It was a scene I can’t forget. I was standing on my porch a few years back when a drama unfolded in front of me. Two package delivery vehicles pulled up near my house, and one driver slammed her car door and approached the other driver in tears. The distraught driver had come to work planning — and needing — to work a full day but was now being called off the job at noon, presumably because of slower-than-expected demand. She was upset because she had already arranged a full day of paid childcare, and now she would not earn enough to cover the cost. She was out of control in fundamental ways: She lacked control of her schedule, her income, and her ability to care for her child.
It was a telling moment as the reality of that driver’s experience unfolded before my eyes. Unfortunately, such circumstances — unpredictable work schedules, low pay, and lack of respect from employers — are the reality for millions of American workers as they struggle to both make a living and manage the rest of their lives.
Many workers today just don’t have much clout when it comes to the things that matter most to them on the job. As evidence of that, a survey of American workers, conducted in 2017 as part of a Good Companies, Good Jobs Initiative research project, found substantial “voice gaps” — areas where workers believe they ought to have more influence and say at work than they do in reality. According to that study, a majority of American workers report having less influence at work than they believe they should have on benefits, compensation, promotions, job security, respect shown to employees, protections from abuse, and new technologies.
Furthermore, more than a third of survey respondents experienced a voice gap on a number of additional workplace issues, including training, employer values, protection from discrimination, and ways to improve how work is done.
When Productivity and Pay Diverged
Nowhere is workers’ lack of influence and power at work clearer than in wages — one of the issues where survey respondents identified the biggest shortfall in the amount of influence they have at work. Real hourly wages for low- and middle-income workers have been stagnating for years, and about a quarter of all employed American adults — not teenagers, but adults — now work in low-wage jobs, according to Paul Osterman, who is the NTU Professor of Human Resources and Management at the MIT Sloan School of Management.
What went wrong for so many American workers? For that matter, what went wrong for the U.S. economy, which is now characterized by a higher level of income inequality than many comparable countries? The following chart, produced by the Economic Policy Institute (EPI), helps tell a key part of the story:
From the late 1940s until the 1970s, productivity and hourly compensation rose pretty much in tandem in the United States — meaning that as economic productivity grew, so did typical workers’ paychecks. Then, starting in the late 1970s, the two measures diverged. Productivity continued its climb, but real hourly compensation fell behind. Corporations and their shareholders began to receive a larger share of the economic benefits of productivity growth — and workers didn’t.
There are a number of reasons for this, ranging from the decline of unions to automation and globalization. On the automation front, research by MIT economist David Autor indicates that automation of routine tasks through computerization has contributed to a declining proportion of middle-skill jobs. That, in turn, results in greater income inequality between low-wage and high-wage workers. Another study by Autor and Anna Salomons of Utrecht University School of Economics has suggested that advances in automation grow the economy but cause workers’ share of those gains to drop. Globalization, meanwhile, has tended to raise wages in rapidly developing countries like China — while causing real wages for lower-income workers in developed countries like the U.S. to stagnate.1
But a significant portion of the decline in U.S. workers’ bargaining power has to do with just that: a loss of ability to bargain through unions. In recent decades, unions, a traditional mechanism for giving workers a voice in the workplace, have been in decline in many countries, but the decline has been particularly severe in the United States: The percentage of workers covered by a union in the U.S. fell from 23% in 19702 to a mere 10.5% in 2018.
What’s more, as Osterman and Beth Shulman reported in their book Good Jobs America, research has found that workers at the low end of the labor market benefit significantly from unionization, which both increases their wages substantially and often results in training arrangements that create career advancement opportunities for them.3 And, if unions are sufficiently widespread in an industry, the better wages they negotiate also benefit nonunionized employees in the same occupations, since nonunionized employers in those industries often emulate union pay scales to prevent unionization. A recent study of this “spillover” effect found, for example, that, had U.S. unions remained as widespread in the private sector in 2015 as they were in 1977, the average nonunionized male in the U.S. private sector would have made about $3,172 more in 2015. In the past, research also found that unions could stimulate managers to adopt more effective management practices — in order to sustain the higher wages unions bargain for.4
A Need to Revamp U.S. Labor Law
However, in the U.S., unions are no longer common enough to have that kind of widespread beneficial influence on many sectors of the economy. In fact, a study by John-Paul Ferguson, now at McGill University, showed that it has become extremely difficult for workers to unionize under current U.S. labor law. Even when workers do vote for a union, the union often isn’t successful in getting employers to negotiate an initial contract. Ferguson found that, when employers strongly oppose the organizing effort, only about one in 10 petitions for a union election culminate in the union successfully securing an initial contract.
