the future of unions

For the few of us left who follow what is happening to labor unions in the US, the news last week on how the UAW made out in the Chrysler bankruptcy was a head turner. After decades of relentless declines, and after a year in which the UAW was obstinately attacked in some circles as the root of all evil, the UAW is about to become Chrysler’s majority shareholder.

Chrysler’s bankruptcy proceedings seem to some as the first salvo of an overzealous president’s efforts to put a thumb on the scale for unions. Whether that is really the case remains to be seen. But there are other signs of “hope” for the American labor movement. The Obama Administration is committed to passing legislation, known as card check, which could level the playing field with employers when it comes to union elections. And there’s also news that the relentless membership declines—declines which began to take hold way back in 1958—have reversed, slightly, in the last two years. Union membership rose from 12.0% in 2006 to 12.1% in 2007 and 12.4% in 2008. It’s the first time there’s been an increase in those statistics since at least 1983. Note also: those increases came during the Bush Administration.

Does this portend a change of fortune for the American labor movement? Or, if not for the whole movement, then maybe for the UAW in particular? Well, not so fast.

First, it’s worth noting that Chrysler is in serious trouble and should that ship go down, not only will that 55% share amount to a hill of beans, more worryingly the UAW will end up being on the hook for one massive retiree health-care bill.

To understand why the union is vulnerable requires a quick primer on the UAW’s newly negotiated Voluntary Employee Benefit Association or VEBA.  And to understand how the UAW even got to that point, a little history is needed.  It’s been widely documented that our current health care system owes something to the so-called “Treaty of Detroit.” The year was 1950 and this was the first peace-time contract negotiation for the UAW and also the first for its new leader, Walter Reuther. During the War, unions had negotiated health care benefits in lieu of increases in pay and in the heady years just after the war, several major industrial unions (most importantly, the steelworkers) pushed for a national health care system.  Walter Reuther arrived on the scene with even bigger plans: he wanted to move the US toward a European-style welfare state. Ultimately, that didn’t fly, but the union’s fallback was to negotiate a wider social safety net for the communities its workers lived in through the employers it negotiated with. So it was during the negotiations of 1950 that the union won massive increases in social welfare which extended beyond the workplace and into workers’ homes including fully funded pensions and retiree health care (in addition to things like annual cost of living increases).

There are those who would say the “Treaty” was torn up during the last contract negotiations with the Big Three, in 2007, when the UAW agreed to take over servicing the $80billion retiree health care obligation that had previously been sitting on the automakers’ books. The companies agreed at that time to hand over huge lump sum payments to fund the VEBA, but then subsequently found they were unable to make the payments once the crisis set in. Those  payments were in lieu of the companies’ initial offer to fund the VEBA with stock; an offer which the union turned down as too risky (they wanted the cash in hand). The Chrysler bankruptcy effectively gives the companies what they initially wanted: a debt for equity swap. The union did get a seat on the board, but it plans to sell the stock as soon as possible in order to place the VEBA on stable financial footing.

So in the end, this is not exactly an unmitigated victory for the UAW. Closer inspection also reveals cracks with respect to card check legislation and the uptick in union membership.  As for card check,  the idea is to counteract what many see as the collapse of enforcement of labor election laws. While the original Wagner Act (of 1935) provided strong protections ensuring against infringement from either unions or employers in union elections, the Taft-Hartley Act (1947) and then the benign neglect of enforcement from both the Reagan and Clinton Administrations has made it very easy for employers to keep workers from voting or, where an election is called, to influence the outcome of these elections. The goal is to reverse this by making it much easier to vote. In a lot of ways, it’s parallel to the idea behind drivers’ license voter registration (and its being opposed by many of the same folks who opposed that innovation as well). But while it will make it easier to hold an election, it will hardly be a panacea for driving up union membership. Employers will still be able to intimidate workers and they will remain free to stymie unions by refusing to negotiate a first contract. The hurdles to organizing a union will remain high, there will simply be fewer of them.

As for the gains in membership in 2007 and 2008, these have come partly from the SEIU’s successes in organizing workers at the very bottom of the labor market: janitors, food service workers, the lower end of health care. That, I think, is very good news. Less encouraging is the fact that most of the increase came from construction unions which were enjoying the fruits of the construction bubble. Its clear that union membership will suffer as a result of the economic crisis, but that sector is going to see very long term impacts and so I don’t hold much hope out that we’ll see another uptick for some time.

