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Speaker 1: So Dan, before we get started today, we just wanted

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Speaker 1: to take a moment to let everyone know about something

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Speaker 1: new from Bloomberg. Do you want to hear what it is?

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Speaker 1: no matter where you're reading the news, you can bring

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Speaker 1: the power of Bloomberg's news and data with you. It's

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Speaker 1: pretty amazing. Download our Io s app or search for

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Speaker 1: the Bloomberg extension on the Chrome Store to try it out.

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Speaker 1: Learn more at bloomberg dot com. Backslash lanes. Just about

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Speaker 1: every indicator of the US labor market shows that jobs

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Speaker 1: are plentiful and we're pushing the limits of how many

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Speaker 1: people can be employed. But many Americans still aren't seeing

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Speaker 1: the kind of lift to their wallets that were used

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Speaker 1: to with these kinds of numbers in the labor market.

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Speaker 1: One possible explanation is that Americans are not organized in

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Speaker 1: labor unions like they used to be. While unions have

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Speaker 1: had some notable successes, like this year's deal by Hollywood

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Speaker 1: writers that averted a strike, or the victory by forty

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Speaker 1: thou unionized Verizon workers last year. Most American workers lack

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Speaker 1: the bargaining power that they had throughout much of the

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Speaker 1: twenty century. Today on Benchmark, we're speaking with an expert

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Speaker 1: on this subject, Jared Bernstein, the former chief economist to

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Speaker 1: Vice President Joe Biden. I'm Scott Landman and economics editor

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Speaker 1: for Bloomberg News in Washington. Joining me as a guest

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Speaker 1: co host today is Patricia Leiah, a reporter covering the U.

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Speaker 1: S economy, also here in d C. Patty, thanks for

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Speaker 1: being here, h I'm really happy to be here. Thank

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Speaker 1: you so. Patty, You've just covered the latest US employment

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Speaker 1: report that came out last Friday. What stood out to

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Speaker 1: you in that report? Yeah, so the headline number for

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Speaker 1: April was pretty good, especially after a disappointing March that

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Speaker 1: was partly caused by that snowstorm we saw that affected

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Speaker 1: most of the northeast Stella. But even as the main

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Speaker 1: headline number came above, estimates, on the jobless rate fell,

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Speaker 1: which growth was still a bit disappointing. It's just not

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Speaker 1: at the level where it used to be in previous recoveries, right,

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Speaker 1: and that's been a puzzle for a while. Now the

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Speaker 1: labor market is getting tighter and tighter, but we're just

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Speaker 1: not seeing the kind of three percent four percent pay

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Speaker 1: gains that had happened in previous expansions when we had

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Speaker 1: a tight labor market that kind of looked like this.

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Speaker 1: So for more on this now, let's bring in Jared Bernstein,

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Speaker 1: since he has been a senior fellow at the Center

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Speaker 1: on Budget and Policy Priorities, and before working in the

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Speaker 1: Obama administration, he was at the Economic Policy Institute and

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Speaker 1: was also Deputy Chief Economist at the Labor to Artment

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Speaker 1: during the Clinton years. He's also a pretty good basketball player,

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Speaker 1: as I found out some years ago. Jared joins us

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Speaker 1: by phone from his office in Washington. Now, Jared, thanks

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Speaker 1: for spending time with us on Benchmark. My pleasure, though

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Speaker 1: I have to say my teammates last night would not

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Speaker 1: describe me as a pretty good basketball player. But at

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Speaker 1: any rate, I'm I'm better at the labor market stuff.

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Speaker 1: I guess, well we'll focus on that today. Good. So,

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Speaker 1: there there are lots of things, Jared that are different

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Speaker 1: about having a job in America today compared with forty

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Speaker 1: or fifty years ago. Was it really better back then?

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Speaker 1: Or are we looking through rose colored glasses at the past. Well,

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Speaker 1: in terms of the connection between wages and the job market,

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Speaker 1: things were better for various groups of workers, not everybody.

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Speaker 1: In fact, if you look at the gender wage differential,

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Speaker 1: women were earning a lot less than men for comparable,

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Speaker 1: comparable work back then than they are now. There was

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Speaker 1: still discrimination in the job market in other ways as well.

