Audio Transcript

Brian Anderson: Welcome back to the 10 Blocks podcast. This is Brian Anderson, the editor of City Journal.

Coming up on the show today, Seth Barron and Steve Malanga will discuss a new plan by Senator Bernie Sanders that would effectively double America’s union membership. As Steve notes in his a recent piece for the City Journal website, it’s a bold agenda, with recommendations to roll back portions of labor law dating back six decades, including state right-to-work laws, to impose new restraints on employers, and limit workers’ ability to opt out of union membership.

We thought it would be an engaging topic for our first post-Labor Day podcast. We also have some exciting episodes coming up: Chris Rufo discussing the new urban left, economist Ed Glaeser delivering his annual James Q. Wilson lecture, and Howard Husock talking about his new book, “Who Killed Civil Society?”

Lastly – make sure you’re subscribed to the show on iTunes, Stitcher, or wherever you get your podcasts. And if you haven’t already, follow us Twitter @CityJournal, and on Instagram @CityJournal_MI. That’s it for me, the conversation between Seth Barron and Steve Malanga begins after this.

Seth Barron: Welcome back to 10 Blocks, the podcast of City Journal. This is your host for today, Seth Barron, associate editor of City Journal. I'm joined by Steve Malanga, senior editor of City Journal and senior fellow at the Manhattan Institute. He's here to talk about his latest piece about Bernie Sanders's proposals regarding unions and organized labor. The piece is called Knight of Forced Labor. Steve, thanks for joining us. What is it that Senator Sanders proposed that you found so noteworthy? Or odd?

Steven Malanga: Or all of those things? So first of all, it's important to remember that Bernie Sanders has pitched himself as the friend of labor. He in fact began by touting the fact that he's allowing his campaign workers to organize and to be organized by a Union. They claim, and I don't have anything to dispute this, that this is the first time a presidential campaign in either party has been organized. That didn't necessarily go so well, because shortly after the workers organized, they began complaining to him about extra hours that he was requiring them to pay. And they basically said that, when you did the numbers, he was paying them less than $15 an hour, which is his proposal for federal minimum wage. But he got back on track with these proposals, which were quite extensive. And what I find so extraordinary about these proposals is, they take labor laws that go back 60 years, and essentially he wants to reverse them– they take positions on labor that have been in place for decades. And that previous Democratic administrations, even when they had a democratic Congress, essentially never enacted the kind of things that Sanders is talking about. So he's talking about something that doesn't just do things that Republicans wouldn't do. He's talking about doing things that FDR said he wouldn't do, that JFK said he wouldn't do, and that, for instance the Obama Administration during its first two years, when they had a democratic Congress and did a number of things because they had a democratic Congress, never accomplished. So it's pretty comprehensive and broad.

Seth Barron: What sort of things? What are we talking about?

Steven Malanga: The first thing, of course, is what's known as "card check," and this is something that we haven't really had since the Taft-Hartley Act hasn't existed. Basically, card check says that all you have to do to organize a workplace is to get more than half of the workers to sign a card to say 'we want a union.' The process that's in place right now is that you can sign a card to, say, authorize a union vote, but you still have to have a secret ballot. And what proponents of this say is it makes it easier. If people are signing a ballot, why not just let them organize. What opponents say, however, is that a secret ballot is crucial because a union, or anybody approaching people in campaigning and saying, 'here, please sign this card,' subjects people to intimidation. And in fact, there are noteworthy instances where you'll get more than 50% of the people signing a card on a workplace saying, 'I want to authorize the vote.' But when they actually have the vote, 70% of the people who vote oppose the unions.

Seth Barron: Why wouldn't people want to be in a union?

Steven Malanga: Well, first of all, you have to pay dues, and the dues can be quite substantial.

Seth Barron: What percentage of your income?

Steven Malanga: Well, it really, really varies depending upon who you're with. Some public- sector union workers in New York pay more than $1,000 a year in union dues. That's quite substantial. In fact, I believe it was Gallup that did a poll a number of years ago, which I wrote about, in which they asked people who were members of union households– union members or spouses– they asked them if they thought they were getting their money's worth for their dues. About 50% of them said they did not believe so. And these were people who were already in a union or already part of a union household. So, the dues is a very big issue. It's not a small issue. What are we getting extra for our dues? And this is one of the reasons why– and this is something else that Sanders proposes to roll back– we have what's known as "Right to Work." Taft-Hartley was passed in 1947 by a majority Republican Congress. It was vetoed by President Truman, but then the Republicans, in concert with a substantial percentage of Democrats– about half of all Democrats in the United States Senate– voted to override Truman's veto. So this became law because both Democrats and Republicans voted for it. And essentially one of the crucial components of it is what's known as "right-to-work." It says the states individually have the right to pass laws which say, if your workplace is organized, you can decline to join the union and you can't be fired for it. Previous to that, under the Wagner Act, you were essentially required, even if you voted against unionization, to join the union. Senator Sanders wants to reverse that. He wants to essentially eliminate or repeal that section of Taft-Hartley, and that would reverse state laws in 28 states. Right to Work has become increasingly common over the years. I think since 2012, we've had five more states join. So we now have more than a majority of states that have right-to-work laws. Also, in polls, it's fairly popular among among average Americans. One poll asked people, essentially, should workers have the right to not join a union if there's a union in their workplace? And 71% of Americans said they agreed with that. And this was a poll in which about 50% of the people who were polled viewed unions favorably, but they still said you should have the right to opt out.

