Free Term Paper on Labor Unions

Many questions arise when one considers organized labor and collective bargaining. Among them are the following:

  • Why do people join unions?
  • What can unions do for their members?
  • What are the economic and social effects of organized labor?
  • How have those effects changed over time?
  • What is the future of U.S. organized labor in the new world economy?

One approach to answering these (and similar) questions is, first, to define what unions are and what they are not, and, second, to trace the history of unions in the United States through good times and bad up to the present.

Outline

I. Types of Unions

II. The Rise and Decline of Unions in the United States

III. Worker Attitudes

IV. The Desire for More

V. Labor Market Monopsony and Feelings of Impotence

VI. The Legal Framework

VII. Union Successes and Changing Labor Markets

VIII. Union Leadership

IX. The Future of Organized Labor in the United States

Types of Unions

Although unions are an economic entity, they are or can be much more than that. Indeed, organized labor (or unionism) represents a broad socioeconomic movement that has taken many forms in many different countries. Among these are the following:

  • Uplift unions. Associations of workers that seek to raise the incomes and/or alter the living conditions of their members (and others) by raising the skills and cultural levels of members and by providing aid to members who have experienced economic reverses. Leadership of these unions is often external (priests, rabbis, ministers, philanthropic volunteers), as distinguished from rank and file.
  • Political unions. Associations of workers that seek to achieve similar objectives primarily through political action, often in alliance with a political party or parties. Unions in democratic socialist nations often fall into this category.
  • Revolutionary unions. Associations that seek the same objectives by overthrowing the system—that is, by forcibly altering the property right and/or economicpolitical system.
  • Industry unions. Associations that seek to raise the incomes of their members and alter the conditions of employment primarily through collective bargaining. Industry unionists generally accept and seek to work within the existing political and economic system.

Although all four types of unions have existed in the United States, industry unions have been the predominant form.

The Rise and Decline of Unions in the United States

Labor UnionsUnion membership was relatively low prior to the First World War, but it grew sharply during that conflict, peaking at 5 to 6 million—including Canadian members of U.S. international unions. Throughout the 1920s and the early 1930s, union membership declined to about 3 million workers, representing 11–12 percent of nonagricultural employment in the early 1930s. The pattern of unionism in the United States has changed since 1930, both in total membership and as a percentage of nonagricultural employment. Although the available data involve differences in definitions and contain some gaps over the years, the general trends are clear. Union membership grew very rapidly during the late 1930s and the World War II period, both in membership and as a percentage of employment. In 1945, unions represented over 14 million workers—about 35 percent of nonagricultural employment. Hence, one-third of U.S. wage and salary workers were unionized. Unions were heavily concentrated in mining, manufacturing, and construction and were located particularly in the northern and western industrial states. Beginning in the late 1940s and throughout the 1950s, union membership grew more slowly, and membership began a slow decline as a proportion of employment (or labor force). Total membership peaked in 1979 at 21 million workers (about 24 percent of nonagricultural employment). Thereafter, membership gradually fell.

Worker Attitudes

One powerful influence in the growth of unions was the attitude of many workers toward collective action, both in the workplace and in other aspects of their lives. Many immigrant groups saw collective action as necessary in the struggle for dignity and higher incomes. German, Scandinavian, and Midland English immigrants brought with them a strong pride of craftsmanship and allegiance to the working class. Although, to some degree, these attitudes were foreign imports, they also resulted from and were strengthened by social and economic pressures created by the rapid industrialization of the United States in the late 1800s, the growing social divide of the times, and serious concern about the distribution of income among the population. Clearly, pride of craftsmanship was a strong component in the earliest unions, which were usually organized along craft lines: printers, carpenters and joiners, plumbers, machinists, railroad engineers, and so on. Other immigrants, such as the Irish and the Jews, were alienated from their new environment and saw a need for group solidarity and protection against the bosses. No doubt, those attitudes reflected previous experiences with foreign overlords as well as ethnic and religious discrimination. Somewhat later, African Americans and Mexican Americans mirrored those attitudes and joined unions in large numbers.

