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Research assistance for this article was provided by Sarah Arnold and Lucas Mann.

The financial markets are in tatters, consumer spending is anemic and the recession continues to deepen, but corporate America is keeping its eyes on the prize: crushing organized labor. The Center for Union Facts, a business front group, has taken out full-page ads in newspapers linking SEIU president Andy Stern to the Rod Blagojevich scandal. The Chamber of Commerce is capitalizing on the debate over the Big Three bailout to claim that “unions drove the auto companies off the cliff,” while minority leader Mitch McConnell and other Republican senators insist on steep wage cuts. A December 10 Republican strategy memo revealed their central obsession: “Republicans should stand firm and take their first shot against organized labor,” the memo read. “This is a precursor to card check”–a clear reference to the Employee Free Choice Act.

This simple amendment to federal labor law, which would, among other things, allow workers to unionize when a majority sign cards rather than requiring a bruising election, has galvanized the business community in a way even the $700 billion bailout couldn’t. “I get the sense that this is more important to them than even taxes or regulation,” says the AFL-CIO’s director of government affairs, Bill Samuels. “This is about power. And the business community is not going to give up power willingly.” Wal-Mart CEO Lee Scott said as much to a meeting with analysts in October. “We like driving the car,” he told them, “and we’re not going to give the steering wheel to anybody but us.”

In the lead-up to the election, the co-founder of Home Depot, Bernie Marcus, called Employee Free Choice “the demise of civilization.” Wal-Mart summoned store managers into mandatory meetings to warn them against it. Industrial launderer Cintas launched a website to oppose it. The retail industry associations paid blue-chip lobbying firms to block it. The Chamber of Commerce hired Bush Labor Secretary Elaine Chao’s chief of staff to run its opposition campaign, which trashed the bill as antidemocratic because it allows workers to bypass a formal election. Business groups spent tens of millions on ads attacking Democrats in tight Senate races, including $5 million targeting challenger Jeff Merkley of Oregon, a supporter of the bill who was smeared with a mailer accusing him of doing the bidding of corrupt labor leaders and trailed at every campaign appearance by a grim reaper claiming “Merkley kills democracy.” “I’ve never seen anything like it,” says Merkley’s campaign manager, John Isaac, “where a group spent so much money to insert their issue into a campaign.”

At first glance, Employee Free Choice looks like little more than a technical fix. In addition to allowing unionizing through majority sign-up, it stiffens penalties for intimidating or firing union supporters and imposes arbitration when a company refuses to bargain a first contract. But as the leading corporate lobbies recognize, the bill could have far-reaching effects. By reviving unions, it could push up wages, realigning the broken economy so that company profits are spread beyond CEOs. It could help rein in corporate power and, perhaps most threatening to a business community that has enjoyed decades of deregulation, sustain a progressive majority in Washington in the years to come. If progressives aren’t doing the math, conservatives are. “Unions don’t spend money to elect Republicans,” Senator John Ensign told a group of executives this past fall. “They spend money to elect Democrats. From our perspective, this would have devastating consequences.”

Throughout his run for president, Obama was explicit in his support for Employee Free Choice and his understanding of the forces arrayed against it. “If a majority of workers want a union, they should get a union; it’s that simple,” he told union members in Pennsylvania in April. “Let’s stand up to the business lobby.” Since his election, he’s sent other friendly signals: supporting a factory takeover by pink-slipped glass workers in Chicago and tapping Representative Hilda Solis as labor secretary. While her predecessor stacked the labor department with experienced unionbusters and gutted regulations and workplace safety inspections, Solis has been a regular on Los Angeles picket lines and pushed a minimum-wage hike into law as a state legislator. Significantly, she made an impassioned plea from the House floor for the Employee Free Choice Act.

