[music playing]

John Donvan:

Hi, everybody. And thank you for joining us for a very special edition of Intelligence Squared U.S. This one hosted at the comedy cellar at the village underground in New York part of a new series called No Laughing Matter. I'm John Donvan, as always, but I could not be there for this one. So, I would like to welcome our special guest moderator, Nick Gillespie, who is editor at large of Reason Magazine, and he will be hosting and moderating this one. But before we get started, I also want to give you a heads up for what's coming up. We're going to be at the homeland security enterprise forum on October 25. And I will be there for that one. And you're going to hear a debate with former homeland security chief Michael Chertoff, and internationally recognized expert on disinformation, Nina Jankowicz, among others, about the era of information disorder that we all seem to find ourselves living through. That's October 25. You can go to our website intelligencesquared.org to reserve tickets and find out more. This should be a good one. So, now on to tonight's debate, which is a good one, here is Nick Gillespie. Nick, let's get to it.

[applause]

Nick Gillespie:

This is Intelligence Squared and this is No Laughing Matter, a new series, which they built around my utter lack of humor. So, we've got that to look forward to. We're going to be debating unions and the proposition under debate is Do Unions Work for the Economy? This is an interesting question because union membership peaked in the United States in 1954, at about 35 percent of the workforce. It is down now about one in 10 less -- or maybe one in 10 workers in the country are unionized now. It's higher in the public sector, and we're going to talk about public sector and private sector. We're going to talk about why did it decline. And also interestingly, polls have found that in just in the past couple of years, support for unionization is higher now than it has been since 1965. 71 percent of people say that unions are good, or they support unions and unionization. We read it in the headlines all the time. So, that's what we're going to be talking about. And I guess before we get going, I'm curious, are there any union members in the audience?

All right, I'll speak slower.

[laughter]

Joking, but that's a sign of the times. There's about 10 people in the audience and one of them is in a union. So, we're going to be looking forward to that. And I am going to introduce first the person who is arguing yes that unions are good for the economy, is the journalist who covered labor for The New York Times for 19 years and has written a book called "Beaten Down, Worked Up: The Past, Present and Future of American Labor," Steven Greenhouse. Please come to the stage --

[applause]

-- and sit to my right. There he is, Steven Greenhouse. New York Times journalist covered the unions and the labor markets, author of Beaten Down and Worked Up. Steven, thanks for joining us.

Steven Greenhouse:

Great to be here.

Nick Gillespie:

And now arguing no, unions are not good for the economy, is pension economist, Bloomberg contributor and senior fellow at the Manhattan Institute, Allison Schrager. Please join me on my left.

[applause]

All right. So, thank you. Thank you both for joining us. If you have to, you're going to have to go through me if you want to really fight with each other. We want to have a good, clean fight, with a lot of facts and a lot of analysis, but no name calling. You ready to go, Steven?

0:03:45

Steven Greenhouse:

Yes.

Nick Gillespie:

Allison, what about you?

Allison Schrager:

Oh, yeah.

Nick Gillespie:

All right, so --

Steven Greenhouse:

Don't we first have to do a weigh in?

Nick Gillespie:

You know, we were supposed to do that already. And I broke the scale, so we're skipping that. We're going to go right to the opening statement. Steven, you have three minutes. Let's get to it. You're up first, you answered yes. Why do you argue that unions work for the economy?

04:07

Steven Greenhouse:

Well, our subject is Do Unions Work for the Economy. When some people talk about the economy, they focus on maximizing corporate profits or maximizing the Dow Jones Industrial Average. The economy is about far more than that. The economy is about people and delivering goods and services to make people's lives better. Unions make people's lives better. Thanks to unions, many more people are in the middle class. People have retirement plans. People have medical coverage. People have much safer jobs. People have work life balance that gives them time to spend with their family.

I also think of the bumper sticker unions, the folks who brought you the weekend, and many Americans forget how bad many, many jobs used to be. A century ago, 2000 -- around 2000 coal miners died each year on the job; now only about 10 do. And we really need to thank unions for that huge improvement. Sitting here about a mile from the Lower East Side, which used to be the heart of the nation's apparel industry. And tens of thousands of apparel workers worked brutal hours, six days a week, seven days a week, often from 7:00 a.m. to 7:00 p.m.

Right before coming here, I stopped at what used to be the Triangle Shirtwaist Factory, which is about a five-minute walk just on the other side of Washington Square. At a time when there was very little regulations of workplaces, and many employers didn't care, didn't pay much attention to workplace safety, 146 workers died in 1911 in a horrific fire there. Most of them were women, many of them were teenagers. Now, thanks to unions, factories are infinitely safer.

And, you know, very few people work 80-hour workweeks. During the Great Depression, FDR and the New Deal Congress thought that far too many Americans had very meager wages. And they thought what we do about this, so they wanted to increase workers bargaining power, and they passed a landmark law that made it far easier to unionize. So, in the late 1930s and 1940s, millions of Americans flocked into unions, and the powerful unions that they created, greatly raised wages and built America's middle class, which was the world's largest middle class, thanks to unions. Many workers could finally afford to buy houses, could finally afford to buy cars. That increased consumer demand, and that in turn, helped the overall GDP.

