Time to put the spotlight on corporate taxes

A battle is slowly brewing in Washington DC over whether to raise corporate taxes to help finance new infrastructure investments.  While higher corporate taxes cannot generate all the funds needed, the coming debate over whether to raise them gives us an opportunity to challenge the still strong popular identification of corporate profitability with the health of the economy and, by extension, worker wellbeing.

According to the media, President Biden’s advisers are hard at work on two major proposals with a combined $3 trillion price tag.  The first aims to modernize the country’s physical infrastructure and is said to include funds for the construction of roads, bridges, rail lines, ports, electric vehicle charging stations, and affordable and energy efficient housing as well as rural broadband, improvements to the electric grid, and worker training programs.  The second targets social infrastructure and would provide funds for free community college education, universal prekindergarten, and a national paid leave program. 

To pay for these proposals, Biden has been talking up the need to raise corporate taxes, at least to offset some of the costs of modernizing the country’s physical infrastructure.  Not surprisingly, Republican leaders in Congress have voiced their opposition to corporate tax increases.  And corporate leaders have drawn their own line in the sand.  As the New York Times reports:

Business groups have warned that corporate tax increases would scuttle their support for an infrastructure plan. “That’s the kind of thing that can just wreck the competitiveness in a country,” Aric Newhouse, the senior vice president for policy and government relations at the National Association of Manufacturers, said last month [February 2021].

Regardless of whether Biden decides to pursue his broad policy agenda, this appears to be a favorable moment for activists to take advantage of media coverage surrounding the proposals and their funding to contest these kinds of corporate claims and demonstrate the anti-working-class consequences of corporate profit-maximizing behavior.  

What do corporations have to complain about?

To hear corporate leaders talk, one would think that they have been subjected to decades of tax increases.  In fact, quite the opposite is true.  The figure below shows the movement in the top corporate tax rate.  As we can see, it peaked in the early 1950s and has been falling ever since, with a big drop in 1986, and another in 2017, thanks to Congressionally approved tax changes.

One consequence of this corporate friendly tax policy is, as the following figure shows, a steady decline in federal corporate tax payments as a share of GDP.  These payments fell from 5.6 percent of GDP in 1953 to 1.5 percent in 1982, and a still lower 1.0 percent in 2020.  By contrast there has been very little change in individual income tax payments as a share of GDP; they were 7.7 percent of GDP in 2020.

Congressional tax policy has certainly been good for the corporate bottom line.  As the next figure illustrates, both pre-tax and after-tax corporate profits have risen as a share of GDP since the early 1980s.  But the rise in after-tax profits has been the most dramatic, soaring from 5.2 percent of GDP in 1980 to 9.1 percent in 2019, before dipping slightly to 8.8 percent in 2020.   To put recent after-tax profit gains in perspective, the 2020 after-tax profit share is greater than the profit share in every year from 1930 to 2005.

What do corporations do with their profits?

Corporations claim that higher taxes would hurt U.S. competitiveness, implying that they need their profits to invest and keep the economy strong.  Yet, despite ever higher after-tax rates of profit, private investment in plant and equipment has been on the decline.

As the figure below shows, gross private domestic nonresidential fixed investment as a share of GDP has been trending down since the early 1980s.  It fell from 14.8 percent in 1981 to 13.4 percent in 2020.

Rather than investing in new plant and equipment, corporations have been using their profits to fund an aggressive program of stock repurchases and dividend payouts.  The figure below highlights the rise in corporate stock buybacks, which have helped drive up stock prices, enriching CEOs and other top wealth holders. In fact, between 2008 and 2017, companies spent some 53 percent of their profits on stock buybacks and another 30 percent on dividend payments.

It should therefore come as no surprise that CEO compensation is also exploding, with CEO-to-worker compensation growing from 21-to-1 in 1965, to 61-to-1 in 1989, 293-to-1 in 2018, and 320-to-1 in 2019.  As we see in the next figure, the growth in CEO compensation has actually been outpacing the rise in the S&P 500.

In sum, the system is not broken.  It continues to work as it is supposed to work, generating large profits for leading corporations that then find ways to generously reward their top managers and stockholders.  Unfortunately, investing in plant and equipment, creating decent jobs, or supporting public investment are all low on the corporate profit-maximizing agenda.  

Thus, if we are going to rebuild and revitalize our economy in ways that meaningfully serve the public interest, working people will have to actively promote policies that will enable them to gain control over the wealth their labor produces.  One example: new labor laws that strengthen the ability of workers to unionize and engage in collective and solidaristic actions.  Another is the expansion of publicly funded and provided social programs, including for health care, housing, education, energy, and transportation. 

And then there are corporate taxes.  Raising them is one of the easiest ways we have to claw back funds from the private sector to help finance some of the investment we need.  Perhaps more importantly, the fight over corporate tax increases provides us with an important opportunity to make the case that the public interest is not well served by reliance on corporate profitability.

The failings of our unemployment insurance system are there by design

Our unemployment insurance system has failed the country at a moment of great need.  With tens of millions of workers struggling just to pay rent and buy food, Congress was forced to pass two emergency spending bills, providing one-time stimulus payments, special weekly unemployment insurance payments, and temporary unemployment benefits to those not covered by the system.  And, because of their limited short-term nature, President Biden must now advocate for a third.

The system’s shortcomings have been obvious for some time, but little effort has been made to improve it.  In fact, those shortcomings were baked into the system at the beginning, as President Roosevelt wanted, not by accident.  While we must continue to organize to ensure working people are able to survive the pandemic, we must also start the long process of building popular support for a radical transformation of our unemployment insurance system.  The history of struggle that produced our current system offers some useful lessons.

Performance

Our unemployment insurance system was designed during the Great Depression.  It was supposed to shield workers and their families from the punishing costs of unemployment, thereby also helping to promote both political and economic stability.  Unfortunately, as Eduardo Porter and Karl Russell reveal in a New York Times article, that system has largely failed working people.

The chart below shows the downward trend in the share of unemployed workers receiving benefits and the replacement value of those benefits.  Benefits now replace less than one-third of prior wages, some eight percentage points below the level in the 1940s.  Benefits aside, it is hard to celebrate a system that covers fewer than 30 percent of those struggling with unemployment.

A faulty system

Although every state has an unemployment insurance system, they all operate independently.  There is no national system.  Each state separately generates the funds it needs to provide unemployment benefits and is largely free, subject to some basic federal standards, to set the conditions under which an unemployed worker becomes eligible to receive benefits, the waiting period before benefits will be paid, the length of time benefits will be paid, the benefit amount, and requirements to continue receiving benefits.

Payroll taxes paid by firms generate the funds used to pay unemployment insurance benefits.  The size of the taxes to be paid depends on the value of employee earnings that is made taxable (the base wage) and the tax rate.  States are free to set the base wage as they want, subject to a federally mandated floor of $7000 established in the 1970s.  States are also free to set the tax rate as they want.  Not surprisingly, in the interest of supporting business profitability, states have generally sought to keep both the base wage and tax rate low.  For example, Florida, Tennessee and Arizona continue to set their base wage at the federal minimum value.  And, as the figure below shows, insurance tax rates have been trending down for some time.

While such a policy might help business, lowering the tax rate means that states have less money in their trust funds to pay unemployment benefits.  Thus, when times are hard, and unemployment claims rise, many states find themselves hard pressed to meet their required obligations.  In fact, as Porter and Russell explain:

Washington has been repeatedly called on to provide additional relief, including emergency patches to unemployment insurance after the Great Recession hit in 2008. Indeed, it has intervened in response to every recession since the 1950s.

This is far from a desirable outcome for those states forced to borrow, since the money has to be paid back with interest by imposing higher future payroll taxes on employers.  Thus, growing numbers of states have sought to minimize the likelihood of this happening, or at least the amount to be borrowed, by raising eligibility standards, reducing benefits, and shortening time of coverage, all of which they hope will reduce the number of people drawing unemployment benefits as well as the amount and length of time they will receive them.

