They're Back: Concessions Are Coming

Although COVID-19 is far from under control and reopening of the economy is stumbling, the airwaves are filled with people telling us how we should be thinking about economic recovery.

Far from a recovery, though, we are facing the worst economic crisis of a generation. The voice of workers and their unions has never been more important, because without us, we have a pretty good idea what’s going happen.

In fact, corporate and government leaders had a rehearsal—the recovery from the Great Recession of 2008.

That deep recession resulted from the predatory lending practices of the largest banks and the sophisticated money-making schemes, like derivatives trading, engineered by Wall Street. What was the government's response? It bailed out the banks—banks it determined too big to fail—and then turned around and bailed out major corporations who were struggling.

The guiding economic model was that corporate profits needed to be restored first, and only then could workers expect any relief to trickle down to them.

This approach resulted in a runaway train on Wall Street. Corporate profits soared, firms used profits to buy back their own stock, and CEO salaries shot up to obscene levels. Meanwhile, back on Main Street, the exuberance of Wall Street didn’t make any difference. Wages stagnated and working people got through by working more hours and putting more money on their credit cards.

So the “recovery” abandoned working people, while introducing an insidious new discourse on economic recovery. We didn’t blame up. No bank, no CEO was ever held responsible for their immoral actions that almost brought our economy to a halt. Instead, as the recovery got underway, we were told to blame downwards.

Who was to blame for the Great Recession? Not the bankers. It was those immigrants who came to take good jobs away from Americans. It was those high-paid union workers like teachers, with their gold-plated pensions and health care plans—and summers off. The theme was, Why should my tax dollars pay for teachers’ benefits when I don’t have any?

Corporate America was incredibly successful in shifting the blame off itself and substituting a discourse of scarcity. CEOs watched as the rest of us fought with each other, blaming down.

PLAY IT AGAIN

This is the play that’s ready to be rolled out, as soon as COVID-19 has retreated enough for us to be serious about economic recovery. The backdrops have been painted, the actors have rehearsed their lines, and the roles for workers and unions have been scripted.

Reprising the role that many unions played in the 1980s recession, unions are to understand that we are all in the same boat and will have to do our part to save our employers. Even though we were junior partners in their success (actually, we were not partners at all), we now have been written in to be senior partners in their failures. We will of course need to take concessions until our employers are profitable enough to cover our current wages and benefits.

LOOK BACK FOR A DIFFERENT WAY

But it doesn’t have to be this way. There are alternatives. And we only have to look back in our history to the recovery from the Great Depression to see a very different model.

The New Deal was based on a different set of assumptions—bailing out companies was not the first priority. The Roosevelt administration didn’t give money to US Steel or the Ford Motor Company, but saw its first priority as restoring workers’ wages.

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From 1935 to 1943, 8.5 million people worked directly for the federal Works Progress Administration—building schools and parks and contributing to the public good—representing a quarter of American households. At its peak, the WPA and its counterpart the Public Works Administration accounted for 25 percent of total federal spending. Now this was a jobs program—one that restored workers' ability to support their families and communities, and at the same time allowed them to gain the dignity and respect they had lost from so many years of being unemployed.

This is how we recovered from the Great Depression, not with corporate bailouts but with direct support of workers’ wages. And unions played a big part. A wave of strikes that unionized previously non-union industries had pushed Roosevelt and other architects of the New Deal to focus on workers, and union organizing in the late 1930s and 1940s help cement unions' place. Unions became powerful equalizing institutions and a counterbalance to corporations. Inequality during the postwar era was the lowest in U.S. history.

SAVING THE PATTERN

As we consider what road to recovery we will take today, two things are fundamentally important. First is how long it took to recover from the Great Depression and how long it took to build pattern agreements in important industries such as steel, auto, rubber, and trucking. Pattern agreements kept employers from playing workers at one company against those at another, to compete for work through wage cuts. This progress was slow. It took the sacrifices of many workers over many contracts to achieve those gains.

Second, it is amazing how quickly those patterns can disappear.

In the 1980s many union leaders saw the economic downturn as temporary. They thought that by taking concessions they would speed the recovery. What we know now is that there would be no going back to an earlier economic moment. Those concessions became the new normal. Last fall's strike at General Motors provides an example. It wasn’t until 2019 that workers were finally getting back some of what they lost to the concessions they made in the wake of the Great Recession.

A NEW STORY

Now is the time for us step up and create a new story about how this economic recovery might happen.

It starts first with a careful analysis of the problems that many employers are facing. This economic crisis is not caused by worker wages. Airlines, hospitality, and other service industries are facing a lack of demand because of COVID-19. Workers could give back all of their wages and it would not make up for the loss of demand.

If not wage and benefit concessions, then how do we rebuild these industries? In so many, workers are being asked to take on a variety of new tasks and procedures to keep customers safe and protected. These workers are the real face of the firm—not the actors in the commercials, nor the corporate executives safely ensconced in their corner offices. The work of these front-line workers—in their careful following of procedures and the emotional support they are providing—is exactly the way demand can be rebuilt. There is no way customers will return without them.

So the last thing we would want to do is to ask these workers to work for less pay and the other protections their contract provides. We can make the argument that they in fact deserve extra compensation for their Herculean effort. We need to fight back against trickle-down thinking and build a new anti-concessions movement.

We have heard so much about the heroism of frontline medical workers and a swath of service workers who in the past routinely were dismissed. We need to build on this recognition of heroism and move it forward into discussions about the economic recovery. That is how to create a worker-centric recovery plan, not through a knee-jerk call for concessions.

This time we must stand up against blaming downwards—the demonization of immigrants, poor folks, and people of color. This is a very different moment. It's not the economic downturn of the 1980s nor the Great Recession. It's time for us to stand up for a workers' recovery not based on concessions.

Tom Juravich is a professor of labor studies and sociology at the University of Massachusetts Amherst.