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Contemporary Issues in Employment and Workplace Policy
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March 14, 2003
Financial Outcomes in Union and Non-Union Workplaces
This Issue Backgrounder examines three aspects of unionization on company performance: labor costs, productivity and productivity growth. This analysis is based on a review of recent economic studies of the impact of unionization on the performance of private sector firms. Most studies show union impact resulting from higher compensation costs, but many also show a negative impact on productivity and productivity growth. The conclusion that unionization reduces company profits is unquestioned even by economists who find favorable economic outcomes from unions. The disagreement is over the sources and the size of the financial impact. impact can be offset by charging higher prices. This finding was based on the combined effect of 16 percent higher compensation costs and one percent lower output per labor hour. Higher levels of union density, a higher union compensation premium, and lower initial productivity would magnify these differences. The reduction of profits would be less if the unionized finn experienced a productivity gain instead of productivity loss. Reduced profitability makes it harder for the unionized finn to attract investment needed to expand facilities and adopt more efficient technology. The result may be slowerproductivity growth-annual increase in output per employee-compared to the nonunion competitor. Slower productivity growth means that a competitive disadvantage in terms of output per labor hour will emerge over time even if the unionized finn starts even or ahead of the non-union finn. Ten years after union organization, the unionized company's output per employee would be 2.4 percent less than the output per employee of its non-union competitor, if the unionized company experiences just 0.25 percent slower productivity growth from an equal starting basis. Unless the product of the unionized company can be sold for a higher price or other cost savings attained, the unionized company is likely to result in profits per labor hour 14 percent less than a nonunion workplace. Within a company, the impact of a unionized segment of the labor force on overall company costs and performance depends on the strategic importance of the unionized segment. A small proportion of the
The EPFanalysis found that a company with 10 percent of its workforce unionized could experience 2.6 percent higher unit labor cost and 21 percent lower before-tax profit than its nonunion counterpart unless the union impact can be offset by charging higher prices.
The Employment Policy Foundation (EPF) applied the research findings on union impacts on compensation cost, productivity and productivity growth to output, cost and profit estimates for a typical company derived from 2001 private sector National Income and Product Accounts data. EPF analysis found that a company with 10 percent of its workforce unionized could experience 2.6 percent higher unit labor cost, and 21 percent lower before-tax profit than its non-union counterpart unless the union
workforce unionized may have a major impact on operations, if the unionized segment affects key elements of the production or distribution process. Unionization of a segment of the workforce of a company may also have a spill-over effect on costs and productivity ifunion wage scales, benefits, and work rules become a model for human resource policies that apply to the non-union workforce. Location of company operations can also have an impact on company performance, regardless of the share of the labor force unionized. Operations in states with high union membership density may be more costly or less productive regardless of the actual percentage ofthe company workforce that is unionized, if the company has to match local standards of compensation and work rules that reflect union presence in the labor market. In a high union density locale, anon-union company may find itself at a disadvantage in terms of attracting and retaining the most skilled and productive workers unless it offers compensation and conditions comparable to the union standard. Table I-at the end of this Issue Backgroundershows the wide variation in union density (private and public) by state. The top ten states in terms of union density account for 41 percent of all union members nationwide.
Marcil 14, 2003
mobility between private and public sectorjobs. Overall union density may also be a factor in the political environment that affects the legal and regulatory framework in which private companies operate.
Impact of Unions on Compensation
Figure 1compares the total hourly compensation (wages and benefits) by union status. From 1986 to 2001, union hourly compensation costs averaged 37_5percent more than non-union compensation costs. This difference overstates the hourly cost premium attributable to unionization.
Figure 2 Union Membership By Industry. 2001
",f BUI·eatJ (If Labol'
From 1986 to 2001, union hourly compensation costs averaged 37.5 percent more than non-union compensation costs. This difference overstates the hourly cost premium attributable to unionization.