Porter and Russell highlight some of the consequences of this strategy:

In Arizona, nearly 70 percent of unemployment insurance applications are denied. Only 15 percent of the unemployed get anything from the state. Many don’t even apply. Tennessee rejects nearly six in 10 applications.

In Florida, only one in 10 unemployed workers gets any benefits. The state is notably stingy: no more than $275 a week, roughly a third of the maximum benefit in Washington State. And benefits run out quickly, after as little as 12 weeks, depending on the state’s overall unemployment rate.

And, the growing stagnation of the US economy, which has led to more precarity of employment, only makes this strategy ever more fiscally “intelligent.”  For example, as the following figure shows, a growing percentage of the unemployed are remaining jobless for a longer time.  Such a trend, absent state actions to restrict access to benefits, would mean financial trouble for state officials.

Adding to the system’s structural shortcomings is that fact that growing numbers of workers, for example the many workers who have been reclassified as independent contractors, are not covered by it.  In addition, since eligibility for benefits requires satisfying a minimum earnings and hours of work requirement over a base year, the growth in irregular low wage work means that many of those in most need of the system’s financial support during periods of unemployment find themselves declared ineligible for benefits.

By design, not by mistake

Our current unemployment insurance system and its patchwork set of state standards and benefits dates back to the depression. While President Roosevelt gets credit for establishing our unemployment insurance system as part of the New Deal, the fact is he deliberately sidelined a far stronger program that, if it had been approved, would have put working people today in a far more secure position. 

The Communist Party (CP) began pushing an unemployment and social insurance bill in the summer of 1930 and, along with the numerous Unemployed Councils that existed in cities throughout the country, worked hard to promote it over the following years.  On March 4, 1933, the day of Roosevelt’s inauguration, they organized demonstrations stressing the need for action on unemployment insurance.

Undeterred by Roosevelt’s lack of action, the CP-authored “Workers Unemployment and Social Insurance Bill” was introduced in Congress in February 1934 by Representative Ernest Lundeen of the Farmer-Labor Party.  In broad brush, the bill mandated the payment of unemployment insurance to all unemployed workers and farmers equal to average local full-time wages, with a guaranteed minimum of $10 per week plus $3 for each dependent. Those forced into part-time employment would receive the difference between their earnings and the average local full-time wage.  The bill also created a social insurance program that would provide payments to the sick and elderly, and maternity benefits to be paid eight weeks before and eight weeks after birth.  All these benefits were to be financed by unappropriated funds in the Treasury and taxes on inheritances, gifts, and individual and corporate incomes above $5,000 a year.

The bill enjoyed strong support among workers—employed and unemployed—and it was soon endorsed by 5 international unions, 35 central labor bodies, and more than 3000 local unions.  Rank and file worker committees also formed across the country to pressure members of Congress to pass it.

When Congress refused to act on the bill, Lundeen reintroduced it in January 1935. Because of public pressure, the bill became the first social insurance plan to be recommended by a congressional committee, in this case the House Labor Committee.  However, it was soon voted down in the full House of Representatives, 204 to 52.

Roosevelt strongly opposed the Lundeen bill and it was to provide a counter that he pushed to create an alternative, one that offered benefits far short of what the Workers Unemployment and Social Insurance Bill offered, and was strongly opposed by many workers and all organizations of the unemployed.  Roosevelt appointed a Committee on Economic Security in July 1934 with the charge to develop a social security bill that he could present to Congress in January 1935 that would include provisions for both unemployment insurance and old-age security.  An administration approved bill was introduced right on schedule in January and Roosevelt called for quick congressional action. 

Roosevelt’s bill was revised in April by a House committee and given a new name, “The Social Security Act.”  After additional revisions the Social Security Act was signed into law on August 14, 1935. The Social Security Act was a complex piece of legislation.  It included what we now call Social Security, a federal old-age benefit program; a program of unemployment insurance administered by the states; and a program of federal grants to states to fund benefits for the needy elderly and aid to dependent children. 

The unemployment system established by the Social Security Act was structured in ways unfavorable to workers (as was the federal old-age benefit program).  Rather than a progressively funded, comprehensive national system of unemployment insurance that paid benefits commensurate with worker wages, the act established a federal-state cooperative system that gave states wide latitude in determining standards.

More specifically, the act levied a uniform national pay-roll tax of 1 percent in 1936, 2 percent in 1937, and 3 percent in 1938, on covered employers, defined as those employers with eight or more employees for at least twenty weeks, not including government employers and employers in agriculture.  Only workers employed by a covered employer could receive benefits.

The act left it to the states to decide whether to enact their own plans, and if so, to determine eligibility conditions, the waiting period to receive benefits, benefit amounts, minimum and maximum benefit levels, duration of benefits, disqualifications, and other administrative matters. It was not until 1937 that programs were established in every state as well as the then-territories of Alaska and Hawaii.  And it was not until 1938 that most began paying benefits.

In the early years, most states required eligible workers to wait 2 to 4 weeks before drawing benefits, which were commonly set at half recent earnings (subject to weekly maximums) for a period ranging from 12 to 16 weeks. Ten state laws called for employee contributions as well as employer contributions; three still do today.

Over the following years the unemployment insurance system has been improved in a number of positive ways, including by broadening coverage and boosting benefits.  However, its basic structure remains largely intact, a structure that is overly complex, with a patchwork set of state eligibility requirements and miserly benefits. And we are paying the cost today.

This history makes clear that nothing will be given to us.  We need and deserve a better unemployment insurance system. And to get it, we are going to have to fight for it, and not be distracted by the temporary, although needed, band-aids Congress is willing to provide.  The principles shaping the Workers Unemployment and Social Insurance Bill can provide a useful starting point for current efforts.

The U.S. recovery on pause, December brings new job losses

A meaningful working-class recovery from the recession seems far away.

After seven months of job gains, although diminishing gains to be sure, we are again losing jobs.  As the chart below shows,  the number of jobs fell by 140,000 in December.

We are currently about 9.8 million jobs down from the February 2020 employment peak, having recovered only 55 percent of the jobs lost.  And, as the following chart illustrates, the percentage of jobs lost remains greater, even now after months of job growth, than it was at any point during the Great Recession. 

If the job recovery continues on its current pace, some analysts predict that it will likely take more than three years to just get back to pre-pandemic employment levels.  However, this might well be too rosy a projection.  One reason is that the early assumption that many of the job losses were temporary, and that those unemployed would soon be recalled to employment, is turning out to be wrong.  A rapidly growing share of the unemployed are remaining unemployed for an extended period. 

As we see below, in October, almost one-third of the unemployed had been unemployed for 27 weeks or longer.  According to the December jobs report, that percentage is now up to 37 percent, four times what it was before the pandemic.  And that figure seriously understates the problem, since many workers have given up looking for work; having dropped out of the workforce, they are no longer counted as unemployed.  The labor force participation rate is now 61.5 percent, down from 63.3 percent in February.

Dean Baker, quoted in a recent Market Place story, underscores the importance of this development:

“This is obviously a story of people losing their job at the beginning of the crisis in March and April and not getting it back,” said Dean Baker, co-founder and senior economist with the Center for Economic and Policy Research.

Those out of work for 27 weeks or more make up a growing share of the unemployed, and that could have enduring consequences, Baker said.

“After people have been unemployed for more than six months, they find it much harder to get a job,” he said. “And if they do get a job, their labor market prospects could be permanently worsened.”

And tragically, the workers that have suffered the greatest job losses during this crisis are those that earned the lowest wages. 

It is no wonder that growing numbers of working people are finding it difficult to meet their basic needs.

