A Country That Works: Getting America Back on Track

Overview

Andy Stern, one of the most visionary leaders in America today, has fought relentlessly to ensure that Americans' hard work is rewarded in today's hypercompetitive, globalized world. As the newsmaking president of the fastest-growing, most dynamic union in America, he has led the charge for modernizing the "house of labor" — taking unions out of the past and into the twenty-first century. He has spearheaded the campaign against the "Wal-Marting" of jobs and has innovated transformative solutions to the daunting ...

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A Country That Works: Getting America Back on Track

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Overview

Andy Stern, one of the most visionary leaders in America today, has fought relentlessly to ensure that Americans' hard work is rewarded in today's hypercompetitive, globalized world. As the newsmaking president of the fastest-growing, most dynamic union in America, he has led the charge for modernizing the "house of labor" — taking unions out of the past and into the twenty-first century. He has spearheaded the campaign against the "Wal-Marting" of jobs and has innovated transformative solutions to the daunting problems facing Americans, from job insecurity to runaway health care costs. In this powerful critique and call-to-arms, he offers a revelatory dissection of the gathering threats to our standard of living — threats that our politicians have failed utterly to address — and he puts forth a bold, unassailable plan for making vital reforms.

In his eye-opening diagnosis that makes the urgency of the threats vividly clear, Stern shows that Americans are contending with the most disruptive economic upheaval in the world economy since the Industrial Revolution. Yet, in the face of this daunting challenge, the American system simply isn't working well enough for most of us. Stern powerfully portrays how with the pace of globalization relentlessly quickening, the competitive pressures on our jobs and quality of life are heating up even more, especially as housing, health care, and oil prices skyrocket. While CEO salaries soar and business and the wealthy are handed plentiful tax shelters, the incomes of both white-collar and blue-collar workers stagnate, leaving most Americans struggling to pay off ever-escalating debt, instead of saving for retirement. The plain fact is that our system is out of whack, serving the interests of the top sliver of the most wealthy while putting the squeeze on the rest of us.

Meanwhile, our politicians irresponsibly sidestep the crucial solutions that we so desperately need in order to make sure Americans can move into the twenty-first century with their futures secure. As Stern so persuasively shows, it is time for bold thinking and creative solutions to overhaul a health care system in crisis; correct a tax system rigged in favor of business and the wealthy; revamp our inadequate retirement system; and make truly innovative improvements in education. He presents a set of course-correction reforms so compelling, simple, and achievable that readers will find themselves enraged that they haven't yet been enacted. Americans have a right to expect our government to work for us. Andy Stern shows how we can get things back on track to make sure it does.

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Editorial Reviews

From the Publisher
"The future of the American dream may lie in the hands of Andy Stern and his bold vision for reform. Read A Country That Works to understand the forces that split the American labor movement in 2005. Or read it for a glimpse into the heart of a man who has devoted his life to the struggle for a better deal for American working people. Either way, be prepared to throw out all your stereotypes about 'big labor' and embrace a vital agenda for change." — Barbara Ehrenreich, author of Nickel and Dimed: On Not Getting By in America

"Andy Stern has written an important book that reveals the alarming facts about how our government is failing to meet the challenges of globalization and putting America's future at risk. His bold vision for reform is a call to arms that should be read by all Americans." — George Soros, financier and philanthropist

"Andy Stern's A Country That Works provides a practical, cooperative approach to cultivate healing and economic growth in America, written by a man who is deeply committed to the potential of both this country and its workers. Stern's strategy of adaptive cooperation would restore the American Dream to employees and employers alike, rewarding those who share a deep-seated belief in equity and community — the values that built our great nation." — Donna L. Brazile, former campaign manager for Gore for President 2000, author of Cooking With Grease: Stirring the Pots in American Politics

"I'm 28, and this is not the world that I or my friends expected when we were growing up. I found this book remarkably useful in thinking about the value of work in America. While there are a lot of books that decry inequality, attack corporate corruption, or criticize freemarket fundamentalism, rarely is the author someone who has 30 years of experience creating change for millions of workers. Stern presents a vision that is based on years of institutional struggle and a practical sense of the grand scope of what is both necessary and possible." — Matt Stoller, President of BlogPac and blogger at MyDD

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Product Details

  • ISBN-13: 9780743297677
  • Publisher: Free Press
  • Publication date: 10/3/2006
  • Pages: 224
  • Sales rank: 920,187
  • Product dimensions: 5.80 (w) x 8.60 (h) x 0.80 (d)

