The US economy today may look good from afar—but it’s far from good. Despite steady GDP growth and low overall unemployment, most Americans have not felt the economic recovery in our daily lives: the proportion of household income going to health insurance has tripled since 1999 and over one-third of severely delinquent debt in the United States comes from the growing student debt burden. When we look behind the big headline numbers, we can see that economic growth has benefited only those at the top: Over the last 30 years, only the top 10 percent of earners have experienced above-average income growth and, according to a recent Gallup survey, less than half of US workers have good jobs. It’s no wonder so many voters think the system is rigged.
Our economy is like a house on weak footing. For decades, we’ve been painting and repainting the exterior, while failing to address the dry rot spreading inside the walls. Extreme inequality means that gains are concentrated at the top and hardworking Americans don’t get the rewards of their labor. GDP growth, stock market rises, and low employment numbers tell a superficial story of long-term economic health. At the foundation of this unequal economy are some large structural problems: corporate concentration, identity-based discrimination, weakened bargaining power for working people, and the dominance of the capital-rich in politics.
Fixing structural problems requires structural change. Leading candidates in the 2020 presidential race are calling for precisely this. Senator Elizabeth Warren, for whom this call has become somewhat of a motto, said at her February presidential campaign announcement, “We can’t afford to tinker around the edges—a tax credit here, a regulation there. Our fight is for big, structural change.”
But what does it mean to enact “structural change” in the economy? Is it just about the boldness of our ideas? Bold ideas alone are too narrow and won’t get us there. On the other hand, if we try to uproot entrenched social dynamics in our economy, we make the challenge too broad, and likely untenable—yet recent critiques of calls for structural change assume this is the primary goal.
Another option is to see structural change through a purely economic lens: as a dramatic change in the way an industry or market functions. However, that still does not capture the expansive nature of our economic challenges. Progressive structural change is about changing who has power in the economy and in our democracy, and purposefully making the rules of our economy work for more people.
Power is the key word. Structures need support to stay standing, like the beams and walls that hold up a house. Power is the support that gives structures durability. Similarly, a broad base of power gives our economy durability. But economic and political power concentrated in the hands of the few is toxic, dangerous, and unsustainable. By shifting the dynamics of power in the economy, we shift the structures that support it.
Today, the US economy is dominated by concentrated private power and minority rule. There’s a link between economic power and political power. And not only because of the role of money in politics. Philosopher Elizabeth Anderson argues that despite the emphasis on freedom in American discourse, most of us are subjected to a high degree of control and coercion in the workplace. This undermines our democracy because, in the absence of organized labor and workplace protections, the rules of the economy are increasingly set by the bosses and shareholders.
Rebalancing power in the economy has no one fix. We need to restore protections and bargaining power for working people. There must be a check on capital. We need to strategically grow industries, like home care and education, that provide social value and are not extractive. And we need to do all this inclusively, explicitly addressing historic and current racial and gender harms.
Examining worker power in greater detail can give us some insight as to why the above interventions can be transformative. Building power for working people and creating structures that codify that power can create progressive structural change.
Born out of radical movements and codified in major legislation like the Wagner Act, organized labor in the mid–20th century served as a counterweight to corporate power. The right to unionize and bargain with employers changed the power dynamics in the job market, where decisions were no longer made solely by employers and the government. The right to bargain gave working men and women a voice in the labor market, and unionization increased their participation in elections. Though the 20th-century labor movement was far from ideal, with racial and gender exclusion and discrimination rampant, it did mark a period of structural change.
In order to regain power in the labor market and deflate the power of working people in democracy, corporations undertook a concerted effort over the past several decades to weaken organized labor. Companies needed more power in the market to cut costs and raise profits for shareholders. Increased competition from globalization, which enabled companies to outsource labor-intensive production, accelerated the decline in the bargaining power of labor. And competition from trade, plus the rise of institutional investing, shifted bosses’ motives toward keeping costs low and maximizing shareholder value.
As Steven Greenhouse notes in Beaten Down, Worked Up: The Past, Present, and Future of American Labor, employers found a model in General Electric’s CEO Jack Welch. Between 1981 and 2001, Welch raised GE’s financial valuation from $13 billion to $500 billion, while eliminating more than a quarter of its workforce.
This was another structural change, but in the wrong direction: Power was sapped from organized labor and redistributed to shareholders who were not representative of the public. In 1965, 84 percent of stock in publicly traded companies was owned by individuals. By 2010, 67 percent was owned by institutional investors, like banks, hedge funds, endowments, and pensions.
To make structural change in the economy today, organizers, politicians and candidates must target who has power: government and big corporations. So it’s very strategic for candidates promising structural change to use the power of government to weaken corporate power and build power for everyday people.
Fixing the structural imbalance between private power and working people requires both a movement of working people and a codification of their power in new structures. Why a movement? Power should not solely reside with government or technical experts. Transformative change can come from those who are most affected by the social and economic systems. Working people’s interests should be central to efforts to rebuild labor’s power, rather than technical solutions. Working people should lead while progressives in the managerial class follow.
Why new structures? Because movements build power and policy changes can codify that power. There are many policy options: First, we can include all working people in the right to unionize, especially those who have been historically and systemically marginalized, like domestic workers. Second, the United States can create a sectoral bargaining process, allowing working people to bargain across firms within the same industry. Third, we can strengthen the right to strike, the most potent tool organized workers can use to wield power in the economy. Some presidential candidates are already fighting for structural change by elevating worker power; Senator Bernie Sanders, Senator Warren, and others all have comprehensive plans.
We have the tools we need to make structural change: people in motion, leaders with a vision and a will for change. Getting rid of Trump in 2020 won’t fix everything—but electing a progressive will be a step in the right direction.