The Desire for More

“More” was his answer when Samuel Gompers, president of the (craft-oriented) American Federation of Labor (AFL), was asked what organized labor wanted. Clearly, with national income rising, with vast fortunes being earned by the bosses, and with periodic depressions and recessions, labor wanted both a larger share of the economic pie and greater security. Moreover, unions were prepared to use collective bargaining, strikes, and boycotts to achieve what they believed to be a more equitable distribution of income. However, it was not until the 1930s that any widespread unionization occurred beyond the traditional craft unions. At that time, the Congress of Industrial Organizations (CIO) spearheaded union organization by industry rather than by crafts and organized large numbers of semiskilled and low-skilled workers into unions. The success of unions in achieving “more” is discussed subsequently.

Labor Market Monopsony and Feelings of Impotence

Closely related to workers’ attitudes and desires (and some political initiatives) were (1) feelings of economic impotence among workers and (2) the existence of labor market monopsony (where one or a few firms provide most of the employment in the area). In such so-called company towns, there was often considerable tension between workers and management. Coal and other mining communities are good examples. Moreover, under such conditions, workers might risk their jobs by complaining. Obviously, workers could use what Freeman (1976) calls “exit voice” to relieve their workplace grievances, but “union voice” (including grievance procedures established in the collective bargaining contract) was an alternative approach that provided workplace dignity without the need to search for a new job.

As automobile transport became cheaper, roads improved, labor markets became more competitive, information concerning alternative employment opportunities increased, and immigrant and other workers became less alienated and part of the burgeoning middle class, the demand for unionism to address labor market problems diminished, but it did not disappear. Workers in large firms continued to support union efforts to standardize wages and process workers’ grievances. In response, many firms established open-door policies, ombudsmen, and employee relations offices to encourage communication between the firm and the workers, to provide a better human relations climate, and to maintain a regular check on the fairness (and limit the arbitrariness) of first-line and other supervisors.

The Legal Framework

Despite company towns, strong feelings of alienation and inequity, and the desire for “more,” unionization and union activities for many years were sharply limited by law. From the early 1800s, unions and union activities were often treated by the courts under the common law as criminal conspiracies—that is, actions or associations in restraint of trade. After Commonwealth v. Hunt (1842), unions per se were no longer illegal, but most of their economic actions were. Indeed, under the Sherman Anti-Trust Act of 1890, treble damages were a possibility on conviction. It is not surprising, therefore, that unionism did not grow rapidly until the legal strictures were temporarily relaxed during World War I and later in the 1930s, when the Wagner Act (the National Labor Relations Act of 1935) somewhat belatedly encouraged unionization as an off set to the power of businesses in labor markets.

The legal climate changed again after World War II with the passage of the Labor- Management Relations (or Taft-Hartley) Act of 1947 and subsequent rulings by the National Labor Relations Board. The 1950s saw the passage of the Labor-Management Racketeering (or Hobbs) Act of 1951 and major congressional hearings. The latter resulted in the prosecution and disgrace of several top labor leaders. While the growth and decline of unionism were affected by changes in the legislative and regulatory climate, those changes cannot account fully for what occurred during the latter half of the 20th century.

Union Successes and Changing Labor Markets

As an economic entity, unions can be more successful in raising wage levels when the wage increases do not lead to major reductions in the employment of their members. When it is difficult or expensive to substitute machinery or other inputs for labor (as, say, in the case of airline pilots), the ability of unions to raise wages above what might otherwise exist is strengthened. The ability to substitute other inputs for labor, however, varies substantially from industry to industry, and it changes over time with new products and new technology. So does the profitability of the firm(s) and the ability to substitute nonunion or foreign labor for U.S. union labor. Hence, the ability of unions to raise wages declines when changes in technology, skill levels, and import/export restrictions make substitutions easier or when firms become less profitable.

It is not surprising, therefore, that Lewis (1963) (and his colleagues and students at the University of Chicago and elsewhere) found very sizeable differences in union wage effects across industries and across time periods. Their studies show effects ranging from 100 percent in 1921–1922 for bituminous coal mining to a zero effect in 1945. Only a few studies, however, showed changes in relative wages greater than 25 percent. Indeed, the average wage effect shown by these studies was approximately 10–15 percent. Many seemingly strong unions had little or no effect on wage levels but were apparently able to provide workers with grievance and other workplace protections. As suggested, these protections may be highly valued by workers. Indeed, according to Lewis, less than 6 percent of the labor force showed union wage effects of 20 percent or more. As suggested, these effects varied among and within industries and over time.