There is no way to sugar coat this situation.  We need a significant stimulus package, a meaningful increase in the minimum wage, real labor law reform, a robust national single-payer health care system, and an aggressive Green New Deal designed public sector investment and jobs program.  And there is no getting around the fact that it is going to take hard organizing and mutually supportive community and workplace actions to move the country in the direction it needs to go.

America’s labor crisis

We face a multifacited labor crisis. One of the most important aspects of this crisis is the U.S. economy’s diminishing capacity to provide employment. This development is highlighted in the chart below, which shows the trend in civilian employment over the last thirty years.  Civilian employment includes all individuals who worked at least one hour for a wage or salary, or were self- employed, or were working at least 15 unpaid hours in a family business or on a family farm, during the week including the 12th of the month when surveys are taken.

As we can see, it took approximately 4 years to bring civilian employment back to its pre-crisis peak after the 2001 recession, and a much longer 6.5 years after the 2008 recession.  The number of years it will take to regain the pre-crisis peak employment level after the end of this recession (which remains ongoing) can be expected to be far greater, with some analysts predicting it could take a decade or more. And of course, new people will be entering the labor force over that decade, generating a serious unemployment problem.

The following chart, which shows the trend in the civilian labor force participation rate, offers additional evidence of the economy’s declining job creating potential. The civilian labor force participation rate is calculated by dividing the sum of all workers who are employed or actively seeking employment by the total noninstitutionalized, civilian working-age population.

As we can see, this measure has been in sharp decline for many years, including over the years of expansion that followed the 2008 recession.  With growing numbers of working-age people, including prime-age workers, forced to drop out of the labor force even during so-called “good times,” there is little reason to expect a significant improvement in employment opportunities in the years following the end of this recession.

These charts make clear that without a significant change in the workings of the economy, working people are facing a future of declining employment possibilities. And it certainly appears that there is no enthusiasm for major economic changes among the most powerful and wealthy in the United States.  According to a recent report, U.S. billionaires saw their fortunes soar by $434 billion during the nation’s lockdown between mid-March and mid-May. And Market Watch reported that the S&P 500 and Nasdaq just booked the best postelection day gains in history.  The reason:

Wall Street warmed to the possibility of a divided U.S. government and further political gridlock in Washington following a contentious election, potentially keeping Trump administration’s tax cuts in place no matter who sits in the White House.

In sum, if we want a meaningful economic recovery, one that serves majority needs, we will have to fight for it.  Among other things, this means finding new ways to strengthen labor-community coalitions and engage people in sustained conversation about the class-contradictory nature of our economic system.

There is a union difference: mortality rates from COVID-19 are lower in unionized nursing homes

We need strong unions, all of us.  Tragically, even during the pandemic, businesses continue to aggressively resist worker attempts at unionization. And recent decisions by the NLRB only add to worker difficulties.

Here is one example of what is at stake: a recently published study of New York State nursing homes found that mortality rates from COVID-19 were 30 percent lower in unionized nursing homes than in facilities without health care worker unions.  By gaining better protection for themselves, unionized workers were also able to better protect the health of those they served.

Although the pandemic makes organizing and solidarity actions more difficult, it is essential that we find effective ways to support worker struggles for strong unions.

Work during the pandemic

Many workers, especially those now celebrated as “essential” or “frontline,” don’t feel safe at work, and for good reason.  Many have been denied needed personal protective equipment (PPE) or even information about the health status of their coworkers.

While surveys find that many employers have implemented new workplace cleaning procedures, they also find that a large percentage of workers continue to work without access to PPE, especially masks and gloves.  Strikingly, according to one study,

If [worker] access to PPE was limited in our data, policies mandating that workers wear protective gear were even more uncommon. Around a third of workers in restaurants, fast food, coffee shops, and hotels and motels reported requirements to wear gloves. This share was dramatically lower (around 12%) in big-box stores, department stores, retail stores, grocery stores, and pharmacies. The share of workers required to wear gloves was even lower in warehouses, fulfillment centers, and in delivery. Mask requirements were vanishingly uncommon across workplaces, at between 2% and 7% in convenience stores, coffee shops, fast food, restaurants, grocery stores, retail, department stores, and big-box stores. Just 12% of those in fulfillment centers reported a mask requirement, which was significantly higher than the 5% of warehouse and delivery workers.

Adding to the danger, many companies are aggressively trying to keep information about worker infections secret from coworkers and the public.  As a Bloomberg Law post explains:

U.S. businesses have been on a silencing spree. Hundreds of U.S. employers across a wide range of industries have told workers not to share information about Covid-19 cases or even raise concerns about the virus, or have retaliated against workers for doing those things, according to workplace complaints filed with the NLRB and the Occupational Safety and Health Administration (OSHA).

Workers at Amazon.com, Cargill, McDonald’s, and Target say they were told to keep Covid cases quiet. The same sort of gagging has been alleged in OSHA complaints against Smithfield Foods, Urban Outfitters, and General Electric. In an email viewed by Bloomberg Businessweek, Delta Air Lines told its 25,000 flight attendants to “please refrain from notifying other crew members on your own” about any Covid symptoms or diagnoses. At Recreational Equipment Inc., an employee texted colleagues to say he’d tested positive and that “I was told not to tell anybody” and “to not post or say anything on social media.”

These policies may help the corporate bottom line, but they endanger workers and those they serve, and thereby help to spread the pandemic.

Without unions, workers have limited ways to force their employers to create a safe work environment.  One is to file a complaint with the Occupational Safety and Health Administration.  And, despite fears of retaliation, many workers have done just that.  As a Brookings blog post reports:

Using data from the Occupational Safety and Health Administration (OSHA), [the figure below] shows the cumulative number of COVID-19 related workplace safety complaints. Between April 20 and August 20, total COVID-19 related workplace safety complaints rose over 350 percent.

Unfortunately, these complaints have achieved little.  According to the Bloomberg Law post,Many thousands of OSHA complaints about coronavirus safety issues have yielded citations against just two companies—a health-care company and a nursing home—totaling about $47,000.” OSHA has still not issued any regulations that address the pandemic.

OSHA rarely sends out inspectors to investigate complaints.  The Bloomberg Law post describes one case in which a mechanic at Maid-Rite, a company that supplies frozen meat products to military bases, nursing homes, and schools, wrote to OSHA describing unsafe conditions:

The mechanic says OSHA called him to say it would be sending Maid-Rite a letter instead of coming to inspect the plant, and that was the last he ever heard from the agency about his complaint. Letters between OSHA and Maid-Rite show OSHA told Maid-Rite in April to investigate worker allegations itself, and Maid-Rite wrote back saying that it was providing and mandating masks and that 6-foot distancing sometimes wasn’t feasible.

No changes were made and so other workers followed up with more complaints over the following weeks, leading OSHA to finally send an inspector to the plant.  However,

in a break from typical protocol, [the inspector] gave the company a heads-up. “OSHA is here, so do everything right!” a supervisor told staff during the inspection, the mechanic later wrote in an affidavit. Fifteen minutes later, the supervisor returned to say “Never mind,” because the visit was over, the mechanic wrote: “As soon as OSHA left, everything went exactly back to the way it was.”

Unions can help

Unions are far from perfect, but they are one of the most effective means workers have to protect their interests, and by extension those they serve.  That point is highlighted by the results of the above noted study on COVID-19 deaths in nursing homes which found that mortality rates from COVID-19 are lower in unionized nursing homes.  This is significant because approximately 43% of all reported COVID-19 deaths in the United States have occurred in nursing homes.

The three authors–Adam Dean, Atheendar Venkataramani, and Simeon Kimmel–focused on nursing homes in New York State, which has had over 6,500 COVID-19 nursing home deaths, second only to New Jersey.  The authors built a model that attempted to explain the variation in confirmed COVID-19 deaths at these New York State nursing homes with an eye to determining if the presence of a health care union made a difference.  They used “proprietary data from 1199SEIU United Healthcare Workers East, the International Brotherhood of Teamsters, and the Communication Workers of America (CWA), as well as publicly-available data from the New York State Nurses Association (NYSNA) to determine if a labor union represented health care workers in each facility.”