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Speaker 1: But if you're simply talking about basically two things, the

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Speaker 1: tightness in the labor market and the way that tightness

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Speaker 1: mapped onto people's paychecks, Yeah, that was that was better

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Speaker 1: back then. So let me give you a pretty mind

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Speaker 1: blowing statistic on this. Uh it used to be the case,

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Speaker 1: I was Patty was saying, at least by some metrics,

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Speaker 1: the current job market might be described as being at

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Speaker 1: full employment. I'm not sure I quite see it, but

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Speaker 1: that's a certainly a legitimate thing to declare. Well, since

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Speaker 1: nineteen eighty, we've been at full employment less than thirty

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Speaker 1: percent of the time. Before eight, say, the late forties

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Speaker 1: to nineteen eighty, we were at full employment almost seventy

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Speaker 1: percent of the time, so we were much more likely

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Speaker 1: to have a tight labor market, and a tight labor

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Speaker 1: market delivers some bargaining cloud to uh middle and lower

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Speaker 1: rage workers. Of course, as you kind of mentioned in

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Speaker 1: your intro, we were more unionized back then as well,

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Speaker 1: so economic growth mapped onto the paychecks of middle wage

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Speaker 1: workers more uh robustly then than it does now. Let

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Speaker 1: me share some facts with our listeners from the Bureau

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Speaker 1: of Labor Statistics. The union membership rate was at ten

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Speaker 1: point seven percent in it was over three and even

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Speaker 1: the state with the highest union membership, New York, is

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Speaker 1: at uh just under the lowest of South Carolina at

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Speaker 1: one point six When when you think about the economy

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Speaker 1: being at full employment, how how has that particular change

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Speaker 1: affected the American worker? Are people not organized in unions

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Speaker 1: to be able to take advantage of a full employment

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Speaker 1: situation like they used to be? Well, I guess the

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Speaker 1: way I look at it is a little bit differently,

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Speaker 1: and the the in American style job markets, you know,

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Speaker 1: we have a kind of a more rigorous version of

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Speaker 1: capitalism than they do in in other more social democracies. Uh,

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Speaker 1: your paycheck is not just a function of how skilled,

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Speaker 1: you are, your value added. That's kind of what they

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Speaker 1: teach you an economics class. But that's part of it,

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Speaker 1: no question. But it's also a matter of your bargaining power,

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Speaker 1: your bargaining clout. And historically there have been two factors

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Speaker 1: that have contributed to the bargaining clout of middle and

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Speaker 1: lower wage workers, or at least two factors. One is

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Speaker 1: very tight labor market and f I mentioned earlier, that's

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Speaker 1: been very much the exception, not the rule, over the

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Speaker 1: last few decades, um and And the other is unionization.

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Speaker 1: And your numbers are correct, I would simply um add

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Speaker 1: to them that in the private sector, which is where

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Speaker 1: most people work, uh, the unionization rate is only seven percent.

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Speaker 1: So that's that's you know, getting a way below not

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Speaker 1: only where it used to be, but where it is

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Speaker 1: in in other advanced economies. There are some other factors

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Speaker 1: that help determine wages at the level of the minimum

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Speaker 1: way age, to the extent to which labor standards are enforced,

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Speaker 1: the structure of employment. You've got the gig work that

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Speaker 1: can sometimes play out in paychecks and ways that are

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Speaker 1: negative for workers. But if you put it all together,

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Speaker 1: the factors that used to give workers, more bargaining power,

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Speaker 1: tight labor markets, high unionization rates, rigorously enforced labor standards.

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Speaker 1: Many of those are things of the past. Right, you

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Speaker 1: think that would be pretty good to be in an union.

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Speaker 1: If you're a worker at a D and T, you

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Speaker 1: have a pension, you have ritary health benefits, you probably

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Speaker 1: have a bunch of other parts that people in the

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Speaker 1: rest of corporate America gave up a long time ago. Right, Well, yes,

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Speaker 1: there are definitely some unions that are still able to

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Speaker 1: deliver that those kinds of benefits to their members. Um.

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Speaker 1: Public sector unions often do a pretty good job, which

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Speaker 1: is one reason why they're under siege and many states

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Speaker 1: throughout the throughout the nation. Uh. And if you compare

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Speaker 1: union workers to non union workers just based on their wages,

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Speaker 1: controlling for everything else, there's still a significant premium there somewhere,

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Speaker 1: I guess between ten and fiftent at least. But an

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Speaker 1: interesting finding that that's germained to our conversation is that

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Speaker 1: when unionization rates get higher, so right now they're about

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Speaker 1: as you said here, but back when they're or if

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Speaker 1: you go over to Europe and you see uh, union

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Speaker 1: rates that are considerably higher than that you end up

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Speaker 1: with a lot more pattern bargaining or collective bargaining where

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Speaker 1: union wages enforced the pay of workers outside the union sector.

