The Labor Movement is Brain Dead (and it's time to pull the plug).
By Peter A. List, President and COO
This spring and summer, as America’s union bosses prepare to gather to debate their current malaise, there is one single, undeniable conclusion that no one seems to want to admit: the American labor movement is clinically brain dead. Labor leaders within the AFL-CIO and their political and academic allies are living in a state of perpetual denial about their true fate, repeating the mantra “organize or die” that has been chanted for years. The problem is, it’s too late for that. The chant now rings hollow. It’s fallen on deaf ears for too long. Someone just needs to have the courage and decency to let the union bosses and the rest of the world know the truth…That the time has come to declare the American union movement dead-let’s move on.
A History Lesson in Institutional Suicide
After putting a gun to its own head, the U.S. labor movement has been comatose for nearly 50 years-sinking further and further into oblivion. The labor movement began to lose its grip on the American workplace after reaching its peak in the mid-1950s, when labor unions represented about a third of all workers in the United States. Today, according to the Bureau of Labor Statistics, unions only represent 12.5 percent of all workers in the U.S.-and less than 8 percent in the private sector.
Unions have become more of a nuisance than a force. Although, according to one study, unions are still a $19 billion per year industry, they have become more like the zombies in George Romero’s Dawn of the Dead, operating more on inertia and instinct. While this inertia may keep them around for a few more years, the fact is, their share of the market in most U.S. industries has dwindled to the point of irrelevance.
There are no “strong” unions anymore. Once upon a time, there were industries in which unions had what is called “union density”-that is the percentage of unionized workers within an industry or market. Those industries and their unions have, in recent decades, been decimated and union bosses still can’t quite get themselves past the point of blaming everyone but themselves for today’s misfortunes. Few, if any, have bothered to note the one common denominator that was prevalent in those industries-unionization.
Killing the golden goose. There is an old axiom about how one should not ‘kill the goose that lays the golden egg.’ However, this is precisely what has happened in those industries where unions once had “union density.”
In the 1940s, 50s and 60s, unions came to dominate such U.S. industries as Big Steel, Big Auto, telephone, textiles, trucking, as well as a host of smaller industries. In several of these industries, unions were only successful as long as the employers had monopolies on their markets.
This was the labor movement’s heyday. When employers were held hostage by unions, they were forced to accept union demands or see their businesses (and industries) crippled. As long as the employers had monopoly advantage in their markets, the union model worked. However, it often came at the expense of capital or productivity improvements, as well as higher prices for the customers. When the employers eventually lost their monopoly advantage, either through deregulation or open competition, these same companies found they could not compete in a free market.
Unions, in their haste to get, as Samuel Gompers once stated, “more, more and more,” have led to the demise of hundreds (if not thousands) of companies, a score of industries, and have cost millions of unionized workers their jobs.
The Perfect Storm
In the past, people have declared unions to be dying or dead, only to have unions revive themselves. This time, however, it’s different and union bosses still can’t quite seem to grasp or understand why. There are several other major factors, which have created a “perfect storm” for unions, that have helped to speed the labor movement’s demise, these are: 1) the growth of government paternalism, 2) the faster flow of capital, and 3) labor’s own defective product. As these forces have converged, they have destroyed any real possibility for the movement to recover from its fatal illness.
Big Brother in the Workplace. When unions were formed, there were virtually no laws that governed the employment relationship. That has changed dramatically in the last 100 years. Today, largely in part due to labor’s own lobbying power during the 20th Century, there are a myriad of federal and state laws that govern virtually every company that employs workers in the U.S. However, the labor movement’s own success in getting laws passed has helped cause its own irrelevance in the workplace.
Nowhere is this more evident than in the explosion of growth in employment-related litigation. The reality is, today’s workers, most of whom only stay at their jobs an average of three years, are not prone to joining and then paying union protection money from perceived employer abuse. Today, the government does it for workers, free of charge and often at greater penalty to the employer. These days, the average employee in the U.S. is more likely to sue, or quit their job with an employer than to unionize.
