RFP: What should we do???

Alabama workers decisively rejected a union. 

This is a disaster for the union movement in America, and a sharp warning for Democrats.  

Now what?

Biden, in Iowa

Of course there were "reasons." People can try to explain away the loss and thereby fail to learn from it.

Critics complain Amazon urged workers to reject the union. Of course. 

Amazon put literature in the toilet stalls. So what? Nobody makes people read on the toilet.

The jobs paid well by local standards. That was Amazon's point.  

Amazon's local management seemed reasonable and fair. Isn't that a good thing? 

Democrats should not dismiss what happened. The union effort lost under circumstances that seemed very favorable. Amazon could afford to pay more and have a union. Biden publicly endorsed a "yes" vote. Even some Republicans joined in, with a double target of polishing their populist credentials while simultaneously showing their base that they weren't afraid of Jeff Bezos, the Amazon founder who also owns the Washington Post.

I was in the room to watch over a dozen Democratic candidates in Iowa say that unions are the solution to America's income-inequality problem. If workers organize and band together, they said one after the other, they have power to change America. Unions are the mechanism. And if unions are strong and growing, then the tide they create raises boats for themselves and the entire country. 

Workers in Alabama said no. 

Request for reader comments.

Most people think we have an income distribution problem in America. The GINI Index, the economists' measure of income inequality, is high in the USA and getting higher. The USA is not among those developed countries with whom we often compare ourselves: Ireland, the UK and Western Europe; Eastern Europe and the Balkans; Canada. Those countries are developed, industrialized, wealthy, and they have substantial income equality and social mobility. That is what American's think we have, but we do not. In America, on the whole, the rich get richer and the poor are stuck staying poor. The USA is in the middle rank of countries for equality of income and opportunity, amid Mexico, Iran, Peru, and Ethiopia. We are more equal than South Africa and Namibia, which lead the list of income inequality.   

Warren

Inequality of incomes has a compounding effect. It leads to unequal life outcomes for children born into the poor and working-poor. People who feel their opportunities are blocked are at high risk of dropping out or acting out. Even the ones that stay on track are tracked for more frustration. 

The Iowa convention was not a gathering of union employees; it was a convention of the business leaders of the unions, AKA "bosses." The union leaders appeared to me to like what they heard. It was a deceptive signal to candidates. Male iowans voted overwhelmingly for Trump. There is no future in pushing an idea of worker solidarity if American workers don't believe in it.  

Democrats have been pushing a second idea: Everyone go to college, or better yet, graduate or professional school. Nurses, accountants, and computer programmers can find work that brings them into the middle class. This is an impossible lift for some people. We need jobs for the Americans we have, and not everybody is above average in intelligence. Democrats paid a price for the implied insult that people need to fix themselves if they want into the middle class. Liberal media figures snickered when Trump said he loved the un-educated. He wants them stupid so he can con them, they said. People who, for whatever reason did not finish college, did not snicker. Trump validated who they were. They don't think they are stupid; they just didn't go to college to study stuff they weren't interested in. They voted for Trump. 

Sanders

If unions and college-for-all are flawed paths to the equality that allows a democratic society to endure, what are the right ones?

One other warning. Raising marginal tax rates does help spread equality, although in fact high income earners in New York City--people making $400,000 in W-2 earned income--are already paying about 64% marginal rate, between federal, FICA, state, and local taxes. [Note, this number is in dispute and may be too high.  See below.]And taxing money after it is earned concedes important ground. It accepts the fact incomes are highly disparate. That makes public benefits the source of income equality, not that the work  itself done by most Americans brought value to the labor marketplace. That makes the government, not the economy, the creator of a middle class. It is teaching a lesson, that the source of money is government transfer, not work, a dangerous lesson we are actively teaching now. Republicans now seem to regret they taught that lesson when Trump was president. Democrats may learn to regret it in the future. 

You tell me. Do we have an income equality problem, and if so, what should we do about it?  I invite comment and guest posts.

[Addendum. Marginal tax rates turn out to depend on a lot of things. A comment noted that adding the FICA paid by an individual, to be matched by an employer, tops out before one gets to the $400,000 range. If a person is self employed, he or she pays both halves, but in any case, not on that last dollar.  My source for the 64% included an estimate of a sales tax, which is also paid in NYC, and that would apply to that last dollar.  I know from experience as someone in a high bracket but who is also drawing Social Security and Medicare, that my wife and I pay a surcharge on our Medicare as well as a higher charge on realized capital gains.   

I know from close observation that, given the cap on state and local taxes, a taxpayer in a high bracket is paying 37% on the margin and another 10% state of Oregon tax which is additive because it is no longer deductible, plus extra Medicare taxes, plus being ineligible for COVID-type benefits.  That puts people here in Oregon at the 50% marginal bracket. It would be higher in NYC, thanks to both the city tax and a sales tax, and if a person were both of Medicare age and still getting the W-2 income, as am I, then it would be significantly higher than my Oregon rate. The premise that a person is "really" paid with stock that does not show up as taxable income is far from universal and not my own situation. My income is mostly fully taxable W-2 income, which is what is taxed at the highest rate. 

Our whole system taxes earned income at the highest rate. Income from capital (e.g. dividends and capital gains) and wealth that is inherited is taxed at a much lower rate, if at all. Heirs are treated much, much better than are workers.]