Their cross-section regression model also included a range of nonunion variables as possible causes for the variation.  These variables included: whether or not a facility had an adequate supply of PPEs, including masks, eye shields, gowns, gloves, and hand sanitizer; the average age of residents; Resource Utilization Group Nursing Case Mix Index of resident acuity, which classifies patient care needs based on diagnosis, proposed treatment, and level of needed assistance with activities of daily living; occupancy rates; staff-hours-to resident-days ratios for RN, CNA, and licensed practical nurses; percent of residents whose primary support comes from Medicaid or Medicare; Overall 5-Star Rating; whether the nursing home was part of a chain; whether the nursing home was for-profit or non-profit; and county-level data on confirmed cases of COVID-19 and population.

Their main regression result, confirmed by several sensitivity tests, was that, taking all the other variables into account, the presence of a health care labor union was associated with a 30% relative decrease in the COVID-19 mortality rate compared to facilities without a health care labor union.

In examining possible reasons for this result, they ran two other regressions.  One found that the presence of a health care labor union was associated with a 13.8% relative increase in access to N95 masks and a 7.3% relative increase in access to eye shields. Labor union status was not a significant predictor of access to other types of PPE.  The other regression found that the presence of a health care labor union was associated with a 42% relative decrease in the COVID-19 infection rate.

The struggle ahead

There is good reason to believe that the union benefits found by Dean, Venkataramani, and Kimmel in their study are not limited to New York State nursing homes.  Unions are one of the most effective ways for workers to ensure access to critical PPEs and implementation of safety regulations, things that as noted above workers desperately seek.

But of course, corporations don’t want to pay the higher costs that come with unionization.  They prefer the status quo, where working people are forced to pay far greater costs, individually and collectively.  And even in the midst of the pandemic, the NLRB continues to pass new rules making it ever more difficult for workers to unionize.

Workers are increasingly coming to understand that they cannot rely on OSHA or the NLRB to defend their interests. Thus, growing numbers of workers are bravely engaging in direct action, risking their jobs, to fight for their rights and the safety of their co-workers.  We need to find ways to support them and improve the broader environment for organizing and unionizing. A recent Gallup poll offers one hopeful sign: approval of unions continues to grow.

The pandemic, technology, and remote work: the corporate push for greater control over workers’ lives

The U.S. economy is undergoing a major transformation largely driven by the coronavirus pandemic.  One hallmark of that transformation is the explosion in what is called “remote” work.

In 2017, according to a Census Bureau study, only 3 percent of full-time workers in the United States reported that they primarily worked from home.  Today, in response to the pandemic, some 42 percent of the U.S. labor force is working from home—with only 26 percent still working on-site.

Corporate leaders appear to have embraced this shift to at-home work and are pursing the use of new technologies designed to increase managerial control over the remote work process. The response of workers to these changes is still evolving.

The pandemic and the corporate embrace of at-home work

Although most corporations initially viewed the shift to remote work as a necessary short-term response to government mandated closures and consumer and worker health concerns, a number are now planning for a permanent, post-pandemic increase in its use. As the New York Times reports:

Facebook expects up to half its workers to be remote as soon as 2025. The chief executive of Shopify, a Canadian e-commerce company that employs 5,000 people, tweeted in May that most of them “will permanently work remotely. Office centricity is over.” Walmart’s tech chief told his workers that “working virtually will be the new normal.”

Quora, a question-and-answer site, said last week that “all existing employees can immediately relocate to anywhere we can legally employ them.” Those who do not want to go anywhere can still use the Silicon Valley headquarters, which would become a co-working space.

And these large firms are not alone.  As Luke Savage, writing in Jacobin, notes:

With the lockdown still only a few weeks old, a survey of company CFOs by PricewaterhouseCoopers found that almost 30 percent were already planning to reduce their business’s physical footprint, with an April study by Gartner suggesting that some three-quarters were planning to shift at least some employees to remote work on a permanent basis.

It’s a different world

Of course, this is not the first time that corporations have embraced remote work.  A number—including such major companies as IBM, Aetna, Best Buy, Bank of America, Yahoo, AT&T and Reddit—actively promoted telecommuting as recently as 15 years ago.  But they all eventually reversed course, concluding that employee productivity, loyalty, and innovation suffered.  Tech companies, in particular, responded by building expansive and expensive new facilities that offered a range of free on-site benefits such as communal cafeterias and gyms to keep employees motivated and loyal.

Because of this history, some analysts doubt that the current corporate celebration of remote work will last long.  But there is reason to believe that this time is different.  Certainly, early indications are that at-home workers remain focused and hard at work.  Savage cites a Globe and Mail article that leads with this head: “Employers used to believe remote workers were happier but less productive. Turns out it’s the opposite.”  The Globe and Mail article goes on to say:

One fear about shifting to a work-from-home culture is that it would lead to operational chaos: missed meetings, spotty WiFi, games of broken telephone (both figurative and literal). Instead, even companies with tens of thousands of employees are finding that the IT infrastructure is holding up and so are lines of authority. Workers are responding to their emails and joining Zoom calls at approximately the right time. Everyone is always reachable.

The Globe and Mail is not alone in finding evidence of high worker productivity.  For example, the New York Times quotes John Sullivan, a professor of management:

“The data over the last three months is so powerful,” he said. “People are shocked. No one found a drop in productivity. Most found an increase. People have been going to work for a thousand years, but it’s going to stop and it’s going to change everyone’s life.”  Innovation, Dr. Sullivan added, might even catch up eventually.

And Bloomberg came to much the same conclusion, reporting that corporate executives at several different finance and investment companies all see evidence of gains in productivity.

Underlying these gains are three potentially long-lasting developments that provide support for the view that the current corporate commitment to expanding remote work needs to be taken seriously. The first is the availability of relatively low cost and easy-to-use online communication platforms like Zoom that allow managers to easily communicate with their workers and for workers to engage in group work when necessary.  The online infrastructure for corporate communication continues to improve.

The second is the recent and ongoing development of technologies that allow management to monitor and evaluate the online work effort of their employees.  As the New York Times explains: “Demand has surged for software that can monitor employees, with programs tracking the words we type, snapping pictures with our computer cameras and giving our managers rankings of who is spending too much time on Facebook and not enough on Excel.”

Of course, corporations have long used technology to monitor and direct work, and large companies like Amazon have pioneered the development and use of software for directing and intensifying the pace of warehouse workers.  Josh Dzieza, writing in the Verge, offers an example:

Every Amazon worker I’ve spoken to said it’s the automatically enforced pace of work, rather than the physical difficulty of the work itself, that makes the job so grueling. Any slack is perpetually being optimized out of the system, and with it any opportunity to rest or recover. A worker on the West Coast told me about a new device that shines a spotlight on the item he’s supposed to pick, allowing Amazon to further accelerate the rate and get rid of what the worker described as “micro rests” stolen in the moment it took to look for the next item on the shelf.

But as Dzieza makes clear, there is also growing availability and use of new software that makes it possible for corporations to easily oversee the work effort of their online workers.  One example is WorkSmart.  Dzieza describes the experience of a software engineer in Bangladesh who was required to download the software as a condition of his employment with Austin-based Crossover Technologies.  Among other things:

The software tracked his keystrokes, mouse clicks, and the applications he was running, all to rate his productivity. He was also required to give the program access to his webcam. Every 10 minutes, the program would take three photos at random to ensure he was at his desk. If [he] wasn’t there when WorkSmart took a photo, or if it determined his work fell below a certain threshold of productivity, he wouldn’t get paid for that 10-minute interval.