This summer, as Nick mentioned, a recent Gallup poll found that 71 percent of Americans approve of unions. That means Americans overwhelmingly think that unions work for the economy. Starbucks workers, Chipotle workers, REI workers, Apple workers, museum workers, adjunct professors, graduate students, many of them are trying to form unions. Video game workers who are tired of working 80-90 hours a week, they're trying to form unions. Amazon workers who are fed up with the stress and with the onerous production quotas and the difficulty in finding time to go to the bathroom, many of them want to unionize, to make their lives saner and happier. And when unions make workers happier, and less stressed-out, unions work for the economy.

Nick Gillespie:

All right, thank you very much. Steven Greenhouse.

[applause]

Yes, unions work for the economy. Okay, Allison, you're taking the position that unions don't work for the economy. Take it away, you got three minutes.

Allison Schrager:

Hi. So, when I was thinking about this question, I realized it's a very complicated question. But for once, it actually is a very simple answer. The answer is no. But why is it complicated? Because what does it mean to work for the economy? Now, I'm an economist and I thought, this isn't a trivial question to me. Traditionally, economists thought working for the economy was rising GDP. And I think that's one way to think about it. But I think we're realizing another really important part of working for the economy is resilience, not only resilience to the next financial crisis, or the next pandemic, or recession, or inflation, or whatever, but also resilience to an economy that's constantly in a state of change. We were once an agrarian economy, then we became an industrial economy. And now we're moving into the next phase, a tech economy and an economy that works can manage to grow and prosper and still be a leader despite all of these changes. And then finally, I think another thing that's become what matters for working in economy is that the prosperity is shared.

And I think what we're going to find in the next hour or so is that the answer is union doesn't fulfill any of those goals. In fact, it hinders all of them. And that's why they don't -- doesn't work for the economy. Unions, among many other things, make companies a lot less dynamic, it's really hard to fire anyone who's not good at their job, it's really hard to give merit bonuses or pay to people who are good at their jobs. It's really hard to adopt new technology. We saw this with the car manufacturers, we even saw this with hostess; you remember when they went bankrupt. So, it becomes very hard to be a more dynamic workplace.

And we also see in the public sector unions have been a big hindrance to education reform, to building infrastructure projects with in any sort of budget or any sort of reasonable timeline, which is a huge boon to taxpayers, generally, they just make the economy much more sclerotic, and a lot less dynamic, which is really, as we're changing is one big reason why unions really are falling out of favor, not just here, but even abroad, even Europe, big stalwart of unions. They're becoming a lot less popular. So, I think it's clear that while, the question isn't, did unions help some people? Are they good for some people? Yeah, sure. Of course, they are. But are they good for the economy, which isn't just a few people but everyone, and not just us people in the future? The answer is clearly no.

Nick Gillespie:

All right, thank you, Allison.

[applause]

What we're going to do now for about the next 20 minutes or so, we're going to have a discussion up here about various points about private sector unions. Then we're going to talk about public sector unions. And we're going to go to audience Q&A. I guess let's start off. And I'll go to Steven first. If unions are so self-evidently good for the workforce and for the economy, can you talk a little bit about the decline in membership? What are the main causes of that? And what does that say about the relevance of unions to the labor market today?

Steven Greenhouse:

In my book, Nick, I write that America of all the industrial countries in the world, the three dozen or so OECD countries, the United States, U.S. corporations are the most anti-union and most aggressively anti-union. So, that to my mind is one of the major reasons that union density has declined since 1980. Another --

Nick Gillespie:

But the decline started long before 1980.

Steven Greenhouse:

But it really, really accelerated starting 1980. It was slow. So, among the other reasons, the union rate decline is, you know, a sharp decline in manufacturing, many manufacturing jobs moved overseas. official policy, kind of, soured on unions with --, you know, and Ronald Reagan fired the air traffic controllers who participated in the illegal strike, it was not a cool -- it was an illegal strike. But that made many CEOs, you know, think well, it's high time we really go after unions, really fight hard against unions. And there's been growth in the service sector. And it's in many ways harder to unionize bank workers or nail salon workers or restaurant workers than it is to unionize, you know, 10,000 workers in downtown Detroit or Flint, Michigan, working. And also, you know, some unions have fallen asleep on the job, they haven't done enough. But I would argue that overwhelmingly, the reason -- the main reason that union density has fallen so much as corporate America fights so hard as we're seeing now at Starbucks, you know, fire, you know, firing over 100 pro-union workers, Amazon, you know, is fighting very hard against unionization. Apple is opposing unionization. So, I think if, you know, there are many times when 80-90 percent of workers at a worksite sign cards, saying we want a union, then the corporation turns on this, you know, full court, anti-union press, you know, with videos that are anti-union and screensavers on everyone's computer that are anti-union, and phone calls and texts that are anti-union. And suddenly people, you know, some pro union workers will get fired, and workers will get scared --

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-- they'll be told that, you know, our plant might close if you unionize, and people feel intimidated. And that's what's happening right now, I think, with Starbucks and Amazon. People start feeling very pro-Union, but then the company really twist people's arm and people feel threatened. And they say, well, this is too scary. Maybe we don't want to union.

John Donvan:

I'm John Donvan. This is Intelligence Squared U.S. We'll hear more from our debaters right after this.

[music playing]

Welcome back to Intelligence Squared U.S. Let's get back to our debate.

Nick Gillespie:

Allison, do you find that convincing that the decline in membership is fundamentally -- it's partly related -- I think I'm summarizing Steven correctly -- it is partly related to a change in work, but it's mostly because the ownership of companies is really, kind of, going after union efforts?

