Journey Through Time: Make Labor Union Sexy Again

At the height of the United States Port strike, the media's representation of the situation gave a bad light on strikes and unions. They call the strikers greedy while creating a story that this strike would be cataclysmic to the economy.  On the other hand, they demanded a basic right to protect themselves. They gathered and unionized their power to voice their concern to the firms.

"I'm going to fight for it because those greedy companies are making billions of dollars and they don't want to share."

-Harold Daggett

While unions today are considered weak, it's not always been like that. Historically, unions in the United States have been a formidable force in shaping labor rights. But now, their appearance is declining every year. Where are they now and should we bring them back?

The Beginning

Even though the labor movement in the United States had already appeared in 1619, labor unions really started in 1866 when The National Labor Union was founded in Baltimore, Maryland. Their movement became the beginning of the campaign for an 8-hour workday. Over the next decades, it became more and more widespread with the progressive campaign of Theodore Roosevelt in 1912 and the Adamson Act in 1916 (Terrel, 2020)

On October 24, 1929, the stock market crashed and the United States entered the Great Depression. unemployment reached 25%, wage was halved,  and productivity dropped to its lowest point. In March 1930, hundreds of thousands of unemployed workers marched through New York City, Detroit, Washington, San Francisco, and other cities in a mass protest (FDR  library, n.d.). 

President Herbert Hoover seemed to do little to stop the crisis. In a widespread backlash over his weak leadership, which caused voters to overwhelmingly elect Franklin D. Roosevelt in 1932. Roosevelt ushered in a broad range of economic programs designed to improve conditions under the aegis of the "New Deal."(FDR  library, n.d.).

"Employees shall have the right to organize and bargain collectively through representative of their own choosing, and shall be free from the interference, restraint, or coercion of employers."

-National Labor Relations Act 1935

For workers, the National Industrial Recovery Act of 1933 which later changed to the Wagner Act or National Labor Relations Act (NLRA) proved the most important piece of legislation he signed. Employees were given the right to organize and bargain collectively and could not be required, as a condition of employment, to join or refrain from joining a labor organization (National Archive, 2022).

Figure 1: Percentage of Union Members in United States, After NLRA, union members received a massive upsurge and tripled the amount of strikes in the 

After NLRA, union members received a massive upsurge and tripled the amount of strikes in the next decade. in this time when the basic labor right we currently have was born. This act allows workers to have better working conditions by mandating employers to set labor contracts according to the agreements that were set by the union, such as a minimum wage, a maximum of 40 hours of work a week, and child labor prohibition (Watcher, 2012).

While The NLRA was successful in protecting labor rights, it failed to alleviate the effects of the Great Depression.  The increase of wages outside of the trend stalled the recovery by creating rents and an inefficient insider-outsider friction that raised wages significantly and restricted employment. With the abandonment of the New Deal and its subsequent policies, it was expected to lead to a strong economic recovery 1940s  (Cole et al, 2004).

The Golden Age

The 1950s marked a golden era for labor unions, Union members rate was constantly above 20%.  They secured a strong presence in negotiations with major industries like automobiles, steel, trucking, and chemicals. Regularly negotiated contracts ensured fair wages in exchange for good workplace relations. These agreements established clear rules for promotions, layoffs, and gave workers opportunities to voice concerns toward neutral parties (Friedman, 2008).

Wages increased consistently, averaging over 2 percent annually, with union workers earning approximately 20 percent more than their nonunion counterparts of similar age, experience, and education. Unions also secured an expanding range of benefits, including medical and dental insurance, paid holidays and vacations, supplemental unemployment insurance, and pensions. This pressure led many nonunion employers to offer comparable benefits to attract workers, although unionized employers still provided benefit packages valued at over 60 percent more than those offered by nonunion employers  (Friedman, 2008).

Figure 2: Union Membership and Inequality rate in US, 1917-2022 (US Department of Treasury, 2023)

The peak of unionization coincided with the low-point of United States inequality and it is not a mere coincidence. Union focused on massive firms like General Motors, Ford, U.S. Steel, and AT&T which employed large numbers of workers. These companies often had low shares of revenue going to non-supervisory workers but high payouts to shareholders and executives. Unionization helped redirect more of these resources toward worker wages and benefits, reducing inequality.  Unionization disproportionately benefited non-white workers who got more disparity in the workplace. (farber et al, 2018)

Their Decline

The rates of U.S. workers in unions peaked in 1954 and over the next decades, it would continuously decrease. Unions have mostly failed in the growing industry while traditionally unionized industries like autos, steel, and manufacturing were in decline.  The only exception is unionization among public sector employees which has seen an increase since 1960.

