Policy Document Series · Issue 13 of 35 · Economy & Work
Labor, Unions
& Minimum Wage
Rebuild American Labor Law from the Ground Up
Worker productivity rose 92% since 1979. Pay rose 34%. The difference — $3.6 trillion per year — went to shareholders, executives, and buybacks. Every country with stronger labor protections has lower inequality and higher or equal productivity. The wealth is there. The only thing missing is the power to claim it.
+92%
Productivity growth since 1979 — worker pay grew just 34%
281:1
CEO-to-worker pay ratio in 2024 — was 21:1 in 1965
41.5%
Of organizing campaigns hit illegal employer violations
$7.25
Federal minimum wage since 2009 — the longest freeze ever
American worker productivity rose 92.4% since 1979 while typical pay rose just 33.6%. If pay had tracked productivity, the median worker would earn roughly $9 more per hour today. The 58.8-percentage-point gap represents the largest wealth transfer in modern economic history — from workers to capital.
Productivity Growth Since 1979
+92%
American workers produce more per hour than at any point in history. The output is there.
Typical Worker Pay Growth Since 1979
+34%
The median worker got 34 cents of every dollar of productivity they created. The rest went to capital.
Ten pillars rebuilding American labor law from the ground up: a $20 federal minimum wage indexed forever, the PRO Act expanded to override right-to-work, sectoral bargaining boards that lift entire industries, workers on corporate boards, 12 weeks paid family leave, an end to gig economy misclassification, a federal ban on non-competes, a federal jobs guarantee at $20/hour, antitrust enforcement in labor markets, and repeal of every Jim Crow-era exclusion still on the books.
The productivity-pay gap is not a market outcome. It is a policy outcome — the direct result of deliberate choices to weaken worker bargaining power over five decades.
Union density collapsed from 35% in 1954 to 10% in 2024. Not because workers stopped wanting unions — 48% of nonunion workers would join one if they could — but because employers violate the law in 41.5% of organizing campaigns, firing workers in 19.4% of those campaigns, and maximum penalties are back pay minus interim earnings (often zero). The average time from petition to first contract: 465 days. Delay is the employer's most effective weapon.
CEO-to-worker pay: 21:1 in 1965. 281:1 in 2024. After the 2017 TCJA cut corporate rates from 35% to 21%, S&P 500 buybacks jumped 55% to $806 billion in one year. Real worker wage growth: 1.9%. Only 6% of workers received any raise attributed to the tax cut. The $1.9 trillion "investment boom" went to shareholders, not paychecks.
The federal minimum wage has been $7.25 since 2009 — the longest freeze in Fair Labor Standards Act history. The tipped subminimum has been $2.13 since 1991. The US ranks 27th of 31 OECD nations in minimum wage purchasing power. Labor's share of national income has fallen from 65.8% in 1947 to its lowest point since the Great Depression — roughly $3.6 trillion per year redirected from workers to profits and buybacks.
Sources: EPI — Productivity-Pay Gap ·
BLS — Union Density ·
MIT Sloan — 48% Would Join Union ·
EPI — CEO Pay 281:1 ·
SEC — $806B Buybacks Post-TCJA
From 1948 to 1973, productivity and pay rose in lockstep — both roughly doubling. The divergence began precisely when policy shifted. This was not an accident of the market. It was constructed.
The legislative dismantling was systematic. The Taft-Hartley Act (1947) banned secondary boycotts and enabled right-to-work laws. The Reagan era normalized permanent striker replacement — allowing companies to simply hire new workers while strikes were ongoing. Trade agreements prioritized capital mobility over worker protections. Antitrust enforcement in labor markets collapsed entirely.
Right-to-work laws spread to 27 states — allowing workers to receive all union benefits without paying dues, systematically defunding unions. The result is measurable: 3.1% lower wages, 36% higher workplace fatality rates, lower health insurance coverage, and higher poverty rates after controlling for cost of living. These are not side effects. They are the intended mechanism.
The NLRB enforcement system became functionally toothless. Employers violate the law in 41.5% of organizing campaigns because maximum penalties are back pay minus interim earnings — often zero. A company can fire an organizer, wait 465 days through NLRB proceedings, pay nothing, and achieve the same result as legal compliance. The 2017 TCJA completed the picture: $1.9 trillion to shareholders over 10 years while business investment growth actually slowed.
