DOLLARS

The Assault on Job Security

Sept | Oct
PAGE 5

2014
Deregulation and Truckers

&SENSE
PAGE 19

Atlantic City Casino Decline

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What’s Behind Wage Stagnation

Real World Economics PAGE 35

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ANNUAL
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 < From the Editors
DOLLARS
&SENSE Unconventional Wisdom
H ere are some bits of “conventional wisdom” about labor relations and work in the
Real World Economics

United States today:

Dollars & Sense magazine explains the workings
of the U.S. and international economies and pro- • It’s part of the America’s cultural DNA to “work hard and play hard.” American habits
vides left perspectives on current economic affairs.
It is edited and produced by a collective of econo- of work and consumption, in contrast with other rich capitalist countries (some-
mists, journalists, and activists who are committed how France always comes up), are deeply ingrained in American culture. We would
to social justice and economic democracy.
never accept more leisure at the expense of incomes or consumption.
the d&s collective
Betsy Aron, Nancy Banks, • U.S. workers have gotten hammered over the last decades, and globalization is the
John Miller, Kevin O’Connell,
Nina Eichacher, Peter Kolozi, Lyden Marcellot,
main culprit. The “good jobs” in manufacturing are gone—decimated first by low-
Jawied Nawabi, Linda Pinkow, wage import competition and then by offshoring—and are never coming back.
Alejandro Reuss, Dan Schneider, Alex Searles,
Zoe Sherman, Bryan Snyder, • Cities and states have to compete to attract new investment, but with the right
Chris Sturr, Jeanne Winner
kinds of inducements they can draw in new businesses and new employment—
staff
most likely in services. The jobs may not be as good as the old manufacturing jobs,
magazine editors Alejandro Reuss, Chris Sturr
business manager Nancy Banks but at least they are jobs, and that additional income can spur further spending,
development director Linda Pinkow investment, and employment, revitalizing local economies.
interns
Omaima Afzaal, Gloria Cadder, Well, the conventional wisdom here isn’t especially wise. Either it is missing critical parts
Zion Griffin, Aaron Markiewitz of the story, or it gets some parts of the story just plain wrong.
work study
Autumn Beaudoin As economist Juliet Schor points out in our interview, the American way of work, leisure, and
consumption has changed over time—and not in little ways. The U.S. labor movement was
associates
Aziza Agia, Randy Albelda, historically ahead of Europe’s in the fight to shorten the working day. Until the Second World
Teresa Amott, Sam Baker, Marc B ­ aldwin, War, the rich capitalist countries were on a common trajectory of declining work hours. It’s
Rose Batt, Rebecca Bauen, Phineas ­Baxandall,
Marc Breslow, Jim Campen, Chuck Collins, only since then that the United States has diverged from that path. If these patterns have
James Cypher, Laurie Dougherty, changed before, under particular historical circumstances, however, they can change again,
Laura Dresser, Janice Fine, Ellen Frank,
Tami J. Friedman, Sue Helper, Thea Lee, under different circumstances. A new and better way of life—greater leisure, greater equal-
David Levy, Arthur ­MacEwan, Mieke Meurs, ity, more economic security, and greater environmental sustainability—is still possible.
Marc Miller, Ellen Mutari, Amy Offner,
Laura Orlando, Robert Pollin, Smriti Rao,
Adria Scharf, Abby Scher, Susan Schacht, As for the ongoing decline of U.S. labor, the story can’t be reduced to the impacts of glo-
Chris Tilly, Ramaa Vasudevan, balization. Labor writer and activist Dan LaBotz explains what’s happened to labor in U.S.
Thad Williamson
trucking over the past few decades: shrunken and weakened unions, declining wages,
design
and long work hours (not all of them paid). Sound familiar? But trucking, unlike manu-
layout Chris Sturr and Alejandro Reuss
front cover Vector illustration by DrAfter123 facturing industry, is not impacted directly by import competition or global sourcing.
(iStock.com) adapted by Chris Sturr The changes in labor relations in the industry have been caused by changes in domestic
printing   Boyertown Publishing
labor relations and regulatory policy, among other things. That casts the effects of glo-
Dollars & Sense (USPS 120-730) is pub­l ished
balization (better said, “neoliberal” or “corporate” globalization) in a new light—as part of
bimonthly by the Economic Affairs Bureau, Inc., a larger story in which employers have succeeded, by various means, in tilting the bal-
One Milk Street, Boston, MA 02109, a non-profit
corporation. ISSN: 0012-5245. 617-447-2177. Fax: ance of class power dramatically in their favor.
617-447-2179. E-mail: dollars@dollarsandsense.org.
Periodical postage paid at Boston, MA, and additional
mailing offices. Cities are building new sports facilities, convention centers, and tourist attractions in search
For subscription information, contact Dollars & Sense,
of post-industrial futures. Tourism and entertainment were supposed to be new growth in-
PO Box 3000, Denville, NJ 07834 (1-877-869-5762). To dustries that would make up for the loss of manufacturing jobs. Across the country, casino-
subscribe online, go to www.dollarsandsense.org.
Please allow 4–6 weeks for delivery. gambling initiatives keep getting put on the ballot, basically with one promise—jobs. But
POSTMASTER: Send address changes to Dollars & according to economists Ellen Mutari and Deborah Figart, anyone looking to casino gam-
Sense, PO Box 3000, Denville, NJ 07834-9811. All
articles copyrighted. Dollars & Sense is indexed in
bling as the future needs to take a hard look at Atlantic City’s present. Casinos are closing, the
Sociological Abstracts, PAIS Bulletin, Alternative city’s casino employment has been declining for the better part of two decades, and casino
Press Index, and The Left Index. Subscriptions: 1 year,
$24.95; 2 years, $39.95; institutions, $45/year; workers are facing the same familiar erosion of wages, job security, and working conditions.
Canada, $33/year; other foreign, $49/year (airmail),
plus $20 for institutions. Back issues available for
$5.00 prepaid, or on microfilm from UMI, 300 N. The “conventional wisdom,” at its core, has an air of fatalism: The fault supposedly lies in the
Zeeb Road, Ann Arbor, MI 48106.
inexorable rise and fall of this or that industry, in disembodied global tides beyond our con-
www.dollarsandsense.org trol, or—worst of all—in our own unchangeable natures. Wrong on all counts. The changes
that created the world we know were wrought by human beings. The hard, messy, conflic-
tive process of creating the future, too, will be the labor of human beings. D&S
 DOLLARS
&SENSE
Real World Economics

NUMBER 314 | SEPTEMBER/OCTOBER 2014

C o n t e n ts

t h e r e gul a r s

4 the short run

page 6 page 19
5 comment
“Just Cause” and the Assault on
f e at u r e s Job Security

13 The Future of Work, Leisure, and Consumption... 6 comment

... in an age of economic and ecological crisis. What Market Basket Means
A N I N T E RV I E W WITH JULIET SCHOR
9 up against the wall street journal
19 From Kings of the Road to Serfs of the Company Change in Garment Factories?
How deregulation left truckers in the dust.
DAN LABOTZ 33 in review
Barbara Garson, Up the Down
Escalator
27 Blight on the Boardwalk
Atlantic City’s declining casinos are a grim harbinger for the
35 economy in numbers
industry nationwide.
E L L E N M U TA R I AND DEBORAH M. FIGART
What Happened to Wages?

37 ask dr. dollar

Ex-Im Bank: Crony Capitalism, or Plain
Old Capitalism?

38 40th anniversary excerpt

From 2006: International Solidarity

September/October 2014 l  DOLLARS & sense  l  3

< The Short Run
By Alejandro Reuss and Daniel Schneider
Senior Class Debtors
We all know that student-loan debt
has shot to record heights in recent
years, with the $1.2 billion in total
outstanding loans overshadowing
even Americans’ mountain of credit-
card debt. Many probably think of
these “student” debtors as snot-
nosed twenty-somethings still
sponging off their parents, but that’s
often far from true.
A recent article on CNN Money
reported that, based on a U.S.
Treasury analysis, in 2013 “156,000
Americans had their Social Security
checks garnished because of student
loans they had defaulted on.” That
added up to about $150 million in
garnished benefits for the year. Many
of the people affected are in their
70s and 80s, and had stopped mak-
ing payments on their loans a long
time ago. (Some of the loans in ques-
4  l  dollars & sense  l  September/October 2014
tion were taken out for the borrow-
ers’ children or grandchildren.)
So it seems that, even in our final
years on earth, avoiding the burden
of undischargable debt has become
an impossibility. Perhaps it’s time to
add a third piece to Ben Franklin’s
famous maxim about the only certain
things in life: death, taxes, … and stu-
dent loans. —DS
Just a Regular José
José Zamora of Los Angeles was
applying for “about 50 to 100 jobs a
day, for months,” he estimates, but
getting no response—“No phone
calls, no emails.” One little change to
his resumé made all the difference,
he says in a recent Buzzfeed video.
José Zamora became Joe Zamora on
a Monday. One week later, “that’s
when all the responses started com-
ing in.”
Zamora, in effect, replicated a fa-
mous economic finding, reported in
the paper “Are Emily and Brendan
More Employable than Lakisha and
Jamal?” Economists Marianne
Bertrand and Sendhil Mullainathan
sent out multiple sets of identical resu-
més, changing only the names. They
found that “white sounding” names
(like Allison or Emily, Brad or Greg) got
50% more callbacks than “African-
American sounding” names (like Aisha
or Lakisha, Darnell or Jamal). That is
the reality of the U.S. labor market to-
day, as many people who have experi-
enced job discrimination could al-
ready tell you. —AR
Update on “Fair Food”
While the past year saw a string of
high-profile protests by fast-food
workers demanding a much-needed
wage increase, some groups have
been fighting to improve working
conditions on the other end of the
supply chain.
In our November/December 2012
issue, Dollars & Sense covered a
successful drive by the Coalition of
Immokalee Workers (CIW), a Florida-
based workers’ rights organization, to
get the burrito chain Chipotle to sign
onto the group’s Fair Food Program. The
Program guarantees that the company
will only buy from tomato growers that
observe basic labor rights, and that it
will pay an extra penny per pound of
tomatoes to bolster worker pay.
Since then, CIW has continued its
public drives to pressure major food
distributors, restaurants, and grocery
retailers to sign on, with recent suc-
cesses including Del Monte Fresh
Produce and Wal-Mart. With the oc-
casional assistance of student activists,
CIW has also continued to pummel the
grocery store Publix and burger chain
Wendy’s with negative publicity and
protests, pushing them towards this
small step in respecting the rights of
farm workers. —DS D&S
< Comment
“Just Cause” and the Assault on Job Security
Is teacher tenure the kind of policy that should protect all workers?
BY RAND WILSON
T he United States is alone among
industrialized countries in allowing
workers to be considered “at will” em-
ployees and dismissed for any reason—
justified or not—unless protected by a
collective-bargaining agreement or
individual contract. At-will employees
have no job security. They can be fired
for a mistake, an argument with a su-
pervisor, a critical comment about the
enterprise or management, taking a
sick day, a complaint about working
conditions or pay, or involvement in
outside political campaigns—all activi-
ties that workers protected by just-
cause contract language can engage in
with far less fear of losing their jobs.
Employers who are compelled to
respect just cause aren’t sitting still.
For example, a California judge ruled in
June that public-school teacher tenure
and seniority rules are unconstitution-
al. The lawsuit that led to the Vergara v.
California decision was financed by
multi-millionaire David Welch and
backed by a slick PR firm. The suit ar-
gued that low-income students per-
formed poorly on tests because of bad
teachers who were protected by ten-
ure—not because of school under-
funding, large classes, or poverty itself.
The state teachers’ union, the
California Teachers Association, noted
that the judge ruled against due-
process rights for teachers because of
testimony that “3% of teachers are gross-
ly ineffective,” a statistic the union says
was invented. While the case is under
appeal and only applies to California
teachers, the anti-worker forces behind
the lawsuit promise more legal assaults
on teachers in other states.
The New York Times editorialized
in favor of Vergara. “The ruling opens
a new chapter in the equal education
struggle,” the editors said. “It also un-
A classic cartoon by the United Electrial
Workers’ longtime cartoonist, Fred Wright.
derscores a shameful problem that
has cast a long shadow over the lives
of children, not just in California but
in the rest of the country as well.”
Those who see the ruling as “just”
affecting teachers, though, are missing
the big picture. It’s part of a larger at-
tack on union members, and on work-
ers in general, including the elimina-
tion of public workers’ collective-
bargaining rights in Wisconsin, the
adoption of “right-to-work” (or what
labor activists call “right-to-work-for-
less”) laws in Indiana and Michigan,
and the Supreme Court’s Harris v.
Quinn decision that will bar “agency
fee” requirements for some public
union members. A common theme in
all these attacks is the effort to weaken
or remove the due-process and job-se-
curity provisions in union contracts—
typically known as “just cause” provi-
September/October 2014  l  DOLLARS & sense  l  5
$
sions—that protect members from
arbitrary discipline and discharge.
Reflecting the growing public senti-
ment against union members’ job se-
curity, the Times editors concluded:
“Teachers deserve reasonable due pro-
cess rights and job protections. But the
unions can either work to change the
anachronistic policies cited by the
court or they will have change thrust
upon them.”
The view that genuine job security
and due process rights are “anachro-
nistic” brings the labor movement to
a significant crossroad. We can contin-
ue the status quo by spending our
shrinking resources to defend tenure,
job security, and due-process rights
for the declining number of union
members who have these benefits
now—or we could seize this opportu-
nity to champion just-cause standards
for all workers. A strong push to
broaden just-cause standards would
appeal to all workers and put employ-
ers on the defensive.
Winning just-cause legislation, be-
ginning at the state level, will not be
easy. But building a movement on this
issue offers union leaders and activists
an opportunity to champion a cause
that will benefit all workers and help
unions grow.
Some teachers’ unions are already
embracing this approach. School
teachers in Los Angeles have made
just-cause a cornerstone of their cam-
paign to win union recognition at the
Ivy Academia Charter School.
Organizers report that it garnered
strong support from parents and the
community. By building this kind of
broad-based support in favor of just-
cause for all, the labor movement will
be in a stronger position with new al-
lies when employers and politicians
seek to roll back just-cause articles in
union contracts.
< Comment
Imagine the labor movement lead-
ing a $50- to $100-million campaign
over the next five years to win just-
cause protections for all workers in
eight to ten states where grassroots
movements have shown a desire to
pursue it. Employers and their political
allies would be forced on the defen-
sive, fighting an uphill battle to protect
the “freedom to fire.”
Union leaders still have to do
everything possible to defend due-
process rights in union contracts and
Market Basket: Can Workers and Bosses Be “Family”?
BY ALE JANDRO REUSS
W hat was so unusual about the
recent battle at the New England
supermarket chain Market Basket?
Well, to begin with, workers staged a
mass, sustained walkout. Also, they
were neither union members nor strik-
ing in conjunction with any union
campaign. Moreover, the protest
movement spanned the managerial hi-
erarchy at the chain, with managers
and supervisors participating along
with ordinary workers. Oh, and it re-
ceived widespread community sup-
port, including a consumer boycott.
The company had longstanding poli-
cies like relatively high wages and a
profit-sharing plan, which workers be-
lieved were threatened by a change in
management. And workers were not
directly demanding higher pay, im-
proved working conditions, or any-
thing like that—but the reinstatement
of the company’s recently sacked CEO.
What’s more, they got what they were
demanding. In other words, what
wasn’t unusual about it?
The confrontation was sparked by
the firing of CEO Arthur T. Demoulas
(hereafter, ATD) in June. Other mem-
bers of the chain’s founding family
owned the majority of the company’s
stock, controlled the board, and—
led by ATD’s own cousin Arthur S.
6  l  dollars & sense  l  September/October 2014
stop political attacks in the legislature.
But launching a major “Just Cause for
All” campaign could help make labor a
champion of the 99%, spur more work-
ers to form unions, and help blunt the
assault on our rights. D&S
R AND WILSON is on the staff of SEIU
Local 888 in Boston. He was the found-
ing director of Massachusetts Jobs with
Justice and has worked to build commu-
nity-labor coalitions for more than 30
years. Readers interested in Just Cause
Demoulas—decided to sack him. For
ATD’s supporters, the family feud came
to represent the contrast between a
brand of management that cared for
workers and consumers and one that
cared only about profit. Protesters at
The answer to labor’s
woes won’t be found
in workers’ loyalty
to the employer, nor
in the benevolence
of employers, nor in
the pining for a “win-
win” solution that
benefits workers and
capitalists alike.
rallies numbered in the thousands.
Workers who walked out persisted even
when threatened with “permanent re-
placement.” The combination of the
walkout and consumer boycott
brought what local news reports called
a “near-complete shutdown of business
for six weeks in July and August.” The
standoff finally ended on August 28,
with ATD buying out his rival relatives—
with funding from private-equity and
campaign updates should email Rand at
justcauseforall@gmail.com.
S O U R C E S : Students Matter (studentsmatter.org);
Vergara vs. State of California (www.cta.org/Vergara);
“In California a Judge Takes on Teacher Tenure,” New
York Times, June 12, 2014; Stephen Greenhouse,
“Wisconsin’s Legacy for Unions,” New York Times,
February 2, 2014; Cynthia Estlund and William E.
Forbath, “The War on Workers: The Supreme Court
Ruling on Harris v. Quinn Is a Blow for Unions,” New
York Times, July 3, 2014; Rand Wilson, “‘Just Cause’: Isn’t
it Time for All Workers to Have More Job Security?”
Truthout, August 3, 2013 (truth-out.org); Ivy Academia
Rally, YouTube (youtube.com).
other lenders—and returning as CEO.
To be sure, Market Basket workers
were defending employment condi-
tions that they felt were threatened by
the change in management. Workers
in the United States, even union mem-
bers, have been on the defensive for
decades, making concessions on wag-
es, health plans, and so on for the priv-
ilege of keeping their jobs. So one can
take the Market Basket battle, both the
mobilization of workers themselves
and the community support, as a
heartening example that it’s possible
to fight and win (even if the “win” basi-
cally entails defending past gains).
The workers at Market Basket fought
without benefit of a union. That can be
seen as an encouraging example, too,
because the vast majority of workers in
the United States are not union mem-
bers. If non-union workers could not
fight and win, under any circumstances,
the prospects for a labor revival would
be very bleak indeed. On the other hand,
the fight was neither for a traditional
union nor any alternative type of work-
ers’ organization. So what the workers
“won” does not include any institutional-
ization of workers’ organized power.
The focus on the reinstatement of
ADT, however, is a major matter of con-
cern. On the one hand, workers effec-
tively asserted that they should have a
collective say in how and by whom the

