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Is There (Middle Class) Life After Maytag? •
The Right to Unionize: Key to Democracy
By Dean Baker
t r u t h o u t | Columnist
Monday 27 August 2007
For the last quarter century, corporate America has been at war against the
labor movement. After a long period in which unions were an accepted part of
the economic and political landscape, most corporations adopted a much more
hostile attitude toward unions. Where unions already were present, employers
sought to weaken or break them. In workplaces without unions, employers were
prepared to do whatever was necessary to prevent workers from organizing.
This anti-union drive has largely enjoyed the support of the government. For
example, it is now a standard practice for employers to fire workers engaged
in an organizing drive. A study by John Schmitt and Ben Zipperer, of the Center
for Economic and Policy Research, found one in five organizers will be fired
during an average organizing drive.
Such firings are illegal, but enforcement is sufficiently slow, and the penalties
sufficiently small, that most employees eagerly embrace this effective anti-union
tactic.
Government policies have also supported anti-union practices in other ways.
A main purpose of trade agreements like NAFTA was to make it as easy as possible
to relocate factories overseas. The high dollar policy Robert Rubin initiated
in the Clinton era also put US manufacturing, and its unionized workers, at
a huge disadvantage. A 30 percent over-valued dollar effectively imposes a 30
percent tariff on goods exported from the United States, while providing a subsidy
of 30 percent on goods imported into the United States.
As a result of these policies, much manufacturing has, in fact, been moved
overseas in the last quarter century, giving the country a trade deficit of
more than $700 billion annually. And the jobs lost in manufacturing have been
disproportionately union jobs. While the unionization rate in manufacturing
was more than 40 percent in the sixties, in 2006 it was just 11.6 percent, less
than the 12 percent average for all workers, although still somewhat higher
than the 7.4 percent average for the private sector as a whole.
The weakening of the labor movement is not just bad news for the workers who
lose union jobs. According to polling data, there are tens of millions of workers
who would like to be represented by a union at their workplace, but don't
currently have the option. The best way to get a guide as to how many workers
would be in unions if they could opt to do so, in the absence of employer threats
and harassment, is to look at the unionization rate in the public sector.
While public sector managers are not generally friendly to unions, they can't
fire union organizers or use the other harsh anti-union tactics that are now
standard practice in the private sector. As a result, more than 36 percent of
public sector employees are members of unions. Given the freedom to choose,
it is likely a comparable share of private sector workers would also be in unions.
This would imply an additional 30 million workers in unions.
In addition to directly benefiting the workers they represent, unions also
benefit the larger workforce and society as a whole. In an industry with a strong
union presence, non-union firms know they must maintain comparable wages and
benefits if they are want to keep their workers from joining a union. The decline
of unions has undoubtedly been an important factor in the growth of inequality
in the last quarter century.
Unions have also been essential to a wide range of political initiatives over
the post-war period. Programs like Medicare, Medicaid and Head Start would not
have been possible without the strong support of the labor movement. The same
is true of the key civil rights legislation of the sixties. More recently, the
labor movement was at the center of the effort to prevent President Bush from
privatizing Social Security. It will be difficult to make much progress on a
wide range of social and economic issues without the support of a strong labor
movement.
Congress is currently debating a bill that would take an important step toward
re-establishing the right of workers to join a union. The Employee Free Choice
Act (EFCA) would require a company to recognize a union once a majority of workers
have signed a card indicating they want to be represented by a union. This gets
around the election process, which gives employers a chance to intimidate workers
and fire the leaders of an organizing effort. (Under the EFCA, workers can still
request an election supervised by the National Labor Relations Board.)
The EFCA would restore some meaning to the right to organize. The bill that
has been passed by the House by is currently being blocked by a Republican filibuster
in the Senate. While the EFCA is not likely to become law under this Congress
(President Bush would almost certainly veto the bill even if it did pass), progressives
should recognize the importance of legislation. The right to organize is not
the concern of just a small special interest group; it is a basic right that
should concern us all. In the same vein, all progressives have an interest in
seeing a strong labor movement. For this reason, the EFCA and other measures
that level the playing field between labor and management should be top items
on the progressive agenda.