Figure 1 Total Compensation
Hourly Compensation Per Labor Hour by Union Status
As shown by Figure 2, union members are more concentrated in some industries than others. Figure 3 compares union and non-union weekly earnings by major industry in 2001_ The implications of these union-nonunion wage differences are complicated, not only by industry, but by variations in hours worked, skills, and locations. For instance, union members in transportation tend to work more hours per week and union members in construction are concentrated in skilled trades and urban locales.
Figure 3 Weekly Earnings Difference by Industry
Union Member and Non-union
Weekly Wage Eatnlng$
~%+.-.--.-.--.- ..-.---. --.-.---.-----.~--------_._-------- . - .....
30% ---------.-.-.-------.----':::=?'20% 11 .. __ ._ .._ ..... .. -1 ..... "'-__
Source, Employment Polky Foundation tabulation of Bareau (If Lnbor S1111istics data.
The combined private and public union density is relevant to indicate the overall union impact on the labor market environment because of the significant labor
SOllWe: EIUIlI(lYIl1~llt olky Foundation tab".lntion Qf Iltu·enu of LabQr P Sluiisllc' dota.
Manufacturing provides a more consistent industry context for comparing compensation of union and nonunion workers. Hours worked per week tend to be similar for union and non-union workers, and the skill and location differences appear to be less pronounced than is the case with the construction industry.
Figure 4 Wage and Benefits Components of Compensation
Hourly Compen$tllio!l Employees, 2002. Cos! fOf Wages and Beooutn hy Union Affiliaiion, M3nufacluring
March 14, 2003
($1.15 per hour higher). Overall, the combined effects of wage and benefits differences in manufacturing result in the hourly employer cost of union workers being 16 percent higher than the hourly employer compensation cost for non-union workers. The 16 percent difference between union and nonunion compensation suggested by the manufacturing comparison for 2002 is consistent with union wage premium estimates for the overall private sector based on econometric models that control for multiple variations in worker characteristics by industry, occupation, age, experience, education, etc.'
Figure 5 Impact of Union Compensation on Profit
EsUmalad Berore-lax Profit Per Hour with 16 Percent Union Compensation Premium Dollars Profit Per Hour $4.00 r~--··-~···-·····-·"'·"'~·-·---···---···-···--···-·····~'---.'~~-"-'''''''-.-'''''~.''''.- -.. ,---.-... ..-" .... ..-- ..... " ~ -
Dollars Per Hour
$30 T~-~·~··-····~···-·-·~-···-· .- - -.---
-.-.--.- .. -.----.- --._.- ._._ .. .. _ _.__ -_.. ,
$2G $15 $10
+--~+-_._.+-------+.-~.-~~ _.. .. ~
$3.50 $3.00 $2.50 $2.00 I $1.50 . $1.00 :
$0.50 I $Q.OO N() Union
SOIU~e: Employment Pulky lIounduHflntabulation of Bure,," of L"bol' Statistics dar...
In manufacturing, the union weekly earnings premium reported by BLS for 2001 (6.2 percent) is almost identical to the 6.4 percent difference in hourly wage cost between union and non-union workers in the BLS Employer Cost of Employee Compensation series for 3rdquarter 2002.1 Figure 4 shows that the difference of 6.4 percent in union versus non-union wages in manufacturing is dwarfed by the 36.5 percent difference between union and non-union benefits costs.
15% 25% 10% Uaion n.,nsity in CompallY Wo~kforce
Sour",,: Employment Policy Foundation StaHstks data.
EPF's comparison of union versus non-union health insurance plan costs found that plans covering union workers in 2001 cost on average $4.754-14.0 percent more than the cost for covered non-union workers.