company as directed. Had a major U.S.
union—even in the heyday of union-
ism in the 1950s and 1960s—effec-
tively asserted a right to veto a
change in top management, it surely
would have been accused of attack-
ing the very foundations of capital-
ism! Far from being anti-capitalist fire-
brands, however, the Market Basket
workers were apparently motivated
by a deep loyalty to Arthur T.
DeMoulas. At demonstrations, work-
ers chanted “ATD!” and “Bring him
back!” That’s certainly not a good les-
son for workers in general. Loyalty to
this or that boss—far more often than
not—fetters workers’ demands and
willingness to fight. It leaves them
open to appeals for sacrifices for the
company, while they have no institu-
tionalized authority over the running
of the company and someone else
enjoys the fruits of these sacrifices.
With ATD taking on over $1 billion in
debt to finance the buyout, it is a wor-
risome possibility that workers will be
asked to sacrifice so the financiers get
what they are due.
The kind of labor-relations practices
that have prevailed at Market Basket—
known as “welfare capitalism”—have a
long history in the United States.
Economic historian Sanford M. Jacoby
writes, in his 1997 book Modern Manors,
that early-20th-century welfare capital-
ism offered employment benefits like
pensions, health-care plans, and profit-
sharing, plus higher job security and
internal career ladders. Precursors of
welfare capitalism, he notes, “initially
prevailed in companies controlled by
their founders … [who] hoped welfare
activities would reproduce the close ties
that had existed when they knew each
of their employees by name.”
Company motivations were cer-
tainly not purely benevolent. By offer-
ing benefits that other employers
didn’t, employers were able to recruit
more highly skilled workers, reduce
turnover, and (at least for a time) stave
off unionization. Welfare capitalism
allowed employers to cast unions as
unwelcome intruders into a close, fami-
ly-like relationship. These practices de-
clined greatly with the unionization of
U.S. mass-production industry between
the 1930s and the 1950s. The kinds of
benefits welfare capitalists had offered
were no longer gifts from the employer,
but things that workers had fought for
and won for themselves. The decline of
unions, however, has certainly not
brought a revival of welfare capitalism.
Employers have clawed back what
workers and unions had once won, and
have shown very little inclination to re-
turn those things as gifts. To the extent
Signs in the windows of a Somerville, Mass., Market Basket express support for fired CEO
Arthur T. Demoulas (“A.T.D.”), and thank (and ask) customers for support. Credit: Chris Sturr.
that welfare capitalism in an earlier age
was meant as a firewall against unions,
that factor is hardly present today.
Employers have found other, less concil-
iatory means to prevent unionization.
Employers certainly bear some costs
for practicing a cold-blooded, naked-
greed style of capitalism. U.S. companies
are notoriously top-heavy with supervi-
sors—deciding, basically, to extract
worker effort by surveillance and threat,
rather than by cultivating workers’ good
will. It would be a mistake, however, to
think that capitalists generally are grave-
ly misguided in their ruthlessness, and
that they would be better off practicing
“high road” labor relations. The current
era of bare-knuckle capitalism, after all,
has on the whole been spectacularly
successful for owners and top managers
(see this issue’s Economy in Numbers,
September/October 2014  l  DOLLARS & sense  l  7
$
pp. 36-7)—as seen in soaring corporate
profits, CEO pay, and the income share
of the “one percent.” They know what
they’re doing.
The answer to that is not going to be
found in workers’ loyalty to the employ-
er, nor in the benevolence of employ-
ers, nor in the pining (even if sincere) for
a “win-win” solution that benefits work-
ers and capitalists alike.
It could start with the words, also
from the annals of the American class
struggle, “The working class and
the employing class have nothing in
common ...” D&S
A LEJA ND RO REUSS is an econo-
mist and historian and co-editor of
Dollars & Sense.
S O U R C E S : Ken Macleod, “Market Basket Workers
Rally For Fired CEO Arthur T. Demoulas,” July 18, 2014
(boston.cbslocal.com); Adam Vaccaro and Roberto
Scalese, “Thousands Rally Outside Market Basket in
Tewksbury,” July 25, 2014 (boston.com); Casey Ross,
Taryn Luna and Jack Newsham, “Market Basket vows to
replace dissident workers,” July 31, 2014 (bostonglobe.
com); CBS/AP, “Market Basket Workers Hold Huge Rally
To Pressure Management,” Aug. 5, 2014 (accessed at
boston.cbslocal.com); The Boston Globe (editorial),
“Market Basket’s descent into greed,” Aug. 27. 2013
(bostonglobe.com); Adam Vaccaro, “How Market
Basket Keeps Its Prices Low,” Aug. 28, 2014 (boston.
com); Adam Vaccaro, “It Wasn’t Just About ‘Artie T.’,” Aug.
29, 2014 (boston.com); Thomas A. Kochan, “What the
Market Basket Struggle Means for Labor,” Sept. 1, 2014
(boston.com); Adam Vaccaro, “Arthur T. Demoulas
Reiterates Commitment to Market Basket Prices,
Worker Pay,” Sept. 12, 2014 (boston.com); Sanford
Jacoby, Modern Manors: Welfare Capitalism Since the
New Deal (Princeton U. Press, 1997).

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< Up Against the Wall Street Journal
After Horror, Change?
Taking Stock of Conditions in Bangladesh’s Garment Factories
BY JOHN MILLER
O n April 24, 2013, the Rana Plaza
factory building, just outside of
Bangladesh’s capital city of Dhaka, col-
lapsed—killing 1,138 workers and in-
flicting serious long-term injuries on at
least 1,000 others.
While the collapse of Rana Plaza
was in one sense an accident, the poli-
cies that led to it surely were not.
Bangladesh’s garment industry grew
to be the world’s second largest ex-
porter, behind only China’s, by endan-
gering and exploiting workers.
Bangladesh’s 5,000 garment factories
paid rock-bottom wages, much lower
than those in China, and just half of
those in Vietnam. One foreign buyer
told The Economist magazine, “There
are no rules whatsoever that can not
be bent.” Cost-saving measures includ-
ed the widespread use of retail build-
ings as factories—including at Rana
Plaza—adding weight that sometimes
exceeded the load-bearing capacity of
the structures.
As Scott Nova, executive director of
the Worker Rights Consortium, testi-
fied before Congress, “the danger to
workers in Bangladesh has been ap-
parent for many years.” The first docu-
mented mass-fatality incident in the
country’s export garment sector oc-
curred in December 1990. In addition
to those killed at Rana Plaza, more
than 600 garment workers have died
in factory fires in Bangladesh since
2005. After Rana Plaza, however,
Bangladesh finally reached a cross-
roads. The policies that had led to the
stunning growth of its garment indus-
try had so tarnished the “Made in
Bangladesh” label that they were no
longer sustainable.
But just how much change has
taken place since Rana Plaza? That
was the focus of an International
Conference at Harvard this June,
W $J
“I believe Bangladesh is mak
ing history as it creates new stan
industry globally.” —Dan Mo dards for the apparel
zena, U.S. Ambassador to Ban
gladesh
“After the collapse of Rana Plaz
a, there has been an unpreceden
good will, and practical action ted level of cooperation,
toward better and safer places
—Srinivas B. Reddy, Cou to wor k in Bangladesh.”
ntry Director, International Lab
Bangladesh or Org anization (ILO)
“It is fair to say that neither the
government, nor the brands,
with the rising crescendo of emp is dealing adequately
loyer-sponsored violence.”
—U.S. Rep. George Miller
(D-Calif.)
Statements made at the Interna
tional Conference on Globali
of the Bangladesh Garment Sec zation and Sustainability
tor, Harvard University, June
14, 2014
bringing together government offi-
cials from Bangladesh and the United even in the not-so-union-friendly
States, representatives of the United States, where recognition is
Bangladesh garment industry, the based at the level of the workplace,
international brands, women’s not the company. Workers in special
groups, trade unions, the export-processing zones (the source
International Labor Organization of about 16% of Bangladesh’s ex-
(ILO), and monitoring groups work- ports), moreover, remain ineligible to
ing in Bangladesh. form unions.
The Bangladesh government did
How Much Change On the Ground? register 160 new garment unions in
Srinivas B. Reddy of the ILO spoke fa- 2013 and the first half of this year,
vorably of an “unprecedented level of compared to just two between 2010
... practical action” toward workplace and 2012. Nonetheless, collective bar-
safety in Bangladesh. gaining happens in only 3% of gar-
The “practical action” on the ment plants. And employers have re-
ground, however, has been much sponded with firings and violence to
more of a mixed bag than Reddy workers registering for union recogni-
suggests. In the wake of massive pro- tion or making bargaining demands.
tests and mounting international Union organizers have been kid-
pressure, Bangladesh amended its napped, brutally beaten, and killed.
labor laws to remove some obstacles After protests that shut down over
to workers forming unions. Most im- 400 factories last fall, the Bangladesh
portantly, the new law bars the coun- government raised the minimum wage
try’s labor ministry from giving facto- for garment workers from the equiva-
ry owners lists of workers who want lent of $38 a month to $68. The higher
to organize. minimum wage, however, fell short of
But formidable obstacles to union- the $103 demanded by workers.
ization still remain. At least 30% of the The government and the garment
workers at an entire company are re- brands have also set up the Rana
quired to join a union before the gov- Plaza Donor Trust Fund to compen-
ernment will grant recognition. This is sate victims and their families for
a higher hurdle than workers face their losses and injuries. But accord-
September/October 2014  l  DOLLARS & sense  l  9
< Up Against the Wall Street Journal

ing to the fund’s website, it stood at
just $17.9 million at the beginning of
August, well below its $40 million
target. Only about half of the 29 in-
ternational brands that had their
clothes sewn at Rana Plaza have
made contributions. Ineke
Zeldenrust of the Amsterdam-based
labor-rights group Clean Clothes
Campaign estimates that those 29
brands are being asked to contribute
less than 0.2% of their $22 billion in
total profits for 2013.
The Accord and the Alliance
Following Rana Plaza, a group of most-
ly European retail chains turned away
from the business-as-usual approach
of company codes that had failed to
ensure safe working conditions in the
factories that made their clothes.
Some 151 apparel brands and retailers
doing business in Bangladesh, includ-
ing 16 U.S.-based retailers, signed the
Accord on Fire and Building Safety in
Bangladesh. Together the signatories
of this five-year agreement contracted
with 1,639 of the 3,498 Bangladesh
factories making garments for export.
The Accord broke important new
ground. Unlike earlier efforts:
• It was negotiated with two global
unions, UndustriALL and UNI
(Global).
• It sets up a governing board
with equal numbers of labor and
retail representatives, and a chair
chosen by the ILO.
• Independent inspectors will con-
duct audits of factory hazards and
make their results public on the
Accord website, including the
name of the factory, detailed in-
formation about the hazard, and
recommended repairs.
• The retailers will provide direct
funding for repairs (up to a maxi-
mum of $2.5 million per compa-
ny) and assume responsibility for
ensuring that all needed renova-
tions and repairs are paid for.
• Most importantly, the Accord is
legally binding. Disputes be-
tween retailers and union repre-
sentatives are subject to arbitra-
tion, with decisions enforceable
by a court of law in the retailer’s
home country.
But most U.S. retailers doing busi-
ness in Bangladesh—including gi-
ants like Wal-Mart, JCPenney, The
Gap, and Sears—refused to sign.
They objected to the Accord’s open-
ended financial commitment and to
its legally binding provisions.
Those companies, along with 21
other North American retailers and

