For all their triumphalist talk of ascendant demography and permanent majorities, Democrats have never really come to terms with the slow death of the labor movement.
Unions have never been less relevant than they are today in the modern economy. Where they have not been obviated by workplace health and safety rules, they are being left behind in the race away from traditional employment to the so-called “gig economy.”
Hence the recent attempts by various liberal state legislatures to block economic progress by making contract work, including that of freelance journalists, impossible. Hence also the many attempts by the Obama administration to slow the bleeding by skewing old and well-established rules to keep unions on life support.
This week, the Trump administration finally and officially rolled back one such effort, known as the “joint employer rule.” This rule, which upended decades of precedent in labor law, attempted to tie independent businesses, particularly franchise businesses such as McDonald’s restaurants, together legally for purposes of liability.
Unions were especially pleased by this because it meant that a single national corporation such as McDonald’s could become the deep-pocketed target of legal, organizing, and pressure campaigns that would otherwise have to be conducted against individual owners of thousands of McDonald’s franchises. But this rule went far beyond fast food.
Where President Barack Obama tried to put such national companies on the hook for nearly anything if they could be shown to have “indirect control” of franchise operations, the new Trump administration rule clarifies that a national company is only liable when it has “direct control” over such issues as worker pay and schedules.
This is as it should be. Obama’s attempt to tilt the playing field might have brought the franchise model crashing down, threatening more than 733,000 establishments and costing hundreds of thousands or millions of low-skill, entry-level jobs. The Council of Economic Advisers estimates that the Obama-era rule, which the Trump administration had already essentially stopped enforcing, raised costs on businesses by a net $5 billion annually and reduced real incomes by $11 billion.
Some people claim there is irony in the fact that wages, and especially low-income wages, have only risen significantly now, under President Trump, whereas they had failed to do so under his predecessors. But there is no irony at all. By working so hard to put the brakes on the labor economy, Obama made Trump’s job too easy. All he had to do was release the parking brake, and voila, the car started working.
Obama’s labor policy, including everything from Obamacare’s mandatory benefits for full-time workers to environmental schemes to minimum wage increases, was constantly focused on finding new ways to eliminate jobs or force shorter hours on lower-skill workers.
The joint employer rule is just one prominent example of this, and its final demise is a welcome development for a labor market that will hopefully just keep growing.
