The situation is so stark that we can ask whether extreme economic circumstances have turned the workers we call heroes into something closer to forced labor. If so, that realization ought to shape our public policies: A just society owes much more than minimal pay and a few plexiglass shields to the citizens — and noncitizens — it compels into service.
Economics 101 suggests that when unemployment is low, workers ought to be able to bargain for higher wages, or bring about change in an unsafe workplace, by threatening to quit and work elsewhere. That’s always been less true than free-market purists believe. Whether because of geography (an employer is the only game in town), or because workers find job searches to be a logistical or economic challenge (or feel emotionally attached to their work), employers often have the whip hand in setting wages and working conditions. From the point of view of an employer, market wages are more like a suggestion than an imperative; from the point of view of a worker, jobs as good as the one you have are few and far between.
Such employer power in the labor market — which economists call monopsony — has drawn increasing scholarly attention in recent years, and is one of the reasons wages have not kept track with productivity. But as unemployment jumps off the chart, so does the leverage of companies: Any worker lucky to have a job is likely to be underpaid for the risk and insufficiently protected from the virus. Since the economic recovery is likely to be weak and prolonged, workers will be bearing the uncompensated hazard of reopening the economy for years unless we intervene with public policies — or unless labor activism rouses employers to act.
Employer power is a major reason that hazard pay increases have been meager, for example, $2 an hour at Target and subject to the whim of employers — Kroger and Amazon have said they will phase out such bonuses. (Amazon founder and chief executive Jeff Bezos owns The Washington Post.) It helps explain why employers have been tragically slow to provide personal protective equipment and improve their safety practices.
In theory, the prospect of employees simply walking away ought to put pressure on employers. But in addition to a lack of jobs, the structure of American unemployment-insurance programs also encourages workers to stay put. Although Congress, as part of its coronavirus relief bill, increased unemployment insurance (adding a bonus on top of state benefits), it retained the basic rule that people who leave their jobs voluntarily do not qualify for compensation. Since the job market has collapsed, this means that for essential workers, the only alternative to staying in an unsafe job is unemployment without benefits — not a viable option.
Can unions help? In many states, some essential workers are in fact in unions. Meatpacking — an industry where several plants have had outbreaks — has about triple the union density of the rest of the private sector (which stands at 6 percent), and many large grocery stores and nursing homes are unionized, too. Recent evidence suggests that unionized workplaces are indeed getting more protective equipment and better safety practices. But many unions are hemmed in by no-strike clauses in their collective bargaining agreements, which stipulate that they cannot collectively withdraw their labor except during contract negotiations. These clauses mean that unions can’t make a credible threat to strike for working conditions in the pandemic, because doing so would open them up to employer lawsuits that would bankrupt them. (Some unions also worry strikes will draw the attention of Immigration and Customs Enforcement to undocumented workers.) So union members are sometimes, rightfully, frustrated that unions can’t deliver as much as they would like.
Essential workers should not be left to the mercies of a dysfunctional labor market. The proposal by Sen. Mitt Romney (R-Utah) to give such workers an hourly “Patriot Pay” bonus of up to $12 through July recognized the impossible position these workers are in — and that some of them now make less than unemployed people. Another option would expand access to the Pandemic Unemployment Compensation program, so that low-wage essential workers would also get that additional $600 weekly check.
Ideally, to compensate them for their all-but-forced labor, the United States might grant citizenship to all essential workers who are undocumented. Making the Occupational Safety and Health Administration an aggressive, well-funded enforcer of workplace conditions instead of the cringing resource-starved agency it is would help. But these are extremely unlikely reforms to come out of a Trump administration. At the end of the day, the solution is less likely to come from governmental beneficence but rather from informal support, sickouts, walkouts and, where feasible, strikes — which other Americans ought to support, given their reliance on these workers.
For nonunion workers, workplace collective action might be particularly effective now, because employer retaliation doesn’t carry the sting it ordinarily does: Unlike workers who quit, those who are fired for activity protected by the National Labor Relations Act qualify for unemployment insurance, and are likely to be eligible for the $600 extra unemployment benefit, too.
The pressure on essential workers during the pandemic prefigures one path for the low-wage labor market once the current phase of the crisis is over: more coercion. Some states are moving fast to reopen, telling workers who do not report for work that they will be kicked off unemployment insurance, and even setting up websites for employers to snitch on them. Such states are effectively forcing people back to work in a depressed and hazardous labor market. Polls suggest that consumers will still stay away from much of the sectors that employ low wage workers, such as restaurants, and the resulting weakness of the labor market will prevent anything close to adequate compensation for coronavirus risk. With the low-wage labor market depressed and flooded with workers, employers will not feel any compulsion to raise wages.
There is a better way forward. At present, the pandemic-related unemployment benefits are set to expire on July 31. Congress should extend the benefits through January, reducing them gradually and automatically as regional job vacancy rates increase. Under that scenario, employers would have to compete with unemployment insurance as the recovery proceeds — and worker incentives to reenter the labor market would rise automatically as business picks up. Such a reform would help ensure workers would reenter the labor market on terms that adequately compensate them for the additional risk they are likely to bear.
Even more profoundly, it could rewrite what people expect from their jobs. Workers might be able to wait a bit longer for a good job offer, instead of having to take the first one that comes along. Workers will be extremely reluctant, and probably angry, to go back to work at $10 an hour, after getting more than $600 a week, many for the first time in their lives.
We shouldn’t underestimate the role of norms and expectations in setting wages and curbing market power. When you consider how we got to our low-wage economy, one place to start is the late 1970s, when the Federal Reserve tackled inflation, and unemployment spiked. Fed Chair Paul Volcker explicitly said that standards of living and wage expectations had to be reduced to slow price increases. Breaking the norms of wage-setting and institutional restraints on employer power that had kept workers’ incomes high in the postwar period was a stated goal of that self-inflicted recession.
Making employers compete with a generous unemployment insurance system might give us a once-in-a-generation chance to reverse Volcker. It could reset bargaining power in the low-wage end of the labor market, ratcheting up what we think low-wage workers are worth and what they should be paid. At the least, it would be a first step toward exiting this pandemic a fairer society than the one that entered it.