But the business lobby Obama once railed against is now giving him a taste of its wares. The Chamber denounced the bill in op-eds as “payback” to “union bosses” that would signal the end of “workplace democracy” and the advent of “Soviet-style thuggery.” All the big industry associations called press conferences to declare war. “This will be Armageddon,” one top Chamber official said of the battle ahead. Another pointedly warned Obama against “picking a fight right away on a major, titanic clash.” Obama’s advisers got the memo. At a November gathering of CEOs, Rahm Emanuel refused to answer a question about the bill, and that same month economic adviser Jennifer Granholm called it “divisive.” Obama recently restated his commitment to ending the “barriers and roadblocks” to unionization but avoided any reference to the bill itself. “The Chamber is fanning the flames on this, saying this is the epic battle between labor and business,” says a key strategist working to pass the measure, “and it scares the shit out of the Obama people and some of the Democrats.”

For a snapshot of how current labor law works, you could do worse than to travel to McComb, Ohio, a small town a half-hour south of Toledo, where, one Wednesday in early December, Bill Lawhorn showed up for his job as a forklift operator for the first time in six years. He and six other workers were fired in 2002 after leading a campaign to unionize Consolidated Biscuit, a massive industrial bakery in McComb that produces popular snacks for Nabisco such as Oreos, Nutter Butters and Ritz crackers. The workers started out with “a fire in their belly,” recalls an organizer from the bakery and confectionary workers union, with more than 650 of 800 signing cards of interest. But after Consolidated Biscuit hired a unionbusting firm and started threatening workers with firings or deportations or shuttering the plant altogether, the union lost the election. In 2004 an administrative law judge found the threats and firings to be illegal, but the company appealed to the National Labor Relations Board (NLRB) and then to a circuit court. It wasn’t until mid-November that Consolidated Biscuit was finally forced to bring Lawhorn back and allow a fresh vote.

Consolidated Biscuit is one of the few big employers in northwest Ohio, and after eleven years earning around $12.50 an hour there, Lawhorn was stuck hunting for work in a region where jobs are scarce. He estimates that he applied for more than a hundred, including security guard positions paying only $7 an hour, but he says he never got a single call. Eventually he borrowed money from his kids to buy a truck to haul garbage for his neighbors, which brought in a little extra cash until gas prices got too high. He and his wife skated along on her wages from a retail distribution center, but then she developed heart trouble and ended up out of work herself. “Times really, really got hard,” he says. “I’m 52 years old. At 52, you shouldn’t borrow from your children; you should loan to them. You shouldn’t wonder how do you buy your grandchildren a Christmas present.” Though Lawhorn received a paycheck in time for Christmas last year, Consolidated Biscuit is still contesting the order to give him back pay.

At least Lawhorn got his job back; one of his fired co-workers died before the case was resolved. Nationwide, some 86,000 workers have been fired over the past eight years for trying to unionize (countless others have been threatened), and only a fraction of these get reinstated by the NLRB. So Lawhorn’s return to the forklift is what passes for a victory these days, under the shredded protections of the 1935 National Labor Relations Act, whose intent was not merely to protect the right to collective bargaining but to “encourag[e] the practice.”

That, says Cornell University’s Kate Bronfenbrenner, is long gone. According to her research, employers fire workers in a quarter of all campaigns, threaten workers with plant closings or outsourcing in half and employ mandatory one-on-one meetings where workers are threatened with job loss in two-thirds. All of these tactics are illegal. Unions, meanwhile, are consigned to getting out their message off the clock and off the premises. “The fact that our labor law has no penalties for employer violations, no punitive damages, no financial penalties, that the worst thing that happens to employers when they commit egregious violations is a slap on the wrist, has emboldened employers to break the law at an extreme that is really astonishing,” says Bronfenbrenner.

The crisis is so deep that in a rising number of campaigns, unions have abandoned board-certified elections altogether, instead using public pressure to secure union recognition from employers when a majority of workers sign cards. Over the past decade, the number of election petitions has fallen by 41 percent. Take the Communications Workers of America: within a year and a half of pressuring management at Cingular (now AT&T) to recognize card check, CWA had organized 30,000 new members. But CWA recently lost three elections in a row at Comcast worksites, despite enjoying majority support–the result of antiunion threats from Comcast. With Employee Free Choice in place, CWA could have used card check even with this sort of intransigent employer.

