How We Make Working in America Better: Unions, Labor Law, & At-Will Employment

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If we’re talking about negotiating for higher income without talking about labor organizing, we’re outright ignoring one of the most powerful determinants of how people are paid.

This week on the show, you’ll hear from two people: an anonymous 20-year veteran of publicly traded, multinational corporate human relations who believes the “at-will employment” structure in the US is the core of our systemic insecurity, as well as renowned labor journalist Hamilton Nolan, who advocates tirelessly for union density as the best way forward. 

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Our show is a production of Morning Brew and is produced by Henah Velez and Katie Gatti Tassin, with our audio engineering and sound design from Nick Torres. Devin Emery is President of Morning Brew content and additional fact checking comes from Scott Wilson.

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Mentioned in the Episode

• 2019 Southwest Airlines mechanics’ union victory (NY Times)

• If Books Could Kill episode on Lean In

• Union wages vs. non-union wages (BLS)

• 50 years of earnings data (Defector)

• US support of labor at a 50-year high (Gallup)

• The Money with Katie Show episode on the Great Salary Reset

• History of “at-will employment” (UPenn)

• The 1935 National Labor Relations Act (NLRB)

• Starbucks locations unionizing in 2021 (Fast Company)

• BBC’s Business Daily on Starbucks unionizers

• Supreme court sides with Starbucks (Reuters)

• Sectoral bargaining (Investopedia)

• Union members in 2023 (BLS)

• Hamilton Nolan’s The Hammer

• The “Laffer Curve” (Investopedia)

• The Pro Act (Protecting the Right to Organize) (Congress.gov)

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Katie:

I’ve talked frequently on the Money with Katie platform about my time working at Southwest Airlines, and it was in many ways an absolutely incredible employment experience. I’m still close friends with many of the people that I met there, and my memories of the company are almost exclusively fond, which is pretty rare.

But a couple of years into my tenure in 2019, the mechanics union won a massive victory, a five-year deal that gave all 2,500 of them $160 million in total back-pay to cover the period since their last contract ended in August, 2012, 20% immediate salary increases and 3% annual raises guaranteed. At the time I was making $60,000 per year and I learned through the grapevine that the mechanics would each be receiving up to $90,000 in one-time payments for the back pay. I am unable to verify that claim now, by the way, so please take that as the hearsay that it was and is still.

It was shocking to me, particularly as I was negotiating around the same time with my boss’s boss for a small individual raise that the union was able to secure 20% raises for everyone, guaranteed 3% bumps annually and one time back pay sums nearing six figures. I remember telling my friend at work like, wait, can we have a union too? It sounds like unions f****** rock.

It was my first time experiencing the difference between collective bargaining and one-on-one negotiations firsthand, and as Michael Hobbess and Peter Shamshiri pointed out on their show If Books Could Kill in their episode about the girlboss hit Lean In:

[If Books Could Kill]:

There’s a glaring omission in the negotiation gap prescription, which is that if the problem we’re trying to overcome is the stereotyping and bias that appear in individualized negotiations, one pretty potent solution would be to rely on collective negotiations, right? Right. The gender pay gap among unionized workers still exists, but is considerably smaller, and women in unions earn higher wages and better benefits almost across the board. There is not a single mention of unions in this entire book, which shouldn’t surprise anyone. Of course.

Katie:

To talk about negotiations without talking about unions is going to yield inherently limited results. It’s true. The gender wage gap for unionized workers is than that for un unionized workers. As of 2023, women and unions make on average 19% more than women not represented by collective bargaining agreements. The racial wage gap is smaller for unionized workers too. They’re also more likely to have things like paid family leave, but it’s not just unionized women or black and brown people who fare better. It’s all unionized people.

Sociologists, Zachary Parolin and Tom VanHeuvelen studied the past 50 years of earnings data for all American men and found that union membership resulted in an average of $1.3 million more in lifetime earnings, which is larger than the average gains from completing college. That is to say, their research found that joining a union had a more powerful effect on lifetime earnings than a college education.

So why are we talking about this now? Well, you’ve probably seen headlines that support for unions is near a 50 year high, but what really got me interested in this topic was as is usually the case, an email from one of you.

Welcome back to the Money with Katie Show, Rich Laborers. I’m Katie Gatti Tassin. Today we’re talking about collective bargaining and how it’s the biggest determinant of wages that we aren’t talking about really at all in the personal finance space.

