employee. These individualized investment accounts not only required less of an employer contribution, saving companies millions of dollars a year, but freed them from having to arrange for the payout of retirement and health care benefits. With this method it was not the employer’s money but the worker’s that was subject to fluctuations in the investment market, although there was widespread faith that the nation’s economy would continue to expand, making investment in stocks and bonds a more dynamic route to future security than a standard company pension, while an economic reversal or seizure on the scale of the Great Depression was deemed impossible.
The reality proved much different. Individual employees turned out in many instances to be reckless investors. Some placed too many of their chips on aggressive but risky stocks; others depleted their 401(k)s or cashed them out when switching jobs; the most distressing stories were those of workers who loyally invested their 401(k)s exclusively in their own company’s stock, only to see their retirement nest egg obliterated when firms such as Enron tanked. Then, in the economic crises of 2001 and 2008, holders of these accounts learned that the value of even “solid” stock and bond portfolios can diminish or disappear overnight. Whether employees have used their 401(k) accounts wisely or not, the wide variation in the results obtained by individual employee-investors defies the notion of guaranteed retirement income inherent in the original movement toward pension savings.
All of these adjustments to the U.S. corporate pension system, as well as substantial increases in health care costs to individuals, have had the effect of making retirement as it was once viewed—an opportunity for travel, greater leisure time, perhaps relocation to the “retirement belt” of Florida, Arizona, or Southern California—increasingly obsolete. Vast numbers of Americans find the luxury of not working something they simply can’t afford. Many now either delay retirement or arrange to earn part-time income during what were to have been their golden years.
Where the phaseout of traditional corporate retirement benefits gets particularly messy is when a company’s benefits obligations are bound by union contract. It has become an article of faith among conservative critics of labor that it is the highly favorable wage and benefits pacts brokered by powerful labor unions that are to blame for U.S. firms losing ground to foreign manufacturers. This narrative has been recycled recently in the controversy over the federal government’s bailout of the U.S. auto industry, where considerable blame was laid at the feet of the UAW for having secured “sweetheart contracts” over the years with the Big Three automakers. Beginning in the late 1940s and 1950s, when auto manufacturing was in a growth phase and U.S.-made cars ruled the roads, the UAW negotiated a number of exemplary contracts, securing good wages, cost-of-living increases, and fat health care and retirement payments. Detroit signed on to these long-term arrangements because times were flush, assembly lines were humming, and they offered a means of saving money in immediate wage hikes at the bargaining table. As Greenhouse writes, the irony is that many of the current problems with, for example, General Motors’ benefits burden, often blamed on the UAW, came about simply because the union did a superb job at negotiating, winning for its members—and by extension all U.S. blue-collar workers—a shot at a middle-class lifestyle.115
Because of these generous pacts, however, GM had as of 2009 paid out $100 billion in retirement and health benefits over the past fifteen years, adding almost $2,000 to the cost of each new car. Even as its actual workforce fell to seventy-four thousand workers from four hundred thousand in 1970, the company was paying health benefits for 340,000 GM retirees and their spouses. Another frequently cited example of alleged union excess was the Job
s Bank, a twenty-five-year-old system by which UAW workers whose factories had closed were kept on salary (the program was dropped in 2009 in response to criticism).
The UAW feels unfairly singled out on the benefits issue. “Our contracts with Chrysler, Ford and GM represent only 10 per cent of the cost of assembling of a vehicle,” UAW head Ron Gettelfinger told Time magazine in 2009. “But most days it seems like we get 110% of the attention.”116
Where the UAW does deserve some blame for the auto industry meltdown is in its having sided with automakers in opposing more rigid fuel-efficiency standards, thus enabling Detroit to continue with the manufacture of gas-guzzling SUVs, earning short-term profits but neglecting to adapt to the market demand for smaller, more fuel-efficient vehicles.
ORGANIZED LABOR SHARES with environmentalism the willingness to challenge the actions of industry, but as in the UAW fuel efficiency controversy, the two do frequently lock horns over the impact of environmental regulations on jobs and economic growth. Some of the best-known struggles have involved federal listings under the Endangered Species Act that affect the logging industry in the Pacific Northwest, the banning of insecticides in agriculture, and the draining of wetlands for residential and commercial development.
The UAW has historically exercised an outsize impact on policies emanating from Washington because autoworkers constitute a massive voting bloc in Ohio and Michigan, states that are almost evenly divided between Republicans and Democrats and are thus fiercely contested politically. A modest financial contributor to the first Earth Day, the UAW initially appeared sympathetic to environmental concerns; but after siding with Congress in 1975 to raise automobile fuel-efficiency standards, the union did an abrupt about-face when data suggested the new standards were impeding the sale of Detroit cars. Beginning in the late 1970s, the UAW joined the Big Three automakers in opposing more regulations, and when in 1990 Congress again made a serious effort to tackle the problem by establishing “corporate average fuel economy” requirements, known as CAFÉ standards, in a bill sponsored by Senator Richard Bryan of Nevada, the UAW worked with automakers to defeat it. While the auto companies granted UAW members extended coffee breaks if they would use company phones to call their congressmen, UAW president Owen Bieber flew to Washington to stand with a Chrysler lobbyist in the hallway outside the Senate chamber, grabbing key senators to remind them that automakers and autoworkers alike were interested to know who would help defend their industry. The Bryan bill was defeated by a slim margin.