Furthermore, the economy has changed dramatically since the 1930s, when a core element of current U.S. labor law, the National Labor Relations Act, was enacted. This has led some experts, including Thomas Kochan, the George M. Bunker Professor of Management at the MIT Sloan School of Management and faculty director of the Good Companies, Good Jobs Initiative, to call for a complete overhaul of U.S. labor law. “That law’s been broken for so long. Modest efforts to reform it haven’t worked,” Kochan said in a podcast interview in 2018. “We need a fundamentally new structure for labor law.” Along those lines, Harvard Law School’s Labor and Worklife Program last year launched a “Clean Slate Project” with the ambitious goal of considering how we should redesign U.S. labor law for the 21st century. “After 18 months, we will put up recommendations for a comprehensive overhaul of labor law,” Sharon Block, executive director of the Labor and Worklife Program, said in August 2018, according to a Harvard Law Today article. “Not just amendments to the National Labor Relations Act, which is how people think of labor law today, but a broader change in the structure to facilitate workers having a greater voice in the economy and in politics.”
Certainly, many workers would like a greater voice in the workplace. For example, our recent survey of U.S. workers found a substantial uptick in the percentage who wish they could join a union. In a new paper published in ILR Review, Kochan, Duanyi Yang, William T. Kimball, and Erin L. Kelly report on this representative survey conducted among U.S. adults. They found that 48% of workers who are not union members would vote to unionize if they had the opportunity, up from about one-third who said that in surveys in 1977 and 1995. Were all those workers to join unions, it would roughly quadruple the number of U.S. employees represented by a union — increasing the total by about 58 million workers. “There continues to be a large unmet demand for union representation among American workers,” the authors conclude.
Innovation and Experimentation
Given the challenges of unionization under current U.S. labor law, there are no easy, immediate solutions to providing union representation for all those workers. But there are innovative and exciting experiments going on, involving new mechanisms for giving employees a voice and greater influence at work. One important factor is what have been called “alt-labor” initiatives, which include a growing number of innovative organizations that increase workers’ influence without being traditional unions.
A good example of an innovative alt-labor organization is the Florida-based Coalition of Immokalee Workers, which has improved wages for workers on tomato farms not by unionizing but by securing agreements with major tomato purchasers such as Taco Bell and Whole Foods Market to pay a penny more per pound for tomatoes to support a wage increase for the farmworkers. Other examples of innovative alt-labor organizations include the National Domestic Workers Alliance, Restaurant Opportunities Centers United, and OUR Walmart (officially, Organization United for Respect at Walmart), an association that helps Walmart employees collaborate on workplace issues that concern them, as well as get information about their rights at work.
Then, too, in some cases, employees have started taking collective action without a traditional union present — as Google employees and contractors did when more than 20,000 of them walked out on Nov. 1, 2018, to protest the way the company had been handling sexual harassment claims. In addition, web-based platforms have cropped up to enable employees to start campaigns for change in their workplaces (coworker.org) or to find better jobs based on workers’ ratings of employers (glassdoor.com).
While all of these innovative approaches are important, most aren’t yet at a scale to make a difference for most workers. What’s more, there are significant questions about how the alt-labor initiatives can be sustainable in the long term without the dues model on which traditional unions rely.
Traditional unions are also trying new approaches. After decades when U.S. unions were often justly criticized for failing to embrace change, there are signs of increasing willingness to innovate among unions, including support for ballot box initiatives for higher local minimum wages like that achieved by the “Fight for $15” campaign in Seattle and support of alt-labor start-ups experimenting with new models.
Unions are also increasing their focus on how advances in technology will affect workers’ jobs. A recent contract between Marriott and its unionized hotel workers in Boston, for example, requires the company to inform the workers 165 days before it introduces new technology into the workplace and to offer training to those workers whose jobs will be impacted by the new technology. In addition, an AFL-CIO commission is now discussing what the changing world of work means to the future of unions; several faculty members affiliated with the Good Companies, Good Jobs Initiative are providing input from their research to this process.
What the Future May Hold
In the swirl of activity that currently encompasses both traditional labor and alt-labor organizations, we can begin to see what’s possible for empowering workers in the 21st century. Technology has made it possible for workers to connect on a large scale to assess the quality of work in companies. They can mobilize on issues specific to a company or on core issues that cut across many employers. Traditional unions have the stability, scale, and infrastructure to advance workers’ skills and standing in unionized workplaces. But alt-labor organizations are more nimble and creative in the variety of approaches they take.