Meet the Author

Andy Stern is president of the Service Employees International Union (SEIU), the largest and fastest-growing union in the United States and Canada. In July 2005, to more effectively represent workers' interests in the twenty-first century, he led his union, along with the International Brotherhood of Teamsters and several others, out of the AFLCIO to start the Change to Win federation, the first new labor movement federation in fifty years. Stern is the leader of a number of successful, trailblazing campaigns to value and reward the work of America's workers. He was a key strategist in the creation of Wal-Mart Watch, a campaign to push for better work conditions and health care benefits for the company's employees. Stern also helped to found America Votes, a coalition of many large-membership organizations whose goal is to increase voter participation. He is a graduate of the University of Pennsylvania, and he lives in Washington, D.C.

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Read an Excerpt

Chapter One

A Country That Doesn't Work

Does it feel like our country isn't working as well as it should for you and your family? Does anyone understand the challenges facing us? When did our incomes start to stagnate? Why are most Americans working such long hours? When did our lives become so crazed?

Late one night while watching CNN, I noticed a network ad for "multiple simultaneous news streams right at your desk." I assumed that was meant as an enticement, but I wondered, Do I need multiple news streams? And the answer was, I don't think so.

That led me to ponder twenty-four-hour news channels, BlackBerries, podcasts, Web streaming, blogs, 24/7 news, e-mail alerts, cell phone calls, text messages — all available while I'm sitting at my desk or driving in my car, remarkably, almost anywhere in the world. I have become addicted to information and want to be plugged in all the time. Yet how much can the human brain continuously absorb?

Our world is fast and merciless. The constant flow of information, this world of nonstop stimuli, is not only physically and emotionally exhausting, it is transforming the quality of our lives. Life is getting faster and faster:

  • The number of phone calls made in the world in 1983 are now made in less than a day.
  • Estimates show that nearly 84 billion e-mails are sent every day in 2006. This is double the volume of 2003, and more than 8 times the number for 2001!
  • The entire world's manufacturing output is ten times higher than it was in 1950.

We live in a time of instant communication: instant messaging, instant access, and instant replay. This warp-speed change has consequences for all aspects of our lives, but particularly for the fabric of our personal relationships. Like many people, I like instant communications, but there are moments that we don't want to take only an instant. Like the time spent with a spouse, partner, or kids. Yet, more and more, people are losing the ability to savor their lives. They're working so hard, putting in longer and longer hours for less pay. In fact, Americans work harder than anyone else in the industrialized world. The average full-time worker spends forty-nine hours per week at work and only two hours relaxing.

Something as simple as a conversation with one's spouse becomes a luxury. Family members are like ships passing in the night — or in the driveway. Parents lead transactional lives where they trade off kids and errands in a "tag, you're it" game: You take the kids to soccer, I'll get the oil changed.

Two-thirds of Americans who work forty hours per week report being stressed, leading to inefficiency and absenteeism costing America $300 billion a year. Meanwhile, we're making less. Economists spend a lot of time measuring just how far real wages are falling for the typical worker, and just how much the cost of living is increasing. Consider these troubling findings:

  • The median income for nonelderly households fell more than $2,572 from 2000 to 2004, a drop of 4.8 percent.
  • The costs of medical care, housing, and food have seen double-digit increases from 2001 to 2005. Gasoline, fuel, and oil prices rose 43.7 percent over the same period.
  • Families have had to take on tremendous amounts of debt in order to keep up. As of September 2005, the total U.S. household debt stood at 121 percent of yearly disposable income.

We have national debates about these problems; we write op-eds and testify on Capitol Hill. The problems don't necessarily get fixed, but they are discussed. Meanwhile, these other costs — of time, leisure, relationships — are on everybody's mind but nobody's agenda.

How can you quantify the distance that develops between you and the people you love the most? How many stories have you heard about kids who throw their parents' Palm Pilots, Treos, or cell phones into the toilet or a bathtub full of water? Who's counting the number of months since you last sat down with your spouse or kids and talked — not about the logistics for tomorrow, but about life? It can't be quantified, but it's a high price to pay.

We share a basic human need to love, play, and relax in one another's company. But what we value as individuals has to be reinforced by what we value as a society. Those are the family values America needs to preserve, and it will not happen by accident, or by the workings of the market, or by fate.

THE NEW FACTS OF LIFE

America is a gift. For generation after generation, from every corner of the earth, people have come to America's shores expecting to work hard, hoping that their work would be valued and rewarded. And, more significant, Americans have expected that their children would be better off economically than their parents.