Extortion is no match to globalization. The flow of capital is like a running river-when an obstacle is thrown in its path, the river finds a way around it. In the past, capital was a slower running river. As the 20th century progressed, the flow of the river went from the primarily unionized Northeast and Midwest to the primarily non-union South and South West. Once the river realized that the jobs flowed south inside our borders pretty easily, it didn’t take long to realize that jobs could be done outside our country pretty easily as well, with no loss in quality in most cases. Today, instead of taking decades to move industries overseas, with the increase of technology, capital moves at lightening speed and where capital goes, so too go the jobs.
The Blame Game. Allegations of corporate greed and “union-busting” are the rallying cries that labor leaders have used for decades to mask their own ineptness in protecting their own members and attracting new ones. Name-calling has become the all-too-convenient way for labor leaders (and their political allies) to push the blame to others, rather than accept their own complicity. However, if truth be told, all one has to do is look at those major industries that have fallen to see one major common denominator-most were heavily unionized.
In the ‘good old days,’ when unions were able to demand and get higher wage and benefit packages for their members, employers had little option but to give in. Today, the reality is far different and the threat that unions bring to the future of American workers is very real. While unions and their political allies can decry outsourcing until they are blue in the face, the fact is, it will not stop as long as labor and its allies attempt to obstruct capital. Given the evidence of the last 40 years, if a union only hastens outsourcing, rather than labor’s leaders being job protectors, they have become job killers. At present, as a result of greater government involvement in the workplace, coupled with the faster flow of capital in the form of outsourcing, labor unions have little to sell the American worker.
Poor Management and Defective Products
In order for any business to succeed, it needs to have a good product (or service), a good marketing plan, as well as good management. The American labor movement has none of the above.
Poor Management. Americans are bombarded daily with media stories of crooked business leaders. By watching the media, it would seem that the entire business community is rife with corruption and abuse. While this is indeed true in some cases, it is by no means indicative of the business community as a whole. When it comes to the House of Labor, though, corrupt union leaders seem to get a free pass in the media.
According to the U.S. Department of Commerce, there are approximately five million registered employers in the United States. By comparison, there are currently only 58 unions in the AFL-CIO. Labor’s free pass has come at the expense of many unionized workers, as their pensions have been raided by organized crime, their jobs traded away, and their industries outsourced. At the same time, union leaders continue to pull in exorbitant salaries and huge perks.
“Our movement is going out of existence,” said Andy Stern in a recent New York Times Magazine article2, “and yet too many labor leaders go and shake their heads and say they’ll do something, and they go back and do the same thing the next day.”
Stern is president of the AFL-CIO’s largest union, the Service Employees International Union (SEIU), and is the most controversial labor leader today. Under Stern’s watch, the SEIU has been one of the only unions to actually grow in the last several years and he is currently trying to shake the labor movement out of its coma, and threatening to leave the federation if the his shake-up attempt fails. Because of this, he is drawing fire from other union bigwigs like Machinists’ union president Tom Buffenbarger who considers Stern an “arrogant usurper” and a “rather small peacock”3.
Stern, however, is unapologetic as he compares union bosses to corporate bosses who would have been fired long ago had they clung to the “same decades-old business plan despite losing customers every year.”4
The New Unity Partnership. For his part, Stern’s shakeup consists primarily of forcing the consolidation of the AFL-CIO from 58 unions to 20 larger national unions that will focus on specific industries. This, Stern argues, will eliminate competition among unions for the same workers in the same industry, thus increasing single union density. It is no coincidence that Stern’s SEIU has been competing against several other unions in aggressively attempting unionize workers in the healthcare industry. If successful, Stern’s plan will also give the newly-formed larger unions a much larger concentration of money for organizing larger employers. Stern does have the support of a handful of other union presidents and, together, they had formed an alliance called the New Unity Partnership. Though disbanded in December after Stern felt NUP was a distraction to the AFL-CIO’s internal debate, NUP’s charm for some labor followers was the comparison to the early days of the CIO-a formal alternative to the then-status quo.
