TPM: How We Ended Up With The Myth Of The Evil Labor Union

[Dennis Donovan]

https://talkingpointsmemo.com/cafe/how-we-ended-up-with-the-myth-of-the-evil-labor-union

Much of antipathy toward labor unions in the U.S. can be traced to an economic myth: the "wage-price spiral."


Pres. of Teamsters Union James R. Hoffa saying the pledge of allegiance to the union. (Photo by Hank Walker/The LIFE Picture Collection via Getty Images)

By Robert J. Shiller

October 21, 2019 9:29 am

This piece is part of TPM Cafe, TPM’s home for opinion and news analysis. It is an excerpt from “Narrative Economics: How Stories Go Viral and Drive Major Economic Events,” out this month.

The wage-price spiral narrative took hold in the United States and many other countries around the middle of the twentieth century. It described a labor movement, led by strong labor unions, demanding higher wages for themselves, which management accommodates without losing profits by pushing up the prices of final goods sold to consumers. Labor then uses the higher prices to justify even higher wage demands, and the process repeats itself again and again, leading to out-of-control inflation. The blame for inflation thus falls on both labor and management, and some may blame the monetary authority, which tolerates the inflation. This narrative is associated with the term cost-push inflation, where cost refers to the cost of labor and inputs to production. It contrasts with a different popular narrative, demand-pull inflation, a theory that blames inflation on consumers who demand more goods than can be produced.

As the figure below shows, the two epidemics, wage-price spiral and cost-push inflation, are roughly parallel. Both epidemics were especially strong sometime between 1950 and 1990. These epidemics reflected changes in moral values, indicating deep concerns about being cheated and a sense of fundamental corruption in society. According to the narratives, labor unions were deceitfully claiming to represent labor as a whole, when in fact they were representing only certain insiders. Meanwhile, politicians and central banks were selfishly perpetuating the upward spiral of inflation, which impoverished real working people not represented by powerful unions. There has been a long downtrend in public support in the United States for labor unions, from 72% in 1936 to 48% in 2009, as documented by the Gallup Poll.


Frequency of Appearance of Wage-Price Spiral and Cost-Push Inflation in Books, 1900–2008. These two related epidemics helped bring about major changes in labor relations and government regulation of business.

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Good read!

[Midnight Writer]

1. Not even Democrats defend unions these days. Big mistake.

[a kennedy]

2. Air traffic controllers and Reagan

Nuff said.

[True Blue American]

7. You saidit!

They forgot the Unions forced no Union companies to pay decent wages keep Employees!

Ford had no problem paying decent wages so his employees could afford to buy the products they built.

Reagan,plus nay sayers and employees who bitched about paying Union dues, went out and voted Republican.

[Guy Whitey Corngood]

3. K&R nt

[Wounded Bear]

4. Propaganda linked labor to communism...

Politically, Repubs and conservatives in general made the connection.

The truth is, of course, that labor is not the major driver of prices. Does giving 100k employees a 5% raise cost more than granting the CEO class a 25% bonus? Our pundit class doesn't explore questions like that enough.

[Farmer-Rick]

15. Exactly right

How come the monumental wage increases lavished on corporate executives with their $50 million private jets supplied by corporate funds don't cause a wage price spiral?

It's all propaganda for the filthy rich to keep stealing our national wealth.

[mopinko]

5. imho, it was more about violence. or at least that is how it looked

to this apprentice carpenter in chicago in the 80's.

here, blacks were kept out of the construction unions through violence when they felt it was warranted.
strikes were sometimes enforced violently.

the mob tentacles were obvious to all of us. our dues were pretty high. not bad when you were working, but hard to pay on unemployment. we didnt really resent it, except to the extent that we knew part of it was lining shady pockets.

i heard a lot of stories about the good old days, some glorifying the violence, and some toting up the butcher's bill.
it weakened the foundations, esp as women and minorities were trying to hard to get in.

[True Blue American]

8. Do you think Unions got their start

By being nice guys against the companies that brought in Pinkertons to kill them?

My Son watched what really happened when employees first tried to start a Union. He was shocked and he was actually an officer because his company was one of the few who had a Union for Engineers!

https://en.m.wikipedia.org/wiki/History_of_union_busting_in_the_United_States

[mopinko]

12. oh no. violence was important to the union movement.

it was a bloody struggle, in both directions.
i am more talking about fratricide.
and the holes in the definition of just who was a brother.

[Caliman73]

16. Which is why when people of color talk about systemic racism, it behooves White people to listen

Racism colors everything in this country. While not all labor unions were driven by racism, the movement was definitely not immune to discrimination against Black people and Latinos. They were seen as undeserving competition and many of the labor laws from the 30's and 40's purposely shut the door to Black and Latino workers who wanted solidarity. Black steel workers in the Rust Belt were also regularly betrayed or blocked by the unions.

That said, Unions were still the best vehicles to fight for living wages and benefits. Corporations were never going to provide living wages and benefits out of the goodness of their hearts.

[mopinko]

17. totally agree.

as one of the early female carpenters in the chicago union, the fight to extend the concept of brothers to brothers and sisters is a battle that goes on to this day.

in fact, a bunch of my sisters and i started an organization for hard hatted women that exists to this day.
as fast as we get women in, our brothers chase them out.

like the country, a more perfect union will always be the struggle.

[Caliman73]

20. Yes. Sorry. I did not mention women.

That is a whole other story. more than 50% of our population and a minority in almost all levels of power in society. Rosie the Riveter was a good war time symbol but once the "men" came home it was "out of the workforce and back in the kitchen".

Change and diversity is inevitable, but the closer we get to it, the harder and dirtier the opposite side will fight.

[mopinko]

21. the fight grows logarithmically.

you are right.

that was just the part i had the worm's eye view of, tho.

[True Blue American]

9. There was no glorifying the employees who were murdered.

[RAB910]

6. Essentially it was decades of right-wing anti-American propaganda

combined with some union excesses.

[True Blue American]

10. Of course there were excesses.

But the companies were more corrupt!

[RAB910]

11. I can't argue that

As I said, the big problem with the right-wing anti-American propaganda machine. Every little excess was blown up 100 times over

[True Blue American]

18. You said it!

I was never in a Union myself but still pay Union dues voluntarily after the way Unions went to bat for us, and still are.

[Farmer-Rick]

13. Yeah, war and high interest rates usually result in high inflation

Also an inactive central bank.

But somehow we all bought into the wage price spiral theory and blamed the Unions. Kind of like we were being fed propaganda by the filthy rich.

[Downtown Hound]

14. Corporate propaganda.

[True Blue American]

19. 1000+

Burns me when Democrats criticize Unions.