The American Dream has helped create an economy and a middle class that has been the envy of the world. And remarkably, despite the Civil War, World Wars I and II, innumerable natural disasters, recessions and depressions, the emergence of an industrial economy, massive changes in technology, and the leadership of forty-two very different presidents, the American Dream has been preserved. That has been the greatness of America.

But profound changes and new forces are now threatening the American Dream. We no longer live in our parents' or grandparents' economy. According to Charles Fishman, author of The Wal-Mart Effect: "In 2003, for the first time in modern U.S. history, the number of Americans working in retail (14.9 million) was greater than the number . . . working in factories (14.5 million)." Our country, joined by the rest of the world, is experiencing the most profound, the most transformative, the most significant economic revolution in world history.

This Is Not My Parents' or Grandparents' Economy

Over the course of history, the world has undergone three major economic revolutions. The first, the agricultural revolution, began when individuals stopped hunting and gathering for survival and established farms and communities. That economic transformation took nearly three thousand years.

The second revolution, the industrial revolution, occurred when people left their farms for factories, and their rural communities for urban ones. That transformation took three hundred years.

We are experiencing the third economic revolution now as America transforms itself from a mass-production and industrial economy to a knowledge, networked, service, and finance economy, and from a national to an international marketplace. This transformation may last a mere thirty years. This revolution is globalized, Googlized, televised, on our screens and in our faces 24/7. It is relentless, unyielding, and disorienting, and its full impact is only now beginning to be understood.

The problem with this revolution is that today's economy is not working for most Americans. For too many of us, life is spent just trying to catch up, instead of striding forward. Workers may not have degrees in economics, but they are experts on the subject of their own lives. The Washington Post regularly asks Americans what they think of the economy. They have emphatically expressed for five years in a row (2001-2005) their anxiety over their deteriorating financial situation. A majority of the respondents say that the economy is either "not so good" or "poor." In a recent survey conducted by Parade magazine, eight out of ten Americans said they do not have much left to save after they have paid their bills. Seven out of ten middle-income Americans report living paycheck to paycheck some or all of the time. Discouragingly, parents are losing hope in the American Dream. Fully 52 percent of voters expect their children to be worse off financially than they are. Just one out of five voters expects the next generation to be better off than they are.

This is a question not just of Americans' perceptions but of their reality. Our credit-card debt is at an all-time high, and our savings rate is the lowest it has been in over seventy years.

  • In the years from 2001 to 2004, productivity increased 11.7 percent, though median income grew only 1.6 percent.
  • More women were predicted to file for bankruptcy in 2005 than will graduate from college.

The Days of "One Job for a Lifetime" Have Come and Gone

At one time, workers went into the job market expecting to find a job at a big company — GM, IBM, AT&T — or the local plant, mine, mill, or diner, and to remain working for the same employer until retirement. No more. By 2010, 25 percent of all jobs are expected to be contingent, meaning that the workers who hold those jobs will lack the rights of regular employees, or even any expectation of long-term employment. One recent study showed that baby boomers, on average, held 10.2 jobs from ages eighteen to thirty-eight.

Creative Destruction of Employers

Joseph Schumpeter, an influential, Austrian-born Harvard economist from the midtwentieth century, described the essential element of capitalism as the process of "creative destruction." From time to time, creative destruction revolutionizes the economic structure from within. An innovation comes along that changes the economic system and in the process destroys the old ways of doing things.

We live in such a time, and it is not just employees bouncing around among employers. Companies are undergoing a whirlwind of reconfiguration. They are created, merged, taken private, made global, joint-ventured, spun off, and forced out of business or out of the country in increasingly short time intervals.

The products Intel creates at the end of one year's business cycle were not even on the drawing board at the beginning of that year. In my lifetime, I have witnessed the transformation of a telephone monopoly — AT&T — into a vast set of competing telecommunications empires where conglomerates continually merge and reinvent themselves by adding wireless and broadband services, expanding customer bases, and bundling discounted services. Now, with content and delivery converging, mergers of entertainment and media technology are on the horizon.

According to the authors of Creative Destruction, Richard Foster and Sarah Kaplan, "If history is a guide, over the next quarter century no more than a third of today's major corporations will survive in an economically important way."

The bottom line: In the next two to three decades, two-thirds of our nation's major corporations will no longer play a major role in our economy. That is a lot of change. So, if you are counting on your employer to be around for your entire career, think again.

