Collective Bargaining Without the Unionization Battles

Labor unions’ public approval has been increasing since 2009, and is now at levels not seen since the 1960s. And yet rates of union membership have been falling. Today just 10% of U. S. workers are represented by a union, and below 6% in the private sector. What if there were a less adversarial way to get the worker-protection aspects of unions without the brutal shop-by-shop campaigns? Enter “sectoral bargaining,” where boards with worker, employer, and government representatives hash out wages and working conditions for occupational groups. Think all fast food workers, janitorial staff, or health care providers. Support the Optimist Economy podcast by becoming a paid subscriber on Substack https://optimisteconomy.substack.com/, or donating at https://buymeacoffee.com/optimisteconomy Complete show notes with links to articles and data at optimisteconomy.com http://optimisteconomy.com. You can also find Optimist Economy on: TikTok https://www.tiktok.com/@optimist_economy YouTube https://www.youtube.com/@optimist_economy Instagram https://www.instagram.com/optimist_economy/

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  Ever since I found out we could curse on the show, every episode has had a little "E" next to it. And I'm like, "E" for economy, right? Am I right? Or is it because I curse like a sailor and always have? Hello and welcome to Optimist Economy. I'm Catherine.

• 0:49Robin Rauzi?

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• 1:26Robin Rauzi?

  Not offended.

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• 1:28Robin Rauzi?

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• 1:52Robin Rauzi?

  Oh, I have one more announcement, apparently. That our Catherine is just never going to talk, which is hard to believe.

• 2:00Speaker 02

  Come on.

• 2:03Robin Rauzi?

  We are recording what should be our 18th episode. In two more weeks, we're going to do another episode where we are answering your questions. So if you have a question you would like to ask The Economist, not me, I'll just read them, you can send them to [email protected] or you can send us a message on Substack.

• 2:23Speaker 02

  Perfect. And I mean, I guess you could ask Robyn a question, but she'll screen them out.

• 2:29Robin Rauzi?

  I mean, if it was a question about, you know, journalism, or style, or avocados, I have opinions.

• 2:39Robin Rauzi?

  Chapter two.

• 2:41Speaker 02

  Chapter two? I wonder what we're going to call chapter on. Chapter, anyway, I'm not going to say it because it was going to be another curse word. And we've been explicit. Every episode has had a little E next to it. E for economy, right? Am I right? Our next chapter is retcon, for retroactive continuity, where we talk about past shows, things people have told us, or things we've thought about after the fact, but we already recorded and didn't want to do it again. So this is just easier.

• 3:07Robin Rauzi?

  It's the correction stage.

• 3:09Speaker 02

  All right. Our last episode was on the estate tax, which, again, just to reiterate, none of you were going to pay. And if you are, you're giving us lots of money. So those are the two versions.

• 3:19Robin Rauzi?

  If you are.

• 3:20Speaker 02

  Two outcomes for you.

• 3:21Robin Rauzi?

  Email us at [email protected]. We'd like to be in touch.

• 3:26Speaker 02

  Absolutely. Was in touch with your estate guy. Do you have any retcon from the estate tax episode?

• 3:33Robin Rauzi?

  Not really.

• 3:34Speaker 02

  My retcon, I think, was kind of similar to what we talked about right at the end of the show, which was even as complicated as the estate tax gifts, we didn't talk about a lot of it. Like, we didn't talk about how it relates to the gift tax. Those are harmonized so that you're not incentivized to do, hold on to wealth, or give all your wealth away. They're supposed to be kind of equalizing the incentives for how you distribute money to heirs. We also didn't talk about all the kind of accounting that goes into how estates are valued and when, based on things, when things were purchased. This is called the step up basis versus the carryover basis. And if y'all are dying to hear more about that, let us know. But it's so confusing.

• 4:19Speaker 02

  I think you should just know that right now, the law is structured in a way that really encourages people to hold on to assets until death, because the way that they're valued is favored for holding on to it.

• 4:33Robin Rauzi?

  Yeah.

• 4:34Speaker 02

  And that was a change to the law. We've basically not only reduced the estate tax, or made the estate tax exemption so much, so much higher, we've changed the accounting around how wealth is assessed, assessed so that they pay less tax. And I messed up like six times that sentence, which is why we didn't put it in the episode. Because it's so hard. The word "assess" is never my favorite. So, we didn't talk about a lot of these complications, and it wasn't because it's tough, even though it is. It's mainly because I don't think that the juice isn't worth the squeeze. Like, we kind of told you what we thought you needed to know. And the big questions are less about the step up basis versus the carryover basis, and more about, do we actually want to tax wealth, and what do we want to use it for?

• 5:15Robin Rauzi?

  Exactly.

• 5:16Speaker 02

  I have another retcon.

• 5:17Robin Rauzi?

  Okay.

• 5:18Speaker 02

  This one's for Robin. I went to a family reunion recently for my grandmother's 95th birthday, and we were talking about her mother, my great-grandmother, and she was hilarious, apparently, told great stories. And I was talking to one of my great-uncles about her, and she said, "Yeah, real personality, but she, you know, she'd tell stories so long, she'd get hoarse." I mean, she wouldn't be able to keep talking because she had talked for so long. And I was like, "Wow, I can't relate to that in the slightest." And I know someone, Robin Rousey, my co-host, she'd have nothing to add on that.

• 5:56Robin Rauzi?

  No notes.

• 5:57Speaker 02

  No notes. No notes. I just want you to know, this is a generational thing, and it ain't going nowhere, Robin.

• 6:06Robin Rauzi?

  Multi-generational. Also, also, now I know I can say, "Are you getting hoarse yet?"

• 6:11Speaker 02

  "Are you getting hoarse yet?" Yeah, that would be all you need to say, and I'd be like, "Uh-oh."

• 6:15Robin Rauzi?

  All right, next chapter, Terms and Conditions. So I looked something up because it was a crossword clue.

• 6:24Speaker 02

  That's the best reason to look something up.

• 6:25Robin Rauzi?

  Yeah.

• 6:26Speaker 02

  Quick question from production for clarity. Did you look this up during or after solving the crossword?

• 6:32Robin Rauzi?

  After.

• 6:33Speaker 02

  After, respect, respect.

• 6:35Robin Rauzi?

