OUTLOOK ’87 : Unions Are Necessary for U.S. Prosperity

Good jobs are being lost by the thousands in San Diego, in Southern California and across the nation. Workers who once thought they had secure employment with long-established companies are finding themselves pushed out on the street as businesses are closed, sold, or rearranged in a leveraged buy-out.

Concurrently, union representation continues to decline.

Union representation now stands at 18.9% nationwide, the lowest since the beginning of the Great Depression.

Simultaneously, the American middle class is narrowing; our economy isn’t producing as many middle-class jobs as it once did. In fact, some economists say the economy is generating more high-paid jobs and more low-paid jobs, with fewer in the middle.

Manufacturing jobs disappear while jobs increase in the service sector.

“What appears to be missing from service industries,” according to Lynne Brown, an economist at Boston’s Federal Reserve Board, “are the high-wage blue-collar jobs. Also missing are the unions, which tend to equalize pay rates.”

According to a recent congressional report on the concentration of wealth, the richest 0.5% have increased their ownership of wealth from 25.4% in 1963 to 35.1% in 1983, a 40% increase. This is an all-time high, according to David M. Gordon, a member of the Los Angeles Times Board of Economists, exceeding “even the 1929 concentration of wealth among the top 0.5% of households by 10%.”

This trend points to an ominous future.

Supreme Court Justice Louis P. Brandeis once said, “We can either have democracy in this country or we can have great wealth concentration in the hands of a few, but we can’t have both.”

The importance of labor unions in supporting our democracy through income redistribution and their participation in the political process is little understood. Even less appreciated is labor’s unseen helping hand to the average non-union wage earner.

The development of trade unionism on a large scale allowed a substantial minority of workers--especially in industry--to find a better place for themselves in a capitalistic society.

Legally protected and encouraged by the federal government, workers fought bloody struggles to gain union representation during the late 1930s; large-scale trade unionism was actively fostered by the government during and after World War II, the period of greatest union growth. Union power kept workers’ standard of living rising with economic growth, established a previously unknown security from arbitrary dismissal and demotion, and created a court of appeals for workers’ grievances over working conditions.

Union membership and median income continued to grow through the 1950s and all the way to the Vietnam War.

Then it entered a gradual decline, which is continuing to this day.

Some economists blame the decline on the ripple effects of a competitive global marketplace.

But the impact of our nation’s trade, employment, fiscal, monetary and regulatory policies is nowhere more evident than at the collective bargaining table.

Union workers have had to develop re-employment programs and shift to stock ownership, lump-sum payments and profit sharing to deal with employment insecurity, foreign trade imbalances, the inflated value of the dollar, leveraged buy-outs, merger mania and government-approved employer opposition to free collective bargaining.

All of these factors have helped undermine collective bargaining settlements.

In 1981, union workers averaged $14.04 per hour in wages and benefits ($9.56 per hour in wages alone). Non-union workers averaged $10.38 per hour in wages and benefits ($7.66 per hour in wages alone). Thus, in 1981, the typical union worker was earning 35% more than the average non-union worker.

The union worker’s position improved slightly in the next five years. In June, 1986, union workers’ wages and benefits averaged $17.79 per hour ($11.85 in wages only)--38% higher than the non-union workers’ average of $12.87 per hour in wages and benefits ($9.60 in wages).

Although union workers fared better than non-union ones, the fact remains that neither is keeping up with the cost of living and that working people are not getting a fair share of the nation’s wealth.

There has been a continuing attack by employers on the whole web of protections and regulations that foster worker rights and help assure decent wages. The National Labor Relations Board has modified the direction of key policies, undermining union organizing efforts and basic worker rights. The NLRB’s case backlog has doubled in the last six years, denying collective bargaining rights to increasing numbers of workers.

While wage earners tighten their belts, top executives are reaping high salaries. As a result, unions and middle-income America are both being adversely affected.

But unions and middle-class Americans are not the only ones who have a stake in creating a more egalitarian society. Everyone does.

The currently affluent must certainly consider the danger to their interests of a left-leaning political alternative--or of the possible consequences if such an alternative doesn’t arise. For without a valid political alternative, America will continue to slide toward a society divided between the hungry and the well-fed, the have-everythings and the have-nothings.

Without question, we are again heading toward a two-tier society and the polarization of Americans. If this is allowed to continue, it is safe to predict that there will be more crime and more anomalous forms of religious and political sectarianism.

During the past year in San Diego, we’ve seen the results of two policies established by the Reagan Administration in 1981.

When the Administration refused to rehire the unionized air controllers, it signaled an obvious preference for business over labor and accelerated the decline in union power.

But perhaps the most significant event occurred almost unnoticed in the first few months of 1981, when Atlantic Richfield announced its intention to acquire Anaconda Co. in what would be the largest merger at that time in U.S. history. That merger would never have been attempted under a liberal or middle-of-the-road Republican Administration.

But conservatism was being tested, and when antitrust regulators failed to speak up, the rush was on. The leveraged buy-out seed had been planted.

Now, more than five years later, this country is immersed in a feeding frenzy that will seriously impair businesses’ future to compete worldwide.

Top management, instead of focusing on productive innovation in manufacturing and technology, is mesmerized by the shuffling of paper for a profit. Management is engaged in a bulimic feast, swallowing its prey through mergers and acquisitions, only to regurgitate the pieces almost immediately to greedy enterprises.

The recent leveraged buy-out of Safeway Stores was made possible by raising billions of dollars with the following caveat at the front of its prospectus: “The Company does not expect to be able to generate cash flow to make all of the principal payments when due. The Company contemplates that assets of certain subsidiaries will be sold to generate necessary cash flow.”

According to an investment management firm, “prior generations would have called that a Ponzi scheme, but innovative investment bankers call it a leveraged buy-out.”

At Lucky Stores, we see the Gemco Division sold and thousands of workers put out of work to accommodate a management buy-out and thwart a takeover attempt by a group of greedy investors.

At Handyman, we see company directors agree to liquidate the company’s assets because the stock was trading significantly below value, which made the company an inviting target for the takeover artists. Again, thousands of workers lose their jobs.

The answer to an enduring, free and prosperous nation is a broadly based middle class and a viable trade union movement--with more good jobs.