Commentary

Author: John Kretzschmar

Publication: Omaha World Herald

Date: June 27, 2012

The author is director of the William Brennan Institute for Labor Studies at the University of Nebraska at Omaha.

The fate of the American labor movement, particularly in the public sector, will be continually in the news as we near the November election.

After Wisconsin Gov. Scott Walker's victory in the recall election, some pundits are describing the demise of organized labor. Those who do so are suffering from a case of "historical amnesia."

They do not remember that organized labor successfully defeated by referendum a more far-reaching anti-union bill in Ohio last November. Union members and their supporters garnered 62 percent of that vote. Unfortunately, a similar referendum option was not available to the electorate in Wisconsin.

In a recent World-Herald commentary, Harold Meyerson asked what life in the United States would have been like if or- ganized labor had not existed. It is not accidental, Meyerson reasons, that during the heyday of the American labor movement, our nation's wealth was broadly shared and family incomes for all segments of the nation nearly doubled as wage increases paralleled gains in worker productivity.

There's not much dispute that labor unions use collective bargaining to improve levels of workplace fairness and justice for union members. What is less appreciated, and hinted at in Meyerson's column, is that labor unions indirectly improve the well-being of non-union wage earners through the "spillover" and "trickle up" effects.

When density is significant, union contracts become the benchmark for non-union employers — a phenomenon called the "spillover" effect. Additionally, union contracts also have a "trickle up" effect when employees of unionized employers, who are not in the bargaining unit, see their wages and benefits improve as the result of the last set of union negotiations.

Meyerson is not alone. He shares his understanding of the benefits that flow to wage earners from unionization with columnist George F. Will. In 1977, Will observed during a period of relatively high unionization, "I think American labor unions get a large share of the credit for making us a middle-class country."

These comments by both Meyerson and Will lead to another observation about the benefits of unionization: the importance of consumer spending to our gross domestic product (GDP).

Consumer spending is the GDP's single largest component. Large corporations are presently sitting on $1 trillion in cash. They are waiting for the right time to invest it. I suggest that the investment decision will be made when senior decision-makers are assured that there is a reliable amount of consumer demand for goods and services.

The importance of increasing consumer demand was the topic of a recent video by billionaire Nick Hanauer. He observed that consumers are the "job creators" in our society and that growing levels of income inequality are bad for the U.S. economy.

Hanauer essentially stated that public- and private-sector employers directly and indirectly benefit from improved wages and working conditions because the best customer of American corporations is the well-paid wage earner.

So as we get closer to the November elections, it is important to look at the benefits of unions for average voters. Unions created a ladder of opportunity they used to climb up from poverty. As Meyerson and Will noted, unions were the tools that helped the everyday wage earner gain a fair shot at the American Dream.

Rather than vilify the American labor movement, we should appreciate that unions are the only institutions in our society that introduce democracy into the workplace and allow employees to collectively negotiate with employers about wages, hours and terms of employment.

Perhaps more importantly, we should remember that without unions in the public sector, government has a tendency to reduce public servants to a commodity that they wish to purchase as cheaply as possible. In 1968, Dr. Martin Luther King Jr. was assassinated while helping public sector employees resist a management mentality of "do more with less."

Without unions, there is a strong likelihood that income inequality will continue to grow. That reality will not benefit the average wage earner or our economic recovery.