More importantly, as Mike Piore and I have written about, I am not at all convinced that what we should be looking for is a “revival” of the US labor movement. The economy we have today is vastly different from the one in which either the AFL or the CIO was founded. Some unions have adapted. Other unions have gained in significance as the industries with which they are associated have gained prominence in the US economy. But many others are simply out of step. The upshot of what Mike and I were trying to say (with perhaps limited success) is that worker voice today comes in multiple forms and many of these rely less on the blunter instruments of countervailing power, such as strikes and work actions, than on relatively softer varieties such as building alliances, framing issues, participating on multiple levels (workplace, community, identity groups, local and national governments, the media, international). We lack a vocabulary for describing each of these elements as an coherent “system”. But many of the tools for analyzing—and indeed carrying out—the elements of the system are within the domain of organizational theory.

UPDATE:  Welcome Andrew Sullivan and RCP readers.  I hope you’ll take the time to check out some of the other posts on… Some interesting characters and more importantly, ideas, lurk within, including a discussion of my new book as well as my polemic on Richard Florida (particularly relevant given Andrew’s long standing affinity for his work).

The paper I wrote with Mike Piore, reference at the end of the post, may not be available to people without an academic subscription.  You can find a pdf of the article here.


Written by seansafford

May 12, 2009 at 7:54 pm

13 Responses

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  1. I love labor. I love capitalism. I hate paradoxes. What’s a guy to do?

    I thought the UAW getting a chunk of Chrysler was a great thing. I’ve always speculated that employee owned companies (i.e. Starbucks(?)) would be better run and managed that any other kind of company. Perhaps because, the turmoil over white-collar vs. blue-collar (i.e. who gets a larger chunk of profits and pay) would be an internal debate instead of one across the table. Also, because the workers en masse would be interested in the stock price, dividends as well as benefits, compensation would be more spread out across the company.

    Employee-owned companies or at least some hefty profit sharing would put downward pressure on the upswing in executive compensation.

    And thanks for the short lesson in labor history.


    Byron Woodson

    May 13, 2009 at 1:20 am

  2. Seems like the car companies and UAW are headed for a little less “us vs. them”, though I don’t underestimate the parties’ aptitude for antagonism. UAW’s going to have to participate in a lot of decisions it previously resisted, while management will find itself with a lot less power to drive those decisions. Of course, both will have to live with the results.



    May 13, 2009 at 7:46 am

  3. I read with interest this article and the much longer paper you authored about changing dynamics in industrial relations. I wonder, however, if you have considered that the rise in loose organizations based in non-economic identity (such as race, gender, or sexual orientation) and seeking “softer power” is the end product of labor laws that do not function to allow workers the proper expression of their economic interests.

    In Canada, 25% of the workforce belongs to unions. Unions there have not experienced the kinds of steep decline seen in the U.S. in the past 30 years. Canada also has the kinds of anti-discrimination law found in the United States. And the Canadian economy (and, although there are increasing divergences, the society as a whole) is quite similar to that of the United States.

    What is responsible for the difference in unionization? More than anything else, the laws. The rise of the kinds of ad-hoc methods of or soft power organizations you describe, in my opinion, is an attempt to build on the laws that do exist that can empower workers vis a vis their employers, rather than worker preferences for identifying by race, etc.

    Why is the civil rights regime so strong in the US compared to the labor rights regime? An individual cause of action in civil rights cases, the right to private attorneys, punitive damages and attorneys fees if you win — vs. none of these things in labor cases — all these things encouraged the development of a civil rights bar and thus the money and talent drawn to expanding theories of civil rights. Labor law was starved of these resources. Something to think about, anyway.



    May 14, 2009 at 7:59 pm

  4. @Nick: If I get you right, you’d state the causal argument as something along the lines of following: (1) labor laws were weakened, (2) workers had to do something, (3) equal employment laws were readily available so they offered the path of least resistance, hence (4) we see this shift.

    I can agree with points 2, 3 and 4. In fact, I think I can agree with point 1 as well. But it begs two questions (1) how did the labor laws come to be weakened and (2) why equal employment opportunity.

    As for why they were weakened, one explanation, certainly the one held by most of the US labor movement, is that Taft-Hartley, Ronald Reagan and the Business Roundtable actively undermined those laws. That’s top down and it externalizes the threats. The alternative we advance is that political strength comes from the willingness of potential members and allies to support the movement and that, ultimately, comes down to whether they see themselves reflected in the movement. The core of our argument is that unions lost on this front and that opened the political opportunity for Reagan, the Business Roundtable, etc, to move in.