  Yeah, and it was mathematician that an equilibrium is named for. And the answer was Nash. So I looked up Nash equilibrium, but I don't understand what this means at all. Because it turns out it's an economic thing. It was supposedly one of the most powerful ideas in economics coming out of 1940s. It says that every agent chooses their optimal strategy, taking the strategies of everyone else as a given. The Nash equilibrium is thus the best everyone can do, but need not be best for society. John Nash was the mathematician depicted in A Beautiful Mind, right?

• 7:16Speaker 02

  Yes.

• 7:16Robin Rauzi?

  Yeah, in the book and the movie.

• 7:18Speaker 02

  Yes.

• 7:19Robin Rauzi?

  So that I knew, but I did not remember that there was a Nash equilibrium, nor do I understand what this means. Can you shed some light on what this is?

• 7:28Speaker 02

  Yeah, he's one of a handful of people who have won the Nobel Prize in Economics despite not being an economist.

• 7:33Robin Rauzi?

  Yeah, he was a mathematician, right?

• 7:35Speaker 02

  This is at the heart of game theory.

• 7:37Robin Rauzi?

  Yeah.

• 7:37Speaker 02

  So the thing that you said doesn't make any sense to me either.

• 7:41Robin Rauzi?

  Okay, good. Because I really was like, I felt like I understood a little bit about a game theory, but I don't, I didn't know if this was something different from game theory.

• 7:51Speaker 02

  No, this is, this is kind of the, the seed from which all game theory spouts. So when you are thinking about economics, we think about a person maximizing their options. So you have two products that you can buy, you only have so much money, each of them give you a different level of utility, and so you optimize based on what you would like. I can consume work or leisure, throwback to work requirements, and I'm gonna, I'm gonna consume as much work to consume as much leisure, and it's gonna be dependent on me and I optimize that situation. Game theory essentially introduces like player two has entered the game. Where my optimization is contingent on another person's optimization.

• 8:35Speaker 02

  And the idea of a Nash equilibrium is that what you end up doing is kind of forecasting what you think the other person is going to do, or what is most likely for the other person to do, and then you act based on what you think they're going to do. So they bring it up in a lot of examples. The one that comes up first, which I think doesn't speak maybe great for our profession, are like two people who commit a crime who are arrested and put in separate rooms.

• 9:02Robin Rauzi?

  This is the prisoner's dilemma.

• 9:04Speaker 02

  This is the prisoner's dilemma. And so you, you know, whether or not you stay silent or confess, for you, just alone, you would stay silent. They don't have evidence, but if the other person confesses.

• 9:16Robin Rauzi?

  You're going down.

• 9:16Speaker 02

  And you don't, you're going down. Whereas if you both confess, you get a lighter sentence. And so the equilibrium is that you would both end up in the option that is like mutually assured optimization, given what the other person does. So I have to tell you, in all honesty, game theory was my worst economic subject in grad school. It's not, it's just, it's a type of thinking.

• 9:39Robin Rauzi?

  Yeah, it seems more like, you know, working on mutually assured destruction, kind of strategic thinking, instead of how do we grow an economy?

• 9:48Speaker 02

  We don't need to get from A to B. I gotta tell you, it was like five years of school. Some of it I'd like to forget, it's real complicated.

• 9:56Speaker 02

  But the intuition it gives us is still there.

• 9:58Robin Rauzi?

  Yeah. Today, we're going to talk about unions.

• 10:01Speaker 02

  Unions.

• 10:02Robin Rauzi?

  And the state of unions.

• 10:03Speaker 02

  Solidarity, guys. This is the union episode. In honor of the union episode, I am wearing a union T-shirt. The National Women's Soccer League Players Association, when they signed their latest collective bargaining agreement in the summer, we said no. They all wore it to the game to celebrate their bargaining victory. And it was a really cool bargaining agreement. I've tried like six times to work it into a Bloomberg column, and my editor's like, I still don't know how this applies to the economy. And I'm like, it does. People need to know this.

• 10:33Robin Rauzi?

  People need to know about women's soccer.

• 10:37Speaker 02

  It's in the top five for me.

• 10:41Speaker 02

  We want to talk about unions. I think because

• 10:44Robin Rauzi?

  I just actually want to know what else is in the top

• 10:46Speaker 02

  What else is in the top five?

• 10:49Robin Rauzi?

  Do you have your favorite bargaining agreements?

• 10:52Speaker 02

  No.

• 10:53Robin Rauzi?

  Like everyone does.

• 10:54Speaker 02

  No, normal people don't, and I'm a human person, so I don't either. Okay.

• 11:02Speaker 02

  I don't know who wouldn't, I don't know who wouldn't say the Treaty of Detroit. I don't know anyone who would, who would be like, yeah, and the Treaty of Detroit didn't make the top five. Like, I'm pretty sure it's gonna be in everyone's top five. Yeah, also the bargaining agreement as a result of the sit-down strike of 1936. That one's a big one for me. I teach the sit-down strike because I think it's so fascinating.

• 11:24Robin Rauzi?

  Okay, what's going on with unions now? I mean, it felt like there was a huge amount of coverage about unions in the Biden administration, especially like the unionization efforts around Starbucks, I think, got a huge amount of attention. And Amazon, and Biden was very clearly pro-union. That is not the environment we're in right now. So that's kind of table-setting.

• 11:45Speaker 02

  Table-setting. I think the premise of why I wanted to talk about unions is that we are at this incredible moment in terms of organized labor in the United States. The approval ratings for unions have hit a seven-decade high.

• 12:03Robin Rauzi?

  This is public polling, not member polling or something.

• 12:07Speaker 02

  This is public polling. You just, you ask people as part of a general sentiment poll, like, do you approve of unions? We are at like a near 70-year high for people's approval of unions. They think we want more unions in the United States. You ask them about their approval of, say, big business, and that is at a multi-decade low. In fact, it's dropped from about 50% to about 25% this century.

• 12:31Robin Rauzi?

  It's like Congress.

• 12:33Speaker 02

  Americans are at a place where they trust unions, they want unions. They will say in majority numbers that the US is worse off without having a strong union presence, and they think very little of big business. And yet, just 5.9% of private sector workers are unionized.

• 12:55Robin Rauzi?

  And that's lower, right?

• 12:57Speaker 02

  It's lower than it was in 1934, before the National Labor Relations Act was passed and the right to unionization became a legal right that every worker was endowed with. So, over the course of the past 90 years, the fate of unions and big business and their sentiments have changed a lot, but unionization has been in about a seven-decade decline, to the point where it is as if the National Labor Relations Act and the right to unionize doesn't exist.

