Pass Employee Choice to Save the Economy

[Omaha Steve]

http://blog.aflcio.org/2008/03/03/pass-employee-choice-to-save-the-economy/

by James Parks, Mar 3, 2008


The Employee Free Choice Act, proposed legislation for which we in the union movement have been fighting for passage in Congress, would level the playing field for workers seeking to join a union. Meanwhile, suppression of workers’ freedom to form unions—which the Employee Free Choice Act addresses—is closely linked to the collapsing housing bubble behind this recession, says Dean Baker in his Point of View column on the AFL-CIO website.



Baker, co-director of the Center for Economic and Policy Research (CEPR), says prior to 1973, employers shared the gains from increased productivity with workers through higher wages. With more to spend, workers bought more, which led firms to produce and invest more. Additional investment spurred productivity growth, keeping the cycle going.

But three decades ago, employers changed the rules. Even though productivity has continued to rise, workers aren’t seeing their efforts reflected in their paychecks. Wages have been virtually stagnant for most workers over this period. Baker sees the reason for this wage stagnation as employers’ systematic thwarting of workers’ freedom to join a union and lax enforcement of weak laws to protect the freedom to form unions. Baker, who is among the majority of economists who believe we are currently in a recession, describes how the paucity helped fuel this recession.

With wage-driven consumption growth no longer possible in an era in which most workers do not see rising wages, the economy needed a different engine for growth. The alternative to wage-driven growth was bubble-driven growth. We had a growth cycle spurred primarily by the stock bubble in the 1990s and by a housing bubble in the current decade.

In the case of both the stock and housing bubbles, people spent heavily against the wealth created by the bubbles. This effect was especially important in the case of housing. Tens of millions of homeowners borrowed heavily against the wealth in their homes, through home equity loans or by refinancing their mortgages. They used this money to buy cars or take vacations, or in many cases to pay the bills.

FULL story at link.