Most of these estimates were made during or prior to the 1960s. During the entire post–World War II period, however, there were massive changes in industrial composition and the U.S. labor market. In particular, manufacturing was affected by (1) a substantial rise in productivity (similar to that experienced earlier in U.S. agriculture), (2) the movement of population and some industry to the less unionized southern states, and (3) the increased ability of Japanese and European firms to export their products to the United States.

Indeed, as a result of these and other factors, manufacturing employment in the United States fell by about 5 million workers during the last three decades, reducing the workforce in manufacturing from about 20 percent of total employment in 1979 to about 11 percent in 2005. In addition to the factors noted previously, the U.S. economy and unions in the United States have been affected by globalization and the emergence of world market conditions that increased further the availability of foreign products. Globalization, of course, affected more than the unionized sector. Indeed, many of the low-skill intensive and often nonunion industries (particularly in the South) were heavily impacted by free trade and the formation of new truly global corporations in both manufacturing and commerce. Included among these were textile, garment, and sewing firms. Mergers created numerous new international corporations with plants around the world. In addition, some U.S. firms simply closed their plants in the United States and even overseas, choosing to become wholesalers who contract with foreign-owned firms to meet the product specifications established by the U.S. firm(s). In addition, the massive transformation of the economy in the late 1980s and 1990s known as the dot.com boom sharply altered job skills, communications, business procedures, and industrial composition.

All of these factors sharply affected the ability of unions to raise or even maintain wage levels in the industries and areas where unions had previously exhibited clout, lowering the extent of unionization and altering the composition of the labor movement. As noted, the largest U.S. unions are now concentrated in public-sector service jobs and in transportation, utilities, and construction—industries where the possibilities for foreign labor substitution are smaller than in, say, manufacturing.

According to Deitz and Orr (2006), job losses in manufacturing “are almost certain to continue”—an assessment that surely applies even more strongly to the 2008–2009 recession and its aftermath. Nonetheless, Deitz and Orr found that, in the early 2000s, high-skilled employment in manufacturing rose substantially in almost all manufacturing industries and in all parts of the country. Such a finding is consistent with the comparative advantage of the United States over many other countries in highly skilled activities. It also reflects the fact that it is often more difficult to substitute other inputs for skilled labor. In a previous age, that was one of the strengths of the craft-oriented unions.

Among the industries that were hard hit by the recent recession is the U.S. auto industry. U.S. carmakers have long struggled with high labor costs—salaries, benefits, health care, and pensions—compared to their nonunionized counterparts, the Japanese automakers. Before the recession, Detroit automakers made agreements with unions to reduce wages while making pension and health care commitments to their workers. Nevertheless, that left carmakers vulnerable to drops in the financial markets, as happened at the end of 2008. The terms of the earlier agreements had to be revisited and additional changes instituted. Most of the auto companies, for example, offered their older workers early retirement packages and made agreements with the United Auto Workers to transfer pension obligations to an independent trust. Massive loans from the government also were solicited. Yet, despite even that, U.S. automakers continued to struggle in the market vis-a-vis the Japanese carmakers. As of mid-2010, there were signs both positive and negative regarding Detroit’s overall prospects for success.

Union Leadership

No listing of the factors influencing U.S. unionism would be complete without some mention of the many charismatic and often controversial leaders of the movement. Samuel Gompers of the American Federation of Labor was cited previously. John L. Lewis, initially with the Coal Miner’s Union, championed the rise of industrial unionism and led in the formation of the CIO. The Reuther brothers, Walter and Victor, developed the sit-down strike into a formidable weapon and directed the once powerful United Auto Workers Union. George Meany, the longtime president of the combined AFL-CIO, also deserves mention. So does Jimmy Hoff a of the Teamsters Union, who was regularly accused of racketeering and connections to the Mob. That circumstance, among other concerns, led to the passage of the Labor-Management Racketeering Act of 1951. In 2005, Andrew Stern, then president of the Service Employees International Union, led his large union out of the unified AFL-CIO in a dispute over how to reorganize the labor movement to meet the challenges of globalization and changing technology. Each of these individuals contributed to the nature and success of unions in the United States, as did a raft of other leaders.

The Future of Organized Labor in the United States

The ups and downs of unionism combined with the uncertainties of the future make any predictions extremely difficult. All one can reasonably do is outline the major factors that could affect unions and union membership now that membership as a proportion of employment is only about 12 percent and slipping.