A leading component of the higher cost of union benefits in manufacturing and in other industries is health insurance. EPF'scomparisonofunion versus non-union health insurance plan costs found that plans covering union workers in 200 1cost on average $4,754-14.0 percent more than the cost for covered non-union workers. Union workers were also found to be less likely to contribute to the cost of health insurance and to contribute a smaller share when they did contribute.' Other benefit areas where employer compensation costs for union workers exceed non-union costs include paid leave ($.76 per hour higher) and pension benefits
Figure 5 illustrates the potential impact of higher union compensation costs on a typical private sector corporation based on the 16 percent overall hourly cost premium per union member typical of the manufacturing sector. The illustration is based on an analysis ofNational Income and Products Accounts data for non-farm private business in 2001.4 The estimates shown reflect only the effect of higher compensation costs associated with unionization and do not include any potential effects of unionization on productivity or productivity growth (these possible effects are discussed subsequently).
Ten percent union density in the company workforce results in estimated hourly profits of $3.34-9.4 percent less than the non-union case.
Figure 5 shows hourly profit per employee as $3.68 per hour for a company with no union members based on average overall labor output of$43.39 per hour. For a company with union presence, the profit per hour was found to be less, depending on the level of unionization. Ten percent union density in the company workforce
© Employment Policy Foundation
results in estimated houri y profits of$3 .34-9.4 percent less than the non-union case. This reflects the effect of the 16 percent union premium, being paid to 10 percent of the workforce, being spread across the entire workforce. As Figure 5 shows, higher union densities result in lower overall profits per hour. The union compensation premium also impacts unit labor costs - tota1labor compensation cost per dollar of output produced. In the example based on a 16 percent union compensation premium, the non-union firm has unit labor cost of 49.6 cents per dollar of output value. At 10 percent union density unit labor cost rises 50.4 cents ( 1.6 percent higher), and at 25 percent union density unit labor cost is 5 1.6 cents-4. 0 percent higher. The illustration considers only the effect of higher compensation costs on profits of a "typical" firm. No adjustment for productivity is included. To the extent that a company is able to pass along the higher costs associated with unionization, the effects on profits will be less. However, increasing global competition in many goods and services industries makes passing on costs less feasible than it once was. A company may also be able to reduce the impact of higher costs through efforts to raise productivity.
March 14, 2003
product oflabor. However, the theory predicts that total profits will be lower after the adjustment in response to the union-imposed increase in labor costs. The substitution of capital for labor can only partially offset the effect on profits of the increase in labor costs. 6 In addition, the "shock effect" of union cost premiums may encourage firms to manage operations more carefully and to find other cost -saving strategies. The "shock effect" argument implies that before unionization the finn may not have been operating in an optimal mode of cost minimization, and that unionization forces management to eliminate overlooked inefficiencies. Because reduction oflaborutilization is a central element of the economizing effects, union work rules that strive to maintain employment levels by limiting management's options to substitute capital for labor or to control the pace of work place significant constraints on economizing to achieve productivity improvements that offset some of the negative profit impact of higher compensation costs. 7 Empowerment. Richard Freeman, James Medoff, and others have argued that unionization provides benefits that go beyond economizing effects. These productivity enhancements are said to be a reflection of the morale boost that workers get from "having a voice" in the workplace. The productivity enhancements reported by various studies reflecting the empowerment theme have ranged as high as 25 percent," Freeman and Medoff add a significant word of caution to these optimistic reports: "Because unionized labor costs are also higher, however, one should not infer from this [higher productivity] that firms should be eagerto get organized. Statistical evidence indicates that the productivity increases cannot offset the greater capital intensity and labor costs under unionism. Higher productivity does not mean a higher rate of return on capital.'? More recent studies have shown negative impacts of unionization on both output per hour and on productivity growth. Clark (1984) found productivity losses between 2.0 and 3.0 percent based on an analysis of company-level data for 902 manufacturing businesses over the 1970-1980 period." Hirsch (1991) found negative total productivity effects of 1.0 percent to 3.3 percent depending on level of union density in the company." He found that the productivity impact for firms with medium union density30 to 60 percent of the workforce unionized were larger (3.3 percent lower productivity than a non-union firm) than the productivity effects on firms with more than 60 percent union density (2.4 percent lower productivity).
