Emerging issues in North American trade--labor law.

Author:Carmody, Chi
Position:PROCEEDINGS OF THE CANADA-UNITED STATES LAW INSTITUTE CONFERENCE on An Example of Cooperation and Common Cause: Enhancing Canada-United States Security and Prosperity Through the Great Lakes and North American Trade: Cleveland, Ohio April 2-4, 2009

Session Chair and Canadian Speaker--Chi Carmody

Canadian Speaker--Kevin Banks

United States Speaker--Robert Strassfeld


MR. CARMODY: Good Morning. For those of you I have not had a chance to meet, my name is Chi Carmody, and I am speaking in place of Michael Lynk. Michael's wife has had a bit of a mishap, which keeps him back in London, Ontario, where both he and I teach. (1) Michael and I began teaching together a decade ago at the University of Western Ontario, Faculty of Law (2). He was somewhat more fortunate than I, because he a few years after both of our arrivals in London he met a lovely lady named Jill, who subsequently became his wife. They have two wonderful little children, which keep Mike very busy. Michael e-mailed me late Thursday night to say that Jill came down with something, and that it was impossible for him to get away, and asked if I would not mind standing in for him, and present his work, the paper that he was going to present to you here today.

However, I am not, thankfully, the only person on this panel. We are joined by two very distinguished speakers. The first of these is Bob Strassfeld. (3) Bob is a professor here at Case Western Reserve University School of Law. (4) He teaches in the field of Torts, Federal Courts, Labor Law, and Legal History. (5) Prior to teaching here at Case Western and beginning his teaching career in 1988, Bob practiced for three years at the Washington, D.C. firm of Shea & Gardner. (6) His current research includes continuing work on the legal history of the Vietnam War and a history of African American lawyers in Cleveland and he has published extensively in a wide range of journals and other legal periodicals. (7)

In addition to Bob, we are also joined today by Kevin Banks. (8) Kevin is a professor at Queens University Faculty of Law in Kingston, Ontario. (9) Kevin and I originally met about a decade ago when Kevin was working with the Commission on Labor Cooperation, an arm of the North American Agreement on Labor Cooperation, at one time headquartered at Dallas, Texas and then subsequently moved to Washington, D.C. (10) At the time, Kevin was also working as a director for Inter-American Labor Cooperation. (11) He then went on from 1998 to 2001 to work with the commission full-time, and he also then began his S.J.D. degree at Harvard University, which he completed, and some of which is forthcoming in a volume from Cambridge University Press, The Impact of Globalization on Labor Standards. (12)

Labor is often said to be one of these fields that has been somewhat neglected, if not overlooked, in the North American Free Trade Agreement (NAFTA). (13) We seemed to have moved towards a much more free market, an open market in North America today. (14) What I wanted to do was to present Michael's paper to you entitled Labor and the New Inequality. Michael begins his concerns and his discussion with this idea that there has been in labor law something of a change from what we saw in the years immediately after the Second World War. What we had was a period that has been classically referred to as The Great Compression. (15) That great compression was composed of rising unionization rates, but it was also composed of rising middle class incomes and rising educational attainment. (16) This, in Michael's view, led to greater social equity across the board, a view which resonates very much with the words of the current administration in Washington. (17) This, in Michael's view, led to and was productive of greater social cohesion across the board, something obviously very desirable.

Now, since 1980, that great compression has been followed by something of a sea shift; and that sea shift has been movements very much in the opposite direction. (18) This movement away from equality and rising income inequality has been recognized. (19) There has been a sort of a surge of inequality, and many of the benefits from globalization have been shared by an increasingly small percentage of the population. (20) As a result, this has generated a host of social tensions and economic fissures.