Dean Baker is the co-director of the Center for Economic and Policy Research (CEPR). He is the author of "The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer" (www.conservativenannystate.org). He also has a blog, "Beat the Press," where he discusses the media's coverage of economic issues. You can find it at the American Prospect's web site.
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Is There (Middle Class) Life After Maytag?
By Louis Uchitelle
The New York Times
Sunday 26 August 2007
Newton, Ohio - The last of the Maytag factories that lifted so many people
into the middle class here will close on Oct. 26. Guy Winchell and his wife,
Lisa, will lose their jobs that day. Their combined income of $43 an hour will
disappear and, soon after, so will their health insurance. Most of the pensions
they would have received will also be gone.
The Winchells are still in their 40s. They can retrain or start a business,
choices promoted by city leaders in a campaign to "reinvent" Newton
without its biggest employer. But as they ponder their futures, the Winchells
are uncertain about how to deal with a lower standard of living. "I'm
not wanting to go waitress," said Mrs. Winchell, who, at 41, drives a
forklift and earns $19 an hour, "but I can do what I have to to make money."
Mr. Winchell, 46, having earned $24 an hour as a skilled electrician, seems
paralyzed by the disappearance of his employer. He imagines that there is work
for electricians in central Iowa but he hasn't looked. "Lisa is
always on me because I'm so angry," he said. "She says, 'What
would your mom have said?' My mom would have said, 'Worrying is
not going to help.'"
Newton's last day as a manufacturing mecca comes a century after Fred
L. Maytag built his first mechanical washing machine here. Over time he also
located his headquarters, research center and most production in Newton, changing
it from a rural county seat into a prosperous city of 16,000. Absent Maytag's
high pay, overall hourly earnings last year for other workers in the county
would have been $3 an hour less, according to Iowa Workforce Development, a
state agency.
And then the Whirlpool Corporation bought Maytag in the spring of 2006 and
began shutting down its operations here, eliminating jobs and depressing wages.
Those caught in this process around the country are gradually swelling what
Katherine S. Newman, a Princeton sociologist, describes as "The Missing
Class," the title of a soon-to-be-published book (Beacon Press), of which
she is co-author.
Ms. Newman calculates that 54 million adults and children occupy a "nether
region" of family incomes well above the poverty line - but well
short of the middle class. Either they fall out of the middle class, as the
Winchells are in danger of doing, or they have never earned enough at one job
to get a family of four into the middle class.
"We are caught in a never-ending cycle of de-industrialization in which
the best jobs disappear," Ms. Newman said. "It is amazing to me
how much we have come to accept that there is nothing to be done about this
loss of income."
HERE in Newton, Maytag's fortress-like headquarters building, its beige-colored
bulk looming over the downtown, has been emptied of 1,200 white-collar workers.
Of nearly 900 unionized blue-collar workers still left last December in the
sprawling factory, 400 were laid off and the rest got a reprieve, including
the Winchells.
But theirs is a dead-end task: keeping retailers supplied until Whirlpool can
start production of redesigned Maytag models built on the chassis of Whirlpool
machines at the company's existing factories in Monterrey, Mexico, and
Clyde, Ohio. In Clyde, top pay for nearly all of the 3,700 non-union blue-collar
workers is $17 an hour, several dollars less than Maytag paid in Newton. But
as Bill Townsend, the plant manager, put it, "whenever we advertise for
employment, it is not difficult finding folks."
Nor is it difficult to recruit workers in Newton anymore. Absent Maytag, a
good wage in central Iowa is $12 or $13 an hour. The trick is to get that much
as well as health insurance - and if not the wage, then at least the health
insurance, even if that means commuting 40 to 50 miles, as more than a few ex-Maytag
workers are now doing.
The downshift is reflected in the Labor Department's national data. Median
family income has risen at an average annual rate of only six-tenths of a percent,
adjusted for inflation, since the mid-1970s - in sharp contrast to the
2.8 percent growth rate in the preceding 26 years.
Hardship, however, is initially postponed in Newton. Local 997 of the United
Automobile Workers, representing Maytag's blue-collar staff, negotiated
a severance package with Whirlpool last fall that extends each departing worker's
health insurance for five or six months and pays at least $850 for each year
worked, up to 30 years.
