A New Social Contract

Editor’s Note: This Forum is available as our spring 2017 print issue. We are pleased to make it freely available online thanks to the generous support of the Cameron Schrier Foundation, the William and Flora Hewlett Foundation, the McCoy Family Center for Ethics in Society at Stanford University, and the National Endowment for the Arts. Please help us continue to make content like this open access by becoming a member!

As economists and futurists debate whether technology-driven unemployment is imaginable in our lifetimes, we join our labor colleague Andy Stern in calling for a basic income as part of a strategy to rebalance the scales for American workers. The labor movement’s job has always been to ensure that workers get a fair slice of the economic pie. We have been winning higher minimum wages around the country, and those wins have made a real difference. But the overarching forces that are suppressing wages and transforming work are now too powerful and entrenched for our much-weakened labor movement to directly defeat.

We agree wholeheartedly with Brishen Rogers that a basic income will be necessary—but not sufficient—to build an inclusive economy in an era of mass economic disruption. The problem is not simply that wages are broadly stagnant; it is also that the balance of power between the average worker and those who are calling the shots is wildly askew. As we contemplate how to respond to the seismic changes in the economy, we cannot just aim to prevent people from starving. We need to fight for “the 99 percent” to have a hand on the wheel of the economy alongside corporations, financiers, and legislators.

A modest basic income is not a silver bullet. On its own, basic income is unlikely to provide a livable income—most of the figures that advocates are proposing are in the arena of $10,000 to $15,000 per year. That’s just enough to eradicate extreme poverty and support a more stable, creative, or comfortable life for everyone else. Most people would still need to work or would strongly prefer to, at least when they can. They would still be subject to the rising costs of health care and education. Jobs would continue to offer less stability and fewer benefits, and income inequality would continue to grow. Even with a basic income, then, there would still be a pressing need to develop a new framework that includes a more comprehensive set of shared benefits for all Americans; a revised employment “contract” for the modern economy; and better vehicles for workers to exercise bargaining power.

Basic income is an example of a universal benefit administered by the government, but it is not the only one we advocate. Others include easily accessible and affordable child care, retirement, health care, long-term care for the elderly, higher education and apprenticeships, and a program of direct employment to rebuild American infrastructure and tighten labor markets. These social benefits should be financed primarily through taxes or social insurance premiums, not through employer payroll costs.

American workers also need a new deal from their employers. In addition to a minimum wage of at least fifteen dollars an hour, Americans should demand that employers abide by a minimum set of legally enforceable expectations including pay equity, paid family and medical leave, predictable scheduling, anti-discrimination protections, and a system of portable benefits for workers not covered by employer-provided plans. We must also reorient how the economic and political power of government impacts working people and push for more democratic, balanced, pro-worker stances in trade agreements, corporate governance, monetary policy, campaign finance, and criminal justice.

Underpinning our ability to win all of these reforms is worker power, which formerly was wielded by labor unions. But organized labor thrived in an era of standardized industrial production, long-term employment in an industry or firm, and the relative immobility of both workers and capital. It has long pursued a strategy that is past its expiration date. And since the 1980s, American employers have engaged in an all-out effort to destroy unions, an effort now abetted by right-wing politicians at the state level who have made it harder to form and maintain unions and limited the scope of collective bargaining. The same cohort has completely blocked progressive labor law reform at the federal level.

The most important single task left to today’s remaining unions, then, is to seed innovation and discover powerful, scalable, sustainable new models of worker organization. Instead of relying on the increasingly inaccessible structures of traditional enterprise-based collective bargaining, many of the new ‘alt-labor’ efforts use public, legislative, and electoral pressure to improve wages and work. These models, Rogers notes, also “better reflect contemporary production relationships among firms, suppliers, and workers” than twentieth century–style unions. But almost without exception worker centers and other alt-labor formations lack the economic and political power, scale, and revenue sustainability of twentieth-century unions.