AMERICA'S NOT WORKING

These new facts of life are creating a country that doesn't work for most Americans. A number of trends are accelerating, which — for better or worse — are not going away and need to be addressed.

Income Inequality Is on the Rise

As Federal Reserve Chairman Alan Greenspan said before the Joint Economic Committee of Congress on June 9, 2005, "[inequality] . . . is not the type of thing which a democratic society, a capitalist democratic society can really accept without addressing . . . it threatens democratic capitalism." Who would have thought that Greenspan would become an economic class warrior?

Perhaps Greenspan was convinced by the data. After World War II, Americans grew wealthier together. From 1947 to 1979, the bottom 20 percent of family incomes doubled, and so did the top 20 percent. As the economy grew, everybody benefited. But this is no longer the case. The rich keep getting richer: between 1979 and 2003, the average member of the top 1 percent of wage earners saw his or her after-tax income increase by 129 percent. That translates to a raise of over $395,000 over those 25 years. But the bottom 20 percent is still stuck in 1979 — their average income rose by only 4 percent, a paltry $600 over those 25 years. That is an unacceptable divide.

  • If the minimum wage had increased at the same rate as CEOs' salaries since 1990, it would be $23.03 an hour, and the average production worker would be earning an annual salary of $110,000.
  • Median pay for the CEOs of the top hundred largest companies rose fully 25 percent to $17.9 million from 2004 to 2005. The typical American worker's pay increased only 3 percent.

In a recent column in The New York Times, Paul Krugman wrote that "rising inequality is driven by the giant income gains of a tiny elite, not the modest gains of college graduates." Even notable pro-business moderate and conservative columnists are shocked by what they see. The conservative economist Ben Stein recently wrote in The New York Times: "This is a country at war. For men who are already billionaires to look for more billions by firing hard-working middle-class employees or demanding they take a pay cut is not the kind of thing that unites a nation. I'm a devout capitalist, but this is just plain ugly." And, again, from Ben Stein:

For centuries, the idea has held that the stockholders own the company . . . But what has happened is that — as in a corrupt, failed third-world state — the trustees in too many cases are captives of the CEO and his colleagues; they owe both their places on the board and their emoluments to the chief executive, and they exercise no meaningful restraint at all on managers. The directors are instead a sort of praetorian guard, protecting management from its real bosses, the stockholders, as management sucks the blood out of the company.

I am by no means saying this is the standard or the usual way business is done in this country. Most managements are still honest and hard-working, I believe. But far too many are simply in the catbird seat to take what is not decently theirs from people who cannot afford to be taken.

Our country cannot sustain its social fabric, rich heritage, and social stability — and support the American Dream — if economic rewards flow only to executives and shareholders and not to American workers.

Guaranteed Pensions Are No More

Another dysfunction of our economy today is that employers are no longer funding pensions, and the employer-provided guaranteed pension system is dying. IBM, famous in years past for guaranteed retirement security as well as lifetime employment, has retracted its guarantees. GM, an innovator in definedbenefit pensions, has frozen pensions for its white-collar workers, and Sears, Aon, Hewlett-Packard, Motorola, and United Airlines have all ended their plans.

The public sector is now following suit. Michigan's and Alaska's newly hired employees are not eligible for their state's existing defined-benefit plan, and twenty states have introduced legislation to cut or freeze pension contributions, or replace defined-benefit with 401(k) self-managed direct-contribution plans.

More and more employers are instituting new rules whereby they make contributions to employee 401(k) accounts, but the amount of those contributions can be adjusted, or terminated, at any time. There is no guarantee of employer contribution to employee retirement income.

As recently as 1980, 84 percent of workers in large companies enjoyed guaranteed pension benefits. Today, Americans are working their way into a retirement crisis of unprecedented proportion. Financial advisers generally recommend that we'll need retirement income that's at least 70 percent of our pre-retirement income in order to live comfortably, with financial security. But most workers ages twenty-five to forty are on track to replace only 55 percent of their pre-retirement income. Two out of ten retirees today have no other source of retirement income than Social Security, and too many of them are struggling. Meanwhile, less than 29 percent of workers under thirty-four receive any retirement benefit at all from their employers. Consider these chilling facts:

  • Five out of ten men and six out of ten women say they have little or no money left after paying bills to save for retirement.
  • A little over half of all workers report that the total value of their savings and investments, excluding their primary home, is less than $25,000. Only 23 percent reported total savings over $100,000.

