Thomas Perez on the Uneven Economic Recovery, Income Inequality, and the Need for Strong Labor Unions

This is a carefully prepared, persuasive, and at times eloquent speech.

It would have been nice if such speeches had been given more consistently at the beginning of the Obama presidency, instead of at the tail end of it, and if they had reflected a broader and louder political focus on protecting and promoting labor rights.

The president’s statement on the passage of “right to work” in Wisconsin, which is cited in this speech, follows a general silence–at least off the campaign trail–on the convulsive labor issues in states across the Midwest, issues that were brought to a head with the Great Recession and the Far Right’s expedient conflation of state budget crises and the supposed “excesses” of public-employee unions.

In the next presidential election cycle, labor unions need to demand more than rhetoric from ostensibly pro-labor candidates. We need to demand some identification of specific policy proposals that will protect and promote labor rights.

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Remarks by 
U.S. Secretary of Labor Thomas Perez
United Auto Workers Collective Bargaining Conference
Detroit, Michigan,
March 24, 2015

[as prepared for delivery]

Thank you. It’s an honor to join you here in Detroit as you gather for this collective bargaining conference. A special thanks to Dennis Williams and Gary Casteel — you are champions of the movement, and I’m proud to call you both good friends. The UAW is in good hands. And to the entire executive board, I applaud your steadfast leadership and your work on behalf of your members, and of all workers.

Power of “We”

A few weeks ago I had the privilege of traveling to Selma, Alabama, to commemorate the 50th anniversary of Bloody Sunday. Half a century ago, the violence that occurred on the Edmund Pettus Bridge shocked the nation. But the tone on the 50th anniversary wasn’t just one of sadness or solemn remembrance of that violent day. It was also a celebration of what happened after. The marchers and their leaders were not deterred by billy clubs or tear gas. Instead of retreating, instead of giving up, two days later, there were marching over that bridge again, raising their voices for the right to be heard.

This was a collection of ordinary individuals who refused to accept the status quo as inevitable. They knew, as President Obama so eloquently said, that “the most powerful word in our democracy is the word ‘we’.” And so they harnessed the power of “we.”

That’s what you’re doing here today. By its very definition, collective bargaining harnesses the power of “we.” This is democracy in action.

You will leave here equipped with the tools you’ll need at the bargaining table over the next few years. Those tools will enable you to raise your voices for fair wages and benefits and working conditions. They’ll enable you to make the case for your share of the wealth. Whether you’re working on an auto assembly line or in a classroom; or in a hospital or an office or a casino, these tools will prepare you to stand up for what you’ve rightly earned.

Your draft resolution says “When we act in common cause, we send a message that we want justice and equality not just for ourselves, but for everyone in our great country.” This principle, of seeking justice for all, has been a defining characteristic of the UAW throughout its history. And it’s as important now as it has ever been, because our country needs voices like yours advocating for the common good—your work over these next few days, and in the coming months and years, is about making the economy work for everyone.

Creating Shared Prosperity

And the timing could not be more appropriate. Because right now, at this moment in our history, we’re at a critical crossroads.

By so many measures, our economy is booming. We’ve seen 60 consecutive months of private sector job growth, with more than 12 million new jobs created. In the last couple of years, more and more of those have been middle and high wage positions. The national unemployment rate is the lowest it’s been since the spring of 2008. Last year, unemployment fell in every single state—the first time that’s happened in 30 years. As we speak, there are 5 million job openings nationwide—the most since January of 2001.

Exports are at an all-time high. 1.8 million new export-related jobs have been created since 2009, and these jobs pay, on average, up to 18 percent more than jobs in non-exporting firms and industries. Consumer confidence is at a seven year high.

The good news isn’t just about jobs and the economy. High school graduation rates are up nationwide. Crime and incarceration rates are both down—the first time they’ve declined together in 40 years. Millions of previously uninsured Americans now have health coverage, thanks to the ACA.

And the American auto industry has come roaring back. The President believed in you. He refused to heed the advice of those who said we should cut and run. He went all in, he bet on the American auto industry and the UAW, because he knew we had a winning hand.

The resilience of American workers and businesses, and the steady leadership of our President, carried us through to the other side of the worst economic crisis in generations. And now the wind is at our backs.

But it’s not time to spike the football. Because while there is great prosperity being created in this country right now, a lot of people haven’t yet been lifted by this rising tide. Too many people are still on the sidelines. And far too many people are working, but barely getting by. Since 1979, productivity has climbed by more than 90 percent, but real wages have been flat. That means more and more workers are putting in 40 hours a week—or more—but they still need food stamps to feed their families. More and more people are working full time but living in poverty. A select few are amassing great wealth while many are waiting for the elusive trickle down. That’s not the best America.

We learned last week that in 2014, the Wall Street bonus pool was $28.5 billion. That’s roughly twice as much as the total earnings of all full time minimum wage workers in America. That’s not the best America.