• 13:25Robin Rauzi?

  Right. Are you seeing a lot, a connection here between these sentiments and the numbers?

• 13:31Speaker 02

  Well, yes, because I think for the show, the reason why I wanted to bring this up is like, hey, y'all, statistically, this is a thing that you're like, I could take some more unions in the US, and we're going in the other direction. So, as a solutions-oriented show, I thought we could talk about how this is something that has some really good solutions that you probably haven't heard of. But I think the second part of that, like, not just making it about me, but about the economy. The idea that unions are very popular, but also not very present, I think does have a connective tissue to, unions were incredibly effective at building the middle class in the United States, and we are suffering from their loss.

• 14:12Speaker 02

  And I think on some level, a lot of people can understand that the economy is a more equal place when workers are empowered and represented through a union.

• 14:21Robin Rauzi?

  Got it. You think that the feelings about wealth inequality are driving the affinity for unions?

• 14:29Speaker 02

  I mean, it would certainly be appropriate if it were the case. There's this really fascinating and important piece of economic research about unions that can explain why I think that, but I have to first explain it to you, and this requires some context. So you're going to have to stay with me. I mean, you always stay with me, but you have to really stay with me here. So, context, one. We, we as in like the royal economics we, know that unions raise the wages of their members. So if you're in a union, you're earning more money. What's not clear is whether or not unions raise the wages of people who aren't in a union. So this would be, you've got a high-paying employer and a unionized, high-quality job that puts pressure on other employers to raise their own wages. That would mean unions are good for other workers.

• 15:12Speaker 02

  But if unions make labor costs more expensive and employers demand less labor, it leads to lower employment, and therefore, unions are bad for other workers. The second piece of context you need to know is that the United States is almost always trending towards greater income inequality. We get more unequal in each successive year, most of the time. And we can trace this, we can measure this back to 1913, the year the federal income tax comes into being, we can look at tax data to see this. So, take all of the income earned in the United States from whatever source, and put it in a big pile, and you see how much the top 10% takes home of total income. From 1913 to around 1940, it just slowly increases every year

• 15:57Speaker 02

  to the point where they take home 40-ish percent to around 50% over that period. At the same time, the bottom 50% takes home a little bit less. All that changes in 1940. And between 1940 and 1980, the top 10% took home a third of income, the bottom 50% took home 20. It doesn't sound like much, but it's a huge gain. It's a massive compression of the income distribution that we often call the golden middle. Because it was associated with a blossoming of middle-class incomes. This all fell apart around 1980, and we go back to the same pattern we were in in 1913.

• 16:37Speaker 02

  The US becomes a little bit more unequal every year as measured by how much income the top 10% is earning. So, back to this paper. Their question was, what made us so equal in the 1940s and 50s? Like, what caused this kind of incredible period of a more equal place? More equal income distribution. So, this paper looks at unionization and the introduction of union rights through the National Labor Relations Act, as well as the protection of unionized shops through the wartime Production Act, and finds, basically, yeah, unions did this. Not entirely on their own, but they were an incredibly large contributor to the income

• 17:20Speaker 02

  equality kind of gains that we saw in the 1940s. And they, the paper, they kind of say, like, it's probably from like the late 30s through at least 1950, we have a reasonable amount of evidence that the decline in income inequality was due to unions. So if people now are feeling like there's a lot of wealth inequality and not a lot of unions, and maybe that's related, there's a lot of economic, I mean, this is a very solid piece of economic research to say, your instincts are right, because history says this is what unions have done. And I gotta tell you, it's very hard to prove anything decreases income inequality in the US. It's not like, oh, so we've actually found like 75 different things that'll help with income, no, we haven't.

• 18:04Speaker 02

  It is very hard to decrease income inequality. It's hard to find something that effectively does it. So for a paper to say like, pretty loud, like, yeah, y'all, unions make the economy a more equal place, is, is a, it's such a remarkable finding. That makes intuitive sense for people who like unions, that's very hard pill to swallow for people who don't, because they do have economic costs associated with them, but they, they reduce income inequality. And so, what I find so incredible is that people, in their opinion polling, have come around to what I would economically assess to be the case, which is that the US is in need of more worker empowerment, bargaining, and unionization.

• 18:45Speaker 02

  There is too much power in the hands of employers right now, and it is showing up in income inequality. If we want to counter this, we need some unions.

• 18:53Robin Rauzi?

  Yeah. Well, and a lot of other things are happening in tandem to that, right? That the biggest employers are themselves getting so big that it's much different than, you know, unionizing a small local factory to try to unionize a national warehouse, you know, union for Amazon.

• 19:12Speaker 02

  Yes. And I think that there are lots of other through lines that we have less amazing evidence with, but that would people would say like, this is probably part of it. Like, we have a turn towards corporate stock buybacks. We have, you know, massive deregulations of major industries. We have kind of a renaissance of mergers and acquisitions that reduce the number of employers and companies and increase concentration in the market. That gets like, basically it's a go ahead from the Fair Trade Commission for decades until Biden's FTC was like, actually, we're not gonna. A lot goes hand in hand with this, but we have identified solidly-

• 19:50Robin Rauzi?

  Well, and wage stagnation goes in hand with this, which-

• 19:53Speaker 02

  Yes. And that could be a two way street as well. So we have at least one very clear quiver in the arrow. No, arrow with a quiver. God damn it. Why do I say it? Okay. So that's part one.

• 20:06Robin Rauzi?

  Okay.

• 20:07Speaker 02

  So people like unions. They want unions. They think unions are important. And this definitely aligns with the economics literature saying that unions were instrumental in decreasing income inequality in the United States. But the policy mechanism we have for increasing unionization is the National Labor Relations Act, and it has been so thoroughly gutted over 90 years. It's as if it's not there.

• 20:31Robin Rauzi?

  Yeah.

• 20:32Speaker 02

  So I could bring up some pretty startling statistics about how the National Labor Relations Act have been gutted. I don't think we should spend too much time on it because- It's basically instructive, but not productive.

• 20:43Robin Rauzi?

  Mm hmm.

• 20:44Speaker 02

  Instructive to the sense that the N L R A is not necessarily the future.

• 20:49Robin Rauzi?

  Yeah.

• 20:49Speaker 02

  Because it has been so thoroughly dismantled and something else has to come. Um, so here's some, here's some crazy stats for you. The union avoidance consulting industry is about $400 million in size. That gives you essentially how much wages they're afraid to lose.

