WORD COUNT 495                                                                                                                                                                            JUNE 24, 2009

UNIONS ARE GOOD FOR RURAL ECONOMIES – by Richard A. Levins

Congress is considering legislation called the Employee Free Choice Act.  If passed, the Act would make it easier for people to join labor unions and bargain for higher wages and better benefits.  This, in turn, would provide some much-needed stimulus for rural economies.

It’s no secret that rural economies are in tough shape.  During the 1990’s, a University of Minnesota study found shocking similarities between the state’s rural economy and that of a developing country.  The current economic tailspin has only made things worse.

For as long as I can remember, rural residents have tried to entice businesses into their communities by offering them a cheaper workforce:   “Bring your factory to our town.  People will work for less here, and we’ll throw in tax cuts for good measure.”  But these efforts have done nothing to halt the economic decline of most of our rural communities.

On the other hand, Paul Krugman, our most recent Nobel Prize winner in economics, wrote that “falling wages are a symptom of a sick economy.”  He went even farther and said that falling wages “can make the economy even sicker”. (NY Times, May 4, 2009)

Krugman argues that a healthy, middle class economy needs middle class wages.  This is why labor unions are so important: More than any other force, they work to keep wages at levels that will support stability.

And what does the Employee Free Choice Act do?  It makes it easier for people to join unions—and that, not the smokescreen about secret ballots, is the real reason large corporations are fighting so desperately to defeat it.

Let’s think for a minute about how Krugman’s support for an economy based on higher wages would benefit rural America.  There are many studies showing how family-sized farms provide more benefits for rural regions than factories.  Those factories depend on cheap labor—higher wages would level the playing field.

And let’s think about all of those people who work in rural processing plants and other businesses that support farming.  Are the communities they work in better off with residents who are paid middle class wages, or with people struggling to make it on rock bottom wages?

There will always be people who continue to sing the  “we must be competitive” song as the rural economy sinks further into the mud.  But we must ask this, too: “Be competitive in what?”  Is there any point in trying to have the lowest wages in the world?  I don’t think so.  What we should be competitive in is our standard of living.  Attractive rural areas are built on quality of life, not cheap wages.

With regard to the Employee Free Choice Act, the real issue comes down to this.  Corporate opponents of the Act know that when workers do the same job for less, the rich get richer at everyone else’s expense.  Supporters of the Act know that healthy rural economies need middle class wages.  Stronger labor unions will help get us there.

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Richard A. Levins is Professor Emeritus of Applied Economics at the University of Minnesota.  He has worked extensively in rural areas, sometimes in farm management, sometimes in community development.

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