Brian Callaci of Open Markets Institute writes in Forge Organizing about how trade unionism and the movement to stop monopolies are complements, not substitutes.

In the United States, it is nearly impossible for workers to win a union contract against an employer that is determined to remain non-union. How much harder, then, to beat an employer that can hire $10,000-a-day anti-union consultants, get the United States Postal Service to place a mailbox in front of the plant for mail-in voting, and even change the pattern of stoplights to keep organizers from talking to workers at shift changes? This, of course, is what Amazon workers at plant BHM1 in Bessemer faced in their vote to win union recognition. In addition to the myriad obstacles that broken U.S. labor law places in the way of workers trying to organize against any company, megacorporations like Amazon, Uber, and Walmart also retain an awesome resource advantage. Beyond the shop floor, this resource advantage carries over into the political sphere. In California last year, Uber, Lyft, and Doordash outspent unions ten-to-one to overturn legislation guaranteeing employment rights to misclassified gig workers. Political and workplace democracy are both at a severe disadvantage against such agglomerations of wealth and power.

One response to the recent growth of corporate power has been a resurgent anti-monopoly movement. Notably for a movement often associated with consumers or small businesses, the current incarnation of anti-monopolism has won some support from labor unions. However, some of the pro-labor left remains skeptical. The most strident critic of antimonopolism, People’s Policy Project founder Matt Bruenig, maintains that only large companies have the resources to implemen generous benefit plans, and that U.S. labor law makes it harder to organize workers at smaller companies in decentralized industries. Outside of Twitter polemics and magazine articles, there is also a longstanding belief in many parts of the labor movement that concentration benefits unions. Some trade unionists look back to the stable bargaining relationships unions once had with giant corporations like GM, US Steel, and AT&T, and see oligopoly as a major factor facilitating a more union-friendly labor relations regime. Others believe that concentration, by reducing the number of decision-makers that unions need to contend with, simplifies the task of organizing.  

However, the evidence in recent decades points to concentration as harmful for workers and their unions. Virtually no mega-corporations have unionized since 1950, and rising industrial consolidation since the 1980s has been destructive to working conditions and union power alike. A look at the historical record shows that unions have had success and failures in both unconcentrated and concentrated industries, depending on institutional context, and that postwar union power in a handful of heavy industries rested on a specific set of institutional supports that have long since faded away. Given the structure of contemporary capitalism, in which large firms operate many dispersed facilities and contract out key functions to economically subordinate franchisees and contractors, trade unionism and antimonopolism are in fact complementary rather than opposing movements. Both can serve as important components of a progressive coalition to take power from corporations and democratize the economy.

The Golden Age of Oligopoly?

Recent evidence cuts against the notion that market concentration benefits workers. While it’s true that workers at big companies once received a substantial “large firm wage premium” over workers employed at smaller firms, the size of that premium has plunged by half since the 1980s, and it’s still falling. In addition, at least in local labor markets, rigorous empirical evidence shows that employer concentration holds wages down. Indeed, industries that have concentrated in recent decades have not followed the relatively egalitarian, but historically unique, paths of mid-century industrial corporations. Most notoriously, meatpacking companies in the 1980s pursued relentless consolidation hand in hand with brutal attacks on unions and workers. Since the 1980s, concentration in meatpacking has gone way up — four companies now control eighty percent of the market — while wages have gone down. In 1982, at the beginning of the industry’s consolidation wave, the United Food and Commercial Workers’ base hourly wage for meatpackers was $10.69, or $29.14 in inflation-adjusted dollars. The average hourly wage in the industry today is $14.23. 

The ability of industrial workers to earn decent wages in concentrated industries in the middle of the last century was due to the unique institutional arrangements of the U.S. economy at that time, brought about in large part through the power of the U.S. labor movement. For a time, some workers did benefit from oligopoly. For the minority of workers employed in “basic industries” like auto manufacturing, concentration helped to facilitate a rough simulation of what is known as sectoral bargaining. Under sectoral bargaining, a single union contract covers all workers in an industry, taking wages out of competition and setting a floor in the labor market. Unlike in many European countries, U.S. labor law does not mandate sectoral bargaining, instead confining union bargaining rights to individual establishments or businesses. However, oligopolistic market structures allowed U.S. unions to simulate European-style sectoral bargaining through what was known as “pattern bargaining.” In pattern bargaining in heavily unionized industries, unions would first negotiate a contract with one firm in their industry’s oligopoly, and then extend the “pattern” to the remaining firms in the industry. As an approximation of European-style sectoral bargaining, it worked well enough for the thirty-or-so years that corporations honored the ritual. When corporations saw an opportunity to abandon the pattern in the 1980s, they were able to overcome labor resistance and do so, with the help of a newly repressive state. Without employer acquiescence to pattern bargaining, it is unclear what benefits concentration can offer to workers.

Aside from its lack of staying power, the postwar arrangement had a few additional shortcomings. First, it excluded the vast majority of workers, who were employed outside of basic industries in light manufacturing, services, and other sectors. Those excluded were disproportionately women and not white. Second, the arrangement was unstable. Labor’s forward progress was all but halted by an employer counter-offensive culminating in the Taft-Hartley Act, a 1947 law that outlawed secondary boycotts, legalized “right to work” laws, and prohibited foremen and independent contractors from unionizing. Meanwhile, almost immediately after agreeing to their first union contracts, big corporations started looking for ways to undermine and sidestep unions by outsourcing more and more work to temp agencies, independent contractors, franchisees, and spun-off suppliers. Giant corporations maintained their market shares and oligopoly power in final product markets, but they hired fewer and fewer workers directly, outsourcing labor to subordinate third-party contractors. For example, in the 1960s, auto companies began outsourcing parts manufacturing to captive non-union companies that they could dominate through their enormous buying (“monopsony”) power. Far from being content with oligopoly pattern bargaining, the United Auto Workers instead launched an antitrust campaign against the auto companies, alleging that their monopsony power over outsourced suppliers depressed wages. Supply chain monopsony of this kind has only gotten worse. 

Read the full op-ed on Forge Organizing here.