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California's Fast Food Council, Record Union Approval, and Minnesota's Hot Labor Market | Roundup #1
Announcing a Weekly News Roundup on Workonomics
Happy Labor Day, and happy belated International Workers’ Day (if you are outside the US or Canada)! It’s a good time to reflect on how much life has improved for the average worker since the 1880s when Labor Day was first recognized. At the time, workers were being killed in the fight for an 8 hour workday. The US didn’t standardize around a 5-day workweek until 1940. The mainstream practice of a 3-day Labor Day weekend has only been around for the last 80 years.
And yet, work has improved for certain types of people more than it has for others. Despite Labor Day being a federal holiday, many folks will still be working today to make ends meet, and overtime doesn’t kick in automatically just because it’s a holiday. We should take a moment to recognize our progress, but also acknowledge that there’s a long way to go to secure economic liberty for all of us.
Introducing a Weekly Roundup Series on Workonomics
So far, I’ve been publishing medium-length pieces on Workonomics. While I’ve enjoyed going deeper on certain topics, they can take a while to research, and it’s hard to publish more than once a month.
I’m going to try out a weekly roundup format where I share the 2-3 most interesting articles, quotes, charts, or other tidbits from what I’ve read in the past week. This will be a bit more bite-sized, intended for people trying quickly come up-to-date on news in labor policy, economics, and how technology is affecting workers. I’ll be trawling Twitter, proposed legislation, and the latest NBER labor papers so you don’t have to…
In parallel, I’ll continue to work on the more in-depth topical pieces, interviews with various doers and thinkers (more on this to come!), and other original content. I will sprinkle those posts in periodically, although I’m still figuring out the right cadence.
Thanks for supporting me by reading Workonomics! It’s through your feedback that is really helping shape this blog’s format and focus areas. I appreciate you all taking the time to read, and looking forward to hearing your thoughts!
On to the Roundup!
#1 — California’s New Bargaining Council for Fast Food Workers
Last Monday, California’s state senate passed AB 257, a bill designed to help increase bargaining power for workers in the fast food industry. This is a significant development for these workers, 85% of whom have experienced some type of labor violation, but also more broadly in terms of its implications for labor organizing in other industries.
From Noam Scheiber at the New York Times:
The California State Senate passed a bill on Monday that could transform the way the service sector is regulated by creating a council to set wages and improve working conditions for fast-food workers…
The bill would set up a 10-member council that would include worker and employer representatives and two state officials, and that would review pay and safety standards across the restaurant industry.
This type of worker council represents an alternative approach to “enterprise bargaining” — in which workers at individual plants, retail locations, or corporate campuses negotiate with individual companies. This is the approach taken by, for example, Starbucks Workers United, which is is organizing individual Starbucks locations.
Enterprise bargaining suffers from a few weaknesses, one of which being that it can be lengthy and cumbersome. To date there are only 220 US Starbucks locations that have won collective bargaining rights (out of 9,000 company-operated stores).In addition, under enterprise bargaining, employers tend to have strong incentives to fight unionization since their non-unionized competitors may have a labor cost advantage.
In contrast, AB 257 is a move toward “sectoral bargaining,” where all workers in a particular industry, across multiple companies and locations, collectively bargain with all of the employers in that industry. It levels the playing field across all employers in the industry, reducing the incentive to fight collective bargaining.
While sectoral bargaining is common in Europe, it is rare in the United States, though certain industries, like auto manufacturing, have arrangements that approximate it. The California bill wouldn’t bring true sectoral bargaining — which involves workers negotiating directly with employers, instead of a government entity setting broad standards — but incorporates crucial elements of the model.
AB 257 (and sectoral bargaining generally) still allows for workers to also take the enterprise bargaining approach “on top.” The council would simply be setting a negotiation floor for workers and unions.
The bill is on California Governor Gavin Newsom’s desk, who has stayed quiet so far on whether he will sign it. If he does, and if the model finds success in California, it may be well used as a template for other states and other fissured industries, like retail workers, rideshare drivers, and delivery couriers.
#2 — Report: Hella Americans are Pro-Union
In the midst of large national campaigns to organize Amazon warehouses, Starbucks coffee shops, and Apple retail stores, support for unions is surging. Gallup on Wednesday showed that support for unions has topped levels not seen since 1965, back when the percentage of unionized workers was closer to 30% (it is now closer to 10%).
A sign of continued efforts of workers to unionize in the years ahead? Or will unions become more polarizing as they did during the 1980s? It is a bit unclear right now, but what is clear is that there aren’t a ton of other things that 71% of Americans can agree on at the moment.
#3 — Minnesota’s Red Hot Labor Market & The Racial Divide
From Lauren Kaori Gurley at the Washington Post:
A construction company needs workers so badly, they’re flying them in from Puerto Rico and from Texas and paying $20 an hour to install roofs. An online Halloween costume retailer booked hundreds of hotel rooms across the city to house its seasonal workforce.
Welcome to Mankato, Minn., home to one of the tightest labor markets in the nation. The unemployment rate in this metro area of 103,000 is even lower than the state average of 1.8 percent — a record low since federal labor statistics began tracking data, and far below the national average of 3.7 percent…
Wages have grown so much in leisure and hospitality throughout Minnesota that they have outpaced inflation these past two years, according to the Minnesota Department of Employment and Economic Development, at a time when national inflation rates are wiping out wage gains for most workers.
A 1.8% unemployment rate is unprecedented. It’s doubly surprising given the labor participation rate (percentage of adults that are working or seeking work) is much higher in Minnesota than it is in the US.
At the same time, it’s extremely concerning that, even though overall Minnesota unemployment is lower than the US average, the Black unemployment rate in the state is higher than the Black unemployment rate for the US. According to WaPo:
In African American and Somali immigrant communities in Minneapolis, some workers have received pay boosts, while others still struggle to find good-paying jobs for a variety of reasons, including a lack of child care, run-ins with the justice system, low education levels, and language barriers. The cost of living in the urban center is significantly higher than in Mankato, leaving many struggling.
Discriminative policy choices have in large part caused the huge gap in economic outcomes in race. But that means that better policy choices can close that gap. If Minnesota wants to correct these injustices (and in the process help employers hire more people), it would do well to invest in better child care support for parents trying to work, reform its criminal justice practices, and redistribute public education funding to the schools that need it the most. Cities like Minneapolis deserve credit for taking some steps to address the cost of living crisis, but there is still much work to be done.
The racial disparity in economic outcomes isn’t unique to Minnesota — we see it everywhere in the US. But a hot labor market presents a great opportunity to fix structural problems and close the racial income gap.
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Commentators like Brian Callaci of Open Markets point out that the enterprise bargaining model laid out in the National Labor Relations Act make sense for large vertically integrated corporations. But for industries that have become increasingly fissured through subcontracting and/or franchising, that organizing model has not worked out as well.