Economy

President Obama Uses Bully Pulpit To Push Economy That Works For Workers

CREDIT: AP Photo/Andrew Harnik

President Barack Obama attends a conversation co-hosted by Coworker.org during the White House Summit on Worker Voice

Barack Obama wants the home stretch of his presidency to be defined by a push to change the balance of economic power in America before runaway corporate influence destroys the country. But he’s not plotting any grand legislative push, and he’s running low on ways to exercise executive power to act without Congress.

So now, he wants you.

At the White House on Wednesday, the administration convened a daylong Summit on Worker Voice that focused on how collective action and pro-active communication among workers, consumers, and employers alike can help steer the country off a dangerous course.

In an age where union power is at a low ebb and corporate power is at high tide, hundreds of millions of Americans are at risk of drowning economically. Ever the optimist, President Obama said he thinks all of that can change.

In a town hall forum in the East Room at the end of the summit, he sat with the co-founder of online worker organizing platform Coworker.org and talked at length about the mix of legal, cultural, and technological changes that could help shift power back to working people.

Time to change how businesses define success

The central issue of the day was how to alleviate the pressures that lead business leaders to make decisions that undermine their employees’ economic security.

The overall share of business income that goes to workers has been dropping for years, while executive compensation, profit-hoarding, and spending on goodies for shareholders have all soared. This level of inequality in the workplace breeds political tension, the president observed.

“Part of the reason issues of CEO compensation are sensitive to folks is not because workers are jealous and they want lifestyles of the rich and famous,” Obama said. “It’s the sense that if, in fact, there are greater competitive pressures out there, how much is everybody willing to give up to meet those competitive pressures as opposed to putting it all on the backs of workers?”

Changing the way businesses think about how their profits get allocated would be a radical shift. Employers have long been incentivized to think of the wages and benefits they dole out to their workers as a burden that is best minimized.

The president said that mindset needs to change. He blamed the ongoing devaluation of workers on a “quarterly report mentality” where “bonuses, incentives, whether a CEO keeps his job, so much of it is just based on short-term profits.”

There are a variety of proposals out there to shift corporate incentives away from that kind of short-term myopia. It’s become something of a theme for Hillary Clinton — who so far has called for tax incentives to reward companies that set up profit-sharing schemes for their workers, changes to how corporate stock buybacks work, and new capital gains tax rules to encourage companies to take a long view.

Such structural changes would come atop existing rules that are supposed to protect working people from bosses so fixated on minimizing their labor costs that they are willing to bend or break the law. In recent years, low-wage worker activism has illustrated just how commonly those rules fail to protect people. Fast food workers, for example, have gone on mass strikes for years to protest not just their low base wages, but also their companies’ habit of cheating them on payday — like forcing them to submit inaccurate timesheets.

“Where I grew up, it was called cheatin’.”

Wage theft doesn’t always take that kind of brute-force approach, though. Many companies have found a simple way to avoid paying overtime or the minimum wage, reimbursing workers for expenses, helping them with tax withholding, and paying payroll taxes to fund systems like unemployment insurance and worker’s compensation. Those costs and protections only kick in legally for workers defined as “employees,” so a company that deems its workforce “independent contractors” can sidestep it all.

“It’s called ‘misclassification’ here in Washington. I don’t like that word, because it sounds like you put it in the wrong file,” Labor Secretary Tom Perez said Wednesday. “Where I grew up, it was called ‘cheatin’’.”

Estimates about the extent of this cheatin’ vary, but misclassification is especially common in the transportation industry. Legal battles over the contractor/employee distinction are still raging in many cases, with courts handing FedEx a major defeat in a class-action suit by workers who say they were cheated out of huge sums of money through misclassification. Uber is being sued in multiple venues by drivers who say they should be employees not contractors.

President Barack Obama and Coworker.org co-founder Michelle Miller at the White House Summit on Worker Voice

President Barack Obama and Coworker.org co-founder Michelle Miller at the White House Summit on Worker Voice

CREDIT: ThinkProgress/Alan Pyke

But it isn’t just workers themselves who get hurt by the practice, Perez said. It’s also other employers who play by the rules, several of which sent their CEOs to the White House event. And because misclassification undermines funding for worker safety net systems, “programs are starting to have trouble with their fiscal stability,” Perez said. “There’s not enough people paying into the system. And that’s because there’s cheatin’ going on.”

