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Washington, D.C. April 9, 2018 — Strengthening and growing the middle class and raising wages are among the most critical challenges facing the country today, and the most effective and direct way to boost wages is to modernize how workers negotiate for a raise. Conservative efforts to kill raises in the federal minimum wage and to weaken collective bargaining, among other efforts, has resulted in an economy heavily skewed towards the wealthiest. A new proposal from the Center for American Progress seeks to combat these trends by proposing a different kind of collective bargaining that responds to the changes in the economy over recent decades. Wage boards—where employers, workers, and the public negotiate collectively—would serve as a key part of a modernized bargaining system under which virtually all workers would be able to collectively bargain; bargaining would occur primarily at the industry level; and workers would have sufficient power to negotiate with employers.

“”Policymakers must be focused on raising wages and improving worker benefits, but our existing labor laws are insufficient to meet these challenges. Modernizing collective bargaining with wage boards will strengthen the American middle class,” said David Madland, senior fellow at CAP and author of the proposal.

While collective bargaining has proven to raise wages and reduce economic inequality, American labor law hasn’t kept up with changes in the U.S. economy; firm-level bargaining, under the current system, leaves out a growing share of the workforce. Compounding the issue is the fact that current law is actually dramatically tilted against workers trying to organize and bargain collectively, with virtually no repercussions for companies that break the rules. While wage boards would represent a significant change from the current bargaining process, they have a proven track record in several U.S. states as well as in other countries. CAP’s paper proposes a wage board model that currently exists in several states, including California and New York. Features of such a system would include:

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  • Representatives of workers, businesses, and the public forming a panel, with the power to set minimum workplace standards for industries, regions, and occupations. The basic goal for these panels would be to foster negotiations about how much of industry revenues should go to workers versus employers and then set standards to help achieve these levels.
  • Panels setting minimum wages for jobs across an industry, as well as wage scales requiring higher pay for greater skills or experience. The wage board could also set minimum benefit and scheduling requirements, as well as profit-sharing requirements. Additionally, standards that panels set would be floors. Individual workers and firm-level unions could negotiate for improvements but could not go below set minimums, while state and local governments could set higher standards.
  • Covering all workers in an industry, whether they were employees or independent contractors and whether or not they were unionized. Wage board standards would include a premium for independent contractors to compensate for the additional costs that independent contractors bear—such as employer-side payroll taxes—and to minimize incentives for employers to cheat by classifying employees as independent contractors.
  • Providing strong legal protections for participating workers as well as some funding and other incentives for worker organizations to facilitate worker participation. This is designed to ensure that workers and their representatives can mount a persuasive case for raising wages and have sufficient power to encourage business and government representatives to seriously consider supporting increases. The goal is to enable workers to stand on relatively even footing with employers.

CAP’s report also notes that wage board bargaining should be complemented by measures—including works councils, representation on corporate boards, and incentives for union membership—that give workers greater voice at their workplace. Indeed, by elevating most wage negotiations from the firm level to the region or industry level, wage boards create a need and opportunity for additional kinds of firm-level participation by workers, as well as incentives for union membership.

Click here to read “Wage Boards for American Workers: Industry-Level Collective Bargaining for All Workers” by David Madland.

The Center for American Progress is a nonpartisan research and educational institute dedicated to promoting a strong, just and free America that ensures opportunity for all. We believe that Americans are bound together by a common commitment to these values and we aspire to ensure that our national policies reflect these values. We work to find progressive and pragmatic solutions to significant domestic and international problems and develop policy proposals that foster a government that is “of the people, by the people, and for the people.”