• 21:04Robin Rauzi?

  You should explain what a union, what union avoidance.

• 21:07Speaker 02

  Union avoidance would be contractors, that businesses hire to persuade people in an organizing campaign, not to unionize. It's both during campaigns, then also to prevent campaigns. Of campaigns that have made it to the National Labor Relations Board, a study in 2019 found that 41% of them had, the employer had violated the law.

• 21:30Robin Rauzi?

  You mean in terms of trying to suppress the unionization effort?

• 21:33Speaker 02

  Every unionization effort you've heard of in the past five years, the employer has violated the law, probably Starbucks more brazenly and openly than anybody else. And I remember thinking at one point, like, maybe Starbucks doesn't know this is illegal. Like, maybe they've just, it hasn't occurred to them that you can't tell people, we'll give you a pay raise if you don't join the union. That's very illegal. And they did it like with a press release.

• 21:59Robin Rauzi?

  Ouch.

• 22:00Speaker 02

  It wasn't, wasn't quiet.

• 22:02Robin Rauzi?

  Well, you know, but you have a law that's been so unenforced, it's entirely possible that, that, that folks don't know that it's illegal. I mean, I'm not making excuses for Starbucks. I, you know, sworn off them, but sorry if they want to be our sponsor, but.

• 22:17Speaker 02

  Oh, yeah, we lost out on Starbucks as a sponsor. Sorry, y'all violate labor law brazenly. But I think probably Starbucks is the most instructive in terms of why the N L R A breaks down is that it doesn't have a good mechanism for making people write a contract. So you followed the Starbucks in Buffalo, New York, voting to organize. That was almost five years ago. They don't have a contract. No Starbucks in the U S does. Their tactic for avoiding unionization, which is something that every company will do, is that they will wait years to get through a contract, by which point people have either given up or left and they can make it weaker if they make it at all. Hence the National Women's Players Association, we said now. Right?

• 22:59Speaker 02

  It's not just that we want to be in a union, like you actually have to bargain with us once we vote for it. Yeah, I mean, the N L R A, the ability to organize, has been weakened on every front.

• 23:10Robin Rauzi?

  Mm hmm. Besides the fact that you can just drag your heels as a business owner, what are the other ways that that law should be letting people organize that that's just not happening?

• 23:20Speaker 02

  Well, it should be really easy. You work in an enterprise. We have enterprise-based bargaining. So this is like you work at a shop.

• 23:26Robin Rauzi?

  Mm hmm.

• 23:26Speaker 02

  You work at a cafe. You work at a manufacturing facility. Y'all have the right to talk about joining a union. People who are in a union can come tell you why it's good. And then you get to vote on whether or not you want to join. And if you vote yes, the employer is supposed to grant a union. Almost every part of that process breaks down.

• 23:44Robin Rauzi?

  Mm hmm.

• 23:45Speaker 02

  Like, one of the, I think it was one of the Amazon votes, where they set up, they were, they set up the ballot box and they put like three cameras in front of it. Some people were like, you know, I don't really feel comfortable voting because it's at my workplace and they're watching me vote. Yeah, stuff like that. That one, they had to vote again. I think that was in Alabama, where the judge was like, yeah, you're gonna have to hold this vote again. Because you had, I mean, what employers do best is counter information campaigns through the union avoidance industry, a lot of misinformation, and then a lot of intimidation.

• 24:20Robin Rauzi?

  Yeah.

• 24:21Speaker 02

  And you're not allowed to tell someone, if you vote for the union, I'll fire you. The other thing that's been happening a lot is that there's been accusations that once shops organize, they will downsize the company and get rid of that shop. For the podcast, it helps to like,

• 24:37Speaker 02

  if they had done such a thorough job of gutting the N L R A, that means they're good at it.

• 24:42Robin Rauzi?

  Mm hmm.

• 24:42Speaker 02

  And so even if we were to prop it up, give it some more teeth, I think we could do lots of things.

• 24:46Robin Rauzi?

  It could just happen again.

• 24:48Speaker 02

  It could just happen again.

• 24:49Robin Rauzi?

  Yeah.

• 24:50Speaker 02

  And so the question is, is there a way to promote unionization that does not rely on the enterprise-based bargaining guaranteed by the National Labor Relations Act that private industry has so thoroughly hated, gutted, and overpowered over the past 90 years? And the answer is, yeah, girl, there is.

• 25:10Robin Rauzi?

  Okay.

• 25:10Speaker 02

  Uh huh, you know it.

• 25:11Robin Rauzi?

  You know it.

• 25:14Robin Rauzi?

  Thank God, or we wouldn't have another podcast episode.

• 25:17Speaker 02

  Yeah. Otherwise, this would be downer economy.

• 25:20Robin Rauzi?

  Downer economy.

• 25:21Speaker 02

  Brought to you by income inequality.

• 25:24Robin Rauzi?

  Brought to you by Starbucks.

• 25:32Speaker 02

  Don't cut that.

• 25:37Speaker 02

  First, let me say, I think we should restore a lot of the rights of enterprise-based bargaining because it has a role in our economy. What I think the US needs to pursue in tandem with gusto is sectoral bargaining.

• 25:49Robin Rauzi?

  Just take a beat here and explain that you're talking about essentially not having to unionize shop by shop by shop, but doing something else instead.

• 25:57Speaker 02

  In a sectoral bargaining model, it's sometimes called multi-employer models or industry models. Basically, everyone who works in an industry, which can be a small or large industry, is brought under a labor agreement. So this used to be called the tripartite because the idea is that you would have a worker representative, a business representative, and a government representative on a board that would negotiate wage and working condition floors for whoever is in an industry.

• 26:29Robin Rauzi?

  Okay.

• 26:31Speaker 02

  You would have much of your minimum working conditions and wages organized on a sector-by-sector level. And the benefits of it is that it's a lot more coverage, even if it has less teeth. And it sets wage and working conditions that are very specific to the sector, meaning that sectors that are small and wouldn't necessarily influence national labor policy can still see improvements in their working conditions that are really specific to them. So you wouldn't necessarily have a piece of legislation that is going to dictate the RODA schedule and workload of nurses. But a wage board could do that and be a way to make improvements industry-wide.