Other recently developed software programs currently in use to monitor the work of call center employees could easily be used to monitor home-based employees doing the same work. Recording the number and length of calls is old hat.  These new programs, using artificial intelligence, can now evaluate the “emotional” tone of the worker’s voice during their conversations with customers.  Some programs can even “coach workers in real time, telling them to speak more slowly or with more energy or to express empathy.” The growing corporate interest in remote work can be expected to spur the development of ever more sophisticated products that will allow even tighter control over at-home work and more detailed evaluation of at-home workers.

The nature of the ongoing transformation of the economy is the third reason that this period may well mark the start of a major shift in the location of work.  Simply stated: unemployment is now high and, when possible, workers welcome a safe alternative to on-site employment.

In the past on-site work was the standard corporate practice and most workers preferred it.  Thus, workers were generally able to undermine individual corporate attempts to push them into working from home.  Now, not only is remote work the new norm, because of the virus it has actually become the desired alternative.  With fear of the virus likely to remain for some time, corporations are in a far stronger position than in the past to normalize remote work and win worker acceptance of new work relations even after the pandemic is brought under control.

Benefits and costs

It is easy to understand why corporations are excited about increasing their use of remote work.  One reason is that it will allow them to greatly reduce their spending on facilities.  Gains on the labor side are likely even larger.  Companies will be able to expand their job search, hiring workers who may live thousands of miles away from the location of corporate operations with no need to pay moving expenses and with the possibility of cheapening the cost of labor by paying salaries commensurate with local living costs.  And, as a bonus, the more a company’s labor force is geographically separated and isolated, the harder it will be for its workers to build the bonds of solidarity needed to challenge management demands.

The use of remote work opens up possibilities for even greater labor savings by making possible the reclassification of new hires into independent contractors.  After all, many remote workers are already paying for the equipment they need (desks, chairs, computers, webcam), the supporting technological infrastructure (high speed Wi-Fi), and office maintenance (cleaning).

Of course, most workers also viewed at-home work positively, at least initially.  They appreciated being able to remain employed and work safely from their homes during the pandemic. But the costs of remote work, as currently structured, are mounting up for workers.

As a Bloomberg article summarizes, “We log longer hours. We attend more meetings with more people. And, we send more emails.”  The article highlights a recently published study by the National Bureau of Economic Research which was based on surveys of some 3 million people at more than 21,000 companies across 16 cities in North America, Europe and the Middle East.  The researchers:

compared employee behavior over two 8 week periods before and after Covid-19 lockdowns. Looking at email and meeting meta-data, the group calculated the workday lasted 48.5 minutes longer, the number of meetings increased about 13% and people sent an average of 1.4 more emails per day to their colleagues.

An online survey of 20,262 people in 10 countries by the technology company Lenovo Group Ltd. found that “A disturbing 71% of those working from home due to Covid-19 have experienced a new or exacerbated ailment caused by the equipment they now must use. . . the most common symptoms [being] back pain, poor posture (e.g., hunched shoulders), neck pain, eye irritation, insomnia and headaches.”

Looking just at the United States, a study done by NordVPN, based on tracking when at-home workers connected and disconnected from its service, found that at-home workers logged three hours more per day on the job than before the start of city and state lockdowns.  And a survey of 1,001 U.S. employees by Eagle Hill Consulting found that “By early April, about 45% of workers said they were burned out. Almost half attributed the mental toll to an increased workload, the challenge of juggling personal and professional life, and a lack of communication and support from their employer.”

Given the direction of corporate planning, it is likely that the costs of remote work for workers—physical and emotional—will only increase.  As one public relations executive explained when discussing why his company now views remote work so positively: The technology is better. Moreover, “we have rules now,” he said. “You have to be available between 9 a.m. and 5:30 p.m. You can’t use this as child care.”

Challenges ahead

For many workers, it is the pandemic, with its forced isolation of family in small housing units, that has made remote work so difficult and emotionally wearing.  And, for many, the experience of on-site work before the coronavirus pandemic forced closures was also far from ideal.  Thus surveys show, as the New York Times reports,

Most American office workers are in no hurry to return to the office full time, even after the coronavirus is under control. But that doesn’t mean they want to work from home forever. The future for them, a variety of new data shows, is likely to be workweeks split between office and home.

For example, a survey by the company Morning Consult done in mid-June found that:

Overall, 73 percent of U.S. adults who have careers where remote work is possible report that the pandemic has made them feel more positively about the prospect of remote work. And given the option, three quarters of these workers say they would like to work from home at least 1-2 days a week once the pandemic is under control.

At issue, then, is who will decide the place of work and perhaps even more importantly, the conditions of work, including remote work.  Current indications are that corporations plan to push workers into more remote work than surveys suggest they want, and definitely under conditions of surveillance and evaluation that they will find objectionable.  It is less clear whether those working remotely or threatened with remote work will be able to organize rapidly enough to force corporations to bargain with them over both the location of work and the work process, on- and off-site, including the aim and uses of new technology.

If there is a reason for optimism it is that there appears to be a growing solidarity between white- and blue-collar workers in the tech industry that includes support for unionization, especially at some of the large firms like Google and Amazon. As Tyler Sonnemaker and Allana Akhtar, writing for Business Insider, describe:

Even a year ago, the idea that tech’s cafeteria workers and office workers were on the same page about forming a labor union would have seemed unthinkable.

The recent wave of employee activism and organizing efforts represents a widening rift between the industry’s rank-and-file employees and its executives. For the first time, developers and product managers with higher pay and closer ties to management are siding with their lower-paid colleagues in warehouses, cafeterias, and contract gigs. . . .

Frequent leaks to the media – notable given the historically tight-knit culture at tech companies – and the emergence of groups like Rideshare Drivers United, Tech Workers Coalition, Athena, and Amazonians United are just two signs of the rise in employee activism in recent years. But over the past few months, emboldened by the pandemic and racial justice protests, workers at startups like Away and giants like Facebook have become a vocal chorus of critics.

Passively allowing management to use technology to shape the work process and the resulting final product is a recipe for ever worsening working and living conditions for the great majority of working people. Hopefully, the ongoing worker agitation and organizing in the United States will continue regardless of the unpredictable nature of the pandemic, producing a shared critique of profit-driven work and support for new organizational forms, including unions, that can fight for a more humane economic system.

Racism, COVID-19, and the fight for economic justice

While the Black Lives Matter protests sweeping the United States were triggered by recent police murders of unarmed African Americans, they are also helping to encourage popular recognition that racism has a long history with punishing consequences for black people that extend beyond policing.  Among the consequences are enormous disparities between black and white well-being and security.  This post seeks to draw attention to some of these disparities by highlighting black-white trends in unemployment, wages, income, wealth, and security. 

A common refrain during this pandemic is that “We are all in it together.”  Although this is true in the sense that almost all of us find our lives transformed for the worst because of COVID-19, it is also not true in some very important ways.  For example, African Americans are disproportionally dying from the virus.  They account for 22.4 percent of all COVID-19 deaths despite making up only 12.5 percent of the population. 

One reason is that African Americans also disproportionally suffer from serious preexisting health conditions, a lack of health insurance, and inadequate housing, all of which increased their vulnerability to the virus.  Another reason is that black workers are far more likely than white workers to work in “front-line” jobs, especially low-wage ones, forcing them to risk their health and that of their families.  While black workers comprise 11.9 percent of the labor force, they make up 17 percent of all front-line workers.  They represent an even higher percentage in some key front-line industries: 26 percent of public transit workers; 19.3 percent of child care and social service workers; and 18.2 percent of trucking, warehouse and postal service workers.

