Look Who’s Talking: A ‘New’ Conventional Wisdom on Labor

A diverse range of voices are coalescing around a common-sense idea: that raising workers’ wages, and restoring their stake in their companies and our recovering economy is good for all of us.

Earlier this year, none other than Walmart CEO Doug McMillon made the case that they were raising wages because investing in their people would drive better customer service. Just last week, McDonald’s – which had long resisted entreaties for higher wages and greater worker voice – joined the bandwagon. New CEO Steve Easterbrook explained that “listening to their employees” led to both wage increases and paid sick days for a portion of their workers. He also made the clear connection that “a motivated workforce leads to better customer service.”

This is good news − good for workers who are getting modest pay increases and money in their pockets; good that a growing number of CEOs see a need to take action.

Nobel Prize-winning economist Paul Krugman wrote last month that Walmart’s action is evidence that we can and should do more. Low wages, he argues, are not the product of inscrutable market forces, but rather choices. He joins many others in connecting rising income inequality with the decline in workers’ bargaining power.

Last year, an analysis of data from the Luxembourg Income Study Database showed that America’s middle class has fallen behind that of Canada, partly due to weaker labor unions.

And this past summer, the Center for American Progress’ Commission on Inclusive Prosperity released a powerful new report that was direct in its conclusions and policy recommendations. The commission, co-chaired by former Treasury Secretary Larry Summers, consisted of more than the usual suspects, showing that lifting up worker voice is a growing priority not just among left-leaning economists but also experts traditionally associated with a more centrist perspective. Our challenges are not just the oft-cited dynamics of globalization and technology, they explained; the structure of our labor markets has dramatically changed. The solution? “We need to support the growth of unions and collective bargaining so workers can capture their share of productivity increases.”

Times columnist Nicholas Kristof, described recently as someone “who had long seen unions as groups that oppose change and only enrich their members,” also has changed his tune. “We should try to strengthen unions, not eviscerate them,” Kristof now argues. He cites sociologist Jake Rosenfeld, who writes that “for decades, unions helped bond productivity levels with average wages for both union and nonunion workers. That connection has been severed.”

This is not a new argument, but it has new proponents and greater traction. In the face of intractable income inequality, diverse people from across the political spectrum are taking a second look at pro-worker strategies and solutions because we must find a way forward. A recent Washington Post article documents this renewed and wide-ranging interest, quoting (among others) former Treasury Secretary and Wall Street veteran Robert Rubin: “Measures that facilitate collective bargaining can result in a broader participation in the benefits of productivity and growth.”

This momentum is in no small part due to the leadership of Labor Secretary Tom Perez, who has made the case for new solutions with frequency and passion. Secretary Perez believes that engaging employees, investing in people and partnerships, and rejecting false choices will lead to a shared prosperity economy. President Obama, who has spoken eloquently about the power of organizing, last week announced plans for a White House Summit on worker voice.

We must “make sure that we give workers the capacity to make their voices heard; to have some influence in the workplace, to make sure they’re partners in building up the US economy, and that growth is broad based and that everybody is benefiting just as everybody is contributing…” – President Obama on sustaining the recovery and helping the middle class

Change comes when disparate voices – academics, policymakers, CEOs, thought leaders – begin rallying around a broad consensus that empowering workers benefits us all. This chorus of voices is growing because workers are raising theirs. Retail workers, auto workers, fast food workers and call center workers are all organizing for higher wages, for paid sick days, for fair scheduling practices so they can care for their families – so they can have a voice. What an incredible opportunity we have, together, to forge a new way forward.

Originally published April 10, 2015.