Minimum-wage hike is rare gain for workers under employer-centered Bush

The federal minimum wage on Wednesday rose by 70 cents, to $5.85 per hour, the first increase in nearly a decade.
While the minimum wage has risen, its effect has been partially offset by a May U.S. Supreme Court ruling that tightened the conditions for demonstrating discrimination in “pay parity” cases — strengthening the hand of employers. The rights and bargaining power of U.S. workers have declined since 2000.

That ruling, Ledbetter v. Goodyear, both tightened the conditions under which plaintiffs have standing to sue for pay disparity discrimination and weakened the federal Equal Employment Opportunity Commission’s (EEOC’s) capacity to regulate employment conditions for U.S. workers. The ruling dovetails with the broader pro-market and pro-employer stance that the administration of President Bush has adopted. Conditions for U.S. workers, particularly those lower on the income scale, have become increasingly precarious, given:

• low U.S. union membership (12 percent of the workforce, the lowest in the Organisation for Economic and Co-operative Development); and

• surplus unskilled and semi-skilled labor, partly attributable to the growing pool of undocumented immigrants.

These conditions, largely invisible to the U.S. middle class, have helped former Sen. John Edwards’s (D-N.C.) presidential campaign achieve traction with populist appeals.

Employer-oriented policies

Bush entered the White House with a commitment to deregulate markets and reduce federal regulatory burdens on corporations, which he has pursued in several ways:

• Tax cuts. Bush followed through speedily on his pledge to reduce taxation on corporations and on the highest-earning taxpayers, initiating major legislation in June 2001 (subsequently augmented). Some Democratic presidential hopefuls, such as Edwards and Sen. Barack ObamaBarack ObamaPutin denies 2016 meddling: US is no 'banana republic' Black turnout key to House fight In this economy, Latinos are most frequent victims of wage theft MORE (Ill.), have promised to reverse these cuts if elected.

• Relaxed regulation. Bush weakened the National Labor Relations Board (NLRB) by appointing commission members disinclined to defend worker interests in federal labor law. The NLRB was created in 1935 to oversee union organization and give federal protection to workers engaging in collective bargaining.

The president’s NLRB appointees have weakened workers’ rights in respect to union recognition and collective bargaining.
In particular, the Board has moved to expand the definition of “supervisory workers.” Any worker — including many professionals — deemed to hold a “supervisory” role is exempted from federal labor protection laws.

• Conservative judicial nominees. The president’s policy of nominating ideologically conservative justices to the U.S. Supreme Court has also had a major impact. May’s ruling confirmed that the court now has a solid majority in favor of the administration’s labor policy:

The case’s plaintiff, Lilly Ledbetter, worked for 19 years at Goodyear, and sued the firm claiming that throughout her career she was paid less than the lowest-paid man doing equivalent work. She cited gender as a source of the disparity.

An appeals court had previously overturned her initial trial court victory on the grounds that she had waited too long to make her claim, violating a 180-day deadline for complaining about discrimination in pay. Before the Supreme Court, a majority of five justices, including Clarence Thomas, a former director of the EEOC, sided with Goodyear against Ledbetter in arguing that she had waited too long before suing.

Union response

Union membership in the United States is the lowest amongst advanced industrial democracies, and declining — although a few innovative unions have adopted new tactics and are growing rapidly. They have pushed back against administration policy in two significant ways:

• Employee Free Choice Act. The AFL-CIO and its Democratic Party allies have promoted the Employee Free Choice Act (EFCA), designed to protect workers against employer restrictions when engaging in organizing drives. The legislation centers on expanding the rights of workers to form and join unions on the grounds that union members enjoy higher wages, better work conditions and access to healthcare. Union members have on average weekly wages 30 percent higher than non-union members, while the value of healthcare and other benefits is 98 percent higher for private-sector workers in unions compared with non-union workers.

In March, the House passed legislation largely along the lines of EFCA. Sen. Edward Kennedy (D-Mass.) has introduced the same legislation in the Senate — although winning passage there will be difficult and the president is almost certain to veto it. However, the issues underlying the bill — declining union membership, poor wages for unskilled and semi-skilled workers, and the unavailability of healthcare coverage for many U.S. workers in full-time private-sector jobs — are already playing a role in the nascent 2008 presidential campaign.

• Minimum wage. Raising the minimum wage for the first time in almost 10 years was an element of the Democratic Party’s midterm election platform in November 2006. After losing control of Congress, the administration did not believe that holding the line on minimum wage increases was politically sustainable, and agreed in May to a gradual, stepped rise, which began Wednesday. However, even after the final rise takes effect in April 2009, the minimum wage will still be only worth approximately $6.86 per hour (2006 dollars), well below its inflation-adjusted peak of $9.43 in February 1968.

Policy debate outlook

The struggle over workers’ rights will continue to be a feature of the U.S. political scene during the 2008 election year:

• Institutional divisions. While the Democrats control Congress, the Supreme Court now appears to have adopted a solidly conservative position on the balance between worker and employer interests. Congress will seek to overturn the court’s decisions through changes in legislation, but will be largely unsuccessful as long as the White House remains in Republican hands. If the Democrats capture the presidency next year, this balance will obviously change.

• Immigration. Despite agreement between the White House and congressional leaders on a comprehensive immigration reform bill, a determined minority was able to kill the measure in the Senate last month. However, while the bill was designed to reduce undocumented migration by offering a very long-term (and expensive) path to citizenship, and by instituting a guest-worker program, this would certainly have failed to curtail U.S. labor market demand for workers. More fundamental labor market reform is necessary, but will be politically unachievable before 2009. In the interim, some innovative labor groups — such as the powerful Service Employees International Union — have begun to organize illegal immigrant laborers.

• Federal regulation. The quasi-judicial NLRB has five members appointed by the president to staggered five-year terms. Historically, the Board has played an immensely important role in improving conditions for workers by monitoring and regulating compliance amongst employers with federal labor law protection. It helped reduce racial inequalities once the civil rights legislation was enacted in the 1960s. However, the Board’s willingness to play an activist role in defending worker rights hinges on its membership. If a Democrat is elected in 2008, he or she would fairly rapidly undo the Bush-era majority, with major consequences for employers.

Oxford Analytica is an international consulting firm providing strategic analysis on world events for business and government leaders. See .