Likewise, with Employee Free Choice in effect, Consolidated Biscuit workers would have had a union since May 2002, when a majority first signed cards. With the threat of arbitration, a contract would have been signed before the end of the year, likely boosting pay to $20 an hour. And the penalty for firings may have been stiff enough–triple back pay plus penalties–that Lawhorn and the others might never have lost their jobs.

What would its passage unleash now? Though union membership has slid to 12 percent in recent decades, the desire to unionize has grown–from 30 percent of nonunion workers in the mid-1980s to 53 percent of them now. “Look, the bill will not stop corporate unionbusting,” says the AFL-CIO’s head of strategic research, Kenneth Zinn, “but it will level the playing field for workers to join a union.” If the bill passes, says Change to Win campaign director Bob Callahan, his federation’s unions–including the Service Employees, Teamsters, and Food and Commercial Workers–are poised to organize on a massive scale. He predicts 5 million new members in the first eighteen months after passage–meaning, he says, 5 million workers winning a double-digit raise, nearly a million of them lifted out of poverty. Zinn imagines whole industries, and even the “right to work” South, possibly opening up to unionization.

With the concentration of wealth approaching 1929 levels, there is a forceful case to be made that unionization holds the best chance for a reversal. Corporate profits have doubled since 2001, while real wages have flatlined and the number of workers earning poverty wages has risen to nearly a quarter of the workforce. Unionized workers earn between 15 and 28 percent more than their nonunion counterparts and receive far better health and retirement benefits, and when unions reach a high enough density in a particular industry, wages in nonunion shops tend to rise to meet the new standard.

But unionization rates have been crashing for decades. “Historically, unionization basically created the middle class,” says economist James Galbraith. “First, by its direct effect on the wages and benefits of unionized workers; second, by its indirect effect on the wages of workers who weren’t unionized; and third, by the impact unions had on the creation of the social institutions that underpin the middle class, such as Social Security, Medicare, Medicaid–the very structures of the New Deal and the Great Society.” A line tracing the rise of wealth inequality and one tracing the decline in unionization make a perfect mirror image of each other.

The business community’s massive campaign this past fall to defeat candidates who supported Employee Free Choice focused on the misbegotten claim that the legislation would take away workers’ right to choose a union by secret ballot election. Actually, labor law allows either a secret ballot or majority sign-up, at the discretion of the employer; the bill would simply put that choice in the hands of the workers. Still, the Chamber, betting on its trumped-up prodemocracy message, dumped millions of dollars on ads with this message in nine battleground states, some using a Sopranos actor to play the union tough who just might kneecap you if you vote no. Interestingly, the gambit failed. Voters in these states told pollsters that secret ballot in union elections ranked last on their list of concerns; many more said they were troubled by the excessive power of big corporations than said they were troubled by the power of big labor.

Since the election, the business community has savvily retooled its campaign. In a November 21 letter to Congress, the Chamber wrote that passage of the bill “would have a particularly devastating impact on small employers who, as the primary source for new jobs, would be counted on to reverse the current economic downturn.” The bill, the letter went on, “is an awful idea in good economic times and a catastrophic idea in the difficult economic times now upon us.” Days later, the Chamber presented new research claiming that unionization is a drag on GDP–an assertion that Galbraith and other economists find laughable. And the Chamber used negotiations over the auto bailout to claim that unionization bankrupted the industry. In fact, labor makes up a tiny portion of a car’s production cost, but in a tense economic environment with spiking unemployment, such talking points easily gained traction in the media.

