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JACKI LYDEN, HOST:

This is WEEKENDS on ALL THINGS CONSIDERED from NPR News. I'm Jacki Lyden. Guy Raz is away.

In a few moments, we'll discuss the White House's new immigration initiative and elections in Egypt. But first, are unions going away? There's no doubt that they're declining.

GOVERNOR SCOTT WALKER: Tonight, we tell Wisconsin, we tell our country, and we tell people all across the globe that voters really do want leaders who stand up and make the tough decisions.

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LYDEN: That's Wisconsin Governor Scott Walker after winning his recall election, triggered when he curtailed public union collective bargaining.

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PRESIDENT RONALD REAGAN: If they do not report for work within 48 hours, they have forfeited their jobs and will be terminated.

LYDEN: Thirty-one years ago in a move that historians say mark a turning point for public sector unions, President Ronald Reagan fired striking air traffic controllers. Their union was called PATCO and it folded. They've unionized again, agreeing not to strike. Just five decades ago, unions were on the front line of the fight for the rights and wages of the middle class.

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UNIDENTIFIED MAN: The unions recruit millions of members in a nationwide drive for collective bargaining to close shop, higher wages, better working conditions.

LYDEN: After World War II, organized labor represented a third of America's workforce. What many workers today take for granted - the five-day workweek, paid overtime, holidays - were actually union achievements. Today, only 12 percent of the workforce belongs to private unions, three times that many belong to public sector unions, but they're in the crosshairs of cash strapped states and cities. That's our cover story today: the decline of union and where that leaves the American middle class.

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MARCUS OLADELL: My name is Marcus Oladell. I'm from East Hartford, Connecticut. I'm 62 years old, and I'm currently driving for First Student School Bus since '96.

LYDEN: Marcus Oladell helped form a union for bus drivers with the Teamsters 12 years ago. Since unionizing, he says drivers' starting wages have doubled to $16 an hour. Before unionizing, senior drivers were given raises of just a nickel an hour.

OLADELL: If they ever tried to give us a nickel raise, we'd be walking. And we had no holidays. Now, we're up to eight holidays a year. And in our last contract, which we never had before, there was a longevity bonus given to members that were there for 10, 15 and 20 years. I mean, granted, we're not getting rich on this, but in the overall scheme of things, what we had 12 years ago, what we have now, no one could argue that we've raised these standards.

LYDEN: Oladell became shop steward of his local in Connecticut for the Teamsters. He's now traveling cross the country helping organize bus yards like his.

OLADELL: The generation behind us has to get an understanding of how powerful a union can be. If that middle class is going to be strong, it has to be represented by unions.

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HAROLD MEYERSON: Well, middle-class wages for a majority of people are largely the invention of American unions.

LYDEN: Harold Meyerson is a political columnist for The Washington Post and editor at large of American Prospect magazine. He says if big labor dies, America's middle class dies with it. He points to the decades after World War II, a time of shared prosperity when productivity and median household income both increased by over 100 percent. It was also a time of peak unionization.

MEYERSON: This had an effect on non-union workers as well. Non-union workers in industries that were heavily unionized, or in regions that were heavily unionized, their employers had to compete with the union employers, and this raised wages for everyone. There's one study that shows it raised wages about 7 percent for non-union workers in those sectors and in those regions.

LYDEN: So tell me how union wages boost wages for those not in unions. How does that work?

MEYERSON: Well, if you were in an industry that was heavily unionized - let's say auto or steel - and you were at a non-union company, your employer was competing with union companies and you, the worker, in a booming economy, which the economy was at the height of union strength, you, the worker, could go over to one of those union companies and get a job and get benefits.

So your employer was more inclined to give you a higher wage. That worked in industries that were heavily unionized, which were abundant then and are scarce now, and that worked in regions and states that were heavily unionized.

LYDEN: So as unions have declined, have we seen a decline in the average wage?

MEYERSON: Oh, we sure have. And manufacturing is very dramatic, whereas the unionized jobs for employees have been there a while. In auto, let's say, pay about 27, 28 bucks an hour. The workers now being hired both in union and non-union plants are being hired at 13 to $15 an hour. And even in the unionized plants, they can't go higher than $19 an hour no matter how long they're there. So that is a real diminution. In some cases, it's half what these more senior union members are making.

LYDEN: So as the economy improved, how much of the profits, how much of the wealth went to the average person compared to today?