Those who need to save more aren't going to just be able to start doing so miraculously. In fact, most Americans are now laden with record debt. In 2005, the United States had a negative savings rate for the first time since the Great Depression. If families continue to file for bankruptcy at the rates they have been recently, then by 2010 nearly one in seven families with children will have done so.

Already we are seeing more and more Americans age sixty-five and older who must keep working. In 2006, there were 15 million more workers over age sixty-five in the workforce than there were ten years ago. That's a 40 percent increase: astonishing.

  • According to the Congressional Budget Office, only half of baby boomers will accumulate enough wealth over their working lives to retire when they plan to and maintain a similar standard of living.
  • According to surveys conducted by AARP, 57 percent of workers age fifty to seventy plan to work into their seventies; 23 percent plan to keep working into their eighties or "as long as they can."

The current talk in Washington about solving these problems focuses on creating opportunities for tax-sheltered savings, either by increasing access to 401(k)s and Individual Retirement Accounts. The idea is to offer incentives to save more. But the hard truth is that those incentives have thus far produced the opposite effect, actually increasing debt. Americans cashed out $458 billion of home equity between 2001 and 2004, in large part because they needed the money to support their families. We own less of our homes than we did thirty years ago. It's no wonder that the number one New Year's resolution for Americans is not to lose weight or quit smoking — it is to get out of debt.

The old retirement formula — no monthly housing payments, combined with sizable pension payments and withdrawals from personal savings to supplement Social Security — is shot. I recently sat in a departure lounge with three pilots from United Airlines whose pensions were terminated and listened as they swapped stories with passengers of dreams of early retirement replaced by fears of lifelong employment. Do we really want our airplane pilots working into their old age?

The Health Care System Is Dying

One of the most pressing crises is health care. I first met Brooke Gurley at a Labor Day 2003 rally with presidential candidates. Brooke is a nurse and a single mother. I asked her how she managed to make the time to work as a volunteer on our health care campaign while also working her long shifts and raising her kids. She said she didn't have it as bad as many others, and told me this story:

Last week I treated a woman in her forties. She grew up without health insurance which is probably why in the first place she developed Type 2 diabetes. But without insurance her illness went untreated and therefore unchecked until she lost the complete use of one of her eyes. She began treatment to stabilize her condition but without health insurance she could not keep paying for it.

The patient had returned to the hospital and was diagnosed with renal failure. Brooke thought this woman had only one or two years to live. Recently, she called to let me know the woman had died. She died because she was poor. In the richest country on earth, no one should die because he or she is poor.

The American employer-based health care system is the perfect storm: Costs are exploding, coverage is eroding, and quality is deteriorating. American workers don't need Washington policy makers to chart the consequences; they live them. Employers faced with increased costs are cutting benefits significantly. A total of 45 million Americans have no health insurance at all. Eight out of ten of those Americans are in a family with at least one working family member. Most Americans, excepting only the very wealthy, grasp the magnitude of the threat, that economic insecurity is only one major illness away.

  • In the past twenty years, the number of families declaring bankruptcy because of a health emergency has gone up 2,000 percent.
  • A recent study reported that half of personal bankruptcy cases were connected to medical bills.
  • According to a recent McKinsey & Company study, by 2008 the average Fortune 500 company will be shelling out as much for health care as it takes in as profit.

Employers are laying off full-time workers and replacing them with part-time workers and outsourced contractors to evade health care responsibilities. Workers, even those who work for profitable employers, are being pushed onto taxpayer-funded state Medicaid plans or face increased copays and deductibles. Hospitals now face a new and growing trend of unpaid bills from the insured. Even nonprofit hospitals are resorting to unacceptable practices because they are under enormous financial pressure.

While trying to organize the workforce at a large urban hospital, a nonprofit with the legal responsibility to provide charity care in exchange for its tax-exempt status, Service Employees International Unions (SEIU's) researchers learned that the hospital was ruthlessly collecting bills from uninsured patients in Tony Soprano fashion. One retired patient had been trying to pay off his late wife's hospital bills, but over the years he came to owe more than the original charges in interest. His original obligation to the hospital of $18,740 had mushroomed with interest to a total bill of $55,000 — forcing him to live his twilight years in poverty. Despite having worked his entire adult life, the patient had no health insurance. The hospital pursued him for payment for twenty years. As a result of an SEIU public relations campaign and the intervention of the state's attorney general, his debt was wiped out, as were the debts of many other patients similarly taken advantage of.

Survey research confirms that, across the board, workers and business owners alike describe health care costs as their top economic threat.