Seth Barron: Okay. So, the way it works now, New York State is a closed-shop state, right?

Steven Malanga: Right, it does not have Right to Work.

Seth Barron: So, if I were to organize Manhattan Institute and get everyone to sign the cards, and we voted, and we decided to have a union, then even the people who didn't want to be in the union would have to be in the union?

Steven Malanga: Right. Or if they opted out, they would have to essentially pay anyway. They'd have to pay a fee, which is called an agency fee. And an agency fee can be whatever the union sets the fee at. The idea is that 'I don't want to be a part of the union, but I still have to pay for whatever representation and negotiation the union is doing on behalf of the workplace.' And that fee can be fairly substantial. And this is one of the reasons why, in the case last year in the public sector called the Janus case, essentially the Supreme Court said, 'you cannot, in any state– even a state like New York State that doesn't have Right to Work– you cannot charge public-sector workers who don't want to be in a union an agency fee.' And that's because the Supreme Court ruled that in the public sector, whatever kind of negotiating that a union does is a free-speech issue. When you're a union, for instance, and you're negotiating for better wages, these things affect state budgets and city budgets, and so workers shouldn't be forced to pay that extra money if they don't agree with that particular point of view of the union because it's a public– a government issue.

Seth Barron: Okay. Now, we're getting into another another aspect of Bernie Sanders's proposals that you mentioned, which is the right of federal workers to strike. Now, explain something to me. I get that the public-sector unions, their boss is the government, and private- sector workers work for private companies. And you cite this interesting quote from President Franklin Roosevelt, who is known as a very left-wing guy, but he apparently thought that public- sector unions didn't really make that much sense.

Steven Malanga: So, Roosevelt proposed and signed the Wagner Act, which essentially set out collective bargaining as we know it now for the private sector. That act purposely excluded the public sector. And in a letter that he wrote to a federal union trade group, he essentially said that collective bargaining doesn't work in the public sector because it's essentially a monopoly. And, particularly the right to strike would allow government workers to essentially hold the government hostage. He says that's quite different from the relationship in the public sector. This is a fairly famous letter. Now, that was at the federal level. Years later, JFK, John F. Kennedy did give workers the right to organize and to bargain collectively on a limited basis. They never earned the right, in particular, to strike.

Seth Barron: This is federal workers? Steven Malanga: Yes, federal workers. Now, state workers–

Seth Barron: Municipal workers, public employees.

Steven Malanga: –state and local public employees, absolutely, are governed by state laws on this issue. And quite a number of states have passed laws which said you can have public sector unions. The laws are different in every state. Some states say you have full bargaining power, meaning you can bargain for everything. Other states say you can organize, but it's really as a trade association, you don't have collective bargaining rights for, let's say, wages and benefits. And one of the justifications for this is that most states have civil service laws and therefore public sector workers in general because civil-service laws have quite a few protections already. Be that as it may, what the federal workers have long looked for is the kind of complete freedom that you have in, let's say a state like New York State, which is the most heavily unionized state in the public sector, and that includes the right to strike. Bernie Sanders would give them that right. Seth Barron: So, employees of the Department of Health and Human Services could walk out; they could have a strike?

Steven Malanga: Yes. Now, I think he's proposed it with some limitations. For instance, what people would be most worried about would be Homeland Security going on strike. That could have serious implications for the airports, for instance. But yes, that's essentially the issue. And part of this is the debate about, what good is collective bargaining if you don't have the right to strike? Because your employer can just say, 'sorry, we're not going to give you that.' Now, there is mediation at the federal level to try to resolve these kinds of issues. But he would essentially give the federal government workers the right to strike. Seth Barron: And do you think that's a good idea? Steven Malanga: No. Again, what Roosevelt essentially said is government is a monopoly. That the thing about the private sector is, your company could have the right to strike, but because it is a competitive environment, even the bargaining position of workers, the unions, have to take into account the competitive environment that they're facing because, essentially, asking for too much or going too far can destroy a company. And that is a kind of mediating influence. At the same time, the employer has to be aware, in a competitive environment, that if 'I don't pay my workers enough, I'm going to lose them.' So, that's a very different environment than government, and that's what Roosevelt worried about, and what you see governors worry about in some places, because there are a lot of places where state workers, for instance, or local workers, or certain workers cannot strike. Teachers cannot strike in a bunch of places. Public safety workers don't have the right to strike. Other places, they do have the right to strike. So, even in a very, very labor-friendly environment like New York State, there are restrictions on that.

Seth Barron: Now, in New York, some people have said that the public-sector unions, which have a fair amount of power, have a conflict of interest, because they give so much money to political campaigns that they essentially elect their own bosses. They get to choose who gets to run for office. Do you see that that's a problem?

