The Raging 2020s

by Alec Ross

  In the early 20th century, the American labor movement began distancing itself from revolutionary politics. This rebranding, spearheaded by American Federation of Labor president Samuel Gompers, helped bring unions into the mainstream. As organized labor became more popular, so too did the policies it espoused. Many cornerstones of the industrial age social contract, including minimum wage standards, eight-hour workdays, and child labor laws, were popularized and otherwise driven by labor groups across the West. While these proposals seemed radical at the time, they proved critical to balancing the scales of power between employers and employees.

  After the Second World War, organized labor served as the backbone of the booming industrial economy. Through their union, people without a college education found a track to the middle class. Unions provided safe conditions at work, a good paycheck to take home, health coverage when they fell ill, and a pension plan when they retired. With this economic security, workers could purchase a home, raise a family, and afford the innovative products rolling off the country’s bustling assembly lines. In the first two decades after the war, Americans saw their purchasing power double.

  It is a period that contradicts the assertions made in favor of Milton Friedman’s shareholder capitalism. As Dr. Martin Luther King Jr. accurately put it, “the labor movement did not diminish the strength of the nation but enlarged it. By raising the living standards of millions, labor miraculously created a market for industry and lifted the whole nation to undreamed of levels of production. Those who attack labor forget these simple truths, but history remembers them.”

  The golden age of American unions, which lasted from the Flint strike to the early 1980s, coincided with the lowest levels of economic inequality the United States has ever seen. During the 1970s, the proportion of income that went to the top 1 percent of earners was approximately half of what it is today. Pay within companies was more equitable too. In 1978, corporate CEOs earned approximately $30 for every $1 earned by workers. Forty years later, they were making $278 for each $1 that went to workers. During that period, compensation for CEOs grew 940 percent, while pay for other workers increased only 12 percent.

  For workers, joining a union directly translates to higher paychecks. Across industries, union members earn 15–25 percent more than they would if they did not join a union. Because unions can influence norms across the labor market, even nonunion workers benefit when there is a strong organized labor presence in their industry. When a quarter or more of an industry is unionized, pay for nonunion workers increases an estimated 5 percent. Among economists, this bump in pay is known as the union effect.

  But as union membership in the United States has declined, workers across the private sector have seen their wage growth grind to a halt over the past forty years.

  If the golden age of the American union began with the GM sit-down strike, the event that marked its end was the PATCO strike. In the summer of 1981, the Professional Air Traffic Controllers Organization (PATCO) was stuck in heated negotiations with the Federal Aviation Administration, demanding raises and shorter hours for its members. With the talks deadlocked, the union ordered some thirteen thousand air traffic controllers to walk off the job on August 3. Thousands of flights were grounded across the country. President Ronald Reagan threatened to fire all controllers who did not return to work within forty-eight hours. On August 5, he did. The FAA soon had planes back in the air, and the government imposed a lifetime ban on all eleven thousand air traffic controllers fired by the president.

  Reagan’s decision sent a clear message to employers across the country: do not let strikes intimidate you. Following the administration’s lead, company management started simply replacing workers who went on strike instead of conceding to workers’ demands. In one fell swoop, the labor movement lost its most powerful negotiating tactic. The unions never recovered. There were 234 strikes involving a thousand or more workers per year on average in the United States in the five years before the PATCO strike. In the five years after it, the number fell to 72. Over the course of the 2010s, the average was 15. Joseph McCartin, director of the Kalmanovitz Initiative for Labor and the Working Poor at Georgetown University, said without the ability to strike, unions lost all their leverage.

  “More and more, employers wanted strikes because they could use a strike to break the union or severely weaken it,” McCartin told me. “As workers lost the ability to engage in strikes, even when they were in unions, they didn’t have the power they used to have. They didn’t have the ability to bargain effectively because they no longer had that ultimate weapon.”

  Though the PATCO strike accelerated their decline, labor unions also helped to sow the seeds of their own demise. Beginning in the late 1950s, public perception of unions started to decline. An early blow came in 1957 when Jimmy Hoffa, the outspoken, mob-connected president of the Teamsters, was wrapped up in a federal investigation that uncovered corruption, fraud, tax evasion, extortion, beatings, and murder. He would later go to prison for attempted bribery, conspiracy, and fraud. In the words of Robert De Niro’s character, Teamster assassin Frank Sheeran, in the movie The Irishman, “Back then, there wasn’t nobody in this country who didn’t know who Jimmy Hoffa was.” Undoubtedly, many of those people started to link organized labor with organized crime.

  Unions also clashed with the counterculture of the 1960s. They came to represent the kind of conformist, workaday lifestyles of an older generation. AFL-CIO president George Meany was the person who coined the phrase silent majority, referring to the conservative, working-class white voters who propelled Richard Nixon to the White House.

