Obama's Next Gauntlet: Reviving the Middle Class

It ain't easy. No use jokin'. Everything's broken."
-Bob Dylan

We can't go back to the old economy. That economy -- marked by booms and busts, Gilded Age inequality, declining wages, growing household debts, and unsustainable trade deficits -- didn't work very well for most Americans. President Obama is faced with the difficult task of creating the structure for the new economy even as he works to lift us out of the collapse of the old.

That's why his stunning budget calls for health care reform, ending our addiction to oil and investing in education as both a way out of the mess and a down payment on the future. His pace is as unrelenting as the crisis. Next up: reviving America's middle class, insuring that once growth returns, its blessings are widely shared. And the centerpiece of that is the Employee Free Choice Act (EFCA).

EFCA helps revive the right of workers to organize in this country. Over the last decades, that basic right has been shredded, as companies waged open warfare on union organizing, and administrations often failed to enforce the laws protecting that right. The tactics were bare knuckle: fire the organizers; hold closed door meetings to threaten the workers. And if workers did vote for a union, one-third of employers simply refused to negotiate a contract with them.

The campaigns have been brutally successful. Today, over a majority of workers say that they would join a union if given a choice, but only about 7.5% of the private workforce is organized.

EFCA gives workers the right to choose a union, either in a closed election or with a majority signing pledge cards. It forces employers to negotiate in good faith, requiring arbitration if no agreement is reached. It stiffens penalties on employers for violating workers' rights.

But EFCA isn't just about worker rights. It's about whether we can return to an economy with a broad middle class. When unions represented 30% of the private economy, they won family wages, health care, pensions, paid vacations -- the basics of middle class existence. Rising union wages and benefits helped lift the wages of non-union workers as well. America has never done much redistribution through taxes. We built a middle class because workers were able to win a decent share of the profits and productivity that they helped to generate. Unions were central to that.

Naturally, as the unions have lost ground, so has America's middle class. Over the eight years of the Bush recovery, we witnessed the extreme: an economy in which profits were up, CEO salaries soared, productivity was up, but workers lost ground. As a recent EPI statement [1]notes, the median working household lost $2000 in annual income over that period. That reality contributed directly to the inequality, speculation, and household indebtedness that provided the kindling for the economic conflagration we now experience.

That's why Obama was an early sponsor of EFCA as a Senator. Earlier this month, he noted [2] that he saw unions as part of the solution, not part of the problem.

"We need to level the playing field for workers and the unions that represent their interests, because we know that you cannot have a strong middle class without a strong labor movement. .."The American economy is not and has never been a zero-sum game. "When workers are prospering, they buy products that make businesses prosper. "We can be competitive and lean and mean and still create a situation where workers are thriving in this country.'

In her first appearance as Labor Secretary, Hilda Solis, the daughter of union workers, journeyed to Miami on Monday to speak at a union rally on the eve of the AFL-CIO Executive Council meetings and to listen to workers telling their stories. Hector Capoda, an AT&T worker and member of the Communications Workers of America, told how he'd been part of organizing a union with majority sign-up. His father, he said, had never had a union, never earned more than $13 an hour and didn't have health care. But as he grew older and weaker, the family could survive because his brother, "a policeman and union," his sister, "a nurse and union," and he had the resources to keep the family together. Clearly moved, Solis confirmed that the president's support for EFCA, and pledged to enforce the law, announcing that "there is a new sheriff in town."

EFCA will be introduced into the House in the next couple weeks, where passage is guaranteed. The real donnybrook will be in the Senate where it has strong majority support but must overcome efforts by a conservative minority to block the vote with a filibuster. The Chamber of Commerce and various business lobbies have threatened to spend $200 million or more to stop EFCA, which Home Depot's founder, Bernie Marcus, charges [3] will lead to "the demise of civilization." Unions are gearing up a major grassroots effort to pass the bill.

But this isn't just a union fight. As the president suggests, this is a central fight for an economy that works. If workers are paid decently, families needn't take on massive debts to educate their children or afford their home. Social Security remains secure if workers once more capture a fair share of the profits they produce. CEOs and speculators have a more difficult time cooking the books if they must negotiate with strong unions. To build an economy that works, strong unions aren't the only answer, but they are central part of the answer.

The campaign on EFCA will be fierce. Gaining 60 votes won't be easy. The business community will go all out, claiming that strong unions will ruin America, trample workers' freedoms, drive jobs abroad. But we've tried an economy with weak unions -- and that didn't work out so well.

Obama is right to tee this up early even as he struggles to get the economy moving, to get the financial system reorganized, to move on health care and new energy. This is a fight that citizens across the country should join. It will be a critical building block of the new economy that we must construct from the ashes of the old.