Collective Bargaining and the Service Industry

Neoliberal fiscal austerity policies decrease public expenditure through cuts to central and local government budgets, welfare services and benefits, and privatization of public resources resulting in job losses. While unemployment is not exclusive to the homeless, it is a common issue associated with many other social determinants of health, such as food insecurity, poor social capital, and unstable housing. Foucault observes: under neoliberalism government must not correct the destructive effects of the market on society. Under neoliberal policies rather than social policies to ensure the welfare of citizens, social policy is defined as economic growth and privatization. The economic game is believed to be the regulator in the change from an industrial-based economy to a service-based economy, significantly influenced by the outsourcing of manufacturing jobs. In turn, this creates intermediate requirements (inputs now purchased from firms specialized in services) that result in creation of a significant amount of the service-based economy.

Unemployment provides a pool of potential workers unable to be unwilling to do the most boring, dead end, menial, underpaid, temporary, insecure, stressful jobs. Economists have worked the numbers in an effort to remind the unemployed their primary function is to control inflation, reduce wage costs, as well as discipline those in the workplace. Many economists embrace (NAIRU) Nonaccelerating Rate of Unemployment – which refers to the level of unemployment (4-6%) required to prevent inflation. However, those who developed the concept, observe NAIRU does not suggest that an unemployment rate is socially optimal, unchanging, or impervious to policy. Stable employment can enable individuals to live healthier lives by residing in safer neighborhoods, affording better health care, providing education or child care for their children, and buying nutritious food. Thus, addressing unemployment can be an essential step to treating other significant social determinants of health.

Often, insecure employment consists of intense work with non-standard working hours. Intense working conditions are associated with higher rates of stress, bodily pains, and a high risk of injury. Excessive hours of work increase chances of physiological and psychological problems such as sleep deprivation, high blood pressure, and heart disease. Consequently, job insecurity has negative effects on personal relationships, parenting effectiveness, and children’s behavior. Unemployment is related to poor health through various pathways. First, unemployment often leads to material deprivation and poverty by reducing income and removing benefits that were previously provided by one’s employer. Second, losing a job is a stressful event that lowers one’s self-esteem, disrupts daily routines, and increases anxiety. Third, unemployment increases the likelihood of turning to unhealthy coping behaviours such as tobacco use and problem drinking.1 Life expectancy is one of the most widely used indicators of health status and a key measure of human well-being.

New research by an ex-government adviser, Sir Michael Marmot, suggests that the rise in life expectancy – a constant trend for a hundred years – has stalled since 2010. Life expectancy is declining. That really would be the sign of a social calamity in a country as advanced as [Britain]. But we are still talking about the robbing of life. People’s lives have been truncated, because they are not living as long as they should have done if the rate of increase had continued. And terrifyingly, this rate of increase is “pretty close to having ground to a halt”, says Marmot. He is “deeply concerned” and “expected it to just keep getting better”. Life expectancy at birth had been going up so fast that women were gaining an extra year of life every five years and men an additional 12 months every three-and-a-half years. Since then life expectancy has continued to creep upwards, but at a slower rate, according to Marmot’s latest analysis.2

The labor movement in the United States grew out of the need to protect the common interest of workers. For those in the industrial sector, organized labor unions fought for better wages, reasonable hours and safer working conditions. The labor movement led efforts to stop child labor, give health benefits and provide aid to workers who were injured or retired. The discontent of industrial workers, combined with New Deal collective bargaining legislation, created the conditions for organizing the great mass production industries. In 1935 John L. Lewis of the United Mine Workers and his followers formed the Committee for Industrial Organization (CIO), which crucially aided the emerging unions in auto, rubber, steel, and other basic industries. In 1938 the CIO was formally established as the Congress of Industrial Organizations. By the end of World War II, more than 12 million workers belonged to unions, and collective bargaining had taken hold throughout the industrial economy.

