- 03 Jun 2018
- Managing the Future of Work
Ep 3: What really worries the AFL-CIO about the future of work?
Bill Kerr: The American workplace is rapidly changing, and many workers feel like they're getting hit from all sides, be it in stagnant wages or insecure jobs. The turbulence that lies ahead may be worse than the ups and downs that we have just weathered. Rapid tech advances and rising automation promise to disrupt previously quiet occupations and industries. The gig economy is also on the rise, which can be a preferred way of working for some but for others is a disappointment due to the lack of benefits and assurance about tomorrow's paycheck. These massive changes create many challenges for organized labor. Union membership has fallen to a record low of 10.7 percent, and unions could face further setbacks in a case currently before the Supreme Court. But opportunities also abound. The disenchantment of the American worker may provide organized labor with the needed spark to revitalize itself.
Welcome to Harvard Business School's podcast, Managing the Future of Work.I'm your host, Professor Bill Kerr. I'm joined today by Damon Silvers who is the director of Policy for the AFL-CIO. The AFL-CIO is America's largest labor group, with more than 50 unions and 12 million workers. What does the AFL-CIO see as the future of work, and how must the AFL-CIO reinvent itself for this future? Let's find out. Welcome, Damon.
Damon Silvers: Thank you, Bill. It's great to be with you.
Kerr: At a time when workers are struggling so much, why isn't union membership soaring?
Silvers: For labor movements to grow, working people need to feel empowered. The United States is unusual in the developed world in that it's a hard thing to do to organize a union, particularly in the private sector or in the public sector in the South. You really are in a significant way exposing yourself to retaliation from your employer. And that's different in the rest of the developed world where labor rights are more effectively protected.
Kerr: In hard times, it's not that union membership soars, or in recessions, it's not that union membership soars.
Silvers: No, Bill, union membership generally falls in recessions and depressions. So, for example, the absolute low point was in 1932 after three years of the Great Depression. By contrast, union membership grew dramatically as the U.S. recovered from the Depression during World War II, during periods of full employment like the 1960s. And, in fact, this is not just historical; we saw in 2017 union membership growing. At last, our labor markets appeared to be moving towards something like a healthy condition.
Kerr: What do you see as the future of unions in the workplace?
Silvers: So I'm not particularly pessimistic about the future of the labor movement or of workers’ organizations. But I do think it's really clear that we need innovation and that the way that work is changing requires that there be new forms of worker organizations. I think that, for starters, they've got to be able to sustain themselves financially.
Kerr: What do you see as the future of worker retraining, and is this a path for the AFL-CIO to grow its membership?
Silvers: We have a real problem in the United States that's going to be increasingly serious that American business chose in the 1980s and 1990s. When faced with serious international competition for the first time since the war, American business largely chose the road, the strategy of trying to lower costs and lower wages, to run essentially a low wage economy rather than the high productivity path. And that by doing so that led to the dismantling of a lot of training programs that had previously existed when unions were stronger in the private sector. And now it's very hard to rebuild that because the business community as a collectivity is very resistant to engaging with the labor movement on training. The results is that, yes, the labor movement has difficulty really getting into the training without the collaboration of employers. But the real result is that employers don't get trained workers.
Kerr: And there's another actor that could be involved in this, which is the state and federal governments.
Silvers: Yes.
Kerr: Are you working with them on the training programs?
Silvers: Yes, we've worked for decades with the Department of Labor at the federal level, and through the Workforce Investment Act system, and with a wide range of agencies at the state and local levels to do training. There are problems. The labor movement turns out to be very good at ensuring that training programs train workers to move between employers. And we help ensure that the training standards are cutting edge and not too employer-specific. And that's very important in terms of a well-functioning labor market. We think that that arrangement, that tripartite arrangement, which exists in some of the most successful manufacturing economies in the world, that tripartite arrangement is where the future lies in the United States. But we've yet to really crack the nut, so to speak, nationwide on this. It's really important that we do it not just for the labor movement but for our society, for our competitiveness going forward. I think the real key here, and it's important to say this at HBS, the real key here is business leadership. [It] is farsighted business leadership that could enter into a dialogue with the labor movement about how we do this tripartite arrangement in a way that actually meets the needs of American business.