Sources: EPI — Employer Violations in 41.5% of Campaigns ·
EPI — Right-to-Work Wage Impact
Every peer democracy with stronger labor protections has lower inequality and comparable or higher productivity. The US is the outlier — uniquely combining low union density with low bargaining coverage and high inequality.
| Country |
Union Density |
Bargaining Coverage |
Key Feature |
| Iceland |
~92% |
~90% |
Near-universal membership; tripartite bargaining; highest wages in Europe |
| Denmark |
68% |
82% |
Flexicurity; $22/hr McDonald's workers; 2% GDP on active labor market programs |
| Sweden |
68% |
88% |
Rehn-Meidner model; 480 days parental leave; outperforms US on innovation |
| Norway |
50% |
64% |
GDP/hour $132 vs. US $97; $1.7T sovereign wealth fund; 5 weeks vacation |
| Germany |
14.3% |
~56% |
Co-determination; workers on boards; 3rd-largest exporter; work-sharing in 2008 |
| France |
~10% |
98% |
Extension model achieves 98% coverage despite low density — the legal mechanism matters |
| United States |
10% |
~11.6% |
Low density AND low coverage; longest minimum wage freeze; 0% federal paid leave |
Norway's GDP per hour worked is $132 versus $97 for the US — 36% higher — with 50% union density. Denmark matches US productivity with 400 fewer work hours per year. France proves density isn't the only lever: with ~10% union density (equal to the US), France achieves 98% bargaining coverage through legal extension mechanisms that apply negotiated agreements to entire sectors. The "labor vs. competitiveness" argument is not supported by a single peer-nation comparison.
The investment gap in workers is equally stark:
| Worker Investment Category |
United States (% GDP) |
Nordic Average (% GDP) |
| Active labor market programs |
0.1% |
1.5–2.0% |
| Paid family leave |
0% (federal) |
1.0–1.5% |
| Childcare subsidies |
0.4% |
1.5–2.0% |
| Unemployment replacement rate |
~27% |
60–90% |
Sources: OECD — Union Density & Bargaining Coverage ·
Our World in Data — Labor Productivity ·
Hans-Böckler-Stiftung — Co-determination
Ten pillars rebuilding American labor law from the ground up — minimum wage, union rights, sectoral bargaining, corporate governance, paid leave, gig economy, non-competes, jobs guarantee, labor antitrust, and Jim Crow repeal.
CA $20: zero employment loss, 2.1% price increase · Germany min wage: 40–60% of observed inequality decline · 138 US state studies: "clear positive wage effects, no negative employment effects"
- $20/hour federal minimum, phased in over 3 years ($15 → $17.50 → $20). Eliminate the tipped subminimum wage — $2.13/hour since 1991 is not a wage, it is an invitation to exploitation.
- Automatic annual indexing to the greater of CPI or median wage growth. After phase-in, tie to 60% of national median wage — the OECD standard. The freeze ends permanently.
- Small business transition support: graduated phase-in schedule for businesses under 25 employees; tax credits for the first two years; direct technical assistance for payroll restructuring.
Override right-to-work · real civil penalties · card check · ban permanent striker replacement
- Override all state right-to-work laws. Ban captive audience meetings — mandatory anti-union meetings on company time that workers must attend under threat of termination.
- NLRB enforcement subject to Universal Mandatory Duty to Act Standard: credible complaints investigated within 30 days; inaction defaults to action; 180-day disposition deadline. No more multi-year delays as employer strategy.
- Meaningful civil penalties: $50,000–$100,000 per violation; personal liability for executives who authorize illegal union-busting. Back-pay-minus-interim-earnings is not accountability — it is permission.
- Card check recognition. First-contract arbitration after 120 days. Ban permanent striker replacements. Restore secondary boycott and solidarity action rights.
- Extend NLRA to agricultural and domestic workers — repealing the Jim Crow-era exclusion (see Pillar 10).
Denmark: $22/hr McDonald's workers with 6 weeks vacation · France: 98% coverage at 10% density · the single most transformative structural reform available
- Sectoral Bargaining Boards for high-low-wage industries: food service, retail, hospitality, care work, logistics, and agriculture. Equal worker and employer representation plus public interest members.
- Agreements set wage floors, scheduling standards, and training requirements for the entire sector — not just the workplaces where unions organize. Every firm in the sector is covered.
- Extension mechanism (French model): agreements automatically cover all firms in the sector through legal extension — achieving near-universal coverage even with low union density. This is how Denmark reaches $22/hour for McDonald's workers with 6 weeks vacation without any statutory minimum wage.