But I am getting ahead of myself. It all started after we released our episode about the Great Salary Reset a few months ago where we heard from several of you who were let go from your jobs in intentional cost cutting measures and replaced by workers who were either younger, cheaper outside the US or employed on a contract basis. In the wake of that episode’s release, I received an email from a person who has worked and still works as the head of HR for publicly traded multinational companies. I confirmed their identity and their employment history for the purposes of this episode, but they agreed to speak with me on the condition of anonymity as they’re still actively employed by one of said firms, and he wrote that to go public with his real thoughts about corporate America would be career seppuku for somebody like him. And yeah, we’re just really grateful for his willingness to speak up even though it is privately.

So for the purposes of our discussion today, I’m going to call him Alan. Alan wrote up several pages in response to our Great Salary Reset episode, particularly concerned with how I left it, struggling to provide an explanation or solution for why things had gotten so much worse for individuals at the mercy of their employers. Unlike my grappling for what to call this phenomenon, he knew its name: an RIF or reduction in force.

He wrote, “An RIF or reduction in force is a commonly used tool used to improve margins more often than to recover from a downturn. In business, you can be at 70% gross margin on $500 million or $3 billion, and they will cut headcount to get to 71% for the street [meaning Wall Street] and the stock price. The key hidden detail here is that companies are rewarded for it. They can put a plan in place in cut million in headcount and take the full benefit of that plan in the fiscal year or quarter before a single layoff is communicated to employees. The company is rewarded not just by its investors but also via tax law. The severance and other expenses in an RIF shift the numbers from the expense bucket to the liability bucket, which allows them to benefit from the wage savings, reduce taxes, and spread the cost out. Over the timeline of the transformation, companies will brag to Wall Street about paying no tax or low single digits, and this is one of the dirtiest of many tools in that toolbox to get there. For some companies, it is a tool that is sharp and used often.”

And a warning, this is about to take an incredibly dark turn, so please brace yourself. Alan has performed a lot of these reductions in force and he told me it’s always personal, but there’s one that sticks out to him for reasons that are legitimately heart wrenching. One employee he had to let go as part of a company’s reduction in force implementation killed his family and then himself shortly thereafter. And obviously something like that really sticks with a person being laid off is traumatic, and while most people who experience it do not take their own lives, the amount of corporate carnage that ensues to eke out an extra percentage point of profitability is heinous. And as you’re going to hear today, there’s really no legal protection from it. Honestly, if anything, it’s incentivized. And all of this highlights the power imbalance between employers and employees who are effectively at the mercy of a balance sheet and Wall Street Fund points.

We’ll get right back to it after a quick break.

If you recall from the previous episode, I gestured at a few potential solutions. I mentioned entrepreneurship, so you become your own employer, and I mentioned unions, but Alan says the real problem as he sees it is at-will employment that at any point in time an employer can cut your headcount for any reason. He wrote, “I’m a bit of a white collar black sheep in my family as most of them worked union jobs and have benefited from union pensions in retirement unions are part of the solution, but that would take centuries, not decades or years. Rather than wait for unions, we can collectively sit out and demand employment contracts like our executive team or our coworkers in virtually every other country in the world. I have read employment contracts for employees all over the globe and other countries provide a level of protection that would make our jobs more secure and create a safety net in the event of a real downturn. It is a normal expectation in those countries for your employer to have a valid reason to let you go. That is not just to cut costs, they also have more time off, way better leave policies, healthcare, and they seem happier. One thing I have loved about working for multinationals is traveling to and working with very smart and kind people around the world. They taught me a lot about how much better work could be if we put people before profit.”

And even now as I read that quote, I have a feeling that our guests today would probably say that unions are how we gain the power to demand those employment contracts, but we’ll get to that. So the opposite of at-will employment is for-cause employment in which the employer has to prove cause to a union or government agency to terminate someone’s employment. And Alan wrote, “Outside the US, this is simply called employment,” but in the US, the main components of being let go are typically severance, COBRA subsidies for health insurance and outplacement services. That is to say, the barrier to exit is quite thin, paper thin, making individual workers expendable.

As Alan told me, “After getting drunk on the Jack Welch playbook, we are still drinking the hair of the dog that bit us to fight that hangover. This shit has been going on since the eighties, but over the decades it has become more openly adopted. Consultants push it, boards expect it, and leaders take their marching orders and execute.”