Union Impact on Productivity
The estimate of union impact on company productivity-output per hour-is more complex than the direct union cost impact. Companies vary widely in their productivity and in productivity growth overtime. Differences in firm size, industry, location, management characteristics, and experience may confound efforts to discern impacts of unionization. The breadth of economists' views on the productivity impact of unions is shown in the results of a 1998 survey of economists. The survey's median estimate of union productivity impact was precisely zero. Half of the survey respondents estimated a negative net productivity impact and the other half estimated a positive impact.' Some economists argue that unionization results in companies becoming more efficient and more productivethat: output per labor hour is higher in unionized firms. The productivity gain argument reflects two strands of cause and effect: economizing and empowerment. Economizing. Higher union costs lead firms to cut back on labor utilization and to substitute capital for labor. Economic theory predicts that relative substitution of capital for labor will raise the marginal and average
The one percent productivity loss estimated by Hirsch for a company with 10 percent union density would reduce profits by 11.8 percent to $3.25 per labor hour compared to the non-union firm's profit of $3.68 per hour.
Even small productivity losses can have a major impact on a company's financial performance. Figure 6 extends the illustration begun earlier to show the effect of union-related productivity changes on the profitability of a hypothetical :finn .12 The illustration applies the lower end of the impacts on total productivity reported by Hirsch (1991), i.e., one per cent lower productivity in union firms. The impact of productivity loss is significant without considering the effect of higher compensation costs. For the example shown in Figure 6, the one percent productivity loss estimated by Hirsch for a company with 10 percent union density would reduce profits by 11.8 percent to $3.25 per labor hour compared to the non-union finn's profit of$3. 68 per hour. Adding the effects of the union premium to the productivity effects result in further lowering of profits to $2.90 per hour in workplace with 10 percent union density."
Figure 6 Productivity Impact of Unionization
Profit per Labor Hoor by Degree of Unlonl~atiQn
March 14, 2003
companies that do not generate productivity growth-those that get less return from effort and resources each yeartend to vanish in the long run. Among companies that experience productivity growth, however, results are not uniform, and the cumulative effect of annual productivity growth results means that quite small differences in annual productivity growth rates can make big differences in aggregate output, market share and profits overtime. Although the results of studies of the relationship between unionization and productivity growth are varied, most recent studies have found a small but notable negative impact of unionization. Hirsch (1991) provides the most comprehensive analysis specifically applicable to company-level data." The effects that he found were relatively small and, like the total productivity effect described previously, the impact varies with union densityminus 0.4 percent for firms with less than 30 percent union density, minus 0.6 percent for firms with 30 to 60 percent union density, and minus 0.5 percent for firms with over 60 percent union density. 1 5
$4.00 $3.50 $3.00 $2.50 $2.00
In 10 years, the unionized company's profit per labor hour will be 18.6 percent less than the non-union company before accounting for any effects of compensation cost premiums or initial productivity differences.
Figure 7 illustrates the potential profit impacts that may result from small changes in productivity growth. The example assumes that both the unionized finn and the non-union finn begin with identical productivity levels and cost levels. In Figure 7, unionization does not initially increase or decrease total output per labor hour and the union compensation premium is ignored. The unionized company is assumed to have a union density of 10 percent. The only difference is a one-quarter percent lower annual productivity growth rate for the unionized company- 225 percent annual growth forthe unionized company versus 2.50 percent productivity growth for the non-union company. 16 In 10 years, the unionized company's profit perlabor hour will be 18.6 percent less than the non-union company before accounting for any effects of compensation cost premiums or initial productivity differences. The analysis assumes no offsetting price increases by the unionized finn and distribution of productivity gains in equal proportions between labor compensation and profits.
$0.00 No Union 10 Percent Union 25 Percent Union
Sf>II"CC! EmploymCllj Policy Fmmda1mn aJlalysi~.
