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Can Wage Boards Work in America?


César F. Rosado Marzán (@cfrosado) is Edward Carmody Professor of Law at the University of Iowa College of Law and co-author (with Sergio Gamonal C.) of Principled Labor Law.

Is another U.S.A. where markets are subordinated to collective, democratic deliberation—i.e., social democracy—possible? Those inspired by stories of New England township meetings where citizens discussed and decided matters of public concern (think Alexis de Tocqueville in Democracy in America) might answer, “why not”? But that America, if ever real, prevailed before capitalist development in the United States. Yes, in the 1930s and 40s the New Deal helped build institutions that countervailed the power of capital (e.g., labor unions) and promised industrial democracy, but those institutions have suffered severe setbacks since the 1970s. The need to rebuild democratic institutions is urgent. How to do so is a burning question of our time.

Reflecting on Antonio Gramsci’s famous dictum, “pessimism of the intellect, optimism of the will,” one answer for the how question is just to fight. And fight many do. The Fight for $15 made $15 an hour a realistic goal for many workers in various states and cities. Worker centers and the “alt labor” movement have also contributed to local labor-protective institutions and flexed their local power. In 2021, we experienced “Striketober,” a level of strike activity that most young Americans had never seen in their lives. And insurgent organizing at companies like Amazon and Starbucks has led to renewed energy around unionization.

But fighting without adequate tools is hard, so some activists also try to summon one of labor’s legendary creatures—the wage board—to aid their cause. This Progressive era-inspired institution, buttressed during the 20th centuries’ war economies and the New Deal’s Fair Labor Standards Act, sets employment standards within its jurisdiction, oftentimes for particular industries or economic sectors. Wage boards are typically convened by governments, which might also set bargaining parameters for the parties or get directly involved as negotiating actors and aim to provide voice to workers who are not otherwise covered by collective bargaining instruments. As Kate Andrias has described, the wage board model suffered a huge setback in 1949 when Southern Democrats broke off from the New Deal coalition and voted with Republicans to get rid of them. Thereafter, as sociologists Bruce Western and Jake Rosenfeld remind us, the federal government convened other tripartite, board-like arrangements until the late 1970s to provide, among other things, equitable wage scales across the country. Wage boards then grew smaller and weaker until they disappeared altogether.

Still, memories of wage boards remain in the labor lore. The Fight for $15 tried to summon this mythical creature in 2016 when it pressured New York State to convene a wage board for fast food workers under its dormant minimum wage law. Some advocates and scholars depicted the board as a form of “sectoral bargaining.” Others, myself included, noted some of its shortcomings: no effective bargaining was engaged in by the directly-affected parties; board members had no power to implement their own agreements; and the board failed to effectively promote unionization of the fast-food sector, as some labor advocates desired. Nevertheless, the experience roused renewed interest in this institution, including by looking at experiences abroad.

More recently, there have been wage board convenings in other U.S. jurisdictions. A few years after the New York fast-food board was created, Seattle established a Domestic Workers Standards Board with more law-making and enforcement potential than the New York equivalent, and affording domestic workers a say in standards setting. Then, last year, California enacted its Fast Food Accountability and Standards Recovery Act (FAST Recovery Act), which created a Fast Food Council that has authority to set various standards for fast-food work in the state. Fast-food workers and their organizations should have an opportunity to form part of this council.

The question is whether these new experiments in standard-setting will effectively regulate the terms and conditions of work in these sectors and, even more ambitiously, help to collectively organize workers.

In my recent article in the University of Chicago Law Review, I explain that reinvigorating tripartite institutions like wage boards is an uphill battle in the United States. The main problem is that wage boards don’t jibe with the contemporary workings of the U.S. economy. Wage boards and other tripartite arrangements tend to prevail in what the comparative political economy literature terms “coordinated market economies,” most of which are located in continental Europe. These countries generally determine important economic and social policy matters through consultation with—if not through actual negotiation between—national or regional labor, employer, and government organizations. In those institutional environments, relationships between firms differ markedly from those in “liberal market economies” like ours. While firms in coordinated market economies tend to deal closely with each other and make decisions based on what U.S. law and custom might consider “insider” information, in liberal market economies, they function more at arm’s length.