If we want to call this recovery complete, more Americans have to get a piece of it. In the wealthiest country on earth, a country that holds itself up as a land of opportunity, we have to make sure that opportunity extends to all. That’s the best America—one where every single person gets a shot at the American Dream.

Now, you’d expect to hear that from Tom Perez, Labor Secretary. But don’t take my word for it. I didn’t tell “CBS This Morning” last year that income inequality is destabilizing, and that, quote: “too much of the GDP over the last generation has gone to too few of the people.” That was Goldman Sachs CEO Lloyd Blankfein.

I didn’t say “A rising tide lifts all boats, but a lifeboat carrying a few, surrounded by many treading water, risks capsizing.” That was Standard and Poor’s last summer in a report explaining that income inequality is stifling GDP growth.

There is a growing consensus that this level of inequality is not sustainable. It will hurt us all in the long run. The future success of our nation depends upon more people getting a piece of the pie.

And that’s why we’re here today—to make sure this recovery doesn’t leave working men and women behind.

Worker Voice

Our history has shown that there’s no greater force for strengthening the middle class than worker voice. In fact, without the American labor movement, and the voice it has provided generations of workers, there may be no American middle class. In the 1930s, jobs in the nation’s automobile factories weren’t good, middle class jobs. They were dirty and dangerous. They paid low wages and subjected workers to treacherous conditions. But the UAW turned them into good jobs.

It’s no coincidence that the median weekly earnings of union members in 2014 were $200 higher than for non-union members. That’s not pocket change—it puts food on the table, it pays the mortgage, it leaves a little left over at the end of the month to put away for college, or a family vacation, or a comfortable retirement.

It’s no coincidence that in Canada, where union density is higher than it is here, the middle class is now doing better than in the U.S.

It’s no coincidence that there’s an inverse relationship between union membership and the size of the gap between rich and poor. As union density increased in the middle of the 20th century, the share of income going to the wealthiest 10 percent declined and prosperity was broadly shared. But as union membership has steadily fallen in recent decades, the share of income going to the top 10 percent has steadily climbed.

Working people in America are better off when the labor movement is strong. That’s because unions have harnessed the collective power of “we” to win their fair share. And in its 80 years, the UAW has been a leader. The UAW bargained for the first employer-paid health insurance for industrial workers. You won the first cost-of-living allowances. You’ve bargained for training and educational programs to ensure your members can climb career ladders.

And with each of these groundbreaking provisions, you’ve not only made the lives of your members better. You’ve raised the bar for all workers nationwide.

That’s why so many workers across so many industries have elected to join the UAW. Whether its faculty and researchers in higher education who wanted a voice in the face of budget cuts and the resulting instability; or claims processors at health insurance companies who wanted to protect their own health benefits.

I want to be clear—I’m not here to endorse specific contract provisions or to tell you what you should ask for at the bargaining table. I’m here simply to support the collective bargaining process. I’m here to support your right to have a voice. I’m here to support the notion that when we come together in good faith, we can reach agreements that benefit employers, workers and customers.

This isn’t about us versus them. There are companies that understand that their workers are an asset to be valued, rather than a cost to be minimized. They reject the notion that they have to choose between their workers and their shareholders—they know that’s a false choice. They know that their employees are their partners in success. They recognize that collective bargaining isn’t an exercise in doing whatever they can to deny worker gains, but rather an opportunity to come to mutually beneficial resolutions.

As I travel around the country, I often tell the story of the Ford plant in Louisville. The plant was on the brink of closure—thousands of your brothers and sisters would have lost their jobs. But the UAW and management came together and built a culture of cooperation that was based on the notion that shared sacrifice would lead to shared prosperity. You developed a viable plan to keep the plant operating, and today that plant’s workforce is 4,400 strong and growing.

Forward-looking employers know that investing in their human capital pays off in the long run. Look at a company like Volkswagen—a company where worker voice isn’t just tolerated; it’s part of their DNA. Executives there supported an effort last year by the UAW to organize its plant in Chattanooga, Tennessee, because it meant they would be able to set up a works council. The works council model, used widely across Germany, creates a process for collaborative decision making about workplace policies. Volkswagen leadership considers its global works council to be a competitive advantage—and it’s worth noting that the company is one of the top 10 in the world in terms of revenue. I applaud both the UAW and Volkswagen for your ongoing work together to forge a path forward and to explore new models to give workers voice in the workplace.

Forward-looking employers know that a culture that welcomes worker voice pays dividends.

There are companies using a variety of inclusive capitalism and worker participation programs to help drive growth and enable employees to have more of a voice in their workplace. New Belgium Brewing is a great example. They have a profit-sharing plan, a generous 401(k) plan, and an Employee Stock Ownership Plan–which also helps workers prepare for retirement—as well as a corporate culture that involves employees in decision-making. The company is now 100 percent employee owned through its ESOP. And they’re certainly not hurting for it—they’re in the middle of constructing a new brewery in North Carolina, they pay good wages, and they happen to make great beer.