Productivity growth is the change in output per labor hour overtime. Technological progress, growing workforce skill, improvements in production organization and methods, and increasing endowments of capital equipment contribute to increasing output per labor hour overtime. Most companies experience positive growth in productivity overtime-especially if results are averaged to eliminate occasional one-year anomalies. Indeed,
© Employment Policy Foundation
issuabackgrounder Summary of Union Impacts
Figure 7 Productivity Growth Impact of Unionization on Profit
Profit~er Labor Hour in Year 1and 10 Years Laterwnh Zero Initial Cost and
March 14, 2003
WiD T~~~~C"~~~~~'~'=O:"~'.-"--~'-"--'""-~'-"-"--"'--~-'----, $1"00
$6"00 $5.00 $4.00 $3.00 $2.00
The union compensation cost premiums and potential productivity losses in the illustration result in 21.2 percent lower profits in the immediate situation. The cwnulative effects of slower productivity growth on top of the initial differences result after 10years in the unionized company, though more profitable than at the start, significantly lagging the non -union competitor in profit by 32.4.17 Figure 8
Combined Impact of Unionization on Profit
Profit per Labor Hour with 16 Percent Unionization, Year 1 and 10 Years Later
$0.00 No Union SOUI'CC:
$~,OO 10 Percent Union $5.00
+~-.. ~--- ~-.~.-----"',-.--~ +.",.-~-... ......-.-~ ~.~~ -""-.- - .~-; -." ".. ..
M.l!I> ._, ... _. __
Employment I'oli~y Foundation allJllysis.
$2.00 $1.00 $0.00 Year 1 10 Years Later
The combined effects of the union compensation premium and negative impacts ofunionization on productivity and productivity growth create significant competitive challenges for firms dealing with existing union presence or confronting potential unionization. Figure 8 illustrates the potential profit impacts of the union impact challenge initially and overtime, The calculations of potential impact include the effectsofa 16 percent union compensation premium maintained unchanged overtime, a one percent initial productivity loss, 0.25 percent slower productivity growth, and no relative price increases to offset the negative union effects.
Figure 8 illustrates the competitive challenge facing the unionized firm, Some decline in profitability is a likely inevitable result of unionization. Companies that recognize the challenge and aggressively seek means to control costs, increase productivity, and promote continuing productivity growth through active industrial relations management may be able to limit the impacts of unionization.
The cumulative effects of slower productivity growth on top of the initial differences result after 10 years in the unionized company, though more profftable than at the start, significantly lagging the non-union competitor in profit by 32,4,17
© Employment Policy foundation
Union Density by State
Employment New York Hawaii Alaska Michigan New Jersey Washington Illinois Rhode Island Ohio Minnesota Pennsylvania Nevada District of Columbia California Wisconsin Connecticut Oregon Massachusetts West Virginia Indiana Missouri Maryland Montana Maine Iowa Delaware 7,575 513
March 14, 2003
Union Mmbr. 2,024 123 59
Union % 26.7 23.9 22.0 21.8 19.6 18.6 18.3 17.9 17.7 17.6 17.0 ]7.0 16.8 16.4 16.2 15.8 15.8 14.8 14.6 14.3 14.2 14.1 13.2 12.9 12.8 12.2 Kentucky Vennont New Hampshire Alabama Kansas wyoming Colorado Oklahoma New Mexico Nebraska Louisiana Tennessee Idaho North Dakota Georgia Utah Florida Arkansas Arizona South Dakota Texas Mississippi VIrginia South Carolina North Carolina United States
Employment 1,678 276 593 1,834 1,179
Union Mmbr. 192
Union % 11.4 10.8 10.1 9.5 9.3 9.0 8.7 8.5 8.0 7.8 7.7 7.6 7.6 7.5 7.2 6.8 6.5 6.3 5.9 5.9 5.6 5.6 5.0 4.5 3.7 13.5 salary
4,452 3,637 2,475 5,466 434 5,075 2,337 5,228 881 242 14,557 2,533 1,497 1,444 2,840 732 2,6% 2,543 2,450 365 559 1,351 371
20 168 117 56 ill 135 182 42 21 259
899 411 888 150 41 2,395 411 237 228 420 lOS 385 362 346 48
1,931 1,385 702 770 1,750 2,395 554 284 3,613 945 6,473 ],026 2,058 328 8,855
3,255 1,642 3,388 120,758
422 64 121 19 497 62 163 75 125 16,280
Source: Bureau of Labor Statistics, Union Membership in 2001. Data reflects combined public and private scctorwageand employment and union membership.
