Studying Ronald Reagan Part 2 – Death of the Union

In part one we dove into “trickle-down” or supply side economics. Now let’s look at another one of Reagan’s biggest “accomplishments” – destroying organized labor. Since 1979 the percent of Americans with collective bargaining(unionization) has dropped from 27% to 11.6% of workers. The end result being the loss of $200 billion per year in potential wages earned. And it doesn’t take Sherlock Holmes to realize that the owners of the business keep any profit not paid to workers in wages. 

Why were unions so important? Let’s rewind in history, to the late 1800’s, America is becoming an industrialized nation and workers are moving from farms to factories. For the first time Americans start having a boss and being employees. We all know what the working conditions were like- child labor, 7-day work week, 12 hour shifts. It is safe to say workers’ lives were at an all time low in American history. Inequality soared until 1929 when the great depression hit, bringing the times of grandeur to an end. In 1935 FDR passed the National Labor Relations Act or the Wagner Act. The act “guarantees the right of private sector employees to organize into trade unions, engage in collective bargaining, and take collective action such as strikes.” Imagine it being literally illegal to organize or strike? That was the hostile scene before unions. 

It is much easier to see the exact reasons for unionization when we rewind back to those hostile conditions. However, if we have any chance of decreasing inequality today, it will be through unions. One of the most important defenses a union provides is education discrimination. Discrimination is a strong word there, but we mean paying two people different wages for the same job simply because one has a higher education. This can be extremely painful to hear as so many millennials have gone to college and accumulated debt in an attempt to make a better life. The key here though is different pay for the same work, if we look from the employers perspective this is just a tool to pay less wages. Paying a few employees a higher rate will always be cheaper than a company wide raise. 

If we look around, tech jobs are the marquee careers of the day, while the former manufacturing jobs that built the middle class are either overseas or done by technology. We are losing all of the decent paying jobs that do not require a college education. Today if a millennial does not go to college, they are going to be working the same jobs they had in high school, competing with teenagers. Next time you enter a fast food restaurant count how many adults you see that are over the age of 30. This in no way knocking those individuals, the working poor are the most mistreated group in this country. The brutal truth is we have hard working adults making $7.25/hour. That is a starvation wage, you could not pay rent in any major city working full time at $7.25/hour, if you can it is at the cost of having food, utilities, or gas money. These are parents and grandparents working for $7.25/hour, do their children not have the right to a decent standard of living? 

Let’s back up and learn more about how we got here. It is hard to pinpoint one action that Reagan took to hurt unions, however his first union battle was the most symbolic. In 1981 Reagan went to task with  the Professional Air Traffic Controllers Organization. Shockingly this union actually endorsed Reagan. Little did PATCO know that the strike was going to effectively cripple unions for the foreseeable future. Since they were a Government agency, Reagan fired all of them immediately. 

This flipped labor ownership relations completely on their head. Historically strikes were used in the private sector as an effective bargaining tool to negotiate higher wages. Reagan himself once lead a strike as the union president of the Screen Actors Guild. However, this blow devastated all unions and gave the green light to business owners that they could mistreat unions and workers. And they were able to do so because Reagan staffed the National Labor Relations Board, effectively neutralizing all enforcement of labor laws. 

We will dissect why unions are important soon, in the meantime this chart tells the story succinctly. 

Reagan firing the PATCO union members was one of the greatest blows to the working class by any President. This real and symbolic gesture opened the floodgates for states to start cracking down on unions. Any manufacturing jobs left in America have left the Midwest for the south. Why? Because these states have the most anti-worker laws in the country, known as “right-to-work” states. Basically working is a privilege and not a right, and the employer maintains the right to fire you at anytime for anything, including organizing. Sadly if we cracked down on these laws, those manufacturing jobs would move overseas. If only workers everywhere had unions.