• 27:14Speaker 02

  And basically, everybody in the industry has to adhere to it. A lot of conservatives love sectoral bargaining because you still have like competition between firms. You don't have like, if one of them becomes enterprise and the other one doesn't, then they're competing on this union side.

• 27:28Robin Rauzi?

  Yeah.

• 27:29Speaker 02

  And it covers everyone. I think the worry from the labor side is that a lot of the benefits to unionization There's a worry that they would be lost if it was too diluted amongst like an industry-wide board. So like, unions are incredibly good at making sure labor law is followed.

• 27:46Robin Rauzi?

  Mm-hmm.

• 27:47Speaker 02

  The safest workplaces in the US are going to be the ones that have a unionized shop.

• 27:50Robin Rauzi?

  Mm-hmm.

• 27:51Speaker 02

  Because they are protected from, say, retaliation if the union makes a complaint about safety as opposed to like, just one guy.

• 27:58Robin Rauzi?

  Mm-hmm.

• 27:59Speaker 02

  So they're pretty good at enforcing and having labor law enforced. But the benefits to an industry-wide board would be, you know, it would get around things like really weird employer subcontracting ownership structures that can be used to shield liability.

• 28:17Robin Rauzi?

  Oh, like, you're bringing in contractors to do the cleaning in your hotel and they're not your employees, that kind of thing?

• 28:24Speaker 02

  Exactly. They're not my employees, so I don't pay for them. And, you know, if they employ children, like, that wasn't on me.

• 28:29Robin Rauzi?

  Right.

• 28:30Speaker 02

  Right? Whereas if you have an industry-wide labor agreement, it doesn't matter which is the employer in the industry. Like, this is the labor agreement that your hotel has to follow because it's a hotel labor agreement.

• 28:42Robin Rauzi?

  Mm-hmm.

• 28:42Speaker 02

  And it's set by workers, it's set by the employers, and it's set by the government.

• 28:47Robin Rauzi?

  Mm-hmm.

• 28:49Speaker 02

  Now, why tripartites fell apart in the US, even though we had these in the 30s and 40s, why they fell apart, is, it's a little, like, it depends on whether or not you're liberal or conservative. Conservatives tend to say it's because unions like the UAW felt like they were a threat to their power. And so they encouraged the abandonment of sectoral bargaining in order to concentrate power amongst enterprise bargaining because the unions wanted all the power. Liberals would say that sectoral bargaining agreements were starting to come into industries that employed black people, and that conservatives did not want black people to be empowered with higher wages or working conditions.

• 29:30Robin Rauzi?

  Hmm.

• 29:30Speaker 02

  So you can take your pick.

• 29:33Robin Rauzi?

  No winners there.

• 29:35Speaker 02

  No winners there. But if it really matters to you to blame someone after the Taft-Hartley Act of 1947, you go pick your hero.

• 29:43Robin Rauzi?

  Or your villain.

• 29:46Speaker 02

  Go pick your villain. Go pick your hero. Go pick your villain. I think the upshot is that this was something that we had in the US and it was popular and effective. If it went away, it wasn't for a good reason or any reason that would make us think that... I mean, if the reason why it went away is political, he said, she said. It's not like, oh, but it turns out it didn't work here. It's like, oh, okay, so it empowered a lot of people and someone was upset about it. Sounds all right to me.

• 30:14Robin Rauzi?

  I'm okay.

• 30:19Speaker 02

  That's weird. My pulse didn't even go up a little bit when you said that. So, yeah, it's something that we had in the US. We were an early champion and developer of sectoral bargaining and Europe adopted it kind of in full force. And even though it was something that we had kind of done first, not done first, but it was an American thing in Europe, really. Now, Europe has a lot of sectoral bargaining agreements, but they're starting to make their way back to the US. The Fast Food Commission in California is a sectoral bargaining agreement that everyone who works for fast food has to follow minimum wage and working conditions. And that's a function of employers and the state of California and workers coming with those pieces.

• 31:02Robin Rauzi?

  That's interesting. Yeah, because we've also had... Is this an extension of the sort of fight for 15, the minimum wage fight for fast food workers, at least in California?

• 31:11Speaker 02

  Yeah, the fight for 15 to raise the minimum wage was a broader fight. It came out of Seattle, Sea-Tac.

• 31:18Robin Rauzi?

  Oh, right.

• 31:19Speaker 02

  The airport. The Sea-Tac Airport was the first one to demand $15 in minimum wage. And then it was brought into a broader national movement. And then when that fell apart, used in focused campaigns.

• 31:30Robin Rauzi?

  Mm-hmm.

• 31:31Speaker 02

  15 is too low now.

• 31:33Robin Rauzi?

  Yeah. We're fighting now over 30 for the Olympics in Los Angeles.

• 31:38Speaker 02

  Really?

• 31:39Robin Rauzi?

  Yeah. And the hotels are fighting it, fighting it hard.

• 31:43Speaker 02

  I would imagine.

• 31:44Robin Rauzi?

  Yeah.

• 31:45Speaker 02

  But this is the thing, like, what should the minimum wage be for hotel workers during the LA Olympics versus like... Your small seaside bed and breakfast in Georgia. I mean, one of the, one of the strengths of sectoral bargaining is that it can set wage floors on the national level and set wage floors on, on state level.

• 32:06Robin Rauzi?

  Hmm, they don't have to be.

• 32:07Speaker 02

  And part of the, one of the reasons why we don't have more of them is that it's actually not clear they're legal.

• 32:13Speaker 02

  They might violate, they might violate antitrust law. Well, there's like some weird antitrust.

• 32:19Robin Rauzi?

  Oh, sure, sure, sure, sure.

• 32:20Speaker 02

  Like, there's no law that says we can't have sectoral bargaining, but there are pieces of the law that could be interpreted as technically this is collusion.

• 32:28Robin Rauzi?

  Colluding, yeah.

• 32:28Speaker 02

  Yeah, so there needs to be some clarity on the national level, but the next sectoral bargaining is nursing home workers in Minnesota are moving towards a sectoral bargaining agreement and also Uber drivers in Massachusetts. You're starting to get these pockets of breakthroughs that are, I mean, they're very successful. So we have the model, we have some small examples. What we really need is kind of federal, like, yeah, y'all go. And, and I think they could really take off. I don't actually think they're illegal. I think someone's going to use language in antitrust law to bring up lawsuits.

• 33:05Robin Rauzi?

  Yeah.

• 33:05Speaker 02

  So it would be nice to skip that part with a little bit of like federal language, like, dear states.

