Global Trend

The Decline of Labor Unions

After decades of growth, union membership in the United States has been declining steadily for the past 20 years, according to the Bureau of Labor Statistics. Total membership peaked at almost 18 million people in 1980. By last year, according to The Charlotte News & Observer, that figure had dropped to less than 16 million, just 13 percent of the country’s workforce.

It’s happening everywhere. In Minnesota, the most heavily unionized state in the Upper Midwest, membership declined by 17.6 percent between 2002 and 2003, according to the St. Paul Pioneer Press. North Carolina, the least unionized state, saw its membership decrease by 26 percent from 1995 to 2004. Only 2.7 percent of employees in that state were union members last year.

While Wisconsin’s union membership increased a few tenths of a percentage point last year, the national trend is clear: A mere 12.9 percent of U.S. workers were union members last year, down from 13.3 percent in 2002. Even in the most unionized states, such as New York, Michigan, Alaska, and Hawaii, union members account for only 22 to 25 percent of the work force.

According to the Baltimore Sun, this has triggered a debate about what started this downward trend in union membership. The slide coincided with Ronald Reagan’s presidency, but scholars and economists, as well as union organizers themselves, are unsure if Reagan’s policies were responsible for the shift, or if they simply accelerated a trend that was already underway.

The fact is that union membership peaked in the 1950s at about 35 percent. By the time Reagan became President in 1980, that figure had already dropped to 23 percent. It’s true that the absolute numbers of union members grew up to that point, but they weren’t keeping pace with the expansion of the workforce.

It appears that, if anything, Reagan gave a slight push to an already developing cultural and societal trend against unions when he fired 12,000 air traffic controllers in 1981. This sent the message that it was all right for business to stand firm against unions. But the unions were already in trouble by then, and it was largely trouble of their own making.

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A bit of history is in order.

The roots of our country’s trade unions extend deep into the early history of America. Several of the Pilgrims arriving at Plymouth Rock in 1620 were “working craftsmen.” And primitive unions, called guilds, were soon in evidence in various cities along the Atlantic seaboard of colonial America.

Organized workers played a significant role in the struggle for independence. Carpenters disguised as Mohawk Indians were the “host” group at the Boston Tea Party in 1773. The Continental Congress met in Carpenters Hall in Philadelphia, and there the Declaration of Independence was signed in 1776. Printers were the first American workers to go on strike, in New York in 1794, in “pursuit of happiness” through shorter hours and higher pay.

By the 1820s, various unions were behind an effort to reduce the workday from 12 to 10 hours, and they began to show interest in the idea of joining together in some larger federation to create a balance against the power of big business. And there is no question that, at that time, there were labor abuses that needed to be challenged.

As the factory system grew, worker organizations grew in response, and by the mid-19th century, unions of various trades began banding together for greater leverage. One of these, the National Labor Union, persuaded Congress to mandate an eight-hour workday, which, of course, is the standard today.

The American Federation of Labor was founded by Samuel Gompers in 1886 to protect the rights of skilled workers. In fact, it was the AFL that eventually convinced Congress to establish the Department of Labor with a legislative mandate to protect and extend the rights of wage earners.

In 1935, John L. Lewis established the CIO, the Committee for Industrial Organization, composed of about a dozen leaders of AFL unions, to represent unskilled workers. The CIO united with the AFL in 1955. This history was marked by continuous, and sometimes violent, disagreement between businesses and workers. Through confrontation, the unions succeeded in improving the pay and working conditions of American workers.

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In some ways, it was the very success of unions that foretold their demise. Their original purpose, of course, was to improve the quality of work life, to eliminate blatant abuses, and to increase wages and benefits. By the 1950s, they had largely succeeded. They then raised a generation of children who grew up knowing nothing of the abuses or privations that led to the formation of unions, so they were not motivated in the same ways. As women and teenagers entered the workforce, willing to accept a lower wage ? often as a second income for the family ? they undercut the very unions that had gone before.

More importantly, though, as the unions continuously battled for ever-higher wages, they eventually priced themselves out of the market. Union-made products from the U.S. became so expensive that sales were lost to foreign competitors. This began a vicious cycle in which companies moved abroad or cut back, and union members lost their jobs.

At the same time, during the last 40 years or so, the U.S. economy shifted away from factory production and more toward knowledge workers and high-tech industries that were never unionized in the first place. These same developments can be seen in Europe and Canada, as well.

The world also began to change politically and economically. Union officials found themselves increasingly desperate, and that desperation may have led to abuses that undermined the public trust. The 12 million union members pay a compulsory $17 billion annually for the right of collective bargaining. But they have seen that money lavished on politicians and misused in the past. They’ve also seen some of their leadership go to prison. In 2002, 44 percent of the Justice Department’s 357 racketeering investigations involved union pension and welfare funds.