    As for why EEO, without getting into it too much (tho it would be great to get into a discussion about it) the short answer is that the answer Mike and I come up with is pretty much historically contingent, and not entirely satisfying… I’d be interested in your (and other’s) thoughts.



    May 14, 2009 at 8:53 pm

  5. Your description of the card check bill is incomplete. If the parties do not sign a collective bargaining agreement within a certain time, the law would allow an arbitrator to impose a contract on the parties! So control of your business is handed over to a government official.



    May 14, 2009 at 9:39 pm

  6. Arbitrators are not government officials. The details of how that would work have not been established. But its not likely it would look too much different from the existing arbitration system. Arbitrators are private attorneys who are appointed either by the parties, by a judge or by the Department of Labor. The goal, of course, is not to have contracts imposed by arbitration, but rather to put pressure on the parties to reach an agreement before that step is necessary. If it works the way it does now, the arbitrators would most likely award the contract to the final bargaining position of either the union or the employer. So its not as if they are imposed out of thin air.



    May 14, 2009 at 9:50 pm

  7. Respectfully, there are good reasons that union membership does not track desire to be in a union, or support for a union. If I want to join my local identity-based affinity group, the only bars to my membership would be acceptance by other members of the group. But union membership is conditioned by many other factors and is a complicated relationship: it might depend on whether, at some past point at my company, a majority of workers voted in a government-sponsored election to be represented by a union, or the employer agreed to grant voluntary recognition to the union; it would depend on whether the union was able to get a contract requiring membership; it would depend upon the state where I reside and whether union membership (or payment of union agency fees, anyway) could be required as a condition of employment, etc.

    Government policy has its hand in most aspects of this question. The federal government gets to determine the timing of the elections, who may participate, and what constitutes fair election conduct. It determines what constitutes fair bargaining for a first contract and many other aspects of labor policy that determine whether being in a union confers real benefits. State government gets to decide whether union membership (or required agency fee-paying) may be required as a condition of employment. Membership in a union is nothing like membership in the ACLU or the Sierra Club; there are many other factors other than mere interest or support that determine union membership, and government has a huge role in most of those factors.

    Take an example that you might be familiar with. Close to 0% of professors at private universities belong to a union; I can’t name a single major private university that has a union of professors. Quite a number of major public universities have unionized professors. One might conclude that private university faculty have very different interests than public university faculty and this manifests itself in different rates of unionization, but I think this is unlikely. The real reason for the disparity, I think, is the Yeshiva decision that essentially placed private university professors off limits for bargaining. Public universities were unaffected. As in the case of university professors, it is government that establishes the key barriers to entry in the organization; the First Amendment prevents government from doing that in the case of any other non-union organization I can think of.

    I know there is some question-begging going on here: how do we get anti-union government policy if most people are pro-union? One would not have to think too hard to identify areas where we get government policy that is at odds with what a majority wants, or where government policy reflects the power of a ideologically committed and influential minority over a diffuse, less committed majority.



    May 15, 2009 at 1:32 pm

  8. As for why EEO has become an alternative means of seeking redress of workplace grievances: like you wrote, it is complicated. One reason, in my opinion, is because between the ADA, ADEA, Title VII and state discrimination laws, the vast majority of workers now fit into some EEO-protected class. The second reason is because potential litigants are able to pursue EEO type cases without government approval; if the EEOC doesn’t want your case, you can sue on your own. In the labor context, if the NLRB doesn’t want to take your case, you are done. A civil rights case that makes it to trial can result in a trial by jury; government-appointed fact-finders make the final determinations in virtually all labor cases. There are financial incentives both to the individual claimant and to their lawyer to take EEO type cases: the possibility of punitive damages and attorneys’ fees, etc. The remedies available in labor cases are far more limited. The law is simply more potent in civil rights cases than it is in labor cases.

    The law has been a great deal more innovative in civil rights than in labor. The last 45 years have seen the Civil Rights Act of 1964, ADEA, ADA, Pregnancy Discrimination, the Civil Rights Act of 1991, and state and local statutes banning anti-gay discrimination. Protections against sexual harassment, or employment decisions with a disparate impact on a protected class, or reverse discrimination, or anti-gay discrimination have been developed. The last major labor reform I can think of was Landrum-Griffin in, what, 1959? Since then, nothing.