African Americans have also disproportionately lost jobs during this pandemic.  The black employment to adult population ratio fell from 59.4 percent before the start of the pandemic to a record low of 48.8 percent in April.  Not surprisingly, recent surveys find, as the Washington Post reports, that:

More than 1 in 5 black families now report they often or sometimes do not have enough food — more than three times the rate for white families. Black families are also almost four times as likely as whites to report they missed a mortgage payment during the crisis — numbers that do not bode well for the already low black homeownership rate.

This pandemic has hit African Americans especially hard precisely because they were forced to confront it from a position of economic and social vulnerability as the following trends help to demonstrate.

Unemployment

The Bureau of Labor Statistics began collecting separate data on African American unemployment in January 1972.  Since then, as the figure below shows, the African American unemployment rate has largely stayed at or above twice the white unemployment rate. 

As Olugbenga Ajilore explains

Between strides in civil rights legislation, desegregation of government, and increases in educational attainment, employment gaps should have narrowed by now, if not completely closed. Yet as [the figure above] shows, this has not been the case.

Wages

The figure below from an Economic Policy Institute study, shows the black-white wage gap for workers in different earning percentiles, by education level, and regression-adjusted (to control for age, gender, education and regional differences).  As we can see, the wage gap has grown over time regardless of measure. 

Elise Gould summarizes some important take-aways from this study:

The black–white wage gap is smallest at the bottom of the wage distribution, where the minimum wage serves as a wage floor. The largest black–white wage gap as well as the one with the most growth since the Great Recession, is found at the top of the wage distribution, explained in part by the pulling away of top earners generally as well as continued occupational segregation, the disproportionate likelihood for white workers to occupy positions in the highest-wage professions.

It’s clear from the figure that education is not a panacea for closing these wage gaps. Again, this should not be shocking, as increased equality of educational access—as laudable a goal as it is—has been shown to have only small effects on class-based wage inequality, and racial wealth gaps have been almost entirely unmoved by a narrowing of the black–white college attainment gap . . . . And after controlling for age, gender, education, and region, black workers are paid 14.9% less than white workers.

Income

The next figure shows that while median household income has generally stagnated for all races/ethnicities over the period 2000 to 2017, only blacks have suffered an actual decline.  The median income for black households actually fell from $42,348 to $40,258 over this period.  As a consequence, the black-white income gap has grown.  The median black household in 2017 earned just 59 cents for every dollar of income earned by the white median household, down from 65 cents in 2000.

Moreover, as Valerie Wilson, points out, “Based on [Economic Policy Institute] imputed historical income values, 10 years after the start of the Great Recession in 2007, only African American and Asian households have not recovered their pre-recession median income.“  Median household income for African American households fell 1.9 percent or $781 over the period 2007 to 2017.  While the decline was greater for Asian households (3.8 percent), they continued to have the highest median income.

Wealth

The wealth gap between black and white households also remains large.  In 1968, median black household wealth was $6,674 compared with median white household wealth of $70,768.  In 2016, as the figure below shows, it was $13,024 compared with $149,703.

As the Washington Post summarizes:

“The historical data reveal that no progress has been made in reducing income and wealth inequalities between black and white households over the past 70 years,” wrote economists Moritz Kuhn, Moritz Schularick and Ulrike I. Steins in their analysis of U.S. incomes and wealth since World War II.

As of 2016, the most recent year for which data is available, you would have to combine the net worth of 11.5 black households to get the net worth of a typical white U.S. household.

The self-reinforcing nature of racial discrimination is well illustrated in the next figure.  It shows the median household wealth by education level as defined by the education level of the head of household. 

As we see, black median household wealth is below white median household wealth at every education level, with the gap growing with the level of education.  In fact, the median black household headed by someone with an advanced degree has less wealth than the median white household headed by someone with only a high school diploma.  The primary reason for this is that wealth is passed on from generation to generation, and the history of racism has made it difficult for black families to accumulate wealth much less pass it on to future generations. 

Security

The dollar value of household ownership of liquid assets is one measure of economic security.  The greater the value, the easier it is for a household to weather difficult times not to mention unexpected crises, such as today’s pandemic.  And as one might expect in light of the above income and wealth trends, black households have far less security than do white households.

As we can see in the following figure, the median black household held only $8,762 in liquid assets (as defined as the sum of all cash, checking and savings accounts, and directly held stocks, bonds, and mutual funds).  In comparison, the median white household held $49,529 in liquid assets.  And the black-white gap is dramatically larger for households headed by someone with a bachelors degree or higher. 

Hopeful possibilities

The fight against police violence against African Americans, now being advanced in the streets, will eventually have to be expanded and the struggle for racial justice joined to a struggle for economic justice.  Ending the disparities highlighted above will require nothing less than a transformational change in the organization and workings of our economy.

One hopeful sign is the widespread popular support for and growing participation in the Black Lives Matter-led movement that is challenging not only racist policing but the idea of policing itself and is demanding that the country acknowledge and confront its racist past.  Perhaps the ways in which our current economic system has allowed corporations to so quickly shift the dangers and costs of the pandemic on to working people, following years of steady decline in majority working and living conditions, is helping whites better understand the destructive consequences of racism and encouraging this political awakening. 

If so, perhaps we have arrived at a moment where it will be possible to build a multi-racial working class-led movement for structural change that is rooted in and guided by a commitment to achieving economic justice for all people of color. One can only hope that is true for all our sakes.

Victory: Ohio’s plan to deny workers their unemployment insurance is shelved

Some stories are just so satisfying that they deserve to be shared.  Here is one.

In early May, Ohio Republican Governor Mike DeWine began reopening the state economy.  And to support business and slash state expenses, both at worker expense, he had a “COVID-19 Fraud” form put up on the Ohio Department of Job and Family Services website where employers could confidentially report employees “who quit or refuse work when it is available due to COVID-19.”  Inspectors would then investigate whether the reported workers should lose their unemployment benefits and possibly be charged with unemployment fraud.

Significantly, as Sarah Ingles, the board president of the Central Ohio Worker Center, noted in a statement quoted by the Intercept, the form “does not define what constitutes a ‘good cause’ exemption, and by doing so, may exclude many Ohio workers who have justifiable reasons for not returning to work and for receiving unemployment insurance benefits.”  In other words, “while the state did not take the time to define what a ‘good cause’ exemption includes or does not include, it did have time to develop an online form where employers could report employees.”

However, thanks to the work of an anonymous hacker, the site has now been taken down. In officialese, “The previous form is under revision pending policy references.”  Most importantly, as Janus Rose writing for Motherboard reports:

“No benefits are being denied right now as a result of a person’s decision not to return to work while we continue to evaluate the policy,” ODJFS Director Kimberly Hall told Cleveland.com.

According to Rose, the hacker developed a script that overwhelmed the system:

The script works by automatically generating fake information and entering it into the form. For example, the companies are taken from a list of the top 100 employers in the state of Ohio—including Wendy’s, Macy’s, and Kroger—and names and addresses are randomly created using freely-available generators found online. Once all the data is entered, the script has to defeat a CAPTCHA-like anti-spam measure at the end of the form. Unlike regular CAPTCHAs, which display a grid of pictures and words that the user must identify, the security tool used by the form is merely a question-and-answer field. By storing a list of common questions and their respective answers, the script can easily defeat the security measure by simply hitting the “switch questions” button until it finds a question it can answer.

To make the code more accessible, software engineer David Ankin repackaged the script into a simple command line tool which allows users to run the script in the background of their computer, continuously submitting fake data to the Ohio website.

“If you get several hundred people to do this, it’s pretty hard to keep your data clean unless you have data scientists on staff,” Ankin told Motherboard.

The hacker told Motherboard they viewed their effort as a form of direct action against the exploitation of working people during the COVID-19 crisis.  Score one for working people.

