What happens to the low-skilled workers?

I was fascinated by this project by This American Life and their friends at Planet Money:  "Unfit for Work: the Startling Rise of Disability in America."   Chana Joffe-Walt makes an incredible, thorough study of the increase in people on disability (a part of the Social Security Adminstration) in the country over the past couple of decades.  She makes a compelling point in the final segment that a large driver of this increase was the federal government's Clinton-era shift to move people off of welfare rolls.  Because states had to cover an increasing percentage of the welfare costs, but disability was funded by the feds, these incentives have motivated states to take an active role in helping people submit successful applications for disability benefits. 

But as a labor lawyer, there was another point in the piece that I found particulary fascinating.  First, look at these charts, that show how applications for disability rise and fall with the unemployment rate:





Joffe-Walt argues, "disability has also become a de facto welfare program for people without a lot of education or job skills," and quotes an MIT economist who observes that unemployment statistics do not count people on disability:  "'That's a kind of ugly secret of the American labor market,' David Autor, an economist at MIT, told me. 'Part of the reason our unemployment rates have been low, until recently, is that a lot of people who would have trouble finding jobs are on a different program.'"  On a more anecdotal level, Joffe-Walt talks about a woman with back pain who, it seems, "could not conceive of a job that would accommodate her pain."  In the radio version (short version and long version) she observes that this reflects a gap between her own world and the world of low-skilled workers:  for Joffe-Walt, and myself, and our coworkers, we are able to work successfully with back problems and knee problems and other physical ailments.  For low-skilled workers, it seems, there may be a mismatch between their job skills and physical abilities (and limitations), on the one hand, and the jobs that are available to them on the other. 

With this fresh in mind, a remark in this Daily Beast article grabbed my attention.  In the provocatively-headlined, "Why a BA is Now a Ticket to a Job in a Coffee Shop", Megan McArdle reviews some recent social science studies suggesting that more and more college graduates are winding up with low-skilled service-sector jobs.  She considers the policy implications of this trend, asking if too many young people are spending too much money on college.  And in the course of this analysis, she observes that as college grads increasingly fill low-wage service jobs, "The workers who can't get those jobs are taking less skilled ones. The lowest-skilled workers are dropping out entirely, many of them probably ending up on disability." This remark certainly seems bourne out by the data in Joffe-Walt's study. 

How can we find a better solution than the sort of jerry-rigged social response of putting people on disability?

[A couple caveats before I move on:  of course there are many folks who so disabled that they can't perform any job.  I'm not talking about them.  Also, there may be some folks who scam the system because they are lazy.  I'm not talking about them either.]

"Unfit for Work" makes clear that while "disability has become a de facto welfare program . . . it wasn't supposed to serve this purpose; it's not a retraining program designed to get people back onto their feet . . . federal disability programs became our extremely expensive default plan."  The program also fails to serve a welfare-like social purpose because "in most cases, going on disability means you will not work, you will not get a raise, you will not get whatever meaning people get from work. Going on disability means, assuming you rely only on those disability payments, you will be poor for the rest of your life."  Not only does disability fail to serve the social purpose of a welfare safety net, but it is an entirely unsustainable safety net, such as it is:  "disability programs, including health care for disabled workers, cost some $260 billion a year. . . . The reserves in the disability insurance program are on track to run out in 2016." 

It is clear that we need a new solution.  There are a lot of depressing facts to take away from this.  But I also learned a couple of things from this reporting that I find really valuable and not simply cause for despair:  first, disability is a big part of the answer to the question of what happens to low-skilled (or wrongly-skilled) workers in this dismal economy, and should be borne in mind when considering unemployment statistics; and second, the study makes clear that disability programs serve as a poor stand-in for the welfare, job-retraining, and social safety-net programs we really need.  Now that we see these glaring errors and omissions in our social system, let's get to work at designing better programs that present better solutions to our social and economic problems.  Namely, finding jobs and health care for everyone who is able to contribute to our economy and society. 