For the Winchells, who have five children, all but one from previous marriages
- their smiling faces on display in oval-shaped photographs grouped together
on a living-room wall - the severance packages translate into more than
20 weeks of pay for the couple. The delayed impact helps to explain, as Mr.
Winchell put it, why he and his wife won't be forced until early next
spring to face the inevitable distress of shrunken incomes and uncertain health
care.
"I'll find work," he declared, "but I really don't
know what I am going to do. I've thought about applying to hospitals because
they have health insurance. One of us will have to take a job with health insurance."
Whatever the damage to living standards, from Whirlpool's point of view,
its strategy in acquiring Maytag was impeccable. Make the same number of washing
machines in two plants - Clyde and Monterrey - instead of three,
achieving economies of scale. Add 1,000 workers in Clyde to accommodate the
increased output, but non-union workers earning less, with fewer benefits, than
the unionized work force in Newton.
The State of Iowa offered numerous incentives to Whirlpool to stay in Newton.
Gov. Tom Vilsack suggested publicly that he would build for Whirlpool "the
most energy-efficient plant in the world." As a lure, the city said it
would give full college scholarships to children who went through the public
schools. "It was part of a retention strategy; here's the benefit
we can provide if you stay," said Kim Didier, executive director of the
Newton Development Corporation.
But for Jeff M. Fettig, Whirlpool's chairman, leaving Newton was, in
the end, a no-brainer. Staying, he said in an interview, was "not economically
viable." He explained: "It was two companies doing the same thing
that you needed one company doing very well."
Given such realities, Steve Schober, an industrial designer at Maytag for 25
years, with a fistful of patents to his credit, applied to Whirlpool's
research department in Benton Harbor, Mich., and was turned down, partly because
he acknowledged in a job interview that he was unhappy about moving his family
from Newton.
So, at 52, with six months of severance as a cushion, he went out on his own
last year, starting Schober Design and working from his home - a large,
handsome Tudor-style with a sloping front lawn in an elegant neighborhood, a
few blocks from the brick mansion where Fred Maytag once lived. As a freelancer,
however, Mr. Schober's annual income plunged in the first year from the
low six figures he had earned at Maytag to $25,000.
Half now goes to pay for health insurance for himself and his children, Katie,
18, and Ben, 16. His wife, Sarah, 51, a special education teacher earning $30,000
a year, has coverage for herself from the public school system. Adding the family
would cost $800 a month, slightly less than Mr. Schober now pays, so the couple
will probably drop his coverage for hers.
"Health insurance was one of those invisible benefits of working for
a corporation," he said. "You didn't have to think about it."
He and his wife invited a reporter to their home on a summer afternoon, offering
refreshments and describing their situation matter-of-factly, as if talking
of a less fortunate family's situation, not their own. Their children
were present at first, but soon Katie, who will be a college freshman in the
fall, partly on scholarship, drifted out of the living room, and then Ben, a
strapping high school athlete, abruptly excused himself, departing to meet his
friends, his parents explained.
"I have three options," Mr. Schober said. "I could get a
job in a different field that doesn't approach what I made at Maytag,
but has a benefits package. I've thought about working for the post office.
Or I could send out my résumé to design studios. One of the issues
in doing this is my age, which works against me. Or I can continue to do what
I am doing, building a client base from Newton."
He is embarked on the third option. While the pay is still sparse, the work
is interesting, he said, citing as an example a contract with a winery to design
small utensils to open wine bottles. But each month to cover expenses, including
a $1,000 mortgage payment, the family cuts into its savings. "We never
did that before," Mrs. Schober said.
The Schobers think differently now about money. They shop more cautiously.
As a family, they organized a garage sale, taking in $580 by selling castoffs
that would have accumulated in the basement. And the couple have taken part-time
weekend jobs.
They work at Newton's recently opened auto speedway. On race weekends,
Mrs. Schober is at an information booth, answering questions, and he shuttles
handicapped patrons in a six-passenger golf cart. Each job pays $10 an hour.
"It helps the cash flow," Mrs. Schober said.