The 1930s and Now: Looking Back to Move Forward

My article What the New Deal Can Teach Us About Winning a Green New Deal is in the latest issue of the journal Class, Race and Corporate Power.  As I say in the abstract,

While there are great differences between the crises and political movements and possibilities of the 1930s and now, there are also important lessons that can be learned from the efforts of activists to build mass movements for social transformation during the Great Depression. My aim in this paper is to illuminate the challenges faced and choices made by these activists and draw out some of the relevant lessons for contemporary activists seeking to advance a Green New Deal.

Advocates of a Green New Deal often point to the New Deal and its government programs to demonstrate the possibility of a progressive state-directed process of economic change.  I wrote my article to show that the New Deal was a response to growing mass activity that threatened the legitimacy and stability of the existing economic and political order rather than elite good-will, and to examine the movement building process that generated that activity.

Depression-era activists were forced to organize in a period of economic crisis, mass unemployment and desperation, and state intransigence. While they fell short of achieving their goal of social transformation, they did build a movement of the unemployed and spark a wave of militant labor activism that was powerful enough to force state policy-makers to embrace significant, although limited, social reforms, including the creation of programs of public employment and systems of social security and unemployment insurance.

Differences between that time period and this one are shrinking and the lessons we can learn from studying the organizing strategies and tactics of those activists are becoming ever more relevant.  The US economy is now in a deep recession, one that will be more devastating than the Great Recession.  US GDP shrank at a 4.8 percent annualized rate in the first quarter of this year and will likely contract at a far greater 25 percent annualized rate in the second quarter.  While most analysts believe the economy will begin growing again in the third quarter, their predictions are for an overall yearly decline in the 6-8 percent range.   As for the years ahead—no one can really say.  The Economist, for example, is talking about a 90 percent economy for years after the current lockdown ends.  In other words, life will remain hard for most working people for some time.

Not surprisingly, given the size of the economic contraction, unemployment has also exploded. According to the Economic Policy Institute, “In the past six weeks, nearly 28 million, or one in six, workers applied for unemployment insurance benefits across the country.”  More than a quarter of the workforce in the following states have filed for benefits: Hawaii, Kentucky, Georgia, Rhode Island, Michigan, and Nevada.  And tragically, millions of other workers have been prevented from applying because of outdated state computer systems and punitive regulations as well as overworked employment department staff.  Even at its best, the US unemployment system, established in 1935 as part of the New Deal reforms, was problematic, paying too little, for too short a time period, and with too many eligibility restrictions.  Now, it is collapsing under the weight of the crisis.

Yet, at the same time, worker organizing and militancy is growing. Payday Report has a strike tracker that has already identified over 150 strikes, walkouts, and sickouts since early March across a range of sectors and industries, including retail, fast food, food processing, warehousing, manufacturing, public sector, health care, and the gig economy.  As an Associated Press story points out:

Across the country, the unexpected front-line workers of the pandemic — grocery store workers, Instacart shoppers and Uber drivers, among them — are taking action to protect themselves. Rolling job actions have raced through what’s left of the economy, including Pittsburgh sanitation workers who walked off their jobs in the first weeks of lockdown and dozens of fast-food workers in California who left restaurants last week to perform socially distant protests in their cars.

Rather than defending workers, governments are now becoming directly involved in suppressing their struggles. For example, after meatpacker walkouts closed at least 22 meat plans and threatened the operation of many others, triggered by an alarming rise in the number of workers testing positive for the virus, President Trump signed an executive order requiring companies to remain open and fully staffed. It remains to be seen how workers will respond.  In Pennsylvania, the Governor responded to nurse walkouts at nursing homes and long-term care facilities to protest a lack of protective equipment by sending national guard members to replace them.

Activists throughout the country are now creatively exploring ways to support those struggling to survive the loss of employment and those engaged in workplace actions to defend their health and well-being.  Many are also seeking ways to weave the many struggles and current expressions of social solidarity together into a mass movement for radical transformation.  Despite important differences in political and economic conditions, activists today are increasingly confronting challenges that are similar to ones faced by activists in the 1930s and there is much we can learn from a critical examination of their efforts.  My article highlights what I believe are some of the most important lessons.

The Green New Deal and the State: Lessons from World War II—Part II

There is growing interest in a Green New Deal, but far too little discussion among supporters about the challenging nature of the required economic transformation, the necessary role of public planning and ownership in shaping it, or the strategies necessary to institutionalize a strong worker-community voice in the process and final outcome. In this two-part series I draw on the experience of World War II, when the state was forced to direct a rapid transformation from civilian to military production, to help encourage and concretize that discussion.

In Part I, I first discussed the need for a rapid Green New Deal-inspired transformation and the value of studying the U.S. experience during World War II to help us achieve it. Then, I examined the evolution, challenges, and central role of state planning in the wartime conversion to alert us to the kind of state agencies and capacities we will need to develop. Finally, I highlighted two problematic aspects of the wartime conversion and postwar reconversion which we must guard against: the ability of corporations to strengthen their dominance and the marginalization of working people from any decision-making role in conversion planning.

Here in Part II, I discuss the efforts of labor activists to democratize the process of transformation during the war period in order to sharpen our thinking about how best to organize a labor-community movement for a Green New Deal.  During this period, many labor activists struggled against powerful political forces to open up space for new forms of economic planning with institutionalized worker-community involvement.  The organizing and movement building efforts of District 8 leaders of the United Electrical, Radio & Machine Workers of America (UE), as described by Rosemary Feuer in her book Radical Unionism in the Midwest, 1900-1950, stand out in this regard.  Although their success was limited, there is much that we can learn from their efforts.

Organizing for a worker-community planned conversion process

District 8 covered Missouri, Iowa, Kansas, Arkansas, southern Indiana and southern and western Illinois, and UE contracts in that area were heavily weighted towards small and medium sized firms producing mechanical and electrical products.  As the government began its war time economic conversion in 1941, its policy of suppressing civilian goods and rewarding big corporations with defense contracts hit the firms that employed UE members hard.

The UE response was to build a labor and community-based effort to gain control over the conversion process. In Evansville, Indiana, the UE organized a community campaign titled “Prevent Evansville from Becoming a Ghost Town.”  As Feurer explains,

District 8’s tentative proposal called upon union and civic and business leaders to request the establishment of a federal program that would “be administered through joint and bona fide union-management-government cooperation” at the local level. It would ensure that before reductions in the production of consumer goods were instituted, government must give enough primary war contracts and subcontracts to “take up the slack” of unemployment caused in cities such as Evansville. It also proposed that laid-off workers would get “first claim on jobs with other companies in the community,” while excessive overtime would be eliminated until unemployment was reduced.

District 8 organizers pressed Evansville’s mayor to gather community, labor, and business representatives from all over the Midwest to discuss how to manage the conversion to save jobs.  They organized mass petition drives and won endorsements for their campaign from many community groups and small businesses.  Persuaded, Evansville’s mayor contacted some 500 mayors from cities with populations under 250,000 in eleven midwestern states, requesting that they send delegations of “city officials, labor leaders, managers of industry and other civic leaders” to a gathering in Chicago.  Some 1500 delegates attended the September meeting.

The conference endorsed the UE’s call for a significant role for labor in conversion planning, specifically “equal participation of management and labor in determining a proper and adequate retraining program and allocation of primary and sub-contracts. . . [And that] all possible steps be taken to avoid serious dislocations in non-defense industries.”  A committee of seven, with two labor representatives, was chosen to draw up a more concrete program of action.

One result was that Evansville and Newton, Iowa (another city with a strong UE presence) were named “Priority Unemployment Plan” areas, and allowed to conduct “an experiment for community-based solving of unemployment and dislocations caused by war priorities.”  The plan restricted new plant construction if existing production capacity was considered sufficient, encouraged industry-wide and geographical-based pooling of production facilities to boost efficiency and stabilize employment, required companies to provide training to help workers upgrade their skills, and supported industry-wide studies to determine how to best adapt existing facilities for military production.

