Demonized in the recent economic crisis, labor unions are dwindling in size. They've gone from 36% of the American work force in 1945 to only 16% today, and they are increasingly unpopular. In many of the 22 right-to-work states, outside of the public sector, unionization is almost non-existent.
One of the few places in American society where unions have remained strong is the world of professional sports. And with lockouts now underway in both the NBA and the NFL, the players unions are at the center of one of the biggest popular culture stories in years. Their ability to protect members could illustrate the benefits of unionization to the average American.
Nobel Prize-winning economist Paul Krugman called the increasing amount of income inequality in the U.S. over the last 25 years “the Great Divergence.” From 1980 to 2005, more than 80% of the total increase in income went to the top 1% of the population. By 2007, over 45% of the total income in the U.S. was in the hands of the top 10%.
While economists have not been able to pinpoint one specific cause as to why this occurred, the rise of globalization and the internet has allowed top performers to maximize their income in ways they could not a generation ago. The NBA is a perfect example of this; by selling jerseys and media rights all over the world, teams can profit off of superstars like LeBron James and Kobe Bryant in unprecedented new ways.
In a free market, many believe James would be worth up to $50 million a year. But, thanks to the collective bargaining agreement signed in 1999, the NBA has a maximum yearly salary. So instead of paying James $50 million, the Miami Heat paid him $14.5 million and used the savings to pay lesser stars Mike Miller $5 million, Udonis Haslem $3.5 million, and Joel Anthony $3 million.
In effect, the NBAPA capped their top earners' wage growth in order to subsidize a middle class of players. Billy Hunter, the union's executive director, warned the players in a recent open letter that "[the owners new salary cap plan] would decimate the middle class, with teams using the bulk of their hard cap room on star players." There is a legitimate philosophical case against this type of income redistribution, but the reality is James needs veteran players like Haslem and Miller on his team to compete for championships, just as society suffers when income inequality becomes too great.
Although basketball owners have legitimate grievances with a labor agreement that forces many teams to operate at a loss, the NFL's own labor situation is a perfect example of what happens when management is allowed to operate unchecked. After reaching a new CBA in 2006, hard-line NFL owners almost immediately wanted to renegotiate, leaving money on the table to sign TV deals that guaranteed them billions of dollars years in advance of a work stoppage.
The players, who routinely sustain life-altering injuries during careers that average only a few seasons, have very little individual negotiating power. Unlike the star-driven NBA, no NFL player is irreplaceable. Without a union, they would be at the mercy of owners determined to maximize profit margins at the expense of the sport itself.
NBA and NFL players, many of whom are millionaires with a stunning inability to manage their finances, are hardly the most sympathetic faces for workers’ rights. But, the struggles they are dealing with – rapacious ownership and a labor environment increasingly titled towards compensating only truly elite performers – are microcosms of many of the problems afflicting the American middle class today.
What remains to be seen is whether or not the NBAPA and NFLPA are fighting a battle that has already been lost.
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