Allison Schrager:

I mean, I think the corporate resistance is part of it. But whether or not it's most of it, not at all. I mean, first of all, I mean, when people -- we keep throwing around that union -- enthusiasm for unions is at record highs. But if you look at the statistics and break them out by age picture looks very different. Pretty much they, you know, it's more like 49 percent, if you look at anyone over 50, because a lot of enthusiasm for unions are people who are too young to remember what a unionized economy really looks like. When pretty much a lot of people sort of had sort of, you're doing more manual work, and it was less skilled and everyone's -- and the work was more routine, banding together made a lot of sense. As I said, because when you join a union, you give up sort of high pay raises and stuff like that. So, everyone can have more stability. But in a more sort of tech service driven economy, you sort of want all these sorts of merit-based pay. So, that's why a lot of workers just don't want to be unions and why a lot of union drives are still failing.

Nick Gillespie:

Are you buying that?

Steven Greenhouse:

So, I worked at The New York Times as a porter for 31 years, we were unionized. I and many of my colleagues got merit pay increases. So, it's a fiction to say that unionized workplaces can't have merit pay increases.

[applause]

Allison said that, you know, unions do very little to increase, broadly, based broadly shared prosperity. I emphatically disagree about that. Unions are really the only institution in American society that try across the board to lift living standards, lift pay of all workers. You know, one of the great stories about the 19 -- in the 1950s, or 1960s, when unions were strongest, and were unionizing many people, was all these nonunion companies rushed to raise their pay and raise their benefits because they were scared of being unionized. So, there was a huge spillover effect where unionized places helped nonunion workers. And a big problem in the United States is that so many employers are so emphatically anti-union, that they don't want to cooperate with unions. You look at, you know, some of the greatest companies in the world are unionized, Daimler Benz, BMW, Toyota, Honda, Siemens, Sony, Airbus, Boeing. You know, so companies can be unionized and still be very successful.

Nick Gillespie:

Do you think --, you know, you're talking about The New York Times, but other more service-oriented places like a Starbucks like a Chipotle, like Amazon; is there room for the owners of those business to, kind of, block unions by giving workers more fringe benefits, more compensation, more flex time and things like that? And is that happening? And does that depress the push for unionization?

Steven Greenhouse:

So, right now, at Starbucks, you know, Howard Schultz, whom Hillary Clinton wanted to name is labor secretary, right, Howard Schultz is doing his utmost to kill the union drive. And he's done something where he said, we will give increased benefits and raises to or nonunion workers. But at the 250 stores where workers voted to unionize, we're not giving you the raises, we're not giving you the benefits. And the union says, that's dirty pool. It's discriminating against people who have unionized, and it's really scaring the bejesus out about a lot of -- a lot of workers say, gee, if I vote for a union, I'm not going to get these benefits. And Starbucks is trying very hard to prevent the Union from ever getting a contract, I believe, or they're really dragging things out. So, a lot of workers see, you know, Starbucks is giving these benefits to its nonunion workers. It's giving them to nonunion workers, but not to its unionized workers and workers are saying, maybe it's not a good idea to join, even though other companies, you know, Amazon has increased pay in many in many places when it faced unionization drive, and that's very common. Unions, even when they don't succeed often raise pay. You know, once upon a time, when I was about 25 years old, I was reported the broken record in Hackensack, New Jersey, and I was involved in a union drive. And on a Friday night, you know, about 100 people signed up to go to a restaurant, you know, to push for the Union. And that Friday afternoon on the bulletin board magically appeared a notice from the CEO saying, everyone's getting a 25 percent raise. And like, you know, that --, you know, we were very happy. And I should note that, you know, the CEO who owned the paper, you know, had his five Mercedes Benz and he probably didn't need all this money, and that wasn't --, you know, all the money going to him wasn't going to help the economy so much. But, you know, that increase in pay going to me who is making $150 a week and working like 60-70 hours a week, the increase in pay that many union members get really boost the economy, and it creates broadly shared prosperity in a way that little else does.

Nick Gillespie:

Did that 25 percent raise stop the union effort?

Steven Greenhouse:

Yes, it did.

Nick Gillespie:

All right. So, but everybody wins.

Steven Greenhouse:

Arguably, yes. Yes, fair enough. People are pretty happy. Yes.

Nick Gillespie:

Allison, let me ask you what is the role of unionization efforts, or a threat of unionization in increasing compensations wages and benefits and things like that, perks for workers versus other parts of the economy? Because we are now going through a phase where wages are going up pretty quickly for, you know, in a way that we haven't seen in a long time. Is that because of fundamentally or primarily is that because of fears of unionization? Or what's going on with --

Allison Schrager:
No, I mean, that's largely because we have a very tight labor market, and there's a shortage of workers. I mean, workers can be empowered a lot of different ways. It doesn't necessarily have to be from unions, it can be from having sort of useful skills, it can be, as we see right now sort of a shortage of labor. And I'd also disagree with the idea that unions are the only institution that shared prosperity. I mean, we have the government that, you know, has a lot of, sort of, you know, social redistributive programs. And I think unions before the, you know, we had those institutions in place when the government unions did, I will admit, play a very important role, especially in terms of standards for workplace safety. But the fact is, we now have a government that does a lot of that role. And so, and I think it's better placed on the government than on employers because it opens it up to sort of more hiring. There's also evidence that, you know, a more unionized industry does create fewer jobs, because jobs get more expensive and, you know, the money does have to come from somewhere.

