Promoting the Common Good
December 1, 1996
With Responses From
Dec 1, 1996
9 Min read time
We cannot address poverty through capital endowments.
I share Richard Freeman's concern about increasing income inequality in the United States and declining welfare for people at the lower end of the distribution. I also share his frustration at the indifference of the electorate and much of the political and policy-making community. And I admire his inventiveness in proposing new strategies to overcome the current impasse. But I am considerably less enthusiastic about the strategies themselves.
This is in part because I do not see the current tendencies in the distribution of income as indicative of social trends more broadly. Indeed, while I would give much more weight than Freeman apparently does to the deliberate policies of the Reagan-and, to a lesser extent, Bush and Clinton-administrations in producing an increasing dispersion of income, I think we should also recognize the progress made on other fronts in reducing economic disadvantage and social stigma. In the last 15 years, that progress has been particularly marked for women, the physically handicapped, gays and lesbians, and Asian Americans. Much of this progress has not been economic in the narrow sense of the term but it has greatly changed the lived experience of the members of these groups in American society. Also noteworthy: in possibly the most conservative period in American politics, we have managed to preserve the gains made in the late l960s and 1970s in the economic welfare and social status of African Americans and the aged. With the possible exception of the aged, I do not see comparable gains for disadvantaged and socially stigmatized groups in other advanced industrial societies-despite their much more even distribution of income.
It may not be completely clear why this particular pattern of social redress has emerged, but a very important factor must be the growing self-consciousness of these groups and their increasing political awareness and cohesion. This contrasts strongly with the declining strength and cohesion of work as a source of identity and locus of political organization, and of the labor movement as a political and economic force. This does not translate directly into the declining income at the bottom of the distribution. Neither low income nor the jobs with which it is associated have ever been a source of identity or effective political organization. One of the enduring characteristics of low-income individuals not identified closely with racial and ethnic communities in the United States is their social and political isolation (a point to which I will return below). But among identity groups effective in the political process, the labor movement is the one for which a reduction in income disparities is most critical to its broader mission. There is thus much ground for optimism in the fact that the decline in union strength seems to have leveled off, and that the AFL-CIO has finally begun a process of organizational renewal with new leadership and aggressive campaigns to organize new members and reassert itself in the political process. The welfare of low-income workers is an integral part of these campaigns. Because part of labor's problem is that it had come to be associated in the public mind with the privileged position of its own members, the prominence which the revived union movement is giving to low-income work is likely to have a dual effect. As it increases public awareness and concern for those at the bottom of the labor market, it will change the public perception of the labor movement.
The recent history of the labor movement carries an important lesson for American social movements more generally. Such movements can gain broad public support for remedial policies, even policies which seem to compromise other core American values: that is what the labor movement did through legislation and court rulings curtailing employer free speech and private property rights; that is what women and racial minorities did through affirmative action. But such public support is contingent on the credibility of the claims which the groups make to promote the general welfare, and not only their own particular interests. When movements seem to retreat from these broader claims, when they come to be perceived as exclusively dedicated to the pursuit of particularistic concerns of their immediate constituencies, the public becomes intolerant of special policies which protect them. The incipient reaction against affirmative action suggests that the Black movement and women's movement are coming to be perceived in the way that labor was in the 1970s. To avoid a similar fate they will have to move quickly, as the labor movement has somewhat belatedly, to reemphasize the problems of their low-income brothers and sisters who have not benefited so clearly from the success of the group as a whole.
This brings us to the question of what kinds of policies it makes sense for movements dedicated to social progress to advocate in the political arena. Of Freeman's five strategies only the proposal to strengthen unions seems both to lend itself to this kind of advocacy and to have real promise for reversing trends in income inequality. But given the need of organized labor to overcome the perception that it is a "narrow," "special" interest, it would be a mistake for it to use its re-emergent political power to demand new protective legislation. What is required, it seems to me, is a much more focused policy than Freeman proposes. In particular, I would propose a two part policy: the first part would seek to raise the minimum wage over the next ten years at a rate substantially in excess of average wage increases (say two times the average). The second part would be a concerted effort to enforce the full range of labor legislation regulating low wage employment: minimum wage laws, equal employment opportunity legislation, sanctions on employers hiring undocumented aliens, unemployment insurance and social security taxes, health and safety legislation, as well as the right to organize and bargain collectively.
