Workers’ Paradise?

CAMBRIDGE -- Will the political resurgence of labor unions throw a wrench into the wheels of globalization? Or will their growing strength serve to make globalization more sustainable by fostering great equality and fairness? One way or the other, unions stand as a major wild card for the evolution of our economic system in 2008 and beyond.

Unions’ rising influence is evident in many recent events: German Chancellor Angela Merkel’s controversial deal to raise minimum wages for postal employees; several American presidential candidates’ open misgivings about trade and immigration; and the Chinese leadership’s nascent concerns about labor standards.

Along with their political clout, unions’ intellectual respectability is also experiencing a renaissance. After decades of vilification by economists for raising unemployment and strangling growth, the union movement is now receiving backing from thought leaders such as Paul Krugman, who argues that stronger unions are needed to counter globalization’s worst excesses.

The sudden emergence of unions as a political force is particularly surprising in the United States, where private-sector union membership has fallen from 25% in 1975 to 8% today. From high-tech Google to mass retailer Wal-Mart, US companies have found ways to keep their shops union-free. Only the public sector, where the membership rate is 35%, has remained a union bastion. One of my best friends from childhood married a union organizer who found it so difficult to land a job in the US that he eventually moved his family to strike-happy Canada.