1 The Employer Cost of Employee Compensation survey provides a detailed breakdown of hourly compensation cost for wages and for non-wage benefits. Manufacturing is the only industry of the major categories listed in Figure 3 for which BLS provides information on hourly benefits cost in addition to wages cost. 2 Employment Policy Foundation, "Employee Share of Health Insurance Costs is Not Increasing," Employment Trends (January 13,2003), http://www.epf.org/researchinewsletters/ 2003/et20030113.pdf 3 Recent studies by Hirsch, Shumacher, and Macpherson (2000) estimate the union premium at 16.3 to 22.1 percent in the late 1990s. Earlier studies by Lewis (1963 and 1986) estimated the union premium at 10 to 15 percent. See Barry T. Hirsch and Edward J. Schumacher, "Private Sector Union Density and the Wage Premium: Past, Present, and Future," in James Bennett and
Bruce Kaufman, eds., The Future of Private Sector Unionism in the United States (Armonk, N. Y.: M.E. Sharpe, 2002, Chapter 6, pp. 92-128. See also Barry 1. Hirsch and David A. Macpherson, "Earnings, Rents and Competition in the Airline Labor Market," JoumalofLabor Economics, Vol. 18, No.1, January 2000, pp. 125-55. H. Gregg Lewis estimates reported in "Jeff'E, Biddle, "II. Gregg Lewis," in Warren J. Samuels, ed., American Economists ofthe Late Twentieth Century (Cheltenham, UK: EdwardElgar, 19%),pp.174-193. 4 Bureau of Economic Analysis, www.bea.gov. EPF derived 200 I output per labor hour ($43.3 9), compensation cost per hour ($22.51), OthL'I' costs per labor hour ($18.20), and profits per labor hour (#3.68) for the non-union base case from aggregate sector gross product, factor shares, and labor hour data reported by BEA 5 Victor R Fuchs., Alan B. Krueger, and James M. Poterba, "Economists Views about Parameters, Values, and Policies: Survey Results in Labor and Public Economics." Joumalof
© Employment Policy foundation
Economic Literature, Vol. 36 (September 1998): 1387-1425. 6 See Hirsh and Schumacher, op.cit., pp 13-15, for a rigourous discussion of the standard theory. 7 See James T. Bennett and Daphne G Taras, "Technological Change and Employment Conditions in Traditionally Heavily Unionized Industries," Journal of Labor Research, Vol. XXIII, 501-511, for an introduction to a series of papers addressing these issues in specific industry contexts. 8 The AFL-CIO fact sheet on the topic claims manufacturing industry gains of 19-24 percent and construction industry productivity gains from unionization of 17 to 38 percent. See wwwaflcio.org, See also Dale Belman, "Unions, The Quality of Labor Relations, and Firm Performance," in Lawrence Mishel and Paula Voos, eds., Unions and Economic Competitiveness, (Armonk, NY: ME. Sharpe, Inc.: 1992), pp. 41-107. 9 Richard B. Freeman and James L. Medoff, "Trade Unions and Productivity: Some New Evidence on an Old Issue," NBER Working Paper Series, no. 1249, December 1983, p. 10. 10 Kim B. Clark, "Unionization and Firm Performance: Impact on Profits, Growth, and Productivity," American Economic Review. Vol. 74 (December 1984): 727-738. II Barry T. Hirsch, Labor Unions and the Economic Performance afFirms, (Kalamazoo, MI: WE. Upjohn Institute for Employment Research, 1991), p. 99. The percents listed in the text are derived from results of minus 2.0, 4.9, and 6. 5 percent reported by Hirsch in the context of effects on the labor value added to output. These percentages were converted to equivalent percents of total output by multiplying by .5, the average non-labor component of total output. 12 As with the previous illustration, the company cost structure reflects averages for output per hour, compensation per hour, other costs, and profit per hour derived from 200 1 BEA National Income and Product Accounts data for the non-farm private business sector. 13 Studies of the impact of unionization on productivity deal with averages, and even if the average productivity effect across many firms is a negative impact, the underlying reality is a wide variety of outcomes for specific companies. Some companies
