Attacking the Core of Our Economy

Testimony Before the House Democratic Policy and Steering Committee

CAP Senior Economist Heather Boushey testifies before the House Democratic Policy and Steering Committee.

SOURCE: Center for American Progress

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No less than the role of the public sector and the endgame of who benefits from our nation’s economic growth is what’s at stake in the battle over collective bargaining. America’s middle class has seen decades of hollowing out but the attack on collective bargaining could be the proverbial “last straw” for the viability of the middle class and for the prosperity it has brought our nation.

Unions aren’t the problem with our economy. We continue to live in one of the richest nations on the planet—the third among the developed nations that belong to the Organisation for Economic Co-operation and Development. Even so, in recent decades, the gains of our productivity have accrued only to the very top.

Just three years after a massive financial crisis, profits are rising rapidly but companies are not investing. The nonfarm nonfinancial business sector was holding more than $1.9 trillion in cash in the third quarter of 2010, the highest level since the fourth quarter of 1959, while investment is at the lowest level in more than four decades.

Yet here we are having a conversation about whether we can afford to allow schoolteachers and police officers to have basic labor rights.

In reality, our economy’s future depends on laying the foundation for long-term economic growth by making sound investments in our human capital, our infrastructure, and the next generation of scientific and technological advances. We need these investments for our economy to grow and we need a highly skilled public-sector workforce to put these policies into effect.

The right to collectively bargain gives workers the right to engage in a meaningful conversation with employers about the things that matter to them. Bargaining over wages is important but bargaining over everything else is critical. Unions bargain over issues like class size and adequate safety measures that improve productivity, as well as workplace flexibility concerns like hours, paid sick days and vacation time, and benefits.

What has been striking about the debate in Wisconsin is that the key issue has not been about pay but about voice at work. Gov. Scott Walker has proposed that collective bargaining only covers wages. The unions agreed to pay cuts and greater contributions for their pensions 16 days ago but the protests have continued in the hopes of maintaining the right of public-sector workers to collectively bargain.

Nonwage issues are especially important to caregivers and women workers. Women make up 62 percent of local government workers and just more than half of state government workers, and employment contracts help workers to address their specific job issues, such as navigating conflicts between care responsibilities and work responsibilities.

Take teachers, for example. We know from decades of research that teachers’ skills are critical for children’s educational outcomes, yet the “best and the brightest” have been increasingly eschewing teaching. As women’s career opportunities have flourished in recent decades, they have the choice of whether or not to devote themselves to teaching and if the wages and benefits don’t measure up, the best minds will find opportunities elsewhere. Now, after watching the vitriol in Wisconsin and around the nation, why would a smart, capable young person choose teaching? Will stripping teachers of their benefits and rights improve the quality of our schools?

Public-sector workers are not overpaid. Economist John Schmitt has shown that, “When state and local government employees are compared to private-sector workers with similar characteristics, state and local workers actually earn 4 percent less, on average, than their private-sector counterparts.” Yes, public-sector workers tend to get more generous benefits, but as Schmitt notes, “relatively large differences in benefits per worker may simply reflect the older, better educated, state and local government workforce.”

The jobs our public-sector workers do are important. In fact, they are critical to our economic growth and to rebuilding our nation’s middle class.

Unfortunately, H.R. 1, which passed the House on partisan lines in February, targeted protections for workers, with dramatic cuts aimed at workforce investment programs, occupational safety and health, and the right to organize. For example, the bill will lead to the shutdown of 3,000 local career one-stop centers, 8,000 fewer workplace health and safety inspections, and the furlough of all National Labor Relations Board employees for half of the rest of the fiscal year.

A strong middle class is the key to our nation’s future. But we can’t build a strong middle class if we don’t have safe streets, enriching classrooms, and all the other things public-sector workers do. They are the foundation for a strong economy, not the enemy.

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Heather Boushey is a Senior Economist at American Progress.

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Heather Boushey

Senior Fellow