The origins of at-will employment grew out of the post-Civil War era. The Tennessee Supreme Court articulated the employment at-will scheme in 1884, granting employers divine rights over their employees. This remains the legal undergirding of US labor law and the United States, unlike almost every other high income country and many low income countries, as Alan noted, has not adopted a general protection against unfair dismissal or discharge without just cause or even any period of notice.

Labor legislation in the years since 1884 have been relatively slim. In an at-will employment environment with no counterweight from labor power employment in America is an inherently David versus Goliath arrangement. The 1935 National Labor Relations Act made it illegal to fire employees for unionizing as it guarantees employees right to organize, but even that it turns out faces a problem of enforceability. In order to make an employer abide by these laws, if you think you’ve been terminated unlawfully, you have to be willing to lawyer up and have the requisite time and money to do so. Beginning in 2021, Starbucks workers attempted to begin unionizing and to hear the workers tell it per an interview with the BBC’s Business Daily:

[BBC Business Daily interview]:

We weren’t allotted any extra labor. We were given bottles of hand sanitizer and a timer that went off every 30 minutes that said that we were supposed to go wash our hands, but there was nobody coming down from higher out to check on us to make sure that we were okay. And then we’ve got a CEO who makes an announcement that they’ve had record breaking profits and then he petitions the Starbucks board for a $40 million bonus based on his good job. And meanwhile, I’ve got coworkers who are working 40 hours a week in the middle of a pandemic and can’t afford to put groceries in their fridge and pay their rent at the same time. I mean, if that doesn’t necessitate having a bigger voice in your workplace, I don’t know what would.

Katie:

And the aforementioned bonus hungry Starbucks leaders didn’t take kindly to this desire for additional labor power. Starbucks has spent nearly a quarter of a billion dollars on union busting in the months and years that followed. They fired pro-union workers closed profitable locations where union support was entrenched and aggressively pursued litigation with employees. Recall that firing an employee for organizing is illegal.

It all started in Buffalo, but it caught on quickly and the Buffalo workers began corresponding with store workers in Memphis who were inspired by the goal to unionize, and they too were promptly cracked down on. Seven of those fired employees came to be known as the Memphis Seven, rising to prominence in the labor organizing movement when the union, which as of August 2nd has not yet achieved a contract with Starbucks, filed unfair labor charges with the NLRB over the firings and other discipline taken by managers. The NLRB sought an injunction accusing Starbucks of unlawfully firing the workers for supporting the union drive and to send a message to other workers and it went all the way to the Supreme Court and the Supreme Court, drum roll please, effectively sided with Starbucks by returning the case to the lower courts.

More than 10,000 Starbucks workers have already unionized, and if they’re successful in negotiating better terms on behalf of their workforce, the impacts in their sector at large could be massive sectoral bargaining, which is a type of collective bargaining that happens at the industry or sector level as opposed to the employer level. So in this case, it would be like all baristas versus just Starbucks workers. It’s popular in Europe, but it’s far less so in the US. The seven countries with the highest union membership in the OECD, Iceland, Sweden, Finland, Denmark, Norway, Belgium, and Italy, all have sectoral systems.

So what’s the state of unionization in the US now? Only 6% of the private sector is unionized and 32% of public sector workers are unionized. But as you’ll hear from our guest today, labor journalist Hamilton Nolan, there is an active campaign to weaken that already weak foothold.

So before we welcome Hamilton to the show, I want to share something he wrote in the final chapter of his book, The Hammer, to get you in the mood for our conversation: “The absolute power of the company and the boss to determine everything about a job’s conditions is so common in America that most people never even think about it. It is widely seen as a state of nature. If you don’t like the job, quit, we are told a sneering rebuke that leaves unspoken the fact that you will then become homeless. The idea that workers deserve to be able to have real power at work is fundamentally un-American. It is a rejection of the cult of the business genius. We are trained to see our economy as one in which titan gifted entrepreneurs launch flourishing companies that provide us the grateful normal citizens with jobs. Who are you to tell John Rockefeller or Andrew Carnegie or Henry Ford or Jack Welch or Bill Gates or Jeff Bezos or Elon Musk, how to run their businesses? If you were so smart, you’d be as rich as they are, wouldn’t you stop being greedy for more and start showing a little gratitude to these gods of capitalism? They are the mighty figures who pull all of society forward into prosperity. Progress, ho!”