  By the mid-1980s, unions were fighting an uphill battle against economic, political, and social change. Companies’ embrace of shareholder capitalism gave the executive suite and boardroom all the leverage it needed to minimize workers’ wages. Then, as globalization ramped up in the 1990s, workers lost even more power. The labor movement has been largely constrained by geography, and even within the United States workers have been vulnerable to the sudden corporate relocations. While unions long had a firm foothold in the industrialized north, they did not have as much traction in the south, which incentivized companies throughout the last fifty years to shift their operations to friendlier labor markets in the south if workers ever demanded too much. Unionization levels vary widely and wildly in the United States. Only 3 percent of workers in the Carolinas are unionized, compared with an average of 15 percent in Illinois, Pennsylvania, Michigan, and New Jersey. This is why my wife’s car was built in Alabama. When the world opened up rapidly at the end of the Cold War, executives discovered vast new options abroad for less expensive labor, which continued to erode the power of workers, both at home and abroad. American unions have only continued to hemorrhage members and fade into the background, with sweeping effects across society and the economy.

  SIX CENTS ON THE DOLLAR

  When workers got hammered following the financial crisis of 2008–9, they did not turn to their unions for inspiration and action. They turned to populist political leaders championing economic protectionism and anti-immigrant policies.

  This trend came as a surprise to many elites in business, government, and academia, who assumed the globalism that emerged in the 1990s had permanently reshaped the world order for the undisputed better. As experts conducted postmortem studies, wrote think pieces, and made pilgrimages to parts of the country where fiery populists drew support, they discovered a large community of people who were disenfranchised and raging at yesterday’s institutions, including their unions. The prosperity that globalization brought to cities like London, New York, Milan, Paris, and San Francisco had not spread to the UK’s Midlands, the US’s Rust Belt, Italy’s south, or France’s communes périurbaines. This was exacerbated by the fact that coinciding with the movement of manufacturing jobs away from their original industrial bases in the heartland were mergers and acquisitions and tax optimization that pushed executive jobs away to fewer points on the
map. More than two-thirds of the job creation that took place in the United States since 2007 was concentrated in just twenty-five cities and counties. Similar dynamics could be seen in the UK where just three or four cities owned all the country’s job growth, in Italy where Milan and a few regions in the north owned all the growth, and in other regions across the West. The places that had served as the backbone of the industrial economy played a reduced role in the digital economy, and the people who lived there became politically radicalized in one direction or another.

  When I was growing up in West Virginia, the state was one of the most reliably Democratic and left-leaning states in the nation, rooted in the pro-union, pro-worker politics of Democratic tradition. At the beginning of the 21st century, the politics shifted, and today it is reactionary and palingenetic, aspiring to return to a time and place of myth and imagining. Though part of the backlash is rooted in old-fashioned xenophobia, much of it is driven by a pervasive sense of economic insecurity. The well-paid union jobs that bolstered the middle class in the mid-20th century had slipped away, and the opportunities that took their place did not always pay the bills. Alongside this is the emasculation that comes with what philosopher Michael Sandel calls “the tyranny of merit”: if you are successful economically, you are seen as having “made it,” and that validates whatever you do and whoever you are, irrespective of whether what you do makes a moral contribution to society or not; and conversely, if you are not university educated and wealthy, your standing is diminished.

  In the supercities where the wealth creation took place, the politics shifted in the other political direction. To be working-class in New York, San Francisco, or London was to no longer be able to afford to live there. The costs of housing shot to the moon. Every day, you got an eyeful of well-being you did not share in. This formed the basis for the growth of an increasingly powerful political movement on the political left.

  A 2020 study by former Treasury secretary Larry Summers (a bête noire of the Left) and Harvard economist Anna Stansbury found that both American economic performance and sluggish wage growth for workers were direct results of workers losing their bargaining power. The loss of worker power went beyond the decline of unions, they argued. It also resulted from the private sector’s fervent embrace of shareholder capitalism. “The rise of the shareholder value maximization doctrine increased the power of shareholders relative to managers and workers, likely increasing pressure on firms to cut labor costs and … to redistribute rents from workers to shareholders,” they wrote.

  In other words, companies were making more money, but fewer of those gains benefited their employees. At the end of the Cold War, workers received an estimated eleven cents of every dollar they earned for their employer. Thirty years later, they made less than six cents on the dollar. In effect, the personal returns employees received for their labor were cut in half.

  “Declining unionization, increasingly demanding and empowered shareholders, decreasing real minimum wages, reduced worker protections, and the increases in outsourcing domestically and abroad have disempowered workers with profound consequences for the labor market and the broader economy,” Summers and Stansbury wrote.

  Today many people blame globalization and technological change for the growing inequality we see in the United States, but Summers and Stansbury say that argument misses the point. Every developed country saw its economy reshaped by technology and globalization over the past thirty years, they write, but only the United States experienced such a dramatic increase in the wealth gap between labor and capital. Their report offers an explanation: the real reason the US is so unequal today is that the country elevated shareholders and weakened labor unions to a greater extent than any other nation in the industrial world.

