Big business v big labour

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ASKED WHAT labour wanted, Samuel Gompers, founding president of the American Federation of Labour in the late 1800s, is often quoted as responding: “more”. His actual answer was surprisingly lyrical. “More schoolhouses and less jails…more learning and less vice…more leisure and less greed…more of the opportunities to cultivate our better natures.” His ability to tie loftiness to pragmatic demands for better wages and working conditions helped make the labour movement a powerful and popular force.

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After years in decline, big labour is regaining both power and popularity. Joe Biden, whose political career began in the union-friendly 1960s, has vowed to be the most pro-union president in history. Feeling newly empowered, workers have staged 241 big strikes this year, 58 of them in November alone. Unions are popping up in surprising places. Last month curators at Boston’s Museum of Fine Arts, who set one up last year, downed catalogues for a day. On December 3rd Liz Shuler, new head of the AFLCIO, the successor umbrella group to Gompers’s organisation, said big tech is the next frontier to be organised. Workers at Alphabet and Kickstarter have already set up unions. Amazon is in the midst of a protracted conflict at a warehouse in Alabama. All this is going down well with Americans. Public support for unions has reached 68%, according to polling by Gallup, a level not seen in half a century.

That presents a pickle for businesses. On the one hand, they are already dealing with a tight labour market. On the other, taking on unions risks angering consumers and potential hires, as well as the president. To balance these competing objectives companies must tread carefully.

These days the first-order answer to the Gompers question given by both the Biden administration and big labour is “more trade unions”—or, as the labour movement and its supporters put it, an increase in the “density” of union representation. Only then, the reasoning goes, will better pay, benefits and working conditions follow. The primary objective has been pursued vigorously. Minutes after his oath of office in January Mr Biden dismissed the general counsel of the National Labour Relations Board (NLRB), who acts as the de facto government prosecutor in labour-management disputes. The general counsel’s office has since reversed procedures adopted under Mr Biden’s more pro-business Republican predecessor, Donald Trump, and pushed to undo older rules, some dating back to the days of Harry Truman. In late November the NLRB voided the result of the unionisation vote at Amazon’s Alabama warehouse, which the e-commerce giant carried by more than two to one, and on December 7th it allowed vote-tallying at three Starbucks cafés to go ahead.

More densification efforts are afoot. Two bills to expand labour power directly are unlikely to go anywhere, given the Democrats’ slim majorities in both houses of Congress. But worker-friendly provisions have been sewn into other legislation. The new bipartisan infrastructure law directs spending to projects with union labour. Mr Biden’s $2trn social- and climate-spending bill, which has passed the House, includes the tax deductibility of dues and tax credits for electric cars made by unionised workers (as well as heavy fines for labour-law violations). A report of a “whole-of-government” task-force set up by the White House to come up with pro-labour policies that could be advanced without new laws is due out any day. It has received more than 400 suggestions.

This revival of organised labour could yet turn out to be a blip. Previous ones petered out; a series of strikes in 1945-46, accompanied by rising inflation, soured the public mood and led to the passage of the more restrictive legislation that remains in force to this day. Unionisation rates have been declining for decades across the West, not just in America. Still, companies are not taking any chances. They are pursuing two main strategies.

The first one is to keep quiet. Rather than inveigh against new labour rules, companies are keeping a low profile. They are operating through big business groups such as the National Association of Manufacturers and the US Chamber of Commerce. Both have been lobbying furiously against pro-labour provisions under consideration in Congress, with some success.

If firms have no choice but to respond directly, as when facing a unionisation drive, they also proceed discreetly. Most CEOs avoid public statements on such matters. Their comments, says a longtime labour lawyer, can be used as evidence of unfair labour practices or provoke a customer backlash. When they do speak up, it is in anodyne terms such as praising the “direct relationship” between employer and employees, as Starbucks’s boss, Kevin Johnson, did this week. Businesses also rely on third-party consultancies and specialised law firms to conduct surveys to gauge worker dissatisfaction (which may lead to disputes and, eventually, union drives), and organise message bursts and workshops to help convince workers (unthreateningly, since anything else would be illegal) that union dues is not money well spent.

Fruits to their labour

The second strategy involves being very loud indeed. Companies are publicising higher wages and benefits. In October Starbucks announced its third rise in just over a year. It will pay baristas at least $15 an hour by 2023, more than twice the federal minimum wage. Amazon has set a floor at $18 for new employees, plus signing bonuses and other perks. Other firms have no choice but to follow suit. According to the Bureau of Labour Statistics, compensation for non-union private-sector employees rose by 1.4% in the third quarter, compared with the second, the biggest jump in a decade. The Conference Board, a business-research outfit, finds that companies expect to raise pay by 3.9% in 2022 on average, the most since 2008. A lot of this is the result of a worker shortage. That it helps pre-empt union demands is a welcome side-effect. One thing is clear. Organised or not, it is labour’s moment.

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Read more from Schumpeter, our columnist on global business:
Can Johnson & Johnson put the taint of scandal behind it? (Dec 4th 2021)
Decoupling is the last thing on business leaders’ minds (Nov 27th 2021)
Walmart gets its bite back (Nov 20th 2021)

This article appeared in the Business section of the print edition under the headline “Big labour v big business”



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