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Collective Bargaining and the Minimum Wage

Last week, the New York Times reported that “Democratic Party leaders … have found an issue they believe can lift their fortunes both locally and nationally in 2014: an increase in the minimum wage.”

This is a good signal that millions of underpaid workers in the world’s richest country will finally get a raise. It’s not a done deal yet, but it’s worth looking at how we got to this point.

Although the fact that the majority of Americans were not sharing in the gains from economic growth had been well known and well documented for decades, it was not a significant political issue until a grassroots movement, known as Occupy Wall Street, made it one.  This movement put forth a political framework that highlighted the conflict between “the 1 percent” – the people who had greatly profited from the run-up to the Great Recession – and the 99 percent who had paid the price for the greed and excess of Wall Street and the rich.

This caused the media to notice and report much more on the problem of rising inequality.  Economists, researchers, and think tanks whose work on these issues had long been ignored by the media began to get more play in the media.  Public awareness increased.   A 2011 poll in the wake of the Occupy movement found that 66 percent of the public thought there were “strong” or “very strong” conflicts between rich and poor, up from 47 percent just two years earlier.   Some politicians began to speak out about these issues.  Mayoral candidate  Bill DeBlasio made New York City’s Latin American levels of inequality his main campaign theme – “A Tale of Two Cities,” he called it – and won a landslide victory in November.

Although the Occupy movement faded – partly due to a heavy dose of police repression driving them from public spaces – other forms of mass organizing around these issues emerged.  Fast-food workers organized walkouts and protests that spread to 60 cities across the country last August.  This brought their story – of parents struggling to feed their children and pay their rent on an average of $9.00 an hour (with many making the federal minimum of $7.25) – to a bigger audience.  The public discovered that the majority of fast food workers were not teenagers; more than a quarter are raising at least one child.

On December 4, President Obama made a speech about what he called the “relentless, decades-long-trend” of “dangerous and growing inequality.”  Unfortunately he did not seem to notice the deliberate government policies that had been the major cause of this decades-long trend.  But his speech was noteworthy and unusual for a U.S. president:

Since 1979,” he said, “when I graduated from high school, our productivity is up by more than 90 percent, but the income of the typical family has increased by less than eight percent.  Since 1979, our economy has more than doubled in size, but most of that growth has flowed to a fortunate few.

For decades, presidents would not hammer like this on such a theme for fear that the major media would accuse them of fomenting “class warfare.” But the political climate had changed.  Obama also pledged to “keep pushing until we get a higher minimum wage,” and took the time to refute the tired arguments against the minimum wage that have long been discredited by economic research.

So there you have it: a combination of grassroots action by activists and organized workers, and public education, changed public consciousness to the point where politicians and their pollsters recognize that there is political profit to be made by raising the minimum wage. When this history is written, the actual cause of the reform will go largely unnoticed.

Unfortunately the White House-supported increase in the minimum wage to $10.10 over two years – important as it is – will not reverse that much of the damage of the past four decades. Now imagine a movement for labor law reform, of the kind that President Obama promised to support in his 2008 presidential campaign: in particular, the Employee Free Choice Act, which would restore the rights of U.S. workers – vastly degraded since 1980 — to form unions and bargain collectively. Of course the big business lobbies would fight it much harder than a minimum wage increase.  But in 2009, when the Democrats had the Congress as well as the presidency, there was at least a possibility.

Restoring collective bargaining rights would be a structural reform that could change the country; and sooner or later there will be enough grassroots organizing to make it a reality.

Mark Weisbrot is an economist and co-director of the Center for Economic and Policy Research. He is co-author, with Dean Baker, of Social Security: the Phony Crisis.

This essay originally ran in Economic Intelligence.

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Mark Weisbrot is co-director of the Center for Economic and Policy Research, in Washington, D.C. and president of Just Foreign Policy. He is also the author of  Failed: What the “Experts” Got Wrong About the Global Economy (Oxford University Press, 2015).

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