On the Contrary

Sectoral Bargaining Reforms: Proceed with Caution

After decades of decline, strike activity grew dramatically in 2018 and 2019.[1] Data from the Bureau of Labor Statistics showed that these two years marked a thirty-five-year high for the number of workers involved in work stoppages.[2] A closer examination at rising wage inequality and nearly stagnant hourly wage growth suggested that despite having jobs and labor market power, workers were still struggling, not able to make ends meet in their day-to-day lives. This, combined with the likelihood that they would be able to find a job if they were unlawfully terminated for organizing, led as many as half a million people in the United States in each of these years to engage in lawful work stoppages—and scores more in wildcat strikes, protests, legal and extralegal pickets, and other forms of mutual aid.

As worker organizing in all its forms has grown, so, too, has the  popularity of policy reforms to address rising economic and political inequality and precarity through work laws.[3] Broadly, these reforms fall into two categories: (1) recommendations that better protect and support the types of concerted activity that we know are on the rise and (2) recommendations to overhaul the framework of collective bargaining in the United States. Proposals that seek to better protect workers’ rights to organize—the most prominent being the Protecting the Right to Organize Act (PRO Act) are primarily aimed at rolling back eighty years’ worth of limitations placed on what workers can do to grow power in the economy. They seek to create robust enforcement mechanisms to deter unlawful labor practices, to end the secondary boycott ban, and perhaps most importantly, to liberalize the rights to picket and strike that have been severely limited over many decades of legislation and legal decisions.

The second set of recommendations from some labor advocates and scholars—to legally overhaul the framework for collective bargaining— is broadly described as a move toward a more European-style model of economic coordination, called “sectoral bargaining.” In the most fundamental sense, sectoral bargaining means exactly what it sounds like: having the terms of workers’ contracts established through bargaining across a sector (horizontal bargaining) or a supply chain (vertical bargaining), instead of through bargaining with individual employers at the enterprise level, as is the norm in the United States. As some analysts have pointed out, we already have a few successful examples of sectoral bargaining on this side of
the Atlantic.[4] The United Food and Commercial Workers Union, for example, has sector-wide agreements with grocery stores in Southern California, which make it easier for the union to establish high standards for work and pay while also giving the grocers some relief from the pressures of labor competition. As a longstanding practice, the construction trades, too, bargain regional or local multi-employer master agreements with construction employer associations. But the voluntary nature of these sectoral arrangements makes them hard to replicate across industries. Restructuring work law to better facilitate these kinds of sectoral arrangements—bargaining frameworks that seem good for workers and businesses—appears at first glance to have few drawbacks, a recommendation that everyone can get behind.

Indeed, sectoral bargaining has become an exciting new buzz word among seemingly unlikely bedfellows—both industry representatives[5] and labor advocates[6] alike. But the devil, as ever, is in the details, and in at least two instances in which sectoral bargaining proposals have been made public and negotiated, those details have been bad for workers. We should ask why.

. . . [T]he devil, as ever, is in the details, and in at least two instances in which sectoral bargaining proposals have been made public and negotiated, those details have been bad for workers.

In California, the largest blue state in the country and the fifth largest economy in the world, we first witnessed the dangerous pitfalls of a potential sectoral bargaining reform, tentatively debated in 2019 by some labor unions and Uber, Lyft, DoorDash, and Instacart. This proposed scheme was advanced after the passage of California’s Assembly Bill 5, or AB5, (which made clear that workers for most labor platforms are employees) but before the law’s enforcement. It was premised on an explicit trade: in exchange for sector-wide “bargaining” over a narrow scope of topics (topics which excluded critical elements of the job, such as how the algorithms assigned work and determined pay), the workers would give up any and all claims to the rights and protections granted to employees under U.S. law.

