Hydraulic Relationships: Labour Law and

the New Inequality

17 June 2010

CRIMT / CIRA

Professor Michael Lynk Faculty of Law University of Western Ontario

“The different sorts of equality are finally inseparable but up to a certain point they are sufficiently distinguishable, and one may speak of political equality, equality before the laws and economic equality. Without the last, the first and second exist only measurably, and they tend to disappear as it shrinks.”

-- William Dean Howells

The Lecture’s Three Arguments:

1.  Widening Inequality

2.  Falling Unionization

3.  Somnolent Labour Laws

PAUL KRUGMAN

The Gilded Age

The Great Compression

The New Inequality

Inequality

  Health   Education   Obesity   Teenage Births   Imprisonment + Punishment   Social Mobility   Social Trust

Gini coefficients of income inequality in OECD countries, mid-2000s

Growing Unequal? Income Distribution and Poverty in OECD Countries - OECD © 2008

Trends in income inequality

Growing Unequal? Income Distribution and Poverty in OECD Countries - OECD © 2008

Top 0.5% Income Share in Canada and the United States 1920-2000

A QUARTER CENTURY OF ECONOMIC INEQUALITY IN CANADA: 1981–2006 By Lars Osberg

Canadian Centre for Policy Alternatives © 2008

Share of Aggregate Incomes Received by Each Quintile of Families and Unattached Individuals (%)

A QUARTER CENTURY OF ECONOMIC INEQUALITY IN CANADA: 1981–2006 By Lars Osberg

Canadian Centre for Policy Alternatives © 2008

Percent Change in Real Taxable Income 1982-2004

A QUARTER CENTURY OF ECONOMIC INEQUALITY IN CANADA: 1981–2006 By Lars Osberg

Canadian Centre for Policy Alternatives © 2008

Share of total wealth

Revisiting wealth inequality René Morissette and Xuelin Zhang

The Distribution of Wealth in Canada 1970-2005

Revisiting wealth inequality René Morissette and Xuelin Zhang

Labour's Share, Canada, Total Compensation as a Share of GDP, 1961-2007

Why Have Real Wages Lagged Labour Productivity Growth in Canada? Andrew Sharpe, Jean-François Arsenault and Peter Harrison

Average Weekly Wages Adjusted for Inflation

RISING PROFIT SHARES, FALLING WAGE SHARES By Ellen Russell and Mathieu Dufour

1980 -- $41,348 (in 2005 dollars)

2005 -- $41,401 (in 2005 dollars)

“[Recent economic studies show] …a clear negative correlation between unionization and inequality: the countries in which income inequality is on average lower in the period 1989-2005 tend to be those in which a greater proportion of workers is affiliated to trade unions.”

ILO, World of Work Report 2008

Union Density Rate Changes 1970-2003

International Patterns of Union Membership David G. Blanchflower

Trends in Union membership and density

Whither Unionism: Current State and Future Prospects of Union Renewal in Canada Pradeep Kumar

Province Unionization Rate, and Rank – 1998

After Tax Inequality Ratio of Highest and Lowest Quintiles, and Rank – 1998

Newfoundland 39.7% (1) 4.90 (4) Quebec 35.7% (2) 4.90 (4) Manitoba 34.9% (3) 4.70 (3) British Columbia 34.8% (4) 5.10 (7) Saskatchewan 33.6% (5) 4.60 (2) Nova Scotia 28.9% (6) 5.40 (8) Ontario 28.0% (7) 5.50 (9) New Brunswick 26.6% (8) 4.90 (4) Prince Edward Island 26.3% (9) 4.20 (1) Alberta 23.0% (10) 6.10 (10) National Average 30.7% 5.40

Figure 9: Comparative Provincial Unionization Levels and After-Tax Inequality Ratios

Sources: R. Morissette, G. Schellenberg & A. Johnson, “Diverging Trends in Unionization” (2005) 6:4 Perspective on Labour and Income (Statistics Canada) 5, Table 3, at p. 8; and D. Sanga, “Income Inequality within Provinces” (Winter 2000), 12:4 Perspectives on Labour and Income (Statistics Canada) 33, at p. 35.

Labour Law Legislative Stagnation   Since 1990, most reforms to labour legislation has been to

curb trade union bargaining power

  Exceptions that prove the rule: BC (1992), Ontario (1992), Saskatchewan (1994)

  All rolled back by subsequent change in government

  1982-2007: 179 pieces of enacted legislation that have curbed or denied collective bargaining

  Broad consensus among American and Canadian industrial relations scholars – differences in union density between US and Canada explained in large part by differences in labour laws

Union Certification: Card Check v. Automatic Vote   Post WWII: every Canadian jurisdiction used card-check

system for union certification   If majority of employees (either 50% or 55%) signed

individual membership cards, LRB would certify without vote.

  Nova Scotia – 1970s – automatic certification regardless of card count

  Since 1984, 5 other jurisdictions – BC (1984/1992/2002), Alberta (1988), Newfoundland (1994), Ontario (1995) & Saskatchewan (2008) – have adopted automatic certification vote

Ontario: Automatic Vote

  Card check lasted from 1947-1995

  Changed to automatic vote in Bill 7 reforms under Harris government

  McGuinty government: maintained automatic vote, except for construction industry

  Post-1995 – substantial downward impact on certification: 21% lower likelihood of certification.

British Columbia: Automatic vote

  Late 1970s to 1984 – Union certification success under card-check: 86%-92%

  1984-1993: automatic vote – 70%

  1993-2002: card-check – 90%

  2002–present: auto vote – 70%

The Future: Wagner Act Plus? Challenges:   Decline in manufacturing, which was traditional base of

unionism   Growth in atypical and contingent labour force, from 15%

in 1980 to 32% today (Part-time, casual, self-employed)   Growth in global trade and global labour markets, exerting

downward pressure on labour conditions   Lack on effective international institutions on labour

conditions   Growth of economic inequality creates its own momentum

on domestic institutions

The Future: Wagner Act Plus? A Way Forward:   Permit Minority Unit Bargaining

  Wage Degree System

  Permit More Cluster and National/Industry Bargaining

  Tie Minimum Wage to Average Wage

  Restore Card-Count