An American Approach to Social Democracy: The Forgotten Promise of the Fair Labor Standards Act.

• Author: Andrias, Kate

ARTICLE CONTENTS INTRODUCTION 619 I. FLSA AND THE STRUCTURE OF CONTEMPORARY LABOR AND EMPLOYMENT LAW 630 A. The Labor/Employment Divide and Worksite Bargaining 631 B. Modern Administrative Governance 633 C. Labor and Inequality 635 II. THE INTELLECTUAL AND LEGISLATIVE ORIGINS OF FLSA'S INDUSTRY COMMITTEES 642 A. The Progressive Era and the Vision of a Democratic Political Economy 643 B. Early Wage Boards 650 C. NIRA and Its Demise 655 III. FLSA'S AMBITION AND ITS INDUSTRY COMMITTEES 659 A. The Legislative Debate 661 B. Wage Boards in Operation 667 1. Who Speaks for Whom? 668 2. Bargaining Versus Administration 672 3. Constitutional Challenge 675 4. Efficiency and Stability 678 5. Union Growth and a "Decency Standard of Living" 680 C. Wartime Growth, Postwar Retrenchment, and the Emergence of Contemporary Workplace Administration 683 IV. INDUSTRY COMMITTEES: CONSTITUTIONAL VIABILITY, WORKER POWER, AND A NEW DEMOCRACY 693 A. Constitutional Viability 693 B. Formalizing Labor Power 695 C. Building Democracy 697 D. Reimagining Workplace Law's Future 700 CONCLUSION 706 INTRODUCTION

There is now widespread consensus that economic inequality in the United States poses a growing and grave problem. (1) Income disparities are the highest they have been since the 1920s, leading some commentators to proclaim a Second Gilded Age. (2) Indeed, the three wealthiest people in the United States now own more wealth than the entire bottom half of the population. (3) Over the last several decades, the share of income and wealth going to the top one percent of earners has grown substantially, while workers' real wages have barely budged. (4) Nearly one-third of workers earn less than twelve dollars an hour, often with unpredictable schedules and poor working conditions. (5) At the same time, social mobility has declined, locking in the staggering economic divide. (6) These economic trends threaten political equality. As in the Gilded Age, democracy itself seems to be at stake, with a few megacompanies wielding outsized power and economic elites exercising disproportionate influence over nearly every facet of governance. (7)

The American system of labor relations is partly to blame for this situation. (8) Unions once bargained for more than a third of American workers, helping to raise wages and benefits throughout the economy and providing a collective voice for workers in politics and in the workplace. (9) They served as a countervailing force to corporate power in the political economy. Now, however, unions represent only about a tenth of the labor market and only about six percent of the private sector workforce. (10) As unions have shrunk to pre-New Deal levels, the United States has lost a key equalizing force in the economy and in politics. Yet features of American labor law, combined with intense employer resistance to unionization, make it nearly impossible to reverse unions' decline. (11) Meanwhile, federal employment law, under which workers are individually entitled to rights, does little to redress systemic inequality. The law guarantees very little, is weakly enforced, and effectively excludes entire categories of workers from many of its protections. (12)

Demands for something new, something different, are gaining steam. Across the country, under such banners as the "Fight for $15," "Red for Ed," and "Domestic Workers Alliance," workers have been pressing governments to raise minimum wages, to increase pay and benefits for workers on a sector-wide basis, and to enact new employment law and social welfare protections, while demanding union rights not just for their particular workplace but for entire industries. (13) At the same time, labor scholars and policy makers have begun converging in their calls for a new, more social democratic system of labor law. (14) And administrative law scholars are increasingly urging new mechanisms to hold both government elites and private actors accountable--and in so doing, to create a more equitable political economy. (15)