Massey Coal, Bloombito, and American freedom of the press

 Bloomberg news today has an article highlighting the plight of a case pending against Massey Coal and its successor, and also providing a good explanation of how the recent Noel Canning decision allows employers a way to delay justice for workers in all sorts of cases.  For a silver lining, I want to add that I think it says something good about America that an article in a plutocrat's eponymous newspaper could have such a forceful headline and message: "Workers Die Awaiting U.S. Justice as Companies Make Limbo".
 

Inequality on the rise, and the Sisyphean task of a labor lawyer

In conenction with posting this incredible chart,

 

 

 

the Maddow Blog concludes,  "I don't imagine Republicans want to hear this, but slashing investments in 'Obamacare,' education, aid to the poor, and foreign aid may advance a far-right vision, but these aren't the policies that are responsible for the existing budget shortfall." The first commenter says that Republicans just don't "get it." Maybe, just maybe, it's no accident, no failure of political comprehension, that certain politicians are promoting policies that "advance a far-right vision" whilst claiming that they serve a different purpose. Call me a conspiracy theorist, but I think a lot of those folks know exactly what they're doing.  

You see, after watching this viral video, I can't help but look at everything - everything - as part of this larger picture.  (The video is so good I'm embedding it here:)

I  saw a few people, pages, movements post this to Facebook before I finally watched it.  You see, I thought I already knew enough about wealth inequality that this wouldn't show me anything new.  I was wrong.  Somehow, the presentation here blew my mind.  After seeing this, I can't help but see the driving forces behind this increasing inequality in everything.  EVERYTHING.   Congressional budget cuts?   Check. The "far right vision" promoting the cuts described above? Check.  The forces behind those Bush tax cuts?  Bailing out banks but not homeowners? No raise to minimum wage in decades? Student loan debt? Check, check, check. It's all leading to this sorry, shameful, devastating state of affairs.  Even less directly economic things...  Criminal justice system?  Check (privitized jails, prison labor, among others).  War?  Check (See Eisenhower on the military-industrial complex, or Rachel Maddow's Drift.) 

Its not so much a conspiracy theory, exactly.  In my mind, it goes more like this:  of course the wealthy and powerful want to hold onto their wealth and power, it's human nature, greed, something less deliberate than a "conspiracy."  This country used to have certain counter-balances to those forces.  We had government regulations on banks and stock trading, minimum wage laws and labor laws, we had unions that consolidated the power of workers to offset the power of companies.  Now, it seems that so many forces are coming together creating the situation you see in the video.  Laws are being taken off the books, regulators are being defunded, unions are weakening.  Companies are consolidating, too, and these larger companies (say, Walmart) and their power over their enormous supply chains and networks of subcontractors creates even greater power that is more difficult to fight against.  Citizens United.  More and more money in politics, and more need for politicians to fundraise, and more need to listen to lobbyists.  The minimum wage wasn't intended to keep up with inflation, and hasn't been raised in decades.  There are so many forces contributing to where we are now.

So then, the next thing that comes into my mind - as I'm sitting here in front of a computer because I'm supposed to be working, so work is on my mind - is that the the trajectory of my career has been to move from helping the powerful consolidate their power (as a Big Law lawyer) to having a job where I am fighting against this trend.  Co-workers in my federal labor law agency are constantly bemoaning our lack of power, the right's incessant assault on our agency despite that lack of power, the sad fact that our process and remedies so often fail to help the workers we are meant to protect.  I have taken a more optimistic view, but have struggled to articulate it in a way that doesn't sound purely naive in these conversations.  But I think this finally gives me a framework to understand the positives and the limitations of my job.  You see, in putting all my energy into enforcing the remnants of a law meant to protect workers' collective power, I am at least moving the right direction in the Sisyphean task of fighting against rising inequality.  (When I say this, I actually envision a little guy trying to keep a boulder from sliding down a hill, and he exerts all his effort just to hold the boulder in place, but at least it doesn't run over him and go crashing down the hill.) If your goal is provide quick and certain remedies for workers who are wronged by their employer, my agency will disappoint you.  But if you view federal labor law as a lucky anachronism, a law supporting a movement that both should have been erased years ago, but despite all odds, still exist, then your view will be different.  To me, it seems that just doing my job, and doing it well, is a step in the direction of supporting the New Deal-era notions of collective worker power against the increasing consolidation of power among the powerful. 