William Sentner, the head of District 8, called for labor to take a leading role in organizing community gatherings in other regions and creating regional planning councils. Unfortunately, CIO leaders did little to support the idea. Moreover, once the war started, unemployment stopped being a serious problem and the federal government took direct control over the conversion process.

Organizing for a worker-community planned reconversion process

As the war began to wind down, District 8 leaders once again took up the issue of conversion, this time conversion back to a peacetime economy.  In 1943, they got the mayor of St. Louis to create a community planning committee, with strong labor participation, to discuss future economic possibilities for the city.  In 1944, they organized a series of union conferences with elected worker representatives from each factory department in plants under UE contract throughout the district, along with selected guests, to discuss reconversion and postwar employment issues.

At these conferences District 8 leaders emphasized the importance of continued government planning to guarantee full employment, but also stressed that the new jobs should be interesting and fulfilling and the workweek should be reduced to 30 hours to allow more time for study, recreation, and family life.  They also discussed the importance of other goals: an expansion of workers’ rights in production; labor-management collaboration to develop and produce new products responsive to new needs; support for women who wanted to continue working, in part by the provision of nurseries; and the need to end employment discrimination against African Americans.

While these conferences were taking place, the Missouri River flooded, covering many thousands of acres of farmland with dirt and sand, and leaving thousands of people homeless.  The US Army Corps of Engineers rushed to take advantage of the situation, proposing a major dredging operation to deepen the lower Missouri River channel, an effort strongly supported by big shipping interests.  It became known as the Pick Plan. Not long after, the Bureau of Reclamation proposed a competing plan that involved building a series of dams and reservoirs in the upper river valley, a plan strongly supported by big agricultural interests. It became known as the Sloan Plan.

While lower river and upper river business interests battled, a grassroots movement grew across the region opposing both plans, seeing them, each in their own way, as highly destructive.  For example, building the dams and reservoirs would destroy the environment and require the flooding of hundreds of thousands of acres, much of it owned by small farmers, and leave tens of thousands of families without homes.

Influenced by the growing public anger, newspapers in St. Louis began calling for the creation of a new public authority, a Missouri Valley Authority (MVA), to implement a unified plan for flood control and development that was responsive to popular needs.  Their interest in an MVA reflected the popularity of the Tennessee Valley Authority (TVA), an agency created in 1933 and tasked with providing cheap electricity to homes and businesses and addressing many of the region’s other development challenges, such as flooding, land erosion, and population out-migration.  In fact, during the 1930s, several bills were submitted to Congress to establish other river-based regional authorities.  Roosevelt endorsed seven of them, but they all died in committee as the Congress grew more conservative and war planning took center stage in Washington DC.

District 8, building on its desire to promote postwar regional public planning, eagerly took up the idea of an MVA.  It issued a pamphlet titled “One River, One Plan” that laid out its vision for the agency.  As a public agency, it was to be responsive to a broad community steering committee; have the authority to engage in economic and environmental planning for the region; and, like the TVA, directly employ unionized workers to carry out much of its work.  Its primary tasks would be the electrification of rural areas and flood control through soil and water conservation projects and reforestation.  The pamphlet estimated that five hundred thousand jobs could be created within five years as a result of these activities and the greater demand for goods and services flowing from electrification and the revitalization of small farms and their communities.

District 8 used its pamphlet to launch a community-based grassroots campaign for its MVA, which received strong support from many unions, environmentalists, and farm groups.  And, in August 1944, Senator James Murray from Montana submitted legislation to establish an MVA, written largely with the help of District 8 representatives.  A similar bill was submitted in the House.  Both versions called for a two-year planning period with the final plan to be voted on by Congress.

District 8 began planning for a bigger campaign to win Congressional approval.  However, their efforts were dealt a major blow when rival supporters of the Pick and Sloan plans settled their differences and coalesced around a compromise plan.  Congress quickly approved the Pick-Sloan Flood Control Act late December 1944 but, giving MVA supporters some hope that they could still prevail, Senator Murray succeeded in removing the act’s anti-MVA provisions.

District 8 leaders persuaded their national union to assign staff to help them establish a St. Louis committee, a nine-state committee, and a national committee to support the MVA. The St. Louis committee was formed in January 1945 with a diverse community-based steering committee.  Its strong outreach effort was remarkably successful, even winning support from the St. Louis Chamber of Commerce.  Feurer provides a good picture of the breadth and success of the effort:

By early 1945, other city-based committees were organizing in the nine-state region. A new national CIO committee for an MVA laid plans for “reaching every CIO member in the nine-state region on the importance of regionally administered MVA.  In addition, other state CIO federations pledged to organize for an MVA and to disseminate material on the MVA through local unions to individual members.  Further the seeds planted in 1944 among AFL unions were beginning to develop into a real coalition.  In Kansas City, the AFL was “circulating all the building trades unions in the nine states for support” to establish a nine-state buildings trades MVA committee. Both the AFL and CIO held valley wide conferences on the MVA to promote and organize for it.

Murray submitted a new bill in February 1945, which included new measures on soil conversation and the protection of wild game, water conservation, and forest renewal. It also gave the MVA responsibility for the “disposal of war and defense factories to encourage industrial and business expansion.”

But the political tide had turned.  The economy was in expansion, the Democratic Party was moving rightward, and powerful forces were promoting a growing fear of communism.  Murray’s new bill was shunted to a hostile committee and big business mounted an unrelenting and successful campaign to kill it, arguing that the MVA would establish an undemocratic “super-government,” was a step toward “state socialism,” and was now unnecessary given passage of the Pick-Sloan Flood Control Act.

Drawing lessons

A careful study of District 8’s efforts, especially its campaign for an MVA, can help us think more creatively and effectively about how to build a labor-community coalition in support of a Green New Deal.  In terms of policy, there are many reasons to consider following District 8 in advocating for regionally based public entities empowered to plan and direct economic activity as a way to begin the national process of transformation.  For example, many of the consequences of climate change are experienced differently depending on region, which makes it far more effective to plan regional responses.  And many of the energy and natural resources that need to be managed during a period of transformation are shared by neighboring states.  Moreover, state governments, unions, and community groups are more likely to have established relations with their regional counterparts, making conversation and coordination easier to achieve.  Also, regionally organized action would make it much harder for corporations to use inter-state competition to weaken initiatives.

Jonathan Kissam, UE’s Communication Director and editor of the UE News, advocates just such an approach:

UE District 8’s Missouri Valley Authority proposal could easily be revived and modernized, and combined with elements of the British proposal for a National Climate Service. A network of regional Just Transition Authorities, publicly owned and accountable to communities and workers, could be set up to address the specific carbon-reduction and employment needs of different regions of the country.

The political lessons are perhaps the most important.  District 8’s success in building significant labor-community alliances around innovative plans for war conversion and then peacetime reconversion highlights the pivotal role unions can, or perhaps must, play in a progressive transformation process.  Underpinning this success was District 8’s commitment to sustained internal organizing and engagement with community partners.  Union members embraced the campaigns because they could see how a planned transformation of regional economic activity was the only way to secure meaningful improvements in workplace conditions, and such a transformation could only be won in alliance with the broader community.  And community allies, and eventually even political leaders, were drawn to the campaigns because they recognized that joining with organized labor gave them the best chance to win structural changes that also benefited them.

We face enormous challenges in attempting to build a similar kind of working class-anchored movement for a Green New Deal-inspired economic transformation.  Among them: weakened unions; popular distrust of the effectiveness of public planning and production; and weak ties between labor, environmental, and other community groups.  Overcoming these challenges will require our own sustained conversations and organizing to strengthen the capacities of, and connections between, our organizations and to develop a shared and grounded vision of a Green New Deal, one that can unite and empower the broader movement for change we so desperately need.