  Summers and Stansbury’s verdict is that “declines in worker power have been major causes of increases in inequality and lack of progress in labor incomes.” To address the problem, they added, the business community and country at large need to rethink their approach to economic prosperity.

  “[This conclusion] raises questions about capitalist institutions,” they write. “In particular it raises issues about the extent to which corporations should be run solely for the benefit of their shareholders. This would suggest that policy should tip the balance more in the direction of supporting union organizing activities and empowering unions.”

  The effect of this shapes more than just economic systems—it shapes culture and politics. If you work hard at your job but are falling further behind, and you hear the urban elites telling you that the answer is to get a college degree, you begin to feel like you’re being told by the winners of the meritocracy that you are unworthy, that your contribution to society is less valuable than theirs, regardless of whether their high-income work is parasitic or humanitarian. The parallel cultural politics of meritocracy that equates economic success with moral worth and social esteem is a dangerous force in politics, because it means that when inequality rises not only do people get poorer, they also get angrier.

  THE STATE OF THE UNIONS

  The people who led the sit-down strike against General Motors in 1936–37 would look with dismay at their union today. In September 2019, members of the United Auto Workers again went on strike against GM. Nearly forty-eight thousand workers walked off the job for forty days, making it the longest auto workers’ strike in fifty years. Workers eventually won small concessions from GM, but they failed to stop the company from shutting its plant in Lordstown, Ohio. That meant thousands of positions would permanently relocate to Mexico, continuing the decades-long decline in American car manufacturing jobs. While the UAW billed the deal as a win for workers, its members felt less enthusiastic—only 57 percent voted to approve the contract.

  Less than a month later, UAW president Gary Jones resigned his post amid federal charges for racketeering and embezzlement of more than $1 million in union funds. The striking GM workers lost hundreds of millions of dollars in wages, while Jones was spending their dues on luxury condos, fancy dinners, and custom-made golf clubs. He pleaded guilty in June of 2020. Just two months later, his predecessor as president of the UAW was also arrested and charged with embezzlement and fraud.

  Most union leaders are not brazenly using their organizations for illicit personal gain, but this example illustrates a stark contrast now evident within many of the largest unions. While union workers are seeing the slimmest of benefits, their leaders are living a lifestyle that their predecessors during labor’s heyday neither enjoyed nor aspired to.

  The men who run the UAW, the AFL-CIO, and the Teamsters are far removed from the factory floor these days. Headquarters for organizations such as the Teamsters and the AFL-CIO are located on prime Washington real estate, with majestic views of the Capitol and the White House. In 2019, the head of the Teamsters, James Hoffa Jr. (Jimmy’s son), earned a nearly $400,000 salary—that would be unimaginable to the beer truckers I worked with.

  The disconnect between union leaders and their members is also the result of organizational structure. Today, the AFL-CIO represents 12.7 million workers across fifty-five different unions, about three-quarters of all union members in the United States. This consolidation gives it more weight to throw around, but also ends up distancing the decision makers from the everyday concerns of workers. Trumka and other AFL-CIO officials are elected not by workers, but by the presidents of the unions they represent. According to Richard Freeman, a labor economist at Harvard, “one expects them to be ‘establishment.’”

  The end result is bloat among the top-heavy unions and an all-around failure to keep up with the economic reality of the 21st century. Labor movements in the age of Uber require agility and willingness to try new things. But, as Freeman notes, the major unions lack both. “The existing unions are very bureaucratic organizations,” he said. “The typical union is not very innovative. You have a bunch of fifty- sixty-year-old characters leading these unions—they’re not start-ups.”

  Moreover
, as Georgetown professor Joseph McCartin observes, unions have taken so many hits over the years that they are stuck in a defensive mindset.

  “In this country, to simply have a labor movement has always been a challenge,” he said. “Think about the degree to which the public culture celebrates individualism, think about the size and expanse of the labor market in this country … think about how that market has been segmented by race, by immigration. To build a union movement in the United States has always been a very, very difficult project. The law has rarely ever supported it—most of the time the law was adamantly arrayed against it. So it has bred in the union movement a sense of defensiveness among people who rise up to positions of leadership. Often they’re most concerned with preserving the institution against the things that would destroy it.” Risk taking, that is, “has never been their forte.”

  In the more than one hundred interviews conducted for this book, none left me feeling more conflicted than the one with AFL-CIO president Richard Trumka. The first thing you see as you walk into the lobby of the federation’s headquarters in Washington, DC, is Labor Omnia Vincit, a seventeen-foot-tall, fifty-one-foot-wide mosaic mural depicting scenes from a futuristic world, captured in marble, glass, and gold. As I gawked at it, a security guard informed me it was the largest freestanding mural in North America.

  Trumka comes from a long line of union coal miners, many of whom died from black lung, as my great-grandfather did after decades of work around the mines after emigrating from Italy. Trumka’s gruff voice hearkens back to his own time in the Pennsylvania coal mines, where he worked through college. Now in his seventies, with a stocky build and Mike Ditka mustache, Trumka looks like a seasoned football coach.