Roosevelt Institute | Cornell University

How to Fix Collective BargainingA Primer on Sectoral Bargaining

By Scott SiegelPublished December 17, 2020

Roosevelt Institute at Cornell University
The nation’s collective bargaining laws do not adequately respond to modern challenges. In a post-COVID-19 economy, sectoral bargaining must be considered to help restore economic and social equality.

The COVID-19 pandemic is wreaking havoc on both Wall Street and Main Street: employment in the service industry is in shambles, the civilian labor force participation rate remains depressed, and the nation’s GDP has been hit as hard as during the Great Recession. The number of American workers discouraged and underemployed are astronomically high compared to a year ago, causing concern about rising inequality after the recovery. The repercussions of this crash and subsequent inequalities are immense, as this would widen the United States’ income gap and further separate the haves and the have-nots.

Economists have proposed countless tools to address this COVID-19 curse – stimulus payments, infrastructure projects, and even a federal jobs guarantee. However, none of these plans address deeply-rooted and persistent issues. Unions present an excellent short- and long-term solution, providing higher wages, a lessened wage gap for female, black, and hispanic workers, and increased benefits and healthcare coverage. Therefore, advocates have pushed for pro-union legislation, such as the PRO Act, to expand union bargaining power and facilitate organizing. Legislation within our current framework is not large enough to fix structural issues — it is time to upend the system and build back better.

Sectoral bargaining expands collective bargaining agreements (CBAs) to entire industries, covering all workers and employers by a single contract, rather than negotiating a deal for every workplace. A sectoral bargaining committee would encompass worker representatives, corporate management, and politicians, who would work to determine wage and labor terms for entire fields. Overseas, this sectoral system already dominates Europe and has shown promising results. In France and Austria, 98% of workers are covered by CBAs, while only 7% of American workers have the same protections. Meanwhile, European countries with low sectoral bargaining rates have seen stagnant wages and rising inequality, similar to what the US has experienced for decades. Americans must ask: How can this model be emulated in the United States?

The first approach might be to replicate what Europe has done in the US: New York state tried this in 2015 when Governor Andrew Cuomo convened a wage board to study fast-food worker wages. The board, including Mike Fishman, Secretary-Treasurer of the Service Employees International Union (labor), Kevin Ryan, Chairman and Founder of Gilt (businesses), and Byron Brown, Mayor of Buffalo (the public), reached a consensus on setting wages at $15 per hour, elevating all workers in the process. Vox reports that California, Colorado, and New Jersey can use similar provisions in their state law to enact wage boards, which would quickly help the working-class’ economic situation.

Another avenue for implementing this strategy is to look towards the National Industrial Recovery Act of 1933, which gave President Roosevelt sweeping powers to unite labor and management to set wages and industry standards. Through the National Recovery Administration, local ‘code boards’ were established to determine competition guidelines and provide input on wages. While the original law was deemed unconstitutional, the spirit of the law can be applied to the current economic situation. Using a similar approach, code boards can be enacted through federal legislation to discuss workplace issues, including wages, safety concerns, and discrimination. The largest hurdle in pursuing this plan is partisanship, as this would require immense political capital. 

One last option might prove to be the most overlooked yet effective: the industry CBA model. In union-dense areas, labor negotiates a CBA with all contractors, setting standardized pay for all employees. This has worked in New York City, where construction unions bargain with groups of contractors to provide enough labor to fill their demand in exchange for fair wages and benefits. For union workers, this brings employers and workers to the same side of the table, as it benefits both to create more jobs and raise wages for all workers. Applying sectoral bargaining to the current labor system keeps issues streamlined as it requires high unionization rates rather than political action.

Applying this model to other industries might be the silver bullet we need. For example, if first responders and healthcare workers had implemented this model before COVID-19 struck, their unions could have demanded safer conditions and hazard pay. With all hospitals and employers held to an agreed-upon standard, it is easy to imagine a more comprehensive response to the pandemic.

While organized labor faces scrutiny and challenges, a 65% approval rating and support from economists push the labor movement forward. Sectoral bargaining presents itself as a unique and powerful tool in the fight to rebuild our economy in a more equitable way. Specific models, such as the industry CBA model, might even be more effective at orchestrating equitable solutions than other monetary or fiscal solutions and should be strongly considered when restoring the economy. With Americans mourning the over 265,000 dead from COVID-19 and millions of cases, the state of the economy should be one of the last things the working class has to worry about. Sectoral bargaining makes sure of that.

Works Cited