The Need for 21st Century Labor Policy

Like almost all parts of the economy, the labor market has become globalized. Workers today don’t just have to compete with other workers within the United States, they also contend with  millions of others in their field all over the world. We’ve seen the effects of this: deindustrialization, rising inequality across the globe, and a reduction in the power of labor unions. What those IMF and Voice of America reports will tell you is that the effects of globalization on wages did not arise  because of a global race to the bottom. Instead, these reports illustrate that faster growth in manufacturing productivity leads to the issue of deindustrialization. Additionally, future growth in developed countries is likely going to depend on productivity growth for the service industry, which is less suited to collective bargaining. To counteract these problems, the United States needs to develop a modern labor policy to prepare its workforce for the globalized economy.

The first branch of this policy should focus on education, which is the most efficient way to increase labor productivity and per capita output. The goal of education policy should be to produce equitable education outcomes within the United States and for American workers compared with those across the world. Equity within the United States means reducing the historical disparities in American education based on race and geography. To do so the United States should increase per pupil spending and use this spending to make up for the environmental and sociological disparities that disadvantaged children bring with them to school. This includes offering students more extracurricular options and providing students with physical and mental health care options. Another method to reduce inequality in American schools is to offer universal pre-K, raise standards for teachers, and provide economic incentives to better teachers to teach at low-income and rural schools.

To reduce inequities between American and international workers, the United States needs to offer more diverse degree options for secondary education. Countries like France offer their students high school diplomas that aren’t generalized, but rather in specific career and technical categories. This allows France to employ a much more varied group of teachers, and allows their students to pursue a common educational standard that provides them with multiple paths. This includes a public education that students may find more fulfilling than a general high school diploma. There should be greater emphasis on career and technical education (CTE) and STEM education to fulfill America’s strong demand in these categories, which are not being met. The United States must be prepared to provide its workers with a level playing field for competing with workers across the world.

Another major factor of American deindustrialization is the decline in the percentage of laborers in private sector unions. In 1980, 23% of American workers were union members; in 2017 that number was 10.6%. This decline has been seriously felt by private sector workers, of which 6.4% are in unions, compared to 34.4% of public sector workers. High union membership even helps those who aren’t members. According to an EPI study, wages for nonunion private sector workers without a Bachelor’s degree would have been 8% higher in 2013 if union membership levels had stayed at 1979 levels. This decline is correlated with the rising number of right-to-work laws, which now exist in 28 states. As detailed in the Voice of America report above, part of labor’s decline has been due to globalized competition, but that does not mean that American workers should feel helpless. Unions need to adapt to international competition by working to establish themselves as a global presence, and not being outflanked by corporations. This may require a complex system of communication between people of differing cultures, but this is becoming increasingly possible in a globalized world.

Unions need not only to internationalize, but also to expand and integrate to encompass the dynamic nature of the modern economy. First of all, unions need to be more inclusive of part-time workers, the self-employed, and gig economy workers. While the ideal of an American laborer working for 40 hours a week and being able to provide for their family is admirable, it is also an old-fashioned idea of employment. Unions in Germany have long been the benefit of a system called co-determination, which allows them to form work councils for companies of a certain size. Work councils require corporate boards to include designated spots for worker representatives to ensure that the company is looking out for its workers as well as its investors. Adopting work councils would also go a long way towards taking on one of organized labor’s greatest challenges: automation. By creating a corporate structure that melds financial and worker’s interests, companies will invest in technology as an addition to manual labor productivity and not as a replacement for it due to institutional incentives.

Automation and globalization have become boogeymen for labor policymakers. Automation seems to threaten the very existence of manufacturing labor and numerous other forms of manual labor. Globalization threatens to continue to erode America’s industrial base that has produced an opioid epidemic and an angry electorate. But the worst thing that policymakers could do in this situation would be to throw their hands up in ignorance. Rather, to prepare American workers for fulfilling careers and international competition, policymakers should seek to reduce inequities between Americans workers and those whom they compete with abroad. Keep in mind that the National Labor Relations Act, which forms the basis of our labor policy today, was written in 1935. As we edge close to the law’s 100th anniversary, it seems like it is in need of an update.