In the 2004 elections, unions spent more than $158 million, mostly on promoting Democratic party positions and candidates, despite the fact that up to 40 percent of union members vote Republican. The fact is, most union members don’t approve of that sort of political spending, no matter which party it goes to, according to a Luntz Research Poll during the 1996 campaigns. They want the money spent on their economic interests. As far as rank-and-file members see it, they don’t pay dues to elect politicians.

But an objective assessment shows that the demise of the unions isn’t due to political pressure from one side or another. It’s coming from the fact that unions have outlived their usefulness, coupled with the leadership’s desperate moves to delay the inevitable decline.

Consider this: According to the Baltimore Sun, union leaders are becoming increasingly aggressive in their efforts to recruit new members. The American Steelworkers Union recently embraced ice cream makers. The United Auto Workers Union has recruited the employees who make Kohler bathroom fixtures, Miller beer, Folger’s coffee, and Planter’s nuts. The International Brotherhood of Teamsters now represents airline flight attendants, police officers, and zookeepers. This lack of focus on one industry diminishes the unions’ clout.

Another recent tactic, according to The Financial Times, involves shareholder proxy votes using union pension funds, which control about 8 percent of the U.S. stock market. While in the past they’ve gone along with company management in their votes, union shareholder revolts have resulted in such surprising developments as the ouster of Disney’s Michael Eisner and the introduction of independent directors at Safeway.

However, as union activists clash with big business, there are bound to be more sparks flying before it’s over. In the short term, this may help the unions shape corporate strategy. But in the long run, such tactics can only serve to marginalize unionism further, as the global economy dictates both the stakes and the nature of the game.

In light of these trends, we offer the following four forecasts for your consideration:

First, the age of unionism is essentially over, having outlived its usefulness. A labor union, like any other service organization, depends on its ability to fulfill a need in society. Unions delivered on this long ago with the reduction of the workday to eight hours, elimination of child labor, introduction of minimum wages, and other reforms that have made the American worker the highest-paid and most “well-cared-for” in the world. There’s nothing wrong with unions when they serve societal needs such as these, but their time has passed. Don’t expect them ever to regain their former strength.

Second, don’t expect the unions to go quietly. They still have billions of dollars and millions of members and will continue to exert influence, both among workers and in the boardroom over the next decade. To the extent that they succeed, they will trumpet their short-term gains.

Third, in the same way that their own success laid the groundwork for their demise, union successes in their present strategy will lay the groundwork for a sea change in the very nature of those unions. To whatever extent they are successful in using proxy fights to wield power in the boardroom, union leadership will essentially become absorbed into the larger world of corporate America. In those cases where they take the reins of power, they will find that the only way to wield that power is within the stark realities of the marketplace, not according to imaginary ideals. The global marketplace is based on creating value, on fair trade, and on competition, not on some abstract idea of what one group or person supposedly “deserves.” Those realities will dictate the actions of corporate leaders, whatever their origins or intentions. In this way, the unions will slowly fade as they merge into the corporate culture.

Fourth, even as organized labor fades in Europe, Canada, and the United States, expect to see the rise of unionism in less-developed nations as they begin to move into a large-scale industrial phase. There is no doubt that there are places in the world where working conditions, compensation, and benefits could use a lot of improvement. The cycle in those countries is apt to be much the same as it was here, with unions serving their function in the development of an economy and then struggling to hold onto power long after they have outlived their usefulness.

References List :
1. The News & Observer, January 28, 2005, “Unions Decline for Third Year,” by Karin Rives. ⓒ Copyright 2005 by The News & Observer Publishing Company. All rights reserved.2. St. Paul Pioneer Press, February 8, 2004, “Labor Unions: Membership in Minnesota Slides.” ⓒ Copyright 2004 by Knight Ridder. All rights reserved.3. The Baltimore Sun, June 8, 2004, “Reagan Presidency Pivotal for Unions,” by Stacey Hirsh. ⓒ Copyright 2004 by The Baltimore Sun. All rights reserved.4. Orlando Business Journal, February 18, 2005, “Corruption Fuels Decline of Unions,” by John Carlisle. ⓒ Copyright 2005 by American City Business Journals, Inc. All rights reserved.5. The Baltimore Sun, January 25, 2004, “Unions Reach Everywhere for Members,” by Stacey Hirsh. ⓒ Copyright 2004 by The Baltimore Sun. All rights reserved.6. Financial Times, May 3, 2004, “Unions Find a Voice in the Boardroom,” by Deborah Brewster. ⓒ Copyright 2004 by The Financial Times, Ltd. All rights reserved.