May 1 is International Workers’ Day. Though it is overlooked in the United States, this day, also referred to as May Day, is a public holiday in many countries around the world. It’s a day to celebrate workers and a day for workers to demonstrate and demand more rights at the workplace.
Though many Americans are currently confined to their homes, May Day feels particularly relevant amidst the coronavirus pandemic. In the last six weeks, over 30 million people have filed for unemployment benefits.[1] Even this staggering figure falls far short of revealing the total number of unemployed Americans.[2] As the ship sinks, companies, by and large, are throwing workers overboard. When they do so, people are left reaching for our country’s tattered safety net, which is wholly unequipped to handle something like this.
The coronavirus is laying bare the injustice of the American workplace. On some level it’s true that we are all in this together. The virus does not care if you are rich or poor, black or white, Christian or Muslim. It does not care if you think this is all a Deep State hoax or whether you are predicting the end of the world. Anyone can be infected.
However, the virus’s effects are tragically far from equal. It is ravaging black and minority communities and is far more lethal for elderly people and those already suffering from other medical conditions. Almost 64,000 Americans have already died, and tens of thousands more will slip away in the coming weeks.[3] Fewer of the dead will be healthy, wealthy, and white.
Social distancing and shelter-in-place orders also affect people in unequal ways. Many Americans are relegated to working from home, which can be uncomfortable, to be sure, especially when adding in the stress and responsibility of also providing full-time child care. But they are lucky. Millions are without work, and others, deemed “essential employees,” continue to put their health on the line to keep society afloat. North Carolina, which is not atypical, defines essential workers to include, among others, healthcare, construction, distribution center, grocery store, restaurant, bank, media, gas station, law office, laundromat, hardware store, delivery, transportation, and manufacturing workers.[4] These are people deemed too important to the functioning of society to be sidelined.
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For decades, many of these, and other, workers have been left behind while a small group has gotten richer. Much richer. In the pre-Covid world, unemployment was low and the economy was booming. Since 2000, wages, in real terms, for those in the top tenth of earners increased by 15.7%.[5] But, meanwhile, most U.S. workers’ real wages remained essentially where they were 40 years ago.[6] Company owners and executives got rich off the backs of workers—i.e., everyone else—and everyone else had little to show for it.
How did we get here? There is no simple answer, but there are two related, but distinct, underlying causes. The first is our at-will employment system, which is a bedrock flaw in the U.S. employment relationship that pervades all aspects of American life. The second is the decline of labor unions, which has been a relatively recent, overt attack on workers by those benefiting from our inequality.
Covid-19’s toll on this country is already catastrophic, and the harm will continue to grow. The loss of life and economic ruin is almost unfathomable. In the past, Americans have responded to large scale devastation, like that wrought by the Great Depression and World War II, by demanding more rights for workers. If we follow suit in the world in which we emerge following the coronavirus, the at-will rule and the attack on unions should be our primary targets.
The At-Will Doctrine: A Fluke of History
The United States’ at-will rule is both unique and uniquely cruel. Nearly every other industrialized country has common law or statutory protections that prohibit employers from firing their employees for no reason or utterly illegitimate reasons. But here:
The long-established, firmly settled employment law of North Carolina is that, in the absence of an employment contract for a definite period, both employer and employee are generally free to terminate their association at any time and without any reason, or for an irrational or arbitrary reason.[7]
With limited exceptions, this is the rule throughout the United States.
This rule has helped make the employer-employee relationship in the United States one of employer dominance and employee subservience. Labor lawyer and scholar Clyde W. Summers summarizes it well: “The law, by giving total dominance to the employer, endows the employer with the divine right to rule the working lives of its subject employees.”[8] Elsewhere, workers are members of the business. In the US, they are mere suppliers of labor who can be discarded for an arbitrary or irrational reason by the almighty company. This has ramifications well beyond the rule itself.
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It’s absurd that in an industrialized democracy, like the United States, workers spend a large portion of their waking hours subject to authoritarian rule. Yet, that’s the system we have. In other democracies, like Germany, Sweden, and Japan, workers are “entitled to a voice in the decisions of the enterprise which affect them.”[9] Life in the modern world revolves around work. It’s where humans spend their time. It’s what supplies them with the means to shape nearly every non-workplace aspect of existence, including taking care of their families. Of course, workers should have a voice at the workplace. In the US, they generally do not.
It didn’t have to be this way. Following the American Civil War, states were split on how they handled employment for indefinite periods time. Courts typically tried to surmise the parties’ intent in entering into the work agreement. Some did so and viewed the relationship as at-will. However, others found that, if the pay was set forth on a weekly, monthly, or annual basis, then that pay period was the parties’ intended duration—just like we do with leases. For example, if the employer hired an employee and told the employee that he or she would receive an annual salary, then the intended duration of the employment agreement was one year.