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10  l  dollars & sense  l  September/October 2014


brands, developed an alternative
five-year agreement, called the
Alliance For Bangladesh Worker
Safety. Some 770 factories in
Bangladesh produce garments for
these 26 companies.
Unlike the Accord, the Alliance is
not legally binding and lacks labor-
organization representatives.
Moreover, retailers contribute a maxi-
mum of $1 million per retailer (less
than half the $2.5 million under the
Accord) to implement their safety plan
and needed repairs, and face no bind-
ing commitment to pay for needed
improvements beyond that. The re-
sponsibility to comply with safety stan-
dards falls to factory owners, although
the Alliance does offer up to $100 mil-
lion in loans for these expenses.
Kalpona Akter, executive director of
the Bangladesh Center for Worker
Solidarity, told the U.S. Senate Foreign
Relations Committee, “There is no
meaningful difference between the
Alliance and the corporate-controlled
‘corporate social responsibility’ pro-
grams that have failed Bangladeshi
garment workers in the past, and have
left behind thousands of dead and
injured workers.”
Historic and Unprecedented?
Dan Mozena, U.S. Ambassador to
Bangladesh, believes that, despite
facing significant obstacles,
“Bangladesh is making history as it
creates new standards for the apparel
industry globally.”
While the Accord may be without
contemporary precedent, joint liabil-
ity agreements that make retailers
responsible for the safety conditions
of their subcontractor’s factories do
have historical antecedents. As politi-
cal scientist Mark Anner has docu-
mented, beginning in the 1920s the
International Ladies Garment Workers
Union (ILGWU) began negotiating
“jobber agreements” in the United
States that held the buyer (or “job-
ber”) for an apparel brand “jointly li-
able” for wages and working condi-
tions in the contractor’s factories.
Jobber agreements played a central
role in the near-eradication of sweat-
shops in the United States by the late
1950s. In today’s global economy,
however, international buyers are
once again able to escape responsibil-
ity for conditions in the far-flung fac-
tories of their subcontractors.
Like jobber agreements, the Accord
holds apparel manufacturers and re-
tailers legally accountable for the safe-
ty conditions in the factories that
make their clothes through agree-
ments negotiated between workers or
unions and buyers or brands. The next
steps for the Accord model, as Anner
has argued, are to address working
conditions other than building safety
(as jobber agreements had), to get
more brands to sign on to the Accord,
and to negotiate similar agreements
in other countries.
That will be no easy task. But, ac-
cording to Arnold Zack, who helped to
negotiate the Better Factories program
that brought ILO monitoring of
Cambodian garment factories,
“Bangladesh is the lynch pin that can
bring an end to the bottom feeding
shopping the brands practice.” D&S
J O H N M I L L E R is a professor of eco-
nomics at Wheaton College and a mem-
ber of the Dollars & Sense collective.
S O U R C E S : Arnold M. Zack, “In an Era of
Accelerating Attention to Workplace Equity: What
Place for Bangladesh,” Boston Global Form, July 8,
2014; Testimony of Kalpona Akter, Testimony of Scott
Nova, Senate Committee on Foreign Relations, Feb.
11, 2014; Mark Anner, Jennifer Bair, and Jeremy Blasi,
“Toward Joint Liability in Global Supply Chains,”
Comparative Labor Law & Policy Journal, Vol. 35:1, Fall
2013; Prepared Remarks for Rep. George Miller
(D-Calif.), Keynote Remarks by U.S. Ambassador to
Bangladesh Dan Mozena, Remarks by Country
Director ILO Bangladesh Srinivas B. Reddy,
International Conference on Globalization and
Sustainability of the Bangladesh Garment Sector, June
14, 2014; “Rags in the ruins,” The Economist, May 4,
2013; “Bangladesh: Amended Labor Law Falls Short,”
Human Rights Watch, July 18, 2013; Rana Plaza Donor
Trust Fund (ranaplaza-arrangement.org/fund).
September/October 2014  l  DOLLARS & sense  l  11
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UCLA INSTITUTE FOR RESEARCH ON

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Research | Education | Outreach

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Chris Tilly, Institute Director

Kent Wong, Labor Center Director

12  l  dollars & sense  l  September/October 2014

 Juli
et S
on chor

T U R E OF
THE FULEISURE,and
WORK, UMPTION
S
CON

A N A G E OF
IN
C O N O M I C AND
E ISIS
C A L C R
ECOLOGI

A N I N T E RV I EW W I T H J U L I E T S C H O R

E conomist Juliet Schor is known worldwide for her research on the interrelated issues of work, leisure, and consumption. Her
books on these themes include The Overworked American: The Unexpected Decline of Leisure, The Overspent American:
Upscaling, Downshifting, and the New Consumer, and Plenitude: The New Economics of True Wealth (retitled True Wealth
for its paperback edition). She is also a professor of sociology at Boston College. —Eds.

D&S: We wouldn’t expect patterns of work, leisure, and consumption to change overnight, but now we’re into more than
half a decade of a profound crisis. Obviously it’s had a big impact on employment, incomes, and so forth, but do you see any
lasting changes emerging?

Juliet Schor: Some of the trends that were pretty significant before the crash have abated. I’m thinking most particularly
about what I’ve called the “fast fashion model” of consumption—cheap imports of manufactured goods that people were
acquiring at accelerating rates, the acceleration of the fashion cycle, and the cycle of acquisition and discard. The trend was
people buying things, holding them for shorter and shorter periods of time and then discarding them either into some kind
of household storage, into a waste stream, or into secondary markets. You had an amazing period of acquisition of consumer
goods. I first started looking at this in the realm of apparel, but it was also in consumer electronics, ordinary household appli-
ances, and pretty much across the board in consumer goods.
Of course, a lot of it was financed by debt or longer working hours, but manufactured goods just became so cheap.
The idea that you could buy a DVD player for $19—and yes, people were trampling each other in the stores on Black
Friday to get them—but that’s just an extraordinary period. So that has changed, because the economics of that have
changed. Going forward, I don’t think we’re going to see that level of availability of cheap goods that we saw before. So I
think that cycle has slowed down. ››
September/October 2014 l  DOLLARS & sense  l  13
 F utur e of W ork
The other big thing has been the bifurcation
of the consumer market. That’s something that’s
been going on for a long time—the falling out of
the middle as a result of the decline of the mid-
dle class, the growth of a really low-end in the
consumer market with dollar stores and a retail
sector where even Walmart is considered expen-
sive. The other side was the expansion of the
hyper-luxury market.
Trends in income and wealth are reflected in
the consumer sphere. There’s more reluctance to
take on debt, so debt-fueled consumer buying is
lessened. There’s also less availability of consumer
credit for households now. The other big thing that
I’ve been looking at is the rise of “alternative cul-
tures” of consumption; that is, people moving out
of the branded, advertised goods and the mass-
produced lifestyles that dominated in the last cou-
ple of decades, into both more ecologically aware
lifestyles with more artisanal and self-production.
14  l  dollars & sense  l September/October 2014
D&S: Stepping back and looking more broadly at
the emergence of this mass consumer culture in
the United States in the 20th century after the
Second World War, what do you see as the key
factors that are at the root of consumer capitalism
in the United States? It seems a little facile to
focus too narrowly on just advertising. Some
scholars point to mass media images and what
kinds of lifestyles people aspire to. Galbraith
pointed to the relentless stream of new products
fueling new desires—the so-called “dependence
effect.” How do you see those influences, as well
as others, sorting out?
JS: I don’t want to completely dismiss factors like
the old monopoly capital idea or the advertising
and marketing story, which is that shortfalls of
demand led to a big effort to get people to buy
things, but I don’t buy that story, for the most part.
If you think about the post-war period, you had a
labor market in which firms were unwilling to use
productivity growth to reduce hours of work,
and I wrote a book about that, The Overworked
American. Part of that was about firms and why
they don’t want to do that. So in the post-war
period, you have, from the labor market side, a sit-
uation where all productivity growth is getting
channeled into income—into expansion of out-
put—so it goes to wages and profits.
Now, of course, workers aren’t getting the ben-
efits of productivity growth, but in the post-war
era, they did. There were contracts that were explic-
itly tied—3% productivity, 3% real wage growth.
So that creates consumer demand, because that
income is getting into people’s pockets. Now you
can ask the question: Why don’t they save it? I
don’t think it’s advertising, primarily, that deter-
mines why people didn’t save more. There, I think,
you have to look at social competition, and the fact
that you have an unequal society in which how you
live, what you buy, and what you have are impor-
tant determinants of social position. Rising income
gives you a constantly rising norm, and people
consume to keep up with that norm. I think it
would have played out more or less similarly if
there weren’t any advertising. The products might
have been different but this sort of “consumer esca-
lator,” the fact that you have growing levels of con-
sumption, is really coming much more from the
production side. So in that way, I’m much more
Marxian than Keynesian, I would say.
D&S: Turning to the contrast between the United
States and other high-income capitalist countries,
especially in terms of the shape of the labor move-
ment and the role of the state: How did working
hours get reduced in other countries? In France or
Germany, for example, the average employed per-
son works about 300 hours less per year than in the
United States. That strikes me as quite central, in
your analysis, in understanding consumption pat-
terns in different countries.
JS: In the United States in the post-war period, the
state devoted a lot of energy to the promotion of
consumption, whether it was the highway system or
suburbanization. That was in part out of a fear of
the “Keynesian problem” of inadequate demand
after the Second World War. In Europe, I guess I
would point to two things. First, after the war, they
had a supply-side problem, which was that they had
to rebuild productive capacity rather than what we
had, which was the demand-side problem. So our
state was much more oriented to promoting con-
sumption than European states, which were more
oriented towards rebuilding their societies. In
Europe, working hours continued to fall and they
didn’t in the United States. That’s the way you need
to think about it—everybody was on a common tra-
jectory of work-hours decline from about 1870. Of
course, the United States was the leader in all of that.
We had the shortest working hours and we were the
first ones to put in reforms of working hours: The
United States was the leader on no Sunday work, no
Saturday work, etc. I think the factors are the role of
trade unions—both that trade unions were much
stronger in Europe and also that in the United States,
trade unions turned against the reduction of work-
ing hours after the Second World War. That has to
do mostly with the Cold War, and with the conser-
vative nature of U.S. trade unions. So in the 1950s,
the AFL-CIO became—“hostile” may be too strong
a word—became extremely disinterested in the idea
of shorter hours of work. That’s something that did
not happen in Europe.
The other thing is that the incentives facing
firms in the United States were really different, in
terms of U.S. employers having much higher per-
worker fixed costs, because of health insurance.
There are some European countries where health
insurance is provided at the firm level, but mostly
not. In the United States that turns out to be a
powerful disincentive to reduce working hours,
and it becomes a powerful incentive for raising
working hours. The growth in inequality, which is
more pronounced in the United States, has also
raised working hours. I think those are the key fac-
tors which led the United States and Europe to
diverge quite rapidly on the issue of work-time.
That divergence turns out to have all sorts of very
important consequences.
One of the things you have seen in the patterns
of leisure-time activities in the United States is
you’ve got time-stressed households doing really
money-intensive things like going to the Caribbean
In Europe, working hours continued to
fall and they didn’t in the United States.
Everybody was on a common trajectory
of work-hours decline from about 1870.
Of course, the United States was the
leader in all of that. We had the shortest
working hours and we were the first ones
to put in reforms of working hours: The
United States was the leader on no
Sunday work, no Saturday work.
for three days, or spending a lot of money to “de-
stress,” or spending money to reward themselves
for working so hard. So we definitely have quite a
bit of that in the United States because work is so
demanding and stressful and that shapes the leisure
patterns. You get what economists call goods- or
income-intensive leisure.
D&S: If we think of consumption behavior as
social—as aiming to enhance a person’s social sta-
tus—can we think of any important restraints on
the amounts or patterns of consumption? If many
people disapprove of polluting or wasteful forms of
consumption, like the Hummer, can we observe a
social constraint on that? Or, in what are very dif-
ficult economic times for a lot of people, is there
any effect on people reining in unseemly levels of
luxury consumption? ››
September/October 2014 l  DOLLARS & sense  l  15
 F utur e of W ork
JS: Well, I’ll start with the latter. I was reading about
and experiencing people’s reluctance to engage in
ostentatious displays at the time of the crash, and in
its early aftermath. I think, by now, that didn’t last
very long. One of the things about the most ostenta-
tious stuff is that we’re increasingly a gated society,
so the wealthy are consuming lavishly outside of the
view of the ordinary and the poor. There is certainly
less celebration of it, and you see it less in the culture
now than before the crash, for sure. The Hummers
are a very interesting case. I have a friend who did
research on the war between Hummer drivers and
the Prius drivers, the Prius drivers being referred to
as “pious” drivers by the Hummer folks. Now the
Hummer vehicle has collapsed as a consumer prod-
uct. Hummer drivers were subjected to a lot of social
disapproval. It also became economically less desir-
able when the price of gas went up.
We can’t successfully address climate
change with a model in which we
continue to try to expand the size of the
economy. We’re going to have to deal
with working hours, because that’s the
only way to stop expanding the size of
the economy in any sensible way.
There is definitely a rising ecological conscious-
ness that is attempting to moralize consumption in
ways that yield social approval or disapproval of
low-carbon versus high-carbon lifestyles. It isn’t
mainstream yet. It’s much more prevalent in highly
educated groups, it tends to be more bi-coastal, it’s
a kind of forward trend in the consumer culture.
You do see more and more, as you move into the
mainstream, people attempting to do more, eco-
logically. I think there’s widespread sentiment
about that. Then, of course, you also have so many
people who are just trying to make ends meet that
they feel it is not possible for them to think about
ecological impact. Of course, the irony is that the
people who are just trying to make ends meet are
the ones with the low carbon footprints, but the
16  l  dollars & sense  l September/October 2014
discourse of environmental impact is permeating
through consumer culture.
D&S: Going back to something about advertising: It
seems to have become more pervasive, both in terms
of physical spaces that are filled with advertising and
products advertised to users. In the last couple of
decades, we’ve seen the advent of direct marketing of
prescription pharmaceuticals, for example, directly to
the people who will end up using them. There’s a
pushback, such as criticism of advertising to children,
but it seems largely there’s a kind of tolerance of this
pervasiveness of advertising in daily life.
JS: This is a little counterintuitive, but part of why
advertising has become so pervasive is that the core
of advertising, which is television spots, has become
so unimportant. People don’t have to watch them
anymore, and that’s huge for advertisers. I think
the 30- or 60-second TV spots are much more
powerful than the kinds of things that advertisers
have moved towards in terms of the spatial expan-
sion of advertising. I think that advertising on the
web is much less powerful. So, that’s one of the
paradoxes of advertising in the contemporary
moment: the moment when advertising is much
more pervasive in terms of space and place, is a
moment when it’s much less powerful. Advertisers
have been able to move in a few directions that
have been productive for them, like word of mouth
advertising, and so forth, but those forms are also
being delegitimized. People know the person sit-
ting next to them in a bar telling them to drink this
vodka might be paid by the company.
Prescription drugs are a big exception, because
that came about as a regulatory change. Drug compa-
nies weren’t allowed to advertise directly to consumers
before. If it weren’t for pharmaceuticals and ads
directed at kids, the advertising industry would be in
big trouble. Now the kid story is, I think, a little bit
different than the adult story, in the sense that you
have a much more powerful approach to children
now than you did in the past. The approach to chil-
dren, I think, is a lot more effective than the approach
to adults, which I think is declining in effectiveness.
So, you can see a theme in what I’m saying about
advertising. Today, I would say I feel less worried
about advertising than I did before I started studying
it. I think people tune it out. I don’t want to go too far
on this, but to me it’s not where the main action is in
terms of what’s driving consumer patterns.
D&S: We see some examples of people, in their
purchasing decisions, transcending a kind of nar-
row consumer mentality. They’re thinking about
environmental impacts, say, in buying a hybrid or
electric car. In terms of other products they may be
thinking about labor conditions, such as buying
fair trade goods or no sweatshop apparel or foot-
wear. On the other hand, one might look at this as
reinforcing a core aspect of consumerism: That
whatever it is that you may want, it’s for sale and
you can buy it.
JS: There’s a debate in sociology and the social sci-
ences more generally—because there are other dis-
ciplines that have weighed in on this question—
about the critique of ethical consumption, political
consumption, green consumption. Some argue
that it’s actually detrimental because it leads people
to think that this purchasing behavior can solve
problems, and it leads them to be less likely to join
in collective solutions to environmental problems,
labor problems, poverty, and development in the
global South.
I did a study of that, and I used two different
data sets: One was a random sample survey of all
Americans. The other was an intentional survey of
people who are political or ethical consumers, or
what we called “conscious consumers,” with about
2,000 participants. What we found is that there are
actually very high levels of correlation between peo-
ple engaging in this kind of purchasing and being
socially and politically involved in trying to solve
these problems in collective ways. And we also
looked at the time sequencing and found a group of
people who are politically involved already and then
you add on this “walk the talk” aspect—if you’re
going to be fighting sweatshops, then don’t buy
sweatshop clothing, and if you’re concerned about
environmental impacts then you don’t want to be
buying things that are at odds with your values. So
you have people who were political first, then
extended to their purchasing behavior, you have
people who got into both at around the same time,
and you have people who moved in the other direc-
tion—who first did the conscious consuming and
then became politically active. Certainly the idea
that becoming a “green consumer” undermines your
likelihood of engaging in collective action around
this is not at all supported by the data in the United
States, and there have also been some studies in
Europe that show the same thing.
I think the fact of the matter is that changing
marketplace behavior in the kind of society we have
today is an important component in a broad-based
campaign, whether it’s on the environment or labor
conditions or whatever. We see a lot of the NGOs
involved in campaigns that have a market-based
dimension—and those have been some of the
most successful campaigns in recent years—be-
cause it’s so hard to get the state to act to do these
things, because it is captured by business. People
have turned to the market in part because it’s an
arena where it looks like you can have some
results, at least in the short term.
Ultimately, can you stop climate change
through consumer behavior and
through just market behavior?
Of course not. Can you ensure
good working conditions
merely by market-oriented
activity? Of course not. To
think that it’s sufficient is the real
mistake, but I don’t think that most
people who work in this field, who try
to work on transforming consumer
behavior, have such a naïve view.
D&S: We’ve already talked about ways in
which consumption is connected to people’s lives
at work, and the availability of leisure time, as well
as some changes in patterns of consumption related
to broader social objectives. What kinds of changes
in consumption—and in the forces shaping con-
sumption—do you envision?
JS: Well, I have a hard time thinking about the future
without orienting all of my thinking about climate,
because I just don’t see much of a positive future
unless we can address climate change very signifi-
cantly. And that means, for wealthy countries, pretty
radical emissions cuts in a pretty short period of time.
It actually means that for most countries. So, as I
think about the future, I think about what we could
do that both addresses climate change through radical
emissions reductions and also increase social justice,
reduces inequality, and starts solving the enormous
problems that we have in this country. My most
recent book, True Wealth, is about how to do that.
Obviously we need to get onto a renewable energy
system, there’s no question about that. We need a car-
bon tax or carbon regulation, and that’s stuff that is
very well known. What is not understood, I don’t ››
September/October 2014 l  DOLLARS & sense  l  17
 F utur e of W ork
think, is that we can’t successfully address climate
change with a model in which we continue to try to
expand the size of the economy.
We’re going to have to deal with working hours,
because that’s the only way to stop expanding the
size of the economy in any sensible way. So the core
of what we need to do is to get back on the trajec-
tory of using productivity growth to reduce hours of
You get a totally different culture of
consumption if people’s incomes are on a
basically stabilized trajectory and what
they’re getting is more and more free
time. It’s not about the acquisition of the
new, it’s not the “work and spend” pattern
as I’ve called it, it’s not “throw away” or
media driven, it’s more “true materialist,”
where you really pay attention
to the things you have.
work. And that then opens up incredible possibili-
ties in terms of rebalancing the labor market, inte-
grating the unemployed, and having a fairer distri-
bution of hours. We’re talking about the distribution
of income, but not about the distribution of hours,
which is one of the things that drives the
distribution of income. So, fair
access to the work
that exists,
18  l  dollars & sense  l September/October 2014
giving people more time off from work, and doing
much more as a society—and probably a lot on the
local and community level—to ensure basic needs
for people. With declining work hours, people’s
incomes are pretty much stabilized, so you need to
bring the incomes of the bottom up, and you need
to bring the incomes of the top down. Part of that
has to be a redistribution of work opportunity and
creating community provisioning of basic needs,
like publicly-owned utilities which provide power
and heat for people at reasonable prices, enhanced
public transportation, more public provisioning of
food. There are really interesting things going on in
global South countries bringing farmers and con-
sumers together in local food economies that are not
just about high-priced organic food, which is what
we have here, but low-priced food that ensures food
security for people. So, shorter hours, basic needs
being met—including housing, education, health-
care—that’s the direction I would like to see us go,
and I think that really it all flows out from a kind of
commitment to climate protection. It could all flow
out from a commitment to basic needs, too. They
really integrate.
Time use is central, and I think you get a totally
different culture of consumption if people’s incomes
are on a basically stabilized trajectory and what
they’re getting is more and more free time. So, you
have a new culture of consumption that is not about
the acquisition of the new, it’s not the “work and
spend” pattern as I’ve called it, it’s not “throw away”
or media driven, it’s more “true materialist,” where
you really pay attention to the things you have, and
it’s a kind of earthier consumption. D&S
From Kings of the Road
to Serfs of the Company
How deregulation has left truck drivers in the dust.
B y D an L a B ot z