The Big Three automakers and the UAW were equally alarmed when Democrats Bill Clinton and Al Gore ran for the White House in 1992, vowing to address the fuel-efficiency issue. Clinton, an Arkansas native, was little known to autoworkers, but Gore had recently published a popular book, Earth in the Balance, warning of the effect the internal combustion engine had on global warming. The Republican Bush/Quayle ticket played on the UAW’s fears, running an ad in Detroit newspapers that read, “If Bill Clinton has his way 40,000 Michigan autoworkers will go from the assembly line to the unemployment line.”117 Once Clinton was elected, the UAW lobbied him hard not to act rashly on fuel efficiency; Clinton, deferring legislative action, instead established a task force to examine the “next generation” of American automobiles, and after Republicans seized control of Congress in 1994 fuel reforms became more or less a dead letter. In 1997, when the Clinton administration was preparing for international global climate change talks in Kyoto, the UAW again cautioned the president against commitments that would unfairly hamstring the U.S. auto industry and possibly result in layoffs.118
While the UAW maneuvering took place at the highest levels of government, a more familiar, everyday version of the labor-environmentalist rift occurs almost daily in city council and community planning meetings across the country, where building trades unions seeking construction jobs face off against forces opposed to excessive or inappropriate development. With the advent of green technology in building and energy design, as well as the initiation of forest stewardship programs by environmental groups like the Natural Resources Defense Council (NRDC), the argument that doing right by the environment costs people their jobs has lost some of its former intensity, and in many urban areas progressive forces have joined with labor to advocate for manufacturing retention—to save jobs, but also because keeping manufacturing in or close to cities is seen as energy efficient and a way to reduce transport-related pollution. Many environmentalists have countered labor’s anxiety about job loss by positing that the stewardship of natural resources and cleaner and more efficient forms of technology will not necessarily bring economic deprivation, but that newer green technology will itself produce enough jobs to offset those lost to the old.
At the same time, in response to the public’s greater awareness of the imperative of environmental action, many large businesses like Exxon, Shell, British Petroleum, and DuPont have learned the efficacy of publicizing their own environmental efforts, such as the creation of dedicated corporate energy-saving programs or research scholarships. Some of these efforts may be inspired by genuine concern and have positive results; many are derided by critics as stunts or “green-washing.” As far as organized labor’s occasional resistance to environmental reform, it’s worth noting that it generally pales in scope compared to the well-oiled reaction of the corporations and their conservative handmaidens, full-time business lobbyists like the Chamber of Commerce and issue-oriented conservative front groups such as the Alliance for Responsible CFC Policy, the Coalition for Vehicle Choice, or Nevadans for Fair Fuel Economy Standards.
THE WAY FORWARD FOR LABOR must involve global networks or coalitions of wage earners to match the power of transnational firms, and that will require nothing less than new ways of thinking and new means of coordination. Just as the issues of ozone depletion and global warming that emerged in the 1980s awakened scientists, environmentalists, and government agencies to the urgent need for global cooperation, so now do global labor economics compel a similar reorientation for labor. To follow the metaphor a step further, much as the release of industrial chemicals into the atmosphere by one nation impacts the residents of all nations, so do the wages paid textile workers in Honduras or Indonesia bear on the lives of textile mill employees in northern Mexico or North Carolina. What the United Students Against Sweatshops demonstrated in 2009 by successfully addressing the unfair treatment of foreign workers was the potential strength in unity of workers coordinating across national borders.
“Trade is global, capital is global, and labor too must become global,” insists Andy Stern, former president of the Service Employees International Union (SEIU), which, with 1.8 million members, is one of the nation’s fastest-growing unions, focusing on grassroots organizing at home and on organizing building and janitorial services, hospitals, and care providers. But the means of accomplishing or even beginning such an effort remains unclear. How does one organize labor under global circumstances, when the political, social, and economic contexts in which men and women (and children) go to work each day, the wages they receive, the protections they enjoy, are so dissimilar? How would one begin to write some sort of global Wagner Act, an international baseline of workers’ rights, let alone enact and enforce it?
The steps being taken in this direction have some of their philosophical grounding in the vigorous protests that met the November 1999 meeting of the World Trade Organization (WTO) in Seattle, and which have recurred at similar gatherings. While in the 1990s international trade pacts were negotiated with inadequate attention given to labor and environmental concerns, today such agreements and the powerful bodies that create them are monitored and sometimes checked by opposition from labor and consumer advocates, environmentalists, and human rights activists. “The labor movement’s message from Seattle could not have been clearer,” comments Jay Mazur of the Union of Needle Trades, Industrial and Textile Employees (UNITE). “The era of trade negotiations conducted by sheltered elites balancing competing commercial interes
ts behind closed doors is over.”119
Labor’s historic affiliation with the Democratic Party also has come under renewed scrutiny. The relationship, despite the Democrats’ clear superiority to the Republicans on labor issues, has over the long term often been disappointing. By placing expectations for needed reforms on the shoulders of elected officials, labor’s own motivation to act as an agent of social change has diminished, and when Democrats fail to deliver on labor’s hopes, the movement faces the demoralizing fact that it has only its “friends” to criticize. As early as 1940 John L. Lewis had begun to fear the labor movement’s adherence to the party of the New Deal and lawmakers in general. Certainly the risk of ceding the independence and fighting instinct of labor to a regime of government-derived and -enforced “labor practices” became apparent in the era of Taft-Hartley, when Congress pulled the rug out from under many of the labor protections won in 1935, a move even the combined efforts of labor and the Democratic Truman administration could not deter. By 1953, the outlines of Lewis’s earlier premonition had become so clear, he told a Senate committee that as far as he was concerned not only Taft-Hartley but even the Wagner Act should be repealed. “This would give to this country, its employers and employees,” he insisted, “an opportunity … to practice for a season true, free and genuine collective bargaining without government interference, free from the brooding shadows which presently hover over all bargaining tables.”120 Even when Democrats supported by labor have won control of the White House and both houses of Congress, as in the Johnson, Carter, and early Clinton administrations, obtaining labor reforms has proven a daunting and at times insurmountable challenge.