• 33:12Robin Rauzi?

  You're allowed to do this.

• 33:13Speaker 02

  You should do this. Love, Uncle Sam.

• 33:17Robin Rauzi?

  Do you think that these would be most effective on the state level? Or do you think that there's a place for them on a national level? I mean, the United States is such a big, big country, but we have employers that are that big. We have, you know.

• 33:30Speaker 02

  Yeah. I think there's room for national, regional, and state agreements. And you could even have local ones pop up. I think it depends on the industry and the occupation. So like.

• 33:45Speaker 02

  You should have a sectoral arrangement for farm workers on the West Coast.

• 33:48Robin Rauzi?

  Right.

• 33:49Speaker 02

  And it shouldn't be about California versus Oregon versus Seattle. We just need a West Coast farm worker alignment. There's something really close that happened with tomato pickers in the Southeast and in Florida, which started with the Coalition of Amokale Workers, which is, in some ways, is less about sectoral bargaining per se from the top down. It was truly a sectoral bargaining movement that came from the bottom up, of targeting employers one by one to treat their tomato pickers better. I mean, that's a 20-year fight. But I think if this were going to work really well, you would see it move based on where it's most appropriate.

• 34:24Robin Rauzi?

  Mm-hmm.

• 34:26Speaker 02

  And then you could still have enterprise bargaining. In fact, there is still a need for enterprise-based bargaining, but we wouldn't unhinge the entire labor movement or like good wage growth and labor law following of workers on like a shrinking population. Like, we could get that population to go up, but maybe it's like put all eggs in one basket versus like different enterprises, different industries, different employment arrangements. Like, one of the problems I have with enterprise-based is it doesn't have a great mechanism for bringing contracted workers into the fold. But if you have a sectoral bargaining agreement, and let's say it applied to media outlets, that would govern freelancers.

• 35:06Robin Rauzi?

  Mm-hmm.

• 35:07Speaker 02

  So you wouldn't be able to structure your labor contract to undercut the sectoral-based workers with contractors that covers everybody who works for the industry.

• 35:16Robin Rauzi?

  Hmm.

• 35:17Speaker 02

  I think what I like about sectoral bargaining is that there's this kind of move towards having a lot of independent contractor relationships, and this is a way to bring them into a bargaining fold without necessarily making them work for employer or be boxed out of an enterprise agreement.

• 35:31Robin Rauzi?

  So some enterprises could have a union on top of a sectoral agreement if they had particular issues that needed to work out? I also, I wonder, I mean, this may be two in the weeds, but I'm, I'm thinking about, so the conflicts between like, living in one place and working in another, which has become more common, right? And I just thought of this because you brought up media workers. California passed laws that said, if you're going to use somebody essentially as a contractor, but they're actually doing the thing that you do. And newspapers were one of the places that got affected by this. In other words, you're hiring journalists to write news stories, then they have to be employees, and they can be part-time employees, but they have to be employees. And so, all of a sudden, everybody who wanted to hire, nobody wanted to hire Californians

• 36:15Robin Rauzi?

  because they were covered by this, this law, and nobody in any other state wanted to figure it out or deal with it. And it really hurt freelancers.

• 36:22Speaker 02

  But I think a sectoral agreement done well could obviate that type of conflict and problem.

• 36:28Robin Rauzi?

  Because you would have all the players at the table.

• 36:30Speaker 02

  Because you have all the players at the table. And maybe the, maybe it's not a, oh god, I'm about to say something stupid, but like, maybe it's not a tripartite, maybe it's a quadright?

• 36:40Robin Rauzi?

  It's a quad.

• 36:41Speaker 02

  Just a quad. Maybe it's a quadpartite? Like, that you need contracted workers, W-2 workers, employers, and government at the table, because we're seeing this bifurcation of workers, along with whether or not they're employee or non-employee, but the industry needs to cover all of them. So you basically have to have them all at the table. But the, I mean, the idea behind sectoral bargaining and why it's so appealing even to conservatives is that it's really about bringing everybody to the table to come up with an agreement that doesn't disadvantage any single employer.

• 37:13Robin Rauzi?

  Mm-hmm.

• 37:14Speaker 02

  Or any single worker, for that matter.

• 37:15Robin Rauzi?

  Yeah, let them, let them compete on some other basis.

• 37:18Speaker 02

  But I think you could imagine it having like, alright, well, we have a media sectoral bargaining agreement for California and New York, it still has to meet some kind of like national standard. So, most laws have a national floor that states can go above.

• 37:32Robin Rauzi?

  Like the minimum wage.

• 37:33Speaker 02

  Child laborers like this, minimum wages like this. So, for sectoral agreements, you'd probably have some, you'd have something similar of like, we have a national agreement in place, but your industry and your state can go above it.

• 37:46Robin Rauzi?

  I mean, you can imagine how this worked in like, I don't know, auto manufacturing or building planes during World War II. Companies now have, have workers who are doing all sorts of different things, right? You have marketing people, you have HR people, you have managers, you have computer programmers.

• 38:04Robin Rauzi?

  But the sector would include everybody who is in that, like if, if Microsoft is in technology and then the agreement was a technology workers agreement.

• 38:12Speaker 02

  There's not a rule here. You could go industry or occupation.

• 38:15Robin Rauzi?

  Oh, okay.

• 38:16Speaker 02

  Or an occupation within an industry. So you could come up with like

• 38:20Robin Rauzi?

  The software.

• 38:20Speaker 02

  A janitorial, grounds clearing and maintenance. Every employer in a state, they all have to follow this basic sectoral agreement for their grounds cleaning and maintenance staff. I actually think healthcare is probably the place where sectoral bargaining could really take off. Because hospitals do amazing things, but they're terrible employers. And we actually really need doctors and medical staff to not be burnt out.

• 38:47Speaker 02

  So it's of national interest that we have happy, healthy workers in the medical profession. But we don't necessarily have happy, healthy employers. So having some type of like negotiated wage contract for like emergency services workers, medical workers, I think it's some people see that as like the natural inroad for the rest of the economy. Is it like, hey, the government has a stake in some hospital in Minnesota not grinding its workforce to the ground? Because we need people to staff hospitals and we, we invest a lot in this profession. Uh, and you're like burning them up and chewing them out. Same thing with like teachers. There are some professions that are just of national interest that I think would give a, I think politically would make for a really easy leeway to like, we need to have

• 39:32Speaker 02

  a good agreement for them. And then that opens the door.