By looking at my job in these terms, I can take a step back and ask whether there is a place where I can fulfill this goal more effectively, or whether I'm contributing something where I am (or again, whether I'm being naive, or just trying to justify making a comfortable government salary instead of a less comfortable non-profit one). 

My father worked in a steel mill in upstate New York until the once-vibrant steel industry was finally put on its knees. He survived takeovers by Koreans, Spanish, and some other foreign-owned companies I'm forgetting, until he was one of the last employees remaining.  I'm a little afraid that this will be my fate as a labor lawyer: that I'll duke it out as Republicans and the Chamber of Commerce wage war on my little agency, until one day, the whole thing will finally be shut down and I'll go out with it.  And join my fellow 99-percenters, I suppose, who were rendered redundent by the changing forces of our economy.  But until then, there are some workers who need some justice, however delayed, and an employer that needs to answer to me, whatever that's worth, for the war it is waging against its employees. 

The Promised Stella D'Oro Strike Post

I am writing this blog entry, in its entirety, for the second time. After Sunday's post on deep practice, making mistakes and correcting them, you may think that I am successfully pushing myself to self-critique and revise. But no, it’s a simple case of a computer glitch losing an hour’s worth of work and – after a bit of rage, glass of wine, and good night’s sleep – forcing me to do the whole thing over again. After that post, however, I can only conclude that this was a sign that I should in fact push myself to rework and revise, and improve upon the prior version. You’ll have to take my word on the improvement part.

I promised a blog on last week’s New Yorker article, Out of the Bronx: Private Equity and the Cookie Factory, by Ian Frazier (subscription required). And as promised, I read the NLRB decision in the labor dispute, available here (.pdf). After the initial blog crash, I found some more sources - a radio interview with the striking employees, for example. (As it turns out, there is also a documentary about the strike, "No Contract, No Cookies," which I'll admit to not having seen. HBO subscription required for this one.)

And I find that the more I learn, the more questions I have.

Let me begin with a brief synopsis. Stella D'Oro began as a family-owned business in Bronx, and during that era, the employees became represented by the Bakery, Confecionary, Tobacco Workers and Grain Millers International, Local 50. At some point the family sold the business to Nabisco, which in turn sold to Kraft, which, in 2006, sold to a private equity fund, Brynwood Partners. Brynwood purchased in the middle of the term of a collective bargaining agreement, and the labor dispute arose during neogtiations for a successor contract. During those negotiations, Brynwood told the Union and employees that it needed wage and benefit concessions because the business was not profitable and, without concessions, it would have no alternative but to close down. After months of negotiating without agreement, on August 14, 2008, the employees decided to go on strike. They offered to return more than seven months later, on May 1, 2009, but Stella refused to take them back. Two months later, on June 30, 2009, an NLRB administrative law judge found for the Union (on the NLRB General Counsel's complaint), holding that Stella had violated federal labor law and was required to take the employees back to work.

This fleeting victory ends the success part of the story, for the employees. The bad part came just three months later, when Brynwood announced on September 8 that it had sold the business to another corporate bakery, Lance, Inc. Exactly one month later, the Stella plant in the Bronx closed for good. Lance moved the Stella product line to one of its factories in Ohio, and the 130-plus employees in the Bronx received a severance of one week's pay for each year of service, and set off to look for new work.