- Moving from one-workplace-at-a-time bargaining to industry-wide negotiation is the single most powerful structural shift available in US labor law. It is also the reform used by every high-wage, high-productivity peer nation.
German co-determination: higher productivity, lower turnover, better crisis resilience · weathered 2008 through work-sharing, not layoffs
- 2,000+ employees: workers elect one-half of board members. 500–2,000 employees: workers elect one-third. Decisions about the company involve the people who do the work.
- 100+ employees: must establish a works council with co-decision rights on scheduling, overtime, workplace safety, and technology changes that affect jobs.
- Works councils have veto power over mass layoffs until an alternative plan — work-sharing, voluntary departures, retraining — is negotiated and exhausted.
California model: women 40% more likely to return to employer · new-mother poverty reduced 10.2% · funded at ~$2/week per worker
- 12 weeks paid family leave at 80% wage replacement (cap: $4,000/month). 12 weeks paid medical leave. 7 days paid sick leave per year — all workers, no exceptions for firm size or employment type.
- Funded by 0.4% payroll tax split employer/employee — approximately $2/week per worker. This is what $2/week buys: the ability to care for a newborn or a sick parent without losing your job or your income.
- Anti-retaliation with private right of action — workers can sue employers who retaliate for taking leave, with attorneys' fees and punitive damages.
Uber drivers earn ~$9.21/hr in W-2-equivalent terms — below minimum wage · ABC test as federal standard
- ABC test as federal employment classification standard. Legal presumption of employment for platform workers — companies must prove independent contractor status, not workers.
- Platform companies must provide minimum wage, overtime, workers' compensation, and unemployment insurance. The gig economy business model is wage theft subsidized by public safety nets.
- Portable benefits accounts for genuinely independent workers — for those who legitimately work across multiple clients, benefits travel with the worker, not the employer.
- Override Prop 22-style state carve-outs at the federal level. No state can create a lower-protection classification for platform workers than federal law requires.
Non-competes suppress wages 4–12% even for workers who never change jobs · California bans them and leads the nation in startups · FTC projected $488B in wage gains
- Federal statutory ban on non-compete agreements for all workers. Narrow exception only for genuine trade secret roles — with mandatory 50% salary compensation during the restriction period (German model) and a 2-year maximum. If the secret is worth protecting, the company pays for the protection.
- Retroactive voiding of all existing non-competes that don't meet the compensated exception. Treble damages for enforcing a void agreement. The enforcement stops immediately.
- Overtime threshold raised to the 55th percentile of full-time salaried earnings (~$75–80K), indexed to wage growth. Close the "manager" loophole: less than 50% actual supervisory time = overtime-eligible regardless of title.
- Extend overtime protections to agricultural workers — another Jim Crow-era exclusion still on the books.
$20/hr + full benefits · net cost ~1–2% GDP after multiplier effects · WPA employed 8.5M and built the nation's infrastructure
- $20/hour plus full benefits (health insurance, retirement, 12 weeks paid leave) for anyone willing and able to work. No one who wants to contribute is turned away.
- Community-directed: infrastructure repair, elder care, childcare, environmental restoration, school support. Work that communities need but markets underprovide.
- Automatic stabilizer: expands in recessions when private employment contracts, contracts in booms when private employment expands. Built-in countercyclical function without congressional action.
- Administered through local governments and nonprofits with federal standards and funding. Net cost: ~1–2% of GDP after tax revenue, reduced safety net spending, and multiplier effects.
Average US labor market HHI: 3,157 — highly concentrated · wages 15–50% below competitive levels in concentrated markets
- DOJ/FTC to apply antitrust scrutiny to labor market concentration — the same standard applied to product markets. When one or two employers dominate a local labor market, workers have no outside option and wages fall accordingly.
- Ban no-poach agreements between franchisors and franchisees — the arrangements that prevent McDonald's workers from being hired by competing franchises in the same area.
- Mandatory wage transparency: all job postings must include salary ranges — a federal extension of the Colorado, New York City, and California models. Workers cannot negotiate what they cannot see.
- Dedicated labor market enforcement division within the FTC — with subpoena authority and a mandate to investigate wage suppression through market concentration.
Agricultural and domestic workers excluded from NLRA (1935) and FLSA (1938) as explicit racial compromise — still on the books 90 years later
- Agricultural and domestic workers were excluded from the NLRA and FLSA in 1935 and 1938 as a political compromise with Southern Democrats to maintain control over Black workers. These exclusions persist 90 years later.
