In a sign of the importance of labor backing in the 2020 Democratic primary, several candidates have courted unions by endorsing the idea of “sectoral bargaining,” that is, collective bargaining on a large scale, involving multiple unions and companies, often covering an entire industry.
It’s a revival of an idea that fell out of favor in the late 1940s in part because of divisions within the labor movement. Many unions felt they didn’t need sectoral bargaining and could do better on their own.
The concept, or some version of it, has won backing from Vermont Sen. Bernie Sanders, New Jersey Sen. Cory Booker, Montana Gov. Steve Bullock, and South Bend, Indiana, Mayor Pete Buttigieg. Some labor unions and their allies see sectoral bargaining as the best way to strengthen unions, which have declined as a share of the workforce to 10.5%.
The term sectoral bargaining has no clear single definition, labor lawyers and historians note. There are numerous variations, most requiring the federal government to intervene and force multiple businesses to have to deal with one or more unions.
It was practiced for brief periods in the U.S. in the 1930s and ’40s before the current versions of the main federal labor laws, the National Labor Relations Act and the Fair Labor Standards Act, were enacted. The main purpose was to set uniform wages and other standards so businesses didn’t have to compete on them. It faded away after World War II in part because many unions didn’t think they needed it. Unions that represented workers in construction, skilled trades, and public safety, such as police or firefighters, rarely had to negotiate with large corporations in the first place, so they saw little reason to bother with councils.
Sectoral bargaining was irrelevant to unions where members’ employers did not compete with one another at a national level, said Steven Silvia, professor of international service at American University. “There weren’t nationwide construction firms. So, they had no need to ‘take wages out of competition.’ The same was true for police and firefighter unions. It’s not like Boston would use firefighters from Cambridge if the wages were lower in Cambridge. So, there was no need for a sectoral contract in the public sector.”
Most of the unions with little need for sectoral bargaining belonged to the American Federation of Labor, which had long opposed government involvement in collective bargaining. “We must not, we cannot, depend upon legislative enactments to set wage standards,” AFL founder Samuel Gompers said in 1912. “When once we encourage such a system, it is equivalent to admitting our incompetency for self-government and our inability to seek better conditions.” That attitude remained prevalent in the AFL leadership until its merger in 1955 with the Congress of Industrial Organization, where the members did favor sectoral bargaining. By then, changes to federal labor law had mostly phased sectoral bargaining out.
“[D]ivisions within the labor movement meant that there was insufficient support for a continuation or expansion of government-facilitated sectoral bargaining,” noted Kate Andrias, professor at the University of Michigan Law School, in the Spring issue of the liberal journal Dissent.
“Where sectoral bargaining did thrive, it really needed that third party of the government to help convene labor and management,” said Joseph McCartin, executive director of Georgetown University’s Kalmanovitz Initiative for Labor and the Working Poor. “The AFL was always more reluctant to have government involvement.”
Sectoral bargaining is starkly different from the main form of collective bargaining that exists today, which is known as “enterprise bargaining.” Enterprise bargaining is when a single union negotiates with a single company for a contract.
The only time that sectoral bargaining had full legal status in the U.S. was during a brief period of time under the National Industrial Recovery Act, said William Jones, a professor of history at the University of Minnesota.
The expansive 1933 law created, among other things, “corporate boards” that allowed businesses to band together and set industrywide prices, wages, and other standards to prevent one business from undercutting others. This was during the Great Depression when it was widely feared that entire industries could collapse if standards fell too low.
The Supreme Court struck the entire law down in 1935 on the grounds that it allowed corporations to engage in price-fixing. A Democrat-led Congress passed the National Labor Relations Act the same year in order to preserve the labor provisions of the prior law. It also enshrined enterprise bargaining as the standard.
“They said, ‘We aren’t going to allow sectoral coordination, but we are going to protect workers’ rights to bargaining collectively and form unions,’” Jones said. “They did this with the hope that that would create the basis for some sectoral standards.”
Congress tried again to bolster sectoral bargaining in 1938 with the Fair Labor Standards Act, which created “industrial committees.” These included labor, industry, and government representatives that could negotiate industrywide standards for wages. About 70 committees were set for different industries, affecting about 20 million workers.
That arrangement is probably the closest to what today’s Democratic presidential candidates envision. “Sectoral collective bargaining, as the Sanders people have been talking about it, has been more about the government setting a floor for wages, and that’s different from a group of employers and unions talking,” Silvia said. “If you have a floor enforced by the government, no company can avoid it.”
The industrial committees became even more prominent in World War II. “War labor boards” were created to set industrywide standards on wages and prices to prevent shortages and inflation. The government was a major purchaser at the time, and there was wide public sentiment supporting these efforts. That faded after the war was over. Congress revised the NLRA in 1947 with what’s known as the Taft-Hartley amendments, stripping away most of what allowed government-backed sectoral bargaining.
Sectoral bargaining is not completely gone, the experts note. It still exists where particular unions are strong or where the federal government is itself directly involved in the economic activity.
Silvia pointed to prevailing wage laws for government contracts, which force bidders to accept certain labor standards to get the contract. “It’s not quite the same because it isn’t done through a collective bargaining mechanism, but it is more the government setting a floor for all companies,” he said.
Jones noted the current UAW-GM strike reflects a “sectoral strategy,” since the one union represents the workers for the three major domestic manufacturers. “They’re in talks with GM now but in a few months they go into talks with Ford and Fiat-Chrysler,” said Jones. “One of the reasons the strike is so important is because whatever the resolution, the GM and UAW reach will be part of the negotiations with the others.”