The social reformers of the 20th century put in place an important (albeit incomplete) safety net that made economic depressions a thing of the past. That included guaranteed and directly provided housing, education, health insurance (for the elderly and children), retirement income, and many other programs and policies. Instead of strengthening the safety-net, the current philosophy is on a radical deconstruction of the administrative state. Such discussion indicates intent to devolve these functions not simply to states, but to corporations (i.e., the privatization movement of public education, healthcare, and social security). If the Trump/Bannon vision is to convert the Welfare State into a Corporate Welfare State, and if it comes to fruition, it will represent an entirely new world order, one that ushers in a new Dickensian world of modern robber barons, precarious labor, and social and economic insecurity and injustice.

The US Bureau of Labor Statistics began reporting in 1948 a monthly unemployment rate. During Bill Clinton’s first term the bureau discontinued including discouraged workers who had stopped looking for a job in the count. That unemployment has fallen to pre-recession levels (in the context of an anemic recovery) is largely due to the mass exodus of workers from the labor market, and the increase in the number of people who are discouraged, marginally attached, or trapped in long term unemployment. The transformation of developed nations into service-based economies has led to the precipitous decline in the employment content in manufacturing. In the US, only 8% of total employment was in manufacturing in 2014. Where will they bring the jobs back from? The share of employment in manufacturing in most developed countries has collapsed anywhere between 40% (i.e., Japan) to 70% (i.e., US and U.K.) since the 70s, when manufacturing employment was around its peak.

A discontented electorate voted for Donald Trump in 2016, influenced by three major policies: national security, economic nationalism, and the deconstruction of the administrative state. This included devolving essential federal functions to the states, provide increasingly smaller or strictly capped grants-in-aid, and eventually shrink, privatize, or eliminate programs altogether. Given Republicans’ hostility to all public assurance programs, the likely reform will include some mix of private sector subsidies, rebates, and vouchers, which are fundamentally at odds with the goal of guaranteeing access to all. If the administration hopes to deliver the jobs it had promised over a decade by focusing on manufacturing, it will fail. Services have become much more important from a supply point of view – a point that does not seem to be sufficiently appreciated in policy discussions. New policies must recognise future growth and export competitiveness will depend more and more on the service-based sector.3

Economic nationalism has no chance in bringing back the manufacturing jobs of the 1970s, rather it has high probability of creating a negative impact established trade between the US and Canada and Mexico. The American Legislative Exchange Council supported by the Koch brothers develops model bills supporting the rubric ‘right to work’ touted as giving workers freedom not to join unions. While it is based on individual rights of non-union members to enjoy benefits of union representation, its primary purpose is to weaken unions. The number of part-time jobs has increased significantly since 2007 while the number of full-time jobs dropped – corporations decided not to add full-time jobs that come with costly benefits. Now many workers find themselves stressed working 60-70 hours a week as the only way to survive. The government must duplicate the legislation of the 1930s that helped protect the common interest of the industrial workers to protect the interests of workers in today’s service industry.

The task at hand is to design a comprehensive policy strategy to remedy the precarious nature of service sector work, much like was done with manufacturing early in the 20th century. Before manufacturing was able to offer a safe working environment and decent family wages, employment in that sector was insecure and hazardous. Trump’s bait and switch job creation in the midst of safety net sabotage has increased demand on the social services workforce, especially for NGOs and volunteers. The vast majority of jobs in the US today are directed to the reproduction of labor, i.e., to the care, education, health, feeding, entertaining, etc. of people. Today, 80% of all jobs in the US are in the service sector, compared to only 12% in goods-producing industries. It is these service sector jobs that continue to be poorly paid and unstable. It is necessary to develop collective bargaining legislation to support the transition from an industrial-based economy to a service-based economy.4

1 David Fryer and Rose Stambe. (April 2014) Neoliberal austerity and unemployment Vol 27 pp 244-249.

2 Jones Owen. (18 July 2017) Now we find out the real cost of austerity – our lives cut short.

3 Berlingieri, Giuseppe. (25 Sept 2014) Outsourcing and the shift from manufacturing to services

4 Pavlina R. Tcherneva. (22 March 2017) Trump’s bait and switch: job creation in the midst of welfare state sabotage, issue no. 78, pp. 148-158

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