New Clear Vision

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Time to Fight Back

June 28, 2011 By: NCVeditor Category: Economy, Politics, Robert Reich

The War on Workers Undermines Economic Justice

by Robert Reich

The battle has resumed in Wisconsin. The state supreme court has allowed Governor Scott Walker to strip bargaining rights from state workers.

Meanwhile, legislators in New Hampshire and officials in Missouri are attacking private unions, seeking to make the states so-called “open shop” where workers can get all the benefits of being union members without paying union dues. Needless to say this ploy undermines the capacity of unions to do much of anything. Other Republican governors and legislatures are following suit.

Republicans in Congress are taking aim at the National Labor Relations Board, which is likely to consider a relatively minor rule change allowing workers to vote on whether to unionize soon after a union has been proposed, rather than allowing employers to delay the vote for years. Many employers have used the delaying tactics to retaliate against workers who try to organize, and intimidate others into rejecting a union.

This war on workers’ rights is an assault on the middle class, and it is undermining the American economy.

The American economy can’t get out of neutral until American workers have more money in their pockets to buy what they produce. And unions are the best way to give them the bargaining power to get better pay.

For three decades after World War II — I call it the “Great Prosperity” — wages rose in tandem with productivity. Americans shared the gains of growth, and had enough money to buy what they produced.

That’s largely due to the role of labor unions. In 1955, over a third of American workers in the private sector were unionized. Today, fewer than 7 percent are.

With the decline of unions has come the stagnation of American wages. More and more of the total income and wealth of America has gone to the very top. The middle class’s purchasing power has depended on mothers going into paid work, everyone working longer hours, and, finally, the middle class going deep into debt, using their homes as collateral.

But now all these coping mechanisms are exhausted — and we’re living with the consequence.

Some say the Great Prosperity was an anomaly. America’s major competitors lay in ruins. We had the world to ourselves. According to this view, there’s no going back.

But this view is wrong. If you want to see the same basic bargain we had then, take a look at Germany now.

Germany is growing much faster than the United States. Its unemployment rate is now only 6.1 percent (we’re now at 9.1 percent).

What’s Germany’s secret? In sharp contrast to the decades of stagnant wages in America, real average hourly pay has risen almost 30 percent there since 1985. Germany has been investing substantially in education and infrastructure.

How did German workers do it? A big part of the story is German labor unions are still powerful enough to insist that German workers get their fair share of the economy’s gains.

That’s why pay at the top in Germany hasn’t risen any faster than pay in the middle. As David Leonhardt reported in the New York Times recently, the top 1 percent of German households earns about 11 percent of all income — a percent that hasn’t changed in four decades.

Contrast this with the United States, where the top 1 percent went from getting 9 percent of total income in the late 1970s to more than 20 percent today.

The only way back toward sustained growth and prosperity in the United States is to remake the basic bargain linking pay to productivity. This would give the American middle class the purchasing power they need to keep the economy going.

Part of the answer is, as in Germany, stronger labor unions — unions strong enough to demand a fair share of the gains from productivity growth.

The current Republican assault on workers’ rights continues a thirty-year war on American workers’ wages. That long-term war has finally taken its toll on the American economy.

It’s time to fight back.

Robert Reich is Chancellor’s Professor of Public Policy at the University of California at Berkeley. He has served in three national administrations, most recently as secretary of labor under President Bill Clinton. He has written thirteen books, including The Work of Nations, Locked in the Cabinet, Supercapitalism, and his most recent book, Aftershock (now available in paperback). His “Marketplace” commentaries can be found on and iTunes, and he regularly blogs at

