In 1981, President Ronald Reagan fired many striking air traffic controllers employed by Federal Aviation Administration. In the face of various challenges confronting labor unions, the union membership drastically, continue to decline. Since support from political party has declined, many workers believe that union's ability to protect their interests has drastically declined, and thus, many private workers belief that it is no longer necessary to be union members.
Roberts, (1997) argue that labor unions have faced hard times and sustained membership loss. The hard times ranging from diminishing influence of bargaining to the intense of global competition and technological changes.
Added to the political influence that contributes to the decline of the union, there are other external dynamics affecting labor unions. Globalization has been identified as the one of the external dynamic that has impact on the unions' strategies.
External Dynamics affecting the Labor Unions
One of the external dynamics having impact on labor unions is globalization. The concept globalization refers to the process of internal integration. Although, human interaction over a long distance has existed for thousands of years, however, rapid development of ICT (information communication technology) and development of internet technology have assisted in the global integration. Typically, the advent of electronic communication notable internet and mobile phones has assisted in connecting billions of people worldwide. The western political theory has presupposed the existence of territorial borders where state borders are delineated. The political theory argues that there is a clear delineation of domestic affair from foreign affairs. However, the advent of globalization has posed fundamental challenges to the traditional assumption of political theory, and it is no longer evident that states could delineate domestic affairs from foreign affairs. In the contemporary international systems, state could not parade as being sufficient. With advent of globalization, states have noticed that they have limited control of social and economic relations that transcend across national border. The economic theory also argues that fundamental objective of firm is to maximize profits. Many firms in the United States have taken the advantages of globalization to shift from the United States and locate their factories in the countries where labor costs are lower and there is less agitation of labor unions.
In the contemporary competitive business environment, many manufacturing companies have continued to shift from the United States labor market to other foreign labor market to maximize profits. Pitts (2008) argues that the aims to maximize profits and lower the labor costs have made many manufacturing companies to move out of the United States and locate their manufacturing plants in the developing countries in Asia, Eastern Europe, Africa and South America. Across the Unite States, firms are now pursing the process re-engineering, automation and labor outsourcing to decline costs and increase the corporate profits. In the United States and other Western Europe, the production costs are very high with increase in workers' benefits and wages. The actions of unions in driving up wages have led to the increase in the costs of productions. The escalation of the production costs and workers' demand for higher wages have forced many corporations to take different actions such as process improvement programs, and other innovation such as computerization, production facility automation, and the use robotics to lower costs. Recent development of telecommunication has eliminated the trade barriers and has made many companies to outsource their production facilities to the developing countries.
More importantly, globalization has assisted many firms in the United States to source for highly skilled workers outside the United States. Many firms in the United States no longer rely on local workers to complete their works; it is now possible for firms to employee labor from any part of the world with impact of internet technology. In a bid to cut labor costs, many organizations are now outsourcing part of their business process to developing countries. Since the beginning of 2000s, firms in the United States have continued outsourcing significant number of it jobs, customer's relations jobs, and advertising jobs to developing countries such as India and Singapore. The issue has had great influence on union's power and ability of union to influence employers for higher wages has weakened drastically. With drastic decline of the labor forces,
"union leaders blame globalization for their declining membership and power can point to a lot of circumstantial evidence to support their fears. The share of private-sector American workers who belong to labor unions peaked at 36% in 1953-54, then declined slowly through die 1960s and more sharply beginning in the early 1970s. By 2006, private-sector union density had fallen below 8%." (Griswold, 2010 P. 184).
"Union membership has not only shrunk during the era of globalization but unions have become less militant. In a survey of 15 major industrialized countries, not including the United States, the number of days per worker lost due to strikes was 1,641 in the 1960s, 2,586 in the 1970s, 1,632 in the 1980s, and a mere 658 in the 1990s." (Griswold, 2010 P. 185).
Economic theory reveals that growing international competitions among firms continue to damage the interests of labor and influence the labor unions. As products face more competition in the global markets, there would be a greater elasticity of demand for labor. This indicates that demand for labor will be more sensitive to changes in wages. Typically, firms will be forced to reduce number of workers employed because firms would not be able to pass the high labor costs to consumer since their products are facing stiff competitions within the global market place since it is possible for consumers to shift to substitute products offered at lower prices. Griswold, (2010) argues the ability of employers to reduce number of workers could force government to make laws less friendly to labor unions because government needs to create jobs for the whole population and not to decline employment opportunities in the country. Globalization could also put pressure on government to take the side of management in the name global competitive markets.
More importantly, technology has contributed to the increase in the competitions that firm face in the global market environment, and therefore wakening the unions bargaining power. A spread of internet technology has opened the more sectors to competitions and reducing barriers to enter the industry. Typically, the internet has allowed several firms to enter the markets and compete with more established companies in the U.S. And thereby declining firms' profits and bargaining power of unions.
Apart from the impact of globalization on unions, baby boomers, generation X and generation Y have also influenced the labor unions.
Generational aspects having influence on Labor Unions and will continue to do so Baby boomers are the largest group in the United States population and they contribute to the largest number of workers in the United States. Baby boomers represent 28% of the U.S. population, and account to the 43% of the total workforce in the United States. Baby boomers are people born between 1946 and 1964, and many people in this group belong to women liberation and civil right movement. In the United States, almost half of baby boomer have high school diploma or equivalent and nearly 40% of baby boomers have earned at least an Associates Degree. (ASHHRA, 2010).
Fig 1: Generation Distribution in the U.S.
As being revealed in Fig 1, generation X represents only 14% of the population in the United States and approximately 21% of U.S. belongs to this group and this group was born between 1965 and 1976. Generation X is often described as self-reliant and 40% of people in this group have earned at a college or university degree. They are able to gain advantages with their academic degrees. Most of them are self-confidence and technological literate. However, generation Y constitutes approximately 27% of the U.S. population. Many people in this generation have not yet entered the workforce, and generation Y constitutes about 27% of workforce in the United States. Typically, the future of U.S. industries depends on this generation. (ASHHRA, 2010).
Description of the three generations reveals that baby boomers will have more impact on the unions and will continue to influence the American unions. Compared to other generation group in the United States, baby boomers constitute the largest percentage of union member. In the United States, baby boomers account for the 43% of the total workforce. Thus, their large membership in the unions often influences the union. More importantly, many baby boomers are in the position of authorities in several private and public organizations, and they have ability to influence the labor unions more than other generations.
Based on different influence that could weaken power of union in the global competitive environment, the report provides the changes that unions need to implement to maintain support for their membership, employers and community at large.
Changes Unions need to maintain to achieve support from their Membership, Employers and the Community
Facing the decline of union membership in the contemporary…