Nick Gillespie:

Steven, let's talk about the relationship between unions, increasing wages and compensation, which is a cost, right, of doing business. Does that have an effect on unemployment or on the number of workers that a company might hire otherwise?

Steven Greenhouse:

Yes, it does. I mean, you know, when something's more expensive, someone might buy less of it, when workers pay as much higher, an employer might hire fewer people. However, you know I just want to read one more quote about broadly shared prosperity. This is from someone we've all heard of the Reverend Dr. Martin Luther King, Jr. "The labor movement was the principal force that transformed misery and despair into hope and progress. Out of its bold struggles, economic and social reform gave birth to unemployment insurance, old age pensions, government relief for the destitute, and above all new wage levels that meant not mere survival, but a tolerable life. The captains of industry did not lead this transformation, they resisted it until they were overcome." And Allison's right, government does some redistribution, does promote broadly shared prosperity. But it's often because unions push it to do far more. Unions push it to pass Social Security and pass Medicaid and raise the minimum wage and approve, you know, funding for childcare.

Nick Gillespie:

Is that -- is unionism the primary driver of increased wages, then?

Allison Schrager:

I mean, pay increases for a lot of different reasons. And I would agree, then the ‘50s, and the ‘60s unions did have a role in increasing pay. I mean, you have to remember the ‘50s and the ‘60s were at a very different time after the post war era. I mean, like all of Europe, they really had to rebuild. So, really, the U.S. was the manufacturing center of the world, which gave companies an enormous benefit and all these profits, which they had to share with their workers, we don't have that now. It's a much more competitive global economy. So, right now, if you do get big pay increases, it's usually a reflection of your skills. And another reason why unions make less sense now is it's a lot easier to monitor people in a workplace and see who's the most productive and who is not. And so, people tend to sort of -- that tends to drive pay now more than it used to.

Nick Gillespie:

Can you just explain that a little bit more? What do you mean?

Allison Schrager:

Well, for instance, like Major League Baseball, you know, as, you know, all the whole Moneyball thing, which means like you can use data to figure out. I mean, this is true, whether on a factory floor or playing baseball of who is the most productive person, who's the one who's adding the most value. When you before no one ever really knew, even in baseball, I mean, although it seems odd to me, because you can just watch people play. But apparently data has really changed this. And it's true in all industries. So, you can monitor who is more productive than not, and sort of compensate them accordingly. When you really had no idea who was productive and who wasn't, there's a much bigger incentive for everyone to unionize. Because if you were a high productivity worker, you may as well just throw your lot in with everyone else so you can get more stability. Now that stability is also less important, because actually, in average tenure has been on the rise in a way unions but on the fall. Like, like job stability isn't this huge concern it used to be. In fact, the bigger problem is that people aren't changing jobs enough, because job changes are usually what brings pay raises.

Nick Gillespie:

Steven -- yep, go ahead.

Steven Greenhouse:

So, you know, Allison said before that young people support unions because they don't know all the bad things about unions that their parents and grandparents know. I think a lot of young people support unions because they see, you know, we're a nation with huge income inequality, the worst income inequality in this century. You know, young people are hearing that their generation will be the first generation in American history to do worse than their parents. And yes, they're all told, go to medical school, go to law school, get an MBA, but, you know, every high school class has a bottom 50 percent. And not all of them are going to get MBAs and become lawyers.

And a lot of people realize, how am I going to pull myself up, I'd love to do it by my own bootstraps. I'm weighed down by $50,000 in college loans, I can hardly afford the rent. I'm living with my parents. A union might be a way for me at Starbucks to go from $15 an hour to $20 an hour. So, I think a lot of young people see unions as one thing they could hold on to, you know, to pull them up. Professor at Columbia, Alex Hertel-Fernandez recently did a big study saying that 74 percent of Americans aged 18 to 24 want to join unions. 75 percent of Hispanic Americans say they join a union if they could. 80 percent of African Americans say they could join -- they would join a union if they could. 84 percent of African American women. So, clearly, a lot of people who, you know, who want to lift themselves up many of whom are struggling, see unions as the way to go.

And I just want to add that, you know, I agree with Allison, that, you know, after World War Two, many American companies were doing extremely well when Europeans and the Japanese economy were on their backs. But, you know, American companies weren't rushing to give good wages and benefits to their workers, it took some big, ugly historic strikes to squeeze GM and Ford and Chrysler to really cough up the middle-class wages that built the middle class and really made America the America, you know, the American people, you know, the richest people on Earth. Now, you know, the period from 1945 or 1950 or so to 1980 or so it's called the Great Compression; really the only sustained time in modern American history when inequality decreased. But since 1980, inequality has significantly increased. I was just looking at some numbers since that bottom 90 percent of Americans have, I think their share of the economy has dropped from around 66 percent to about 55 percent. And the top 10 percent has gone from my numbers are going to be off, like 35 percent to about 45 percent. My numbers don't quite add up. But so, as unions have weakened, inequality has increased.

Now, Allison is going to add, because she is so intelligent --

Nick Gillespie:

Yeah, let's let her answer for herself, though. You know, so, Steven, you know, raises the question of the relationship between unionization and inequality. And there's no question that, you know, after World War Two until sometime in the ‘70s, wages compressed, inequality lessened. Is -- what is the relationship of the unionization of the workforce to that phenomenon? And does the decrease in unions in unionization explain a growing inequality in America?