We should not assume that the explanation is the lack of interest in unionization. Polling data collected by Richard Freeman (2007) from 1984 to 2004  show an increasing percentage of non-union workers would have voted to form a union if given the opportunity to vote in a secret ballot election. On the other hand, employers have turned sharply against unions. Since the 1970s, employers have fought Unions more aggressively.  In the 1970s, rising unemployment, increasing international competition, and the movement of industry to the nonunion South and to rural areas weakened the bargaining position of many American unions leaving them vulnerable to a renewed management offensive. (Friedman, 2008)

Figure 3: Work Stoppages Involving 1000 or more workers in United States, 1947- 2010 (Reuss, 2011)

The situation became much worse in the 1980s, President Ronald Reagan's mass firing of striking air-traffic controllers (members of the Professional Air Traffic Controllers Organization, or PATCO) in 1981 showed a green light for private industry to do their union busting. After PATCO, employers responded to strikes by firing the strikers and bringing in permanent replacements, a practice that is illegal in many countries, but not in the United States. The number of large strikes was already in decline during the preceding few years and has since declined to microscopic proportions. (Reuss, 2011)

The Current Situation

Figure 4: Percentage of Union Union Members in United States, 1983-2023 (U.S. Bureau of Labor Statistic, 2023)

The share of union members today is at its lowest level over the past several decades. There are 14 million workers who join unions which represent 10% of workers in 2023. Although it is decreasing, in the public sector, union members are still rising and reached 32.5% of its share compared to the private sector who only have 6%. Not to mention there were massive spikes in strikes last year. while declining, there is no means it is gone. (U.S. Bureau of Labor Statistic, 2023)

Do they need to exist?

The labourer belongs neither to an owner nor to the soil, but 8, 10, 12, 15 hours of his daily life belong to whomsoever buys them.

-Karl Marx

Before labor unions existed, they did not have any protection against the exploitation they got. Basic rights like minimum wages, maximum working hours, child labor prohibition, and liveable workplaces exist because the workers fight for it.  Labor unions give workers bargaining power to their employers. The ability to strike turns into a weapon for their employers. it causes the wage not set by HR but instead is determined through a process of negotiation between union and firm.

When workers are able to win union representation and collectively bargain, their wages, benefits, and working conditions improve. Union workers are 40% more likely to get health care and retirement benefits compared to non-union workers (US bureau of statistics, 2024). Union workers also have a better working environment. Workplaces with unionized members have 14% less mortality rate than similarly non-unionized workplaces (Zoorob, 2018).

Figure 5: Median weekly earnings in the United States from 2000 to 2023, by union membership and gender (Statista, 2023)

Union members enjoy wages that are on average, 16% higher than those of non-union workers, while also contributing to a narrower pay gap for women. For women in union members, they only have a 14% difference to men in contrast to women in non-union members who have 20% difference from men. Not only that, women as union members have competitive wages to men as non-union members. This shows that unions can give better benefits to their member while shortening the gap for gender disparity

With increased wages unions bring, there is a concern that labor unions can create insider and outsider friction. With the increase in wages, firm profitability will decrease and they can choose to stop employing new workers. This can harm the workers outside of the union and larger unemployment in an economy (cole et al, 2009).

Figure 6: The bargained wage-setting curve and labour market equilibrium when there is a union voice effect. (Core, 2017)

However, the problem depends on the type of the union itself.  Inclusive unions which are focused on ensuring every worker gets employment can increase the willingness of the workers to work and increase productivity with the same wage. With higher productivity from each employee, the existence of a union will also benefit employers, increasing their profitability, thus leading to an expansion by the firm, hiring more labor, and increasing overall employment in the economy. This situation does not happen in non-inclusive unions which are only focused on the members of the union (Core, 2017).

Will They Come Back?

Figure 7: Approval Rate of Labor Union in US, 1936-2024 (Gallup, 2024)

With the 70% approval rate of labor unions, the highest since 1965, 2023 were considered the "Great Reset" for American workers. According to the Cornell-ILR Labor Action Tracker, there were 451 strikes in 2023 and the number of workers doubled from 2022.  This situation was led by the strikes of workers and writers that brought the union power to the mainstream. 

The reason for the union's decline is the lack of awareness of the idea itself. History shows that union can thrive in the US. Unions provide workers with a collective voice to advocate for fair wages, better working conditions, and protection against exploitation. If we wish to bring back the union to the states they used to be, action is required. This means not only spreading the ideals of collective bargaining and solidarity but also working tirelessly to reinstate and strengthen labor laws that have been weakened over time. When people have the vision of the rewards and the risks of unions, they are more likely to rally behind the cause.

"One of the effects of union decline just means that a lot of people just don't know people in unions don't know what unions do. So then the effect of these kinds of breakthroughs is that it changes people's consciousness by making those options more realistic and something that, like, I could actually take a risk and actually try to win this thing and I might actually have a decent chance of getting it."

Barry Eidlin

Reference

• Bureau of Labor Statistics. (January 23, 2024). Median weekly earnings in the United States from 2000 to 2023, by union membership and gender (in U.S. dollars) [Graph]. In Statista. Retrieved November 28, 2024, from https://remote-lib.ui.ac.id:6499/statistics/1374789/earnings-union-membership-gender-us/
• Cole, H. L., & Ohanian, L. E. (2004, August). New Deal Policies and the Persistence of the Great Depression: A General Equilibrium. Journal of Political Economy, 779-816. Retrieved from https://www.jstor.org/stable/pdf/10.1086/421169.pdf?refreqid=fastly-default%3A2c3229dcc9de7682f0e00966736b70ca&ab_segments=&initiator=&acceptTC=1
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