Archives for May 18, 2023

Last week, the Center for American Progress (CAP) issued a report that confirmed a fact we all knew: unions build workers’ wealth. Even though its principal finding approaches the level of truism, it needs to be repeated and supported frequently with fresh evidence or it can get lost in the discourse.

This recent CAP report, appropriately entitled “Unions Build Wealth for the American Working Class,” reminds us that unions help “working-class families” to put some of the building blocks of wealth in place. CAP defines “working-class families” as households that do not include anyone with a college degree. That’s the educational attainment of about two-thirds of adults age 25 and older.

The 2023 report’s bottom line is striking: working-class union households from 2010 to 2019 had median wealth of slightly more than $200,000 while the median working-class nonunion household had a little more than $52,000 in wealth. The gap is even greater for working-class families of color, although their total wealth is lower than that of white families. CAP issued an earlier report that analyzed 2013 data and focused on middle-class families’ wealth. It found that median middle-class union household possessed $50,800 in wealth while the median middle-class nonunion household had $27,000 in wealth. The earlier report found wealth gaps between union and nonunion households dating back to 1989.

CAP’s newest wealth report is surprising because of how unsurprising it is. Everything we know about unions points to this result. Unions raise wages, which puts more money in workers’ pockets and creates the opportunity to save. Unions increase the likelihood that workers will receive employer-provided benefits, including health insurance and paid sick leave, that protect workers from potentially devastating economic losses that can be associated with illness or injury. Unions protect employees from discriminatory and unfair discharges, including those driven by age discrimination, that can force workers to subsist on unemployment insurance benefits that can be a small fraction of their wages. As the CAP report says, “[j]ob stability also creates peace of mind, which helps workers focus on the longer term and save more.”

So, unions add wealth. This is not to say that workers are getting rich. They are not. But the median wealth identified in the CAP report should help to ameliorate some of these workers’ worries about whether they can retire and maintain some semblance of their pre-retirement lifestyles. As noted above, unionized workers are more likely to have retirement plans than non-union workers. Defined-benefit pensions that provide workers with guaranteed lifetime income to supplement their Social Security benefits are available to only a very small percentage of workers, almost certainly consisting largely of union members and public-sector employees. Yet, unionized workplaces have not been immune to the long-term trend toward defined-contribution plans — like 401(k)s — that collect workers’ savings, but do not guarantee lifetime income. As a result, for many workers, their retirement savings, their homes, and Social Security may be their only economic supports in retirement.

Let’s check a few back-of-the-envelope calculations. There is a general, not-very-good, but still worth considering rule-of-thumb that retirees need to replace about 70% of their pre-retirement incomes to continue their lifestyles. This lower income reflects, in part, the possibility that workers’ tax rates and expenses will be lower after retirement. Median annual earnings in 2021 for a full-time full-year worker with a high school degree and no college education was slightly above $40,000. For those with some college, but no college degree, the median annual income was around $45,000. We know incomes are higher for union workers and lower for non-union workers, but let’s ignore that differential for now.

Applying the 70% rule of thumb, these working-class people very roughly need around $28,000 to $31,500 per year to support themselves in retirement. On average, Social Security replaces about 40% of workers’ pre-retirement income. The replacement rate is higher for workers at lower earnings levels, so let’s call it 50% or $20,000 to $22,500. So, to reach a 70% target retirement income, these workers need to supplement their Social Security benefits with between $8,000 and $9,000. If working-class union members take their savings of $200,000 and buy an annuity that guarantees income of about 5% per year, they will have $10,000 — slightly more than they need. If they decide not to buy an annuity, keep their money in safe investments, and spend it down at a rate of $8,000 per year, they will have sufficient savings to support themselves for more than 25 years. In sum, unions do not just make workers wealthier. Unions make retiring with dignity possible.

Of course, these are the roughest of rough calculations. Don’t rely on them for your retirement planning. Really. Also, these calculations fail to take into account the reality that some working-class families’ wealth is tied up in their homes. If they sell their homes to finance their retirements, they will need some place to live, which would add to their annual expenses. So, sustaining reasonable lifestyles in retirement is likely to be more of a struggle than my simple math discloses. However, that’s certainly not a consequence of unions that fight aggressively for retirement plans and sufficient incomes to allow workers to have savings they can put in those plans. It’s a failure of our retirement system, and that failure threatens non-union workers’ retirement finances far worse.

The bottom line is that workers’ bottom line, and their wealth, and their retirement, will be much better with a union than without.

The President does not make laws regarding worker organizing and collective bargaining. The Constitution delegates that responsibility to Congress. In turn, Congress delegated the administration of private-sector labor law to the National Labor Relations Board. The Supreme Court subsequently built a fortress called “preemption” around the NLRB’s jurisdiction and Congress’ authority. With only limited exceptions, efforts by the states or the President to regulate within the labor relations fortress are preempted and, therefore, void.

Yet, the Constitution directs the President to “faithfully execute” the laws. Also, Congress regularly delegates expansive authority to the President to administer laws, especially when federal spending and extensive, detailed, and/or complex implementation issues are involved. Congress cannot oversee every procurement decision, administer every grant, and distribute funds to governments and private entities effectively. Congress needs the President, the President’s Cabinet, and the legion of career employees who staff Cabinet departments to do it.