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Speaker 1: So there's a spill over there that can happen as well.

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Speaker 1: And you certainly don't see that when you're down to

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Speaker 1: the kind of levels of of collective bargaining that we

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Speaker 1: have our nations with that still have higher union membership

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Speaker 1: rates experiencing faster wage growth than the United States has

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Speaker 1: been with declining union membership, or has it been fairly

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Speaker 1: consistent worldwide? Well, I think on average you wouldn't really

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Speaker 1: find that UM, But I think if you look distributionally,

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Speaker 1: their their wage distributions tend to be UM tighter, less

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Speaker 1: dispersed than ours, They have less wage inequality, less less

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Speaker 1: earnings dispersion UM, and in fact, in many cases, as

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Speaker 1: their unionization rates go down, they end up with more

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Speaker 1: of that UM. An important early study found that about

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Speaker 1: a fifth of the increase in in wage dispersion, at

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Speaker 1: least among men, was attributed to the decline in unionization.

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Speaker 1: Now fifth may not sound like a ton, but that

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Speaker 1: was the largest factor that I think anyone's ever uncovered

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Speaker 1: in that in that research. Is it harder to organize

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Speaker 1: labor unions these days, or oh yes, yeah, is there

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Speaker 1: more apathy among workers or what is it? Well, I

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Speaker 1: don't know that there's more apathy among workers. And in fact,

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Speaker 1: if you pull people depending on the question, you know,

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Speaker 1: these surveys can be a little squirrelly. Many people will

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Speaker 1: say something to the effect of, we recognize that we

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Speaker 1: need some form of an organization to push back on

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Speaker 1: UM the kinds of things that our employers are trying

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Speaker 1: to do to us. Now. They might not like the

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Speaker 1: word union, but that's a pretty consistent finding. I think

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Speaker 1: what's really different now is that there is a depocketed,

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Speaker 1: multi billion dollar union avoidance industry, and you know, you'll

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Speaker 1: see stores like Walmart closed down a franchise somewhere if

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Speaker 1: they're worried that it's going to become unionized. So the UH,

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Speaker 1: the anti union initiatives taken by UM employers, not not all,

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Speaker 1: by the way, but those who are particularly averse to

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Speaker 1: UH to union membership UM have gotten a lot more aggressive.

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Speaker 1: I do think that workers probably think differently about unions

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Speaker 1: than they used to. I know there was a case

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Speaker 1: pretty recently, I think it was Volkswagen in maybe Tennessee,

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Speaker 1: where the workers voted not to form a bargaining unit unit.

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Speaker 1: And I wonder if some of what was going on

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Speaker 1: there was a sense that the you know, the union

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Speaker 1: wasn't going to really help them all that much. Let's

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Speaker 1: drill down a little bit further into some of the

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Speaker 1: wage data you have. By all indicators a tight labor market.

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Speaker 1: The retail sector is a major is a fairly significant

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Speaker 1: part of our employment. I think it's around fourteen fifteen

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Speaker 1: million people are employed in retail. Uh, they're fairly low paid. UH.

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Speaker 1: Maybe the wage gains, at least in some of the

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Speaker 1: recent data have been have been pretty flat. Would could

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Speaker 1: would they be potentially faster if there was more union

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Speaker 1: organization in that sector or do you think there are

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Speaker 1: other forces at play? I think that you'll find union

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Speaker 1: wages are higher, as I mentioned earlier, that there's a

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Speaker 1: premium there. Whether they're growing faster or not. UM, that's

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Speaker 1: probably a tougher call. I don't I don't know that

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Speaker 1: I've seen so much of that in the data. So

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Speaker 1: probably more of a level story than a growth story.

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Speaker 1: I think, you know, economists are scratching our heads over

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Speaker 1: the the what we call the flatness of the Phillips curve,

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Speaker 1: which is just a fancy way of saying the breakdown

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Speaker 1: and the correlation between tight labor markets and price growth

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Speaker 1: and wage growth. Uh, whether you're looking at prices or wages,

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Speaker 1: you might expect there to be more uh growth when

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Speaker 1: you're you're down at an unemployment rate that's four point

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Speaker 1: four percent. But there are many explanations for that, by

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Speaker 1: the way. One is that the federal reserves, at least

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Speaker 1: in terms of inflation or prices, has kind of locked

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Speaker 1: in everybody's heads that are going to target two percent

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Speaker 1: no matter what, so inflation is really quote well anchored.

