On July 15, 2020, Sharon Black and Benjamin Sachs write on Popular Resistance.org:
The COVID-19 pandemic has spurred multiple crises in our country including a public health crisis and an economic one. The need to protect the health of Americans and the need to protect their livelihoods might seem to require disparate approaches. But, as unlikely as it may seem, we believe that rewriting the rules of how workers can act collectively is a key solution to both.
Why? COVID-19 poses particular and grave challenges to working people, and, in the context of the pandemic, threats to workers’ health are a threat to public health. As has become painfully obvious, moreover, the costs of the pandemic are being borne disproportionately by low-wage workers, a population made up primarily of workers of color. As they work to keep the economy moving, these workers are being asked to put their lives on the line in ways that are both unacceptable and unnecessary, especially as the country faces the many facets of our nation’s structural racism.
To stem this tide of workplace transmission we need fundamental changes in the way we approach worker voice and power. Workers need the power to demand new ways to keep themselves and their families safe and to build a more equitable economy than the one the pandemic shut down. How can we change the law to make this possible? We recently issued a report, Worker Power and Voice in the Pandemic Response, that lays out recommendations to answer this question.
First, we must make work safer. But it is clear that we cannot rely on the Trump administration to ensure worker safety and health; after all, this administration’s Occupational Safety and Health Administration (OSHA) is abandoning workers to the ravages of the virus. Accordingly, we recommend several steps to give workers the power to achieve safer workplaces. We recommend creation of committees where workers can sit at the table with their employers to identify the safety and health problems that they confront at work and to demand – free from retaliation – that their employers take the necessary steps to ensure safe and healthy workplaces. Workers themselves know best what threatens their health and how best to ameliorate those threats, but too few employers are even asking for their input.
We also recommend that every workplace have a safety monitor who can provide information and confidential advice to workers about their right to a safe workplace. Providing workers with a reliable and independent source of information about the virus and their rights will enable workers to make informed choices about whether their workplaces are safe and how they can collectively respond when they have unanswered concerns. New polling by Data for Progress shows that the public overwhelming supports both of these policies.
Second, we must adapt the right to organize to fit the new realities of the COVID workplace. Having a union has always been the most reliable route to economic security – something in short supply for workers in the midst of the worst economic downturn since the Depression. In fact, the right to join a union was first codified in the wake of the Depression as a means to stabilize the financial freefall. And research shows that unionized workplaces are safer than other workplaces.
But, the COVID crisis has changed some fundamental features of worker organizing. Because, for example, COVID requires social distancing, it has altered the nature of the American workplace, making in-person communication between workers far more difficult – and dangerous – than it was prior to the pandemic. This means that the process for organizing unions, holding union elections, and engaging in collective activity – terribly difficult before the pandemic – have become essentially impossible under current rules. The result is to constrain worker voice at the exact moment workers, especially workers of color, are straining to be heard. We recommend that all workers have access to a way to meet on-line with coworkers to discuss their common interests without the employer looking over their digital shoulder. Again, a majority of Americans surveyed think this kind of digital meeting space is a good idea. We also recommend increasing the visibility of workers’ collective actions, like strikes and walk outs related to safety, so consumers can make informed judgments about companies and how they spend their money.
Third, we must protect opportunities for good union jobs, which means protecting public employment. COVID threatens to initiate a period of sustained unemployment – the latest predictions from the Fed suggest double digit unemployment for months to come. Today’s unemployment demands a series of bold legislative responses. Those legislative responses must include (1) supporting public sector employment, which has been the source of good union jobs and (2) creating new jobs that provide a similar path to secure employment for the most vulnerable who have lost their jobs in this recession.
The devastation being wrought by COVID requires a fundamental redesign of the law of work. We urgently need legal reforms that empower workers to demand safer workplaces and a more equitable and secure economy than we had before the pandemic.
Gary Reber Comments:
The labor movement is stuck in the slave mentality of worker dependency on others for their survival. No where in the the report on recommendations referenced in this article is their a call for workers to become owners in the companies that employ them.
As long as people are powerless and depend on others for their income, they are going to be vulnerable to economic downturns, cheaper labor, displacement by advancing technology, sickness, disability, old age, and death that leaves them and those dependent on them helpless. Increased government assistance, private charity, and job creation, while it may be necessary in the short-term, are not the answer, as the underlying problem remains.