Actually, there was one more success. On August 27, 2010, the National Labor Relations Board affirmed the decision of the administrative law judge. Of course, by this point another legal feather in the cap wasn't good for very much. The legal battles, and victories, do not touch on Brynwood's decision to sell Stella, or Lance's decision to move the work to Ohio, and they can't bring the work back to the Bronx. In fact, (unless I'm missing something, a lawyerly caveat) the best that the employees can hope for as a result of the Board's decision (which is currently on appeal to the Second Circuit) is backpay giving them the wages they should have earned from the date of their offer to return from the strike on May 1, 2009, until the time when the employer shut down the business five months later.  That is, five-month's wages is the all that is still at stake here, as far as I can tell.

The New Yorker article seems to contemplate whether the decision to strike was a good one.  Frazier notes that two years later, "most" of the employees have either retired or "are still looking for new jobs."  (The employees on the radio show reported that about 25 of their coworkers, out of 130, had found new jobs.)  He goes on to muse that the Stella D'Oro strike seems "similar" to Occupy Wall Street (of which strike leader Mike Filippou is a supporter, he tells us) because both are "not about specific demands but about inequality."

This caught my attention, and I'm wondering if Frazier is correct, or if he is idealizing the Stella strike.  Or is it possible that there was a hint of idealism among the strikers themselves?  And if there was, is that a bad thing?

Hearing about the events, with the benefit of hindsight, it is nearly impossible to avoid concluding that the strike was the wrong choice - and I am trying to avoid viewing this entirely through the 20/20 lense of hindsight. I am reminded of the guiding image in the excellent new book by Joe McCartin (my former professor, I'm proud to report), Collision Course: Ronald Reagan, the Air Traffic Controllers and the Strike that Changed America. McCartin uses this image of a "collision course" to describe the unfortunate trajectories of the union's and employer's positions, showing how the conflict between the union and the Reagan administration ultimately led, first to a massive strike, and then, to breaking the union and a loss for the labor movement as a whole.  Though I am admittedly simplifying, this image comes to mind here.

Here, the employees were justifiably angered and motivated by what they viewed as the private equity firm's greed.  I was struck listening to employees Filippou and George Kassai  in the WNYC interview by how they so proudly discuss their years of commitment to the company and its product, and accuse the company of making inferior cookies after its cost cutting. In the negotiations, Filippou appeared to understand Brynwood's calculus: he remarked that the employees knew that the employer could just close the facility, sell the brand and real estate, and make a profit in the process, or it could obtain the concessions it was requesting and then still sell the company, but at an even greater profit.  355 NLRB No. 158 at 21.  The employees clearly understood that Brynwood could sell the company at any time, but as I understand it, this paradoxically seemed to fuel their motivation to fight the company.

While the employer's perceived greed, the principle of fighting "inequality" (a la Occupy Wall Street), seemed to motivate the employees through the eight-month strike, the truth of this perception was ultimately their undoing. Filippou was correct that Brynwood could sell at any time and, indeed they did.

So what were the employees to do? Is the takeaway from the Stella story that every time employees go up against a private equity fund, the employees have to capitulate to whatever demands the employers makes of them?

This New York Times article looking at labor and private equity suggests - thankfully - that employees have had better outcomes in other cases.  As best as I can tell from the Union website, the U.S. Foods strike profiled in the article resulted in a new contract in December 2011. These employees were fighting none other than the king of private equity firms, Kohlberg Kravis Roberts. The Times article also mentions a victory by employees when Hugo Boss "reversed a decision to close a factory in Ohio after succumbing to an aggressive union-led campaign."  The union, Workers United, gives credit for bringing Hugo back to the bargaining table to the findings of a NLRB regional investigation; the business press remarks that Ohio's pension fund threatened to pull the €110 millon it had invested with the private equity owner. I'll refrain from drawing conclusions from my two sentences of research, but this certainly suggests that the battle of labor against private equity must be, at the very least, fought on many fronts. 

Rather than conclude with some sense of undeserved authority, let me instead share the questions that remain in my mind: what lessons can the labor movement (such as it is) take from the Stella battle? Do the Stella employees in fact regret their decision to go on strike? What would they have done differently? Was there any way to predict, at the time, the course of events that would unfold? Do private equity-owned-employers require a different calculus than typical employers for the employees and unions that try to stand up to them?