Allison Schrager:

No, I don't believe it's causal, which means is I don't think the unions caused that. I think what brought down unions and what increased inequality was the same thing, which was more globalization, and what we call a skill biased technical change. It's just where the economy changed and it really did favor sort of high end, high skill workers more than everyone else. And that's also to some degree will undermine unions, because it made sort of paying lower skill for routine jobs a lot harder and encourage mechanization in a lot of companies. Although I totally agree with Steven that, like, it's I think we pretty much have the economy figured out for high skilled people. I think people who, as I said, you know, aren't on that path do need more help. I think that's absolutely true. I just don't think unions are the best way to help them anymore.

Nick Gillespie:

Steven, can I ask you, you paint a picture of, kind of, the historical role of unions in bringing up wages and things like that, but then you were talking about, you know, auto workers, say, in the post war era, when there was not a lot of competition within the United States, auto manufacturers could pay their workers more and then pass the increase in price on to their customers. Allison has raised the specter of we're in a global economy now. You know, certainly GM, Ford, you know, Ford is not even making cars anymore. Chrysler is not really a major manufacturer anymore. Everything has become globalized. So, is it true that at least when it comes to manufacturing, you know, we're in a global work, you know, environment now. So, you're not going to see the ability of major industrial firms or large groups of workers being able to squeeze that, kind of, increase in compensation out of their employers.

Steven Greenhouse:

It's certainly true that, you know, in the 1960s and ‘70s, when the American auto industry was king, you know, and American auto workers were making, you know, high wages, comparatively on a global scale. You know, things were looking good. But as Allison said, you know, in Germany and Japan, we built these economies that had all this new capital stock and its workers are paid less. It was much harder for American car manufacturers to compete. You know, they had lousy models, their models weren't sturdily built and their and their wages were higher. And we became uncompetitive. But let's not forget that, you know, the main competitors that are beating the butt of American carmakers are unionized. So, unionized for, you know, Daimler Benz, Volkswagen; and Volkswagen has its problems. BMW, Nissan, Toyota, you know, these are unionized companies. So, it's wrong to think that just because something is unionized, it can't be competitive.

Nick Gillespie:

Yeah. Can I ask you, Allison, to respond to the fact that Denmark, Finland and Sweden to name three Scandinavian countries, they have about a 65 percent unionization rate in their workforce, but all of them also rank higher than the United States in global indices of economic freedom and of global competitiveness. So, is unionization actually a problem in either broader economic freedom or being able to compete with other countries?

Allison Schrager:

Well, I think it's worth noting all those countries union rates have also been falling steadily. The unionization in Sweden 20 years ago was about 80 percent, now it's 60 percent. So, I mean, that's a pretty dramatic decline, and I think shows that the global economy is moving away from unions.

Nick Gillespie:

All right --

Steven Greenhouse:

I just want to chime in. So, I wrote a lot about the Fight for $15 a few years ago, and I remember meeting a fast-food worker from Denmark who came to New York. And I ended up after meeting that work, I ended up working on a story with my New York Times colleague in Paris, Liz Alderman. And we did a piece saying, why is it that fast food workers in Denmark average more than $20 an hour, whereas at this time, 6-7-8 years ago, fast food workers in the United States average $8.50 an hour. And Big Macs cost only a smidgen more in Denmark. And it was because workers in Denmark had far more bargaining power and their sectoral bargaining, and basically fast-food workers in the U.S. had very little bargaining power. And, you know, the Danish worker had, you know, had much more paid vacation, had paid sick days, learned her schedule, like three, four weeks in advance, whereas a lot of American workers don't learn his schedule three days in advance. So, again, there's something. You know, I was a New York Times reporter covering labor for 19 years, and I tried being scrupulously fair as between, you know, business and labor. But like 10 years into the beat, I was seeing something really broken in the U.S. economy. This was like, in the early 2000s, 2001-2-3-4-5-6-7-8. You know, corporate profits keep reaching record levels year after year, the stock market was climbing to record levels, productivity per hour per worker kept reaching record levels, but wages absolutely stagnated. Many corporations were getting rid of good defined benefit pensions and replacing them with much cheaper and much riskier 401k's. Many companies where we're getting much stingier on their health care plans. So, why is it when corporations are doing so fantastically well, that they're squeezing their workers so badly?

[music playing]

John Donvan:

I'm John Donvan. This is Intelligence Squared U.S. More when we return.

Welcome back to Intelligence Squared U.S. I'm John Donvan. Let's get back to our debate.

Nick Gillespie:

Steven raises a good point, which is that, you know, profits have been very good, but wages don't necessarily seem to keep pace with that. What is the answer to that? If not, you know, that we need a stronger labor movement in order to take some of the money that goes to the owners and shareholders of businesses and put them in the pockets of the people who are actually bringing those profits?

Allison Schrager:

Well, actually, I know profits are higher than normal, but that is aggregate profits. When you actually drill down a little bit more into the data, you see that there's a couple of companies, we call them superstar companies that dominate each industry and are extraordinarily profitable. But most other industry companies in that industry have very thin margins. And the evidence also suggests that these, sort of, super-profitable companies pay their workers incredibly well. So, I think that's part of the disconnect. Also, I mean, you might wonder then, well, why are wages becoming a smaller share of profits? Well, that's also because it's how we are measuring profits. When you actually account for capital depreciation and foreign profits, we see the actual the worker share of profit is about stable. So, it really when you dig into the data, you see one, a lot of firms aren't very productive and that's why they're not paying their workers as much, those who are due. And also, as I said that this sort of like Smalling labor share is actually not really depends on how you measure profitability.