T
››
H E T R U C K D R I V E R WA S O N C E T H E K I N G O F T H E R O A D , R I D I N G
high from the 1950s through the 1970s. Sitting up in the tractor, pulling an eighteen-wheeler, looking Teamster-supported
out over America’s city streets and country roads and highways, he—back then, the driver was almost always a port drivers who
haul goods for
he—earned good money, often had health benefits, and may well have had a pension plan. Hank Williams and Walmart, picketing
Johnny Cash came in loud and clear over the radio, and the driver could see in his mind’s eye the truck stop, their employer,
cup of coffee, and slice of apple pie down the road. True, the hours were long and the work sometimes danger- Green Fleet Systems,
ous and unhealthy, but by and large, trucking was considered a good occupation. That was especially true for at the Port of Los
Angeles in
those drivers, nearly half a million, who were members of the International Brotherhood of Teamsters (IBT), November 2013.
covered by its freight contract, and who had enough seniority to protect them from layoffs in down times.
Trucking became the stuff of song and story, of legend. Dave Dudley’s wonderful “Six Days on the Credit: International
Brotherhood of
Road”—the story of a truck driver who is a little overweight, way behind schedule, popping pills, and passing Teamsters
everything in sight, but happy because he’s “gonna make it home tonight”—became a top hit in 1963. (Even
better was the 1968 black blues version of the song by Taj Mahal—at a time when both employers and the
union excluded African Americans from jobs as drivers.) A decade later C.W. McCall’s song “Convoy” told
the story of a mythical truck driver rebellion against the 55-mile per hour speed limit, a tale not so different
from the real truckers’ shutdown of 1974 over rising oil prices. “Convoy” became the number-one song in
1976 and later a bad movie. Truck drivers, popular culture told us, were lovers and fighters, independent
working men in the mythic tradition of the pioneers and the cowpunchers. The romance of the road called
to young men who sometimes spent a lifetime working for themselves or for the trucking company and
retired with a company pin, a union pension, and nostalgia for their days behind the wheel. ››
September/October 2014 l  DOLLARS & sense  l  19
 T ruck e r S e rfs
Even back then, there were some serious prob-
lems in the trucking business. With recessions in
1975 and again in 1979, the companies began to
press for higher productivity. With unemployment
high, workers were reluctant to strike. The
Teamsters fell under the control of a string of lead-
ers—Frank Fitzsimmons, Jackie Presser, and Roy
Williams—who had led the union into subservi-
ence to Richard Nixon, the mafia, and the FBI.
››
Presser, whom the New York Times called a
Striking Teamsters “Teamster union leader, lackey of the mob,
battle police during
the Minneapolis Presidential adviser and top-level Government
Teamsters strike of informer,” collaborated with employers while
1934, which led to a ignoring the needs of rank-and-file union mem-
general strike.
bers. The rank-and-file of the 1970s rebelled, car-
Credit: National ried out wildcat strikes and organized Teamsters
Archives and for a Democratic Union (TDU), and began a long
Records
battle for reform with some success. All these prob-
Administration
lems and conflicts notwithstanding, until 1980,
working in the trucking industry meant a steady
job, relatively high pay, and good benefits for hun-
dreds of thousands of American workers.
Those were the days—and they are long over.
“The trucking industry is going to hell in a
hand basket.” That’s what Ben Sizemore, a truck
driver for over 35 years, told Dollars & Sense.
Sizemore is a member of Teamster Local 407 in
Cleveland, Ohio—he’s one of the lucky ones who
still has a union. “The laws have changed in favor
of the corporations, and they’re putting more of a
burden on the driver. The employers today are
20  l  dollars & sense  l September/October 2014
trying to get more out of you for less. We have
gone backwards in wages.” Industry experts say
that trucking workers’ real wages have been driven
back to the early 1950s, before there was a national
freight contract.
When they don’t have a labor union to repre-
sent them, drivers not only have low wages, but
also work long hours—some of them unpaid. They
often deal with difficult working conditions and
face significant health and safety issues. Some of
the jobs are so bad and pay so little that employers
have a hard time filling the seats, with a turnover
rate of more than 100% per year among large
truck-load firms. If once they were kings of the
road, today most truck drivers are serfs toiling on
the vast corporate estate we call America. How did
this happen? Where are we today? And what are
the prospects for the future?
The Great Depression Leads to Regulation
Truck transportation, replacing horse teams and
wagons and supplementing the railroads, only
really got rolling in the 1920s—just in time for the
Great Crash of 1929 and the Great Depression.
With 25% of the population unemployed, anyone
and his brother modified their Model Ts, putting a
box on the back, and went into the business, lead-
ing to fierce competition in local drayage (short-
distance) as well as long-haul (intercity) trucking.
Cutthroat competition led to the collapse of scores
of trucking companies, forced down workers’
wages, and made it difficult for shippers to find
reliable service. Trucking was a mess.
In response, Congress passed and President
Franklin D. Roosevelt signed the Motor Carrier
Act of 1935, which regulated the trucking indus-
try’s routes and rates, while making it difficult for
new companies to enter the business—thus end-
ing the cutthroat competition that had prevailed
earlier. The industry was more or less frozen in
time as a collection of local cartage companies
and regional carriers who moved freight through
interline shipments; that is, breaking down and
reassembling shipments, passing a barrel or a box
from one company to another until it reached its
final destination. The result was a government-
supervised oligopoly, a legal cartel, but it brought
an end to the chaos that the Depression had
wrought on the industry.
At the same time the Teamsters succeeded in
organizing both city and long-haul drivers in the
East, Midwest, and West Coast, winning contracts
that provided standard wages, hours, and condi-
tions in numerous cities and even several regions of
the country. And Teamsters organized not only the
drivers, but also dockworkers and, later, clerical
workers, becoming a national, industrial union.
When the economy revived as a result of America’s
entry into World War II, trucking expanded to
become a major transportation sector rivaling the
railroads. Then, in the late 1950s, Teamster
President Jimmy Hoffa began to bring all of the
freight hauling companies into what became
known as the National Master Freight Agreement.
By the 1970s that “pattern agreement” covered
450,000 workers, and influenced—and tended to
enhance—contracts covering hundreds of thou-
sands of others.
With the American economy in its prosperous
post-war years, the combination of government
regulation and union organization created a sta-
ble and profitable trucking industry while also
making it possible for the companies to pay higher
wages and health and pension benefits for work-
ers. We can now see, as economist Thomas Piketty
has recently argued, that the “Golden Age”—
1940-1970—was an exceptional period in
American capitalism. The regulatory system
tended to benefit the largest shippers (such as
General Motors, Montgomery Ward, and Sears),
and big regional trucking companies, as well as a
group of highly paid workers, at the expense of
smaller, would-be competitors and the general
public to whom costs could be passed on. When
that period ended, something had to change. The
sun shining, the window open, and the breeze
blowing in, truck drivers drove their rigs into the
future—unaware of what it was to hold.
The Return of Crisis and Deregulation
The reader may find it surprising that it was Ralph
Nader and Ted Kennedy who pushed for deregu-
lation of trucking (along with commercial air
travel), setting off the revolution that ended gov-
ernment control of the industry and toppled the
Teamsters from the union’s stronghold. While
Nader and Kennedy initiated the movement, they
were part of a broader, bi-partisan consensus in
favor of a deregulated economy. When he signed
the Motor Carrier Act of 1980, Jimmy Carter
promised that it would benefit all the nation’s cit-
izens—including labor. But that was not true. For
labor it proved a disaster.
The 1980 Act was predicated upon the idea of
the free market, removing barriers to the entry of
new companies and dismantling regulated routes
and rates. The earlier Freight Common Carrier
sector now split into two parts: “truck-load” (TL)
and “less-than-truck-load.” (LTL). Very quickly, ››

Truckers’ Health Problems

“L ong-haul trucking has been recognized as an occupation that is disproportionately detrimental—when compared
to other occupations—to the health, safety, and well-being of drivers.” So argue Yorghos Apostolopoulos, Michael
Lemke, and Sevil Sönmez in their recent article “Risks Endemic to Long-Haul Trucking in North America: Strategies to
Protect and Promote Driver Well-Being,” published in the environmental and occupational health journal New Solutions.
“Tractor-trailer drivers function in a work context marked by high physical and psychological workload, erratic sched-
ules, time pressures, disrupted sleep patterns, and resultant ramifications. These stressors have been linked with truckers’
excess cardio-metabolic disease, certain types of cancer, and musculo-skeletal and sleep disorders, along with highway
crashes that carry serious repercussions not only for truckers but also for the general population.”
These issues the authors note spill over into society in terms not only of accidents but other social costs. They call for
an “Integrated Trucker-Health Protection and Promotion” approach that would focus on: “1) trucking work environment
stressors (e.g., lack of healthful workplace resources, mile-based pay, fragmented sleep patterns, team driving); 2) non-
work-environment stressors (e.g., absence of social capital and institutional protections, absence of health insurance
provision to drivers and their families); and 3) trucker health risk behaviors (e.g., unhealthy diets, lack of exercise).”
While these researchers call for “key stakeholders” to take an interest in this approach which could lead to both
greater health and economic efficiency, it seems that for such a program to be successful, workers would need to be
fully involved and have a union that they control with the power to make employers and the government treat driver
health as the important issue that it is.
››
September/October 2014 l  DOLLARS & sense  l  21
 T ruckEr S e rfs
says Stephen V. Burks, professor of economics and
management at the University of Minnesota in
Morris, “companies fled the less-than-truck load
freight industry while others flooded the truck-
load sector.” Existing trucking companies “double
breasted”—opened non-union subsidiaries parallel
to their existing union operations but paying lower
wages, offering fewer benefits, and imposing poorer
working conditions. More importantly, thousands
of new non-union carriers entered the field. They
grew and prospered as union companies collapsed.
“The union got slaughtered,” says Burks.
The less-than-truckload (LTL) sector of the
industry began to shake out, with hundreds of
companies failing. Sadly many of these companies
first became Employee Stock Ownership Plan
(ESOP) ventures that took truck drivers’ and dock
workers’ savings and voluntary wage reductions
before finally folding. Today there are about 60
LTL companies, but just a handful such as Conway,
YRC Worldwide, Old Dominion, and Arkansas
Best Freight (ABF) dominate the industry.
At the same time, other new non-union com-
panies, eventually thousands of them, entered the
truckload (TL) freight sector of the industry, where
networks of terminals were not required. In fact,
one could operate a trucking company with no
terminals at all. Today, many drivers pick up freight
at one location—an entire truckload—and deliver
it to another. Drivers often go into the warehouse
and pick up and load the freight themselves on
their own unpaid time. This means that the com-
pany owner’s only capital investment is the truck.
It also means that there is no fixed base of opera-
tions, or one might say, no workplace. Truck driv-
ers go to work all alone, sometimes at a different
location every day, and might not have any contact
with other drivers except at a truck stop. This
makes it extremely difficult for the Teamsters to
organize these workers, the great majority of whom
remain non-union.
At the time of deregulation, there were perhaps
200,000 “owner-operators,” self-employed drivers
who owned their own trucks and worked for truck
brokers, trucking companies, or shippers. While at
one time the union had organized some owner-
operators, by the time of deregulation there were few
union members among them. Some of these drivers
survived and some went under in the new competi-
tive market, but there are still perhaps 300,000 own-
er-operators today, almost all non-union.
Finally there is the package sector—the govern-
ment calls them “couriers”—which requires enor-
mous capital for extensive networks of terminals
and equipment. It became reduced to just three
large corporations: United Parcel Service (UPS),

