INTERVIEW

Too many Americans heading downward

* The former U.S. Department of Labor secretary suggests seeking solidarity among employees.

The Dayton Daily News interviewed former U.S. Department of Labor Secretary Robert B. Reich about tiered wage contracts and their impact on workers. The following is a transcript of that interview.

Q: Isn't it an irresistible bargain for workers with 20 to 25 years of seniority who are five to 10 years from retirement to consent to tiered wage structures when the alternative is losing the plant?

Reich: Absolutely. And it's unreasonable to expect them to sacrifice wages, benefits and job security for the sake of younger workers whom they don't even know.

Q: What choices do unions have?

Reich: Unions in industries like the automobile industry, which are increasingly global in scope, have limited options. They can fight a rear-guard action against outsourcing, two-tiered wage contracts, downsizing, and all the other consequences of intensifying global competition, or they can work in partnership to upgrade the skills of their members, obtain a piece of the action in terms of pay linked to improved productivity and profitability and also gain more participation in ownership in the company.

Q: Are you aware of good sources for tracking the numbers of tiered contracts?

Reich: No. It's a problem because employees need to understand the extent to which the labor market is changing. Unions need to understand what they're up against in terms of the trend toward types of treatment of employees doing essentially the same work. And the government needs to be able to develop policies that respond to this. Without good data, everyone is handicapped.

Q: We now see data showing that the gap between union and nonunion, blue-collar wages is narrowing and that nonunion manufacturing workers actually earn more in some cities than their union counterparts. Are unions in jeopardy of further decline if this trend continues?

Reich: Certainly, if there are little or no advantages going to the employee from joining a labor union, then the labor union is going to be in trouble. But be very careful about those data. In certain locations and in certain industries the reason that nonunion wages are higher than union wages is that employers are trying to prevent or want to deter or discourage employees from joining a union. So, one way of doing that is keeping wages and benefits high. If the unions were to disappear tomorrow, it may be that those nonunion wages and benefits might collapse.

Q: Recently, as bottom-tiered workers have reached majority at their local unions, they've ousted the old leadership that negotiated these tiers. But they remain locked into long-term contracts. What can they do?

Reich: If their unions negotiated in good faith on their behalf, I don't see what recourse they have. If there was bargaining in good faith, if they were members of the union at the time, they presumably are obligated by the terms of those contracts. If they weren't members of the union at the time, then it may be possible for them to form a separate bargaining unit and negotiate a different contract, but that would depend on the terms of the first contract.

Q: Where do you believe this trend of tiering younger workers may be heading?

Reich: If younger workers are relatively unskilled and in abundant supply relative to the demand for them, their wages are heading south. That's been the story in this country for the last two decades. American companies, indeed all companies, regardless of where they're headquartered, are focusing on the bottom line like never before. Labor costs typically constitute about 70 percent of the cost of production. So you can bet that executives are going to be looking for every possible way to reduce labor costs.

Q: If tiered wage structures have preserved American jobs and avoided inflation during our full-employment economy, aren't these substantial benefits to our nation?

Reich: That's probably true. But let me restate it in slightly broader terms. Flexible wages, that is, wages that can move up and down according to the demand for workers, tend to have two benefits attached to them. One is they create more jobs and the second is they tend to avoid inflationary wage pressures. The disadvantage to such flexibility is that many people get stuck with low-paying jobs.

Q: Organized labor now represents less than 10 percent of private sector workers. What hope does it have of reversing this trend of tiered wage structures, temporary workers, and independent contractors?

Reich: Organized labor can attempt to fight back on several fronts. It can refuse to enter into two-tiered labor contracts and seek more solidarity among all employees. It can work with governments to ensure that all laws and regulations are being followed and that all workers who are doing essentially the same work are treated similarly when the law calls for it. They can organize more aggressively and seek to gain bargaining leverage with employers. And finally they can agree to get rid of rigid job classifications and work rules which inhibit an employer's flexibility. But in exchange, get an employer's commitment to maintain wages for all people doing the same job.... There is not an easy answer to all of this. Anyone who thinks someone can waive a magic wand and prevent tiering doesn't know much about the economy or who has economic power these days. The real problem is that too many Americans are still on a downward escalator. Even though the ranks of the very wealthy continue to grow and, indeed, some of America's wealthy are richer than they ever have been, it is also the case that many of America's blue-collar workers and pink-collar workers are still having a difficult time making ends meet. If you have the right education and connections, you're probably doing very well. If you don't, you aren't.