In 1877, Horace Wood misstated the law and set the course for today’s ubiquitous at-will rule.[10] Wood summarized American employment law in a treatise, but he ignored the significant body of jurisprudence that rejected a blanket at-will rule.[11] Instead, he falsely explained that all indefinite hirings were at-will. Courts around the country slowly began to cite Wood’s treatise, and by 1930 the at-will rule had taken hold throughout the country. Today, when employers fire employees for completely stupid but not illegal reasons—callously and thoughtlessly causing very real harm to real people—management lawyers can thank a bad treatise writer from the 1870s for their recitations of the at-will rule.
In other industrialized democracies, employers cannot fire employees for wholly arbitrary reasons, but that does not mean employers are forced to unfairly keep bad workers to the detriment of the company. It simply means, for the most part, just cause is needed to take the serious step of terminating someone’s employment.
The at-will rule’s power imbalance spills outside the workplace. People use their incomes to buy homes, send their children to school, buy food for their families, and go on vacations. People make friends and connections at work that transcend the workplace. Individuals often relocate for work, and it’s not uncommon for an employer to relocate an employee. An employee’s decision to leave a job will have almost no impact on the company.[12] At the same time, employers unilaterally make fundamental decisions, including when to terminate work, that carry massive risks for employees. America’s uniquely subservient workplace is not built to last.
The Attack on Labor
One way to push against the utter subservience created by the at-will rule is worker unity. Employer power comes from company owners’ control of the pursestrings. They write the checks and they use that control to extract labor. In our at-will system, employee power comes from numbers, plain and simple. It doesn’t matter if the worker is on the shop floor or a high-level management employee—his or her bargaining power, when acting alone and with next-to-no job protections, is essentially non-existent.
Owners know this. They have exerted an ungodly amount of resources isolating workers from one another. Most notably, “right-to-work” laws—which, confusingly, have nothing to do with employees’ right to work—have worked to gut union membership and weaken worker rights. As way of background, 1947’s Taft-Hartley Act—itself an attack on labor—mandates that union benefits extend to non-union members. That is, since the 1940s, American workers have had the ability to decline membership but still enjoy nearly all the benefits that come with belonging to a union. In exchange for these benefits and protections, they had to pay “agency fees,” i.e., dues for non union members.[13] “Right-to-work” laws eliminate agency fees and, in so doing, take money from unions, who still have to provide benefits and protections to non-members! The effect is that unions have fewer resources and members.
Unsurprisingly, the legislative and judicial attack on workers’ ability to join together has been devastating. Union membership peaked in the 1950s at 34.8%.[14] Today that number is down to 10.3% and, in the private sector, only 6.2% of workers belong to a union.[15] As a result, inequality has run rampant in the American workplace. In 1965, CEOs made 20 times the average worker’s salary—today, on average, they make 278 times as much.[16]
Looking for a labor rights attorney? Reach out to Herrmann & Murphy for a consultation today.
Union density’s decline has ripple effects outside the bargaining unit. Nonunion workers benefit from unions, too. Unions help set pay and benefits standards that nonunion employers follow.[17] Employers raise pay and offer additional benefits to ward off an organizing drive.[18] Union density matters, and higher union density meant, historically, more protections and better pay and benefits for all.
Make no mistake about it—income inequality’s explosion and stagnant worker wages are tied to the decline of unions. Many have tried to distort the issue, claiming that good factory jobs have been replaced by inferior service industry jobs.[19] But there is nothing better about manual factory labor than working in a restaurant, at a hotel, or in customer service.[20] The difference is that production jobs were unionized and, for the most part, service industry jobs are not. There is nothing innate about service industry jobs that make them less conducive to union membership. All things being equal, the opposite is likely true—it’s easier to move a production factory oversees, but the same is not true for a restaurant.[21] The real culprit is company owners’ attack on unions.
Signs of an Employee Awakening Are Already Here
With this virus could come an awakening. Our employment laws and norms have been designed to make workers completely subservient cogs in enterprise. This is a fiction. Humans are not cogs, no matter how much company owners want them to be. Other industrialized democracies have long factored humanity into the workplace. The U.S. has not. Covid-19 could begin to change that.
In roughly six weeks, well over 30 million Americans have already been cast out by companies. Most of those who continue to work, especially those deemed “essential,” are nonunion, at-will employees whose employers can legally fire them for an objectively stupid reason. These workers often make just enough to scrape by and suffer from an embarrassing—but legal—lack of benefits. Some of the companies benefitting most from this pandemic are actively seeking to undermine efforts at collective bargaining among our frontline workers rightly being recognized as heroes of the corona-economy.[22]
The virus has made it clear that companies and employees are not in this together. Workers should come together and demand a fair share in the country’s future prosperity. Though right-to-work laws have weakened unions, the National Labor Relations Act gives workers “the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection”[23] Companies will continue to profit while neglecting fair wages, better benefits, and basic human dignity unless workers come together and say, “enough is enough.”