Nick Gillespie:

All right let's talk about public sector unions. And there is about 35 percent of the public sector workforce is unionized. So, it's doing much better than the roughly 6 percent of the private sector market. Steven, let's start with you. Is there a qualitative difference to the union presence and, kind of, the union reality in the public sector and the private sector? And if so, what is it?

Steven Greenhouse:

You know, private sector unions are, kind of, more oppositional, they say, you know, the man is making all these profits, the billion-dollar investors are, you know, making up all this money, which should be going to higher wages. And I think there's generally more tension and they feel that there's something broken and unfair in the economy with all this income inequality and, you know, stock market soaring until recently. And they said, why are wages -- why, for decades, are wages stagnating? That's changed in the last two, three years. So, it was more adversarial. In the public sector, you know, unions, you know, they're not --, you know, they don't see, you know, the government as the bad guy, as the bad person, you know, they, kind of, want to work with the government, and they want to make government work better. But there are of course, tensions as well because unions will often want, you know, of course, higher wages, and then that's really squeezing the taxpayer. And that it's much more politically delicate if you're a public sector union president than if you're a private sector --

Nick Gillespie:

What explains, you know, such a higher rate of unionization in the public sector than the private sector, though?

Steven Greenhouse:

Well, this ties back to what I was saying earlier; in the private sector, the employers are super aggressively opposing unions, much more so in Germany and France and Sweden and Japan. And whereas, in the public sector, there's, you know, one state's grant workers the right to bargain. And under the National Labor Relations Act of 1935, which gave American workers the federally protected right to unionize that only covered private sector workers, not public sector workers. So, each state has to decide whether to give its public sector workers a right to unionize. So, once the state gives them the right generally, you know, mayors and city council presidents don't fight against the union. And also, you know, unions sometimes give donations to politicians so the politicians, you know, don't fight against them. And that can be very complicated.

Nick Gillespie:

Allison, what do --, you know, what is the difference between public and private sector unionization? And where does that lead in terms of, you know, outcomes for the economy. Not necessarily for the particular workers, but the economy.

Allison Schrager:

Well, I mean, it's terrible. I mean, it also corrupts our political process. I mean, unions are amongst the biggest donors, sort of former teachers are sitting on school boards, they really -- one of the reasons why there's not this adversarial relationship is unions say to the politicians; it's like, I can get you elected or not. So, they actually --

[applause]

Nick Gillespie:

I'm not exactly sure what that clapping signifies, but I'm nervous, I know that.

Allison Schrager:

I made a good point.

Nick Gillespie:

Right.

Allison Schrager:

So. But as I said, I think we shows up a terrible is the economy. I mean, honestly, I think this proposition is answered just by the school shut down for the last year, which unions had a big role in which deprived, especially a lot of poor children of education, which they're never going to recover from. I mean, that's terrible to the economy.

[applause]

Nick Gillespie:

Okay. Steven, talk to that, because one of one of the arguments against unions in the private or the public sector is that it makes workplaces and the economy less responsive to changes in reality, or in consumer demand. That does seem to be the case with schools, right? That, you know, we want different types of schools but it's hard to do that if unions are saying, no, we're not going to do that.

Steven Greenhouse:

So, again, many studies have found, you know, states, you know, that have --, you know, where the teacher's union -- where teachers are highly unionized, they have better education results, by and large than states where there isn't much union density among teachers. Teachers --

Nick Gillespie:

And I'm sorry, just to put a face on that. So, a state like Massachusetts does very well in outcomes --

Steven Greenhouse:

Massachusetts, Minnesota, Oregon, Washington, New York, New Jersey, then Mississippi, Louisiana. I think teachers' unions got the message a few years ago that you have to work harder to improve schools. And they deemphasize trying to raise pay, and they really emphasized improving schools. And teachers' unions have made it easier to get rid of bad teachers. Some might argue it's still too tough, but they've gone a long way to make it easy to get rid of bad teachers. You know, we've seen these recent strikes, you know, a few weeks ago, in Minnesota, a few weeks ago in Columbus, Ohio, a few years ago in LA and Chicago, where the unions are pushing for more nurses, more school nurses, more librarians, more school counselors, better class sizes. You know, the LA strike, they're protesting class sizes of 38-40-42. The Arizona teacher strike, you know, I interviewed a teacher; a second-year teachers making $34,000 a year. How many of you would want to go teach for $34,000 a year? So, there are real problems in the schools. And, you know, yes, there are school boards where things are too cozy between the union and the school board. I totally agree, Allison, but there are many school boards, which are dominated by the Koch brothers’ money and Walton brothers’ money; you know, they want to shrink the state, and they don't want to give enough money to unions. And, you know, the big, historic teacher strikes in 2018 in West Virginia, Oklahoma, and Arizona, and all three states there are very conservative legislators that all voted big tax cuts for the rich, big tax cuts for corporations, big tax cuts for fracking, and they didn't leave enough money for the schools. And certainly, in those states, the unions did not control the state legislatures. And the union said we have to change this because what the state legislature is doing is really bad for our children and our schools.