Drivers Strike L.A.-Long Beach, Country’s Largest Port, for Five Days

W orkers associated with Justice for Port Drivers, a Teamster-backed group, struck at the adjoining ports of Los
Angeles and Long Beach on Monday, July 7. The picket lines, at the largest seaport in the United States, han-
dling most of the enormous trade from China, lasted for five days. The 120 drivers employed by Total Transportation
Services Inc., Green Fleet Systems, and Pacific 9 were demanding to be treated as wage-earners rather than as inde-
pendent contractors.
This was one of a series of small “demonstration strikes” calling attention to port truckers’ issues, though this one
had a larger impact than the others. The drivers picketed at four terminals, taking advantage of the fact that the con-
tract between the Pacific Maritime Association (PMA), which represents shipping companies, and the International
Longshore and Warehouse Union (ILWU), which represents all West Coast stevedores, had expired and negotiations
were ongoing. With no PMA-ILWU contract in force, on their own initiative some ILWU members joined the picket line,
at least at first. Their action briefly paralyzed Evergreen, APL, and Yusen terminals in Los Angeles and the Long Beach
Container Terminal.
After a labor arbitrator ruled that the strike was not legitimate, employers and the union informed ILWU members
that they had to return to work—breaking a long tradition of ILWU workers honoring others’ picket lines. Los Angeles
Mayor Eric Garcetti then intervened, holding a meeting with the port drivers who agreed to a “five-day cooling off
period.” The small strike had an equally slight impact on the movement of freight at the port, but it showed the driv-
ers continued commitment to win their status as wage-earners.

22  l  dollars & sense  l September/October 2014

Federal Express (FedEx), and the United States
Postal Service (USPS). (I have not discussed here
the private carriers such as Coca Cola and Pepsi
Cola, firms with over a thousand trucks and drivers
but not part of the for-hire industry.)
Where Is the Industry and
Where Are the Drivers Today?
What was the overall impact of deregulation? “It
was effective at its goal,” says Ken Paff, the national
organizer of Teamsters for a Democratic Union
(TDU), a reform group within the Teamsters
union. “It drove down costs. The mainstream econ-
omists would say it became ‘more efficient.’ The
biggest change was driving down labor costs,
because the biggest bill is labor. Fuel is second.
Trucks may be third. So that’s how costs were
driven down by deregulation: by cutting wages.”
While the drivers’ wages declined, the trucking
companies have, by and large, done well. The total
tonnage of freight being shipped by truck is up, the
best year since 1998. Total trucking industry revenues
for 2013, reports the Journal of Commerce, rose to
$106.6 billion. UPS, the largest, had revenue of $25.6
billion, FedEx $15.4 billion, J.B. Hunt (the leading
truck-load carrier), $5.0 billion, and YRC (the lead-
ing less-than-truck-load carrier), $4.8 billion. The
average profit margin last year, according to Forbes,
was 6%, compared to 3% to 4% in recent years. In
terms of return on investment, profits are even higher.
UPS, for example, had a return on investment of
14.62% in the first quarter of 2014, while its five-year
return on investment through 2013 was 15.03%.
What did deregulation mean for the Teamsters
and their historic freight contract that once cov-
ered 450,000 workers? Paff says, “There is no
Master Freight Agreement today.” Today the freight
contract covers only about 35,000 workers, while
the related UPS freight contract covers 13,000,
and the carhaul (auto transporter) contract covers
7,000. UPS also has 250,000 package car drivers
and loaders under union contract, though many of
the warehouse workers are part-timers. DHL has
2,000 union workers. Most long-haul freight driv-
ers today have no union and no collective bargain-
ing agreement—and their wages reflect that.
Some experts put the number of unorganized
over-the-road drivers at about 800,000, though
just how many truck drivers there are is a matter of
great debate among the experts. According to the
U.S. Bureau of Labor Statistics (BLS), there are
about three million truck drivers in the United
States. Of these, 1.7 million drive tractor trailers,
while another 1.3 million or so drive box-style
delivery trucks. The tractor drivers earn an average
of $18.37 an hour or $38,200 a year for full-time
work, says the BLS, while delivery truck drivers
average $13.23 per hour or $27,530 per year.
What these statistics don’t reveal is one of the
biggest problems of truck drivers today: unpaid
work. Under current safety regulations governing
over-the-road truck drivers, drivers cannot drive
more than eleven hours per day or work more than
fourteen hours per day. What this means in prac-
tice is that drivers who are paid by the trip or the
load—not by the hour—may spend anywhere
from a half hour to several hours in a day either
waiting in line at a warehouse or working loading
the truck for no pay at all. The jobs in the truck-
“[Deregulation] was effective at its goal,”
says TDU’s Ken Paff. “It drove down costs.
The biggest change was driving down
labor costs, because the biggest bill is
labor. Fuel is second. Trucks may be third.
So that’s how costs were driven down by
deregulation: by cutting wages.”
load freight sector are so demanding and poorly
paid that, according to the American Trucking
Associations, companies have a nearly 100% turn-
over rate; that is, each year the company must hire
the equivalent of an entire workforce. Companies
complain that they can’t even fill the seats, much
less find enough well-qualified drives.
Michael Belzer, author of Sweatshops on Wheels:
Winners and Losers in Trucking Deregulation,
believes that the biggest reason for the tremendous
turnover is unpaid working time. “You need to pay
people,” says Belzer. “The problem is economic.
The driver shortage is not because people are sit-
ting around collecting unemployment or welfare.
The problem is that the job is now comparable to
fast food or Walmart or ditch digger work. My
solution is to pay people a decent living.” ››
September/October 2014 l  DOLLARS & sense  l  23
 T ruckEr S e rfs
Belzer argues that because the companies don’t
pay workers for delays or non-driving work, there
is an enormous loss of efficiency in the national
economy while at the same time workers lose out
in terms of wages. The answer, he says, is to com-
bine full recording of all hours worked in “elec-
tronic logs” or “electronic on-board recorders”
(EOBR), technology already produced by a variety
of companies, and paying at least the minimum
wage for what are currently unpaid hours. The
result, he says, would be an increase in the effi-
ciency of the economy and an increase in workers’
wages, which would also make it possible to reduce
It is difficult to imagine that Teamsters
organizing will be successful without a
truly democratic union movement. Even
then the union will need allies in the
social movements, such as we saw in the
brief alliance between the ILWU in
Longview and the Occupy movement.
driver turnover. Belzer confesses that while some
large employers see the benefit in such an arrange-
ment, there does not now exist the constellation of
forces in government, society, and the industry to
bring about such a limited re-regulation.
Port Drivers: A Return to Union Organizing?
After deregulation, the Teamsters turned to orga-
nizing everyone from police officers to school
employees. Their dues kept the union alive as an
institution, but failed to increase workers’ power
in relation to the employers in the transportation
sector which has been the union’s heart for
decades. TDU leaders, who are supportive of all
Teamster organizing, criticize the union’s leader-
ship for a scattershot approach that has failed to
focus on core Teamster industries, including
trucking. The Teamsters union has in the last
decade made several efforts to revive organizing in
the trucking industry, though so far without
24  l  dollars & sense  l September/October 2014
much success. An organizing campaign at FedEx
that began ten years ago fizzled.
The Teamsters’ most recent attempt is a cam-
paign among the 70,000 or more drivers who work
in and around the country’s seaports, hauling
freight from docks to inland warehouses or other
destinations. Teamster president Jimmy Hoffa, Jr.,
the son of past IBT president James R. Hoffa,
named Fred Potter, an IBT vice-president and New
Jersey Teamster leader to head the Ports Division.
Potter, who earned $241,424 in 2012, told the
press, “These are going to be nasty campaigns.
Workers are going to be challenged, and we want
to make sure they are up for the challenge. This is
no different in many cases than preparing soldiers
for war.” So far there have only been skirmishes,
though they seem to be growing in significance.
Still, there is certainly an army of low-paid and
over-worked drivers out there who might be orga-
nized if the workers and the union can find the
right strategy. Port drivers around the country are
overwhelmingly among the people of color—
Asian, Middle Eastern, Latino, and African
American—who form part of America’s enormous
pool of low-wage workers. An in-depth study titled
“Big Rig: Poverty, Pollution, and the
Misclassification of Truck Drivers at America’s
Ports,” which was produced in 2010 by the National
Employment Law Project and Change to Win, a
labor federation of which the Teamsters are a mem-
ber, found, “Port truck drivers work long hours for
poverty-level wage.”
The authors of the report surveyed 2,183 port
drivers in seven locations and found that average
net earnings before taxes were $28,783 per year for
contractors and $35,000 per year for employees.
Contract drivers had to pay “for all truck-related
expenses including purchase, fuel, taxes, insurance,
maintenance, and repair costs.” The report argued
that many drivers were misclassified as contractors
when in fact they were wage-earners, laying the
basis for the Teamsters organizing strategy: turn
contractors in wage-earners.
A 2014 update of the report sums up the cur-
rent situation: “Powerful companies have moved
core operations into nebulous networks of under-
capitalized subcontractors, both domestic and
overseas. And large numbers of workers find them-
selves beyond the reach of such core labor protec-
tions as a minimum wage, unemployment insur-
ance, and Social Security.” The report estimates
that California port trucking companies are annu-
ally liable for between $787 million and $998 mil-
lion each year for wage and hour violations. This is
wage theft of enormous proportions.
Back in July 2008, Hoffa himself showed up at
the Oakland Port at the head of a demonstration of
3,000 labor unionists and environmentalists. “Port
drivers are on the front lines of this fight for clean
air and good jobs,” he said. “They toil away every
day earning poverty level wages and can’t earn
enough to pay for the maintenance of their older
trucks which are pumping out toxic pollution.
This coalition of environmental, community and
labor activists has come together for a common
cause—to curb pollution in our ports and create
good-paying jobs for port drivers.”
The Teamsters have encouraged drivers to file
complaints with the California State Department
of Industrial Relations for wage theft, since they
are not paid for all of the hours they work, and
hundreds have done so. The Teamsters have also
won court cases in various states ruling that so-
called independent contractors were actually wage-
earners. These cases are important because, as con-
tractors, the drivers were not entitled to sick pay,
vacation holidays, or severance pay.
The basis for such rulings has been the fact that
the companies—which sometimes illegally required long-time labor organizer, now retired, who has

drivers to rent equipment from them—control
every aspect of the workers’ jobs: when and where
they go, what they do, and how they do it. They
are in no way independent. In addition to their
court cases, the Teamsters have been pushing for
several years at both the state and the federal level
for new legislation that would in many situations
classify owner-operators as employees because they
do not really have any control over their jobs. Both
trucking industry associations and broader busi-
ness organizations have opposed such laws.
The second aspect of the Teamster campaign
has been to use their alliances with community and
environmental groups to push for regulations or
legislation requiring cleaner trucks and better prac-
tices. Many port drivers had been driving old junk
trucks and leaving them idling while standing in
line. When the Teamsters pushed for, and won,
new environmental regulations that would soon
retire trucks built before 2008, the low-paid drivers
could not afford to buy new ones—at a cost of
$125,000 each. “The new rules forced some driv-
ers out of the Port of Oakland,” says Joe Keffer, a
››
worked as a volunteer with port drivers in their
Flyer for Occupy the
organizing efforts. “The company then came in Ports, an alliance
and said, ‘We’ll buy your truck’.” So employers between West Coast
loaned money to drivers for new trucks, turning Occupy groups and
the ILWU in
the drivers into debt peons working to pay off their Longview in 2011.
loans to the bosses. Two prominent blogs—the
Working In These Times blog and the Washington
Post’s Wonkblog—have called this “sharecropping
on wheels.”
Alex Cherin, executive director of the Harbor
Trucking Association at the Port of Los Angeles,
an employers’ organization, has repeatedly claimed
that most of the drivers want to be owner-
operators, not wage-earners, and that those who
want to be wage-earners can fill any of hundreds
of positions available from the companies at the
port.  Volunteers working with port drivers also
report some drivers don’t want to be wage-earners
and feel threatened by the Teamster strategy. They
want to be owner-operators with whatever degree
of independence they believe that gives them.
Perhaps the Teamsters will have to try another
strategy if they are going to organize the ports. ››
September/October 2014 l  DOLLARS & sense  l  25