Several factors weigh heavily in what may occur in the near future. These factors include (1) globalization, (2) the change in the composition of the labor movement from the manufacturing and mining to the service industries, (3) the growing skill levels of U.S. workers within manufacturing and beyond, and (4) the growth of social discord in both the United States and the newly industrializing nations. Moreover, as in the past, legal-legislative changes could have major impacts.

Clearly, the old feelings of alienation, impotency in the workplace, and even class struggle have risen recently with industrial relocation and new technology. It seems likely that these concerns will continue to be addressed among skilled and professional workers largely by exit voice, rather than by union voice. That certainly was the pattern in the 1990s and the early 2000s. Indeed, exit voice among such workers may entail migration across national boundaries, going where the jobs are. Among lower-skilled and semiskilled workers, however, the emerging world labor market may limit the opportunities for exit voice both within and outside the United States, and that may encourage unionization. Many displaced workers have already found their way into the service industries, now the most heavily unionized sector of the economy. Some of these workers, of course, have left the labor force, have relocated into nonunion jobs, or have been retrained for higher-skilled occupations. Union leaders like Andrew Stern argue that recent events require both the reorganization of existing unions and an emphasis on industry-wide (rather than firm-level) bargaining. Whether such changes could or would reinvigorate unions or increase membership, however, is problematical. It is also unknown whether the new immigrants to the United States, legal or illegal, will be as supportive of unions as were the immigrants of the middle to late 1800s and early 1900s.

Alternative approaches to strengthen unions may be tried, particularly the formation of truly international unions to match the new international corporations or the insistence on international labor standards via the courts, the United Nations, and various treaties. These approaches face many obstacles. The first is somewhat daunting since political (rather than business) unionism has been the norm in many other developed nations. Moreover, there are innumerable differences in labor laws and regulatory climates among the nations. Also, there are important questions of national sovereignty. Finally, some nations are rejecting globalization and even capitalism, nationalizing industries and hence limiting the opportunities for collective bargaining on either a firm-wide or industry-wide basis. Nevertheless, there is some agitation overseas (for example, in China) for independent industry unionism now that there are private employers throughout that nation. Of course, U.S. unions would welcome and support such a development in China and elsewhere.

Finally, to the degree that perceived income differences grow among Americans, there will be stronger demands for government regulation of the labor market via living wage and minimum wage laws, governmentally regulated pension arrangements, and the like. As in the past, organized labor in the United States is likely to support both collective bargaining and governmental initiatives to address the overall distribution of income.

 

Robert M. Fearn

 

Bibliography:

  1. Bennett, James T., and Bruce E. Kaufmann, eds., What Do Unions Do? A Twenty-Year Perspective. New Brunswick, NJ: Transaction Publishers, 2007.
  2. Briggs, Vernon, Immigration and American Unionism. Ithaca, NY: Cornell University Press, 2001.
  3. Brody, David, Labor Embattled: History, Power, Rights. Urbana: University of Illinois Press, 2005.
  4. Bureau of Labor Statistics, U.S. Department of Labor. “Union Members—2009.” January 22, 2010. http://www.bls.gov/news.release/pdf/union2.pdf
  5. Deitz, Richard, and James Orr, “A Leaner, More Skilled U.S. Manufacturing Work-force.” Current Issues in Economics and Finance 12 (2006): 1–7.
  6. Dine, Philip M., State of the Unions: How Labor Can Strengthen the Middle Class, Improve Our Economy, and Regain Political Influence. New York: McGraw-Hill, 2008.
  7. Early, Steve, Embedded with Organized Labor: Journalistic Reflections on the Class War at Home. New York: Monthly Review Press, 2009.
  8. Freeman, Richard, “Individual Mobility and Union Voice in the Labor Market.” American Economic Review 66 (1976): 361–368.
  9. Lewis, H. Gregg, Unionism and Relative Wages in the United States. Chicago: University of Chicago Press, 1963.
  10. Martinez, Rick, “Can Unions Fly High Once More?” News and Observer (August 25, 2005): 13A. Troy, Leo, Beyond Unions and Collective Bargaining. Armonk, NY: M. E. Sharpe, 2000.
  11. Weir, Robert E., and James P. Hanlan, eds., Historical Encyclopedia of American Labor. Westport, CT: Greenwood Press, 2004.
  12. Yates, Michael D., Why Unions Matter, 2d ed. New York: Monthly Review Press, 2009.