Kerr: That brings us to an important relationship between the labor movement and business. On one side, we can talk about the things like training that you can provide to businesses and try to closely cooperate, but on the opposite side, sometimes you want to be able to push back on behalf of the workers against business. How does that relationship unfold? How can you be doing both activities at the same time?
Silvers: Well, we have in the United States, and we've had in the United States at other times in our history, a uniquely confrontational relationship between business and labor compared, again, to other developed societies. And many historians have marveled at this because American politics is not as left-oriented as that of many other developed countries, and yet our labor relations have more conflict than-
Kerr: It doesn't seem like an award you want to win.
Silvers: [Laughs] Right. No, it isn't, and it's less and less so. In the private sector since the 1970s, large parts of the business community have come to believe that they are best off operating in a labor market in which their workers are not organized. And they invest a lot of money and political capital in trying to preserve that, some of which, frankly, they do through breaking the law in terms of like, it is nominally illegal to retaliate against workers for trying to form a union, yet many, many businesses do that and employ sophisticated legal strategies to get away with it. My view is that, while this behavior may be rational for individual firms, it's increasingly irrational for the United States as an economy, a labor market, and a society.
And let me tell you something about what I think the cost of the United States is and to American businesses of these arrangements. The first cost is what we were just talking about when it comes to training: that there are a bunch of collective action problems that business has in the workplace that business cannot solve by itself. And these problems are going to become more severe in the context of technological change. Problem two is that American business desperately needs the United States to do more investment in public goods. We need more investment in our physical infrastructure, in our communications infrastructure, in our energy infrastructure. We are quickly falling behind globally here.
The third problem is far more profound and far more dangerous. The labor movement has not been able since the 1980s to ensure that wages grew with productivity. The resulting wage stagnation has damaged the American public's belief in democracy because democracy for the average American is not delivering the economic goods. This is creating a situation in which the very fabric of what makes America America is in danger. At its core, this problem is the problem of our economic system in our labor market not fairly distributing the gains from productivity growth and from economic success. This is a problem of having too weak a labor movement.
Kerr: In fact, President Trump ran on a platform of helping the American worker. What kind of report card would you give him so far in his office on this topic?
Silvers: Well you know the AFL-CIO, more than most of the institutions that traditionally support Democrats, the AFL-CIO was real clear when President Trump was inaugurated that we were open to working with him if he meant what he said. We wanted to give him a chance. We took the man at his word initially and we wanted to give him a chance. Very quickly it became clear to us that the priorities of the administration as a whole were not where you would think they would be based on what was said during the campaign and that what the administration and its allies in Congress seem to really care about was a more traditional sort of right wing agenda of upward income redistribution and dismantling social protections that are critical to working people's quality of life. The fact that the first thing that the administration chose to do in Congress was to try to repeal the Affordable Care Act was not a good start.
At the same time, we were really appalled by the divisive nature of the governing style of this administration. This reached a kind of peak in Charlottesville last summer at which time the president of the AFL-CIO resigned from President Trump's Manufacturing Council because it just didn't seem like the administration understood that racism and fascism are not appropriate forces in American public life. Again, in terms of our core issues though, although the administration did recently put out an infrastructure program, we've yet to see any meaningful movement there or any real meaningful expenditure of political capital there. Instead, what we've seen is systematic attacks at the administrative level on workers' rights and workers' safety.
Kerr: Would this be rolling back regulatory license and so forth?
Silvers: Yes: either the delay, or the repeal, or the failure to enforce a wide range of rules that protect workers; budgets that defund the people that we count on to keep working people safe at work; to enforce our working people's rights; a National Labor Relations Board that has systematically been reversing precedence that protect the most vulnerable among working people and enable workers to organize and bargain without fear of retaliation. Let me just add also that in the president's tax bill, I think this is maybe emblematic of what we've experienced with the Trump administration. President Trump said he wanted a tax reform package when he was campaigning that would stop subsidies for American companies to move activity offshore. He made a big fuss about the Carrier plant in Indiana. And we appreciated the fact that President Trump seemed to care about what was happening to those industrial workers in Indiana.