March 14, 2003 respond to unionization with vigorous efforts to improve efficiency, to increase productivity by capital substitution, technical innovation, and to improve employee skills through training. Other companies may respond less vigorously and experience significant productivity declines. Available studies have not identified the relationship between company response to unionization and competitiveness of the market, If companies in highly competitive markets strive for productivity enhancement in the face of unionization while companies in less competitive environments pass along higher costs and accept lower productivity, then any negative average productivity losses from unionization would translate into smaller profit losses than suggested by Figure 6. 14 More recent analyses have tended to confirm the levels of impacts reported by Hirsch in his 1991 study. Some have suggested the possibility of negative productivity growth impacts somewhat greater than those reported by Hirsch. A recent study by Pantuosco (200]), for example, found negative effects of minus 0.8 percent on state-level aggregate output growth associated with union density at the state level.: This study suggests that the impact of unionization may extend beyond the immediately unionized firm and affect the general market environment. Negative effects of union density at the state level could imply mean greater negative impacts at the company level. See Lou Pantuosco, et. al., "The Effect of Unions on Labor Markets and Economic Growth: An Analysis of State Data," in Journal of Labor Research. Vol. XXII, Winter 2001,pp.195-205. 15 Hirsch at p. 106. 16 The productivity growth differential selected for the example is less than the 0.4 percent differential reported by Hirsch to reflect the fact that the illustrated union density-l 0 percent-is at the lower end of the density distribution defined in Hirsch's report. 11 The assumption of maintaining a constant union premium over time is important. The empirical record suggests that the union compensation premium may have declined by 20 percent over the past 20 years.
© Employment Policy Foundation
The Future Of Organized Labor
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home forums trough weekly articles toolkit files contact
til Email this page to a friend! Bill Pearson, retired president of UFCW Local 789 in St. Paul, Minnesota has just returned from the annual World Future Society's Conference which was held in San Francisco, California. Pearson participated in e session entitled "Organized Labor and Tomorrow's Workplace: 2010 ane Thereafter". The purpose of the session was to attempt to determine where labor unions will be in the coming future and how they can hope tc share a better workplace future by adding productivity and creativity The following is Pearson's speech to the lVFS participants at tiu conference.
The Future Of Organized Labor
By Bill Pearson
Opening Statement: The labor movement has been all but neutered, and consequently, .if i1 ~ doesn't make swift and dramatic changes, it will be gone as we know il today. Which by the time I am done, you will see I think is a good thing. Why And How It Happened: The labor movement has become big business. The business union mode it embraced corrupted its core principles. As employers consolidated anc got bigger, so did unions. It wasn't intentional; it was a simple cause anc effect. The structure lost its soul, as members became less important thar the survival of the organization. Those standards may be fine for ~ business enterprise, but not for an organization whose sole purpose is the workers in it. Dramatic Forces Affecting The Labor Movement: There are several forces well outside of labors control that will that wiT cause further harm than they have already faced:
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The Future Of Organized Labor
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Wage Disparities continue, as the only meaningful job growth will be in the retail and service sector. Two areas the labor movement has proven to be wholly ineffective in reaching or motivating. These are the two lowest paying hourly occupations in the marketplace. Income Inequality will get worse, as the haves will accumulate more, and the have-nots will become larger in number. Especially challenging will be the aging of the population who will have to rely on social security as their only source of income, or compete with the younger worker for the poor paying retail work.
