Ruminations of a Reflective Mind: Michael Smith's Blog on Life and Society

Chapter 5: Neoliberal Deregulation: Eroding Protections and the Racial Impact

Starting in the late 1970s and accelerating through the 1980s and 1990s, the United States embraced a set of economic policies often dubbed “neoliberalism.” Characterized by deregulation, privatization, free-market fundamentalism, and a weakening of labor institutions, this shift profoundly affected all workers – but its burdens fell heaviest on Black workers, who had finally made some gains in the previous decades. The story of neoliberal labor policy is one of rollback: rolling back union power, rolling back wage growth, and rolling back enforcement of labor standards. These changes echo earlier patterns of labor exploitation, albeit in modern forms.

One seminal moment was the PATCO strike of 1981, mentioned earlier. When President Reagan summarily fired the striking air traffic controllers and broke their union, it sent a clear signal to private employers: the government would not only tolerate union-busting, it effectively endorsed it. Strikebreaking and aggressive tactics to suppress unions became more common. In the 1980s, numerous strikes by industrial unions ended with employers hiring permanent replacement workers (a practice technically allowed by a 1930s Supreme Court decision, but long frowned upon; Reagan’s action “normalized” it). The result was a dramatic power shift – labor’s leverage declined as companies felt emboldened to stave off unions or demand concessions. Union membership as a percentage of the workforce plummeted from about 20% in 1983 to just 10% by 2019. For Black workers, the drop was even more drastic: from 27% to 11% unionized in that period. That decline matters because union jobs were one of the few equalizing forces reducing the racial pay gap. As unions shrank, Black workers lost ground in relative wages and job security.

Another hallmark of neoliberalism was deregulation of industries and the erosion of labor standards in the name of “flexibility.” The trucking, airline, and telecommunications industries were deregulated in the late 1970s, breaking up stable unionized sectors and driving down wages. The minimum wage, once regularly increased, was allowed to stagnate – by 1980 it was $3.10/hour; by 1990, only $3.80; today it’s stuck at $7.25 (unchanged since 2009). Adjusted for inflation, the minimum wage peaked in 1968; its decline disproportionately hurts Black and brown workers who are more likely to be in low-wage jobs. In fact, recent research shows Black workers are significantly more likely to earn at or below the federal minimum wage than white workers. About 2.4% of Black workers in 2019 earned the minimum or less, versus 1.9% of white workers. And proposals to raise the minimum wage to $15 have an outsized benefit for Black Americans – an estimated 38% of Black workers would get a raise, compared to 23% of white workers. The neoliberal refusal to meaningfully raise wage floors thus exacerbates racial inequity in income.

The 1980s and 90s also saw globalization – jobs moving offshore to lower-wage countries – which gutted manufacturing employment in cities where Black workers had made inroads (think Detroit’s auto plants or Pittsburgh’s steel mills). Whole communities suffered job loss, and nothing comparable replaced those livelihoods. Many Black workers ended up in the expanding service sector: retail, fast food, healthcare support, gig work – often in non-union, lower-paying roles. The rise of the “gig economy” and independent contractor work in the 2000s is arguably a high-tech replay of earlier exploitation models. Companies like Uber, Lyft, DoorDash and others have effectively resurrected something akin to sharecropping, but in the digital age – workers bear the costs (car, gas, time) and the company takes a hefty “share” of the proceeds, all while claiming these workers aren’t employees at all. By labeling drivers and delivery people as independent contractors, these firms sidestep the requirements of labor law: minimum wage, overtime, benefits, the right to unionize, etc. This misclassification of workers has become widespread and is very much in line with historical patterns – recall how sharecroppers were nominally “tenants” not employees, or how convict leasees were “prisoners” not free laborers, thus outside standard protections. The Department of Labor itself acknowledges that misclassification is a serious problem that strips workers of minimum wage and overtime pay. But corporate lobbyists have fought hard to preserve the contractor model, and in many cases, they’ve succeeded in keeping gig workers unprotected.

Neoliberal ideology also brought tax cuts for the wealthy, reduced social spending, and a general weakening of the social safety net. Cuts to welfare programs (epitomized by the 1996 Welfare Reform Act) and unemployment insurance directly affect labor by pressuring people to take any job, no matter how poor the pay or conditions, because support is limited. Who is disproportionately affected? Black Americans, due to persisting racial economic gaps, have higher rates of poverty and unemployment, and so they rely more on the safety net. Diminishing that net forces many into the least desirable, most exploitative jobs without leverage to demand better. This too echoes the past – consider how during Reconstruction the cessation of Freedmen’s Bureau aid or land redistribution left freedpeople with no choice but to return to plantations.

