Foul!

09.28.12

The NFL Referees’ Strike Highlights Larger Truths About the U.S. Economy

NFL owners thought they could get away with treating officials the way corporate America treats its employees.

“Whoever wants to know the heart and mind of America had better learn baseball,” wrote the cultural critic Jacques Barzun in the middle of last century. But if you want to understand what’s going on in the U.S economy, you’d be better advised to get to know football. The recently resolved labor dispute between the National Football League and its referees illuminates several larger trends in the economy.

First, when rich and powerful guys defund the rulemakers and regulators, bad things happen—but only the public and the little guys seem to suffer. The NFL officials aren’t just workers. We learned they are vital to the quality of the experience in the marketplace—the pace of the game, making sure it is called reasonably, protecting participants from injury, and providing a safety net. They police activity, smack down out-of-bounds behavior, punish wrongdoers, and generally tamp down volatility. Which is very similar to the function that regulators like the Securities and Exchange Commission and the Office of the Comptroller of the Currency were supposed to do. When those entities were underfunded, understaffed, and marginalized, it encouraged an anything-goes environment. And then things went south, it wasn’t the owners of the institution that got hurt. Wall Street CEOs still got their businesses and saw their companies bailed out. It was small investors, borrowers, little firms that got hurt. Just so, during the strike, which severely hampered the quality of the experience, the owners didn’t suffer any financial harm. The payments from television deals and ticket sales still flowed in. But it was the workers and spectators that got hurt: the player who may have been injured when a cheap shot was missed, the coaches and fans who suffered when the results were miscalled, and small-time betters who found the spreads suddenly meaningless and unpredictable.

Second, American management views low wages and dominance over labor as an entitlement. It’s no secret that organized labor has declined as a force in American culture. In 2011, according to the Bureau of Labor Statistics, only 11.8 percent of salaried workers belong to a union, and only 7.6 percent of private-sector workers were represented by unions—down from 9.8 percent in 2000. The overwhelming majority of companies in the U.S. today simply do not have to deal with workers who band together to negotiate salaries and benefits. In the 1950s, big corporation and big labor forged an entente, in which they generally agreed to share an expanding pie. These days it’s much more like a zero-sum game. Capital takes what it wants and essentially tells workers to take what is offered without offering much of a peep. As David Lynch of Bloomberg notes, “quarterly corporate profits of $1.9 trillion have almost doubled since the end of 2008, while workers’ inflation-adjusted average hourly earnings have declined.” The concept of sharing the wealth is simply alien to the titans of industry who own NFL teams. So the willingness of a group of employees to hold fast to their demands came as a shock, and the owners’ natural inclination was to tell the refs to stuff it.  

Third, there’s an epidemic of wealthy entities choosing not to fund retirement promises made to longtime workers—when they could easily afford to do so. One of the central points of contention was the owners’ desire to convert the officials’ old-school, defined-benefit pension into a 401(K). Commissioner Roger Goodell told the Huffington Post that “Yours truly doesn’t have that. It’s something that doesn’t really exist anymore and that I think is going away steadily.” (Of course, people who earn multi-million dollar salaries, as Goodell does, can easily fund their own retirements out of wages and savings.) The NFL owners would have saved a few million dollars by altering the pension scheme—a tiny sliver of their overall revenues, and a sum that wouldn’t  put a crimp in their day. Just so, corporate America at large, which is flush with cash, is choosing not to fund adequately the pensions it has promised to employees—even as they pay out dividends and large bonuses and stay current on other obligations. For years, states, cities, and the federal government have chosen not to collect—or deploy—adequate resources to fund pensions plans and other benefit programs. There is a pension-funding crisis in the U.S. But it is largely a matter of choice.

Fourth, while the public isn’t exactly high on unions, it won’t always stand for it when organized labor is pushed around by powerful bullies. In the case of the NFL officials, public sentiment was overwhelmingly on the side of the referees. Players, fans, and even the sportscasters on networks that have vital, massive contracts with the NFL excoriated the owners for their shortsightedness and mean spiritedness. Just so, attempts by state governors to curtail the rights of esteemed public employees like teachers, cops and firefighters has frequently provoked a backlash. Wisconsin, where labor sought to recall Gov. Scott Walker, is Exhibit A. Ohio, where organized labor successfully overturned an anti-public-union measure, is Exhibit B.