In other words, it would have supplanted the employment rights of a mostly subordinated racial minority and immigrant workforce and possibly entrenched digital piece payment and algorithmic management as acceptable, union-endorsed industry practices.[7] In exchange, the suggested sectoral bargaining reforms would have made it much easier for unions to represent atomized, dispersed workers and to bring notorious companies like Uber and Lyft to the bargaining table. But the subjects of bargaining once unions were at the table with industry were severely limited by the terms of the arrangement, and the low threshold for representation (5 percent of the workforce) raised the possibility of a company-influenced union winning an election. Rather than centering worker power, the proposal ignored the myriad problems with federal labor law and the historical reality that concerted activity—not mere representation—is the locus of power for organized labor.

Two years later, during the height of the coronavirus pandemic and following the historic Black Lives Matter uprisings, a similar proposal circulated in New York State, with the support of the International Association of Machinists and Aerospace Workers. The Machinists, through a private contract with and funding from Uber, established the ironically named Independent Drivers Guild (IDG) in 2016 and since then has been behind “sectoral bargaining” discussions with policy makers in Illinois, Connecticut, and New York. Like the others, the New York proposal was crafted behind closed doors, then carried by Diane Savino, a former AFSCME leader, in the State Senate and garnered the brief support of the Transport Workers Union (TWU) International President John Samuelsen.[8]

Then, a copy of the draft bill leaked to the public. Those familiar with the proposal discussed in California in 2019 found it strikingly similar. It aimed at creating a sector-wide union encompassing dues-paying Lyft and Uber drivers, and a parallel union representing food delivery workers, who were made “independent contractors” by law, without the benefits of an employment floor—including the minimum wage, overtime, workers’ compensation, and unemployment insurance. Confirming workers’ fears of a company union, the bill seemed written in such a way as to allow only the IDG, or a subsidiary of the IDG, to qualify as a bargaining representative for the workers. It also undermined the rights of workers to strike, boycott, and picket.[9] The proposal sought to legalize—at the state level—the system of piece payment endemic to the on-demand platform business model and even take away rights won through litigation and organizing by the New York Taxi Workers Alliance—including state unemployment insurance and a citywide pay structure in New York City. While any benefits to workers were scant, generous financial payments to the anointed unions were written explicitly into the bill. Amid overwhelming public criticism and outcry from workers, TWU’s Samuelsen withdrew his support, and the bill never received a vote.[10]

Both the California and New York proposals ultimately failed because app-deployed workers and independent workers associations protested, refusing to accept lower wages and protections in exchange for union representation.[11] Many of those involved in fighting these initiatives felt they got thrown under the bus by those in the labor movement who sought to make this compromise. “Why,” they asked, “should a majority immigrant and racial minority workforce deemed ‘essential’ during a pandemic accept lower labor standards as a matter of law?”

What is striking about both “sectoral bargaining” proposals—proffered in the two most progressive states in the nation—is that they involved on-demand labor platform work and that they entailed giving up the hard-won employment floor. For some in labor, the on-demand ride-hail and food delivery sector appeared to be the ideal space to experiment with such reforms. Uber, Lyft, DoorDash, and Instacart depend for their business model on the misclassification of their workforce as “independent contractors” rather than employees. In both California and New York, these companies faced an uphill battle to legalize this misclassification, so a “compromise” in which employment rights were rolled back in favor of a sectoral bargaining scheme seemed achievable. This leverage, combined with academic analysis (including my own), that suggests in the abstract that collective worker rights are superior to individual rights collided to make these sector-wide proposals seem both achievable and desirable.

But, historically, sectoral bargaining has been successful as a means of raising the floor for labor standards in economic spaces where labor power and worker empowerment are already quite robust. These sectoral schemes—presented as a compromise between a few hyper-valued companies with significant capital and a large vulnerable workforce—were drafted as a mechanism to limit rights and near-universal standards. Rather than raising the floor, they sought to lower it. They also would have limited democratic worker participation and voice in the conditions created through bargaining and risked turning collective representation into an instrument of management control. Ironically, they were bargaining reforms that may have limited—and not extended—collective power.

. . . [W]ithout first growing possibilities for worker power, policy attempts to create sectoral bargaining may be putting the cart before the horse.