In addition to lawsuits, the central role of misclassification in many business models has inspired calls to create a new legal structure for workers in the so-called gig economy. A third category between traditional employment and contracting could deliver some of the protections that contractors are denied while still being more limber and affordable than full W-2 employment.

The emphasis there is on could. The uncertainty about how well this third-way approach would actually serve workers’ needs has the president concerned about settling for “a watered-down version of the protections and rights that a union provides,” Obama said Wednesday.

Supplementing union power with new models

Unions have been receding in American life for years, thanks in large part to persistent conservative attacks on their ability to operate effectively.

Alternative models for collective workplace action abound, including many that are functionally quite similar to traditional unions. And then there’s Coworker.org, a decentralized online platform that furnishes various organizing tools directly to individual workers and campaigns.

The way Coworker.org approaches the question of worker voice in society and on the job is all about changing the way people think about themselves and the economy, co-founder Michelle Miller, who hosted the White House town hall discussion, said in an interview.

The front page of Coworker.org

The front page of Coworker.org

“I don’t think anybody self-identifies as a consumer, but we do self-identify as people in a community,” Miller said. “What we need to do more of is really be responding to the level of corporate influence in our lives and create a way for all of us to say, ‘No, I’m an active participant in how you behave too. Don’t make me a third party to abusing someone that I didn’t sign up for.’”

Convincing employers to think of their workers as assets that are worth investing in, rather than as another cost to cut, is an intimidatingly large lift. Miller acknowledges that it will take “thoughtful movement work” to make the strides that modern labor activists and many progressive politicians want to see.

The first step is to start small. “You have to start with wanting to overturn the ban on tattoos in your workplace, and work on winning that, and then that starts to open up doors to understanding: ’Oh, this is how power works in my company,” said Miller. “It’s a real-time learning process for people to uncover the way that finance and these bigger economic structures really impact their ability to make change in the first place.”

Consumers to the rescue?

Workers needn’t be alone in this effort. Consumers have a large role to play too, especially in the social media age when it’s easier than ever to put someone on blast for behavior that’s out of step with one’s values.

Every public campaign effort launched on Coworker.org attracts some support from “consumers and neighbors and allies who sign onto these campaigns and write in that they shop there, they bank there, and they really respect the workers,” Miller told ThinkProgress.

Think of it as peer pressure, but for high-road employment practices. Technology enables those who can afford to consume ethically to go further than their own dollars by encouraging others to follow there lead. It doesn’t have to be nasty and it doesn’t need to produce a full-fledged boycott to be influential.

“I’ll bet a lot of folks here, if they go to a restaurant and they know that the people working there are making a living wage, the fact that they might be paying an extra dollar for a burger would feel okay,” Obama said. “Some people might not be able to afford it, but a lot of people could. And when you make people conscious that there’s a connection between how employees are treated and the purchases you’re making, I think that can have an impact.”

Consumers work, and workers consume. As more and more people clue in to that communitarian reality — and turn the resulting working-class solidarity into a tool to pressure business interests — there’s the potential for a real shake-up in the country’s longstanding identity as an individualistic society.

A fight for survival

There’s already much evidence that our political system responds only to the rich and not to working-class interests. All those attacks on unions around the country have weakened economic security for the middle class significantly as the fruits of collective bargaining and union action dried up, which further exacerbates overall inequality. Alarmingly high rates of child hunger and skyrocketing housing costs that undermine the traditional connection between hard work and basic comfort contribute to a sense that something essential is crumbling.

It’s little wonder, then, that the man leading the country spoke of rebalancing economic burdens in stark terms. Continuing on as we have “will have an adverse effect on our democracy” as well as our competitiveness, Obama said Wednesday, because “not only does our economy but our politics also turn in a bad direction when you start seeing huge separations between how folks at the top are doing and everybody else is doing.”

If the stakes seemed high inside the East Room, it was partly because of people far from the White House. Obama’s 15-month push on modern labor issues will play out amid a presidential election in which an avowed democratic socialist has been gaining ground with voters on the strength of Pope Francis-like critiques of capitalism.

In that political context, Wednesday’s solicitation to the business community to reassess their very definition of success rang a subtle note of warning: Either deal with us now, or reap the whirlwind of leftist populism down the line.