0 Comments to “Time to Fight Back”

  1. Moments of social crisis may provide us with opportunities for social change: and of course, social changes can initiate social crises. But there are alternatives.
    At the moment we are all subject to a credit crunch; a banking crisis; a financial collapse and economic recession leading to a global depression and deflation and debt. Owners are closing work premises. Banks and finance houses are collapsing as their customers and investors withdraw their cash, and clients default on their loans. At this time, 2011, factories and offices and shops are closing down and becoming vacant lots. Their workers and officers and managers are being made redundant, and unemployed, to become the responsibility of the State and the benefit systems. This is not the first time that such crises have occurred. Year 2000, in Argentina, and Bolivia and Colombia in response to the collapse of their economies, and the bankruptcy of the owners and shareholders, some unemployed groups moved to create workers factories, ‘Tomas’, to Occupy! Resist! Produce! The empty lots, factories, offices, hotels, shops, had been abandoned by the owners and locked up. The rationale behind the Tomas had been the preservation of jobs, with workers entrenching themselves in factories and physically occupying them, resisting ejection by the police. Some of the workers decided to occupy the lots, takeover the companies, and to start up again as cooperatives.[ a co-operative is an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise with voluntary and open membership; democratic member control; member economic participation; autonomy and independence; education, training and information ; co-operation among co-operatives; and concern for community.] These workers gathered together as committees to make decisions about how to run the enterprises. Most of their takeovers were later developed as cooperatives. They knew how to operate the enterprises, the machines and processes, but not how to finance them. They had occupied the premises, and got them working again. But under the law, they were trespassers. They were not running a legal entity. In fact the enterprises were bankrupt, debt ridden and could not be recognized for the purposes of contracts and loans. Initially, the tomas appealed to the national governments for finance to legalize their occupation. The experiences in Argentina showed clearly that each worker enterprise, TOMAS required financial aid, legal aid, and skill training programs in order to survive as a going concern. It was only later in 2004 under a different government that the rules were changed, and government aid was offered to support them as workers cooperatives. A recent report by Ana Dinerstein indicated that of the 161 TOMAS, most operate at only a fraction of the full capacity (in relation to the volumes produced before the crisis), primarily as a result of a lack of capital investment, poor labor utilization and the weaknesses of management. In addition there are difficulties in the marketing of the products and capacity to compete in national markets.We have already seen that across the capitalist world, 2008/9 governments have been more than willing to bailout the owners and shareholders of bankrupt corporations and banks to the tune of trillions of dollars. But they have been unwilling to pay monies to the workers to operate these enterprises. If we assume that the workers would rather be employed than not, and feel able to run the operation without the owners, then they can all be available to operate them as worker enterprises or worker cooperatives or as social businesses. Worker factories can be conceived as a new social policy. Any government, in the developed world, will be paying thousands of unemployed people various benefits, which will cost millions of dollars with no tax returns. But this money could be spent instead to support the establishment of worker enterprises; to allow the workers to take over the enterprise, and operate as a cooperative or social business with legal rights and access to loans to invest in new equipment. The government would sponsor the legislation necessary to allow takeovers by occupation, or negotiation, and prevent owners or previous bosses from reclaiming the enterprises, once back in profit. Efforts are directed at establishing new minimum conditions for production and decision-making, overhauling the work-space, machinery and equipment, re-establishing services that have been cut off, as well as settling legal arrangements and negotiations with the government and creditors, clients and suppliers.
    The Cooperative movement represents an alternative way of organizing employers and employment. Co-operatives provide over 100 million jobs around the world, 20% more than multinational enterprises.In Argentina, there are 12,670 co-operative societies with over 9.3 million members – approximately 23.5% of the population. Co-operative enterprises provide direct employment to over 233,000 individuals.In Bolivia, 2,940,211 people or one -third of the population is a member of the 1590 co-operatives. . Cooperativa de Ahorro y Credito Jesus Nazareno Ltda. (CJN) handled 25% of the savings in 2002. 1590 co-operatives provide 32,323 direct jobs and 128,180 indirect jobs.In Colombia over 4.8 million people or 10.6% of the population are members of the 8,124 co-operatives in the country. The movement reports an annual growth rate of 7.78% with 348,249 new members joining co-operatives in 2009. Co-ops provide 91% of all micro-credit in the country. The co-operative movement provides 137,888 jobs through direct employment and an additional 559,118 jobs as worker-owners in workers co-operatives – providing 3.65% of all jobs in the country.Many writers seem to consider that cooperatives, in supporting the capitalist business model, do not mark any significant change in economic enterprise. At this time, 2011, to do otherwise would be difficult, in view of the fact that capitalism in various forms is the dominant system of economic organization across the globe, from China, to the USA, to Japan, the EU, Russia, India, Brazil to Argentina, the Middle East to North Africa, South Africa,What is significant is that the majority of worker occupations and takeovers of factories and offices in South America, the UK, EU, and USA, whatever their original intentions, eventually re-establish themselves as cooperatives- enterprises that are owned by the workers, the customers, in association with the government or local funding authority. These enterprises are dependent for funding in order to continue to make products and offer services. They are required to make profits so as to repay the loans, as well as the members of the cooperative; as well as to pay their workers, and fund the benefits such as pensions. Enterprises, cooperative and corporate and state, depend upon funding agencies. Capitalist enterprises are privately owned and operated for private profit. A cooperative enterprise is planned to make profits to share among the workers and members: joint ownership with profit-sharing. Whether the enterprises are cooperative or private, they are all funded by these investment funds. The fundamental question remains: what should happen to the profits?

    go to…..A Discourse: Social Ecology……..Comments


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