Democrats should be less concerned about the exploitation of white-collar labor and more concerned about a strong non-partisan civil service.

The “company town” provides the quintessential image of exploitation of blue-collar labor during the 20th century.  Such a town was established (or sprang up spontaneously)  around a large company in order to to house the company’s workers.  Workers purchased and rented homes close to the factory, and because the large company dominated the local employment market workers committed themselves to staying with the company by taking actions (like buying a house) that tied them to the community.  Those workers also took out loans from banks closely associated with the company in order to buy their homes, cars, and other goods.  In this way they were indebted to their employer.  That debt made them even less mobile.  All of these factors gave the workers in the town a substantially weaker bargaining position; their decision to stay in their community became tied with the decision to work for the company, and this made them unwilling to take risks when bargaining.

The modern analog of factory-town exploitation is what one might call “specialization exploitation.”  I’m not sure I’m convinced by the existence of this modern form of exploitation, but many Democrats are.  This modern exploitation supposedly functions as follows.  Workers, even white-collar ones, are convinced to spend significant time and resources on education and work experience that will allow them to provide particular services to the holders of capital (mainly corporations).  Many of those workers incur debt obtaining that education and experience, and subsequently will be less likely to take risks or hold out for higher pay in negotiations with the capitalists.  Because moving requires substantial resources, those with debt are also less likely to seek out higher paying jobs in other parts of the country.  In such a non-competitive labor market, capitalists are able to exploit the desperation and immobility of white-collar laborers in order to reap greater profits.  And because laborers possess the financial burden of improving their own human capital (primarily through education), and they borrow from the capitalists to obtain it, the white-collar laborer must live in debt service to the capitalists who are also her employers.  This gives a morally relevant explanation to slow wage growth; it is the result of capitalist exploitation of labor.

The analogy is even stronger for those with skills specialized for public service.  Unlike for a lawyer or salesperson, the school teacher or social worker who is fired faces uncertain employment prospects unless she is willing to move.  In those, and many other domains of service, the government dominates.  Therefore, it seems that public servants are often put in a similar bargaining position as workers in “company towns” of yore; either take what the company gives you or leave town (at often great cost).

This story comes from the intellectual descendants of early 20th century Socialists.  Those who have a great affinity for Thomas Pikitty’s recent book Capital in the Twenty-first Century should probably count themselves among this group.  In their view, all wage earners are in similar disadvantaged bargaining position with respect to managers and owners of capital.  Social workers, teachers, and clerks are in a similar position as welders and construction workers.  And the basic situation of all wage earners has changed little over the past century; even though their objective economic condition has improved immensely, relative to the capitalists they are still disadvantaged.  This is one important reason why liberals are very concerned with the collective bargaining rights of public workers and other white-collar workers.  It is thought that only through collective bargaining can workers of any type be on equal footing with their employers.  It is a way to make sure that workers get fair compensation and treatment.

I think that something like the above story is correct, though I find the depiction of early 20th century company towns to be more convincing than the modern variant.  However, I don’t think it actually matters much for Wisconsin politics whether the modern socialist view of labor economics is correct or not.  What matters is the fact that most Wisconsinites generally do not buy the fact that white-collar workers need the protections of collective bargaining.  And so any objections to the curtailment of collective bargaining rights of public employees justified by appeal to the disadvantaged bargaining position of white-collar public servants is bound to fail.  And as we know from recent experience in Wisconsin, this argument largely does fail.

Democrats have also attempted to develop another family of arguments that associates collective bargaining with improved service to the public.  In fact, the Wisconsin State Journal recently featured an op-ed by Jennifer Ruef supporting collective bargaining rights for teachers.  Ruef claims that improved working conditions for teachers won through collective bargaining have also benefited the learning conditions of students.  For instance, union agreements in the past capped class sizes and limited the number of sections teachers must teach in a day.  These are probably good policies to benefit student learning, but of course student benefit is only incidental to any benefit to teachers.  Teachers unions are representatives of teachers and not students, and as a result they have incentives only to benefit teachers.  Although the interests of teachers and students will sometimes align, they often will not.  For instance, administrative flexibility in firing and pay decisions likely benefit students by keeping the best teachers and getting rid of the worst ones.  Administrators, rather than teacher’s unions have incentives to improve student performance, and there is no reason to think that schools are resistant to adopt policies most beneficial to students, as long as the funds are available.  More importantly, the sort of argument Ruef provides (and the claim that teachers unions are out to benefit students) looks fishy to many in the public, and in politics this perception is just as important as reality.

Luckily winning over Wisconsinites to liberal economic views or favorable views of teachers unions are largely unnecessary to justifying the core protections that unions afford public workers.  These protections are especially important in public service not because of the disadvantaged bargaining position of public workers but rather was a bulwark against cronyism in the civil service.  A public sector labor union create a locus of power not controlled by appointed political officials.  This prevents political officials from using the civil service to dole out positions as rewards for political support.  Protections from being fired also allow civil servants to file reports and take actions against the wishes of political officials, without fear of political reprisals.

Cronyism is precisely what many Democrats fear in a civil service dominated by political appointees rather than career civil servants, and it is very difficult for public servants to do their jobs if they have to constantly worry about whether their actions will offend whoever happens to occupy the Governor’s Mansion.  Of course, in a state dominated by Republicans, increased cronyism would likely benefit them.  And this is precisely what can be seen in Governor Walker’s WEDC, which is tasked with spurring economic growth in Wisconsin.  Many jobs in the agencies went to campaign supporters of Walker, and much of the money it lent went to companies that supported him.  In a Wisconsin with a weaker civil service, more corruption is likely inevitable.  For instance, consider whether scientists in the DNR could give an unbiased analysis of the environmental effects of a new mine, if she could be fired and replaced for any reason.  A scientist should certainly think twice about being critical of the mine if the politicians who could fire her received campaign contributions from the mine owners.

A strong civil service is one of the most important tools to prevent corruption in government, and a public employee union contributes significantly to a  strong civil service.  Of course, civil service protections can be written into state law without those employees being unionized.  But when a single party controls the entire state government, which happens often in Wisconsin, the law is little restraint to corruption.  This argument for public service unions works better for some parts of government than others.  It is less clear why public grade school teachers would need to be protected from corruption than it is for state regulators.  However, it is reasonable to think that teachers would need some protections from administrative favoritism, incompetence, and arbitrariness.  At least I think that an argument can be made for the view that unions are important institutional players that require the administration to justify its decisions; and that certainly is better for both teachers and students.  However, I think the argument must be made in different terms than Democrats have done up until now; otherwise they will keep on losing the argument in the eyes of the public.

Reading of Interest

Anyone who wants to learn about corruption that is rampant when there are few protections to those working in the civil service should read about the American bureaucracy during the 19th century.  Protections against arbitrary firings and merit-based hiring procedures that were instituted during the early part of the 20th century significantly decreased corruption in the Federal and state governments.  The following book is a rather famous depiction of the development of this modern American civil service and the corrupt systems that preceded it.

Stephen Skowronek, Building a New American State: The Expansion of National Administrative Capacities, 1877-1920. Cambridge University Press. 1982.