• 39:33Robin Rauzi?

  It's interesting you say that because both of those, both of those groups of people, nurses and teachers, both have pretty strong unions.

• 39:39Speaker 02

  Yeah, they do, but it, but a sectoral agreement would basically extend it to any non-unionized nurse because they're not, no profession is unionized at a hundred percent.

• 39:48Robin Rauzi?

  Okay. Well, and teachers is, yeah, I mean, you know, the, with the expansion of charter schools and things, fewer and fewer teachers even in public schools.

• 39:55Speaker 02

  Yes. So this is sectoral bargaining. I think it, I, I don't know if the case is like, y'all, it's not as crazy as it sounds.

• 40:05Robin Rauzi?

  Well, it does sound hard, and it does sound like something that the federal government would be wary of. Large employers have a lot of power and sway with our elected leaders, especially right now. And I don't know if they would put the full force of their opposition on something like this.

• 40:26Speaker 02

  I mean, if they respond to this the way they've responded to enterprise-based bargaining, it's going to be an uphill battle. But at the same time, like, we have the ultimate ace up our sleeve, which is that people don't like businesses and they like unions. So to the extent that we live in a representative democracy, this should not be as hard of a sell. Like, yeah, businesses have a ton of power, but like, they're not popular. And people want them to have less power and want workers to have more wages and want workers to be empowered in a union. So the idea is there, the policy is there, the support is there, we have a good solution. Do we have great leaders? No.

• 41:03Robin Rauzi?

  Not at the moment.

• 41:05Speaker 02

  But leaders are replaceable.

• 41:07Robin Rauzi?

  And our federal laws wouldn't preclude, like, as you were saying, there's places doing this at the state level. Demonstrating success in this at the state level could go a long way.

• 41:17Speaker 02

  Yeah. And maybe it'll take a while to get there, but I think there is a deep level of optimism for me for having a worker and union-based solution going forward that is very palatable to many people that would make a massive difference in our economy. And coming back to the same problem of like, our elected leaders are kind of crap. Like, well, that's been a problem for forever. And I have a lot harder time being optimistic when there's not a clear solution in front of me.

• 41:45Robin Rauzi?

  How does this get implemented? I mean, is this a new National Labor Relations Act? Or is it just a guidance from the Department of Labor to the states?

• 41:56Speaker 02

  I think preferably it would be national legislation, but there, states are taking the initiative to come up with their own sectoral agreements that are coming from worker pressure. And I think that employers are brought to the table when they realize how much better it is to be at the table with

• 42:14Speaker 02

  A person from the state of California on a wage board versus the legislature of California. That's the thing, like employers have to see it to their advantage to neutralize legislatures who are more active in this area. So this is why you need federal legislation because not every industry or state is going to have a legislature that they're afraid of. But, but yeah, I mean, I think that's one reason why employers come to the table is that they'd rather deal with a wage and hour and working condition technocrat expert to broker an agreement than leaving it to the fate of like the clown car that are the state and federal legislatures that we have. You want something tailored that will work for you and you can't get

• 42:55Speaker 02

  that necessarily from, but now the past 30 years have seen them incredibly good at taking all the teeth out of labor law and legislatures, but that won't last forever.

• 43:05Robin Rauzi?

  But they also want, I mean, we've talked about this before too, that there's a certain amount of certainty and predictability the businesses want and are, and would probably be willing to negotiate to get, right? Because as you say, when what you're doing is at the whim of state house votes year after year, or like the crazy petition gatherers at the Trader Joe's here in Los Angeles, like you don't know what your business could be facing, including a jump from $20 an hour to $30 an hour in wages.

• 43:37Speaker 02

  And I think this is very appealing to businesses who are good employers. I mean, the, the kind of, not necessarily dirty little secret, but you know, in a lot of industries, you could have a sectoral bargaining agreement and you'd have a lot of employers that wouldn't have to change a thing about how they do business, but it is bringing up their competitors to a better level. Where you're going to have leading employers who are paragons in terms of following wage and hour in labor law, who, who very much value their workforce and they are competing with people who are like wage violators who don't pay well. And at the moment, they're competing with them, but you could neutralize them and you could bring up standards for the entire industry. There's something that they would lose there, but there's also something that they would gain.

• 44:23Speaker 02

  Well, let's palate cleanse with chapter something.

• 44:27Robin Rauzi?

  Yeah.

• 44:27Speaker 02

  Executive orders.

• 44:28Robin Rauzi?

  Executive orders.

• 44:29Speaker 02

  Robin, after you.

• 44:30Robin Rauzi?

  Um, yeah, so we got this executive order from Rich, who I'm gonna shout out again in a second, who's also a spiritual sponsor for us this week.

• 44:39Speaker 02

  Oh, my God.

• 44:40Robin Rauzi?

  I know. Rich Gaddati of Midland, Michigan. Thank you so much, man. But he also sent a great executive order, and it said, "No corporation or company should receive a tax cut or government contract if any of their employees rely on public assistance. If you don't pay your workers' living wage, you don't deserve benefits from the government." This could be a rule, for all I know, but, um, it's, it's not. Catherine, checking your head.

• 45:03Speaker 02

  It's not a rule.

• 45:04Robin Rauzi?

  Yeah.

• 45:05Speaker 02

  Just ask Starbucks.

• 45:07Robin Rauzi?

  Do you think they have government contracts?

• 45:09Speaker 02

  Oh, they don't have government contracts. Oh, but is it government contracts? Receive a tax cut?

• 45:14Robin Rauzi?

  He said, "Well, yeah, I guess anybody receives a tax cut. Maybe like a tax credit, like a research. I mean, everybody gets the tax cuts."

• 45:22Speaker 02

  This has been a pet project of mine for a while that I think Rich would appreciate. I wanted to do a map of PPP loans and corporate tax cut rates to child labor violations.

• 45:36Robin Rauzi?

  Hmm.

• 45:37Speaker 02

  Because a lot of people who, I've done like a cursory, because, you know, they list child labor violations, it's by the location. And I went through one day, and I looked up like five, and two of them, I found their PPP loans. Not only did they get a PPP loan in the pandemic and not have to pay it back, but like two years later, they were employing children. And I'm like, this should, I wish, I pitched it to every journalistic outlet I had contacts at, and nobody did it. Maybe it seems kind of vindictive. Maybe that's my style. But yeah, Rich, I think we should have, um, you should have to do like a, oh, okay, well, I have now a related executive order. So I think we ought to come up with some kind of like, speaking of the massively long road trips that Robin and I have embarked on recently, I think we could use billboards a little bit more effectively.

