Before this questions can be answered, it is important to know the history of labor unions in this country.
I. History
Labor unions were designed for “collective bargaining” in wages, but also in aspects such as reasonable hours, safer working conditions, health benefits, and aid when retired or injured (Sandroff, 2012). A clear example of worker abuse was done by Pullman, the railroad magnate, who “offered the lowest wages possible, charge the rent that would break their backs, and he worked them like dogs” (Revolutionist: Eugene V. Debs, 2020). Pullman and other early industrial conglomerates overworked employees which resulted in less personal time to enhance education or other entrepreneurial pursuits.
A. August 20, 1866
In 1890, full-time manufacturing employees worked a backbreaking 100 hours per week (Ward, 2017) until awareness of the abuse and the demand for an 8-hour workday was brought about on August 20, 1866, by the National Labor Union, a coalition of skilled and unskilled workers, farmers, and reformers (“Today in history – August 20,” n.d.).
B. Industry: Pitting Workers Against Each Other
According to Sandroff (2012), with a continuous flood of immigrants, the price of labor declined; one group was often pitted against the other to keep wages down. However, by the 1950s organized labor included Blacks and the Latino population, by the 1960s and 70s, Filipino and Mexican American farmworkers rallied support, and by the 1990s, nursing home and home care workers were included (Sandroff, 2012).
C. The Great Depression, 8-Hour and 6-Hour Workdays
In 1926, the Ford Motor Company instituted the 8-hour-a-day, five-day workweek. But the Great Depression, the Kellogg company in 1930, instituted a six-hour workday, a move that let the company hire back employees who had been let go and hire other unemployed people (Sahadi, 2023). Shorter work hours provide an opportunity for workers to increase education, earn other certifications, and improve their marketability across sectors.
II. The Real Reasons Why Unions Love the Federal Minimum Wage
The AFL-CIO advocates for a higher federal minimum wage by claiming that employment and consumer spending increased following the increase of wages (“Raising the minimum wage,” n.d.). In a 2017 report, it is estimated that between 2012-2-17, unions may have spent over $70M to increase the minimum wage (Rensi, 2017).
A. Reduced competition from less skilled workers (Sherk, 2007). Unskilled workers who are happy with their wages will less likely compete for unionized jobs.
B. Raising the minimum wage makes unskilled workers more expensive to hire. With higher overall wages, hiring skilled and highly paid union members becomes a more attractive choice (Sherk, 2007).
C. Union contracts and salary floors are tied to the minimum wage. When the federal legal minimum wage is increased, union wages increase by at least 15% (Rensi, 2017). In other areas, an increase in the minimum wage resulted in an increase of union wages by 20 and 40% (Sherk, 2007).
III. Future Pitfalls of Further Increasing Minimum Wage
A. Force Industry to Use Robots/Machines. Although initially capital intensive, machines can operate 24 hours a day which will reduce the overall cost of production. Machines do not need days off, vacations, or retirement benefits.
B. Increase the Use of Illegal Alien Labor. Some industries will resort to illegal alien labor. They can pay “under the table” which also reduces other overhead costs such as FICA and other taxes.
C. Companies Will Find More Ways to Classify Employees as “Contract Labor.” With the rising trend of gig employees, companies can shift the cost of FICA, benefits, and other perks to the “contractor.” By framing the gig economy as “economic freedom”, companies can reduce their tax and benefits burden to the “contractor.” It then becomes the “contractor’s” responsibility to create their own retirement plan. More importantly, industry no longer has the responsibility of workmen’s compensation or health expenses in case of injury on the job.
IV. How the Gig Economy Looks Today
According to Ving (n.d.), Doordash has more than 1M food delivery drivers, who earn between $13 and $17 per hour, and work six days a week which is much more than the 8-hour, 5-day work week that 20thcentury workers fought for. To date, Uber drivers are paying for their medical insurance (Insurance Agency Network, 2023). In 2010, the US. recorded the lowest number of traffic fatalities since 1949; however, the recent rise in motor vehicle accidents is attributable to Uber and Lyft drivers spending more time on the road (“Rideshare accident statistics 2022,” 2022). Whether the accidents of less trained, overworked “contract” labor result in death or injury, the burden falls on the individual. This trend – of laborers who are not fully protected with medical, injury, or life insurance will add to the social burden on government. Also, workers who retire with minimal resources end up relying on government for health care and other social benefits as they age.
V. Conclusion.
The current economic conditions squeeze the worker between increasing prices and stagnant wages. Many resort to second and third jobs just to be able to afford the essentials. The poorest workers are at a higher risk. This demographic already does not have enough in savings, or retirement. Today’s freedom for the gig worker could lead to an increase in social services, thereby increasing the strain on governmental budgets.
References
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Rensi, E. (2017, January 18). Why do unions fund the fight for $15 minimum wage? Because they gain a financial windfall in return. Forbes. https://www.forbes.com/sites/edrensi/2017/01/19/why-it-is-that-unions-fund-the-fight-for-15/?sh=7bb1324950ce
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Sherk, J. (2007, February 7). Union members, not minimum-wage earners, benefit when the MinimumWage rises. The Heritage Foundation. https://www.heritage.org/jobs-and-labor/report/union-members-not-minimum-wage-earners-benefit-when-the-minimumwage-rises
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