“Whenever the legislature attempts to regulate the differences between masters and their workmen, its counselors are always the masters. When the regulation, therefore, is in favor of the workmen, it is always just and equitable; but it is sometimes otherwise when in favor of the masters….
“The masters, being fewer in number, can combine much more easily…and in all disputes…can hold out much longer. Masters are always and everywhere in a sort of tacit but constant and uniform combination not to raise wages above their actual [natural] rate…[and upon occasion] even below this rate…
“We seldom, indeed, hear of this combination because it is the usual…natural state of things… These are always conducted with the utmost silence and secrecy till the moment of execution, and when the workmen yield, as they sometimes do, without resistance…They [employer efforts to reduce wages] are never heard of by the people…
“Such combinations, however, are frequently resisted by a contrary combination of workmen…But whether [the workers’] combination be offensive or defensive, they are always abundantly heard of…”
Adam Smith, The Wealth of Nations, 1776
As early as 1776, Adam Smith described how an imbalance of power between employers and employees affected whether legislation was “just and equitable.” In addition to control over the legislative process by employer interests, this same dynamic occurs with the dissemination of information. What Adam Smith suggests (and more modern day research supports) is that people can be persuaded to make decisions contrary to their best interests because information that would reveal the true order of things is being suppressed.
A recent NY Times article exposed a widespread employer practice that requires employees who lose their jobs to foreigners on temporary visas to sign “gag orders” or lose their severance pay. One departing employee who voluntarily forfeited $10,000 in order to speak the truth said he felt obligated to come forward because he was single and childless, and therefore “the only one with the ability to put my foot down.” Like many of his outsourced and laid-off fellow former employees, another heroic outspoken employee spent two years in the search for subsequent employment–at a job that paid him $45,000 less than the one he was laid off from.
While corporate lobbyists are in the halls of Congress almost daily with laments about so-called “skills shortages” and the need to liberalize the H-1B visa program, members of Congress do not hear from the thousands of workers who were required to train their (cheaper) replacements before being laid off. The granting of H-1Bs is purportedly conditioned on the requirement that they not reduce wages or “adversely affect the working conditions” of American workers, but many employers have been able to circumvent these requirements by exploiting loopholes in the law. Now some of these former employees can no longer remain silent and are now coming out to the news media in spite of signing “non-disparagement” agreements. Many of them are fearful that they could be subject to retaliation and the ruin of what little might be left of their careers.
When a story like this appears in the news, it is almost certain that it represents only the tip of an ugly iceberg of coercion and secrecy. While we seldom hear of the details, we can see some of the effects of these practices in evidence of stagnating wages, a disappearing middle class, and the precariatization of American workers. Our entire workplace protection regulatory infrastructure has become toothless as a result of intense employer lobbying and fiscal underfunding. The former employees who were brave enough to bring this matter to the media and Congress have already paid a high price. Now that this nefarious cat is out of the bag, it remains to be seen whether Congress will do something to fix it or attempt to stuff it back in and ignore it.
