Paul Krugman: Strong Unions Create a Strong Middle Class

Sheldon Friedman, AFL-CIO Voice@Work research coordinator, sent us this report. 

Princeton economist and widely read New York Times columnist Paul Krugman spoke at the AFL-CIO breakfast during the annual meeting of the Labor and Employment Relations Association (LERA) in New Orleans on Saturday. Krugman has authored 20 books, including the most recently published The Conscience of a Liberal, in which he endorses the Employee Free Choice Act.  

AFL-CIO Voice@Work Campaign Director Fred Azcarate opened the breakfast with a brief update on the fight for the Employee Free Choice Act and urged the more than 300 participants—academics, graduate students and labor representatives—to join with the union movement in the struggle to pass this vital workplace rights legislation. 

Speaking on the topic, “Unions and Inequality,” Krugman noted the percentage of workers in unions declined from a high of 35 percent in the mid-1950s to today’s level of 12 percent. As a result, the United States has “lost something that’s essential to maintain a decent society.” Krugman attributes the nation’s worsening economic inequality in large part to declining unionization and the erosion of legal protection of workers’ freedom to choose unions and bargain. He cited a finding that one-third of the difference in the rise in earnings inequality between the United States and Canada is attributable to the much faster rate of decline of unionization in this country. In fact, he says even this dramatic finding

almost certainly is a major underestimate.   

Krugman explained that when a high percentage of workers are in unions and workers’ freedom to choose unions is protected, there is an “umbrella” effect in which all workers, union and nonunion, benefit. He cited work by economists Peter Temin and Frank Levy, who found that for a generation after World War II, the so-called “Treaty of Detroit” between the UAW and General Motors Corp. set standards for workers throughout the U.S. economy. (The Treaty of Detroit refers to the landmark contract the UAW negotiated after the war that has since been seen as the crowning achievement of the midcentury labor movement, with the largest automakers agreeing to generous benefit and compensation packages.)  The bottom line, says Krugman:  

To have a middle class society, you need a strong union movement. 

Krugman also took issue with corporate spinners and extremist politicians who blame the steep decline in unions on the alleged loss of interest by workers in joining unions. Rather, Krugman says, the biggest culprit has been a hostile political environment that aided and abetted an aggressive, often lawless anti-union, anti-workers’ rights offensive by many of the nation’s employers. Corporate anti-union strategies that blossomed in the 1970s were given government approval in the 1980s Reagan era. This lethal combination has been “extremely effective in blocking unionization,” Krugman noted. He cited Bush era National Labor Relations Board (NLRB) decisions, such as the 2006 ruling that expanded the definition of supervisor, as an example of how government has put its thumb on the scale against workers’ rights.   

The importance of strong unions and protections for workers’ rights extends far beyond wages, health insurance, pensions and justice on the job, Krugman noted. Unions provide a crucial counterweight to the power of money in political campaigns. They also have a significant impact on the political consciousness and political participation of their members and their families. Krugman cited political science research that found voter participation would be 10 percentage points higher among people on the bottom two-thirds of the income ladder if the proportion of workers in unions had not declined since the 1950s. 

Krugman, who has been dubbed “the most important political columnist in America” by the Washington Monthly magazine, concluded that the decline in unionization was caused largely by political factors, and it can be changed through political action. Polling indicates 53 percent of nonunion U.S. workers want unions today, but employer intimidation—aided by a hostile political climate and ineffective labor laws—prevents workers from exercising their free choice to form unions. Restoring workers’ freedom to form unions and bargain would change the political complexion of the country in a positive way. Krugman ended his presentation this way: 

We’ve become a country where the interests of workers are hardly represented at the table. 

And that’s got to change. 

The AFL-CIO has hosted the annual LERA breakfast since the mid-1990s. Distinguished labor historian Nelson Lichtenstein was last year’s speaker.

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