So then what happens when they draft a tax bill? Well, tax is very complicated. It's easy to hide things. But if you read through it carefully, what it turns out that bill does is that it takes the corporate tax code and changes it so that onshore earnings, earnings made from actually creating jobs in the United States, are fully taxed at the new rate of 20 percent. Offshore earnings, that is earnings from essentially the same activity undertaken somewhere else other than the United States, are taxed at a rate of zero. Now this is actually worse in terms of a subsidy for offshoring than the tax code was before Donald Trump was elected. And that, I think, captures for us this experience of the last year. We've not decided that it is impossible to do anything with the Trump administration, but let's put it this way: the door seems to have narrowed down to a tiny crack compared to what Trump said he was intending to do a year ago.
Kerr: Okay. I'm sure in the upcoming elections, these issues will continue to surface and affect political choices. Tell us about the new commission inside the AFL-CIO on the future of work.
Silvers: The leaders of a number of our largest unions in both the private and public sector came to the president of the AFL-CIO and said, "We think that we really have to address in a really rigorous and thoughtful way the evolving nature of work in an era of rapidly developing technology, A, and also, B, in an era in which the very sort of the core of what labor unions do is under a sustained political attack," the Janus case being emblematic of that.
Kerr: Can you tell us about the Janus case?
Silvers: Sure. So the Janus case is of giant consequence. A very fundamental principle in American labor law is that when a union has won the right to represent a group of workers, public or private sector, through a democratic process, that the union is responsible for representing all the workers in that workplace, not just the workers who voted for the union, and not just the workers who wish to belong to it. And that's a good rule. It's a key kind of rule for the functioning of our society. In the absence of any rules, there is an obvious incentive here for each individual not to pay dues, you know, “I'll get something for free.” So a body of law developed that said that it's okay for unions and employers to agree that all the workers in a workplace should have to pay a fee to support the work the union does in the workplace to bargain and enforce contracts but that no one should be forced to fund a union's political activity if they don't agree with it.
Kerr: So, in practice, it's not that the non-union member pays the same dues to the organization. It's a much smaller share that reflects-
Silvers: It's a smaller share. It's generally called an agency fee. It's not true that people are forced to join unions. It doesn't work that way. People are forced to support things that they benefit from, which if they didn't support them wouldn't exist. There's been an argument in conservative circles for a while that unions that represent public sector workers are nothing but political organizations, that they're not actually in the business of representing people in the workplace. In my view, this is kind of nuts. Go to any public sector workplace, and watch a shop steward discuss whether or not a given worker has been treated fairly in some promotion decision, or whether the dental plan properly provides for preventative care. These are not political decisions. These are decisions that ensure that public sector workers have some dignity at work.
Anyway, but there's been this argument. And the Janus case is about the argument that because in the right wing's view all public sector unionism is nothing but politics, that it should be illegal to require the payment of these fees for bargaining and enforcing labor contracts in the public sector. That's what the Janus case is about. If the Supreme Court finds that to be true, it will significantly weaken the ability of public sector unions to do their job. It's a frankly ideological case constructed by people who would like to weaken both the bargaining power of workers and the functionality of the public sector in the United States. Their complaint against the labor movement in the public sector is in substantial part that it helps support a robust public sector. They don't like the idea that the plaintiffs and the people who fund them, the Koch brothers, some other people, they don't like the idea that we have a well-functioning public sector.
So that's what this case is about, really. If the plaintiffs win here, if the agency fee structure is removed from public sector unions, it's going to destabilize public sector collective bargaining to some degree. How much, we don't know. And by destabilize, I mean that the United States is a country where there are relatively few public sector strikes compared to other developed countries. I think if that is taken away, that we'll have less stabile bargaining. And that is not necessarily in business's interest.
Kerr: Over the next couple of decades, we're going to see significant technological changes to include automation and artificial intelligence that have the potential to dramatically reshape the workplace. To what extent are you excited or concerned about these upcoming changes?
Silvers: We are technological optimists. For almost 300 years, we've had rapid technological change. A lot of jobs have been displaced over that time, but the net impact of technological change throughout has been rising productivity. Rising productivity means better lives. It means better lives both measured through dollar incomes, but it also means that the quality of work is better. It is better to work in an auto assembly plant today than it was to work in an auto assembly plant in 1925 in every respect. And so we're technological optimists.
Kerr: So you look ahead, what are the groups of workers you think will struggle the most with the upcoming technology changes, and how can you help them?
