Can a grand bargain empower Amazon’s workers and limit corporate power?

Can a grand bargain empower Amazon’s workers and limit corporate power?

By Nelson Lichtenstein

Nelson Lichtenstein is research professor at the University of California, Santa Barbara. He is writing a history of economic policy during the Clinton Administration.

March 25, 2021 at 7:00 p.m. GMT+9

If so, it could transform American capitalism

Union leaders are joined by community group representatives, elected officials and social activists for a rally in support of unionization efforts by Amazon workers in Alabama on March 21 in Los Angeles. (Frederic J. Brown/AFP/Getty Images)

The union certification vote at Amazon’s Bessemer, Ala., fulfillment center has received enormous attention, including from President Biden. Some 5,000 workers are likely to participate in the mail-in ballot before the end of this month. But Amazon itself employs nearly 1 million blue-collar workers at more than 110 U.S. distribution centers, so the stakes are enormous. A union victory might well spur other Amazon employees to organize. A defeat will undoubtedly be a large setback — not only for organized labor but for contemporary efforts to reduce economic inequality in the United States and limit the seemingly unfettered economic and cultural power that Silicon Valley corporations now hold.

The vote comes at a time in which critics across the political spectrum believe that Amazon is too big and holds too much power. Sen. Marco Rubio (R-Fla.) and others on the right oppose Silicon Valley’s cultural liberalism, while on the left, Sen. Elizabeth Warren (D-Mass.) is among the many voices proposing a break up of Big Tech. And of course, even if a majority of Bessemer employees vote for a union, success on a companywide basis will require both more organizing and more governmental pressure.

But the union certification vote could be a key step toward the sort of grand bargain that will shift the contours of American capitalism. A similar compact was struck during the New Deal in the battle over the legitimacy and power of chain retailers. That history shows that trade unionism itself may well be the most efficacious road to a reform of Silicon Valley capitalism.

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This is not the first time a giant retailer has been caught between unionizing pressures from below and antitrust agitation from the Washington corridors of power. During the 1920s and 1930s, the rise of multistate chain stores — Woolworth, J.C. Penney’s, A&P, Safeway and several others — generated every bit as much alarm as that evoked by Amazon and Facebook today.

Much opposition came from the South, where “the chain-store menace” was equated with Yankee imperialism, the destruction of local enterprise and the emasculation of White manhood as a generation of independent proprietors were transformed into an army of salaried clerks beholden to New York capitalists. Huey Long, the governor of Louisiana and later a U.S. senator, told his constituents, “I would rather have thieves and gangsters than chain stores in Louisiana.”

Rep. Wright Patman (D-Tex.) championed the anti-chain-store movement. A progressive populist — except on issues of race — Patman had partnered with Sen. Joseph Robinson (D-Ark.) to pass legislation in 1936 that sought to thwart the competitive advantage enjoyed by the chains. These stores used their scale to leverage kickbacks and discounts from suppliers and deployed “loss leaders” — popular items with deeply slashed prices — both to ruin competitors and entice customers into the store. Patman and Robinson wanted to mandate a national standard, “retail price maintenance,” to insure that stores both large and small sold toothpaste, canned soup and 1,000 other items for the same price. Patman saw “the huge chain stores sapping the civic life of local communities with an absentee overlordship … and reducing their independent business men to employees or to idleness.”

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The price maintenance law proved largely ineffective, so in 1937 and 1938, Patman stepped up the anti-chain-store pressure with a legislative proposal that would impose a heavy tax on retail corporations with more than 10 outlets in multiple states. Opponents rightly called it a “death sentence” law, because the tax burden rose in near-exponential fashion on the largest and most geographically pervasive chains. Fifteen states had already enacted a somewhat more modest set of escalating taxes, which the Supreme Court — still sharply conservative — had ruled constitutional.

No store was in Patman’s crosshairs more than “The Great A&P,” a grocery behemoth that had 15,000 stores in the early 1930s. It also had a vast array of captive food-processing enterprises that easily enabled the New York-based company to undercut its small-town competition and whipsaw grocery wholesalers. Nearly 1 in 7 grocery dollars spent by American consumers flowed across A&P counters. Like Amazon today, A&P used its massive purchasing power to squeeze and manipulate the business practices of tens of thousands of farmers, druggists, wholesalers and vendors of every sort.

Urban consumers generally liked A&P’s low prices, but trade unions certainly didn’t like the long hours required of workers and the low wages it paid them. As the writer Marc Levinson shows, brothers George and John Hartford, who had helped found the company in the 19th century, were paternalists who hated trade unionism. In 1934, when a coalition of unions struck at A&P stores in Cleveland, the Hartfords closed all 293 of their stores in the city and discharged 2,200 workers. White House intervention got the stores reopened and the workers rehired, but A&P signed no contract with organized labor.

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Worried about the consequence of chain-busting regulations like the one proposed by Patman, the Hartfords reluctantly reached out to the labor movement — not the radical Congress of Industrial Organizations, but the more moderate American Federation of Labor (AFL). Congress had passed the Wagner Act in 1935, providing a framework for collective bargaining and boosting the power of labor, as demonstrated by sit-down strikes among the clerks at Woolworth stores. Early in 1938, AFL President William Green met with A&P executives, where the makings of a deal became obvious: If A&P would sign contracts with unions representing meat cutters, retail clerks and truck drivers, organized labor would oppose the Patman bill, allowing the chain to survive.

The bargain worked. Instead of endorsing Patman’s initiative, the AFL declared that it would study “taxes of discriminatory and punitive character.” State labor federations in Texas and Louisiana came out against the federal chain-store tax, and Patrick Gorman of the Amalgamated Meat Cutters declared “mass production methods are here to stay as long as consumers demand them.”

For its part, A&P ceased to oppose labor organization in its stores, leading to rapid organization of grocery workers in the urban North — not only at A&P, but also at rivals Safeway, Kroger and many regionally important chains. With the rise of chain supermarkets in the postwar era, the locally owned independent grocer virtually ceased to exist, but grocery unions flourished. Wages were never particularly high in the sector, but stable employment (everyone has to buy food, even in recessions) and seniority guarantees ensured that unionized grocery workers could expect something close to a career at work, with health insurance, a pension and enough income to buy a house. Today 1.3 million workers are members of the United Food and Commercial Workers.

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Chains thrived — but so did workers.

Could such a deal be made today?

Amazon is adamantly hostile to unionization of its employees. As spokeswoman Heather Knox asserts, “We believe we already offer everything the unions are requesting and that we highly value direct communication with our employees.” But that attitude might fade if Amazon executives truly feared that the federal government was serious about regulating, fissuring and taxing the company, and that its core business model was in danger. Then, like the Hartfords, unionization of its several hundred thousand workers could seem the lesser evil. (Amazon founder and chief executive Jeff Bezos owns The Washington Post.)

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Critics of such a deal might argue that Amazon and the other powerful Silicon Valley firms, where union organizing efforts are also stirring, constitute a far more genuine threat to economic and political democracy than A&P in its heyday. The effort to tame them can’t be traded away for a mess of union pottage.

Unions are weaker today than they were in the 1930s, but the idea that wages have to rise and democracy has to be revitalized, in the workplace and beyond, is returning in an echo of that era. During the heyday of postwar prosperity, when real income doubled and trade unionism stood at its 20th century apogee, General Motors, U.S. Steel and other high-wage, highly unionized firms were oligopolies paying uniform wages in a society where labor’s power enforced work rights on the shop floor and helped shape social policy, constrain market forces and limit corporate influence. Economist John Kenneth Galbraith famously called this “countervailing power.” It might be a grand bargain worth considering.