Michael quotes from the Indian political economist, Amartya Sen, with the proposition that the central issue in globalization today really is the issue of growing inequality. (21) What are we to do about this growing inequality, given that it is so pervasive and given that globalization, while so very successful, has in some sense exacerbated the tensions between those who do not have and those who do have? This has led some commentators such as Paul Krugrnan, but also others, to refer to what we have seen since 1980 as "The Great Divergence," a divergence in material standards in the quality of living and opportunities of life. (22)

Now what do we have? Well first of all, this inequality and the place of labor law is something that Michael has been concerned about. He has noted, for example, that there has been a slight decrease in unionization rates in Canada but a much more precipitous decrease in unionization rates in the United States. (23) Those rates have, in the United States, resulted in a unionization rate of about twelve percent of the population today. (24) The redistributive effects of unionization have therefore, largely been foregone. Individuals have been forced to compete directly in the market, and as a result, what has happened is that not only unionization but labor laws themselves have, in fact, fallen back and have weakened in vitality, and the good benefits that come out of strong labor laws have been lost.

Michael suggests in his paper that strong labor laws are part of an array of strong social measures such as dynamic social programs, fairness in taxation, protective labor and employment, occupational health and safety standards, and effective levels of public spending on education, health care, and infrastructure. As was alluded to last night by Jessica LeCroy in her remarks, while the United States spends a tremendous amount of money on health care and education, Canadians, generally speaking, tend to, at least on the education side, (25) and if you look on the health care side as well, come out ahead. (26) So Michael says all of this is really developing three trends. First of all, we have this broad concern about rising inequality. At the same time, as we have rising inequality, there is decreasing unionization and stagnating labor laws. (27) Michael's suggestion, therefore, is that perhaps, if we revitalize unionization and start thinking anew about unionization and about labor laws, perhaps we will be able to redress some of this balance.

Well, it comes as no surprise then that this idea of rising income inequality or economic inequality has created a host of social problems. (28) He suggested that it could be linked to such things as the environmental concerns we have, as well as the rise of a class of individuals for whom the benefits of globalization really are not tangible. If you take a look, for example, on MSN, yesterday there was an interesting article on its website about jobs that pay twelve dollars an hour. That is the sort of new environment in which young people are having to struggle for employment and are having to struggle to try to put together conditions in which they can establish themselves, establish their families, and move forward.

So the ideas about the benefits of globalization, when you are confronted with that kind of an employment and economic future, really are further and further away from the real benefits left for other individuals. (29) Michael also suggests that we have the rise of a number of other problems that we really have not acknowledged. For example there is the fact that a lot of people are working part-time jobs and are therefore formally excluded from the benefits of unionization. (30) In addition we have the rise of child labor, forced labor, and people working long periods of time in a lot of different jobs that in effect do not remunerate people for the work they do. (31) What he suggests is that this inequality is really acting to destabilize the sorts of benefits that many have touted as coming from economic liberalization. (32)

In particular, he also goes on to talk about the fact that a lot of this economic well-being that we are so proud to speak of today has in fact been achieved at the expense of stagnant purchasing power. (33) Most middle-income people today, he suggests, and certainly lower-income people, are no better off than they were prior to 1980. (34) There has been a steep increase in executive pay, and we have seen tremendous concern about that not only here in the United States, (35) but also in Canada (36) and many other countries, where, for example, CEO pay has rocketed skywards, while the average worker has continued to work for wages that in many instances have not kept up or simply remained stagnant. (37) He has also suggested that out of this, there has been a sort of wanting influence of organized labor, which has led to its inability to counteract a lot of changes that we see on the political front.

The consequences of this, he suggests, are particularly noticeable. The Gini Coefficient, a standard measure of deviation between the highest and lowest income earners, has actually widened considerably. (38) Here, in the United States, the Gini Coefficient is sixteen to one. (39) Canada's is somewhat less unequal but still increasing. (40) He suggested that this widening coefficient produces a growing level of social dysfunction, which we view, for example, in rising criminality and rising levels of incarceration, in more illiteracy, in less social mobility and opportunity, in lower life expectancy, and in the erosion of ties that keep us together as a nation. I just quoted for you this very famous book by Robert Putnam, Bowling Alone: The Collapse and Revival of American Community. (41) So these are the consequences of economic inequality, and he suggests...

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