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Bernie Sanders’s Union Problem

Karl W. Smith

(Bloomberg Opinion) -- The labor troubles of Bernie Sanders’s presidential campaign have provided economic conservatives an opportunity for some schadenfreude, and they have taken it. But the campaign’s labor strife does expose a flaw in the candidate’s economic thinking: Sanders argues that unions, strict labor regulation and a high minimum wage will work to counteract the power of the billionaire class. These policies are most burdensome, however, on small organizations.

One complaint issued against the Sanders campaign was that the long hours of salaried workers pushed their pay to below $15 an hour. All the major Democratic candidates, Sanders included, support a $15 an hour minimum wage. 

Some critics (myself included) have suggested that a national minimum-wage policy would ignore the diversity of employer-employee relationships in the U.S. economy. Not all workers are breadwinners trying to provide for their families. Many are young people, primary caregivers looking for side income, or maybe workers with something in their past — disability, drug abuse, incarceration — that would otherwise make employers reluctant to hire them.

All of these people deserve the opportunity to both earn money and gain a foothold in the labor market. For some of them the alternative to low-paying, part-time work is no work at all.

Now, this situation probably doesn’t apply to campaign staff members. Yet the chance to work for campaign in which you deeply believe, before the pressures of family and a mortgage take hold, is a once-in-a-lifetime opportunity for many of them. The Sanders campaign, moreover, is not a multibillion-dollar corporation awash in profits. In fact it shares many of the features of startup: It’s a small, scrappy organization trying to stretch every dollar in an effort to change the world. It depends, for its survival, on money coming in from those who are invested in the founder’s vision.

All three of these stakeholders — staff members, campaign officials and donors — want the most effective campaign possible. Yet a minimum-wage requirement can make that difficult. To adhere to that requirement, the Sanders campaign didn’t increase its workers’ pay, but rather decreased their hours.

That hurts almost everyone: the campaign and the donors, who both get less bang for the buck; and staff members, many of whom would like to work more. Just as important, not everyone who wants to work on the Sanders campaign has a chance to. There are probably young people who would jump at the chance to work long hours even if it meant they made less than $15 per hour.

Which brings up a second problem with minimum wages, collective bargaining agreements and labor regulations: They create an insider-outsider dynamic. The union reportedly rejected a proposal by the campaign to raise workers’ pay, instead asking the campaign to cover more of their health-care costs. Robust benefits — including health care — are a common feature of collective bargaining agreements. They also make each employment decision more consequential.

Taking a worker on entails a significant commitment. That encourages employers to screen prospective employees more carefully, and gives an advantage to those with strong resumes over those who may be just starting out. Indeed, most collective bargaining agreements have detailed rules about when and how existing workers can be terminated.

Arcane rules and good pay are a boon to unionized workers with seniority. But they’re an obstacle to employment for everyone else.

Lastly, and perhaps most relevant politically: That the Sanders campaign is having labor troubles is evidence that not all employers who oppose unions do so out of greed. The vast majority of businesses are operating in a competitive environment where their success and that of their workers are linked. Larger, more profitable companies tend to pay their workers better even when there isn’t a union.

The forces of globalization and technological change have been rough on the working class in the U.S. and most of the developed world. This fact cannot be denied or ignored, and Sanders is right to emphasize it. Where he is wrong is in insisting that labor regulation, higher minimum wages and stronger collective bargaining agreements will expand opportunity for those who need it most. Policies such as wage subsidies and income credits for those raising a family offer a far better way to help American workers.

To contact the author of this story: Karl W. Smith at ksmith602@bloomberg.net

To contact the editor responsible for this story: Michael Newman at mnewman43@bloomberg.net

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Karl W. Smith is a former assistant professor of economics at the University of North Carolina's school of government and founder of the blog Modeled Behavior.

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