The rise and decline of labor unions in the United States

Lqbor Relations Project

Labor Relations Project

In the United States, Canada and other advanced countries, labor unions are legal workers' representatives and the union activities largely centered on the collective bargaining over wages and improvement of working conditions of union members. Unions remain important actors in the United States, and unions fight for the issues such as wages, trade policy and improvement of healthcare for membership. Labor unions also assist in minimizing the income disparities; guarantee a secured income, as well as improving standard of living of industrial society.

"Unions also aimed at correcting imbalances in income distribution through maintaining "solidarity wages" that minimized differentials between workers. Unions also they adopted an inclusive approach to workers outside the union, and provided a variety of services which made them non-competing groups in the world of work." (Jose, 2006 P. 2).

Formation of Unions started in the 19th Century. In 1880s, Knights of Labor was the major force in the United States that fought for the labor cause, however, the organization collapsed due to poor management. In the late 1800s, organized labor union became politically vocal in the United States. The American Federation of Labor also emerged and coalition of many national unions assisted in resolving many jurisdictional disputes during the period. However, there was a rapid growth of unionism in the United States between 1900 and 1919, which was followed by a long years of decline until there was a promulgation of the Wagner Act of 1935 that induced the labor movement in the United States. However, after the Second World War, unions formed the backbone element of Modern liberalism and New Deal Coalition in the United States, and the percentages of workers belonging to union reached 35% in 1954. (Marinas & Condruz-Bacescu 2006). In 1970, unions became major players in the U.S. national politics usually taking the side of the Democrats. In 1979, union members were estimated to reach 21 million and between 1970s and 1980s, labor leaders provided stiff opposition to trade liberalization, which include North American Free Trade, and World Trade Organization. For more than 3 decades, labor unions fought for higher trade barriers, and labor unions lobbied for higher tariffs and quotas as well as outright bans on imported steel from China. (Griswold, 2010).

Presently, labor unions are under the two umbrellas of CIO (Congress of Industrial Organizations) and AFL (American Federation of Labor) and both organizations play active roles in politics and economic issues. Despite the significant impact of union in 1980s in the United States, the unions experience a steady decline in the membership participations since 1980s. The decline in union membership is more pronounced in private sectors than public sectors. Since the middle of 20th century, there has been a decline in the American labor movement. In the early 50s, approximately one-third of American workers belonged to unions, however, at present, only one-tenth of American workers belong labor unions.

This project formulates research objective to enhance professional understanding on labor relations and unions

Research Objectives

To provide understanding on the changes that is needed for unions to maintain support from the community, their membership, and the employers.

To provide understanding on the impact of politics on membership decline. In the last few decades, there has been a drastic decline of labor unions membership and political influence has contributed to the decline in the unions' membership.

To investigate the generational aspects, such as baby boomers, Generation X, and Generation Y, influencing labor unions and continue to do so.

To investigate other external dynamics, such as global workforce, that has impacts on labor unions.

To understand the strategies that Labor Unions need to adopt to remain active and viable in the 21st century.

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 globalize environment, unions needs to re-organize their strategies to maintain membership support, employers and community support. Unions have to realized that their ability to threaten employers with strike could no longer hold in the present globalize environment. Labor unions need to realize the influence of globalization on their power, thus, labor unions need to develop worldwide support network to promote workers' interest. As multinational corporations are shifting to less developed countries to source for cheap labor, labor unions should team up with non-governmental organizations to promote the interest of workers globally. Unions could use this tactics to improve workers' condition, improve rights of workers globally and at the same time using this tactic to retain jobs in the U.S. And Europe. If the labor unions could use these tactics to drive up the costs of labor in the foreign countries, U.S. labor will become more attractive. Labor should employ SMU (Social-Movement Unionism) theory to implement their bargaining position. SMU argues that unions should organize their bargaining positions beyond national borders to remain successful and increase union membership. Although, SMU is relatively new, however, union should seek for support of workers in the developing nations to increase union membership both locally and internationally. Pitts (2008) argues that the improvement in the working condition of developing countries and retention of wealth in many developing nations are due to the labor strategies. Typically, some labor unions have implemented labor networks to form the world unions in conjunction with NGOs to improve the working conditions of workers worldwide.

More important change that unions need to implement is to promote working condition of workers globally. The labor unions should team up with NGOS to promote civil rights, environmental protection and workers safety. Typically, if the unions could ensure that firms in the developing countries abide by the environment protection, there would be increase in the costs production in the developing countries, and the production costs will be closer to the production costs in the United States. As production costs rise in the developing countries, firms in the United States will be unwilling to relocate their plants to developing countries, thus, firms will be forced to improve the working conditions of workers in the United States.

The paper suggests the strategies that labor unions need to adopt to remain active and viable in the 21st century.

Strategies that Labor Unions need to adopt to remain Active and Viable in the 21st Century

As the world has entered in the 21st century, the United States has been affected by powerful social and economic forces that have weakened the power of labor unions. One of the strategies that labor unions could employ in order to be active in the 21st century is to modify their institution and structure the union organization to adapt to globalization. It is essential to realize that globalization has come to stay and will continue to influence the union's forces if the labor unions do not structure their organization to adapt to globalization. More importantly, labor unions should structure their organizations to adapt to the technological changes. Typically, labor unions needs to shift towards

"ensuring the employability of workers. The union should also mobilized resources along with the state and businesses to create facilities for continuous training and skill upgrading. The training facilities should especially addressed the needs of less-skilled workers who were at risk of exclusion from employment. The unions should also take responsibility for assisting the state in providing a variety of services-educational, social, cultural and recreational- that enriched the personal and professional lives of members and their families." ( Jose, 2006 P. 4).

Conclusion

The paper provides analysis of labor unions and labor relations. Investigation of the unions influence has revealed that unions had been the contributing forces that improve the workers' condition in the United States and other developed world. However, since 1960s, union membership has declined drastically making the union influence to decline. One of the contributing factors leading to the decline in the union membership is the advent of globalization and technology. Firms within the United States have faced competitions from other countries and to decline costs, many organizations have resulted to several strategies such as outsourcing, and the use of automation. The increase in the unemployment rates has also declined the union membership thereby declining the union power. To make union more active in the competitive market environment, union will need to promote working condition of workers globally. Labor unions should team up with NGOS to enhance workers safety, promote civil rights, and enhance environmental protection.