If the rhetoric doesn’t work, the business lobby is ready to threaten retaliation. “They’ll promise to dump money to oppose supporters of the bill in the next election,” says Mary Beth Maxwell, director of the pro-union American Rights at Work. The Chamber of Commerce has been aggressively educating its local chapters so that business leaders can buttonhole senators in their home districts. When Arkansas Senator Blanche Lincoln, a Democrat who counts Wal-Mart among her top donors, met with the Little Rock Chamber of Commerce in late November, she tried to talk about healthcare and the economy, but the businessmen in the room hammered her on Employee Free Choice. A Rove disciple, former US Attorney Tim Griffin, publicly mulled over a run against her if she repeats her 2007 yes vote. Weeks later, the senator hedged her bets, saying the reform is perhaps “not necessary.” “We have the most ideological business community in the world,” says economist Larry Mishel, president of the Economic Policy Institute, “and they enforce it.”

According to the AFL-CIO’s Samuels, “We’re seeing heavy pressure from the retail world, the chain drugstores, Wal-Mart, the retail federation, the nonunion building contractors and some of the low-wage employers like Tyson’s, the ones who have spent twenty years trying to create a business climate that isn’t friendly toward unions, and from the several-billion-dollar-industry of antiunion consultants.” Wal-Mart, he says, is at the top of that list. “They’re flying their forces into DC already.” Wal-Mart sent a shot across the bow in October, when the company shuttered an auto shop in Quebec within days of the workers there voting to organize. “It will be very tight in the Senate,” says one Democratic Congressional aide. “We’re not kidding ourselves.”

One of the many ironies here is that the Employee Free Choice Act already has majority support–the bill just needs to get a vote on the Senate floor. In 2007 the bill passed overwhelmingly in the House and garnered fifty-one votes in the Senate, but when Democrats failed to achieve a filibuster-proof majority, the business press was quick to assert that this put “a question mark” over labor law reform. The real question, says SEIU president Stern, is, “Are we willing to say if we can’t get sixty votes we won’t fight? We will lose as progressives if we concede that idea.” Other union leaders worry privately that the bill can’t be won intact, that the increased penalties for worker intimidation might face better odds on their own. Representative George Miller, chair of the House Education and Labor Committee, insists that it can. “We had the same opposition last year [2007], and the members understand the issue pretty clearly,” he says. “You’re either going to give the middle class the tools so they can hold on to their economic livelihood or you’re not. It’s a very important priority for me.”

SEIU has committed 50 percent of its staff to a field campaign in support of Employee Free Choice and national healthcare and expects each local to commit 30 percent of its staff as well. Secretary-treasurer Anna Burger says the union will be in fourteen states with an ambitious “field, phone, air, town-hall-meeting press strategy. We’re going to tie that to a Hill strategy as well so they never lose sight of us, and we never lose sight of them, until we get this done. And if they don’t vote with us, they need to be clear about what’s going to happen to them. People up for re-election should experience some of our ground operation now.” Kenneth Zinn says the AFL-CIO will be active in eighteen states, continuing the record-breaking ground operation it put in place for the 2008 election. It is also raising $30 million for a media campaign. Altogether, says Bob Callahan of Change to Win, the two labor federations will have several thousand people on the ground full time to fight for the bill. “Labor has done an incredible job of staying focused on this as a top priority,” says Mary Beth Maxwell, “and allies have really stepped up and realized this is more than just labor’s fight.”

As UC Santa Barbara labor historian Nelson Lichtenstein points out, the New Deal was not just a series of reforms that stabilized banking or stimulated the economy. “Those reforms,” he says, “were backstopped by the organization of the working class, and those reforms continued for two generations.” Any Obama-era reforms, he adds, “can and will dissipate” unless unions form an institutional bulwark against retreat.

Fred Feinstein, a former counsel to the NLRB during the Clinton years, was a Congressional aide in the late ’70s, the last time Democrats, in control on Capitol Hill, made a full-court press to pass labor law reform. They failed to achieve cloture in the Senate by a single vote. Then, unions were more than twice their current size and less allied with progressive causes, and so it was easier to frame the battle as a parochial fight between big labor and big business. “Labor’s decline helps recast that dynamic,” he says. “This time around it isn’t about two special interests; it’s about economic recovery and restoring the middle class.”