Grand Bargaining

With Labor Day upon us, I’ve found myself thinking about three apparently unrelated pieces of sociological research, and how all point to the role of laws, policies, and institutions as "signalers" of the social values that we share.

First, in an unpublished paper, Stanford University’s Cristobal Young examines the role of unemployment insurance in encouraging prolonged job search effort. Second, in a talk earlier this month at the annual meeting of the American Sociological Association, Shelley Correll (also at Stanford) discussed how greater awareness of laws such as the Family and Medical Leave Act (FMLA) make it harder for employers to discriminate against those who take it. Third, a recent article by Bruce Western (Harvard University) and Jake Rosenfeld (University of Washington) argues that unions contribute to a moral economy that reduces wage inequality for all workers, not just union members.

I think that these three pieces of scholarship tell a similar story: policies, laws and institutions have impact beyond their primary intended purpose. Unemployment benefits are more than the money one receives when jobless; laws pertaining employment rights are more than rules enforced by the imposition of sanctions; and unions are more than organizations seeking to improve their members’ wages and working conditions. These policies, programs, and institutions also have a symbolic importance—they signal a consensus about what we value and desire as a society which simultaneously shapes the lens through which we judge our own behavior and that of others.

In my view, what these three pieces of sociological research share is that they illustrate how social norms and expectations—and not just "market forces"—help to govern the norms of behavior, even in the sphere of economics and the workplace. Adequate UI benefits represent a collective pat on the back for the jobless in their search for work—a signal that your friends and neighbors support your struggle to get back on your feet. FMLA signals to employers and coworkers that it’s okay to take time off to care for a sick family member, reinforcing the idea that a commitment to work and a commitment to family need not be mutually exclusive. Western and Rosenfeld show that unions have both a direct and an indirect effect on the income of Americans—not only do they bargain for better wages for members, but they also signal to "the powers that be" that the economic needs of the middle class should be attended to.

First, Cristobal Young: The standard economic view of unemployment insurance (UI) is that, by providing a means of support to the unemployed, the program also creates a disincentive for jobless workers to find work (here)—which, in turn, leads the unemployed to be jobless for a longer duration (here). Young, however, argues that these analyses may not sufficiently account for those who drop out of the labor market, nor for UI’s effects on the job-search effort. Since UI pays people to search for work, says Young, the program helps to create an "optimism-sustaining liquidity" that supports their job-search efforts. In examining more than 300,000 administrative audits of reported UI job-search activity, Young found that more generous UI benefits actually serve to increase the probability of unemployed workers’ continued job-search commitment. Thus, Young’s results suggest that states with more liberal eligibility rules and better benefits may enjoy a lower rate of labor-force withdrawal.

Second, Shelley Correll’s talk addressed the question of whether family-friendly laws, such as the Family and Medical Leave Act (FMLA), serve to reduce the so-called "caregiver penalty." Her work builds on a body of research showing that those who engage in extensive caretaking activity experience a "penalty" in both wages and status (for research on mothers, see here). In the case of family leave, there is empirical evidence to show that those who take such leave—both men and women—are prone to receive lower salaries and have lower likelihood of being promoted, even when compared to individuals who take leave for other reasons. Since these gaps persist in the presence of an arsenal of statistical controls, Correll argues, it’s likely that bias and discrimination (and not just differences among workers) play a role. Drawing from another body of research showing that lawmaking can be instrumental in changing the norms and judgments of society, Correll designed a series of experiments to see how increased knowledge about FMLA might change the way that people who use the law are viewed. And indeed, preliminary results show that making FMLA more salient (i.e. increasing awareness of the existence of this law) helped to eliminate the "caretaker penalty" for hypothetical workers who took family leave.

Third and finally, Bruce Western and Jake Rosenfeld examine the effects of unions’ decline on income inequality, demonstrating that nonunion workers in highly unionized regions and industries enjoy more wage equality than do counterparts in less unionized areas. Overall, deunionization explains approximately one fifth of the increase in hourly wage inequality among women and about a third among men. The authors suggest that this is because the labor market is "embedded in a moral economy," affecting the norms of behavior beyond that which has been bargained directly. This moral economy influences ideas and perceptions about the fair distribution of resources, so that violations of distributional norms spur condemnation and charges of injustice. Labor unions are a major pillar of this moral economy, even in today’s deunionized labor markets: "For generations, unions were the core institution advocating for more equitable wage distribution," said Rosenfeld. "Today, when unions — at least in the private sector — have largely disappeared, that means that this voice for equity has faded dramatically. People now have very different ideas about what's acceptable in terms of pay distribution."

These three scholarly pieces strongly suggest that the policies, programs, and institutions that govern the norms of workplace behaviors are important, both for their own effects, but also because they act as a guidepost to what we deem to be socially right or wrong and how we wish to view (and in fact end up viewing) people’s behaviors. They signal a common vision for a just society and how we aim to achieve it.

On this Labor Day, it’s also worth noting that unions were the key champions of almost every piece of social legislation in the U.S. affecting workers—from laws on child labor and the minimum wage to laws on unemployment insurance, family leave, occupational safety and health, and employee non-discrimination. Even in their period of decline, they have done much to benefit the nation.

- Esther Quintero