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Local 4 Sheet Metal Division
  • Local 4  Sheet Metal Division
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    Member from various Unions came together on June 7th, 2011 to rally in front of Memphis City Hall.  The same day City Council was to vote on a budget that would allow the privatization of the City's sanitation service.

    As Unions Go ... 

    So goes the middle class, for better or for worse.

    At no other time in my almost 30-year career as a union labor lawyer have employees had more reason to join or form a union. 

    What employee does not want protection from unfair layoffs or someone to protect their job from elimination? What laid-off employee does not want someone to negotiate their severance pay, health insurance, or enhanced pension benefits? 

    Yet, according to a recent Bureau of Labor Statistics report, unions lost 612,000 members in 2010, dropping the unionized share of the work force to 11.9 percent from 12.3 percent in 2009. Union membership in the private sector fell from 7.2 percent to 6.9 percent, the lowest point since the infancy of the labor movement in the 1930s.

    The correlation between strong unions and a strong economy in this country is fact. Economist Paul Krugman referred to the years 1929-1947 as "the birth of the middle class." These years also saw the birth and growth of the modern union movement. The number of U.S. workers belonging to labor unions increased from 3.6 million to 15.4 million during those years.

    The postwar prosperity years of 1947 to 1973 saw further growth in union membership. As Richard A. Levins wrote, "Middle class economies don't just happen. They are made. Union made."

    The wage advantage for a typical union worker is 13.7 percent. The union wage advantage for a low-wage worker is 20.6 percent, says the Center for Economic and Policy Research. Even Fed chairman Ben Bernanke opined in 2008 that there was good evidence that cash that goes to low- and moderate-income people is more likely to be spent in the near future than monies that go to the rich.

    The rich spend only so much and then just keep getting richer. The middle class spends out of a felt necessity, thereby contributing to a vigorous economy. 

    But, as good union jobs are lost overseas and replaced with minimum-wage jobs with no benefits, the middle class in this country is going the same way as unions — away. The good manufacturing jobs are disappearing, and now we see letters to the editor begrudging auto workers for desiring a good wage, health benefits, and a retirement to look forward to.

    In Memphis, the International Harvester and Firestone union jobs are a thing of the past and have not been replaced with anything equivalent. Not coincidentally, the median income across all sectors in Memphis is $30,875, and, according to the U.S. Census Bureau, the income gap between rich and poor in Shelby County is continually growing. 

    I fear what this country will be like with the continued decline of the middle class. I wonder what jobs there will be for the high school graduates of the future. They can't all be corporate CEOs or doctors or lawyers. 

    I see a country of increasingly rich and increasingly poor, a country more and more polarized. As surely as growth in union participation led to a strong middle class, falling participation has weakened it.

    The loss of the middle class leads to an unstable economy polarized into rich and poor. Resurgent unions could balance that power and lead us to where we need to be: a growing, middle-class economy. Government policies that favor unions and the middle class are necessary to keep our economy both fair and growing. 

    The currently fashionable attack on unions is not the answer. Companies join together to form cooperatives and chambers of commerce lobby for their interests. But when employees do something similar to better their circumstances, it somehow becomes suspect.

    When people criticize unions, I remind them that unions are identical to the people who are their members. Unions give employees — ordinary people — the opportunity to have a voice in the terms and conditions of their employment. Unions sponsor pension plans that invest in the economy, as well as apprenticeship programs that train skilled workers. 

    The Roosevelt administration's three-legged stool of retirement — one based on a triad of Social Security, employer-sponsored pensions, and private savings — is wobbling more than ever. 401(k) plans won't replace the legs of the stool. (The average 401(k) balance as of March 31, 2010, was $66,900, according to Boston-based Fidelity Investments, which has 11 million participants.)      

    We need better jobs, better wages, and better benefits to improve the economy. If you think we don't need unions anymore, think again. 

    Deborah Godwin is a Memphis labor lawyer.

    Misclassified Workers

     One of the ways that many construction workers experience wage theft is being told they are independent contractors, and not employees. We call this misclassification, and it's a growing problem.  But what is an independent contractor?

    The general rule, according to the IRS, is that an individual is an independent contractor if you, the person for whom the services are performed, have the right to control or direct only the result of the work and not the means and methods of accomplishing the result.  In other words, here is what needs to be done and it’s up to you how it will be done.  In most cases a contract between the parties is used.  

    In 2008 an employee of Warner Construction (a local company) filed IRS Form SS-8 which launched an investigation to determine if the worker was in fact an employee or as the company claimed, an independent contractor.  The IRS ruled that the worker was an employee because there was no written contract between the parties and that the company determined the methods by which he completed the task assigned to him. 

    Every year these crimes are being committed by companies classifying their employees as independent contractors.  It’s not just in Tennessee, but all over America.  This abuse leads to billions of dollars lost in government revenues, according to the IRS. This is money that could be used for healthcare, roads, and the schools our children attend. 

    Workers being paid as 1099 independent contractors or having paychecks replaced with cash is a growing crime and because of that, responsible employers are left with a huge disadvantage in a competitive market.  Studies show that companies misclassifying their employees can cut labor costs by 2% by avoiding unemployment insurance premiums and by classifying them as independent contractors, can cut labor costs by 20% to 40% by avoiding all payroll taxes. 

    Another way workers are being misclassified is by the type of services they perform for a company on prevailing wage construction projects.  These projects are funded by tax dollars which require companies to pay the area prevailing rate for the trade of work being performed, such as sheet metal work iron work, and so on.  Companies will try to avoid paying the prevailing rate by classifying the workers as laborers instead of journeymen tradesmen and, in some cases, make the employee pay back the difference between the prevailing rate and his normal pay.

    Low pay, no pay, no overtime pay, no health benefits, no pension plan, no sick days, no vacation days, no workers compensation for on the job injuries, lack of safety, and no training; each of these reductions result in a savings in labor costs for businesses that misclassify their employees.  They avoid mandated taxes, wages, and various benefit programs that would enhance the quality of life for their employees. 

    So what can be done?  Our members of Congress can do something about the growing problem of misclassifying workers. The Fair Playing Field Act was introduced this fall in Congress, to close tax loopholes that make it easier for employers to misclassify workers. We urge all our Mid-South members of Congress to co-sponsor this legislation and to enforce current laws so that workers get the wages they deserve, government gets the tax revenue it needs, and so that all business compete on a level playing field.


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