The Employee Free Choice Act would rebuild economy, stengthen democracy
For all its dangers, the current economic crisis also is a unique opportunity for creating an economy that respects the value of work. It is time to reduce the massive economic inequality created during the Reagan and Bush administrations. This inequality is not only a social injustice; it has also played a large role in pushing our economy to the brink of depression.
The chart below says a lot about why we're in so much trouble today.
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The upper line represents changes in productivity (output per worker) in the American economy from 1947 to 2004. The lower line does the same for median family income.
The two lines tracked each other closely from 1947 to 1979. After that, we see a growing gap between them. This tells us that workers no longer got their share of the increasing wealth created by their work. Their share declined under Reagan, and declined further under both Bush presidencies.
If most people's incomes are stagnant or shrinking, who will purchase the increasing volume of goods and services being produced in a growing economy? Of course, everyone wants more - more and better cars, houses, entertainment and travel. But these desires don't constitute what economists call "demand" unless people have the money to buy what they want.
And how do we put more money into the hands of people without paying them more for their work? In a word, CREDIT. Encourage people to borrow more in order to buy more.
In the short run, that will sustain demand for the swelling products of an increasingly productive workforce. In the long run, it won't work. Demand will collapse as bills finally come due, and then the economy will crash. But if you're a CEO receiving a fortune in compensation every year, who cares about the long run?
According to Federal Reserve Statistics, total American consumer debt (in constant dollars, excluding mortgages) increased by 180 percent from 1980 to 2008. During this period, the population increased by only 34 percent.
During the "boom" years of the Bush administration, Washington and Wall Street discovered a way to keep consumers spending for a few more years despite their debts. They sharply reduced mortgage interest rates and loosened lending standards, creating a great housing bubble. Easy mortgage money chased housing prices ever higher. This gave homeowners the illusion of wealth in the form of inflated equity. They borrowed against this apparent wealth to keep on shopping.
Then the bubble burst. Now the party is over, and we have to clean up the mess. We must get back to a healthy economy with workers getting their fair share of the wealth they produce. This cannot happen unless workers recover their bargaining power against management.
Only 7.5 percent of private-sector workers are unionized today, down from a historic high of 35 percent right after World War II. This decline owes a lot to the Taft-Hartley Act of 1947, passed by congressional Republicans over President Truman's veto.
This law amended the National Labor Relations Act to let employers insist on an election even if 100 percent of their workers have signed cards asking to be represented by a union. It also allowed management to campaign against the union.
As a result, employers now require workers to attend anti-union rallies while barring union organizers from the workplace during the campaign. Supervisors meet individually with employees to get the names of union supporters and threaten them with dismissal. Employers routinely contest the election results, and refuse to bargain in good faith once the union is finally certified.
To address these problems, Rep. George Miller (D-Calif) and Peter King (R-N.Y.) sponsored the Employee Free Choice Act in 2007. It was passed in the House of Representatives by a bipartisan majority of 241-185. But it fell short of the 60 Senate votes needed to overcome a Republican filibuster.
The EFCA does three things to restore bargaining power to labor: (1) It allows unions to be certified if a majority of workers sign authorization cards. (2) It provides serious penalties against employers who break the law during certification campaigns and negotiations for contracts. (3) It provides federal mediation if a first contract can't be negotiated within 90 days, and binding arbitration after 30 days of mediation.
The GOP and its corporate paymasters are preparing to battle President Obama and the Democrats when they try once more to pass the EFCA. Three days after Bank of America received a $25 billion dollar federal bailout, it hosted a conference call with prominent CEOs and conservative activists, including billionaire Bernie Marcus, co-founder of Home Depot. Marcus proclaimed that passing the EFCA would be "the demise of a civilization."