“The Gilded Age was not a golden age,” says Tom Perez, the U.S. labor secretary. “America works best when employers and employees work together” — as they did not during the Gilded Age of the late 19th century and have not during the neo-Gilded Age we are stumbling through today.
Perez recently traveled to Germany to see how employer-worker collaboration has helped that nation become the most successful example of broadly shared prosperity in the advanced capitalist world. “If I had to distill my trip,” he told me in an interview, “what I learned is that co-determination” — the term that describes the more equitable balance of power between workers and management at German companies — “is a critical component in the success of German businesses and the prosperity that German workers enjoy.”
Not surprisingly, Perez describes himself as a strong advocate of the American system of collective bargaining and laments the attacks on it that have greatly weakened the bargaining power of U.S. workers over the past 30 years. But given the challenges posed to that system by the hostility of many U.S. employers to unions, Perez says that, “we also need to create space for alternative models of employer-employee interaction.” In Germany, workers in companies with at least five employees may elect to create works councils — consultative bodies of workers and managers that meet regularly to resolve workplace issues and negotiate working conditions (though not wages — those are usually set in talks between management and unions, which remain more powerful in Germany than they are here).
While Perez believes that we need to enhance our workers’ ability to form unions without fear of being fired, he also champions works councils as a means of boosting worker input — and company output. While in Germany, he spent a day at Volkswagen’s corporate headquarters, and he views the company’s success as at least partly a consequence of the voice and power it accords its global workforce. “Volkswagen has a manufacturing footprint in more than 20 nations,” he says, “and they have works councils in all but three — China, Russia and the U.S. It’s embarrassing that we’re in the company of China and Russia as the only nations without a VW works council.”
Now, that may be beginning to change. At Volkswagen’s plant in Chattanooga, Tenn. , the company has encouraged a United Auto Workers local that claims the support of more than 40 percent of the factory’s employees to form a works council. Like all sizable German corporations, VW is required by law to divide its board of directors between management and worker representatives, and its board clearly wants to afford its Tennessee employees the same rights and labor standards enjoyed by its workers worldwide.
But Volkswagen is the great exception among companies that employ American workers. With the circumspection that comes with being a Cabinet member, Perez neglects to point out that nothing is stopping other U.S. employers, who routinely claim they want to hear their workers’ viewpoints, from offering their employees the chance to set up works councils of their own. In fact, most U.S. businesses shun the idea of granting any form of collective power to their workers for the same reason that the governments of China and Russia do: They’re sitting atop a nice, authoritarian structure, and they don’t want any changes that may weaken their command.
As an increasing number of states move to a “right-to-work” model of labor relations — in which workers who benefit from union contracts can opt out of paying dues to the union that secured those benefits — a number of labor-law scholars, most prominently the University of California’s Catherine Fisk, argue that U.S. labor law permits not only works councils but collective bargaining with unions that may not represent a majority of the company’s workers. Fisk contends the National Labor Relations Board has the authority to require employers in those “right-to-work” states to bargain contracts (including wages) with “members only” unions, such as the UAW’s Chattanooga local, that cover only the union members. The consequence of allowing workers to opt out of union dues, Fisk writes, should be to allow the union to opt out of representing them on the job and covering them under the contracts it wins.
Such labor-meets-libertarianism goes well beyond anything Perez advocates. But as American workers’ income stagnates and power wanes, the labor secretary acknowledges that new solutions will have to be found to bolster both. “This is a time for an ‘all of the above and then some’ strategy,” he says.