Steven Malanga: Well, first of all, it's not that "some people say." A very prominent labor leader in New York State in the 1960s said, 'we have the ability to elect our own bosses.' So, that was a pronouncement on his part, and he articulated that as a strategy. So that has been their strategy, articulated by them since the '60s. That is essentially what they are, where their power lies.

Seth Barron: I'm reminded of the the joke in the Woody Allen movie "Sleeper," that takes place hundreds of years in the future, and someone says, 'we don't know what happened, but a man named Albert Shanker got hold of an atom bomb.'

Steven Malanga: Yes. Albert Shanker was, among other things, famously infamous for saying, 'when children join my union, I'll represent their interests.'. Seth Barron: He was the head of the teachers union. Steven Malanga: Yes. So you can imagine why even Woody Allen thought that he was worth taking a shot at.

Seth Barron: Now, another aspect of Bernie Sanders's plans that you talk about in your piece has to do with pension plans. We talk a lot about public-sector pension plans and how they're underfunded, but Bernie Sanders wants to do something about private pension plans.

Steven Malanga: A very specific type of private pension plan called a multi-employer plan. Basically, what Congress did was it created the ability for unions to essentially create pension funds for workers, let's say in construction, who don't work for a single employer, but work through the Union for different employers. So if you're a construction worker, you might be working on an office tower somewhere in Midtown Manhattan one year, and the next year you're working on another office tower or residential tower somewhere else. In those cases, with these multi-employer plans, the unions essentially took contributions based on the benefits they negotiated with the owners and the construction companies, and they put them in these pension plans. Well, about a third of these multi-employer plans are seriously, seriously underfunded– in danger of going insolvent. So, back in 2014, Congress actually passed a law– and it was necessary to pass a law to do this– to say these pension plans now have the ability to reduce the benefits that they are paying to retirees so that they remain solvent. Otherwise they're going to go bust. Bernie didn't like that idea. Instead, he essentially wants to bail out these unions, so what he proposes is a series of tax increases that are essentially aimed at rich people. Some of them are very quirky, like in the art market where people trade art: 'I'll trade you Picasso for your little Rembrandt there.' He wants to tax transactions like that, which are apparently not taxed now. He wants to tax money put in a 401(k) above a certain level. In other words, once you reach a certain level in your 401(k), no matter who you are, you have enough money, and therefore if you put anything more in it, I'll tax it. And what that does is, it makes– obviously– more money available for taxation. So he says a bunch of little things he wants to do, but essentially he wants to then take all this money and use it to bail out these pension plans. He's not talking about any kind of reforms; he's basically just talking about giving them money. And the one thing that doesn't get at is, why did these systems become underfunded in the first place? There are a whole bunch of reasons. Some of them have to do with just the way the industries themselves have gone through very volatile economic period, but some of it has to do with the fact that the money hasn't necessarily been managed well. When some of these funds have had surpluses during the good times, they've increased benefits. Whereas a lot of pension trustees will tell you, and some laws– like the Arista Law– say, that you need to essentially harbor some of those surpluses. So, there are a whole bunch of issues with respect to how we wound up in this particular situation, but what Sanders is talking about is essentially bailing out these plans. But there's nothing that goes along with that, which says we'll stop this from ever happening again.

Seth Barron: It's hard to come up with a rationale for doing that. Usually, if you're going to bail someone out, either it's too big to fail or we're bailing it out because we made a mistake. But if it's just a question that the Teamster's Union made terrible investments in such and such–

Steven Malanga: Well, his rationale is, these people were victimized by the economy and maybe by their trustees, therefore they're still victims. Part of the problem is, that in the '60s and '70s, when we set up the series of laws that governed private-sector pensions in America, one of the things that Congress did was it essentially put in place a tax that private pensions have to pay so that there would be a rescue fund. But the rescue fund is not big enough to rescue these multiple-employer plans. So, now he's basically looking for a way of enhancing this rescue fund with attacks just on people.

Seth Barron: Okay. Well, we just celebrated Labor Day here in America. We're really the only country that doesn't have Labor Day on May 1st. We have invented our own Labor Day. Now, unions made improvements in the lives of working people, I think it can be fair to say. What's the state of organized labor? What's the future for organized labor? Should more people be in unions?

Steven Malanga: Well, again, to use the FDR measure, it's a competitive marketplace out there, and essentially Sanders argues that people are not joining unions because it's too hard to unionize these days. That's why he wants to make all these changes. The fact of the matter, however, is that many of these laws have been in place for decades, and they were in place back when we had much higher levels of private-sector unionization. Private-sector unionization has been declining for years for a lot of reasons having to do with the way the economy has changed, with the kind of jobs that have been created, and the fact that many of the people working in the kinds of industries that have been growing haven't voted for unionization. Many of the laws that allowed people to organize in the '40s and '50s are still in place, but there's just not necessarily that interest. If you think of the kind of industries that are ascendent these days, they don't really show a lot of interest in unionization.

Seth Barron: Well, we'd love to hear your comments about today's episode on Twitter @CityJournal #10Blocks. If you like our show and want to hear more of it, please leave ratings and reviews on iTunes. This is your host, Seth Barron. Steve Malanga, thanks for joining us. Steven Malanga: Thank you.