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 orgtheory.net… 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.