There are a number of potential overlapping strategies for how new forms of worker organizations might operate, all of which could be prototyped at the city or state level:

Regional and sectoral bargaining over minimum standards

Standards for wages and benefits can be set throughout an industry or within a geographic area, negotiated by representatives of employers, workers and government. Examples include wage setting boards; the stakeholder process we used in Seattle for the fifteen dollar minimum wage negotiations in 2014; and New York’s process for a fifteen dollar fast food worker wage in 2015.

Benefits administration

Worker organizations could replace employers as the primary providers and administrators of worker benefits that are universal, portable, and prorated. Workers would earn and accrue benefits on a per-hour basis into a portable account. Examples are New York’s Black Car Fund and legislation introduced in Washington State this year to create a portable benefits system.

Labor standards enforcement

Worker organizations could begin to “represent” workers through onsite enforcement of labor standards and employment laws, either within a geographic area or an industry. Examples include the Coalition of Immokalee Workers (the farm workers that Rogers references), the Workers Defense Project (Austin construction-industry employees), and SEIU’s Maintenance Cooperation Trust Fund (California).

Certification & labeling

Companies could earn a label or certification by registering with a worker-led nonprofit organization, adhering to certain labor and employment standards, and agreeing to audits by the certifying organization. Successful examples include the Fair Trade label and LEED conservation standards.

Codetermination

In parts of Europe, labor agreements are made at the national level by unions and employer associations, and firms meet with “works councils” to adjust the agreements to local circumstances. Workers at German companies elect a council to resolve workplace issues, and large companies are required to have worker representation on their boards; in the United States, a variation is used by health care company Kaiser Permanente.

Worker ownership

Employees earn or purchase an equity stake in their companies, gaining direct control over the selection of a management team, reinvestment in the firm, and compensation. A successful U.S. example is Cooperative Home Care Associates in the Bronx. Employee stock purchase plans, or ESOPs, accomplish some of the same goals as worker-owned firms and are much more common.

Advocacy

Membership-based advocacy organizations such as AARP, Planned Parenthood, the NRA, the ACLU, Greenpeace, and MoveOn have achieved significant and ongoing political power. The largest of these organizations are “functional” rather than just “issue” oriented, as Peter Murray notes in “The Secret of Scale” (2013). Groups such as the AARP (various insurance products) and the NRA (gun safety insurance) offer benefits or services that are purchased not because it is the right thing to do, but because they are “relevant to the daily lives” of members.

Job training and placement

Worker organizations could partner with schools, employers, and government to promote skill development and job placement. Examples include the SEIU Healthcare Northwest Training Partnership in Washington State, which trains three thousand home-care aides a year, and the Registered Apprenticeship College Consortium, a partnership among community colleges, national accreditors, employers, and major apprenticeship sponsors.

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It is difficult to fathom a basic income policy standing alone in an environment that is hostile to inclusive prosperity, to broadly sharing the economic gains made possible by technology. But with powerful worker organizations we can, in Rogers’s words, “reduce elites’ domination of our politics, which may otherwise prevent implementation of a basic income, limit its generosity, or set it up to fail.” Indeed it may be that the “union 2.0” project needs to come first to see it across the finish line—and protect it once it is in place.

Basic income proponents from the tech sector, nonprofits, academia, and labor must ally and craft a compact that incorporates both strategies, to be developed in tandem: basic income to provide an income floor, and independent new institutions that can influence wages and working conditions. The economic security provided by a basic income program would then work in concert with other social programs, legal changes, and innovations in worker bargaining.

If we are not successful, the same forces that led us to this moment will continue to rule us. And the longer it goes on, the closer we slouch toward a dystopian future of an advanced technological culture, one which could have been a dream of prosperity but instead is used to entrench the rule of the few over the many. Basic income is a ray of sunshine in that dark vision, pointing the way toward a shared economic future that feels both hopeful and possible.