The coronavirus pandemic has thrust America’s flawed unemployment system into the policymaking spotlight. As millions of Americans lost jobs at the start of the pandemic, federal lawmakers passed the CARES Act to expand unemployment insurance (UI) coverage and boost benefits far beyond what the nation’s otherwise parsimonious benefits system allowed. The resulting “super unemployment” program, renewed since on two separate occasions, constitutes the largest revision to the federal UI system since its passage.
Left unaddressed, however, were the many administrative challenges that practically prevent workers from obtaining benefits in the first place. As Marina notes, chronic programmatic mishaps and delays have plagued most of the nation’s 50 state-run unemployment systems. After decades of state budget cuts, unemployment agencies stood woefully understaffed and under-resourced on the eve of the pandemic’s massive layoffs. The result has been a continuing administrative crisis, which has prevented millions of Americans from securing benefits when they are most needed.
While the most straightforward solution would be for states to boost UI agency funding, lawmakers will likely be looking to cut, not boost, administrative overhead in the years ahead, particularly given most states’ uncertain fiscal outlook. As lawmakers search for solutions, one approach from Northern Europe may find new appeal among cash-strapped states: allowing unions and other labor organizations to administer UI benefits alongside government agencies.
While novel to most Americans, this arrangement—dubbed the “Ghent system”—is actually nothing new. Union-run unemployment insurance was common throughout Western Europe during the early twentieth century and remains the model in Belgium, Sweden, Denmark, and Finland. Under the Ghent system, government contracts out UI administration to labor organizations, allowing them to process and approve claims with reimbursements from the government. In the modern Ghent system, union-run UI programs often function parallel to a state-run UI agency and must service all claimants regardless of union membership.
By delegating outward, the Ghent system reduces government’s administrative burden and results in comparatively low operating costs. It also provides better service; studies show that program coverage and participation rates are in fact higher among Ghent-system countries than elsewhere. This, scholars argue, is because unions, which are structured to serve employee interests, invest more in guiding applicants and through the application process than do government agencies not directly accountable to workers.
In some respects, American unions are well positioned for this sort of administrative role. Many American unions already help members apply for social programs like retirement insurance and Medicare and often do so in coordination with government agencies. During the pandemic, some unions have expanded their role as social program navigators; in Los Angeles, for example, staff and volunteers at UNITE HERE Local 11 helped union members file over 1,100 UI claims, securing over $20 million in benefits as of this summer. As millions of workers remain furloughed or unemployed, few organizations may be better poised to help those out of work than the same groups who fought for them on the job.
In return for administering benefits, the Ghent system offers unions a unique organizing opportunity. While modern Ghent systems do not make unemployment insurance conditional on union membership, the benefits transaction itself nonetheless enables unions to establish relationships with workers and make a membership pitch in an employer-free setting. At the same time, the conferral of benefits fosters positive associations with labor unions and makes workers more disposed to take organizers up on the unionizing pitch after finding jobs later on.
The effects on union membership are dramatic: according to multiple studies, the Ghent system corresponds to a roughly 17-point increase in unionization rates. Such a boost would more than triple current union membership in the U.S. and dwarfs the projected impact of most other pro-union policy reforms. Ghent countries have not only the highest but also the most stable union membership rates in the world. This is partly because unlike in most of the developed world, where economic upheaval tends to erode union membership, rising unemployment in Ghent nations actually bolsters union participation.
Perhaps just as surprising, existing federal law may make Ghent remarkably achievable at the state level. As Professor Matthew Dimick points out, current law creates a gaping hole in federal labor law preemption by granting states broad discretion to administer UI benefits as they see fit “through unemployment offices or such other agencies as the Secretary of Labor may approve.” President Biden’s newly appointed Labor Secretary, Marty Walsh, could thus move to permit states to delegate UI programmatic responsibilities out to labor organizations under his authority to approve “other agencies” for administering benefits—all without congressional action. Given President Biden’s express commitment to strengthening labor unions, now may present states’ best opportunity in decades to seek authorization for this kind of program.
There are, however, legitimate reasons to have reservations about a full-scale Ghent system. For one, it is not entirely clear whether unions would want to assume such a large role in UI administration—or, for that matter, whether they would even have the wherewithal to take on such vast responsibilities. Doing so might even risk directing public backlash toward labor organizations when mishaps inevitably occur, fueling anti-union sentiment. Moreover, since terminating UI benefits can often implicate important (and costly) due process protections, states may as a general rule be wary to allow labor unions significant discretion to issue benefits in the first instance, only to have to reverse their actions through costly pre-deprivation hearings later on. To work out any of these potential challenges, states interested in pursuing the Ghent model may want to begin with more limited pilot programs (perhaps restricted to participating union members) before expanding access to union-run services to the broader labor market.
Perhaps just as saliently, it’s also unclear that Ghent would actually empower American unions to the extent proponents hope. Unlike the United States, current Ghent countries allow for members-only minority unions and sectoral bargaining in addition to the majoritarian, enterprise-based system of the NLRA. These alternatives mean that any increase in union membership from Ghent can translate directly into expanded collective bargaining coverage for workers. By contrast, American labor law—at least as currently understood—offers merely a binary: either a union obtains majority status and bargains for all workers in a given workplace, or it possesses no bargaining rights at all. As a result, while Ghent would likely increase union membership at the individual level, it’s uncertain that those gains would produce the kind of enterprise-level majorities needed to bargain collectively under the NLRA. Absent broader reforms, therefore, Ghent’s ability to foster industrial democracy in the U.S. may prove substantially more limited than it has in Europe.
For the Ghent system’s proponents, political conditions have perhaps never been more promising. As millions of working families struggle with unemployment, American Ghent could appeal to states as a way to reduce administrative burdens, reduce costs, and, incidentally, empower workers. With an unprecedentedly pro-union Democrat in the White House, state lawmakers also have a clear legal path for implementing such a program with DoL approval—all without the need for congressional action. The crucial question for American Ghent, then, may not be whether the political moment is right, but whether and how policymakers ought to seize it.