Promising signs of an awakening abound. Nonunion workers at Amazon warehouses, Walmart stores, Whole Foods groceries, and poultry plants are striking to protest unsafe working conditions.[24] Others in the service industry are walking off the job together and forming socially distanced in-vehicle picket lines.[25] Even those in the gig economy are teaming up to protest.[26] If these lessons stick, the American workplace and society could be a more just place for all.
Reach out for a consultation today.
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[1] Nelson D. Schwartz, Tiffany Hsu, and Patricia Cohen, Stymied in Seeking Benefits, Millions of Unemployed Go Uncounted, N.Y. Times (April 30, 2020), https://www.nytimes.com/2020/04/30/business/economy/coronavirus-unemployment-claims.html
[2] Id.
[3] https://www.worldometers.info/coronavirus/#countries
[4] https://files.nc.gov/governor/documents/files/EO121-Stay-at-Home-Order-3.pdf
[5] Drew Desilver, For most U.S. workers, real wages have barely budged in decades, Pew Research Center (August 7, 2018), https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us-workers-real-wages-have-barely-budged-for-decades/
[6] Id.
[7] Kristufek v. Saxonburg Ceramics, Inc., 901 F. Supp. 1018, 1023 (W.D.N.C. 1994), aff’d, 60 F.3d 823 (4th Cir. 1995) (internal quotations and citations omitted).
[8] Clyde W. Summers, Employment At Will in the United States: The Divine Right of Employers, 3 U. Pa. J. Lab. & Emp. L. 65 (2000).
[9] Id.
[10] Id.
[11] H.G. Wood, Master and Servant, § 134 (1877).
[12] Richard Wolff, Democracy at Work: A Cure for Capitalism (2012).
[13] Rick Ungar, ‘Right-to-Work Laws Explained, Debunked and Demystified, Forbes (Dec. 11, 2012), https://www.forbes.com/sites/rickungar/2012/12/11/right-to-work-laws-explained-debunked-demystified/#62976dbd480b.
[14] Gerald Mayer, Union Membership Trends in the United States, CRS Report for Congress (Aug. 31, 2004), https://digitalcommons.ilr.cornell.edu/cgi/viewcontent.cgi?referer=&httpsredir=1&article=1176&context=key_workplace.
[15] Union Members—2019, Bureau of Labor Statistics, U.S. Department of Labor (Jan. 22, 2020), https://www.bls.gov/news.release/pdf/union2.pdf.
[16] Jeff Cox, CEOs see pay grow 1,000% in the last 40 years, now make 278 times the average worker, CNBC (Aug. 16, 2019), https://www.cnbc.com/2019/08/16/ceos-see-pay-grow-1000percent-and-now-make-278-times-the-average-worker.html.
[17] Jake Rosenfeld, Patrick Denice, and Jennifer Laird, Union decline lowers wages of nonunion workers: The overlooked reason why wages are stuck and inequality is growing, Economic Policy Institute (Aug. 30, 2016), https://www.epi.org/publication/union-decline-lowers-wages-of-nonunion-workers-the-overlooked-reason-why-wages-are-stuck-and-inequality-is-growing/.
[18] Id.
[19] Richard Rothstein, The Color of Law: A Forgotten History of How Our Government Segregated America (2017).
[20] Id.
[21] Id.
[22] Paul Blest, Leaked Amazon Memo Details Plan to Smear Fired Warehouse Organizer: ‘He’s Not Smart or Articulate’, VICE NEWS (Apr. 2, 2020), https://www.vice.com/en_us/article/5dm8bx/leaked-amazon-memo-details-plan-to-smear-fired-warehouse-organizer-hes-not-smart-or-articulate; Lauren Kaori Gurley, Leaked Memos Show Instacart is Running a Union-Busting Campaign, VICE NEWS (Jan. 27, 2020), https://www.vice.com/en_us/article/akw3z8/leaked-memos-show-instacart-is-running-a-union-busting-campaign.
[23] 29 U.S.C. § 157.
[24] See, e.g., Robert Combs, ANALYSIS: Covid-19 Has Workers Striking. Where are the Unions?, Bloomberg Law (Apr. 14, 2020), https://news.bloomberglaw.com/bloomberg-law-analysis/analysis-covid-19-has-workers-striking-where-are-the-unions.
[25] Id.
[26] Id.