T ruckEr S e rfs
Maybe they need to go back to their roots. When
the union was founded in 1903, they represented
drivers of horse teams, many of whom owned
their own horses and wagons. Back in the 1950s
and 1960s, the Teamsters succeeded in organizing
some owner-operators when they agreed to nego-
tiate both their wages and the costs of maintain-
ing their equipment.
When I talked to Ben Sizemore the other day,
he was driving through West Virginia down to
Charlotte, S.C. He told me in his twangy accent
that things weren’t right out there on the road.
“These guys are working like they should to make
a living, but they are not getting home time with
their wives and families. They’re not being paid
what they deserve. That’s what the American dream
is all about, isn’t it: a fair day’s work for a fair day’s
pay—and it’s gotten away from that.”
What can be done to improve conditions for
truck drivers? The most important thing is union
organization and the use of union power to fight
back against the companies that dominate the
industry. While the Teamsters organizing deserves
support, it is difficult to imagine that it will be
successful without a truly democratic union
movement that can tap the knowledge, creativity,
and righteous indignation of both wage-earners
and owner-operators. Even then the union will
need allies in the social movements, such as we
saw in the brief alliance between the ILWU in
Longview and the Occupy movement. Only with
such a broad class movement will it be possible to
take on the industry. When that sort of alliance
arises again—democratic, militant, and from
below—there will be the possibility of lifting driv-
ers out of serfdom. D&S
D A N L A B O T Z was a truck driver in Chicago from
1974 to 1980, an activist in the Teamsters Union, and a
founding member of Teamsters for a Democratic
Union (TDU). He is the author of Rank-and-File Rebel-
lion: Teamsters for a Democratic Union (1991). He is also
a co-editor of New Politics and editor of Mexican Labor
News and Analysis.
S O U R C E S : Dave Dudley, “Six Days on the Road,” Grand Ole Opry
live TV performance, October, 1966 (youtube.com); Taj Mahal, “Six
Days on the Road,” from the 1968 Columbia Records album Giant Step/
De Ole Folks at Home, (youtube.com); Richard D. Leone, The Negro in
26  l  dollars & sense  l September/October 2014
the Trucking Industry, Industrial Research Unit, Wharton School of
Finance and Commerce, (University of Pennsylvania Press, 1970); C.W.
McCall, “Convoy” 1975 (youtube.com); Howard K. Smith (reporter),
“Truckers’ Strike Causes Widespread Unemployment and Shortages,”
ABC Evening News, February 6, 1974, Valderbilt Television News
Archive (tvnews.vanderbilt.edu);. Ben A. Franklin, “Ex-F.B.I. Agent Links
Teamsters’ Chief to Crimes,” New York Times, February 18, 1983; William
Serrin, “Jackie Presser’s Secret Lives Detailed in Government Files,” New
York Times, March 27, 1989; Thomas Piketty, Capital in the Twenty-First
Century (Harvard University Press, 2014); John Berlau, “Ted Kennedy’s
Deregulatory Legacy on Airlines and Trucking,” Competitive Enterprise
Institute, August 26, 2009 (cei.org); National Center for Employee
Ownership, “How an Employee Stock Ownership Plan (ESOP) Works”
(nceo.org); William B. Cassidy, “Top 50 Trucking Companies Rode their
Breaks in 2013,” Journal of Commerce, April 16, 2014 (joc.com); Mary
Ellen Biery, “U.S. Trucking Companies Deliver Sales, Profit Gains,”
Forbes, February 20, 2014 (forbes.com); “United Parcel Service’s ROI per
Quarter,” CSIMarket.com, 2013 (csimarket.com); “UPS’s ROI Over the
Last Five Years,” CSIMarket.com, 2013 (csimarket.com); “Occupational
Outlook Handbook: Transportation and Material Moving Occupations,”
Bureau of Labor Statistics (bls.gov); “Summary of Hours of Service
Regulations,” Federal Motor Carrier Safety Administration (dot.gov);
“Truckload Turnover Ticks Down in Third Quarter,” American Trucking
Association press release, December 11, 2013 (truckline.com); Michael
H. Belzer, Sweatshops on Wheels: Winners and Losers in Trucking Deregu-
lation (Oxford University Press, 2000); J.J. Keller & Associates website
(http://www.jjkeller.com/); Steven Greenhouse, “Teamsters Hope to
Lure FedEx Drivers,” New York Times, May 30, 2006; “Annual $150,000
Club Report, 2012,” Teamsters for a Democratic Union (tdu.org); Brian
Sumer, “Teamsters persist in drive to unionize truckers at L.A. and
Long Beach ports,” Daily Breeze, May 3, 2013 (dailybreeze.com);
Rebecca Smith, David Bensman, and Paul Alexander Marvy, “The Big
Rig: Poverty, Pollution, and the Misclassification of Truck Drivers at
America’s Ports,” National Employment Law Project and Change to
Win, December 2010 (nelp.org); Rebecca Smith, David Bensman, and
Paul Alexander Marvy and John Zerolnick,” The Big Rig Overhaul:
Restoring Middle-Class Jobs at America’s Ports Though Labor Law
Enforcement,” National Employment Law Project and Change to Win,
March 2014 (justice4ladrivers.net); “Hoffa Joins Thousands of Workers
to Support Clean and Safe Ports in Oakland ,” Teamsters press release,
July 22, 2008 (teamster.org); James Jaillet, “Federal court says fleet’s
drivers are employees, not contractors in Calif. Ruling,” Overdrive
magazine, June 17, 2014 (overdriveonline.com); Jill Dunn, “Federal,
state governments review owner-operator status,” Overdrive maga-
zine, March 02, 2012 (overdriveonline.com); Jill Dunn, “Clean Ports bill
floated in Congress,” Overdrive magazine, August 29, 2013 (overdriveo-
nline.com); Sarah Jaffe, “Sharecropping on Wheels,” Working In These
Times blog, May 15, 2013 (inthesetimes.com/working/); Lydia DePillis
“Teamsters score a win against ‘sharecropping on wheels.’ But will the
trucking industry really change?” Washington Post Wonkblog, March
22, 2014 (washingtonpost.com/blogs/wonkblog/); Ricardo Lopez,
“Port truck drivers launch strike to protest alleged labor violations,” Los
Angeles Times, April 18, 2014; Pacific Maritime Association (pmanet.
org); International Longshore and Warehouse Union (ilwu.org); Robert
Brenner and Suzi Weissman, “Unions that Used to Strike,” Jacobin
magazine, August 6, 2014 (jacobinmag.com); Karen Robes Meeks,
“ILWU joins picketing truck drivers and Long Beach, LA ports,” Long
Beach Press Telegram, April 28, 2014 (presstelegram.com); Andrew
Khouri, “Truckers strike briefly shuts 4 terminals at L.A., Long Beach
ports,” Los Angeles Times, July 8, 2014 (latimes.com); Bill Mongelluzzo,
“Arbitrator Rules ILWU Workers Must Return to Work at LA,” Journal of
Commerce, July 8, 2014 (joc.com); Yorghos Apostolopoulos, Michael
Lemke, and Sevil Sönmez, “Risks Endemic to Long-Haul Trucking in
North America: Strategies to Protect and Promote Driver Well-Being,”
New Solutions magazine, January, 2014 (ncbi.nlm.nih.gov).
Blight on
the Boardwalk

Atlantic City’s declining casinos

are a grim harbinger for the
industry, and its workers,
nationwide.

B Y E llen M utari and D eborah M . F i g art

O N A CO LD WIN TER WED N ES D AY I N F E BRUA RY 2 0 1 4 , 1 , 3 0 0 PE OP LE

››
showed up for an “emergency job fair” at the Golden Nugget casino in Atlantic City, N.J. They had Revel employees Joe
heard that fifty openings were going to be filled immediately. With local casino employment at its lowest Lucchetti and Robert
in thirty years, a casino shutdown just one month earlier that put 1,600 employees out of work, and a state Fitting remove
letters from a sign at
unemployment rate stubbornly above 7%, hopeful applicants lined up in droves for a chance to win one Revel hotel-casino,
of the positions. The queue snaked around one floor and down the stairs to another. The odds of actually on Labor Day, 2014,
landing a job made slot machines look like relatively good investments. in Atlantic City.
Still, the job fair still seemed like a rare silver lining amid cloudy skies: Executive Vice President and Credit: © AP Photo/
General Manager Tom Pohlman had told the media that the Golden Nugget was seeing a spike in custom- The Press of Atlantic
ers following the closing of local competitor Atlantic Club casino. It was looking to hire additional dealers, City, Michael Ein.
as well as front desk attendants, cocktail servers, valet attendants, and more.
Then came the heartbreaking announcement from the Golden Nugget’s corporate office in Las Vegas:
“While our gaming revenue has been reported as slightly up in Atlantic City, the comparative increase in
business is off a low base and not the reason for the job fair.” Instead, applicants were asked if they would
relocate to a newer Golden Nugget casino in Lake Charles, La., that wasn’t scheduled to open until the end
of the year. They were also told that the Atlantic City property still might hire—but not until warmer
weather increased seasonal summer business. ››
September/October 2014 l  DOLLARS & sense  l  27
 B light on th e B oardwalk
The summer of 2014 brought even more bad
news for Atlantic City’s hard-working casino employ-
ees. Three more casinos—out of the twelve operat-
ing at the beginning of the year—announced that
they would shut their doors after the summer tour-
ists went home. Showboat Atlantic City closed on
August 31, just before Labor Day. Revel, the $2.4
billion luxury resort that industry boosters promised
would revitalize the city when it opened in 2012,
shut down its hotel on September 1 and its casino
the following day. The city’s smallest casino, Trump
Plaza, went dark on September 16. Four huge build-
ings now sit empty on the famous Atlantic City
Boardwalk, a new form of urban blight.
While there are still rumors that some prop-
erties may be reopened as casinos, upscale apart-
ment complexes, or other entertainment venues,
the original employees have lost their seniority
and terms of employment, along with their jobs.
The three closures this fall added over 6,000 to
the queue of job-seekers. Only a few hundred
were given transfers to jobs at other casinos
owned by their employers, including new casi-
nos in other states.
Are Atlantic City’s losses simply gains for the
other cities and towns that are building new casi-
nos? Or is the Atlantic City story a harbinger of the
future of the entire casino gaming industry? Does
the recent wave of casino closures in Atlantic City
have broad implications for citizens weighing
whether the promises offered by casino develop-
ment are likely to be realized?
New Jersey Casino Employment, 1978-2014
60,000
50,000
40,000
30,000
20,000
10,000
0
1978
1983
1988
1993
1998
2003
2008
2013
Source: New Jersey Casino Control Commission annual reports until 2011, then Division of Gaming
Enforcement website; New Jersey Department of Labor and Workforce Development, New Jersey Eco-
nomic Indicators; 2014 figure is an estimate.
28  l  dollars & sense  l September/October 2014
The answers to these questions are not simple.
There are signs, however, that casino gambling in
the United States is already past its heyday.
Gambling has become so normalized that is has
ceased to be special. Many folks who used to ride
the bus to play the slot machines in Atlantic City
have more accessible places to gamble up and down
the East Coast. Atlantic City’s casinos—and most
of the locales offering casino gaming in the United
States—now operate in a saturated market. The
oversupply of casinos is contributing not only to
casino closures, but also to cost-cutting that is
undermining job quality.
Market Saturation for Casino Gambling
Atlantic City ventured into the casino gambling
industry in the 1970s, as the U.S. economy shifted
from the so-called “Golden Age” of postwar pros-
perity to the recent era of sluggish economic growth,
deindustrialization, and income polarization.
Atlantic City’s gamble with gaming was viewed as a
success story that inspired other economically
depressed areas. Casinos, it was thought, would
bring jobs and tax revenues and enhance the eco-
nomic development of surrounding communities.
The subsequent success of two casinos on Native
American reservations in Connecticut spurred a
new wave of expansion, in the mid-to-late 1990s,
focused on slot parlors and “racinos” (race tracks
with slot machines).
Gradually, one state after another has tried to
upgrade from slot parlors to full-service commer-
cial casinos. States such as New York, Massachusetts,
and Florida are hotly debating whether or how to
expand the number of large-scale casinos with table
games and resort amenities. At the same time, as
noted in Bloomberg Businessweek, gambling rev-
enues are falling in many of the earlier gaming
states, including Mississippi, Missouri, Illinois,
and Michigan. Caesars Entertainment shuttered its
Harrah’s Tunica casino in Mississippi in June of
2014. In Delaware, Gov. Jack Markell (D) recently
announced an $8 million “temporary” bailout of
that state’s three casinos, arguing it was necessary
due to the financial squeeze felt from high taxes
and increased competition.
In Atlantic City, jobs started being cut long
before the casinos themselves started closing.
Casino employment peaked back in 1997, at
almost 50,000 jobs. After the recent closings, there
are only about half as many jobs, bringing New
 How Concentrated is Gambling in Atlantic City?

