Betty Dukes testifies on Capitol Hill in Washington, Wednesday, June 29, 2011, during the Senate Judiciary Committee hearing to examine the factors at issue in the Dukes v. Wal-Mart Stores Supreme Court ruling. Dukes, a Wal-Mart greeter in the San Francisco area, was the plaintiff in the largest gender bias class action lawsuit in US history, which charged Wal-Mart with discriminating against women in promotions, pay, and job assignments in violation of the Civil Rights Act. (AP Photo/J. Scott Applewhite)

These are not the best of times for American workers. Real hourly wages have not increased since the 1970s, and the post-employment picture is nearly as bad: defined-benefit pension plans have all but disappeared, and three-quarters of those people approaching retirement possess less than $30,000 in savings. Meanwhile, unlike wages, productivity gains have been robust. As workers toil harder and longer, decade after decade they have earned far less than a fair slice of the wealth created. This is the plight of the 99 percent.

What workers lost did not vanish; it has simply trickled up. Way up. Much has been rightly made of the 1 percent’s grip on 20 percent of total national income, but the top 0.0001 percent alone takes 5 percent of that, a figure that has quintupled since workers last experienced a real wage gain. By these and other measures of income inequality, the United States stands alone among industrialized nations.

This is not a new American story, however. Comparable levels of inequality existed before and during the Great Depression, and wage gains had also stalled. And yet, by the late 1930s, as the Depression ended, income inequality had begun to narrow and continued to do so until the mid-1970s.

What happened? To be sure, the economic landscape shifted with America’s entry into World War II and the stimulus of war production. But economic policy had also been transformed by New Deal legislation. The National Labor Relations Act (NRLA) of 1935 guaranteed workers a right to form unions and embedded collective bargaining in the nation’s fabric. Today, it is worth recalling the rationale that Congress set forth in the act:

The inequality of bargaining power between employees who do not possess full freedom of association…and employers who are organized in the corporate or other forms of ownership association…tends to aggravate recurrent business depressions, by depressing wage rates and the purchasing power of wage earners in industry.

In other words, Congress recognized that economic crisis was linked to disparities in wealth, which, in turn, were inseparable from imbalances of power in the workplace. The remedy was the NLRA, granting workers a right to assert a collective voice in dealing with employers. In 1937 the Supreme Court affirmed the law as a constitutional exercise of the commerce power that enabled workers “to deal on an equality with their employers” and created democracy in the workplace by guaranteeing the “fundamental right” to “self-organization and to select representatives of their own choosing for collective bargaining…without restraint or coercion by their employer.”

Today, that system of employee rights is in jeopardy. Its legal foundations have been eroded by Court rulings over the past forty years—rulings issued alongside increasing employer resistance to unions, outsourcing and intensifying global competition. As William Yeomans writes on page 14, the Court’s role in curtailing labor rights was envisioned in Lewis Powell’s 1971 memo to the US Chamber of Commerce urging business to plead its case before “an activist-minded Supreme Court.”

Since then, the Court has discounted the value of labor organization to the nation’s political economy, restricting three basic guarantees of labor law: the right of workers to learn about unions; the right of workers to organize and choose union representation; and the right of workers to enter into collective bargaining about all matters touching their employment. The 99 percent have paid the price: since the 1970s, union representation has drastically declined and, partly as a consequence, economic inequality has widened.

The guarantees established by the NLRA begin with workers’ right to learn about unions. According to a 1956 ruling by the Warren Court, this hinges “on the ability of employees to learn the advantage of self-
organization from others.” In the 1950s, when unions represented about a third of US workers, knowledge about workplace representation could be gained through routine, casual contact with union members. Today, with less than 7 percent of the private sector unionized, employees’ ability to hear the arguments in favor of organizing depends increasingly on the role of union organizers.

