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The Employee Free Choice Act Can Help Us Avoid a Depression

We’re facing the greatest financial crisis since the Great Depression, as most everyone likes to remind us when discussing our economic situation. The specters of that mark in American history – the bread lines, sky-high unemployment, black-and-white photographs showing desperate faces – are enough to inspire fear and action to avoid another such catastrophe.

Business interests are taking advantage of the Great Depression to demand they have their way on critical policy issues. They remind us that more jobs can will be lost, more businesses will go under, and more economic havoc will ensue should they not get their way.

Now that Wall Street’s been bailed out, there are plenty of plans in play for a middle class bailout – be it a new economic stimulus package, help for homeowners, or a new era for working families – there are lots of ways a lame duck Congress, or at worst, the new Congress in 2009, can help the rest of America that doesn’t work on Wall Street.

In particular, working people and union members are being scapegoated in new attacks against solutions for America’s economic woes. Wealthy conservative interests are going back to the 1930s and blaming union members for prolonging the Great Depression, and then turning around to accuse Barack Obama of wanting to do the same today because he wants to pass the Employee Free Choice Act.

So let’s dismantle this argument. It seems today’s coordinated message among conservatives is to blame union members not only for the Great Depression, but for the possibility of landing us in one when Obama is president. There’s an op-ed in the Wall Street Journal, a blog post at the National Review, and the peanut gallery chimes in at the National Association of Manufacturers’ blog, all saying the same thing.

The main thrust of conservatives’ complaints is that when our country has more union members, we’re worse off; they point to the Wagner Act of the 1930s, a key component of FDR’s New Deal that allowed unions to represent workers in negotiations with businesses over wages, benefits, and the like. The connection drawn by conservatives is that the Employee Free Choice Act, a bill supported by almost every single Democrat in Congress that makes it easier for people to form or join unions, will bring economic disaster akin to what the Wagner Act supposedly did during the Depression.

Business groups’ fight against the Wagner Act was “the largest lobbying campaign in American history by business organizations” at the time. Not unlike today, employers described themselves as 1) advocates for employees, protecting them from "union goons," and 2) patriots fighting unions who wanted to undermine national economic well-being and democracy.

Except the Wagner Act did not bring economic disaster as businesses predicted at the time. Instead of hampering economic recovery, the New Deal, of which the Wagner Act was a key part, got the country out of the Great Depression and ushered in a prolonged era of prosperity that built the American middle class. The WSJ op-ed this morning tries to draw a connection between the Supreme Court upholding the bill and a short period of economic downturn thereafter. Except that in the years between when it was passed and upheld, workers were joining unions and negotiating with their employers anyway. This is a red herring argument designed to provoke unfounded fears and hold down working families.

Then, as now, unions helped to increase consumers’ purchasing power by raising wages, and by passing the Employee Free Choice Act we will likely see the same effects.

During the Great Depression, America had enormously high levels of economic inequality much akin to what we see today. And after the New Deal was passed, along with the Wagner Act, America saw the birth of its middle class, borne on the backs of higher wages and benefits from an increased ability for workers to join unions. Stewart Acuff explains the benefits:

Why is collective bargaining so effective at reducing extreme economic inequality? There are several reasons, but heading the list is greater bargaining power for workers in dealing with the corporations that employ them. During the quarter century after World War II when union density and collective bargaining coverage in the United States were far higher than today, wages rose in step with productivity, and the gains from economic growth were distributed proportionately across the income spectrum. Indeed, during this period, those at the bottom of the economic ladder achieved a modest increase in their share of the pie. […]

Collective bargaining lifts wages of all workers, but is especially effective in raising wages for low-wage workers–as economist John Schmitt, among others, has shown. Under the banner of equal pay for equal work, collective bargaining also attacks inequality by giving wages of women and workers of color an extra boost. Economists at the London School of Economics have found that collective bargaining even restrains CEO pay.

More people in unions means higher wages, equal pay for equal work, less inequality, and economic growth. But when we see fewer people in unions, we see economic inequality rise again.

Increasingly, economists are looking at other factors to explain the steep rise in economic inequality. Political and institutional factors are getting renewed scrutiny. Several studies show that deunionization has played a major role. That’s not surprising, because unions not only increase the wages of their members, but often have a spillover effect that pulls up the wages of other workers as well.

So, despite this conservative coordination to blame union members for Great Depressions past and future, the facts fly in the face of that argument. These falsehoods being pushed by wealthy business interests show that their concerns are only to keep their veto power in the workplace at all costs.

When we have President Obama and a solid pro-worker majority in the Senate, the Employee Free Choice Act is going to be a big battle. We’re encountering a well-funded opposition that’s muddying the media’s waters with false characterizations and misinformation.

Progressives should be proud to support the Employee Free Choice Act, not only because it will help rebuild the middle class created by the New Deal, but because it will get our whole country back on track.

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Michael Whitney

Michael Whitney

My name is Michael Whitney. I'm a progressive online organizer working with FDL Action. Rush Limbaugh called me "clueless" once. He went into rehab two days later.