25 November 2006

Who Killed American Labor Unions?

One of the defining political and economic facts of the first decade of the 21st century in the United States is that the percentage of private sector employees who are in private sector unions is at a record low. The percentage hasn't been this low since the 1920s, before good government statistics on labor union membership were kept and before federal law protected labor unions.

There are two main schools of thought regarding the reason that we've seen this decline. I will offer a third contributing cause.

Probably the most popular theory for the decline of American unions has been to blame a legal environment put into place by Ronald Reagan, symbolized by the firing of America's air traffic controllers in his administration, and linked to a number of specific changes in labor law, most notably the establishment of an employer's right to permanently replace employees that strike. Obviously, this dates from the 1980s and beyond, and this time period has also seen a marked decline in major strikes. But, the union movement was already on the wane when this happened, and why should new laws, which still provide partial protection for unions leave labor worse off than it was when there were no effective laws protecting unions in most states, and actively anti-union laws in many states?

The second most popular theory for the decline of the American union has been to blame the deindustrialization of the American economy in the wake of international trade. Cheap foreign labor in combination with free trade in goods, but not services, and a lax foreign regulatory environment governing both the treatment of workers and pollution controls, it is argued, has made the outsourcing of American manufacturing almost inevitable. Automation of factories has gutted the manufacturing jobs that outsourcing didn't shift. Unions have always dominanted big business in America, because employees have with a couple of notable exceptions, organized individual employers, rather than industries. So, unions have fallen with the industry that they hung their star upon.

Less charitable versions of the second story go further. They blame the pace of outsourcing, in part, on artificially high union wages and inflexible attitudes that hurt the quality and productivity of the American work force. No one disputes that union wages are higher than non-union wages, but foreign wages are lower still. The union movement has persausive statistics to show that productivity is higher in union shops, and identifying who is responsible for poor quality is always difficult.

The second theory has the virtue of going back further, to the 1970s, and of coinciding closely with the three and a half decades in which the bottom 80%-90% of the income distribution has seen stagnant wage growth, while the top 10%-20% (and particularly the very top 1%) has seen stunning improvements in income.

But, this second theory has warts as well. While manufacturing has been in a nearly never ending free fall in the rust belt, manufacturers like Toyota, Honda and General Motor's Saturn division have built new factories in rural areas in the South and in places like Ohio away from urban centers. These new factories have generally speaking, had higher quality than existing U.S. automaker's factories, have not been locked into high rust belt union wage scales, and have even where unions have been established not been marked by the same highly antagonistic union-management relations. In much of the South, only about 5% of private sector workforce is in a union. Unions aren't a natural part of the socio-economic environment, even when they are created for show.

There is another possibility, and it can take us back all the way to the mid-1950s, when the private sector labor movement peaked and started to fall. This is that meritocratic policies, like the G.I. Bill, increased support for state colleges, anti-discrimination laws, and affirmative action, stripped unions of potential organizers or leaders. These policies are all designed to allow bright people who were minorities or who were working or middle class, obtain college educations and managerial or professional jobs. They succeeded. The percentage of people graduating from college has tripled in the last forty years. The percentage of women among those graduates has gone from 40% to 58%, and has increased even more dramatically in professions like law, where only about 5% or less of graduates were women as recently as 1970. The black middle class is much larger than it once was, and laws banning discrimination in real estate, have in due course separated the black middle class from the ghettos.

A 1950s study I read found that the average union leader at that time was on a par with college graduates in vocabulary, a proxy for general socio-economic success about as strong as IQ. I also recall stories of pre-Jim Crow America that describe how the thin ranks of black professionals prior to the Civil Rights movement had to return to their segregated neighborhoods each day, providing positive role models for the neighborhood, and how segregated neighborhoods helped foster some black owned businesses to serve these communities.

Anecdotes side, no one disputes that pre-G.I. bill America denied people who couldn't afford to go to college, or who weren't permitted to go to college, opportunities to advance up the economic ladder in a way unthinkable now. There were a few scholarships for the most brilliant young minds, but they were the exception. Social advancement though young women marrying up was probably more common than social advancement secured with a college education.