Employers are right to be concerned about the effect of health care costs on their competitiveness. In a global economy, American businesses are handicapped by shouldering the burden of America's broken health care system. It defies today's economics to expect American manufacturers, such as automakers, to compete for market share when the price of health care adds fifteen hundred dollars to the sticker price of a new car, while across the border in Canada and in other industrialized nations the cost of health care is not added directly to the product's price. The business community must admit the employer-based health care system simply isn't working; we need a universal health care system.

Employees and Employers Are Getting Divorced

Americans do not need a marriage counselor to help them recognize the telltale signs of the breakup of their long-standing relationship with their employers. Loyalty and the old social contract are becoming passé. Increasing rates of self-employment and contingent, home-based, part-time, and contract work are all signs of the untying of the employment matrimonial knot. The shift in responsibilities for retirement income to the worker is the most glaring manifestation, but employers are also shedding responsibility for health insurance, training, employment security, and pay increases based on seniority. Workers now see job switching as the best way for them to learn new skills and get promotions and raises.

The pain of the divorce is felt most acutely by American workers, as they try to find their footing in a new economic world. Self-managed work lives — where we're so much more in charge of steering the course of our careers — are the aftermath of the divorce. So, where are the personal trainers to counsel and guide us through this new terrain? Some institution — the government, unions, employers — must take on this new role of safely charting a course for workers to manage their work lives. More on that later.

WHAT DOES A LABOR LEADER KNOW ABOUT THE FUTURE?

I can only imagine what might be said about this book: A labor union leader talking about the future . . . Isn't that an oxymoron? Aren't they all stuck in the past?

I have spent thirty-three years of my life working in the most historically vital institution for American workers — the labor union movement. As president of the Service Employees International Union (SEIU), which represents janitors, providers of home health care and child care, security workers, and public-sector and hospital employees, I reluctantly led my union out of the AFL-CIO, the national federation of unions. SEIU made that decision because we believe all unions must change to do a better job of confronting the challenges facing American workers. Reform was the only way forward.

As the president of SEIU, it's my job to watch out for the threats that confront our members — and all American workers — and to find solutions to improve their lives. So I've studied the current failures of the American economy a good deal. I have also seen the remarkable power of the mobilization of people behind a cause to make significant change. I've been blessed along the way in my career to meet Angenita Tanner from Chicago, Illinois. Angenita earned a degree in early childhood education and became a family child care provider: "I watch over these kids like they're my babies so their parents can go to work knowing their kids are cared for, loved, and safe." Angenita and forty-nine thousand other child care providers toiled for ten years before they were able to form a union — their victory sparked a movement that has spread to ten states.

I witnessed the courage of Mirna Blanco, a janitor from Houston, Texas, who worked a four-hour shift five nights a week for one of America's largest cleaning contractors. Every night, she cleaned twenty-nine offices, two hallways, and numerous bathrooms — for $20.60. Mirna and her five thousand Houston co-workers decided to stand up for their families, and won union recognition in one of the largest private-sector victories in the history of the South.

Through their unions, Angenita, Mirna, and tens of thousands of other workers have found their voice, united their strength, and improved millions of lives. Unions rewrote the old rules of work by winning the eight-hour workday, minimum wage, Social Security, and Medicare. These successes helped to create the greatest middle class in the world and raised the standards of all American workers.

After the Great Depression, American society agreed on an unwritten social contract that "a rising tide," as President Kennedy said, "lifts all the boats" — and he wasn't talking just about luxury liners. Economic growth, increased productivity, and rising profits translated into improved living standards for most Americans. We prospered together. When the market wasn't working effectively, two primary forces intervened to help the market distribute gains relatively equally: the government and labor unions.

The federal government adjusted the economy to produce greater fairness, raising the floor for the poor, not the ceiling for the wealthy. By setting progressive tax policy, raising the minimum wage, and creating the Earned Income Tax Credit (EITC), the government helped to more evenly allocate the proceeds of the economy.

Unfortunately, government, as we have learned, can also promote unequal distribution. The policies of the Bush administration that are trying to phase out the estate tax, and that have provided dividend and capital gains' tax relief and added corporate loopholes have lowered individual tax rates disproportionately for the wealthy. That's accelerated the widening of the income gap. In fact, from 2003 to 2005, the only group to see their wages grow faster than inflation was the wealthiest 5 percent of Americans.