The problem for Stern and the rest of the labor movement, however, is that if adopted, Stern’s proposals will likely only prolong labor’s inevitable demise for a few more years. Eventually, the end result will be the same. The real problem for today’s unions is that their products are defective.
Defective Products. Unions have two primary products (or services) that they sell-the first is negotiating and administering contracts, and the second is servicing their members.
With regard to their first product of negotiating labor agreements, the problem for unions today is that, while the National Labor Relations Act (the federal law regulating private-sector labor relations) requires a company and union to negotiate, it does not require agreement. As a result, when unions are getting voted into companies by workers, unions fail 45% of the time to ever get a contract5. This failure rate is up from 1994, when unions were failing about a third of the time to get contracts for newly unionized workers6.
Before buying a product, many people investigate whether the product is going to deliver what the salesman promises to the buyer. If, however, the product (whether it’s a car or a toaster) fails nearly half of the time, most consumers wouldn’t buy the product. It’s the same thing for unions. Union salespeople (organizers) will continue having a hard time convincing workers that unions are in their best interest when, like defective cars or toasters, there is ample evidence that unions can cause workers irreparable harm.
When it comes to their second product, servicing their existing members, the story isn’t so good there either. Many unionized workers believe that unions serve as a “protection” for them. However, it isn’t until they lose their job that many workers find that the union dues paid for union representation do not help them, either when their jobs are outsourced, or when they get fired.
Often, these workers find themselves placed into the position of having to file federal charges with the National Labor Relations Board against their own unions for the unions’ alleged ‘failure to represent’ the members. Unfortunately for the workers, however, these types of charges are dismissed as workers learn that a union’s duty to represent the worker does not necessarily mean that it has to be to the worker’s satisfaction or liking. In the end, many unions fail the very workers they were supposed to be there to help.
Unlike a century ago, with the failure of today’s unions at the negotiating table, as well as with the workers they already represent, today’s unions have very little to offer to the American worker in the 21st Century. Nevertheless, unions continue to sell workers on the concept of unionizing and, in some cases, are successful.
However, their success at unionizing some workers belies the fact that it is too little too late. Union organizers, the union sales people, are left to try convincing workers that a union is in their best interests when, time after time, it is proven to be not the case.
Unions are History
Ten years ago, John Sweeney, then president of Andrew Stern’s SEIU, took over the helm of the AFL-CIO as a ‘reformer.’ Much like his successor Stern, John Sweeney’s goal was to shake the labor movement out of its deep coma. In the last ten years, while some unions have spent more of their members’ money on organizing and the whole union movement has spent hundreds of millions on trying to get union-friendly politicians elected. These efforts, along with the tremendous amounts of money, have been wasted. The union movement is no closer now than it was ten or even 20 years ago of seeing a reversal of its fortunes.
An unattractive institution. While companies have always resisted unions, it can be argued that there was once a time and a place for unions. Today, with the advent of government in the workplace, combined with the failure rate of unions across the board, unions have outlived their usefulness in all but the most barbaric of companies. While there are a few around, they by no means can sustain the labor movement, as it exists today. For the most part, unions are unattractive to companies and to workers….Someone just needs to have the decency and courage to tell the world that unions are brain dead and it’s time to pull the plug.
Peter List is President & COO of the North American Employers Group, LLC and one of the nation’s most sought after experts in employee and labor relations. His experiences in the union movement have made him one of the most successful consultants in the country, helping companies in nearly every industry resolve employee issues and remain union-free. For more information about NAEG, you can visit their website at www.naeg.net
1 Source: Big Labor: A $19 Billion-a-Year Business. National Institute for Labor Relations Research. June 7, 2004.
2 Source: The New Boos. The New York Times Magazine. Matt Bai. January 30, 2005.
5 Source: Brent Garren, Senior Associate General Counsel, UNITE, before the American Bar Association's Section on Labor and Employment Law, Aug. 11, 2003.
6 Source: The Dunlop Commission on the Future of Worker-Management Relations, Final Report, 1994.