• 46:22Robin Rauzi?

  Oh, yeah.

• 46:23Speaker 02

  Because billboards, right now, I don't know if you've driven on 1,500 miles, my assessment of the southeast would be it's personal injury lawyers. Sex shops and Jesus.

• 46:34Robin Rauzi?

  Oh, really? I get a lot of casinos in Jesus.

• 46:36Speaker 02

  You got casinos in Jesus? We got a lot of sex shops and then, and then Jesus in personal injury law. I think we ought to have some billboard apportions where if you violate labor law, and in particular, child labor law, the nearest billboard has to say what you did. So just, it's almost like the sex offender registry, but just a little bit bigger.

• 46:59Speaker 02

  It's like a billboard with like a down arrow that says like, this Starbucks was found in violation of the law by the National Labor Relations Act. Where like this.

• 47:09Robin Rauzi?

  It's like a scarlet letter kind of situation. Is that what you're?

• 47:12Speaker 02

  Yeah, a little bit, especially if you're a repeat offender. Maybe just like on the door, there's a sticker that says like, just so you know, this shop, doesn't have to necessarily be a billboard. I've just kind of got billboards on the line.

• 47:23Robin Rauzi?

  I'm sure they do this where you do, where you live, that they have grades for their food safety. So why not for their labor safety?

• 47:30Speaker 02

  Oh, yeah. Definitely put like a big pink sign, like you're legally obligated after you have a child labor violation. Too bad, labor law was written a long time ago and we don't care about it. So you had to pay all of like 15 bucks for that kid you kept locked in your place for two days. But we're going to put a really big sign on the door that says you use child labor in violation of the law. I feel like that's, that is my executive order.

• 47:52Robin Rauzi?

  It's been 30 days since our last child labor, child labor violation.

• 47:59Speaker 02

  But I would do it for wage an hour too. I would do it for, we stole wages on this date. Just put it up big time. And then if it's like a place where customers don't. I mean, I feel like if, then if you had like a, a big sign for, the billboard would just go for places that didn't have customers come in, like a warehouse. Oh God, do you know how chilling it would be for Americans if we put a sign above every warehouse with the number of people injured and killed on the inside?

• 48:24Speaker 02

  It would lead to a very, I think, I genuinely think people don't understand just how dangerous some workplaces will fully are in violation of labor law. And I don't know, I feel like we have a vindictive spirit in this country. Certainly we have like a self righteous bent. So like, so why not play into that for the sake of better workplace safety? Like billboard, a warehouse four miles down this road has killed three people. Yeah, I mean, you just.

• 48:55Robin Rauzi?

  Okay, that's an uplifting executive order.

• 48:58Speaker 02

  I'm just saying, there's lots of room for positive change.

• 49:05Robin Rauzi?

  Okay, and spiritual sponsors. Like I said, we have, Rich was our spiritual sponsor this week. He joined us on Substack as a spiritual sponsor, but my personal spiritual sponsor this week is barber shop patter. So I recently, the woman who cuts my hair was sick and I needed to get my hair trimmed and I went into a barber shop near me, which is not a normal place I would go, but I said, hey, can you just clean up my neck and over my ears? And I got to listen to the guy, he was working at the next chair, talk about baseball. It was Dodger baseball, went back to before the Dodgers even left Brooklyn, and I could have listened to it all day. And I wanted to record it and just play it by my bed at night to like lull me to sleep.

• 49:49Robin Rauzi?

  It was so, so comforting. Yeah, and I was walking by that barber shop yesterday and I was like, that was like the best. And just remembering it like lowered my pulse rate, maybe 10 beats a minute.

• 50:03Speaker 02

  That's lovely. My spiritual sponsor for the week is garage door openers. I have been in apartments or, you know, houses that were converted to triplexes or my own house, but with street parking. And for the first time in my life, I have a garage that is opened up with a little clicker that lives in my car. And I gotta tell you, I have never felt wealthier or richer in my entire life. I am like, watch out, here comes the queen, she's gonna hit this little button and I'm gonna take my car back to the house it has.

• 50:39Speaker 02

  I just, it's not something I've ever like, it's not like I just like laid there on the couch in DC thinking of like how deeply I wanted a garage door opener. And then like within a week of having the garage door opener, I was like, I will never go back. This is truly amazing.

• 50:58Robin Rauzi?

  I really hope that the woman who's positioned to buy our house in Spokane doesn't hear this, but after living there, I was like, if I ever have to live in Spokane again, we need a garage. Because, I mean, you didn't have to scrape snow off your car.

• 51:11Speaker 02

  Oh, I did in Wisconsin.

• 51:12Robin Rauzi?

  My car, did I ever tell you my car got frozen shut in Ohio? Like, the doors and everything froze. Huge snowstorm on the East Coast, freezes in Southern Ohio. They canceled classes for a week because we dropped so much snow. And then it turned so cold that it was dangerous to be outside, so they didn't even want the students walking to class. And my car was out on the street, and even once I dug it out, the doors would not open. And I got that de-icer, would not open. I opened the trunk, flattened out the seats, crawled through the car, and started it to warm it up so that eventually I could open the doors.

• 51:50Speaker 02

  Everything you're saying is my absolute nightmare. So that's why I'm like, the hail falling right now, I'm like, looks good. Doesn't it just warm your heart? Seeing pieces of ice falling from the sky in June in Houston? Like, I'm like, this makes perfect sense. I love this. Whereas like, any amount of snow, I'm like, well, I'm gonna hang out inside and not leave until it's gone, because if I try to walk or drive, I'll die out there. At least I know that when it comes to winter, I'm soft as hell.

• 52:24Robin Rauzi?

  All right. That wraps another episode of Optimus Economy and Weather Report.

• 52:31Speaker 02

  We like to end our show by thanking our two producers, audio and visual, Andy and Sophie, or Sophie and Andy, might be. Thank you so much. And that's just like another thing I said in the show that you'll have to fix, but I trust you, you're very capable. We would not be able to do the show without you. And of course, another shout out to all of the sponsors who have helped the show. We would not be able to do the show without you.

• 52:54Robin Rauzi?

  Thanks so much.