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Fighting the Future
(David McNew/Getty Images)

Fighting the Future

Walter Russell Mead

The National Labor Relations Board voted 3-2 last week to dramatically expand the bargaining rights of millions of workers at temp agencies, subcontractors, and franchises. While some of these employees could previously only negotiate with their immediate employer—i.e., the local McDonald’s franchise—more will now be able to negotiate with the parent company—i.e., McDonalds itself. This is but the latest of an increasingly draconian set of efforts to keep the blue model ticking.

In many ways, the 20th-century model of employment was still marked by the feudal and patriarchal past: the employer-employee relationship at big corporations, operating under blue model assumptions, was and is a kind of halfway house between the relationship of the lord of the manor and the peasants in the fields, and a purely market transaction in which one person performs a designated service for another for a mutually agreed upon price.

In the classic jobs-for-life corporate system, employees worked by the clock, not the task, were promoted and assigned on the basis of seniority, not performance, and the employer had a kind of patriarchal responsibility to her employees. Employees often signed morals clauses, regulating their personal behavior. In many cases, especially in isolated locations, but even in some “company towns”, employers operated “company stores” where employees could buy goods on credit (at, of course, interest).

Labor unions came onto this scene, which, much like the feudal villages of old, generally worked better for the higher-ups than for the peasants, and tried to improve things for those they represented. They tried to increase cash wages, and they tried to transform the patron-client aspects of the employment system into something that benefitted workers more. So instead of company stores selling bad goods for high prices on credit, there would be credit unions offering loans at good terms with no restrictions on where employees could buy the products for which they were borrowing the money. This was the era of defined-benefit pension plans and employer-sponsored health plans, an era in which good corporate citizens were expected to provide a range of non-wage benefits to their (mostly) lifetime employees.

In the blue model world, with the economy dominated by large bureaucratic corporations it was relatively easy to improve worker compensation through legal mandates. Labor law began to extend the patriarchal responsibilities of companies toward their employees, mandating rising levels of benefits. For several decades things worked reasonably well. Unfortunately, the ever-rising costs imposed by this approach, however beneficial to workers, ran into the buzzsaw of economic transformation. Beginning the in 1970s, the economic climate was becoming less hospitable to the oligopolies that once dominated the landscape. The breakup of the stable oligopolies and monopolies that dominated the large American market without fear of competition, the globalization of manufacturing, the increased speed of technological change, the end of discrimination against women and minorities in the labor market—all these combined to make the costs of the full formal system increasingly uneconomic for all but the most profitable and secure firms.

The response was the creation of a new economic sector in which the patrimonial relationship between worker and employer was attenuated. Temporary employment contractors, subcontractors, the rise of franchise operations, the rise of self employed providers of services once produced in house: these and other changes in the employment market increasingly simplified the employer-employee relationship: I do the job, you give me the money, we both go home. One of the reasons that the United States has escaped the troubles of the European labor market, with high youth unemployment rates, the marginalization of immigrants and chronic underinvestment is that over here the old model was less rigidly entrenched by the law, and alternative forms of employment took hold much faster.

For people still thinking in and acting on the assumptions of 20th-century progressive, blue model thought, this was a horrible roll-back of all the social progress of the 1930s through the 1980s. As fast as noble, public-spirited champions of the workers and middle class imposed new obligations on the greedy and unscrupulous capitalists, the same capitalists slithered out of their obligations by exploiting legal loopholes to transform their stable, jobs-for-life employees into hire-and fire-at-will contractors and subcontractors.

And, let’s be honest: one of the driving forces behind the transformation is that the old model imposed costs that were uneconomically high. So when companies move away from the old system, they save on labor and pension costs—and that can and does mean that workers can end up with less—in some cases, significantly less.

President Obama and the progressives in his Administration believe that by fighting this trend—and the NLRB ruling is intended to do exactly that—that by forcing corporations back into the old patriarchal model of a politically-defined and regulated patron-client/employer-employee relationship, they are fighting for the economic interests of poor people and the lower middle class most directly, but also indirectly and to a lesser extent for the rights of all workers. Union activists believe the same thing, passionately and sincerely.

What they don’t see is that the genie can’t be stuffed back in the bottle. All the king’s horses and all the king’s men can’t put blue Humpty Dumpty together again. Take the fast food industry, for example, an industry that virtually every economic and social policy of the contemporary progressive movement is trying to maim. From the $15-an-hour minimum wage in the industry demanded by New York to the fight against fast food on nutritional grounds by the Broccoli Police and the Nutrition Nannies, to this new NLRB ruling mandating that the employees of franchises be considered for certain regulatory purposes employees of the parent companies, the progressive movement is trying to do to McDonalds and related companies what Bill deBlasio and the taxi lobby want to do to Uber.

The net effect of these changes will be to narrow the choices of food that poor people have, to raise the price of the food they have to buy, and to accelerate the automation of the restaurant industry, further reducing the already limited number of jobs open to people with few skills. Progressives will look on the consequences of this disaster and conclude that with urban unemployment higher and the cost of living for the poor rising, we obviously need more food stamps and rent subsidies—and so we must impose heavier taxes on the companies and industries that are still profitable in order to pay for these necessary benefits.

The fundamental reason we have moved from the jobs-for-life, employer-as-__paterfamilias__ model isn’t actually because evil corporations and capitalists declared an unprovoked war on the working class. The reason for the shift is pattern of economic change that the information revolution and its unruly scion, globalization, are driving. Yes, companies and investors are trying to maximize their profits. The way to fix this is not for progressives to take up William F. Buckley’s stance “athwart history, yelling Stop!” We need to be thinking about new forms of labor market regulation and policy that ensure that, as the old system of employment gradually fades away and a new one gradually emerges, the new system is one that offers the best possible mix of opportunity and security to ordinary people.

The Obama Administration’s record on these issues is not all bad. Obamacare, flawed in other ways as it is, does at least begin to break the connection between a worker’s employment and a worker’s health care, and lowers some of the barriers that constituted discrimination against the self-employed and others buying insurance outside of employer-operated plans. That’s a very good thing, and whenever Obamacare is either reformed or replaced—as it surely will be over time—these accomplishments need to be conserved and even built upon. The EITC, championed by the Clinton Administration back in the days when forward looking rather than reactionary people still had a meaningful voice in Democratic party councils, was a visionary way to help make the labor market work flexibly and effectively while protecting low income workers.

But unfortunately the reactionary progressives now seem firmly in the saddle as the Obama Administration lurches toward its close. Labor unions in particular are heavily invested in the old model—their essential aim in life is to be the mayor of the village negotiating on behalf of the peasants with the feudal lords. As such, they are determined to keep the remnants of feudalism still present in our economy alive. It is an impossible agenda because it is a reactionary agenda. In the end it hurts everyone, especially the poor, whom, allegedly, the blue agenda is intended to protect.

Unfortunately, the structures and bureaucracies of the blue progressive era are determined to fight transformation every step of the way. They can’t stop the transformation of the economy and society now underway, but they can make it uglier and harder than it needs to be. That is what this NLRB ruling will do, unless either the courts or a change in the composition of the Board manage to undo the damage before it’s too late.

Meanwhile, the real business of the United States is to look forward, not back. Instead of trying to revive decaying social forms, it’s our job to think about how to make the transition to something new and better.

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