One cannot discuss post-1970s labor without addressing mass incarceration. As mentioned, the prison population exploded from the 1970s onward – largely a result of punitive drug laws and policies that disproportionately targeted Black communities. By the 21st century, there were well over 1 million Black Americans in prisons or jails. Incarceration is fundamentally a labor issue in two ways: it removes people from the free labor market (unemployment statistics hide this effect), and it exploits inmate labor behind bars. The 13th Amendment’s loophole has allowed states to compel prison inmates to work for little or no pay, and many do – from road crews to license plate factories to call centers. In some states, prisoners are paid just a few cents an hour for jobs that if done by a free worker would earn at least the minimum wage. Courts have consistently ruled that prisoners aren’t covered by standard labor laws; as one federal court bluntly stated in 2010, “prisoners have no enforceable right to be paid for their work under the Constitution.” Prison labor today isn’t exactly the same as convict leasing (in many cases it’s for state-run operations rather than leasing to private companies, though some private prison industries exist), but it is a direct descendant of that practice. And given the racial disparities in incarceration, it amounts to a disproportionate extraction of labor from Black and brown bodies – a bitter irony in a country that proclaims freedom.

As President Clinton signed the 1994 Crime Bill—promoted as tough on crime but devastating to Black communities—incarceration rates surged even higher. Mandatory minimums and “three strikes” laws funneled a new generation into the prison labor market.

By the 2010s, the cumulative impact of neoliberal policies was stark: rising inequality (with the top 1% gaining a huge share of income), stagnant real wages for most workers, a federal minimum wage stuck at poverty levels, and a greatly diminished union movement. Black workers found themselves often in precarious positions – for instance, Black unemployment has remained about double that of whites for decades, a pattern consistent in good times and bad. During the 1980s recessions triggered by anti-inflation policies, Black unemployment soared above 20%. Even in the late 2010s, at “full employment,” Black unemployment was around 6% vs. 3% for whites. In essence, what is a moderate recession for white America can feel like a depression in Black America.

It’s crucial to realize that deregulation and anti-worker policies are not “colorblind” in their effects. When labor protections are eroded, the workers with the least power suffer the most – and due to historical and ongoing racism, Black workers disproportionately fall into that category. For example, weakening overtime rules or allowing more workers to be exempted from overtime pay tends to hurt Black salaried workers who, on average, earn less and thus were prime candidates to benefit from expanded overtime coverage. (The Obama administration had tried to raise the salary threshold for overtime pay to about $47,000, which would have particularly helped many Black and female workers; the Trump administration slashed that to about $35,000, leaving millions with no overtime protection.)

Right-to-work laws, which now exist in a majority of states, especially across the South and Midwest, undermine unions by letting workers opt out of paying union dues even if they benefit from union contracts. These laws have been shown to reduce union resources and lower wages in those states. Given that a large percentage of the Black population lives in the South (a legacy of history) and that region uniformly has right-to-work laws and low union density, Black workers are stuck in the least worker-friendly jurisdictions. It is not a coincidence that these same states were the heart of the slave economy and later Jim Crow. The legacy continues: weak labor rights in those states today maintain a cheaper, more exploitable labor force, which again is often along racial lines (e.g., Mississippi, Alabama, Louisiana – heavily Black workforces in many low-wage industries, minimal union presence, scant state labor protections).

In summary, the neoliberal era has reanimated old demons in new guises. The drive for “flexibility” in labor markets often means a return to something resembling the master-servant dynamic of old, just with at-will employment and temp agencies in place of slave overseers. The insistence on personal responsibility and shrinking government mirrors the post-Reconstruction retreat, leaving Black workers to fend for themselves in a still-unequal society. And the mass incarceration and gig economy trends show how, when one avenue of exploitation closes, another opens – the plantation yields to the penitentiary, the sharecropper’s plot yields to the Uber driver’s car. This is not to paint Black workers solely as victims; they have continuously organized, agitated, and pushed back (the Fight for $15 minimum wage campaign, the resurgence of teacher strikes—often led by women of color—in the late 2010s, union drives among Amazon and Starbucks workers that include many Black employees). But the deck remains stacked.

As we turn to the specific policies of recent years, especially under President Trump, we will see how those initiatives often fit neatly into this historical pattern of prioritizing corporate freedom over worker freedom—and how that disproportionately harms Black Americans.

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