We’ll be right back after a message from the sponsors of today’s episode.

Let’s welcome Hamilton Nolan to the show.

Hamilton, we talk frequently about wage stagnation as a phrase in the personal finance world or I guess you could say in this corner of the personal finance world. And the general consensus is that wages for the average worker have stagnated since the 1970s. And I think that phrasing matters. Wages have stagnated intentionally or maybe unintentionally. I think we’re lulled into this sort of passivity about it like they stagnated on their own. It’s something that just happened by itself as opposed to being the result of very intentional decisions by specific actors. Now when you layer union membership rates over the middle classes share of aggregate income, they map together in a pretty convincing way. So we know correlation is not causation, but in this case, is it?

Hamilton:

Yes, it definitely is causation and you put your finger on I think one of the leading causes of that wage stagnation that you talked about. When I try to tell people the big picture of what’s happened in the American economy in the past 50 years, you can really think of three things. And one of ’em could be the wage stagnation, meaning that essentially middle class workers have not gained a lot of ground even though their productivity has gone up, their wages haven’t kept up with that. And then there’s the rise of wealth to the rich. So the portion of America’s wealth that goes to the top 10% and the top 1% and the top 0.01% is on a rocket ship to the moon for the past 50 years going up and up and up.

And then the other thing which you touched on is the decline in union power. And union density is the term that just means the percentage of American workers who are union members in the workforce. In the middle of the 20th century, it was one in three workers was a union member, and today it’s one in 10. And so when you look at that graph, you can see the line for union density going down as a perfect mirror image of the line for wealth of the rich going up. And then that wage stagnation has just sort of a straight line in the middle. And that’s pretty much the story of the past century in America and kind of the underlying reasons why I think a lot of people feel that the economy is broken even if they can’t quite understand why.

Katie:

You hear that a lot, yeah, “the economy is so bad.” And technically when you look at all of the data that quote we have decided is what tells us that things are good like GDP rising, you look at those markers and you’re like, well, technically things are good, so why does it feel so bad for everybody?

And I do think that this labor power part of the equation is something that often gets discussed in different circles than the circles that are discussing how you can be better with money and why you feel like you can’t buy a house. But I know that we typically refer to on this show and elsewhere to Ronald Reagan’s presidency sort of as shorthand for the dawn of that neoliberal economic era in the US, but it is obviously more complicated than that. And I’m curious if there’s anything specific that you can point to that happened during the Reagan era that served to weaken labor power or knocked down the first small domino that then ended with the big domino falling that says 1% of Americans own whatever crazy metric it is.

Hamilton:

When you think of what Reagan did economically, what did he do? Deregulation. He cut taxes on the rich, he cut taxes on corporations, he sort of unleashed corporate power and at the same time cut the social safety net, cut domestic spending for working class people. But for labor specifically, he also kind of declared open season on unions. And the big thing that he did right when he took office was the air traffic controllers of PatCo, which was the name of the union, went on strike. The strike was illegal, which is not that unusual because public employees strike illegally pretty frequently and he fired all of them.

And that was a wow moment. I mean that was sort of an unprecedented moment in labor relations in America and it put the fear of God into the labor movement. The labor movement got very cowed and sort of scared at that point.

And it also sent a message to corporate America saying, hey, the government has now taken your side and it is open season on unions. And it sort of gave corporate America along with all the economic benefits that Reagan was giving them, it also gave them kind of a blessing to be extremely aggressive in their posture toward their own unions. And so throughout the eighties you saw a really a new kind of wave of hostility in terms of labor relations and corporations feeling like they had the freedom to try to steamroll and break their own unions. And so it is fair to blame Reagan for that? The belief that you can cut tax rates and that will bring in more money because it will unleash growth, which is false, but one of the type of right-wing economic beliefs that he clung to and smashing unions was certainly a part of that.

Katie:

I think, isn’t that idea called the Laffer Curve?

Hamilton:

Yes, the Laffer Curve.

Katie:

It is this kind of magical economic thinking. I wonder what shred of legitimacy allows people to make that claim in good faith. I imagine there is some data that to some extent that is true, but then it has just been dialed up to an extreme. What do you make of that idea?

