The following was published on July 5, 2021 at Postindustrial, a Pittsburgh-based magazine. Part 1 was published at Postindustrial on July 1, 2021 and is reproduced here.
By Michael Madison
Where is Pittsburgh’s growth going to come from? Partly, it may come from the ever-elusive productivity gains that arise from substituting computers for humans.
Partly, it may come from us, from our increasing and changing patterns of consumption. Like most of the U.S., Pittsburgh long ago gave up its status as a production-based economy and became a consumption-based economy. The Klavon’s story shows how this works. The store can pay its employees at least $15 per hour and remain profitable so long as customers are buying enough ice cream to keep the scoopers and owners happy. When you can, buy local.
But not all businesses will respond to local conditions as directly and voluntarily as Klavon’s did. Profits aren’t guaranteed. A services economy is a mobile economy. Factories and mills can’t go anywhere. Companies can.
A friend of mine, a strategic planning and fundraising consultant, likes to open meetings by telling an apocryphal story about a minister addressing the congregation: “The good news is that we have all the money we need to fix the church! The bad news is that the money is still in your pockets.”
The story is meant to motivate people to give to help out the existing church, but what if the congregation were to stand up, walk out, and move to a nicer, brighter church in another town? That’s part of the difficult balance of growing and sustaining a modern, postindustrial economy.
Not only are companies mobile, but they’re mobile in supply chains that link regions in complex ways. Pittsburgh’s steel industry eventually shut down when it faced an unprofitable market. Modern businesses often have a different option.
Confronted with expectations that they compensate their workers differently, they may refresh investment opportunities and profitability by moving out and moving on. Or they can do what Amazon has done. Fresh from turning down Pittsburgh as a base for its “HQ2” and the associated high-income jobs, Amazon is rapidly building fulfillment centers in Pittsburgh, with associated low-income jobs.
What’s to put an end to this, or what’s to add some much-needed braking? It’s an old lesson that we shouldn’t turn to market capitalism to fix problems that market capitalism created, but this is a problem that politicians can’t fix. Increases in the minimum wage, like them or not, are important and valuable. But they aren’t enough.
The market forces that pushed Klavon’s to raise its wage work in additional ways. Workers are mobile, too, which gives them what economists call bargaining power. A service sector worker in Pittsburgh can move to another region, or can work from home for an employer located almost anywhere. That worker can negotiate for a better deal.
Not everyone has those opportunities or wants them. More importantly, like the “buy local” motto, the “negotiate for yourself” strategy has massive limits.
If we want to make Pittsburgh better, then collective action by workers themselves is needed.
A modern labor movement might show the way.
In East Liberty, the neighborhood that’s home to Pittsburgh’s Google outpost, several dozen workers plug away on Google projects but are employed by a contractor, HCL America, rather than by Google itself. Using contract workers is mostly contractual sleight-of-hand by Google, and in most respects it’s legal. Google shields itself from various tax and labor law risks when it doesn’t hire outright employees. But workers are workers, and this group of HCL employees — who do their work for Google — organized themselves under federal labor law last year with the help of the United Steelworkers. As a recognized bargaining unit, they’re entitled to have HCL sit down and negotiate a union contract.
That’s the last thing that HCL wants to do; HCL is simply a wheel-greaser in the global tech ecology. Which is why the spotlight in this dispute has been shining on Google.
People who work at Google don’t fit the stereotype of craft workers in steel mills who need unions to protect them from overbearing managers and owners. But work is work, and labor is labor, and in the modern market economy, prosperity is rarely given.
The claim to prosperity has to be asserted against a profit-and-investment dependent marketplace that doesn’t yield without a struggle.
The workers are waiting.
All of Pittsburgh should be watching.