T he Atlantic City casino industry’s “four-firm concentration ratio” (or “CR4”)–the market share accounted by the top four
companies in the industry—indicates that the industry has become very concentrated. A CR4 of almost 85% puts it on
par with such national industries as soft drinks (with Coca-Cola as leader) and tobacco (with Philip Morris as leader).
A weakness of the concentration ratio as a measure is that it does not give us any information about the degree of
competition in the rest of the industry. For example, do one or two firms in the top four hold the lion’s share, or are
the four relatively equal players? Beyond the big players, are there only a few other firms (as in Atlantic City gambling)
or hundreds of other small firms that would give consumers a choice (as with Las Vegas casinos)?
The Herfindahl-Hirschman Index (HHI), named after economists Orris Herfindahl and Albert Hirschman, is a more
sophisticated measure of market power and thus of possible anti-competitive behavior. The HHI is calculated as the
sum of the squares of the market shares of the fifty largest firms, or all of the firms if the number is less than fifty. This
measure better accounts for the relative sizes of firms in the industry. The HHI can theoretically range from zero to
10,000. In the case of a pure monopoly—a single firm with 100% of the market—we get an HHI of 1002 = 100 x 100 =
10,000. The Antitrust Division of the U.S. Department of Justice uses the HHI to evaluate proposed mergers for pos-
sible anti-competitive effects. The Justice Department considers a market with an HHI higher than 2,500 points to be
“highly concentrated.” In 2013, the HHI for the Atlantic City casino market was 2,522.1. ››
Jersey casino employment to its lowest levels since
1981, just three years after the first slot machines Atlantic City Casino Industry Concentration, 2013
started dinging in the city. (See figure.) As gaming Market Square of
Corporation
revenues decline, casinos are also going to court Share Market Share
and obtaining rebates on their property taxes, fur- Caesars Entertainmment (Caesars,
41.0% 1,681.0
ther squeezing already tight municipal budgets. Harrah’s, Bally’s, Showboat)
Casino analysts argue that the U.S. market has Marina District Development
23.5% 552.3
Company, LLC (Borgata)
reached the point where new casinos simply “can-
nibalize” the customer base of older ones—a sign Trump Entertainment Resorts
11.8% 139.2
Holdings, LP (Taj Mahal, Plaza)
of industry maturation. At the same time, the
global casinos and gaming sector has taken off. Tropicana Entertainment, Inc.
8.2% 67.2
(Tropicana)
Macau, a city on a peninsula in southern China,
4-Firm Concentration Ratio (CR4) 84.5%
surpassed Las Vegas as the world’s largest gaming
market in 2006. Less than one-fourth of the gam- Revel Entertainment Group LLC (Revel) 6.4% 41.0
ing industry is now centered in the United States. Landry’s Inc. (Golden Nugget) 4.6% 21.1
Why do the casino operators keep building if DGMB Casino LLC (Resorts) 4.5% 20.3
the U.S. market is saturated? To understand this, Herfindahl-Hirschman Index (HHI) 2,522.1
we have to remember that the industry is highly Source: New Jersey Division of Gaming Enforcement, quarterly financial reports from Casinos,
Fourth Quarter 2013.
concentrated. The major casino companies are
global oligopolies. Most local gambling markets
are oligopolies or monopolies. Oligopolies do not On the other hand, in concentrated industries,
behave according to the textbook models of per- market leaders can also benefit by restricting supply.
fectly competitive firms. Instead, they strategically Caesars Entertainment, for example, is the second-
focus on maintaining or increasing their market largest casino gaming company in the world. The
share. Each time state or local governments decide company also owned four of the twelve casinos oper-
to build more casinos to boost tax revenues, casino ating in Atlantic City as of 2013, making it the largest
companies risk losing market share to a competitor firm in the local market, with a market share of 41%.
if they don’t bid on the project. Their philosophy The top four Atlantic City casinos, meanwhile,
seems to be to keep moving to avoid sinking. So account for nearly 85% of total industry revenue in
they keep building. the city. (See sidebar on industry concentration.) ››
September/October 2014 l  DOLLARS & sense  l  29
 B light on th e B oardwalk
Caesars, the market leader in this highly con-
centrated local market, was one of two firms that
purchased the Atlantic Club’s assets in a bank-
ruptcy sale. Caesars bought the building while
Tropicana bought information about the clientele,
gleaned from customer loyalty cards, as well as the
slot machines and other gambling equipment.
Caesars then resold the property with a controver-
sial deed restriction that prohibits any new owners
from operating a casino on the site. Showboat, one
of the other recently closed casinos, is a Caesars
property. Caesars Entertainment determined that
it was in its business interest to shut Showboat
down, even though it was still profitable.
Presumably, as the owner of three of the other casi-
nos in the city, Caesars believes that they can absorb
While longtime employees are fighting
against concessions and wage
stagnation, younger workers juggle
multiple part-time and seasonal
jobs at several casinos. The recent
introduction of cost-cutting practices is
making it harder to find full-time
jobs with benefits.
most of Showboat’s customers themselves rather
than lose market share to competitors.
Yet Caesars is not exactly a firm, in the conven-
tional sense. As noted by Eileen Appelbaum and
Rosemary Batt, authors of Private Equity at Work:
When Wall Street Manages Main Street, the primary
shareholder in Caesars Entertainment is a fund con-
trolled by two private-equity firms, TPG Capital
and Apollo Global Management. The buyout of
Caesars was one of the largest in the history of pri-
vate equity, and burdened the company with bil-
lions of dollars in debt. To manage the debt, the
private-equity managers, Appelbaum and Batt note,
“cut staff, reduced hours, outsourced jobs, and scaled
back operations.” And, they engaged in the type of
behavior that Appelbaum and Batt warn about in
30  l  dollars & sense  l September/October 2014
the conclusion to their book: “all too often private
equity owners have engaged in financial engineering
… to maximize their own returns while putting
operating companies and their stakeholders in jeop-
ardy.” One waiter who was working at Atlantic Club
when it was for sale complained to us that manage-
ment was closing most of the restaurants. He
assumed this was done to make the property look
more desirable for prospective buyers, by simply
lowering costs on the corporate balance sheet. Such
practices are increasingly rampant in the industry.
Casinos for Economic Development
Even as the casinos look for ways to boost market
share and profits, the local communities going “all
in” on casinos as an economic development strat-
egy face increasingly long odds. Across the United
States, the driving distance to the closest casino is
getting shorter and shorter. Each locale has to find
new ways to draw in customers or else rely on rev-
enue from gamblers in their own backyard. Amid
this backdrop, Atlantic City and some other locali-
ties have been trying to transition from “conve-
nience gambling” centered on slot machines and
maybe a few table games to destination resorts for
overnight guests. Success depends upon standing
out in a crowd. It’s not easy to do.
A good analogy would be sports teams. Most
sports franchises primarily appeal to fans in their
local media market. Very few teams are able to sus-
tain a premier position of national popularity year
after year. Las Vegas, in this analogy, is the New York
Yankees of gambling destinations (despite some lean
years in the wake of the Great Recession). Atlantic
City, with its beaches, boardwalk, and recent invest-
ments in other amenities, has a lot to offer tourists as
well. But locations that have little besides casinos are
unlikely to compete beyond convenience gambling.
Most casino markets, just like most sports fran-
chises, will have to settle for a smaller, local customer
base. But this means policymakers and voters need
to pause before betting the farm on casinos to bring
in fresh revenue from visitors.
And even if the casino is profitable, the larger
question for economic development is whether
casinos promote rising living standards. If casinos
survive but the employees don’t thrive, the prom-
ise of sustainable economic development cannot
be achieved. For our forthcoming book, Just One
More Hand: Life in the Casino Economy, we con-
ducted in-depth interviews with employees in
Atlantic City’s casinos. We
found an industry that tradi-
tionally offers wages higher
than what workers get at
many other service-sector
jobs, such as those in retail
sales. We met folks who loved
their jobs, others who couldn’t
wait to leave, and still others
who were let go. We heard
happy stories about a job
where every day is different
and horror stories about abu-
sive customers and unhealthy
working conditions.
Yet even those who loved
their jobs felt the best days
were a thing of the past.
Beyond the declining num-
ber of jobs, job quality has
decreased as well. Throughout
the city, wages have been frozen, benefits cut,
and in some casino houses the work has been
reorganized to remove individual autonomy and
skill. There are fewer opportunities to get to
know the customers, as cutbacks impinge on ser-
vice. New casino owners keep coming and going
through mergers and bankruptcies, leading to
greater responsiveness to debt-holders and other
financial investors focused on short-term gains.
Managers move from casino to casino in a global
labor market.
Consequently, employees feel they are treated
like numbers on an accounting spreadsheet. Every
employee has a number that indicates his or her
rank in terms of seniority, and more frequently it
seems that this is their only identity to upper man-
agement. Manuela (we use pseudonyms), a hotel
housekeeper, was typical when she voiced her frus-
tration with the changing attitudes of manage-
ment: “Now we are only a number. They don’t care
about us no more.” Keith used to take pride in his
work as a waiter in a high-end casino restaurant:
“Initially, it was elegant, beautiful, difficult but
rewarding. It was interacting with people and mak-
ing a good living. All of those things. And interact-
ing with your coworkers, management, feeling
value, all of these things that you would expect to
fulfill your, you know, your sense of person. Now,
here we are, production ... that’s what we are. How
can you produce more? That’s really what it is.”
Ken, a supervisor who has worked in the gaming
››
pits since the 1980s, complained that “now the
Showboat Atlantic
bean-counters are running the corporations instead City, on the
of actually casino management.” boardwalk, closed
While longtime employees are fighting against its doors on August
31, just before
concessions and wage stagnation, younger workers Labor Day.
juggle multiple part-time and seasonal jobs at sev-
eral casinos. The recent introduction of cost- Credit: Stinkie
Pinkie, Creative
cutting practices is making it harder to find full- Commons
time jobs with benefits. As Bernice, a former Attribution Share-
gaming inspector, shared: “Almost everybody at Alike License (via
Wikimedia
the casinos now are part-time workers. That’s sad.
Commons)
Because that was a reason why New Jersey thirty
years ago wanted casinos here. They wanted them
here so people can build up their family life. Now
they got people that can’t even maintain their fam-
ily life.” “The full-time staff is shrinking,” Ken
explained, “and it’s part-time that’s increasing
because they don’t have to pay the benefits. So…
we have part-time dealers, we have seasonal deal-
ers, we have part-time supervisors that only work
two days. They pay them a little higher rate, but
they pay them no benefits at all.”
Isiah, who recently lost his part-time job at
Revel when it closed, is a typical example. He and
his wife, both casino dealers, need three jobs in
order to support themselves and their children.
Isiah was working two jobs, trying to cobble
together enough hours to pay his bills: “Borgata
gives me 24 hours, but I’m allowed to pick up two ››
September/October 2014 l  DOLLARS & sense  l  31
 B light on th e B oardwalk
extra days to reach to 40 [hours per week], if it
becomes available. Revel gives me two days with 16
hours, and allows me to pick up one more day if it
becomes available. During the summer time, it
changes. Borgata gives me 40 hours a week and
Revel gives me 24.” His wife works swing shift so
she can come home and chauffer their children to
their activities during the day. With Revel closed
and thousands of other dealers looking for work,
Isiah worries about money while feeling lucky for
their remaining two jobs.
The casino operators argue that competition
from newly constructed casinos necessitates these
changes in hours, wages, and benefits. Like many
of today’s businesses, they argue that they need
flexibility in order to remain competitive. The ero-
sion of job quality in Atlantic City’s casinos is likely
to spread to other cities as they, too, struggle in a
saturated market. The implications are not promis-
ing for casinos as an economic development tool.
How Gambling Came and What It Left
The market for gambling is a state creation. Back
when the New Jersey Casino Control Act was
enacted in 1977, gambling—whether legal in Las
Vegas or illegal everywhere else—was associated
with organized crime. New Jersey’s highly regu-
lated model of casino gaming helped legitimate the
industry nationally, making it safe for Wall Street
and the rest of the country. Regulating casinos was
thus integral to the normalization of gambling.
State governments frequently promote as well as
regulate the industry, sometimes combining both
functions within the same agencies. Government
planning was, and is, as important as entrepreneur-
ship in the expansion of casino gaming.
Government has nurtured the industry not
simply to generate profits for shareholders, but to
serve particular public purposes. In exchange for
various forms of public support, the casinos are
supposed to benefit the community by providing
good jobs, bringing customers for local businesses,
and using local vendors. But, as the organization
Good Jobs First has documented, development
subsidies, including those provided to the casinos,
are rarely transparent, lack binding requirements
or “clawback provisions” if rosy job creation pro-
jections are not met, and are seldom subjected to
rigorous cost/benefit analysis. They redirect funds
32  l  dollars & sense  l September/October 2014
away from public goods and usually go to large
businesses with lobbying power rather than smaller
local businesses.
Unfortunately, as state and local governments
have seen their coffers diminish—especially dur-
ing the Great Recession and anemic recovery—
generating revenue from casino gaming has
become more of a priority. In some cases, this has
meant greater complicity with cost-cutting strate-
gies as desperate measures to keep the casinos’
doors open and tax revenues flowing. Unfortunately,
cost-cutting measures displace the goal of creating
good jobs. The casino economy needs to be more
than a place to party. If government is going to
play a role in planning for economic development
and job creation, the industries it invests in and
cultivates should provide sustainable livelihoods
and meaningful work for people in their localities.
Supporters of casino gambling, due to their prom-
ise of good jobs, need to heed the cautionary tale
being told in Atlantic City today: Zoe, a cocktail
server at Showboat whose family worked on the
campaign to pass the referendum that legalized
casino gaming in New Jersey, voiced the disap-
pointment that she and others have felt about the
lack of economic development in the casino era:
“My thought on Atlantic City is: they came in and
kind of robbed it for what it was worth and then
left. They built these boxes and put everything
that they wanted inside the box and they wanted
you to stay in the box …. So, the vision that my
family, my mother, thought was going to happen
with casino gambling—that they were going to
bring in and revitalize Atlantic City—was noth-
ing. They did nothing.” D&S
E L L E N M U TA R I is a professor of economics at the
Richard Stockton College of New Jersey. D E B O R A H
M . F I G A R T is a professor of education and econom-
ics at the Richard Stockton College of New Jersey. They
are the authors of Just One More Hand: Life in the Casino
Economy, forthcoming from Rowman & Littlefield.
S O U R C E S : Ellen Mutari and Deborah M. Figart, Just One More
Hand: Life in the Casino Economy (Rowman & Littlefield, 2015); Jennifer
Bogdan, “Golden Nugget Job Fair: Work-Seekers Pack Casino,” Press of
Atlantic City, Feb. 27, 2014; Christopher Palmeri, “Casinos Know When
to Fold ’Em,” Bloomberg Businessweek, April 7-14, 2014; Randall Chase,
“$8M Bailout Proposed for Del. Casinos,” Press of Atlantic City, June 18,
2013; Eileen Appelbaum and Rosemary Batt, Private Equity at Work:
When Wall Street Manages Main Street (Russell Sage, 2014).
< In Review
Debt and Desperation
Down the Up Escalator: How the 99% Live
by Barbara Garson (Anchor Books, 2014)
BY ABBY SCHER
I ’m a member of the Barbara Garson
fan club, and have been since she
published Money Makes the World Go
Around in the 1990s. That’s when she
tracked (more or less) how bankers
invested a $30,000 book advance that
she deposited with them. She talked
with real people, telling their stories as
big finance whipped around the globe
creating havoc.
Now, in Down the Up Escalator: How
the 99% Live, she is once again talking
with real people and telling their stories
as big finance whips around the globe
creating havoc. But rather than feeling
like we’ve heard it all before, Garson’s
deep humanism and cinematic por-
traits bring us close to people we
should know but don’t hear from nearly
enough. Along the way, she brings in
big economic analysis culled from the
Financial Times, economic journalist
Doug Henwood, economist Rick Wolff,
and a series of other left-economics
luminaries to broaden the insights she
finds in people’s own stories.
When the book first came out in the
spring of 2013, it had a different subti-
tle: How the 99% Live in the Great
Recession. That was tweaked for the
paperback issued in January 2014 be-
cause her book actually looks beyond
the official recessionary months of
December 2007 to June 2009 in the
United States to the years since, when
people have not recovered. Those we
meet had somewhat middle-class lives
before losing their jobs, their homes, or
their savings. In the wake of the crisis,
they have experienced an “L-shaped”
recovery, staying in the economic
trough while financiers and stockhold-
ers have enjoyed a “V-shaped” recovery.
“For though the highest level lenders
were relieved of their risks,” writes
Garson, “the ground level borrowers still
owe as much as ever.” Median family
income continued to drop—by almost
5% for white families in the three years
after the recession officially ended, and
by 11% for black families.
We follow the lives of the “Pink Slip
Club,” four single, middle-class New
Yorkers who never really emerge from
The people Garson
follows—members of
the “Pink Slip Club”—
had somewhat middle-
class lives before losing
their jobs, their homes,
or their savings.
the trough of long-term unemploy-
ment by the book’s end. We meet a
memorable Filipino immigrant who
bought and sold properties like crazy
and got caught in the bubble. She now
lives in a trailer with her husband but
still believes she will catch the real-
estate wave to prosperity. Garson sits
and cries with an older African-
American woman in Oakland who
mortgaged her paid-off home to help
her children buy homes of their own,
and got caught in a lender’s run-
September/October 2014  l  DOLLARS & sense  l  33
around. Then there’s the white
Midwestern family Garson meets when
she travels to Evansville, Ind., to inter-
view a young Sirius XM Radio sales-
man who had pitched a contract to
Garson’s husband. “I got his number
for you,” her husband told her. “I fig-
ured anyone selling XM Radio from a
call center had to be doing something
better before the recession.”
“Michael Kenny” (Garson changed
the names of the people she inter-
viewed) lost his job at a small agency
providing day laborers for retailer
warehouses when the agency went
bust. After the recession hit, big box
stores just didn’t need the loading
crews. His fiancée also lost her job,
when the print shop where she
worked went under, but she was
quickly hired by a rival shop. “’Caitlin’
held one of the rare 9 to 5 jobs in her
circle.” Another friend was notable for
owning a car that was paid off. But for
the most part, the dreadlocked
Michael and his friends “have a hippie
ethic not because they dropped out of
socially rewarding careers”—like some
of Garson’s friends in the 1960s—but
because they didn’t have a choice.
Recently, 1,100 people lost their jobs in
Evansville when Whirlpool sent the
work to Mexico. As a local Teamster
told her, “Everywhere I go I hear peo-
ple tell me about $15 an hour jobs that
left Evansville but I only see $7.50 jobs
coming in.” Michael, 28, didn’t know
how to use Garson’s credit card at a
gas pump because he lives without
credit cards himself.
As vivid as Michael’s circle of friends
is, it is Garson’s portrait of his father that
lingers. We see the hollowing out of the
middle class in this man’s story. This is a
conservative guy who is reading Karl
Rove’s Courage and Consequence: My Life
as a Conservative in the Fight when
Garson visits him. He dedicated his ca-
reer to a big box store that is now trying
< In Review

to force him out after 24 years. He played opening, instead of paying people more gap for even a moment. For all our
by the rules, mostly, and attributes his out of the growing revenue generated bruises, we merely went into a deep
longevity on the job to God. “I truly be- over the past decades, corporations pothole and emerged on the same
lieve it’s through the grace of God and offered larger and larger heaps of credit. rough and dangerous road.”
the strength and perseverance he gives And Mr. Kenny bit. “What were you buy- Corporations have written off
me to say the right things to the right ing?” Garson asks. “Just normal expenses. Americans first as workers when they
people.” Now he needs to work from 2:30 We were saying, ‘Why should the two of sent jobs overseas and now even as
in the afternoon to 3:30 in the morning, us be working as hard as we are and not consumers when they tightened ac-
13 hours a day, 4 days a week, and as a be able to afford a decent car or comput- cess to credit. Garson’s book is pitched
manager doesn’t get overtime pay. ers.’ … So you’d put it on your card.” Then to the general reader who will appreci-
Garson takes this opportunity to inform there were their daughter’s health prob- ate her explanations of swaps, deriva-
us that Americans work what amounts lems and, after that, college tuition. But tives, and subprime mortgages. This
to an extra day a week compared to their now that the couple is tithing 10% of can be a weakness for those who want
European counterparts, but Mr. Kenny’s their income to their church, they say a deeper investigation into the more
story tells us more than any statistic. He their financial problems are over. technical understanding of the crisis,
lived the shrinking possibilities of the When people began borrowing but it’s still a great read for those of us
middle class over the last decades, with again, Garson notes, the financial press who need to be reminded of the crisis
each recovery ending with a smaller per- crowed that consumer confidence was at the human scale. D&S
centage of the population in the labor returning. But Garson pointedly asks,
force and middle-class jobs harder and “Is that a sign of consumer confidence A B B Y S C H E R is a journalist and
harder to find. He clings to the job be- or consumer desperation?” sociologist, a former co-editor and
cause there aren’t any others. “Unlike the Great Depression [and a current board member of D&S, and
Mr. Kenny’s story also tells us about decade and a half of labor struggles], an Associate Fellow of the Institute for
middle-class debt. As Garson said in her the Great Recession didn’t narrow the Policy Studies.