Tim and Rhonda Saunders, in their mid-40s, have taken a different route. He
went back to school, while she took a full-time job.
While Mr. Saunders put in 20 years at Maytag, mostly shaping sheet metal into
cabinets and doors, she raised their two children and worked part-time as a
bookkeeper. His layoff last December forced her into the full-time job, at $12
an hour in the accounts-payable department of a small manufacturer, so the family
could have health insurance. She took the new job without giving up the part-time
work and the $220 a week it brings in. That work is now done at home on evenings
and weekends.
"We have to pay more for her health insurance than I did at Maytag: $300
a month versus $50," Mr. Saunders said. "And the coverage is not
quite as good. But without it, I could not have gone back to school."
What pushed him into school was the job market. He found that he could not
replace, or even approach, his $23-an-hour Maytag wage, not with only a high
school diploma. A cousin steered him toward computer programming as a good source
of future income, and he enrolled at the Des Moines Area Community College,
attending classes full-time on the Newton campus. He turned out to be an A student.
More than 450 other ex-Maytag employees are also enrolled in full-time schooling,
their expenses paid by the federal government as part of its Trade Adjustment
Assistance program.
Maytag first qualified in 2003. The company was faltering then, losing market
share to imports and whittling down its blue-collar staff from a high of 2,500
in 2000. The Labor Department ruled that the import competition qualified the
laid-off workers for up to $15,000 each in tuition, along with book and transportation
subsidies, and unemployment insurance for two years.
The extended unemployment pay has been a lure. For a number of ex-Maytag workers,
it comes to about $360 a week, or $9 an hour - not much below what many jobs
pay in Iowa. In his own initial effort to land work, Mr. Saunders found that
the best he could do was $11 an hour.
So he went to school, and the family tightened its belt. He listed the economies
he and his wife have imposed: no more weekend camping trips, cooking hamburgers
instead of steaks on the grill, paying less of the college tuition for their
children, who are turning more to student loans.
But then he inadvertently mentioned a planned excursion to New York with their
daughter, and acknowledged that the $3,000 trip was hardly belt-tightening.
"My son always wanted a used racing car," he explained. "And
when he turned 18 a couple of years ago, we gave him one, knowing then that
my daughter would want to go to New York when she was 18 and see a couple of
shows. So we saved the money and it was put away before this ever happened.
It was something I wanted to do for her. She was so easy to raise and she worked
so hard in school."
Tootie Samson, a 47-year-old mother of three, and a grandmother, is also going
back to school with federal aid, but with a different goal in mind. Having already
earned a two-year degree in interior design on her own, she'll now go
for a bachelor's and maybe open her own shop.
Ms. Samson joined Maytag on the assembly line in 1997 after working 20 years
as a bookkeeper at less than $10 an hour. She came for the wage, $20 an hour
today, and to qualify for a pension, lost now in the buyout. She was laid off
in 2003, allowing her time to study interior design. Then, to her surprise,
she was called back last March. Whirlpool had underestimated how many workers
it would need to keep the plant running through October.
"For me, it is fortunate to be back at Maytag as it closes," she
said. "You need that closure. It's done. It's over. You always
think that maybe you'll get called back and now you know it is over and
you can move on with your life."
With Maytag gone, the Newton Development Corporation scrambled to find buyers
for the headquarters building and the factory - the great concern being
that once shuttered, these buildings would become giant eyesores. Iowa Telecom
finally bought the headquarters building, and the Industrial Realty Group of
Los Angeles, the factory, with Whirlpool subsidizing both purchases as a goodwill
gesture.
BUT Maytag fulfilled one function that can't be finessed. As the biggest
employer paying the best wages, it put upward pressure on the pay of other employers,
who sought to prevent their best workers from jumping to Maytag. Now that pressure
is gone. The loss is seen in the development corporation's effort to persuade
a fiberglass company to put a plant here employing 700 people at $12 to $13
an hour, and health insurance.
Ms. Didier, an ex-Maytag employee earning less herself as the development corporation's
executive director, put the best face on it she could. "With Maytag,"
she said, "it was difficult for companies to get good people at a lower
wage, and now they can."
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