Hamilton:

I mean, at this point you can’t make the claim in good faith because it’s been disproven by many, many years of experimentation. So I think the real answer is people assume that economics is a hard science and in fact, there are a lot of elements of faith and economics, particularly when you’re talking about political economics and the way that economics functions in politics. We still hear a lot of things that are probably not true, but which one side or the other would like to believe in the idea that if we raise the minimum wage, everybody’s going to get laid off. That’s an article of faith that has been disproven to a large extent by economists. And yet you’ll still hear that.

Katie:

This sort of tone setting that happened in the eighties that kind of shifted the power to corporations and sort of made it okay I guess to be really aggressive with labor power. I think that the way that manifests today in maybe a subtler way in the modern American workforce and life more broadly is that you kind of just take it for granted that if your boss tells you to do something that you have to do it, that you have no recourse and that they sort of have unilateral making power about what your work life is going to be like, whether that’s snowing you with busy work or responsibilities that you never agreed to when you were first hired to do the job, or if you’re an hourly worker that cut back on your hours with really no notice. Why is that?

Hamilton:

It’s a great point because one of the things that’s happened in America as unions have declined in the 1950s when one in three workers was a union member, then you add on top of that everybody who had a union member in their family or their friend was a union member. And it was a situation where even if you weren’t a union member, you probably had some kind of direct connection to a union member or you could talk to somebody who told you all about unions and what they got. And today with levels of unionization so low, people just don’t know that there’s an alternative to what they have known their whole life, which is like you get a job and the boss is basically the king and that’s how it is. The boss tells you and they’re the boss. So that’s how it is the first step I think down the road to getting people to understand their own power as workers is just to be like that is not a law of nature.

That is a systemic design system that exists, because unions got weak. Because you don’t have a union in your workplace who can sit down and negotiate these conditions with your boss. I mean, the very idea that you can have a contract at your job that guarantees you things, meaning your boss can’t just change your pay, can’t just change your hours, can’t just change your working conditions and benefits. That is really a foreign idea.

As you say, to a lot of workers, they’ve never had that in their own workplace and they probably don’t know anybody in their own life who has a union contract at work. It’s such an important step one, and we see this in the union organizing process, just getting people to understand it doesn’t have to be this way. The boss does not have to be a king that is not ordained by God, that is not natural law. You can sit down at a table and negotiate these conditions with your boss if you have a union. Sometimes you can kind of see the light bulb go on in people’s heads and it opens up such a great world of possibilities about how their lives could be better.

Katie:

It’s my understanding from reading your work and other labor journalists that the increasing unionization when unions are stronger, that that has positive effects for wages for people not in unions too because it just drives up wages across the board, which I think is another interesting element of this. And to your point about people not really even knowing anybody, I don’t think I know anybody that’s in a union, not off the top of my head at least.

Hamilton:

Yeah, absolutely. And that’s not just an opinion, that’s a fact. The higher the unionization is in an industry, it raises wages even for the non-union workers in that industry because the non-union companies still have to compete with the union companies for workers. And so you think of the auto industry, for example, where the UAW is a strong union and they’re in certain automakers and they get this contract that has all this great stuff. The non-union companies have to compete for auto workers with the companies with this good union contract, and it causes them to raise their own wages and benefits to compete.

So we know for a fact that increasing unionization helps everybody in the industry even if you’re not in a union. And on top of that, it’s not just economics, it’s making the workplace more equal, getting rid of discrimination in the workplace, making the workplace safer. There’s tons of social benefits that flow downstream from increasing unionization in any industry, even for non-union workers. And it’s one reason why I try to talk so much about union density as this statistic that most people don’t ever really hear about or think about as being something important. But the fact is that if we raise union density in this country, there’s all these incredible benefits that come downstream of that.

Katie:

I want to talk about Starbucks and the labor organizing that’s taking place in Starbucks locations and how all over the country these people are facing or we’re facing, I’m sure they still are intense union busting efforts from Starbucks itself. I’ve talked to people who are interested in organizing their workplaces and they are terrified to lose their jobs. And I think that there is this circular kind of cause and effect at play here where the people in the workplaces or in the sectors who would benefit the most from unionizing are the ones who are most at risk when they attempt to do so. And I’m curious how you think about untangling that knot.

Hamilton:

Yeah, it’s very common for people to be scared to try to unionize and for good reason. In many cases, people are scared to lose their jobs, they’re scared of retaliation. I think a couple of things to understand on that front is first of all, you are absolutely legally protected in terms of organizing your workplace. It is absolutely your legal right to try to organize a united workplace and your employer is absolutely barred from retaliating against you. They can’t fire you, they can’t cut your wages, they can’t cut your hours, they can’t move you to a crappier desk. All of that is illegal. So as a baseline, you are absolutely entitled as a legal matter to try to organize your workplace and everybody should.