Yet one of these mechanisms, sectoral bargaining--which would enable unions to negotiate for higher wages and better employment standards for all workers throughout the economy--still elicits skepticism. (16) There is a sense that a sectoral bargaining approach integrating labor and employment law is distinctly European, and therefore distinctly un-American. (17) This argument is not entirely unfounded. Virtually all European countries empower unions to negotiate employment rights for workers on a sectoral basis. (18) Through one method or another, the government extends--or facilitates extension of--union-negotiated standards to workers throughout the economy; workers also have rights of participation at the shop level through, for example, works councils, local unions, or competing minority unions. (19) Moreover, in most industrial democracies, unions have an official seat at the table when important questions about the workplace, social benefits, and the political economy more generally are up for debate. The American system, however, rejects this social democratic approach to labor law. It valorizes private contracting, permits significant employer resistance to unions, and provides only a marginal role for unions in a minimal social welfare state. (20) More broadly, American law does not empower representative organizations in administrative decision-making. It embraces judicial-like rule-of-law principles, technocratic decision-making, liberal pluralistic participation, and presidential control. (21)

The conventional wisdom holds that the United States briefly experimented with the social democratic, sectoral approach in the early 1930s, before abandoning it in 1935. According to this story, in the early years of the Depression, the United States Congress, pressed by President Roosevelt, enacted the National Industrial Recovery Act (NIRA). (22) The cornerstone of President Roosevelt's initial response to widespread poverty, labor unrest, and economic instability, NIRA gave unions, businesses, and consumers shared power to set industry codes, including minimum wages and maximum hours, while simultaneously providing workers the right to organize unions. NIRA, however, was short-lived. Soon after its enactment, the law became mired in implementation challenges. Then, in 1935, the U.S. Supreme Court struck down the statute in A.L.A. Schechter Poultry Corp. v. United States, (23) concluding that NIRA delegated too much legislative power.

While Schechter Poultry is famous in the constitutional and administrative law canons as a rare exercise of the nondelegation doctrine, it is also widely understood to have ended the nation's brief, failed experiment with a form of social democratic power sharing in governance sometimes known as "tripartism" or "labor corporatism." (24) Tripartism is used in various forms in most industrialized democracies, particularly Europe's social democracies; it gives worker organizations, business groups, and sometimes consumer organizations a legally defined role in decisions about the direction of the economy generally and about social welfare policy in particular. (25)

According to the standard narrative, after Schechter Poultry, the United States switched course. (26) In 1935, Congress enacted what is now called labor law: the National Labor Relations Act (NLRA). (27) The NLRA, like NIRA, provided for the right to organize and bargain, but it no longer gave unions a seat at the table in federal administration, nor did it require sectoral bargaining. (28) Subsequently, Congress enacted what is now employment law, chiefly the Fair Labor Standards Act of 1938 (FLSA), which established a system of government-guaranteed minimum wages through traditional administrative law mechanisms. (29) On the conventional account, American tripartism following the demise of NIRA was limited to wartime emergencies and some industry-specific problems, (30) and the basic federal workplace regime that replaced NIRA separated private collective bargaining from individual employment law. The employment law regime aspired only to bare minima in wage protection, and, with respect to administration, it embraced a technocratic, legalistic approach, rather than a system that affirmatively granted worker organizations power in political decision-making. (31)

This conventional narrative, however, occludes an important part of the history. Shared power over economic policy, in the service of raising living standards for American working people, remained an important feature of national and state policy well into the New Deal--not only through the important but anomalous war boards or the esoteric Railway Labor Act but also in the core employment law statutes that remain in force today. That is, after Schechter Poultry, when Congress enacted first the NLRA and then FLSA, it not only sought to protect workers' right to organize and to a subsistence wage but also affirmatively brought worker organizations into the governing process and empowered them to negotiate for all workers.

In particular, the original FLSA was more ambitious both procedurally and substantively than the low minimum wages and overtime protections for which it is known today. It created "industry committees" or wage boards composed of tripartite representatives--employers, unions, and the public--with discretion to set minimum wages on an industry-by-industry basis within a statutorily defined range. Supporters of FLSA saw the law as a means to end poverty wages, while extending the reach of unions throughout the nation and throughout the economy. Thus, even more so than the NLRA, FLSA embodied a commitment to empowering worker organizations in the political economy; in fact, many contemporaries saw FLSA as a direct outgrowth of NIRA and tripartite models abroad. (32) And together with the NLRA, FLSA created an interconnected system of labor law and employment law and an American...