MEYERSON: The clearest way to look at that is how income was distributed across the entire economy. During the high point of union strength in the '70s, let's say, only a third of the national income went to the wealthiest 10 percent. Today, it's 50 percent of the national income goes to the wealthiest 10 percent. So that's about a 17 percent difference that makes a real difference in the lives of ordinary workers who are at the middle of the American economy.

LYDEN: What do you think that we would look like without a middle class generated by union workers?

MEYERSON: Well, it's pretty much what we look like now because, as we've noted, only 7 percent of private sector workers are unionized. We would have massive inequality of wealth. We would have low levels of intergenerational mobility, which studies have shown people are not moving up the economic ladder now. We would have real declines in wealth because people's income isn't keeping up, so most of their wealth is in their homes, and the Federal Reserve has just shown that people have lost two decades worth of value on their homes. We would have a really strapped middle class, which, in fact, is what we have now.

LYDEN: Washington Post columnist Harold Meyerson.

Public sector unions have grown as cities, and the demand for services have expanded. Therein comes the crisis, especially as the economy has fallen. On the same day as the tumultuous recall vote in Wisconsin, two California cities were voting on measures to force city workers to pay more for their pensions - San Diego and San Jose. In San Jose, Democratic Mayor Chuck Reed took on the unions. Retirement benefits there swelled to $245 million this year, a quarter of the city budget.

MAYOR CHUCK REED: We started this problem decades ago, and it has grown little by little over the years, occasionally growing rapidly. And at the end here, it is growing so rapidly that it threatens our life, much like cancer.

LYDEN: Mayor Reed pushed for a new law requiring workers to pay more for their pensions. It passed resoundingly, but the unions have now brought suit. Mayor Reed says things were getting desperate.

REED: Oh, there is nothing that hasn't been cut in the city of San Jose over the last decade. We laid off police officers, we laid off firefighters, we closed libraries, we spun off community centers, we closed community centers.

LYDEN: And how much money do you think you'll save?

REED: Well, it all depends on a lot of factors. But we know that in the first year, we'll save about $25 million. But over the course of time, those savings grow. At about 40 years out when the entire workforce has come under the new plan, we'll be saving around $180 million a year. So it's billions of dollars. This is a really huge problem that we're facing.

LYDEN: So, Mayor Reed, this is being interpreted as an anti-union vote by a Democrat, the party that traditionally supported organized labor. What do you think the political consequences are here?

REED: I think this is a choice that's very difficult for Democrats to make. But it is a choice between providing services to the people or providing benefits to our employees. And that's a hard choice that I came down on the side of I represent the people that elected me. I represent a million people in San Jose. And the unions represent the interests of themselves and their members.

And my job is to look out for all of the people. And as a Democrat, I believe I've got to deliver services to those people who are being injured because we're cutting services. So that's a choice, I think, all Democrats are going to be faced with as they deal with these rising pension costs throughout the country.

LYDEN: What do you think is the future between cities like yours, San Jose, I think - what is it - eighth, 10th in the country in terms of population...

REED: We're 10th largest in the country.

LYDEN: Tenth largest in the country and public sector unions?

REED: I think the unions will come to realize that it is in their interest or the interests of their members to ensure that these pension plans and retirement benefits are sustainable, because it is the employees who get hammered when these plans run out of money. Just look at what happened in Central Falls, Rhode Island. One day, they called their retirees up and said, hey, we're getting short of money, so we're only going to pay you half of what you were getting.

I don't want to do that to my people. I do want to do that to our employees. I want to say what you've earned, you're going to get paid, and the plan will be solvent, and the city will be solvent, so you can count on that.

LYDEN: The way forward is tough for cities and unions. Central Falls, Rhode Island, is a city in bankruptcy. It got the state to help pay pensions for retired police and firefighters who were losing as much as half of their benefits over the next four years.

Harold Meyerson says it may be hard for people who are working or without a job to have sympathy for union workers, even in public sector jobs.

MEYERSON: It's a real problem since most private sector workers have lost their defined benefit pensions of yore and have either 401(k)s or less than that or nothing. And they are being asked to support traditional retirement benefits for public sector workers. So that can be a real factor. But by the same token, it's hard to really be that envious when you think about it of cops, firefighters and teachers. These are not the economic elites in the United States. But if you know wealthy cops, firefighters or teachers, you don't know a lot of people.

LYDEN: Washington Post columnist Harold Meyerson.

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LYDEN: You're listening to ALL THINGS CONSIDERED from NPR News.

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