Nick Gillespie:

Very quickly, Allison, to you; just do want to talk about other types of public sector unions because police unions, firemen unions, prison guard unions in California are very powerful, what, kind of, -- do they exert a positive or negative influence on the economy?

Allison Schrager:

Absolutely not. I mean, police have stood in the way of law police reform. As you point out in California, the prison union, we're one of the big, sort of, pushers for the three strikes law which increased a lot of, sort of, imprisonment and committed -- due to mass incarceration. Also, I mean, back to the teachers. I mean, one of the reasons why their pay is so low is that, you know, the public sector unions have lobbied a lot for sort of very expensive public sector pensions, which are one, bankrupting Illinois, but also means that you can't pay young teachers as much, which makes it a lot harder to recruit high quality energetic young teachers, because all of their pay is back loaded. And that's all -- and sort of this makes it really higher to retain high quality public services. Also, I think we also should bring up sort of the cost that public -- that unions and public sector unions are putting on building infrastructure. We've all read those horrific stories about how we have the most expensive subway construction cost in the world. We hire four people for every one job they do everywhere else.

Nick Gillespie:

But we have the best-looking subway riders, at least, in New York.

Steven Greenhouse:

But Allison, [inaudible] constructed in other countries, it's also highly unionized. So, there's something dysfunctional about management --

Allison Schrager:

But not the management, that's the difference. Like, they might have the sort of people who build the tunnels being unionized but at every level of it is unionized in New York.

Nick Gillespie:

Let's go to the audience Q&A. If you want to please line up over here. So, first question, please.

Audience Member:

Yeah, have a question for Allison. So, you said that terms of private sector unions, that the force that prevents, you know, harm to worker happiness, depress wages, should be the government, which feels like it's nice to say, but like, we're not Scandinavia, we don't have universal health care. We have a lot of forces working against our government making our --

Nick Gillespie:

Okay, so the question is?

Audience Member:

So, what prevents a race to the bottom. Like for companies. Like why -- what prevents them from paying less when they have no shortage of workers?

Nick Gillespie:

Thank you.

Allison Schrager:

Well, right now, they do have a shortage of workers. And actually, one of the forces against universal health care is unions.

Nick Gillespie:

Could you explain that briefly?

Allison Schrager:

[laughs] Well, I mean, I said, they were against sort of the tax on Cadillac plans. I mean, one of their big benefits that they give to their constituents is good health plans. So, it sort of undermines their value, when we would -- if we had government sponsored health care.

Steven Greenhouse:

Okay, can I just disagree? You know, unions are overwhelmingly for universal health coverage. They opposed the high -- the tax on expensive health plans, that's true. But that's a different issue from opposing -- they are many -- that's that was not the way we were going to pay for universal health coverage, that would have to be done by, you know, broader taxes overall.

Nick Gillespie:

Next question, please.

Audience Member:

Sure. You guys talked a lot about the automotive industry and manufacturing in America. And you mentioned a bunch of companies that have largely unionized workforces in Japan, and in Germany. But many of those companies have brought manufacturing to America in the south, where they've intentionally targeted markets that don't have unions, and make, you know, the automakers in Detroit even more uncompetitive. How do you feel about that dynamic and the impact that has on the Rust Belt?

Nick Gillespie:

Let's start with Steven.

Steven Greenhouse:

So, you know, the German automakers, the Japanese automakers, the Korean automakers, they're very, very successful, being very unionized where they are, and they have to, you know, -- it's much easier to unionize in Germany, Japan than it is in the U.S. So, they come to the U.S., and they say, gee, we could live with, you know, we're not being pressured to have a union, we can make more profits this way. So, they --, you know, in an anti-union country where it's very hard to unionize for all sorts of reasons, you know, they say, let's take the low road anti-union route, and we'll -- it will make it easier for us to undercut the Detroit -- unionized Detroit automakers.

Nick Gillespie:

Is that good for the economy? We understand why they do it. Is it good for the economy?

Steven Greenhouse:

Yes, and no. I mean, it creates jobs, that's good. You know, it will help shareholders in Japan and Germany, you know, where the workers say, well, gee, I wish I made $28 an hour than $20 an hour. And would that increase? Would that help create more broader prosperity? Yes. So, yes, it's good it creates jobs, but I think it would be better if the workers were paid more, which would help create broader prosperity.

Allison Schrager:

Can I just make a point there that in 2009, those factories were still profitable and didn't need a bailout while the automakers in Detroit did.

Nick Gillespie:

All right. Thank you. Next question, please.

Audience Member:

Hi, at one time, I worked for a nonprofit healthcare. In H.R., so I wasn't unionized, but the employees were. And one of the complaints was that the more money they made every year, the more money they paid in union fees. And so, I was just curious, if either of, you know, that ratio of as pay might increase what is being paid out to union fees, and if that helps the economy.

Nick Gillespie:

Anyone?

Steven Greenhouse:

Unions charged dues. They are institutions that need money to run. Some charge a flat $25 a month or $50 a month, some charge 1 percent of pay or 1.5 percent of pay. And as your pay goes up, your dues will go up, and the union will say perhaps justly, perhaps not, we helped increase your pay and so you should stay paying the 1 percent. And, you know, some workers are very happy to do it. And some workers are unhappy with their union dues. And, you know, this study came out yesterday, saying that unionized workers over their lifetime earn $1.3 million more than non-comparable nonunion workers. And, you know, I tweeted this out and someone said, well, what about union dues? And I said, you know, if you pay $1000 to $1500 in union dues per year times 40-year career, that's $40,000 -- $60,000. That's a lot less than 1.3 million. I will also question the 1.3 million. It sounds a little high, Allison.

