Sara Horowitz Considers the Legacy of Labor
Question: Did labor mismanage its own costs over the years?
Sara Horowitz: When the new deal was enacted, gave up a lot of control over its own health insurance and pensions and became, really, the consumer of these items. And the new deal, which I would have supported and supported and a big fan of the new deal just want to have another new deal. But what happened is labor developed a whole expertise of being able to set up health plans and insurance and housing and… You know, labor was really entrepreneurial because it had to take care of its own members. And one of the biggest problems is that the UAW negotiated for health and pension and then it was delivered by, you know, big insurance carriers. And the big problem is this one way cost and the inflation associated with healthcare. And so, that’s one of the reasons why it became very expensive. If, let’s say, there were clinics and they were run by nurse, practitioners, and physicians’ assistants and there was, like, real attention to wellness and attention to diabetes and obesity and high blood pressure and we really managed it, we did these innovative things. If the union has the membership and has the control over its own business of the insurance, it’s going to see to it that the members get those things because their economic interests are aligned. When you’re just negotiating for it, you don’t really care. All you know is that this is how much that piece of insurance or that pension cost and you just want to make sure that the worker is not bearing that cost. And I don’t… I’d say that the problem is that labor was one piece of a whole system that wasn’t managing those costs but it was never asked to manage those costs in the collective bargaining system.
Question: How were unions different in the past?
Sara Horowitz: You know, I would say that in the ‘80s, was really… You know, if you remember back to 1980 or ’81 or ’82 with PATCO. You know, Ronald Reagan came in and made sure that that was, you know, one of the top items on his agenda. And when you look at what happened to labor, you know, there definitely is a connection between that and the way our labor laws work. You know, if you are an employer in the middle of an organizing drive, it makes very good sense to fire the key workers because there’s no penalty. The penalty means that the worker, eventually, might get their job back and you just have to “make them whole.” And what make them whole means is just pay them back with inflation. There’s not any real damage to it. Whereas, if you’re an employer and you don’t pay wages, the Department of Labor will come after you and there’re, potentially, criminal charges attach to that. So clearly, we had a government that has not, necessarily, wanted to see the rise of unions in a way that, let’s say, FDR certainly did.
Question: Has labor been too passive in the U.S.?
Sara Horowitz: Well, you know, it’s funny ‘cause in France, they… The French Labor Movement actually has about the same low rates of unionization that we have. It’s just everybody is out on the street. And, you know, another interesting kind of factoid is that unions tend to grow during prosperity, not during times like this because people are scared of their jobs. The only exception was, you know, the 20s and the 30s. So I think it’s more like… It needs to be more tactical. And, you know, this is really relatively new. We really haven’t seen it. And I do think that people are ready. And I think they’re ready for… This sounds ridiculous but they’re ready for change mostly because the alternative is worse.
The labor expert takes a look back on labor’s importance in the American workplace.
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