What can we learn from these subverted experiments? One lesson is that any system of sectoral bargaining reform—whether implemented formally through new laws or informally through voluntary mechanisms—must be predicated on employment status. A second, perhaps even more important lesson, is that without first growing possibilities for worker power, policy attempts to create sectoral bargaining may be putting the cart before the horse. In a moment when workers are organizing and agitating at a historic scale, academics, analysts, unions, and lawmakers should support reforms that have the potential to grow, and not limit, workplace democracy, concerted activity, and power. Some leaders are doing just that.[12] Fundamental economic reforms (including sectoral bargaining reforms) that are good for workers—and for political and economic equality —are much more likely to follow democratic organizing and agitation, not the other way around.

1. Heidi Shierholz and Margaret Poydock, “Continued Surge in Strike Activity Signals Worker Dissatisfaction with Wage Growth,” Economic Policy Institute, February 11, 2020, available at https://www.epi.org/publication/ continued-surge-in-strike-activity /#:~:text=Data%20from%20the%20Bureau%20of,over%20a%20two%2Dyear%20period.
2. Ibid.
3. Brishan Rogers and Kate Andrias, “Rebuilding Worker Voice in Today’s Economy,” Roosevelt Institute, July 2020, available at https://rooseveltinstitute.org/wp-content/uploads/2020/07/RI-Rebuilding-Worker-Voice-201808.pdf; Sharon Block and Ben Sachs, “Clean Slate for Worker Power,” Harvard Labor and Work Life Program, May 2020, available at https://lwp.law.harvard.edu/files/lwp/files/full_report_clean_slate_for_worker_power.pdf; David Rolf and Oren Cass, “Would Sectoral Bargaining Provide a Better Framework for American Labor Law?” American Compass, September 14, 2020, available at https://americancompass. org/essays/would-sectoral-bargaining-providea-better-framework-for-american-labor-law/
4. Lynn Rhinehart and Celine McNicholas, “Collective Bargaining beyond the Worksite: How Workers and Their Unions Build Power and Set Standards for Their Industries,” Economic Policy Institute, May 4, 2020, available at https://www.epi.org/publication/ collective-bargaining-beyond-the-worksitehow-workers-and-their-unions-build-powerand-set-standards-for-their-industries/.
5. Taryn Luna, “After Winning Prop. 22, Lyft President Says He Still Wants a Deal with Unions,” Los Angeles Times, November 5, 2020, available at https://www.latimes.com/california/story/2020-11-05/prop-22-win-lyft-founder-union-deal-california.
6. Sharon Block and Benjamin Sachs, “What California Should Do Next to Help Uber Drivers,” The Washington Post, September 13, 2019, available at https://www.washingtonpost.com/outlook/2019/09/13/how-trump-administration-gave-uber-drivers-california-wayunionize/.
7. Veena B. Dubal, “The New Racial Wage Code, ”Harvard Law and Policy Review (forthcoming), available at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3855094.
8. Noah Lanard, “New Front in Ride Hailing Wars Stopping Blue States from Treating Drivers as Workers,” Mother Jones, June 3, 2021, available at https://www.motherjones.com/ politics/2021/06/new-front-in-ride-hailingwars-stopping-blue-states-from-treating-drivers-as-workers/.
9. Nelson Lichtenstein, “Not All Labor Law Reforms Are Created Equal,” Jacobin, June 2021, available at https://www.jacobinmag.com/2021/06/labor-law-reform-uber-lyft-newyork-california-pro-act.
10. Annie McDonough, “How a Deal for Gig Workers Fell Apart,” City & State New York, June 2021, available at https://www.cityandstateny.com/policy/2021/06/how-a-deal-for-gig-workers-fell-apart/182731/.
11. Ibid.
12. Principles for Sectoral Bargaining Reform, March 2021, available at https://concernedsectoral-bargaining.medium.com/sectoral-bargaining-

Author Biography
Veena Dubal is a professor of law at the University of California Hastings College of the Law whose research focuses on the intersection of law, technology, and precarious work. Her commentary and research on the intersections of technology, low-wage work, and organizing (particularly in the so-called “sharing” or platform economy) are regularly featured both in the local and national media.