Trade Unions in America Gerry OShea
In April of
last year some of the heads of the country’s biggest banks appeared before the
House Financial Services Committee in Washington to address questions about
various monetary issues and for a general review of the banking industry ten
years after the Financial Crisis.
These men –
yes, all men – also knew they would face some questioning about their own
salaries, all in annual multi-millions, which some members of the committee considered
a bit brazen especially after their unimpressive leadership in the banking
crisis.
Congresswoman
Katie Porter from California used her time on the mic to deal with a
constituent’s concerns. She explained that a woman, Marie, had contacted her
with a very challenging story. She is a single mother working for JPMorgan
Chase and earning a post-tax annual salary of $29,100. The congresswoman
documented her expenses for food, housing, childcare and the cost of running
her 12-year old car.
Ms. Porter
explained that, after cutting every corner to save money, Marie was still short
$567 every month, leading to a series of questions for Mr. Jamie Simon, the CEO
of the bank, whose salary the previous year topped 30 million dollars. How did
he suggest that his employee should deal with her conundrum? Should she use a
Chase borrowing card or seek a line of credit from the bank? The congresswoman set
out these options and pressed him for his opinion.
Mr. Simon
was taken aback, completely nonplussed by the series of unexpected questions.
His facial expression conveyed a sense of dismay at being subjected to such
public scrutiny about an issue that never crossed his desk. Did the
congresswoman not understand that new employees are hired at whatever salary is
decided by the Human Resources Department, while the deliberations in his suite
of offices in the top floor deal with matters of much greater gravity? He
kicked to touch, claiming in a textbook non-answer that he would need time to
think before replying.
New York Democrat, Nydia Velasquez, noted that
the Citigroup CEO, Michael Corbat, got 24 million for his leadership of the
bank the previous year while the median employee salary is under $50,000. His
salary, the congresswoman calculated, was 486 times more than the average
worker’s. “Does this ratio seem fair to you?” she asked the irritated CEO.
Corbat was
not impressed by her focus on his remuneration and his reply was meant to end
the colloquy without further interrogation: “My compensation is decided by our
board and voted on by our shareholders.”
The ranking
Republican member, Mr. Patrick McHenry from North Carolina, accused the
Democrats of staging a political stunt and criticized them for not focusing
their questions for the bank bosses on issues like the Brexit crisis. He
condemned the Democrats’ “attack on our economic system and the nature of our
market.”
Mr. McHenry
was right in claiming that the issues raised by the Democrats point to systemic
problems. The banks make substantial profit because of the efforts of all the
employees, but who decides how to divvy up the resulting financial benefits
from the business. The answer points to the people at the top and, true to
form, they take good care of themselves.
So, the CEO gets thirty million and the people
taking care of the customers struggle to pay their weekly bills. Marie and her ilk
are paid a going rate and should be happy with an annual increase of 3% or so.
That is the way the system works.
This unfair
situation makes the case clearly for the urgent need for trade unions whose
purpose is to make sure that employees’ salaries and benefits are on the table
for negotiation and their paychecks reflect the company’s success. Mike Quill, the great union leader and founder
of the Transport Workers’ Union, always made his case publicly in terms of achieving
decent living conditions for his members and their families. That priority has
not changed for workers and their children.
Since 1989
the working class share of total income in America has declined from 45% to
27%; the marginal tax levied on top earners has been reduced from 72% in 1970
to 37% today; in the same time frame the number of millionaires has increased
from 120,000 to 18.6 million.
Milton
Friedman, who died in 2006, was the doyen of conservative economists and
exercised significant power over right-wing leaders, including President Ronald
Reagan and Prime Minister Margaret Thatcher. One of Friedman’s core beliefs is
that in his words “the social responsibility of business is to increase its
profits.” Or as Michael Douglas famously proclaimed when playing Gordon Gekko
in the 1987 movie Wall Street “greed is good.”
Back in Mr.
Friedman’s time in the 1970s, about 18.2 million workers carried a union card
which gave them a voice in their demands for a decent wage and humane working
conditions. Today only 14.6 million of a much larger work force are organized.
Titans of
industry like the Koch Brothers and nearly all the corporate sector resented
the intrusion of trade union negotiators demanding better salaries and
conditions for their members. They used their clout, especially in state
legislatures with Republican majorities, to make it harder for employees to
organize and more difficult for unions to assert real power in the workplace.
Despite big
improvements in company profits, mainly because of major developments in worker
productivity, ordinary workers’ salaries, allowing for inflation, have remained
stagnant while millionaire numbers have been multiplying every year.
In the three
months from March of this year, as the country tried to come to terms with the
hated COVID, American billionaires increased their wealth by a massive 282
billion. The 119 billionaires in New York State upped their bank accounts by
77.3 billion dollars in the same three months.
Keep in mind
that during that time 2.5 million workers lost their jobs and tens of thousands
more of essential workers, for instance supermarket shelf stackers, bus drivers
and hospital staff, put their lives on the line every day, often at meagre
salaries. We rightly called them heroes but expected many of them to get by on
$15 an hour.
Clearly, the
blatant discrepancy here between the lifestyle and entitlements of these two
groups in American society – the millionaires and “ordinary” workers -cries out
for structural changes in our economic system.
The
propaganda against unions and the ineptitude of some labor leaders have led to
a diminution of workers’ rights and a levelling of take-home paychecks. The
Supreme Court, with its conservative majority, overturned a 40-year decision
that permitted public workers’ unions to collect a service fee from non-members
who, after this ruling, can benefit from a union contract without paying for
the service.
Unionization
is much higher in Europe – up to 75% in the Nordic countries – and workers
benefit from the focus on what they call the social wage, which is central in
all negotiations. This includes family healthcare, working conditions and
pension entitlements.
After giving
birth in America, many women, shamefully, are back at work a week later. In
nearly all the European Union countries a nursing mother gets months at home with
most of her salary coming in every week. Only 14% of non-public workers in the
United States get any paid family leave.
Despite all
the problems that organized labor faces today in America, union members still
earn significantly more, in the region of 30%, and generally enjoy better
benefits than their non-unionized counterparts. Ask any of the union
construction workers in the tri-state area about their salary and benefit
package. It is hard to understand why American employees are so meek and
undemanding that they settle for a situation where they have no negotiating
power. The boss dictates!
Peter Ward,
head of the Hotel Trades Council, clearly bewildered by many workers’
unwillingness to support union representation, summed the situation up this way
in a speech last year: “To me the definition of stupid is a person who doesn’t
exercise enlightened self-interest.”
Republicans
are accusing Joe Biden every day of being a far-left socialist. His policies
involve some serious alterations in the country’s taxation and investment
systems. Polls reveal that young people want major changes in the way the
economy is organized, and a President Biden may assume the unlikely mantel of a
radical.
There will be no real progress for workers in
America without significant growth in trade union membership and strong worker
representation in board rooms and at the highest level of every Government
Department.
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