3. Demographics: Touched on above, this single factor will do more to change our society then any other. The massive boomer population will cause us to look at life far different, as masses of people will be looking for their escape to a better more laid back existence. Add to the mix growing numbers of immigrants, and the dramatic population shifts will bring an upheaval like never witnessed before. 4. Technology: This item is a no brainer, as everyone understands the remarkable impact the internet will have. Everyone but union officials, that is. They tend to view the new technology tools as a weapon used by reformers who are trying to change the way unions are doing business. That pathetic fact will leave them forever behind the curve in keeping up with the changes they so badly need to make. 5. Political Ideologies: There is no question; the political shift in the country is to the right. Worse yet, if President Bush is (and he will be) re-elected, labor unions will be on the receiving end of the worst beating of their lives. When Will It Happen? I read once, bureaucracies can stand for years, even after their death. The labor movement could be the classic example of that statement. It is entirely possible for the tired old structure to be intact and even less meaningful ten years from now. The sad fact is if the leaders in the labor movement don't quickly come to grips with their failures, they will continue the downward spiral into oblivion. In the mid 50'S the labor movement peaked at about 35% of the labor force organized. They were the voice of all workers. Today, even with public sector (police, fire, teachers, state, county and federal employees) included, we are at about 13%. Try as we may, we no longer influence the labor markets. Non-union employers more so affect our ability to bargain, rather than vice-a-versa. If today's Union inconsequential, we are not that smart, year 2012, the labor leaders recognize the fact they have become won't have to wait for a total collapse. I'm afraid they and certainly not that unselfish. My sense is, by the movement will cease to exist as we know it. The shell
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The Future Of Organized Labor
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will be there, but all it will take is for someone to kick it over, and then they win mercifully disappear. \'Vhat about The Workers? The famous labor song, Solidarity Forever, contains the ever so apt descriptive solution; "From The Ashes Of The Old." It's also the title of an exceptional book by historian/teacher Stanley Aronowitz. Both are perfect in describing the future, and what win be for. working women and men. From the beginning of time, people have understood the importance of the collective. While many celebrate the demise of communism and socialism for the rugged individualism we are so in awe of, it won't last. Even as we speak, there is a silent revolution of collectivism, unseen by many. Every day in this country, millions of folks gather to share stories, experiences and offer help to perfect strangers. The Internet has bred a rebirth of humanism not seen in years. That will be the nexus of the next Labor Movement. It goes much deeper though. On screen, activities are limiting. The outgrowth of this new movement will be based on major societal changes. Our aging population (remember the boomer factor) coupled with increasing Internet dependency will render the big box boom meaningless. Smaller tighter communities will evolve, where the people living in them will become dependent on one another. The growing number of have-nots will pose enormous problems on our society. Recognizing the depth of the divide, social and economic justice will become the solution and salvation of mankind. Communities will become the source and the center of the rebirth. That's where and when the new labor movement will emerge. By the year 2020, organized labor will have a new face. It will not be about collecting dues and touting opinions by highly paid union officials over impressed by what they say or don't do. They will be community driven organizations acting in concert with like-minded groups from around the world. They will become a Movement in the truest sense of the word, as the masses of members, all working and living in one place will belong. They will unite and use the net to change the way employers operate. They will use the old IWW (Wobblies) technique of starving out employers whose motivation is nothing but profit. The Union will become the base for all social agendas, from health care to pensions to child -care and virtually every other social need. Almost from its earliest roots, naysayers have been predicting its demise. I am convinced we will be a far more vibrant and vital part of our society, but it won't be without a fair amount of pain and hardships on the workers. In the end, it will be worth it. Today's labor movement isn't capable of being what it needs to be to have a positive impact on the lives of its members or workers who have no representation. Tomorrows will
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The Future Of Organized Labor
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