As Union Power Dwindles, the Rich Get Richer and Corporate Profits Soar

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As Union Power Dwindles, the Rich Get Richer and Corporate Profits Soar

Hundreds of Verizon workers strike outside of the telecommunications company’s Brooklyn offices on April 13, 2016 in New York City. Across the nation nearly 40,000 Verizon workers with the Communications Workers of America (CWA) and the International Brotherhood of Electrical Workers (IBEW) walked off their jobs, demanding a new contract. (Photo: Spencer Platt/Getty Images)

A recent report by the Economic Policy Institute reveals in startling fashion a fact that rings true intuitively for many working Americans: The rich benefit substantially from the dwindling membership and political clout of unions. 

This, of course, is nothing new.

Organized labor's history in the United States is at once fascinating, infuriating, and complicated, a story that includes brief episodes of significant gains followed, inevitably, by fierce offensives launched by executives in partnership with politicians seeking to regain, as Franklin D. Roosevelt put it, "their high seats in the temple of our civilization."

The American labor movement, relative to that of other rich nations, has been particularly fractious and conflicted, problems often caused by racial and religious tensions — and these tensions often limited labor's ability to maintain its position as a cohesive political force in the face of powerful antagonists.

Even so, its victories, particularly in the post-Depression era, were an essential factor in the development of the middle class and in the empowerment of workers previously confined to dreadfully low pay and seemingly endless exploitation.

But in the past several decades, labor's victories have all but collapsed as the political process has become increasingly tailored toward the interests not of organized working people, but of organized wealth.

This process was a very conscious one: Facing fierce activism and empowered consumer advocacy groups, the business class, in the early 1970s, set out to take back its position as the overseer and framer of American politics.

In August of 1971, Lewis Powell, the future Supreme Court justice, lamented that "the American economic system is under broad attack."

Powell urged business to respond fiercely and decisively — and without shame.

"Business must learn the lesson, long ago learned by labor and other self-interest groups," Powell wrote. "This is the lesson that political power is necessary; that such power must be assiduously cultivated; and that when necessary, it must be used aggressively and with determination — without embarrassment and without the reluctance which has been so characteristic of American business."

Learn they did — and very quickly.

As Jacob Hacker and Paul Pierson document in their book Winner-Take-All Politics, "The number of corporations with public affairs offices in Washington grew from 100 in 1968 to over 500 in 1978. In 1971, only 175 firms had registered lobbyists in Washington, but by 1982, nearly 2,500 did. The number of corporate PACs increased from under 300 in 1976 to over 1,200 by the middle of 1980."

Coinciding both with the emergence of Movement Conservatism and neoliberalism, the business offensive yielded remarkable results for corporate America — and disastrous results for the working class. From Ronald Reagan's tax cuts and union busting to Bill Clinton's deregulation of the financial industry and welfare reform, business gained momentum that it has yet to lose.

Approximately two years after the beginning of the Great Recession, the Supreme Court's Citizens United decision consolidated this momentum, making it easy for politically motivated executives to pour millions — cash that is both disclosed and dark — into the political system.

As the political scientists Martin Gilens and Benjamin Page noted in a 2014 study, the rich now have near-total control over public policy, and the results are what you would expect: Stagnant wages, a collapsing middle class, worsening income and wealth inequality, and, of course, the further decline of unions.

According to Ana Swanson of the Washington Post, "Union membership has plummeted in the U.S., from nearly one-third of workers 50 years ago to one in 10 American workers today."

And the Economic Policy Institute's new report reveals why unions are viewed with such disdain by much of corporate America and their partners in government: "When union membership was at its peak (33.4 percent in 1945) the share of income going to the top 10 percent was only 32.6 percent."

Today, with union membership at around 11.1 percent, the report notes, "The share of income going to the top 10 percent...hit 47.2 percent in 2014 — only slightly lower than 47.8 percent in 2012, the highest it has been since 1917 (the earliest year data are available)."

The Economic Policy Institute has also documented the disparity in wage growth between the top 0.1% and the bottom 90%. The numbers are staggering: Since 1979, those in the top 0.1% have seen wage growth of 324.4%, versus a meager 16.7% growth for those in the bottom 90%.

Also during this period, the middle class has experienced a sharp decline, one that is linked to the decline in union membership.

"From 1979 to 2012, union membership slid by more than one half, from 24 percent of all workers to 11 percent," writes Cole Stangler of the International Business Times. "Over that same time, the size of the middle class shrank by more than 10 percentage points, to 45 percent of the population."

Those who shape government policy understand these facts all too well, and they are eager to perpetuate the status quo they have worked so hard to ingrain, one that keeps workers powerless, disorganized, and economically insecure.

They understand, for example, the point Tali Kristal makes in a 2013 paper published in the American Sociological Review, in which she argues that corporate profits have soared not merely, as some assert, because of productivity-increasing computerization and technological advances.

There is another crucial factor at play: Namely, the "disempowerment of workers when bargaining with employers."

This declining bargaining power, combined with "falling rates of unionization," allowed large corporations to "grab the lion’s share of the fruits of economic growth."

All the while, as Kristal documents, labor's share of the pie has continued to shrink in the decades since 1979 — and inequality, along with corporate profits, have surged.

"Union decline has not only increased wage disparities among workers; it has also allowed U.S. capitalists to grab a growing slice of economic gains at the expense of all of their employees," Kristal concludes. "Employers were able to do this, not because of the inexorable impact of abstract market forces or impersonal technologies, but because they have been able to deploy new technologies in ways that spurred the decline of unions and reduced the collective capacity of workers to sustain or boost their wages and benefits."

Unions, then — and the broad right of workers to organize and bargain collectively — remain central in both the fight against corporate control of the political process and in the fight to restore the clout of the working class.

Despite its sharp decline, organized labor continues to achieve major victories through collective bargaining and, as was the case with Verizon workers, strikes — signs that, while they come in the midst of the decline of labor's influence, provide hope that with sustained effort, unions can regain strength and push for major reforms that will put a dent in corporate America's lead.

"Strikes work," writes Hamilton Nolan. "As much as workers need wages, businesses need labor even more. The free market has not raised your wages in decades. The government has not raised your wages in decades. You need to raise your own wages. Organize. Then strike."

Millions are taking Nolan's advice, and the business class has taken notice.

"We are the many, and they are the money, " said Congressman Keith Ellison. "We are going to win this fight if we stick to it."

Jake Johnson

Jake Johnson

Jake Johnson is an independent writer. Follow him on Twitter: @wordsofdissent

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