Today is Labor Day, a holiday meant to honor workers' many contributions to American society. But what about the other 364 days a year?
Wages are stagnant. Inequality continues to soar. The economy is growing, but the bulk of U.S. workers get mere scraps from the bonanza.
Plenty of this is due to decades of bad macroeconomic policy. But a lot of it is also because of failed rules in the labor market. Those rules can also be repaired. (The Economic Policy Institute has written a helpful paper detailing specific fixes.)
It won't be easy. There is not a lot of political appetite for reforms this aggressive. But if there's a will, here's the way:
1. Guarantee workers protections from unjust firing. This would be quite controversial with many employers, but it's also perhaps the most important and sweeping change. Right now, U.S. employers typically have "at will" relationships with their employees, meaning they can often fire employees "without cause." Unless a fired employee sues, alleging discrimination (because of age, gender, race, etc), an employer doesn't have to justify its termination decision to a judge or third-party arbitrator. For most workers in other Western nations, it's different. Employers in other countries have to proactively establish just cause for the decision. America should adopt a just cause standard as well. This would undoubtedly create problems for many employers, who might be more careful in their hiring decisions, and at some companies, this hesitation might lead to less jobs being created. But it would also make sure a job is a relationship of mutual obligation between employer and employee. And it would strengthen most every other reform on this list.
2. Make it easier to form unions and to strike. There are already penalties for employers who interfere with workers trying to form a union, or who fire workers in retaliation for forming a union. But those penalties are pretty weak. Meanwhile, bosses can require workers to attend meetings meant to dissuade unionization, they can gum up the legal works for years to delay an actual union agreement, and they can "permanently replace" workers who go on strike or protest. Labor law needs to be reformed to toughen up those penalties, and clamp down on all these other practices. Americans should also have the freedom to participate in secondary strikes and protests in solidarity with workers at other places of employment.
3. Ban right-to-work laws. Unions are legally obligated to bargain on behalf of all workers in the covered workplace, whether those employees are union members or not. For that reason, union contracts also require all workers, members or not, to pay the basic fees that fund the union's bargaining. But a whole bunch of states have passed so-called "right to work" laws, which forbid those fees for non-union workers. This sets off a free rider problem that eats away at unions' resources. Unfortunately, the Supreme Court recently applied the "right to work" standard to all public employees. But the federal government could still ban right-to-work laws in the private sector, and should.
4. End forced arbitration and regulate non-compete agreements. These are two examples of recent innovations employers use to dismantle worker bargaining power. Some companies are inserting clauses into work contracts that force any worker who signs to give up their right to class-action lawsuits, and instead rely on arbitration — a process heavily tilted in businesses' favor — to settle disputes with their employer. They're also pushing for clauses that forbid workers from finding employment with similar firms and competitors when they leave their job. These non-compete agreements are perfectly reasonable in many cases. If, as part of your job, your are privy to highly valuable trade secrets or intellectual property, it makes sense that your employer would want you to agree not to race off to its direct competitor. But when non-competes are applied to entire industries, and for onerously long periods of time, they unfairly shrink the range of workers' future opportunities.
5. Make pay and scheduling more just. Inflation has eroded the real value of the minimum wage. Many employers also indulge in chaotic schedules arranged at the last minute, sabotaging workers' family lives and their chances of finding second jobs. And while all hourly workers are eligible for overtime pay, the threshold for salaried workers is now so low that if you make the poverty level for a family of four, you won't get a pay boost for working more than 40 hours a week. The minimum wage should be increased to $15 an hour and indexed to rise with the national median wage; lawmakers should crack down on chaotic scheduling practices, and require extra compensation when last-minute scheduling is unavoidable; and the salaried overtime threshold should be raised to at least $47,500 per year, to then increase automatically.
6. National paid sick leave. This one is pretty self-explanatory. America has no national law requiring employers to provide workers with a set number of paid sick days each year. As of now, fully one-third of all U.S. workers do not get a single paid sick day, and it's as high as 44 percent if you only look at workers in the bottom half of the income distribution. Lawmakers need to fix this: say, one hour of paid sick leave for every 30 hours worked. That's about eight paid sick days a year for someone who works 40 hours a week, 50 weeks a year.
7. Increase transparency and communication. Right now, when many Americans get a job, employers do not clearly spell out if they're covered by something like overtime pay, or why the worker is classified as an independent contractor. The law needs to require businesses to clearly lay all this out when they hire someone, and provide justifications for independent contractor classifications especially. Franchise businesses also successfully argue that they're not responsible for labor violations by franchisee employers, and should not be sued for those offenses. Federal law should establish a joint employer standard that makes it clear they do bear responsibility.
On top of all that, Congress also needs to bulk up the federal staff tasked with enforcing all these rules, and provide them with more resources. The government should also require federal contractors to meet all these standards.
Now, the good news is most of these reforms have already been introduced in the legislature. The bad news is they aren't going to get passed under a Republican Congress and president. Democrats would need to retake both the House and the Senate, and the White House, and — barring a truly massive electoral sweep — finally get rid of the filibuster.
It's unlikely, I know. But on this Labor Day, it's at least something to hope for.