Longer term, restoring worker voice will require both continued innovation on the ground — and better public policy. There are some interesting new efforts in that arena, such as a 2018 Roosevelt Institute report by Kate Andrias of the University of Michigan and Brishen Rogers of Temple University. Andrias and Rogers outline four pillars that they think a modern labor law should encompass: It should cover all workers; protect and facilitate unionization; encourage bargaining on the sector level rather than just by enterprise; and protect employees’ rights to engage in collective actions such as striking and picketing.
But more is needed. For example, productive and innovative labor-management partnerships such as the one at Kaiser Permanente that Kochan and several coauthors studied intensively5 need to be encouraged by any new labor policy. So too do the emerging innovative forms of worker voice. They will need to be protected, encouraged, and evaluated — and those that prove effective should find their places in what is likely to be a variety of voice mechanisms for workers. As Kochan, Yang, Kimball, and Kelly concluded in their recent ILR Review article, “no one-sized shoe” worker voice option fits all in today’s workforce and economy.
What’s more, research currently underway by Kochan, Kimball, and Alex Hertel-Fernandez of Columbia University suggests that many of today’s workers would ideally prefer a somewhat different kind of labor union than in the past — one that is not very involved in politics and is not inclined to threaten to strike but that does bargain on workers’ behalf and enables them to obtain better retirement and health insurance benefits. Workers also expressed interest in the possibility of receiving unemployment benefits and training for new jobs through a union. There is also a need for more voice for workers not historically covered by unions in the U.S., such as temporary, contract, or “gig” workers.
In the long term, modernizing and improving labor policy is imperative if we want to flourish as a democracy. The kind of income inequality we now see — where CEOs in public companies in the U.S. now make, by some estimates, more than 300 times what their median workers earn — isn’t conducive to a well-functioning democracy. In particular, as technological innovation continues, workers’ frustrations about displacement and economic insecurity may lead to political turbulence and authoritarianism. In their 2017 book Shaping the Future of Work: A Handbook for Action and a New Social Contract, Kochan and Lee Dyer make a point with ominous implications for American democracy:
“It is hard to find a thriving democratic society that does not have a free labor movement. Labor is often one of the first groups to be suppressed when totalitarian leaders rise to power. Europeans, remembering the history of fascism, Nazism, and communism, tend to be more accepting than many Americans of treating labor as a 'social partner' with a legitimate seat at the table in dialogues about the future of work and social and economic policies. The growth of populist political movements and candidates in Europe and America may be waking up leaders and citizens to the current threats to democracy and by extension the futures of capitalism and market economies.”6
Over time, widespread low wages lead to a weakened nation. As labor leader David Rolf, until recently the president of SEIU 775 in Seattle, pointed out in a 2018 interview with the Good Companies, Good Jobs Initiative at MIT Sloan, workers who are making poverty-level wages don’t make good customers — or good taxpayers, for that matter, and they often require government assistance programs to supplement their meager incomes.
Peter Temin, an MIT Professor of Economics Emeritus, wrote in his 2017 book The Vanishing Middle Class that the U.S. economy is now starting to resemble a “dual economy” model developed in the 1950s to describe developing nations in places like Africa and Latin America that had a small “capitalist” sector that was more prosperous and a large low-wage “subsistence” sector. In such economies, the wealthy few often have an incentive to keep wages low for the majority of people.7
Americans would do well to ask: Is that the kind of country we want to become? If not, it’s time to change that trajectory — through innovative ideas and experimentation, and through public policy responsive to 21st-century realities.
1. P. Temin, The Vanishing Middle Class: Prejudice and Power in a Dual Economy (Cambridge, MA: MIT Press, 2017), 148-151.
2. T.A. Kochan and L. Dyer, Shaping the Future of Work: A Handbook for Action and a New Social Contract (Cambridge, MA: MITxPress, 2017), 135-6.
3. P. Osterman and B. Shulman, Good Jobs America: Making Work Better for Everyone (New York: Russell Sage Foundation, 2011), 92-3.
4. See Kochan and Dyer, Shaping the Future of Work, 89, for more details.
5. T.A. Kochan, A.E. Eaton, R.B. McKersie, and P.S. Adler, Healing Together: The Labor-Management Partnership at Kaiser Permanente (Ithaca, NY: Cornell University Press, 2009).
6. Kochan and Dyer, Shaping the Future of Work, 137.
7. Temin, The Vanishing Middle Class, 1-13.