Early in Barack Obama’s a recent Netflix documentary series on American jobs, viewers meet a maid at the Pierre Hotel in New York named Elba. She spends her shifts cleaning hotel rooms, and she talks about the challenges of the job, including back pain and occasional misbehavior from guests. Elba aims to be a symbol of hard service industry work in today’s economy.
But when she mentioned how much money she made, I’ll admit I was surprised: Elba makes about $4,000 a month, or about $50,000 a year. While modest, that income still allows for something approaching a middle-class lifestyle, especially when combined with the income her husband, Francisco, makes at his job in the cafeteria of the Pierre Hotel.
“I don’t worry too much about money,” said Elba, who recently became a grandmother, “because I know I can count on my salary.”
Many other service workers earn much less. Full-time Starbucks baristas in New York often earn less than $35,000 a year, while many Walmart employees earn even less. Across New York, the median household income is about $75,000 — which is less than Elba and Francis make.
How is it that they earn a living wage while so many other Americans do not? Most of the answer is that Elba belongs to a union.
Unions are a much smaller part of the American economy than they once were, representing only 6 percent of private sector workers. However, unions allow their members to earn substantially more than similar workers who are not unionized. Consider this data from the federal government:
At workplaces where workers do not belong to a union, an employer has much more leverage over employees. The company can more easily outsource jobs – such as cleaning or cafeteria work – to contractors who pay as little as possible. The company can also withhold wages for its own workers, effectively encouraging them to quit and find better paying work.
Economic theory may suggest that market forces take care of these problems and pay workers their true worth. But the economy doesn’t really work the way order theories imagine. Similar workers often earn different wages, and union status is an important reason.
A large empirical study by economists at Columbia and Princeton, tracking millions of workers over decades, found that unionized workers typically earned 10-20 percent more than similar workers. (Here’s a Times article about the study.) The results also suggested that much of the money came from business profits and executive pay. Unions reduce economic inequality by effectively moving money out of stock returns (which disproportionately flow to the rich) and top incomes and into wages.
Obviously, unions can overreach and demand wages so high, or working conditions so inefficient, that a company cannot survive. But those situations are the exception, not the norm. In most situations, unions give workers the bargaining power they lack when trying to negotiate their wages individually. An employer has a harder time rejecting the requests of hundreds of workers at once.
If you’re trying to understand why income inequality has soared over the past half century, the decline of unions is a central part of the story.
This chart compares the share of workers who belong to a union with the share of income flowing to high earners:
And in LA…
I wanted to tell you Elba’s story this morning because it is connected to a recent news development in Southern California. About a month ago, 15,000 hotel workers in the Union Here, the same national union to which Elba belongs, voted to authorize a strike. Most of them walked off their jobs and took to picket lines for three days over the July 4 weekend before returning to work on Wednesday.
The workers, who include housekeepers and cafeteria workers, now typically earn $20 to $25 an hour, which they say is often not enough to afford decent housing. “We can’t afford to live where we work,” Ayden Vargas said. Vargas works at the Fairmont Miramar in Santa Monica and lives in San Bernardino, nearly 80 miles away.
The workers are asking for an immediate $5 raise, followed by $3 annual raises in subsequent years, as well as better health coverage and pensions. The hotels countered by offering an initial increase of $2.50, followed by smaller annual increases.
The largest hotel in Los Angeles, the Westin Bonaventure Hotel & Suites, settled with its Unite workers ahead of a July 4 strike and gave them unspecified wage increases and pension improvements. United officials say workers at the other hotels may strike again soon. The 4th of July strike was already the largest in the US hotel industry in 50 years.
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