    Finally, the expansion of civil rights law also was aided by at least some bi-partisan support for such laws: during an otherwise very conservative period in U.S. history G.H.W.Bush signed the 1991 Civil Rights Act and the ADA into law; it is impossible to imagine him signing into law any expansion of labor rights.



    May 15, 2009 at 2:18 pm

  9. To first speak directly to this intriguing discussion, Speaking directly to your exchange, let me say that I think it’s might be possible to reconcile the basic premises of both yours and NickM’s opinions, if not the conclusions to which you arrive from them. I don’t have perfect knowledge of the history of American Labor or the EEO, so correct me if you catch any oversights, please, as what follows is no more than my opinion.

    That Labor’s problems began with Reagan is almost axiomatic, as Reagan was certainly anti-labor – but wasn’t this was part of a broader effort, as Goldwater Revolution-types tried more broadly to undermine all the major engines of the Democratic Party’s political infrastructure? I know that in my home state of Texas, unions were but one target alongside the trial lawyers’ lobby and, most infamously, the Texas Democratic delegation itself.

    Therefore it seems a little simplistic to me to first state that Reagan had the power to moderately forbear the effects of globalization in America, or mitigate domestic factors like the rise of the one-man sub-contractor, then posit that because he did not exercise this power, there was an unendurable, actively malignant force against Labor which resulted in the decline of unionization.

    This to me understates the extent to which unions, as a fairly unique American organization requiring both government recognition and pre-approval, were vulnerable to the first president to come along and simply ignore them to death (helped along, of course by anti-Labor heads of the DoL, of course and a death of a thousand cuts through conservatives in Congress).

    Working from that view, union strength in America would also have been uniquely vulnerable to Democratic inaction – and this is where seansafford’s point comes into play. Just as Republicans had no reason to save unions or reform (and thus energize) them, Democrats at the time seem to have noticed no pressing need to change Labor’s organizing structures.

    And why not? They benefited from a stable status quo of almost entirely unelected union leaders, who came to represent the views of their still-constituent union members less and less. Most critically, this meant that just as the rise of the Sunbelt turned traditional American politics upside-down, Labor leaders had no reason at all to shift emphasis to organizing in the hostile grounds of the South. One hopes that a rising contingent of Southern union members would have prevented this. Smaller things probably contributed to this disconnect of Labor from its leaders – I believe NickM mentioned that union membership often has many hurdles; this would be supported by the strength of unions in Europe, where in many countries to join the local you apparently just fill out a form.

    One last thing: I think NickM makes a critical point about bipartisan support. I remember someone on another blog saying that Johnson might have given the civil rights movement its largest victories, but it was, ironically, Nixon who cemented them, by embracing a rhetoric that emphasized “color-blindness,” and accused anyone who disagreed with him of “reverse racism.” He got his short-term political goals accomplished, but in the end affirmed even in the conservative South the legitimacy of the civil rights movement and the evil of racism. Another example was given: Reagan, who worked with Tip O’Neil to pass legislation that raised taxes and cut benefits – during a recession, at that! – to save the welfare state he had promised to abolish.

    The point is, I can’t think of a single Republican since Eisenhower, with his Interstate “largest public project in history” Highway System, who would have even *entertained* the notion of saving or reforming unions in America.

    I have always been a fan of unions – albeit, likely thanks to my age (or lack thereof) in a similar manner as young children are fans of dinosaurs. But among the first things I remembering learning about economics is that productivity increases lead to wage increases – and that, in the political economy, the worst side-effect of Reaganomics (Greenspanomics? Rubenomics?) was the decoupling of productivity increases from wage increases.

    So it’s great for me to have found both this blog and this post very recently, as it poses in a different way the question I’ve been asking myself as I’ve learned more and more about American Labor: craft unionism had the AFL, and industrial unionism had the CIO; a service economy unionism has yet to successfully arise, however – and is SEIU really innovative in that way? I hope I’ll have the free time to continue to check in at this blog, and read/have more interesting discussions like this. : )



    May 15, 2009 at 11:57 pm

  10. […] for the last several weeks. Sean’s posts about the new spirit of capitalism and the future of unions are instant orgtheory classics.  You can read all of his fantastic posts here. I’ve also […]


  11. […] is especially true of the auto industry. For reasons I detailed in a previous post, the auto industry took on retiree health care in the 1950s and, just based on demographics, the […]


  12. […] is especially true of the auto industry. For reasons I detailed in a previous post, the auto industry took on retiree health care in the 1950s and, just based on demographics, the […]


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