This is the authority — implementing and administering laws — the President can use, in some circumstances, to help workers organize or join unions and bargain collectively. Hold your applause. This authority is limited. Unlike Congress, the President likely could not declare that only unionized entities can receive federal funds or tax credits, for example. Even so, there is a great deal the President can do, if the President values workers and understands the important role that worker power can play in ensuring effective administration of government programs.

The New York Times’s Jonathan Weisman nicely illustrated the point in his story about a recent union representation election victory by the United Steelworkers at a Blue Bird electric school bus plant. Weisman described the Biden Administration’s role as follows:

Just two weeks ago. . . the Environmental Protection Agency, which administers the Clean School Bus Program, pushed a demand on all recipients of federal subsidies to detail the health insurance, paid leave, retirement and other benefits they were offering their workers. They also required the companies to have ‘committed to remain neutral in any organizing campaign and/or to voluntarily recognize a union based on a show of majority support.’ And under the rules of the infrastructure bill, no federal money may to be used to thwart a union election.

Any union organizer can tell you the immense value of an employer remaining neutral, or taming its opposition to a union, in a representation election campaign.

These requirements were not written into the Infrastructure Investment and Jobs Act that birthed the Clean School Bus Program. The EPA, which administers the bus program, imposed the requirements to advance the program’s goals. The requirements will help ensure a high-quality, stable, sufficient, and skilled workforce at Blue Bird that can cost-effectively produce electric school buses without the delays associated with excessive employee turnover, low morale, and workplace disputes.

This is what it means for the President to faithfully execute the laws: setting requirements that help to achieve a statutory program’s goals. The Clean School Bus Program is only one example. An even better example may be the Commerce Department’s Broadband Equity, Access, and Deployment Program (BEAD) program. The BEAD program will spend $42.45 billion to expand high-speed Internet access in all 50 states, the District of Columbia, Puerto Rico, and the U.S. territories and commonwealths. These states are the grantees (i.e. they will receive the money), but they will partner with subgrantees that likely will use contractors and subcontractors to complete the work.

The “notice of funding opportunity” (or NOFO) soliciting BEAD grant applications includes a section entitled “Fair Labor Practices and Highly Skilled Workforce.” The requirements in that section “promote the effective and efficient completion of high-quality broadband infrastructure projects by ensuring a reliable supply of skilled workers and minimizing disruptive and costly delays.” Again, that’s the goal: faithfully executing the law and advancing its goals by empowering workers and blocking employers from illegally exploiting their power.

Subgrantees and their contractors and subcontractors must disclose their records of compliance with federal labor and employment laws to the state/grantees. States and other grantees must evaluate those compliance records. So, chronic labor rights violators should not expect to participate in the broadband program. Perhaps more important, subgrantees and their contractors and subcontractors must produce plans to ensure ongoing compliance with labor and employment laws. The funding document suggests how:

• use a directly employed workforce as opposed to a subcontracted workforce;
• pay prevailing wages and benefits to workers,
• use project labor agreements (i.e., pre-hire collective bargaining agreements between unions and contractors that govern terms and conditions of employment for all workers on a construction project);
• implement workplace safety and health committees that include workers;
• commit to union neutrality;
• use labor peace agreements;
• use Registered Apprenticeships or other joint labor-management training programs; and
• take steps to prevent the misclassification of workers.

Only two of these requirements — project labor agreements and labor-management registered apprenticeships — directly lead to union representation of workers. Several others (e.g., union neutrality, labor peace agreements, direct employment, and prevailing wages) increase the likelihood that workers will be able to win a union or unionized contractors will be able to win contracted or subcontracted work.

This NOFO section also requires that subgrantees, contractors, and subcontractors have a plan to employ “an appropriately skilled and credentialed workforce.” In addition to training and credentials, subgrantees are encouraged to determine whether the workforce is unionized and directly employed or subcontracted. Signaling unmistakably that unionized employees are more likely to be appropriately skilled and credentialed, and encouraging states to inquire about this point with their subgrantees, will give unionized contractors and their employees an improved opportunity to secure this work.

These provisions’ measure of success is not words on a page. The measure is how the words influence the behavior of states, internet service providers, construction and installation contractors and subcontractors, their employees, and the unions that represent workers in the broadband industry. Ultimately, the question is whether more workers in the broadband sector are represented by unions and secure higher pay, better benefits, and lasting, secure jobs.

Maybe that’s the next story for the New York Times or other news outlets to report.

In this episode, Burnes Center Senior Fellow Seth Harris hosted a roundtable of labor reporters from a diverse group of news outlets to talk about some of the biggest stories about workers, unions, and worker power in the U.S. today. 

Listen here.

Matthew Cunningham-Cook is a researcher and writer with The Lever focusing on capital markets, health care and retirement policy.

Alexandra Martinez is the Senior News Reporter at Prism where she covers workers’ rights, immigration, the economy, gender justice, and the environment.

Tim Noah is a venerable Washington-based staff writer at the New Republic with years of experience covering labor-related politics and policy.

Noam Scheiber is a Chicago-based reporter for the New York Times who covers workers, the labor movement, and the workplace.

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