Or take Southwest Airlines, which offers industry-leading wages, a generous 401(k) match, and a variety of stock plans. They also have profit-sharing—15 percent of net profits go to employees. These benefits have all been crafted through collective bargaining. Southwest actively encourages employee engagement, and employees consistently say that they feel like the company cares about them. Meanwhile, the airline has never had to do layoffs, and their turnover rate is less than three percent. And last year, as a result of profit-sharing, $355 million went to the company’s 46,000 employees.

It’s important to note that the profit sharing is a great perk—but the employee engagement is key. Research has shown that firms with profit-sharing, employee ownership, and other forms of inclusive capitalism, have higher productivity, lower turnover and greater stability than other companies—but those benefits were greatest for companies that also cultivated a culture of employee participation.

And yet, while I meet employers everywhere I go who welcome worker voice and know it benefits their bottom line, American labor today finds itself up against some pretty strong headwinds.

A Fortune 100 CEO, who wanted to expand benefits in order to attract top talent, told me of a renegade shareholder who said “I’d rather be rich than right.” Another CEO told me that implementing strategies focused on long term growth and sustainability, rather than short term profits, can be nearly impossible when facing the “quarter by quarter results vortex.”

There was the well-known conservative lobbyist who was caught on tape telling an industry group: “I get up every morning, and I try to figure out how to screw with the labor unions—that’s my offense.”

There are the elected officials—in Wisconsin and elsewhere—who have made it their mission to quash worker voice. They won’t be happy until they’ve reversed the many decades of gains won by organized labor.

I hope you all know that this Administration’s commitment to the right to bargain collectively is unwavering. Later this year, the White House will convene a summit on worker voice to look at ways that we, as a nation, can strengthen the middle class by fostering more opportunities for workers to have a voice in the workplace.

As the president said in response to Wisconsin’s Right to Work law, “I t’s inexcusable that, over the past several years, just when middle-class families and workers need that kind of security the most, there’s been a sustained, coordinated assault on unions, led by powerful interests and their allies in government.”

But you know what? Those powerful interests and their allies might win a fight here or there. But they can’t quiet the collective voice of the working men and women of this nation. Despite their best efforts, low wage fast food workers nationwide are organizing and speaking up. Despite their best efforts, even companies that are notorious for low pay and meager benefits are raising wages.

At the end of the day, the winner will always be the collective power of “we.”

Conclusion

We know that from our nation’s history. Our history has shown that, in the words of Dr. King, the arc of the moral universe bends toward justice. But it doesn’t bend on its own.

No one knows this better than the people in this room. For 80 years, you’ve been bending that arc. You bent it when you sat in for seven days in 1936 at the Bendix Products auto parts plant in South Bend, Indiana, and won the right to bargain. You bent it when your members returned from World War II, and you bargained to hold the ground that had been hard-won during the New Deal. You bent it when you sent money to support the Montgomery Bus Boycott, and when Walter Reuther bailed Dr. King out of jail in Birmingham. You bent it when you lent office space in Solidarity House to Dr. King so he could organize the March on Washington, and so he could pen his famous “I have a Dream” speech.

You bent it when you began to lend your collective voice to bring workers in new industries into your fold. You bent it when you worked in partnership with management during the recession to save jobs and ensure future success.

And I have no doubt that you’ll bend it again. As you work together to prepare for bargaining, engaging in this democratic process, rolling up your sleeves, sitting at the table, having legitimate differences but remaining committed to finding solutions—you are bending that arc.

Because the best America is one where every person has the opportunity to punch their ticket to the middle class. The best America is one where we understand that we all succeed only when we all succeed. The best America is one where prosperity is broadly shared.

Our nation has come a long way in the 50 years since Bloody Sunday. The challenges we face today are not the challenges of 1965. But we can learn an awful lot from the ordinary people who crossed the Edmund Pettus Bridge.

They bent the arc—they did it using the same power that the UAW has used throughout its history: the power of “we.”

I came across a study not long ago in which psychologists found that when people hold hands, their tolerance for pain increases. They report feeling less pain. When we hold hands, painful things don’t hurt as much. That’s the collective power of “we.” When we hold hands and work together, when we hold tight and say we’re all in this together, we do better and go farther. So let’s hold hands. Let’s hold tight and move forward with the power of “we.”

 

2 thoughts on “Thomas Perez on the Uneven Economic Recovery, Income Inequality, and the Need for Strong Labor Unions

  1. This is an excellent speech and I hope the Democrats, including Pres. Obama, are listening to the woes that workers and the middle class are suffering and finally start doing acting in our interests.

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