Secondly though, the penalties in American labor law for breaking for the employer retaliating against you and breaking those laws is so weak that employers actually often will violate labor law consciously because they know that they just won’t get in enough trouble for it. Sometimes the penalty for fired somebody illegally, for example, who’s trying to organize a union, it might take a year or two years to wind your way through the NLRB and eventually maybe they have to pay you back pay. Or in some cases when employers break the law, they just have to hang up poster in a break room that’s like, we’re sorry for breaking labor law one year ago.

So the fact is companies systematically break these laws in many cases because they know the penalties are weak. And the Starbucks campaign, you saw all of this play out in the Starbucks campaign. It was a really great sort of example of all these dynamics because you had these workers organizing their stores, it took off across the country, really inspiring, I think inspired not just Starbucks workers, but a lot of workers across the country to get interested in union organizing. And then you had the company, as you say, doing all this illegal stuff and it was found to be illegal by the NLRB. I mean, and this was litigated. And as a matter of fact, Starbucks was just ordered to reopen two stores that they closed, as you mentioned, they closed stores because they were unionizing. They LRB just I think last week ordered Starbucks to reopen two stores. Enforcement is out there and getting bad PR for the company is one of the tools that workers have in their toolbox.

And so everybody should understand that they are allowed to organize unions and also understand that even if your boss retaliates against you, not only can you pursue legal remedies, but also there’s other forms of power. There’s bad pr and there’s this solidarity that you have with your coworkers and the ability to strike, which is the underlying basis of all union power. So if you’re scared or you’re intimidated to unionize, it’s very common. Almost everybody that has ever unionized has felt the same way, and yet millions of people have done it. So take heart.

Katie:

Something that really interests me is the way in which our policy tends to reflect our cultural belief systems in that it’s very, very hard to enact political change if there is not the cultural will and uproar to do it. And I think that when I hear you say that the penalties are so weak and legally speaking, you have these recourses, but at the same time it’s important to recognize that a lot of these companies are like, screw it, we’ll put up a sign, we’ll pay the fines, whatever. It honestly reminds me a little bit of the way hospitals can be fined for not putting their prices transparently online, but the fine is like $500 a day. So they’re like, alright, head pat, sure, here’s your 500 bucks.

But I think in this case, the cultural problem that I would point to is this deeply held belief in the American psyche that entrepreneurs are gods and we should all be grateful to labor under their genius for whatever wages they will pay us. And I think that that belief is maybe even more of the obstacle than the logistical obstacle of people not knowing how to organize or understanding that they even can or that it is their legal right to do so. And so the idea that workers should have power, it’s socialism, and I think socialism is a word that gets people really fired up in the United States.

Again, point to the cultural, deeply held beliefs. I’ve read in your work before this analogy that you make that capitalism is like nuclear power. Labor organizing is inherently socialist. And I would love if you could tell me a little bit more about that analogy and how you think about these opposing forces.

Hamilton:

Capitalism is a powerful force for things like technological innovation, improving efficiency. We know that capitalism is good at those things, but I compare it to nuclear power because it’s very good at these things and it’s demonstrated that it’s good at these things, but if you don’t tightly contain it, it just poisons everything. Nuclear power is great and it can power our cities, but if we don’t keep it contained, there’s a meltdown and we all die. And capitalism is kind of like that because it’s very good at innovation and productivity and all this stuff, but if you allow capitalism to be unregulated and unchecked and to filter itself into all aspects of our lives, there is no space for humanity in capitalism. That’s not part of the logic of capitalism. The logic of capitalism is maximization of profits and corporations are basically big machines for the maximization of profits.

It’s not a matter of getting mad at companies, it’s like getting mad at a machine. That’s what they are, and that’s what they do. And they will do anything to maximize profits. And that’s why we had slavery for hundreds of years. Slavery is a great way to maximize profits. You push labor costs to zero. We had to actually regulate that out of existence. Capitalism didn’t do that by itself. You have to keep it in a box. And when we outlawed slavery, capitalism still wants to keep labor costs as close to zero as possible.