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Speaker 1: Another is, of course, the bargaining power story that I've

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Speaker 1: I've been talking about we've been discussing throughout our our conversation.

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Speaker 1: Uh and UH. Another is the bargaining power discussion that

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Speaker 1: we've been having uh throughout our conversation. UH. And then

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Speaker 1: there is kind of a sectual story, as you were suggesting, UM,

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Speaker 1: there are sectors in our economy that are facing a

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Speaker 1: set of pressures they didn't face fourty or fifty years ago.

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Speaker 1: For instance, our manufacturers are in much more of a

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Speaker 1: global competitive situation than they were back in those days

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Speaker 1: of you know, literally two and three percent unemployment rates

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Speaker 1: if you go back to the nineteen sixties. UM and so,

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Speaker 1: uh what what While globalization has many upsides, no question,

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Speaker 1: particularly in terms of the supply of resources, liquid supply

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Speaker 1: chains and all that, UM, for many workers, blue collar workers,

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Speaker 1: production workers, workers and manufacturing, that kind of wage competition

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Speaker 1: has hurt them. M. That's become a very politically salient

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Speaker 1: effect in recent years. Need I say, Jared, In some

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Speaker 1: cases corporations are you for unions and not for the

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Speaker 1: best reasons. I used to report in Mexico, and there's

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Speaker 1: a practice they're called protection contracts, which has become standard.

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Speaker 1: It's basically an agreement between a company, in these case

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Speaker 1: automakers and an union that doesn't legitimately represent workers, UM,

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Speaker 1: which agrees even years before they break ground on the plant,

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Speaker 1: to keep wages really, really low. I'm wondering if you've

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Speaker 1: ever seen anything similar in the US, or basically if

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Speaker 1: you haven't, what's the bad side of unionizing. Yeah, I

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Speaker 1: think that those are these kind of basically management kind

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Speaker 1: of puppet unions UM. And I don't know that we've

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Speaker 1: had so much of that in this country. We've certainly

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Speaker 1: seen that in UM countries without much of the kind

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Speaker 1: of more industrialized union base that got started here in

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Speaker 1: the in in the Great Depression, UH, and you know,

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Speaker 1: fought their way off and violently into a much more

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Speaker 1: solid part of the job market, at least until their

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Speaker 1: membership really started to erode back in the in the

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Speaker 1: eighties or so with the pat Co strike. But if

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Speaker 1: you go back to the days of early unionism and

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Speaker 1: to sit down strike at Flint in the nineteen thirties, UM,

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Speaker 1: there was these were militant unions sometimes and militant management

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Speaker 1: by the way on the other side, and they were

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Speaker 1: fighting tooth and nail for UM what I'm calling bargaining power.

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Speaker 1: But back then they would have very much have seen

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Speaker 1: as h pushing back on essentially a corrupt system that

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Speaker 1: wasn't affording them the UH the pay that they believe

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Speaker 1: they deserved. So we we have to my knowledge, and

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Speaker 1: I must say that I haven't focused on this as much,

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Speaker 1: especially as unionization rates have gotten so low, But we

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Speaker 1: haven't had the kind of company union so much here

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Speaker 1: that you're describing in Mexico, Jared. When we originally were

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Speaker 1: coming up with the idea for this topic on this podcast,

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Speaker 1: we were looking at the the Hollywood writers, the TV writers,

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Speaker 1: and they were threatening to go on strike, and we

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Speaker 1: were going to do a show about how they were

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Speaker 1: on strike and what that says about the economy. And

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Speaker 1: in fact, at the very last minute, they reached a

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Speaker 1: settlement with the studios and and got some uh what

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Speaker 1: what seemed like some some decent pay increases or benefit

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Speaker 1: or benefits from that deal. And also a year ago

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Speaker 1: we had this big Verizon strike and even though both

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Speaker 1: sides claimed victory, there was some indication that that this

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Speaker 1: strike was able to get some benefits for for the

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Speaker 1: Verizon workers that maybe they wouldn't have had if they

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Speaker 1: weren't able to get organized. Now, putting these events together,

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Speaker 1: are these two things representative of what unions can still

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Speaker 1: do in the economy or they really kind of the

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Speaker 1: exception to the rule when it comes to workers bargaining

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Speaker 1: power these days, more the exception than the rule. Uh. Interestingly,

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Speaker 1: I think the way people in the union movement are

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Speaker 1: starting to think about the way forward. And remember, we

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Speaker 1: talked about a seven percent unionization rate in the private sector,

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Speaker 1: and that's as we've been saying, that's a multi decade trend.

