Robert J. S. Ross

Struggles at the bottom of the pyramid [unpublished] June 2009

In the midst of the last Great Depression, in 1933, Secretary of Labor Frances Perkins said: “The red silk bargain dress in the shop window is a danger signal. It is a warning of the return of the sweatshop, a challenge to us all to reinforce the gains we have made in our long and difficult progress toward a civilized industrial order.”

Depressions wreak havoc on labor standards. As unemployment grows workers become less able to turn down offers of jobs – even at substandard wages – and employers enjoy more leverage with their existing workers.  Benefits are taken back, raises are deferred or wages are cut. Legal residents and citizens now out of work will “drop down” in the labor market; competition for low wage jobs will increase.

Many of the jobs that now pay low but legal wages are considered unskilled or semi-skilled – and many are really hard. Today’s immigrants, legal as well as undocumented are a large fraction of low wage workers – about 14 per cent of the US labor force, but 20 per cent of low wage workers., according to a 2003 study by the Urban Institute. Both native born workers and immigrants will experience pressure on their living standards as unemployment increases and endures. The restaurant workers and janitors and retail clerks –who earn $11/hr and below — will have to fight hard to keep their heads above water.  Middle income workers will experience their living standards as sliding downwards.

Some will identify the source of their difficulties as fellow workers. Blaming immigrants or minority groups was the unhappy choice of some in the 1930s, like Father Coughlin, the radio priest from Michigan – who then blamed Jews for the Depression and admired Hitler’s “solution.” Others will try to address their job problems by joining together – in unions and politics.  In either case the coming days will see struggles at the bottom of the pyramid.

As there was 75 years ago, there is also a change in public mood, more sympathy for labor, and a more sympathetic administration.  President Obama has appointed official to the Dept. of Labor (both the Secretary and people under her) who are historically advocates of labor law enforcement.  We can hope that the proposed budget’s addition of almost 300 labor law enforcers will rein in the blatant violations of the minimum wage law and overtime abuses that have characterized the recent past.

One of the most important ways that conditions at the bottom of the pyramid were improved in the 20th Century was through the birth of the modern labor movement.  Now more than ever wage workers need each other and their freedom of association to combat the pressures of the unforgiving market.  But the law that “freed” the labor movement in the 1930s – labor’s Magna Carta – the Wagner Act of 1935, needs, as do many 75 year-olds, more teeth.  The Employee Free Choice Act (EFCA) will allow unions to more easily be formed and it will press employers to come to terms with unions that gain legal recognition.  The difference in pay for union v. nonunion restaurant workers could be about 25%, for janitors as much 50%.

Even in white collar occupations the pressures on wages and benefits is mounting. At the middle of the pyramid the same rule holds as at the bottom:   As we enter a period of hard times the way out is together, the way down is division.