This development shunted many men and some women who would have found jobs in factories and become union leaders and organizers into the managerial and professional class, co-opting them and undermining potential spokespesons for class struggle. Running a union is very different stuff from working on the factory floor, and without leadership, a union will wither. The rise of service unions, likewise, can be seen, in part of the return of an American underclass with little chance of advancement in its lifetime, as immigrants, legal and illegal alike, fill low wage jobs to which poor English skills relegate them (as well as the fact that service jobs are harder to outsource).

There is no definitive answer to the question "Who Killed American Labor Unions?", and I certainly don't favor a return to a deliberate policy of keeping down talented working class and minority kids so that they can run unions. But, if you don't consider all possible causes of a problem, and your solution doesn't address the real cause, your solution won't work.


Anonymous said...

A fourth thought on the matter. American Labor Unions have outlived their usefulness.

Andrew Oh-Willeke said...

Fair enough. Generally applicable laws may be addressing needs once met by unions.

A good case study would be the United Mine Workers of America which went from 160,000 to about 16,000 mine working members between 1980 and 2006, and isn't growing fast despite a new surge in coal mining.

Given the real safety problems in mining, often the #1 reason for joining a union, rather than pay, contrary to popular belief, this theory isn't rock solid. Here is what the story on the union's decline says:

The former union miners were among thousands east of the Mississippi River whose mines closed after Congress mandated acid rain controls in 1990, shattering demand for high-sulfur coal. To comply, utilities switched en masse to low-sulfur coal from the vast Powder River Basin in Montana and Wyoming.

The shift effectively broke the union. Mines closed or went bankrupt across the Midwest and northern Appalachia, where the union was dominant, and opened throughout the nonunion West.

Court rulings hastened the union's decline. Gateway, for example, was for decades a union mine doing business as Zeigler 11. But its previous owner won the right in bankruptcy court to shed its union contracts in 2004. Peabody bought the mine out of bankruptcy, changed its name and reopened it in 2005 under a nonunion subsidiary, Black Beauty Coal Co.

Eighty percent of Peabody's miners were unionized in the 1980s. With its operations now mostly in the West, chief executive Gregory Boyce reported this year to shareholders that 85 percent of Peabody's coal comes from "union-free operations."

Then again, there have been lots of new safety regulations enacted and the perception of the new young miners is what counts:

Now the union is trying to come back, too, beginning with an organizing campaign targeting Peabody Energy Corp., owner of the Gateway Mine and the world's largest coal company.

It is proving to be a tough slog, and not just because the weakened union is up against a multibillion-dollar company. The UMWA is struggling to bridge a gap between young workers like Vandom, giddy over high wages in this long-depressed region, and older ones focused on pensions and gold-plated health care in retirement.

. . . . As Midwestern coal production crashed in the 1980s and 1990s, young workers fled. People here refer to a "lost generation of miners." At Gateway, as at mines throughout the area, almost everyone is over 50 or under 30.

. . . Carl "Bubba" Vincelette, 27, another Gateway miner, was in grade school as mines closed and once-proud union men clamored to be janitors. His father never mined coal. "A lot of the young guys see all these places were union before and they all closed, so it's all part of what went wrong," he said.

If older miners say the union made them middle class, Vincelette credits Peabody, which he sees as a progressive firm that pays four times what he made at his previous job and invests heavily in safety and training. In two of the past three years, Peabody mines have won the Mine Safety and Health Administration's top award for safety.

Bobby Townsend, 46, one of the youngest union supporters at Wildcat Hills, a strip mine 80 miles southeast of here, sees Peabody very differently. He speaks with outrage about a company whose stock soared with energy prices and rewarded its departing chief executive with $46 million last year but won't pay for the health insurance of miners like him when they retire.

. . . . Vincelette recalled that he had listened with an open mind when a UMWA organizer visited him recently. The organizer said union coal miners elect safety committees that have authority to shut a mine if they judge it unsafe. But Vincelette said he trusted Peabody to be vigilant about safety.

In the same vein, mutual banks declined precipitously when the FDIC was invented, because FDIC eliminated the economic incentive to overleverage, effectively creating a heads I win, tails you lose situation in commercial banks that make risky investments with depositor's money.