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What’s Behind Wage Stagnation
REAL WORLD ECONOMICS PAGE 35

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34  l  dollars & sense  l  September/October 2014

 < Economy in Numbers $

What Happened to Wages?

How Wages Stagnated and Capital Captured Productivity Gains
BY GERALD FRIEDMAN

F rom the dawn of American industrialization in the 19th century until the 1970s, wages rose with labor productivity,
allowing working people to share in the gains produced by capitalist society. Since then, the United States has en-
tered a new era, in which stagnant wages have allowed capitalists to capture a growing share of the fruits of rising pro-
ductivity. The divergence between productivity and wages challenges orthodox economic theory, which expects em-
ployers to bid up the wages of more productive workers. What’s more, the success American capitalists have had in
monopolizing productivity gains undermines the social justification for capitalism: If working people no longer share the
benefits of rising productivity then why should they continue to tolerate capitalist hierarchy? D&S
G E R A L D F R I E D M A N is a professor of economics at the University of Massachusetts-Amherst.
S O U R C E S : Historical Statistics of the United States Millennial Edition Online; Economic Report of the President 2014; Edward Saez and Thomas Piketty, “Income Inequality in the
United States, 1913-1998,” Quarterly Journal of Economics, 118(1), 2003, 1-39; Bureau of Economic Analysis (bea.gov).

Figure 1: Productivity and Wages, 1889-1973

250.0
Productivity and wages used to rise
together. For much of U.S. history,
200.0
wages did rise in tandem with labor
Index 1970 = 100.0

productivity. Briefly, before and after

150.0
World War I, the wages of production
and other workers lagged productivity.
100.0
For 20 years after World War II, they
rose faster than productivity. Only in
50.0
the 1960s, however, did the average
0.0
wages of ordinary workers begin to lag
consistently behind labor productivity.
1889

1895

1901

1907

1913

1919

1925

1931

1937

1943

1949

1955

1961

1967

1973

Output per worker Real wages

Wages have stagnated despite continued Figure 2: Productivity and Wages, 1970-2013
productivity growth. While productivity has

Wages, actual and hypothetical (2013 $)

300.0 $60.00
increased dramatically, average hourly wages
Average wage, if had kept up
have barely kept up with inflation. Total hourly 250.0 with productivity: $47.65 $50.00
compensation (including not only wages but
Index 1970 = 100.0

also the rising cost of employer-provided health 200.0 $40.00

insurance) has increased by just 0.8% a year, still

150.0 $30.00
much less than the 2.0% average annual increase in
labor productivity. This rise in total compensation $20.00
100.0
does not benefit most current workers, since it is
mostly driven by the rising cost of health insurance 50.0
Actual average $10.00
wage: $20.81
and higher Social Security taxes to provide for an
aging population. Had real wages kept pace with 0.0 $0.00

productivity, they would have risen from $19.97/

1970

1975

1980

1985

1990

1995

2000

2005

2010

hour in 1970 (in constant 2013 dollars) to $47.65/

Real hourly wages Real hourly compensation Output per hour
hour in 2013—more than double the actual
average real wage of $20.81/hour in 2013.

September/October 2014  l  DOLLARS & sense  l  35

 < Economy in Numbers

Figure 3: Productivity and Pay for the

Highest-Paid Employees, 1970-2012
900.0
Pay has increased only for those at
the very top. Pay has lagged behind
800.0
productivity for all but the highest-paid
700.0 employees. Even workers at the 90th
600.0
percentile—those whose earnings are
higher than 90% of workers—have fallen
Trillions of dollars

500.0
behind productivity growth. Only for
400.0 employees in the top 0.5% of the pay
300.0
scale has hourly pay increased as much
as average productivity has. For the
200.0 very highest-paid employees—the top
100.0 0.01%, just 13,000 people—pay has risen
much faster than productivity. This group
0.0
includes top corporate executives and
1970

1975

1980

1985

1990

1995

2000

2005

2010
other “super managers.”
Productivity Top 10% Top 1% Top 0.1% Top 0.01%

Figure 4: Productivity and Profits, 1970-2012

Corporate profits have risen faster than labor 350.0

productivity. While workers’ earnings have

300.0
lagged productivity, corporate profits have
grown faster than the rate of productivity growth,
250.0
Index 1970 = 100.0

especially since 2000. From World War II through

the early 1970s, profits rose with productivity and
200.0
wages, and labor and capital shared the benefits
of productivity growth. Since the recession of
150.0
the early 1980s, corporate profits have soared,
reaching new heights in the 21st century. Profits
100.0
have risen faster than productivity as business has
captured productivity gains that in earlier times
50.0
went to labor in the form of rising wages—that is,
business has succeeded in increasing the share of
0.0
the economic “pie” going to profits.
1970

1975

1980

1985

1990

1995

2000

2005

2010
Productivity Profits
Output per hour Real corporate profits per worker hour
Figure 5: Wages, Non-Wage Compensation,
and Profits, 1970 and 2012
60%
A growing share of income goes to profits, health
50% insurance, and paying for retirement. When profits and
the costs of health insurance and pensions (largely Social
40%
Security taxes but also private pensions) increase faster
30% than productivity, it reduces the share of income available
for workers’ wages. Since 1970, the share of income going
20% to wages has fallen by nearly a fifth, dropping by over 9
percentage points—from over half of GDP down to barely
10%
42%; the share going to other forms of labor compensation
0% has risen by almost 4 percentage points, from 7% to 11%;
Wages and salaries Non-wage labor Corporate profits and the share going to corporate profits has risen by nearly
compensation 6 percentage points, from 7% to nearly 13%.
1970 2012

36  l  dollars & sense  l  September/October 2014

< Ask Dr. Dollar
Crony Capitalism, or Plain Old Capitalism?
Dear Dr. Dollar:
Congressional Republicans and the Heritage Foundation are making a big deal
about the Export-Import Bank, calling it “crony capitalism.” Are they right? Does the
ExIm Bank serve a useful purpose, or is it just propping up the profits of trans-na-
tional corporations? —Arnie Alpert, Canterbury, N.H.
B Y A R T H U R M ACE WA N
B y the time you read this, the
Export-Import Bank dispute might
be over—at least for now. But the ba-
sic controversy will not go away.
The Export-Import Bank, created in
1934, is a federal government agency
that supplies loans or guarantees loans
to foreign firms to finance their pur-
chases of U.S. exports. Its supporters
argue that it strengthens the U.S. econ-
omy and creates jobs in the United
States by bolstering demand abroad
for goods produced here.
For the Export-Import Bank to stay
in existence, Congress must reautho-
rize it by the end of September. Its exis-
tence, however, has come under attack
by the anti-big-government forces of
the right. They claim that there is no
justification for the government to pro-
vide this support for U.S. firms. If the
buyers abroad of U.S. goods cannot get
financing for the purchases from regu-
lar banks—i.e., in the “free market”—
the U.S. exporters must be charging
prices that are too high. That is, the U.S.
firms are not effectively competing in
the “free market,” and it is not the job
of government to subsidize their ineffi-
cient operations.
These critics of the Export-Import
Bank claim it is simply “crony capitalism,”
where well-connected firms are able to
get handouts from the government.
This, they argue, is not the way “real
capitalism” should and can function.
For example, in a June 25 editorial titled
“The Ex-Im Bank: Crony Capitalism in
Action” at the National Review Online,
the editors wrote that the Bank “hands
out generous loans and credit guaran-
tees to a select number of corporations
[and] is corrupt and poorly managed.
$?
the same way very large firms always get
support: by spending money to influ-
ence elections and gain access to gov-
ernment officials and by using their pow-
er to create the belief that what’s good
for their profits is good for the economy.
…The bank has a long history of deal-
Whether it is via this Bank or through U.S.
ing with dodgy firms and doling out
ambassadors around the world and vari-
suspiciously large amounts of loans to
certain companies.”
The Export-Import Bank has long
ous government-led “trade missions,” the
U.S. government has long promoted
sales by U.S. firms abroad.
been supported by the establishment
Rather than “crony capitalism,” this is
of both the Republican and Democratic
“real capitalism,” the way the system
parties. Helping business sell goods
regularly works. Consider, for example,
abroad, they have argued, is a good
lax regulation of financial firms, subsi-
way to create jobs in the country. The
dies to fossil-fuel firms, or patent rules
Bank’s supporters argue that foreign
that treat pharmaceuticals so favorably.
governments provide similar subsidies
The right-wing arguments against the
to their firms, and thus we must provide
Export-Import Bank could just as well
subsidies to our firms so they can effec-
be applied in these and many other
tively compete. They frequently cite the
cases. The so-called “crony capitalism” of
support that European governments
the Bank cannot be so easily carved out
provide to Air Bus, the primary compet-
from the operation of real capitalism.
itor of the U.S. firm Boeing. (Back to
The right-wing attack on the Export-
Boeing in a moment.)
Import Bank focuses attention on the
The Export-Import Bank also touts
way real capitalism works. It also reveals
itself as a supporter of small business.
the division among conservatives. The
Yet its support in fact goes mostly to a
Republican establishment has long bal-
few large firms. In 2013, the Bank made
lyhooed the “free market,” while making
loan guarantees totaling $12.2 billion,
sure the government has provided plen-
of which $8 billion, 65%, were for pur-
ty of support for big business. There are,
chases of goods from a single company,
however, many conservatives who seem
Boeing; another 8.2% of the guarantees
to be true believers in the “free market.”
went to finance the exports of the giant
These two groups have long managed
engineering firm Fluor.
to stay together, promoting a common
Of the $6.9 billion in direct loans
rhetoric. For better or for worse, the
that the Bank provided in 2013, 81%
crack in the conservative political bloc
went for purchases from just five
represented by the Export-Import Bank
firms—Bechtel, General Electric,
dispute may portend some major politi-
Applied Materials, Fluor, and Komatsu
cal changes. D&S
America. The total direct loans and
guarantees of about $19 billion is tiny A R T H U R M A C E W A N is professor
(less than 1%) compared to the United emeritus of economics at UMass-Boston
States’ total 2013 exports of about $2.3 and a Dollars & Sense Associate.
trillion. Still, they are important for
Boeing and these other firms. Questions about the economy?
But the Export-Import Bank’s support Ask Dr. Dollar!
for these large firms is not “crony capital- Submit questions by email (dollars@
ism.” The firms are not getting support dollarsandsense.org) or U.S. mail
(c/o Dollars & Sense, One Milk Street,
because their CEO’s relatives or friends sit
Boston, MA 02109).
in Congress. They are getting support in
September/October 2014  l  DOLLARS & sense  l  37
< 40th Anniversary Excerpt
$
2006
International Solidarity: It’s Still a Good Idea

I KEEP
ncreasing linkages between national economies—growing international trade, investment, and
migration—pose new challenges for the working class. Even in countries where workers have strong
traditions of labor solidarity, what happens when they are suddenly thrust into a brave new world of
global labor competition? Will they extend the bounds of solidarity to include workers in other countries,
or immigrant workers from other countries? Or will they view “foreign” workers as the enemy, adopting a MAKING
SENSE
defensive crouch grounded in nationalism and nativism?
Dollars & Sense has consistently championed the broadest international solidarity—as both the
strongest tactical course to confront globalized capital, and as the only principled course equally valuing
workers from all countries. Here, we have two anniversary pieces highlighting this internationalist D&S@40
perspective: Esther Cervantes’ article on undocumented immigrants and the U.S. labor market (May/June
2006) proposes a future of labor struggle harkening back to the Industrial Workers of the World’s vision of “one big union.” Meanwhile,
Nick Thorkelson’s cartoon “Borderline Neoliberalism” (Sept./Oct. 2000, excerpted opposite) sketches a response to capital’s “flyover”
across international borders—a bridge between the workers of different countries, and a handshake of solidarity. —Eds.

D&S, May/June 2006

take a good look at the familiar asser-
tion: Undocumented workers do the
jobs that Americans won’t do.
Undocumented workers take jobs at
the low end of the U.S. wage scale,
sometimes falling beneath the official
minimum entirely. U.S. citizens won’t do
these jobs because they don’t pay well
enough to support a family in the United
States. However, the extreme poverty of
the undocumented population’s home
countries lends these low-paying jobs in
the United States a certain appeal. From the full “Borderline Neoliberalism”
Meanwhile, black and Latino U.S. citizens by Nick Thorkelson (Sept./Oct. 2000)
also cluster, though not as tightly, in low-

C ongress and the streets are abuzz

with talk of immigration policy re-
form. Militias patrol the Mexican border
under the aegis of national security, and
the House decides that helping the
undocumented should be a felony.
Meanwhile, hundreds of thousands
march for amnesty, and contractors tell
newspapers that the undocumented
are essential to their business. The pres-
ident proposes a guest worker pro-
gram, which Senators John McCain
(R-Ariz.) and Ted Kennedy (D-Mass.)
counter with a version of their own.
The labor movement is divided on the
issue of guest workers: The Service
Employees International Union (SEIU)
backs the idea, while the AFL-CIO does
not. It’s clear that the economy is the
elephant in the corner, and it’s time to
wage occupations, bear more unem-
ployment than whites, and suffer pover-
ty without the undocumented worker’s
light at the end of the tunnel. How might
we make this situation tenable?
Some critics of the various immigra-
tion reform proposals complain that po-
licing employers to crack down on un-
documented hires would be impractical
and expensive. There is, however, an eas-
ier, less expensive, and time-tested alter-
native: unionization. In this, so far it’s the
AFL-CIO that’s leading the way. SEIU ac-
cepted guest worker proposals with the
idea that regulating the flow of tempo-
rary workers would at least give immi-
grants the protection of health and safe-
ty laws and the right to switch jobs. But
AFL-CIO President John Sweeney im-
plied that this doesn’t go far enough.
“Guest worker programs are a bad idea
and harm all workers,” he wrote, by en-
couraging employers to turn good jobs
into temporary ones and removing none
of the current incentives to exploit for-
eigners willing to accept low wages and
bad conditions.
Now the AFL-CIO needs to take a
cue from the Industrial Workers of the
World (IWW): “the working class knows
no borders or races, but exists wherev-
er workers are exploited for the benefit
of capital.” Whether as undocumented
or guest workers, the poor of other
countries will continue to pose prob-
lems for workers in more prosperous
countries, unless they organize togeth-
er to solve the problems of poverty,
inequality, and exploitation—prob-
lems that know no borders. D&S

38  l  dollars & sense  l  September/October 2014

September/October 2014  l  DOLLARS & sense  l  39
 Levy Economics Institute
Master of Science in
Levy
Levy Economics
of
Economics
Institute
Institute
of Bard
Bard College
College
Economic Theory and Policy

A highly selective and innovative program providing students in economics

and finance with exceedingly marketable skills in applied empirical research
and policy analysis, and unrivaled access to the Levy Institute’s global
network of scholars. Need- and merit-based scholarships are available.

Early Decision deadline with scholarship preference: November 15

Regular Decision deadline: January 15

For more information, visit www.bard.edu/levyms

or contact us at levyms@bard.edu.