Comparative political economists have argued that in institutional environments where firms regularly collaborate with one another, they can also better establish collaborative and even bargaining relationships with governments and with labor organizations. Lacking the closeness that prevails in coordinated market economies, firms in liberal market economies see no benefit, and lots of problems, in collaborating with other parties like organized labor. It just makes no sense for them. Moreover, U.S. law and institutions have been shaped with that “common sense” in mind. For example, in 2018, the Ninth Circuit held in Chamber of Commerce v. Seattle that a Seattle ordinance giving ride-share workers the right to bargain collectively with “driver coordinators” like Uber and Lyft was preempted by federal anti-trust law. The opinion is one of many examples underscoring the incongruence between progressive-left aspirations for coordination and U.S. legal and institutional realities. Therefore, we get atomized market exchange, not wage boards or other forms of coordination, in the United States.

Of course, many academic generalizations about coordinated and liberal market economies are made looking down from stratospheric levels. Once we descend more closely to specific U.S. states and regions, we can find important pockets of inter-firm collaboration and information sharing, such as in Silicon Valley. Moreover, coordinated and liberal market economies were not created by God, but by mortals. People can craft different things at different times. Indeed, students of the American political economy have shown the importance of historical political alliances, such as the New Deal coalition. Gramsci noted a similar phenomenon many years ago, coining the concept of the “national popular” bloc, which is required to cement various forms of hegemony over nation-states.

With this more down-to-earth view, can we see a future for the latest experiments of tripartism in Seattle and California? After all, even the New York board, which exists in a “blue” state with strong unions and vibrant social movements, does not provide a space where the parties of the actual sector being regulated set standards. However, the Seattle and California experiments might provide a basis for effective standard-setting and working-class organization in their respective industries.

First, the Seattle and California boards provide a space for domestic workers and fast-food workers, respectively, to actively participate in standards-setting. The Seattle Domestic Workers Standards Board has thirteen members (called Commissioners). Four of these Commissioners represent “hiring entities” (employers); two represent individuals either contracting with or hiring one or more domestic workers (households); four represent domestic workers or organizations that represent domestic workers; two represent domestic workers not in worker organizations; and one represents the community, or the public interest. While all positions are appointed, which means that they might not be generally and democratically representative of the sector, the board at least has people who are domestic workers themselves, and/or who represent domestic workers—making it qualitatively different from New York’s wage board.

The California law provides for a Fast Food Council with ten members. Four of the council members must represent fast-food workers or their organizations; four members must represent fast-food employers; and the other two members must represent the government. Like Seattle’s board, all members are appointed, but at least represent flesh-and-bone individuals who work in the sector or represent parties who do so.

Second, distinct from the New York board, the Seattle and California boards have more than advisory jurisdiction. The Seattle Board has some authority to investigate violations of the Seattle Municipal Code, to coordinate implementation and enforcement of the rules related to domestic workers, and to create guidelines to implement and enforce those rules. Standards of the Fast Food Council, once promulgated, will be regarded as minimum standards binding on all covered fast-food employers, except in situations in which there is a valid collective bargaining agreement covering specific employers.

Finally, workers in Seattle and California seem to have a meaningful opportunity to wield those institutions. These boards are in places where unions and an ecosystem of densely-packed organizations representing economically-subordinated people prevail. As I have described elsewhere (e.g., in academic writing on Puerto Rico and Uruguay), workers need some independent source of power outside government to effectively participate and make boards work in their favor. Given the organizational conditions in Seattle and California, and the more-than-mere-advisory function of their wage boards, these experiments might stand a fighting chance—assuming, of course, that the federal government does not interfere as it did in Chamber of Commerce v. Seattle.

Advocating for deep, structural, social and economic change is tricky. The right mix of organized political actors, coalitions, and law must exist to produce historical shifts in the political economy of labor. Those circumstances do not generally exist yet in the United States. But Seattle and California might be two places where the wage board creature can be conjured up to aid organized groups of the economically subordinated.