And we constantly see today all these schemes, the gig economy, things like this that are basically schemes to keep labor costs as low as possible, which is detrimental for humanity. But again, that’s not a national part of the logic of capitalism. And so socialism to me and socialism is one of those terms that everybody will tell you a different definition of.

But I think of socialism as like you go to the public library and you don’t pay that socialism in action. We all use it. We’re all taxed, and we use our collective resources to do things that are good for everybody. We build roads. You can call the fire department and they will come put out your house fire and you don’t have to pay them. That’s socialism essentially. Social security, that’s socialism. A lot of the things that people actually like in day-to-day are effectively what socialism means. They don’t get thought of that way in our discourse.

But labor organizing, which just means working people, harnessing their collective power together and getting the fairest deal that they can at work is another example of good socialism and action people coming together, collective power, solidarity, you increase fairness, you increase equality for everybody. You spread wealth more evenly. Instead of having a billionaire and a bunch of peasants, you spread the wealth more evenly and that is good. And that is essentially what socialism means, and that’s the nature of labor organizing. It’s not worth engaging it like what politicians say socialism is, but I think that is what people should really think of when they think of socialism, public libraries, the fire department, and fair wages.

Katie:

So that’s the US, that’s our culture, that’s our politicians. That’s the way that we think about labor power, the way we think about capitalism. Are there any countries that you can point to where labor power is exceptionally strong? Any places that we could look to and be like, yeah, they actually, they’ve kind of struck this balance. Well, they have somehow devised a system that is prioritizing people over money. I am curious what we could learn about what they’re doing and the outcomes that they’re getting.

Hamilton:

I don’t know that any country is perfect in terms of labor relations, but typically Europe and Scandinavia are much better on these fronts. And two examples of that are, for example, in Germany. In Germany they have things called works councils, which basically means if you have a company, you are legally mandated to have this committee of workers that sits there that you negotiate the operations of the company with. So workers are legally entitled to be involved in the operations of a company. Workers have a seat at the table by law in Germany in a way that they don’t In America. In America, there’s no board seat for workers. It’s a very confrontational system. And yet that’s built into the German system and it’s very successful. It’s a very successful system.

And then in a lot of countries, they also have what’s called sectoral bargaining, which just means that instead of having to unionize every individual fast food restaurant and get a separate contract for each one of them, you negotiate a set of standards for an entire industry. You could have sectoral bargaining for the fast food industry, and that would be worker representatives and industry representatives sit down at the table and say, here’s essentially going to be a basic contract instead of standards that govern this whole industry. And that, as you can imagine, is a much easier and more straightforward way to win improvements for millions of people than unionizing them a 100 people at a time over and over.

And so that’s another thing that’s more common that would probably be a great benefit here in America. And so generally, Europe is a little more civilized, a little humane, and they also, they don’t have as much of that mythology that you talked about, the American mythology of the cowboy entrepreneur who’s the God, and we’re all here serving them that in France, that’s not the case in France, they chase CEOs down the street and throw things at ’em.

So part of it is cultural. But yeah, those are two basic ideas that we could easily adopt and that I think a lot of the labor movement would like to see adopted here.

Katie:

Are there any pieces of major legislation in the pipeline right now that would improve any of this? I think you wrote recently, everyone always wants me to tell them it’s getting better. Things are improving and here are all the ways it’s improving. Or they know the state of labor and like, oh look, this is encouraging. So I’m not asking you for that, but I am curious if there is any legislation in the pipeline that people should be aware of.

Hamilton:

Definitely. The big bill regarding labor and labor powered America is called the Pro Act. And the Pro Act is a bill that would actually fix a lot of the awful aspects of American labor law that some of which we talked about earlier. For example, it would create better penalties for companies for breaking labor law. So it would help to eliminate that incentive that we talked about for companies to break these laws in the first place. It would get rid of these statewide right to work laws, which are laws that exist in about half the states in America, usually in red states. And there are laws that make it hard for unions to sustain themselves and harder for unions to sustain their own power because they say people don’t have to pay union dues if they don’t want to. And so it eats away at unions from the inside, and it’s specifically designed to hobble unions and make ’em weaker, proactive, get rid of those laws.

It would fix a lot of other bad labor laws that were passed in the 1940s to pull in the power of organized labor after World War II when it was really strong things like secondary strikes, which means that you can go on strike to support another union that’s on strike that’s actually illegal in America, which is crazy if you think about it, that you as union workers aren’t allowed to go on strike to support another side of union workers. But those are the kind of things that were passed to pull in labor power after War ii and the product would fix that stuff.

