Newswise – Increasingly, the American dream is out of reach for many Americans. The likelihood of an American worker outperforming their parents economically remains low compared to peer countries, especially among children born into low-income families. But why? And how can American workers regain their power and achieve economic stability and long-term success?
Stalled economic mobility, particularly among low-wage workers, and the decline of worker power over the past decades are at the center of a new report on the landscape by Jake Rosenfeld, professor of sociology in arts and science at Washington University in St. Louis, and Ioana Marinescu, associate professor at the School of Social Policy and Practice at the University of Pennsylvania. (Marinescu is currently on leave to serve as a senior economist in the United States Department of Justice’s Antitrust Division.)
“The ongoing pandemic has underscored that certain groups of workers bear the brunt of maintaining vital services and providing essential goods, but they have limited decision-making power over their working conditions and are often underpaid,” said Rosenfeld, author of “What Unions No Longer Do” and “You Get Paid What You’re Worth and Other Myths of the Modern Economy”.
“Our country is at an inflection point. The choices we make now will shape the path to worker power and economic mobility. Through informed policy choices, we can empower working people in the decades to come and ensure that the American Dream remains relevant for future generations.
In the report, Rosenfeld and Marinescu presented recommendations for designing effective programs, policies and practices to rebalance economic conditions for workers. They also identified areas where further research is needed to understand the ramifications of potential policy decisions.
The report is part of a series commissioned by WorkRise, an action research network on jobs, workers and mobility based at the Urban Institute. The Bill and Melinda Gates Foundation, Mastercard Centers for Inclusive Growth and others funded the research.
Policies that increase worker power
Worker power—the ability of employees to demand better wages and working conditions—is affected by two factors: employees’ bargaining power with the organization (voice) and opportunities outside the organization ( exit).
“Through informed policy choices, we can empower working people in the decades to come and ensure the American Dream remains relevant for generations to come.”
Indicators of worker power – such as wage levels for workers without a university degree, union membership rates or the total share of earnings of non-managerial workers – show a sharp decline from the late 1970s, said the authors.
Rosenfeld and Marinescu said the following policies can increase worker power by increasing exit options for workers:
- Raise the minimum wage. According to the authors, raising the minimum wage prevents employers from exploiting the lowest paid workers, does not lead to job losses – if the minimum wage is not too high – and helps fill the gap. racial gap in worker power.
- Strengthen the enforcement of labor antitrust laws. Mergers not only reduce product competition, but they also reduce labor market opportunities, leading to lower wages, the authors explained. The 2021 Executive Order on Promoting Competition in the U.S. Economy advocates such an approach.
- Limit non-competition agreementsthat are common in many occupations, to increase worker choice among employers, which results in higher wages.
- Develop national professional licenses. State-specific licenses make it harder and more expensive for workers to move to better job opportunities. However, this is a double-edged sword, as professional licensing has been shown to benefit people of color, allowing them to demonstrate their qualifications and earn higher salaries.
- Institute pay transparency laws. Employers will always have more information about wages, but there are ways to change the information asymmetry. Pay transparency laws empower employees by giving them access to salary information within the organization, thereby strengthening their bargaining power. Similarly, prohibiting employers from soliciting workers’ wage histories can empower workers.
These labor laws are a way to increase the power of American workers. According to Rosenfeld and Marinescu, policies that allow workers to say no to bad jobs and choose their best job are another avenue to consider. These policies come in many forms. For example, by breaking the link between employment and health insurance, public health insurance programs like Medicaid and Medicare can strengthen a worker’s outside employment options.
Racial discrimination in the labor market
Racial discrimination in the labor market further hampers the ability of minority workers to move up the economic ladder. Surprisingly, however, Rosenfeld and Marinescu reported that most anti-discrimination policies proposed to combat such discrimination do not increase the power of minority workers.
“Limiting background checks or drug tests are examples of policies intended to help minority workers. But without this screening information, the research finds that employers are more likely to let their biases dictate their hiring decisions,” the authors said.
“Drug testing increases black employment by 7% to 30% and relative wages by 1.4% to 13%. As long as employers hold negative beliefs about black workers — no matter how accurate — preventing employers from accessing criminal histories, credit histories, or drug use can backfire.
Declining unionization rates
According to Rosenfeld and Marinescu, deunionization has played an important role in blocking the mobility of low-wage workers, both within generations and between generations. In the United States, only about one in 17 private sector workers is a member of a union (6.1%). In comparison, more than a third of the public sector remains unionized (33.9% in 2021).
While it’s true that globalization and technological change have hurt unions in the United States and other developed economies, Rosenfeld said that doesn’t fully explain why unionization rates have fallen so dramatically here. .
“Employer resistance to unions began in the 1960s and accelerated in the 1970s and 1980s. Today, companies pay an average of $340 million a year to anti-union consultants and consulting firms. specialized lawyers to fight union organizing efforts. It’s a big hurdle for employees to overcome,” Rosenfeld said.
However, today’s tight labor market has renewed interest in unionization, and for good reason: policies that promote unionization will reduce inequality, reduce poverty and create greater intergenerational mobility, said Rosenfeld.
“No other single intervention on behalf of workers has the direct and indirect influence on worker power and mobility within workplaces that unions have had,” the authors wrote.
The PRO Act, which the House of Representatives passed in 2021 and awaits action in the Senate, would be the most significant pro-labor legislation enacted since the National Labor Relations Act in 1935. Among other things, the reform includes a crackdown against employer retaliation in union elections and prohibits common practices such as mandatory attendance meetings, where employers warn workers of the consequences of unionizing.
Another way to increase worker voice in organizations is to mandate worker representation on boards, a common policy in other political economies, Rosenfeld said.
The most important message, according to Rosenfeld and Marinescu, is that change is possible.
“The Landscape Report provides researchers, policymakers and others with a blueprint to evaluate these solutions and move forward so that the American Dream remains in research for all workers,” he said. .