What Trump Should Do Now That Andy Puzder Withdrew His Nomination For Secretary of Labor
Now that President Trump’s pick for Secretary of Labor, CKE Restaurants CEO Andy Puzder, has withdrawn his nomination for U.S. Secretary of Labor, America will avoid, at least for the moment, a highly divisive debate over the future of U.S. employment and labor policy. This gives President Trump an opportunity to reconsider the type of person he wants to carry out his agenda.
Will Trump choose someone who respects the mission of the Labor Department, which is: “To foster, promote, and develop the welfare of the wage earners, job seekers, and retirees of the United States; improve working conditions; advance opportunities for profitable employment; and assure work-related benefits and rights.”
Or, will he choose another candidate who will implement an agenda that weakens employment standards and enforcement; thwart efforts of women and men who are organizing to support low-wage workers, and deepen the divide between business and labor? If this is the direction of whoever gets confirmed Secretary of Labor, we will be revisiting last century’s labor battles and further divide the nation.
This will not serve the country or the Trump Administration well. The U.S. needs to replace the debates of the past with a more positive, forward looking vision and strategy for labor and employment policy. Today, more than ever, the nation needs a policy, and policy leaders, that unite workers, unions, employers, and government around actions capable of building an economy that works for all and that heals the wounds laid bare in the election.
I call this a high-road strategy because it builds on what many firms, unions, and workers are already doing to achieve good long-term profits and support good paying and fulfilling jobs and careers. It is based on a simple premise, supported by years of research and evidence from multiple industries: Firms have choices in how to compete; they can pursue profits by following what we call a “low-road” strategy of minimizing wages, tightly controlling workers, and resisting any form of worker organizing. For years, Walmart has been this prototypical firm. Or they can follow a “high road” strategy of investing in employees and empowering them to help improve operations and use advanced technologies to achieve high levels of productivity and customer service that will generate both good long-term profits and support good wages and careers.
In retail, Costco has been cited as such a firm that competes successfully with Walmart. In airlines, Southwest Airlines is the favorite example of a firm that achieves high profits, high customer service/satisfaction ratings, and is constantly voted one of the best place to work.
Employment and labor policy should focus on increasing the number of high-road firms and jobs and vigorously enforcing the nation’s laws and regulations to assure compliance and encourage gradual upgrading of working conditions in low road firms.
Business leaders who have built or want to build high-road firms have the most to benefit from a policy that supports the spread of high road firms and in fact would be hurt by efforts to weaken regulations or labor standards covering their low road competitors.
The best current example of this can be seen in the large number of firms that have already adjusted to the new overtime rules promulgated by the Labor Department last year but then blocked from taking affect by an injunction issued by a judge in Texas. Many firms have already raised salaries or made other adjustments to conform to the new rules. If Trump’s Department of Labor lets the injunction stand only the lowest of the low road firms that are resisting the changes will benefit. High road employers would do well to quietly urge that the new rules be implemented and not let the lowest common denominators in business speak for them.
Workers also have a lot to gain from a high-road labor policy. Today’s workforce wants jobs and careers that allow them to contribute to addressing important problems, ones critical to the success of their employer and to society. They want a voice at work, both to speak up for their interests and to ensure they have the tools and discretion to provide great service to their customers, patients, students, etc. They know what is at stake and are ready to speak out when a high road strategy is put at risk.
Consider the case of executives, managers, clerks, truck drivers, and warehouse workers who came together in 2014 at Market Basket, a New England grocery chain to oppose the firing of their CEO who over many years had built a high road firm with a record of low prices and great service to customers and good jobs and careers for employees. The employees revolted, mobilized a six week walkout that was supported by their customers, and eventually the board of directors relented and sold the business to the CEO. The employees and customers won the battle, saved the high road business, good jobs, good prices, and good customer service. These employees knew what was at stake and were willing to put their jobs and their company at risk to preserve a high road firm.
Labor unions, those that exist today and the various worker advocacy groups experimenting with new ways of building collective voice at work, also would thrive in a high road strategy. For thirty years labor has been unable to overcome business resistance to reforming the existing labor law. That will not likely change, indeed, it is already clear that anti-labor groups are working hard to pass right to work laws in as many states as possible and perhaps even nationally through Congressional action. But labor has also shown it can be a productive partner with high road employers in improving productivity, customer/patient/student service and achieving good jobs and careers for its members.
The Kaiser Permanente Labor Management Partnership is the most visible case in point. It was born out of crisis in the late 1990s; Kaiser was losing money and at risk of being broken up into separate insurance and health care delivery organizations. Instead labor and management leaders formed a partnership and committed to work together. Over the past two decades they have returned Kaiser to profitability, improved quality ratings of its hospitals, become a leader in use of electronic medical records technologies, an industry leader in wages and benefits, and serve as a model for the integrated health care organizations others are trying to emulate across the country.
A high road labor relations strategy would endorse partnerships like this and would open up labor law to further experimentation with new forms of worker voice needed to catch up with the a more mobile workforce.
President Trump was elected by people who felt left behind by the loss of good paying jobs. So he also needs a high road labor and employment policy rather than one that gets mired down in legal battles to lower existing standards. Consider his stated promise to invest in infrastructure. If this comes to pass the first test will be whether he enforces or weakens laws that require contractors to pay prevailing wages. Low road contractors will push hard to weaken or avoid this requirement. High road firms and unions will favor maintaining them and the best of the high road firms and unions will go a step further and negotiate project labor agreements that jointly commit to completing their projects without strikes, safely, on time, and on budget.
In short, there is both evidence to support a high road labor policy and the potential for broad based support from business, labor, workers, customers. Let’s set our sights on the future not the past as Congress considers candidates for Secretary of Labor and more importantly as Congress, the Administration and all the key stakeholders in our economy take up the big challenges and opportunities on our plate.
Thomas A. Kochan is a professor of industrial relations, work and employment at the MIT Sloan School of Management, where he has been a faculty member since 1980.