When workers have only their labor to sell, they will be replaced as soon as there is a cheaper alternative. If they cannot work, they cannot produce. If they cannot produce, they cannot consume unless others give them what they need, or they take what others have by force.
Raising wages is not the answer. That simply increases the costs of production, which in turn raises the price level. As experience has taught us, the rise in prices usually more than offsets the increase in wages, leaving workers worse off than before.
As Louis O. Kelso and Mortimer J. Adler pointed out in The Capitalist Manifesto (1958), there is only one sustainable solution to the growing disparity of productive power between human labor and capital. That is for workers to become direct owners of capital as well as of their own labor.
The labor union movement needs to transform to a producers’ ownership union movement and embrace and fight for economic democracy. They should play the part that they have always aspired to — that is, a better and easier life through participation in the nation’s economic growth and progress. As a result, labor unions will be able to broaden their functions, revitalize their constituency, and reverse their decline.
Unfortunately, at the present time the movement is built on one-factor economics — the labor worker. The insufficiency of labor worker earnings to purchase increasingly capital-produced products and services gave rise to labor laws and labor unions designed to coerce higher and higher prices (wages) forthe same or reduced labor input. With government assistance, unions have gradually converted productive enterprises in the private and public sectors into welfare institutions. Kelso stated: “The myth of the ‘rising productivity’ of labor is used to conceal the increasing productiveness of capital and the decreasing productiveness of labor, and to disguise income redistribution by making it seem morally acceptable.”
Historically and in its present form, the labor movement is destructive in that it agrees with the idea that propertyless people should exist to serve those who own property. The labor movement doesn’t seek to end wage slavery; it merely seeks to improve the condition of the wage slave. If it actually cared about human rights and freedom, it wouldn’t call itself the “labor movement.”
Unions are the only group of people in the whole world who can demand a real, justice managed, equal allocationEmployee Stock Ownership Plan (ESOP), who can demand the right to participate in the expansion of their employer by asserting their constitutional preferential rights to become capital owners, be productive, and succeed. The ESOP can give employees access to capital credit so that they can purchase the employer’s stock, pay for it in pre-tax dollars out of the earnings generated by the new assets that underlie that stock, and after the stock is paid for earn and collect the capital earnings income from it, and accumulate it in a tax haven until they retire, whereby they continue to be productive capital earners receiving income from their capital asset ownership stakes. This is a viable route to individual self-sufficiency needing significantly less or no government redistributive assistance.
The unions should reassess their role of bargaining for more and more income for the same work or less and less work, and embrace a cooperative approach to survival, whereby they redefine “more” income for their workers in terms of the combined wages of labor and capital on the part of the workforce. They should continue to represent the workers as labor workers in all the aspects that are represented today — wages, hours, and working conditions — and, in addition, represent workers as full voting stockowners as capital ownership is built into the workforce. What is needed is leadership to define “more” as two ways to earn income.
If we continue with the past’s unworkable trickle-down economic policies, governments will have to continue to use the coercive power of taxation to redistribute income that is made by people who earn it through owning “tools” as inputs to production or their laborandgive it to those who need it. This results in ever deepening massive debt on local, state, and national government levels, which leads to the citizenry becoming parasites instead of enabling people to become productive in the way that goods, products, and services are actually produced.
When labor unions transform to producers’ ownership unions, opportunity will be created for the unions to reach out to all shareholders (stock owners) who are not adequately represented on corporate boards, and eventually all labor workers will want to join an ownership union in order to be effectively represented as an aspiring capital owner. The overall strategy should assure that the labor compensation of the union’s members does not exceed the labor costs of the employer’s competitors, and that capital earnings of its members are built up to a level that optimizes their combined labor-capital worker earnings. A producers’ ownership union would work collaboratively with management to secure financing of advanced technologies and other new capital investments and broaden ownership. This will enable American companies to become more cost-competitive in global markets and to reduce the outsourcing of jobs to workers willing or forced to take lower wages.
Kelso stated, “Working conditions for the labor force have, of course, improved over the years. But the economic quality of life for the majority of Americans has trailed far behind the technical capabilities of the economy to produce creature comforts, and even further behind the desires of consumers to live economically better lives. The missing link is that most of those un-produced goods and services can be produced only through capital, and the people who need them have no opportunity to earn income from capital ownership.”