- Full NLRA coverage for agricultural and domestic workers — the right to organize, bargain collectively, and strike. The same protections every other worker has.
- Full FLSA coverage — minimum wage, overtime, recordkeeping. No more two-tier labor law.
- OSHA enforcement in agriculture: mandatory heat standards, pesticide exposure limits, sanitation requirements — all subject to Universal Mandatory Duty to Act Standard.
Sources: UC Berkeley — CA $20 Fast-Food Minimum ·
IZA — Germany Min Wage ·
QJE — 138 State Minimum Wage Studies ·
Guardian — Denmark McDonald's Workers ·
CEPR — California Paid Leave ·
EPI — Uber Driver Earnings ·
US Treasury — Non-Compete Effects ·
Levy Economics Institute — Jobs Guarantee ·
Azar et al. — Labor Market Concentration
The current extraction economy is not free — taxpayers subsidize poverty wages through SNAP, Medicaid, and EITC. Walmart and McDonald's workers alone cost taxpayers billions in public assistance annually. Every reform in this platform either pays for itself, is funded by modest contributions, or produces returns that dwarf the investment.
| Component |
Funding |
Notes |
| $20 minimum wage |
Employer cost |
Zero employment loss at CA $20. Reduced turnover saves employers; reduced safety net spending saves taxpayers. |
| Paid family and medical leave |
0.4% payroll tax |
~$2/week per worker. California model shows net positive employer effects from reduced turnover. |
| Federal jobs guarantee |
~1–2% GDP net |
After tax revenue from employed workers, reduced safety net spending, and economic multiplier effects. |
| Sectoral bargaining |
Self-funding |
Administrative costs offset by wage gains and reduced enforcement burden. Higher wages = higher tax revenue. |
| PRO Act enforcement |
Issue 2 revenue |
Civil penalties generate revenue. Union wage premium generates additional tax revenue. |
| Non-compete ban |
Net positive |
FTC projected $488B in wage gains over a decade. Higher wages = higher tax revenue = self-funding reform. |
"A $20 minimum wage will kill jobs and destroy small businesses."
California implemented a $20 fast-food minimum in 2024 — zero statistically significant employment loss, 2.1% menu price increase. Germany introduced its minimum wage in 2015 — zero job loss, 40–60% of the observed inequality decline attributed to it. The most comprehensive US study (138 state changes) found "clear positive wage effects with no corresponding negative employment effects." The UK raised its minimum wage 30%+ in real terms over 8 years with no adverse employment effects. The fear does not match the evidence in a single documented case.
"Unions hurt the economy and kill competitiveness."
Norway's GDP per hour is 36% higher than America's — with 50% union density. Denmark matches US productivity with 400 fewer work hours per year. Sweden outperforms the US on innovation with 68% union density. Germany is the world's 3rd-largest exporter with workers on half its corporate boards. The "labor vs. competitiveness" argument is not supported by a single peer-nation comparison. Every country that treats workers better produces as much or more per hour.
"Sectoral bargaining is socialist central planning."
Denmark, Sweden, Norway, Germany, Austria, and the Netherlands all use sectoral bargaining. They are market economies with thriving private sectors and some of the world's most competitive firms. Denmark scores at the top of the Heritage Foundation's own "economic freedom" rankings — alongside strong unions and sectoral bargaining. Setting wage floors is no more "central planning" than the minimum wage itself, which the same critics rarely propose to eliminate.
"A jobs guarantee would be too expensive."
Net cost: 1–2% of GDP after accounting for tax revenue from employed workers, reduced safety net spending (unemployment insurance, SNAP, Medicaid), and economic multiplier effects. The WPA employed 8.5 million Americans and built the nation's infrastructure. The current system — where involuntary unemployment costs the economy $700+ billion annually in lost output — is the expensive approach. Paying people to work costs less than paying them not to while their skills atrophy.
"Non-competes protect legitimate business interests."
Trade secret law — the Defend Trade Secrets Act — already protects actual secrets. Non-competes suppress wages 4–12% even for workers who never change jobs, simply by eliminating the outside option. California has banned them for 150 years and leads the nation in innovation, startups, and wage growth. The German model allows narrow non-competes only when employers pay 50% of salary during the restriction period — forcing companies to use them only when they're actually worth it to the business, not just as wage suppression tools.