Nick Gillespie:

Okay.

Allison Schrager:

Well, is that for the whole economy or comparable countries?

Steven Greenhouse:

It's for the whole economy.

Allison Schrager:

Well, yeah, I mean, because you have more white-collar union worker, unions worker working there.

Nick Gillespie:

Let's go to the next question. Thank you very much.

Audience Member:

How much would you say that modern technology empowers workers more now naturally? You know, they can find jobs more easily, they can shame their employers on social media or praise them for good conditions, so that it puts natural pressure on employers to improve conditions and therefore makes unions less necessary than they might have been in the past.

Nick Gillespie:

Thank you. Allison, you want to go first?

Allison Schrager:

I think they definitely do. I said, I think workers are getting power from all sorts of places. And also, technology also isn't so great for unions, too. Because, you know, if you make now -- I mean, before, as I said, in the ‘60s, there wasn't a lot of competition. Now, there's only foreign competition but if you make sort of the cost of labor way too high, then you can also just turn to technology. So, it can be powerful, but if you -- or it can be very sort of a danger to workers, particularly union.

Nick Gillespie:

Steven.

Steven Greenhouse:

Yeah, great question. And it really cuts both ways. I agree with Allison, you know, one way it empowers workers, because if you want to organize, you can do it by social media, you can do it by Zoom. It in ways makes unionizing easier, you know, it's harder for the boss to like, look over your back. On the other hand, you know, greater technology means you're, you know, you're competing now with, you know, bright people in Russia, or Ukraine, or Japan or Singapore, who could take away your job from you. You know, The New York Times had this great front page story a few weeks ago by Jodi Kantor, about algorithmic management where, you know, cameras and sensors, you know, tell, you know, you're working at home, and they tell, you know, whether you're at your computer, you know, every minute, every hour, and if you'd go away to the bathroom, and then a camera snaps your picture, then you're not there, you might get paid for that hour. And I see that unions in Norway and Germany are saying, there's something broken with algorithmic management, it's driving auto workers crazy, it's stressing them out. And we the unions want to step up to try to make this more humane and fairer so that workers aren't fired improperly for that.

Nick Gillespie:

All right let's go to the next question.

[applause]

Audience Member:

Hey. You've talked a lot about the differences between now and say, in the 1950s and ‘60s. So, I'm wondering what the parallels are now, though, compared to that time with rightward shifts in the U.S. and Scandinavia. We're now more of a service economy, as you've mentioned, but compared to manufacturing economy. But what are the similarities between now and then which you've said, you know, started the need for unions in the first place?

Nick Gillespie:

Thank you very much. Allison, you want to go first?

Allison Schrager:

Well, I think it's also a time of great change and change makes people uncomfortable. So, I mean, to some degree, I think that was what was so attractive about unions is there was a sense of community there. But as I said, like, unfortunately now for the way the economy is changing, becoming more globalized, more technical, it doesn't really confer the same benefits. And as I said, people can find community elsewhere. Or to some degree is what are looking for different things from their workforce.

Nick Gillespie:

Thank you. Steven, anything to add?

Steven Greenhouse:

So, as we were discussing the 1950s was, kind of, a rising tide for America, corporations are doing very well, and they had money to share with their workers. And the workers really pressured them into sharing with their workers. Now, you know, we're in a more competitive world. And one might say, well, that's a reason, you know, not to favor unions. But, you know, corporate profits have been way up, the stock market until recently was way up, income inequality is way up. You know you look at these charts showing that since unit density started to fall in 1980 -- well, from 1945 to 1980, basically, productivity per hour rose, compensation per hour rose at basically the exact same rate as productivity per hour. Since 1980, with unions declining, productivity has arisen three times as fast generally as compensation per hour.

[music playing]

So, I think a lot of workers could say, we are not getting our share fair of the pie. And that even though the world is more competitive, we still need to unionize.

Nick Gillespie:

I want to thank Allison Schrager and Steven Greenhouse for debating for Intelligence Squared in our No Laughing Matter series at the village underground of the comedy cellar. Thank you so much for parsing out whether or not unions work for the economy. Thank you very much.

[applause]

John Donvan:

Thanks, everybody for tuning into this episode of Intelligence Squared, which is made possible by a generous grant from the Laura and Gary Lauder venture philanthropy foundation. As a nonprofit, our work to combat extreme polarization through the civil and respectful debate we present is generously funded by listeners like you, by the Rosenkranz Foundation, and by friends of Intelligence Squared. Robert Rosencrantz is our chairman. Claire Connor is CEO. David Ariosto is head of editorial, Julia Melfi and Marlette Sandoval are our producers. Leah Matho [spelled phonetically] is our consulting producer. Damon Whitmore and Kristen Miller are our radio producers. Andrew Lipson is Director of Production. Raven Baker is our events operations manager. I'm your host, John Donvan. And this episode is guest hosted by Nick Gillespie. We'll see you next time.

[end of transcript]

This transcript has been lightly edited for clarity. Please excuse any errors.