Walter Reuther, President of the United Auto Workers, expressed his open-mindedness to the goal of democratic worker ownership in his 1967 testimony to the Joint Economic Committee of Congress as a strategy for saving manufacturing jobs in America from being outcompeted by Japan and eventual outsourcing to other Asian countries with far lower wage costs: “Profit sharing in the form of stock distributions to workers would help to democratize the ownership of America’s vast corporate wealth, which is today appallingly undemocratic and unhealthy.
“If workers had definite assurance of equitable shares in the profits of the corporations that employ them, they would see less need to seek an equitable balance between their gains and soaring profits through augmented increases in basic wage rates. This would be a desirable result from the standpoint of stabilization policy because profit sharing does not increase costs. Since profits are a residual, after all costs have been met, and since their size is not determinable until after customers have paid the prices charged for the firm’s products, profit sharing [through wider share ownership] cannot be said to have any inflationary impact on costs and prices.”
Reuther advocated the adoption of Kelso’s ideas to counter the loss of autoworkers’ jobs to other countries. As Reuther explained, workers as capital owners receiving a part or all of their income from profits would increase pay and benefits without adding to production costs. This would keep prices low and increase the purchasing power of the additional income.
Unfortunately for democratic unionism, the United Auto Workers, American manufacturing workers, and American citizens generally, Reuther was killed in an airplane crash in 1970 before his idea was implemented. Leonard Woodcock, his successor, nor any subsequent union leader never followed through.
As to how workers and everyone else could afford to purchase capital, they could do as Kelso proposed and pay for the capital with the future earnings of the capital itself, collateralizing with insurance instead of existing wealth. People as disparate as Ronald Reagan and Hubert Humphrey were in favor of a program of expanded capital ownership for all citizens — “Capital Homesteading” — financed in this way.
Nor is it a pipe dream. Kelso’s technique has been used successfully in the Employee Stock Ownership Plan (ESOP) he invented. Today more than 11 million workers in over 8,000 companies are part owners of the companies that employ them without having put up existing savings.
Making displaced workers as well as all citizens owners of America’s corporate wealth would have another benefit, particularly valuable in these days of quarantine and isolation. Factories could be automated without affecting family income. The union movement should embrace this shift in the technologies of production and should also expand beyond representing corporate employees and represent capital ownership empowerment for all propertyless citizens.
A few tax and monetary reforms could easily be implemented with only a few legal changes in the system. One, all dividends could be made tax-deductible at the corporate level and treated as ordinary income unless used to make tax-deferred purchases of newly issued equity representing new capital growth.
Two, by paying out all earnings as dividends, a corporation could legally avoid all corporate income tax. At the same time, the personal tax base would increase and entitlements and transfer payments reduced as people’s incomes became sufficient to meet their needs.
Three, new growth could be financed by issuing equity instead of debt, while the commercial banking system backed up by the Federal Reserve could monetize private sector growth instead of government debt — which was the original function of the Federal Reserve. The result would be an elastic, stable, uniform, and asset-backed currency and a shift away from government debt as the backing of the money supply.
Judging by how long it took to achieve full employment in World War II, as well as the tremendous amount of unmet consumption needs in this country alone, it is possible that there could be a complete economic turn-around very soon after the passage of a Capital Homestead Act. Full employment would probably follow in short order.
Keeping in mind the average payback of new capital of three to seven years, full dividend payout would increase effective demand exponentially after the new capital repaid its financing. This would further increase the demand for labor and more new capital. There would no longer be a shortage of jobs, but a shortage of workers, and a consequent rise in wages naturally as employers bid up the market price of labor.
The increase in taxable income would increase tax revenues and at the same time reduce the need for entitlements and transfer payments. This would reduce government deficits with the possibility over the long-term of eliminating both the deficit and the outstanding debt as more people met their own needs through their labor and capital ownership. Government borrowing could then be restricted to short-term loans out of existing savings to meet temporary shortfalls in tax revenues.
As Daniel Webster reminded us two-hundred years ago in 1820, “Power naturally and necessarily follows property.” Reparation could be made in this way to everyone who has suffered from the effects of an unjust system. By making every citizen a direct owner of America’s future corporate wealth without redistributing existing wealth, every person would be empowered and face a more peaceful and secure future.