Silvers: What we need to deal with technology changes are a couple of things. We need monetary policy that is seriously about full employment. Secondly, we need a revival of collective bargaining in the private sector tied to training so that we can smooth the redeployment of workers. We also need to be focused on in the entirely new things that are coming into being, the work that you couldn't have imagined 20 years ago. We see that a lot of the growth that we're now seeing in the labor movement in the last year that I referred to is in those kinds of spaces, for example, digital media. There was no such thing as a digital media job in 1990. We now have unions that are predominantly unions of digital media workers. I'll tell you paradoxically where I think there's going to be real trouble, and that is at the top of the labor market. I think technology and globalization together are going to do some real damage to the American upper upper middle class, lawyers, doctors.
Kerr: The rise of artificial intelligence and other cognitive computing that can do the work of doctors, and lawyers, and so forth.
Silvers: Exactly. And this is a group of people with a lot of power in our society, a lot of influence. And they're not used to being on the losing end of economic change. How that plays out, I couldn't tell you.
Kerr: Let me take another example that we're seeing 2018 live. McDonald's and many other fast food franchises are becoming more automated. You're seeing fewer workers in them. What does the future look like in that sector?
Silvers: I think this is emblematic of something much larger. The US economy has generated a lot of very low wage jobs since the 1980s, and particularly since the 2008 economic crisis. It's part of why we're having a larger crisis of our political economy. It's because behind some of the more positive numbers is a lived experience of good jobs being replaced by bad jobs. Technology offers the possibility of turning workplaces that are characterized by a lot of bad jobs into a smaller number of good jobs, but there's no guarantee that the good jobs will actually be good jobs, they'll actually be well paid, they'll actually have some economic security associated with them. And unless we have a really conscious policy of full employment, there's going to be a problem in terms of the displacement of people who now do bad jobs to no jobs.
There really are possibilities here of workplaces that would be very hard pressed to provide quality employment, to be able to provide quality employment. This is why we say we're technological optimists. But as long as the balance of power between workers and employers in these sectors is so much tilted in the employer's favor, the odds that the wealth that is created by increased productivity actually ends up in the hands of the people doing the work is not very high. And that's a dangerous social situation.
Kerr: One of the other big trends that we're seeing is the rise of the gig economy with people working for companies like Uber as contractors and not full-time employees. What does that mean for the American worker?
Silvers: There are two things to really be concerned about in the gig economy. The first is the legal strategies of the major platform employers: the Ubers, the Lyfts, TaskRabbit, etc., their legal strategies to try to sustain the fantasy that they're not employers, that they're not directing people. This is tied up with the fantasy that somehow technology means that there are no more issues of power in the workplace. In reality, Uber, Lyft, they know more about their employees and have a tighter grip on their behavior. I use the word employee consciously. They have employees. They've just been able to get away with denying it legally. But they know more about what the people who work for them are doing than any steel or Auto Company ever did. In the absence of workers having some collective power, the digital technology, artificial intelligence, cheap surveillance technology, these combine to make an environment in which the information advantages that accrue to the employers vis-à-vis both their workers and their customers are at a scale and intensity we've never seen before.
Kerr: One could imagine two possible responses from the AFL-CIO, one being to fight gig work in order to have the traditional full-time employment with benefits, or to also say this is a rapidly growing part of the economy. There is reasons with training and other things that perhaps we could play a role in the gig economy. How are you currently thinking about those choices, and could you do both?
Silvers: We are sort of by definition doing both, but the focus from our perspective [is] in organizing people doing new kinds of work, not in trying to make new kinds of work go away, but in organizing them. I don't have any problem with the notion that the Uber app represents a positive development in the dispatch of taxis. It just seems obvious to me that that's true. It is a highly efficient way of getting people a car when they want one. There is no reason that that 21st century technology needs to be linked to 19th century labor practices in the way that Uber is doing. Our issue is with the 19th century labor practices, not the 21st century technology.
Kerr: Forces ranging from automation to the gig economy will provide both opportunities and challenges for workers going forward. We appreciate Damon Silvers of the AFL-CIO for joining us today to talk about how his organization sees the future of work and what it must do to reinvent itself for this future. Thank you for listening in, and thank you, Damon, for joining us.
Silvers: Thank you, Bill.