And that will go a long way toward not just helping unions that exist now, but helping to unleash more organizing of unions, which is really what we need. Because in the situation that we’re in now, when only one in 10 workers is in a union, the biggest thing we need is the next 10 million union members to make this labor movement stronger and to spread all the benefits of unions to more people. So it’s hard to organize and sustain power in the set of labor laws we have now. Passing the product will be an amazing step toward making that a lot easier. It’s highly unlikely the product will ever pass as long as the filibuster exists because Republicans are going to filibuster it because they know how impactful it would be. And how much it would help workers. And so we’re going to have to get rid of the filibuster. It’s a pass a law that good, I think. So anybody who’s interested in that think about not only the law is good, but also what do we have to do to get the law passed in the first place?

Katie:

It occurs to me that we don’t really know a ton of specifics yet about Kamala’s economic policy or the last I checked, we don’t have a 900 page PDF outlining exactly what they intend to do, but we do have that on the right. And I know that you have read the economic and labor section of Project 2025. Can you break that down for us?

Hamilton:

Yeah. Project 2025, as you know, is that sort of 900 page document the Heritage Foundation put together to guide the next Trump administration, which is incredibly, they just published so you can actually read what could be coming for us.

So Biden, he put a great person in charge of the NLRB, which is the agency that oversees labor law in America, Jennifer Abruzzo, who has just been tireless in working to improve regulations as much as possible to help make them more worker friendly and union friendly. Things like making it easier to organize gig workers and making it harder for companies to call everybody an independent contractor, because a company can call you an independent contractor and then say you’re not legally allowed to unionize. And so addressing these kinds of things that are partly economic changes and in many cases are specifically bad labor laws, the NLRB has been doing a good job of rolling those back.

Day one, she’s getting fired. They will install an anti-union lawyer as the head of that agency, which is what Trump did, by the way, in his first administration. And they will systematically work to roll back the good things that have been done. When you see all the union organizing on college campuses and among grad workers and things like that, that’s the type of thing that they want to make illegal and make it impossible to do those things. And unfortunately, not to be negative, but even if Trump doesn’t win, there’s a danger that the right-wing courts will also reverse a lot of those things.

Katie:

Courts aside, I guess, do we have any early indications of what the Democrats plan would be for the NLRB? Do we have reason to believe that it would be a continuation of Biden era labor policy, or is there any signal that there would be a shift?

Hamilton:

Yeah, it’s a good question. I think a lot of people have been trying, have been scrambling to figure this out since Kamala era sort of came. Her sentence was so fast that everybody’s like, oh, whoa. The conventional wisdom, I think, within the labor world is that generally speaking, she will be a continuation of the Biden era policies. I think she would probably keep on the people at the NLRB, I think she will probably generally continue down the same path as Biden, and she has essentially the full endorsement of the entire labor movement, AFL, CIO, most of the major unions, with the exception of the Teamsters. It’s hard to say for certain.

Katie:

Well, thank you Hamilton, for joining us and for sharing your wisdom. I know you just published a book.

Hamilton:

Yes. My book is called The Hammer. It is a book about the labor movement in America. It’s about some of these things we talked about, and it’s really about how the labor movement can be the best tool to fix the biggest problem that we have in America, which is that rise of inequalities that we talked about.

Katie:

To me, these types of conversations are important because I feel like they provide just a more honest understanding of the broad forces that impact how we work and what we get paid to do it. In my mind, this information doesn’t diminish the importance of being a good individual negotiator in the current status quo, but it might reveal its limits. Being the best negotiator in the world is still not enough to offset the inherent power imbalance of a legal environment that is so unfavorable to workers between our anonymous listeners’ perspective on at-will employment after working in corporate human relations for two decades, and Hamilton’s belief in labor organizing is the way we right-size our economies, such that the wealth being created is felt as broad prosperity and not a punishingly and increasingly top heavy slog. I feel like I have a better understanding of the legal environment that we are up against, and hopefully now you do too.

I am Katie Gatti Tassin, and this has been The Money with Katie Show. Our show is a production of Morning Brew and is produced by Henah Velez and me, Katie Gatti Tassin with our audio engineering and sound design from Nick Torres. Devin Emery is our chief content officer, and additional fact checking comes from Scott Wilson.