But in Lechmere, Inc. v. NLRB, a 1992 decision written by Justice Clarence Thomas, the Court allowed employers to bar union organizers from company property—in this case, members of the United Food and Commercial Workers, who were passing out leaflets to employees in the parking lot of a shopping mall. In an amicus brief, the Chamber of Commerce urged the Court to ignore the “quasi-public” nature of the mall, claiming that the union presence amounted to “trespass.” The Court agreed, holding that except in extreme situations, employer property rights outweigh employee rights to learn about unions. Famously, in the 2010 Citizens United decision, the Roberts Court invoked the metaphor of an “‘open marketplace’ of ideas” in striking down restrictions on corporate expenditures aimed at influencing federal elections as a violation of the First Amendment. Conversely, in Lechmere, the Rehnquist Court held that corporations can exercise their property rights to seal off an actual marketplace from the idea of union representation.

Meanwhile, the Court has upheld the right of employers to speak out against unions, even when taxpayers foot the bill. And it has done so at the expense of the states’ sovereignty so zealously protected by the Court over the past quarter-century. In a 2008 case brought by the Chamber of Commerce, the Court struck down a California statute barring private organizations from using state funds received, for example, through grants or contracts to “assist, promote, or deter unionization.” The majority held that an employer’s right to speak on union questions overrides a state’s right to control the use of public funds. “A legislature,” remarked Justice Stephen Breyer in dissent, “generally has the right not to fund activities that it would prefer not to fund.” But the majority disagreed, at least with respect to speech about unionization.

The second guarantee is of the right to organize. In the case of 8 million undocumented workers—who outnumber private-sector union members—the Court has effectively revoked that right. Consider the fate of José Castro, who joined the United Rubber Workers’ drive to organize a plastics factory in Paramount, California. Castro was fired when he began distributing union membership cards. The National Labor Relations Board held that this was illegal, since the NLRA expressly forbids employers from retaliating against union supporters. But in a 2002 case, Hoffman Plastic Compounds, Inc. v. NLRB, the Supreme Court denied Castro back pay because he was an undocumented immigrant. Writing for the 5-4 majority, Chief Justice Rehnquist held that although undocumented workers are protected by the NLRA, awarding them back pay “trivializes the immigration laws…and encourages future violations.”

Of course, it is ludicrous to imagine that the dream of being unlawfully fired for union activism and then awarded back pay would encourage undocumented workers to cross the border. Rather, in Hoffman, the Court created new incentives for employers to hire undocumented immigrants whose rights may be trampled on without financial penalty—that is, with impunity. As Justice Breyer warned in dissent, it now pays for employers to violate both immigration and labor laws “with a wink and a nod,” knowing that the status of the undocumented “ultimately will lower the costs of labor law violations.” By elevating a questionable interpretation of immigration policy over the effective enforcement of labor law regarding a whole category of employees who are central in today’s economy, the Court has rendered it nearly impossible to organize in low-wage workplaces, where workers are most in need of representation but also most frequently undocumented. The rights of employees like José Castro have become a dead letter.

And where employees do become union members despite these risks, they find their right to collective bargaining has been chipped away by the Supreme Court. Here, too, the Chamber of Commerce has played a pivotal role, pressing the Court to protect employer authority, diminish the voice of union representatives and exclude key management decisions from the bargaining required by the NLRA.

Nowhere did the Chamber heed the vision of the 1971 Powell memo more purposefully than in First National Maintenance Corp. v. NLRB (1981). The NLRB had found that First National, a New York cleaning company, breached its duty to bargain with District 1199 of the Retail, Wholesale and Department Store Union when it canceled a contract and laid off dozens of union employees. After a federal appeals court upheld the board’s ruling, the Chamber intervened, urging the cleaning company to appeal to the Supreme Court. Without formally representing First National, the Chamber’s lawyers nonetheless guided the case through the Court, even proposing to pay company counsel $50,000 to step aside and allow a former federal judge to present the oral argument, though this offer was turned down.

