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Want Better Wages? Build Worker Power

Amy Traub

Let’s say you have a lucrative industry. Businesses are expanding. Profits are healthy. So what kind of paychecks are the workers bringing home?

From the end of World War II through the early 1970s, median and minimum wages tracked productivity. A rising tide lifted most boats. You could expect that in an industry doing well, workers would share in the bounty. As the Economic Policy Institute points out, that hasn’t been the case economy-wide for a long time: between 1979 and 2012, productivity grew 74.5 percent, while wages inched up just five percent. Looking just at the last decade, data suggests that productivity growth isn’t being shared with workers in the middle or at the bottom.

So how are the workers in our booming industry doing? If you’re talking about supermarkets and other food retailers in California, a new report by Saru Jayaraman and the Food Labor Research Center, University of California, Berkeley has bad news: steady growth in sales and employment was accompanied by a 16.7% decline in the weekly wages of full-time workers between 2000 and 2010. In an industry that used to provide economic security and a foothold in the middle class, it is now common for workers to go hungry.

The report carefully teases out a variety of causes for the decline of good jobs in the California grocery industry, but what stands out is the decline of unionization and union power. Driven by the expansion of non-union retailers Target and Walmart into the food retail market, unionized supermarkets in California lost market share and sought to imitate their rivals’ low-wage strategies, pushing down pay and sending profits to Wall Street rather than investing in the workforce. While working in a union store still offers distinct benefits in pay, benefits, schedules and advancement opportunities as compared to non-union grocery work, union wages for California grocery workers have fallen precipitously and the number of union workers has shrunk. In a nutshell, wages fell as the industry expanded because workers didn’t have the power they once did.

But what if our booming industry is hotels in New York City? Like food retail in California, it’s a service industry that’s thriving. And like work as a grocery cashier or shelf stocker, employment as a hotel housekeeper or bellman requires little formal education. But thanks to a new citywide contract negotiated by the hotel workers’ union, New York’s 32,000 union hotel workers will stay “very much in the middle class” in the words of union president Peter Ward. Under the terms of the tentative contract, hotel housekeepers, who currently earn $27.41 an hour with fully-paid health care, will see their wages rise a dollar a year over the next decade, reaching annual pay of nearly $70,000 plus benefits by 2024. (Disclosure: I was worked for the New York Hotel Trades Council between 2002 and 2004. I can attest that the care offered by the union-run health clinics was excellent. For more background, see Robert Kuttner’s excellent article on the union)

There are numerous differences between the California grocery industry and New York City hotels. But it seems clear that the extent to which workers are empowered to get a better deal on the job has played a large role in their wage trajectories and diverging fates. And yet the role of worker power often gets overlooked the mainstream conversation about inequality and inadequate wages. Discussions of fast food worker organizing, for example, focus on the call for a $15 an hour wage, frequently glossing over workers’ other demand for the right to form a union without retaliation.

The focus on wages to the exclusion of worker power may be about to change. When President Obama signed an executive order in January to raise wages for low-paid federal contract workers, it was a concrete victory for hundreds of thousands of employees working on behalf of America. At the same time, no one can be under the illusion that $10.10 an hour is sufficient to turn around the lives of working people. In addition to a raise, Change to Win Deputy Director Joseph Geevarghese told Businessweek “workers need a voice at the table.” That means the right to bargain collectively in return for labor peace, a concept my Demos colleagues will explore further in an upcoming paper.

A minimum wage hike sets a critical floor on the labor market, but it is worker power that ensures that working people will see the gains of a growing, productive economy—and the industries within it.