I would place particular emphasis on equal employment opportunity and employer sanctions. One of the factors depressing wages at the bottom of the labor market over the last two decades has been the progressive substitution of immigrant labor for American nationals, particularly African Americans. This occurred, especially in the beginning, because American nationals did not want menial, low wage jobs. But it has also happened because the availability of immigrant workers has combined with the deterioration of labor standards and their increasingly lax enforcement to make it unnecessary for employers to improve job offers to attract labor. Meanwhile, equal employment opportunity enforcement ignored this sector of the labor market to focus on more attractive job opportunities. And the Labor Department's Wages and Hours Division, which enforces minimum wage legislation, shifted resources from that task to enforcing laws governing equal pay for women and minorities, again at the high end of the market. The enforcement of employer sanctions should be accomplished by shifting resources from apprehending workers to apprehending employers who hire them. When jobs are no longer available, the flow of foreign labor to the United States should diminish sufficiently to alleviate downward pressure on wages. Those who remain, or continue to come, will tend to have family ties and relations of the kind which will eventually lead to a regularization of their legal status. We need not demonize or criminalize foreign nationals simply for wanting to raise their income by taking jobs in the United States. But we also need to recognize that job opportunities in the United States are rationed, at least at the bottom of the labor market. The twin instruments of equal employment opportunity and employer sanctions enforce rationing criteria consistent with public policy; in their absence, employers pick a set of criteria dictated by private economic interests and prejudices that, experience shows, are destructive of internal equity and undermine social stability.
Freeman's proposal to delegate legislation protecting and regulating the right to organize and bargain collectively is intriguing. In some ways, it simply implements the logic of NAFTA, or, more broadly, the globalization of economic activity. If we live and work in a world where US workers already compete directly with the radically different labor law regimes of Canada and Mexico, why should we be particularly concerned with uniformity within our own borders? The states already control the legal regimes governing collective bargaining by state and local employees, and this has become an increasingly large component of collective bargaining activity. On the other hand, this strategy seems inconsistent: If we are concerned with income inequality, how can we be indifferent to the inequality of bargaining power that produces it? If competition among countries has failed to reduce income inequality (indeed, is one of the leading candidates to explain its current increase) why should competition among states have a different result? The more consistent proposal would be to impose the logic of uniformity upon the process of globalization. I would, in fact, as soon adopt the labor legislation of any one of our neighbors as I would delegate it to the states. Mexican labor legislation-or that of virtually any of the Canadian provinces-would do more to strengthen unions in the United States than the legislation which even the most progressive states here would be likely to pass under Freeman's proposal.
I also have problems with Freeman's other proposals. Freeman expresses an interest, for example, in urban economic development, but offers no concrete proposals. Though the agglomeration effects upon which he would build an urban policy have recently attracted interest from economists, they are not new. The way they have been played out in recent years mirrors the growing disparity in the rest of the economy. On the one side are high-income agglomerations built around high-tech industries and finance from which the poor are excluded by their educational background. On the other side are low-wage agglomerations in such industries as garments, which have been a traditional path for upward social mobility. The latter opportunities have been severely restricted by globalization, but they remain and have become a channel for advancement for new immigrant groups. The fact that urban garment centers in the United States have managed to survive at all attests to the substantial locational advantages of agglomeration and market proximity: these industries quite probably would sustain much higher wages than they now pay. But as in other low-wage industries, their wages have been declining in recent years and the American-born poor, particularly African Americans, are-again, originally by their own choice but now by employer policy- increasingly excluded. The first task is thus not to create new agglomerations but to raise wages and open up jobs in those that are already there.
The more serious problem an urban strategy needs to address is social isolation. The isolation of the urban poor is probably the major impediment to their organizing on their own behalf. It has been increased by central-city violence, which has led people to withdraw further into their own homes. We need to experiment less with enterprise zones than with urban safety zones where airport-like security and police saturation might create secure public spaces in which people could associate with each other.
My strongest objection, however, is to addressing poverty through capital endowments. The management of financial risk in a capitalist society requires considerable expertise. Even to purchase such expertise on the market requires a good deal more knowledge about finance than most people in our society now have. I imagine that we could achieve a broader distribution of the requisite competence. But I do not see how we could develop it widely enough to protect the endowments initially created to solve the income distribution problem. And if we did, the result would be a civilization completely obsessed with financial management. Though I would be hard pressed to choose between that civilization and one which tolerates the income disparities we seem now to be developing, I do not believe that we face that depressing choice.
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December 01, 1996
9 Min read time