The trickle-down theory has been thoroughly discredited as our economy has poured so much money into the wealthiest 1 percent without any real income growth for most workers. According to a report by the Federal Reserve Bank, 10 percent of Americans owned nearly 70 percent of the nation's wealth in 2004. The largest block of that wealth — 34 percent — was owned by only 1 percent of the population. What's more, that top 1 percent saw its share of the nation's wealth climb significantly from 1989 to 2004, while the bottom 50 percent saw its share diminish in the same period.

In the past, even when the government failed to function as a positive force for distribution, unions were hard at work. Whatever your thoughts about unions, there is one undeniable fact — they work. The union movement led the fight for the forty-hour work week, child labor laws, unemployment, and workers' compensation. Unions ensure that everyone's hard work is valued and rewarded, not just that of executives and shareholders. Responsible unions can help equalize competition in markets by ensuring that every competitor pays the same employment costs for cleaning or security as they do for the costs of electricity or tax rates. Then, competition is based not on who can pay their workers the lowest wages, but on who can innovate, use technology, or manage more efficiently. In this way, unions act as a private-sector force to set minimum wages and benefits among all competitors, and they don't come with the inflexibility of government laws and regulations. And, as a bonus, unions do not require increases in taxes or new government bureaucracies.

According to the Bureau of Labor Statistics' June 2005 survey of employer costs, union workers earned an average of $10.27 more per hour in total compensation than did nonunion workers; that's $33.42 versus $23.15. The value of the benefits that union workers receive is double the value for nonunion workers: on average, $12.50 an hour in benefits compared with $6.38 for nonunion workers. In the all-important area of health care, 92 percent of union workers are covered by medical benefits, compared with 68 percent of nonunion workers.

The World Is Changing

But now the world is changing fast. The economy has changed, business has changed, yet union leaders have mostly stayed the same. As a result, the labor movement is paying the price — as are American workers. Since the founding of the AFL-CIO in 1955, union membership has declined from one out of three workers to one out of eight, and in the private sector to only one out of twelve.

Today, American workers need help. But it is not only unions that are clutching the past. Politicians, trapped in the twentieth century, are unable to break away from the ties that bind them and enact meaningful reforms. They fail to understand that Americans do not wake up pondering whether they are in a red or a blue state. They wake up wondering how they are going to roust their kids out of bed, get them downstairs, feed them, and get them off to school, and still get themselves to work on time. Laden with ever-increasing debt, they worry about whether they are going to earn enough money to pay their bills. They are concerned about what will happen to their savings if they contract a devastating illness. They wonder how they are going to care for their parents, who are, thankfully, living longer but are also in need of more time and attention.

Like many of our politicians, business leaders cannot find the courage to call for much-needed changes in our health care and retirement systems — changes that are also necessary for business to remain competitive in a global economy. They hope to escape the full weight of these problems in part by morphing their companies from distinctly American corporations into multinationals for which the United States is just another market, or by shifting responsibility and cost to their employees.

If I learned anything in my years as a labor leader it is that you can't drive into the future by looking in the rearview mirror. You either change and make history or stick to the status quo and become history. America is in desperate need of a bold, future-oriented vision, a thoughtful plan for a country that works. We need new ideas and a collaborative, nonpartisan approach.

There are solutions all around us; we just need the courage to accept that change accompanies the answers.

A VIEW FROM THE TOP

I've noticed a disturbing attitude, voiced in many elite quarters, that America's best days are over. In her Wall Street Journal column, under the heading "America is in trouble — and our elites are merely resigned," Peggy Noonan, former Reagan speechwriter, wrote:

I think that a lot of people are carrying around in their heads, unarticulated and even in some cases unnoticed, a sense that the wheels are coming off the trolley and the trolley off the tracks. That in some deep and fundamental way things have broken down and can't be fixed, or won't be fixed any time soon. That our pollsters are preoccupied with "right track" and "wrong track" but missing the number of people who think the answer to "How are things going in America?" is "Off the tracks and hurtling forward, toward an unknown destination."

I know an attorney in a large law firm that represents almost every major Fortune 500 company who has sold all of his U.S. securities. He no longer sees America as a good investment. His change of heart stems from an unspoken fear that every dominant nation will see its decline and, for America, that day is on the horizon. Institutional investors, like public pension funds, that once shunned overseas investments as unsafe, are now diversifying their portfolios to include foreign funds because they are not sure that having all their money tied up in American companies is safe any longer.