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Speaker 1: And those kinds of trends are hard to turn around.

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Speaker 1: So folks are trying to think outside the box, and

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Speaker 1: they're thinking less about well, actually, in a way, it's

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Speaker 1: it's less about the kind of the Brizon model and

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Speaker 1: more the writer's model. That is, UH, instead of thinking

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Speaker 1: about organizing an industry, organizing a sector, organizing fast food,

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Speaker 1: or organizing retail, they're thinking about how they can organize

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Speaker 1: place by place. Now, this would take a change in

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Speaker 1: labor law, UM, and so you're not going to see

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Speaker 1: that from this administration. But the idea is that especially

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Speaker 1: with a more sort of what some people call the

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Speaker 1: the fisher economy or the gig economy, the the W

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Speaker 1: two economy, the idea that you're working maybe less for

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Speaker 1: a particular employer, there's more UM of self employment, UH,

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Speaker 1: independent contracting, things like that. UM. With with with those

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Speaker 1: kinds of developments going on, UM, people are starting to

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Speaker 1: think more about trying to form unions at a particular

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Speaker 1: restaurant versus UH the restaurant industry. UM that that if

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Speaker 1: they're able to pull that off, that may may give

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Speaker 1: them some uh may give them some success. So Jerry,

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Speaker 1: we definitely have a tight labor market. We saw a

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Speaker 1: high number of openings and quits this morning. So with

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Speaker 1: or without unions, what's it gonna take for us to

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Speaker 1: see higher wages in the US? Well, I think the

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Speaker 1: wage story is a really interesting one. Um. Uh. Wages

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Speaker 1: have accelerated, as I'm sure you know, if you go back,

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Speaker 1: uh a year and a half or so, wages we're

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Speaker 1: growing two percent year over year nominal. Uh. Now they're

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Speaker 1: growing somewhere between two point five and three percent. I

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Speaker 1: have an index that I put together which takes five

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Speaker 1: different series and smashes it together in some sort of

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Speaker 1: sophisticated waiting way. Um, and uh, it's it's growing. It

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Speaker 1: was growing two percent, now it's growing two point eight percent. Um.

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Speaker 1: So we're getting some some uh bump. But the thing

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Speaker 1: that's got me nervous now, and this is only a

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Speaker 1: few months so these numbers, as you know, are jumpy,

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Speaker 1: is that if you look at the blue collar wage

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Speaker 1: or the wage of non managers and services, so of

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Speaker 1: the workforce that's not in the that that's that's in

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Speaker 1: those categories. Um, they went from two to two point

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Speaker 1: five and they've just been sitting at two point five

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Speaker 1: for a number of months, even as the jobless rate

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Speaker 1: has come down. Now, if you look at the other

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Speaker 1: of the workforce with higher wages, they've started growing at

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Speaker 1: a pace that's closer to three or even north of three.

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Speaker 1: And so I'm worried that there's this wage inequality problem evolving. Uh,

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Speaker 1: and I gotta be watching that. It's definitely a story

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Speaker 1: that we will will continue to follow here at Bloomberg

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Speaker 1: and on Benchmark. Jared Bernstein, thank you so much for

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Speaker 1: being with us today. My pleasure Benchmark will be back

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Speaker 1: next week and until then, you can find us on

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Speaker 1: the Bloomberg terminal, Bloomberg dot com, or Bloomberg App, as

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Speaker 1: well as on Apple podcast, Pocketcast, Stitcher, or wherever you

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Speaker 1: might enjoy listening to podcasts. While you're there, take a

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Speaker 1: minute to rate and review the show so more listeners

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Speaker 1: can find us and let us know what you thought

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Speaker 1: of the show. You can follow me on Twitter at

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Speaker 1: at Scott Landman Patty you are at Patty Lea, and

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Speaker 1: our guest Jared Bernstein is at at icon. Jared Benchmark

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Speaker 1: is produced by Sarah Patterson. The head of Bloomberg Podcast

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Speaker 1: is Alec McKay. Thanks for listening to you. Next time,

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