The Chamber’s investment paid off. Relying on briefs written by the Chamber arguing that the NLRA insulated a “core of entrepreneurial control” from mandatory collective bargaining, the Supreme Court upheld the company’s actions. The Court adopted a new cost-benefit analysis, justifying the rejection of union input by weighing the “burden” on business against the “benefit” for management-labor relations and the collective bargaining system. Writing for the majority, Justice Harry Blackmun affirmed the “employer’s need for unencumbered decisionmaking,” even though the decision cut to the heart of employees’ interests—in this case, remaining employed. In his dissent, Justice William Brennan objected to the Court’s “one-sided approach” to resolving “serious two-sided controversies.” By narrowing the scope of democratic dialogue about workplace decisions that can devastate entire communities, the Court has not simply narrowed the scope of collective bargaining; it has sacrificed a civic counterweight to cold business calculus.

It is tempting to ascribe the Court’s devaluing of the NLRA’s guarantees to the notion that labor’s collective rights have been displaced by a new set of individual employment rights spawned by the 1964 Civil Rights Act’s prohibition of discrimination on the basis of race, gender, religion or national origin. But that would be to forget that laws protecting individual rights in the workplace have been won, time and again, through collective effort. And the rights of individual employees have been enforced through class-action lawsuits that ensure compliance with minimum labor standards. Rarely can a worker stand alone in bearing the cost of litigation or the risk of suing an employer.

Today, however, the Court has cast doubt on the legitimacy of class-action suits in a series of decisions, stymieing the efforts of individual workers to join with others in pursuing workplace justice. Chief among them is Wal-Mart v. Dukes. Betty Dukes, a Walmart greeter, was frustrated by seeing better jobs at the store filled by men without the openings ever being posted. Last year, in a 5-4 decision, the Court rejected her effort to sue the company on behalf of thousands of women just like her. Pointedly, Justice Antonin Scalia began the majority opinion by deeming the class action “an exception to the usual rule that litigation is conducted by and on behalf of the individual named parties only.” Dukes presented evidence that women made up 70 percent of Walmart’s hourly employees but only 33 percent of its managers. But according to Justice Scalia, neither these statistics nor the stories of widespread exclusion and humiliation by individual managers constituted evidence of discriminatory policy because Walmart had issued a policy barring such practices. As the dissent noted, the Court failed to take account of a corporate culture that can pervade millions of seemingly discrete decisions and reinforce gender stereotypes despite the company’s well-crafted official anti-discrimination code.

Coupled with Wal-Mart v. Dukes are the Court’s mandatory arbitration cases. In the 1991 case of Gilmer v. Interstate/Johnson Lane Corp., the Rehnquist Court ruled that companies could require workers, as a condition of employment, to sign away their rights to sue them in court. Alleged violations of civil rights and employment laws would instead have to be heard by private arbitrators, often under rules designed by management. Soon employers extended this device to require workers to give up their right to bring class actions. Then, in 2011, in AT&T Mobility v. Concepcion, the Court allowed the insertion of such arbitration clauses into service contracts, barring customers from filing class actions against AT&T not just in court but also in arbitration, on the theory that class actions increase “risks to defendants.” If the Chamber of Commerce prevails—and it is currently litigating the issue in the lower courts—the AT&T decision will be expanded to employment contracts. And if the Supreme Court buys the Chamber’s argument, it is not hyperbolic to foresee the end of class-action employment litigation.

At that point, most workers would stand alone, in arbitration and without access to the bargaining table, effectively stripped of the right to proceed collectively. The obligatory waiver of class-action suits echoes the “yellow dog” contracts that employers once required workers to sign agreeing not to join a union—agreements outlawed by Congress in 1932. This, together with limits imposed by the Court on workers’ rights of representation, suggests that the future of labor law may circle back to the pre-NLRA era. In the wake of the Powell memo, the Court appears to have understood one fundamental workplace reality only too well: power lies in numbers. The fate of the 
99 percent rests on workers and their unions using what’s left of the law to organize those numbers.

ALSO IN THIS FORUM

Bill Moyers and Bernard A. Weisberger: “The 1 Percent Court
William Yeomans: “How the Right Packed the Court
Jamie Raskin: “Citizens United and the Corporate Court
Dahlia Lithwick: “One Nation by and for the Corporations
Michael Greenberger: “The Roberts Court and Wall Street
Herman Schwartz: “Rewriting Antitrust Law
Sherrilyn Ifill: “A Court Out of Touch
Nan Aron: “The Way Forward