I think these naysayers are dead wrong. This is not Rwanda. Or Bosnia. Or the last days of the Roman Empire. America is a country with enormous wealth, creativity, intellectual capacity, and entrepreneurial spirit. A recent review of the world's research universities shows that the United States is home to thirty-eight of the globe's fifty top institutions. We also have a workforce with determination, pragmatism, self-reliance, and a drive to work hard to succeed in today's global contest. After all, as I noted before, we're working harder than ever before. But America needs leadership and a plan to galvanize our enormous capabilities.

Conventional wisdom that (fill in the blank) the market, or trade, education, high-tech jobs, or wealth trickling down will be the answer to our economic woes has been proven wrong. Returning to the New Deal policies of the industrial mass-production era, now seventy years old, is unrealistic.

A friend of mine shared with me an old West Virginia proverb: "If you keep on going in the same direction, you're liable to get where you are headed — whether you want to get there or not." America needs a new route; yet, to date, our elected officials, and business and labor leaders have not developed twenty-first-century policies to ensure America's continued economic leadership.

TEAM USA

Worldwide forces are stimulating American workers and employers to undergo their own transformation. Yet, even as individuals assume greater control over their lives and seek more flexibility and choices, many old, large institutions are frozen in time.

America cannot confront the challenges we're facing with constituency groups operating in separate silos, or like-minded individuals failing to combine their voices. Our country's failure to break loose from conventional wisdom and embrace the future is the biggest threat we face.

In order to continue American prosperity, a new American dialogue and a new American economic plan are required. Business, labor, and policy makers must shed their cocoons and form a compact to create a new twenty-first-century American economic plan on the foundations of the twentieth-century successes: valuing and rewarding fairly everyone's work; establishing a strong middle class; promoting innovation and entrepreneurship; welcoming hardworking, tax-paying immigrants into our nation.

Over the course of my work life, I have learned a lot and helped bring about a lot of change. I have seen ordinary workers like Clara Vargas, an immigrant from Cuba making $6.40 as a cleaner at the University of Miami, join nine other university workers on a hunger strike that captured the attention of all of Miami — America's third poorest city — and stimulated a citywide discussion on making work pay.

I have been involved in joining the voices of many citizens and communities to make Wal-Mart a company that embraces a more responsible competitiveness, through a grassroots organization, Wal-Mart Watch, that has sparked a national conversation about employers' responsibility for their employees' health care and overall economic growth. I have seen long-competitive advocacy groups that had never worked together join efforts to form a new coalition, America Votes.

I have sat down with employers who were once my most ferocious adversaries and realigned our relationships so that both they and their workers could be more successful.

Over twelve years my union, SEIU, has conducted three bold change processes that fundamentally remodeled our mission, as well as our strategies and resource allocations.

In every case, change was sparked by the courage to try new approaches rather than default to familiar ways. I have seen firsthand how a vision for the future, leadership, a coalition committed to change, lively debate, and a detailed plan can bring positive change to fruition.

The global economy presents enormous challenges, but America has a vast reservoir of knowledge and the talents to conquer those challenges. Will the leadership come from immigrants marching on the streets for the American Dream? Or from bloggers and DJs fueling a youth movement, or from a new political party? Or will an existing party wake up to the truth and speak its convictions? Will the 2008 presidential candidates offer a new vision for America's future, or will traditional adversaries from business, labor, and government have the guts to come together to stake out a new course for America? Who is thinking about the future?

My purpose in writing this book is to help galvanize the forces for change.

We have to do it, and we have to do it now.

Copyright © 2006 by Andrew Stern

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Table of Contents

Contents

Chapter One: A Country That Doesn't Work

Chapter Two: Globalization Is for Real

Chapter Three: Change Has Got to Come

Chapter Four: A Story of Transformation

Chapter Five: Taking It to the Next Level

Chapter Six: The Strength of One

Chapter Seven: Pushing Past Partisan Roadblocks

Chapter Eight: Don't Let Them Fool You

Chapter Nine: A Plan for a Country That Works

Conclusion

Notes

Acknowledgments

Special Acknowledgment

Index

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  • Anonymous

    Posted November 23, 2006

    Business Works Better without Labor

    This is the most refreshing book I've read in many years from a labor leader not afraid to buck the system and admit that unions are hurting the American economy. Stern evocatively demonstrates how labor unions must cooperate with business to achieve the gains that we need to make America strong again. Workers need unions to keep them in check and preventing outrageous demands for higher wages. Hopefully the newly elected Democratic Congress will take heed of Stern's valuable lesson and oppose lifting the minimum wage and expand free trade that has made this a great nation. Bravo!

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