Unions are a crucial aspect of the U.S. economy and should be adapted to be made more efficient rather than dismissed or eliminated.
In a letter to the president of the National Federation of Federal Employees in 1937, President Roosevelt wrote: "Organizations of government employees have a logical place in government affairs. The desire of government employees for fair and adequate pay, reasonable hours of work, safe and suitable working conditions, development of opportunities for advancement, facilities for fair and impartial consideration and review of grievances, and other objectives of a proper employee relations policy, is basically no different from that of employees in private industry."
But the days of elected officials supporting organized labor may be behind us for good. Scott Walker, the Governor of Wisconsin who stripped government employees of collective bargaining rights, easily survived a recall election recently, inciting Republicans to declare that the backbone of the American labor union had been finally and truly broken. The discussion then turned to the implications for Democrats in the 2012 election, but the uncertain future for labor unions should not be dismissed so easily.
Unions played a vital role in buoying the middle class throughout the 20th century, and they still remain a prominent fixture in countries around the world. During the 1950s—the height of unionization in the United States—membership rates hovered around 35p ercent and the public attitude toward unions was generally favorable. Progressives like President Roosevelt understood the importance of healthy unions to level the playing field between labor and management, and as a necessary check on the free market, so that employers would be beholden to their workers as well as shareholders and profits.
But in the following decades, several factors contributed to the steady decline of unions. As the United States began to move away from manufacturing, the middle class that supplied unskilled labor to the economy began to lose its collective power and political clout. Stonemasons, construction workers, and machine operators were laid off as the skills-focused service industry dominated the economy. Globalization led to the mass outsourcing of traditional middle class jobs. The relentless advent of technology required employees to have specific training or college degrees, when their positions weren’t replaced entirely by machines.
Unsurprisingly, income inequality grew larger as union membership rates fell during this time. And when union membership rates slow down, so do blue-collar wages. The middle class share of aggregate income has been in consistent decline since the 1960s, to an alarmingly low level today.
In light of the Occupy Wall Street movement and the ongoing discussion of class warfare, it would be easy to presume that the "99%" would support labor unions that have been the historical equalizer between management and the working class. However, the fact that Scott Walker remains governor today is a sure sign that the existing model of unions, especially in the public sector, is unsustainable in an era of global economic turmoil. Eventually, budget deficits must be dealt with at every level of government, and austerity will spare few of the perks, like pensions and health benefits, that are associated with union membership.
But the election results should not be taken as the final word. Just as the motive for profit does not drive all employers to act ruthlessly, unions should not be assumed to exploit powers like collective bargaining to freeze out non-union members or hold employers hostage with strikes. Likewise, unions do not inherently cause inflation, unemployment, or state budget deficits, according to leading economists.
Here are some findings from a report by the Economic Policy Institute that show how unions benefit society as a whole:
- “Unions raise wages of unionized workers by roughly 20% and raise compensation, including both wages and benefits, by about 28%.”
- “Unions reduce wage inequality because they raise wages more for low and middle-wage workers than for higher-wage workers, more for blue-collar than for white-collar workers, and more for workers who do not have a college degree.”
- “Strong unions set a pay standard that nonunion employers follow. For example, a high school graduate whose workplace is not unionized but whose industry is 25% unionized is paid 5% more than similar workers in less unionized industries.”
- “Unionized workers receive better pension plans. Not only are they more likely to have a guaranteed benefit in retirement, their employers contribute 28% more toward pensions.”
There was a spurt of experimentation in the 1990s when companies and unions from AFL-CIO cooperated to form teamwork strategies that improved efficiency. Industry giants like Xerox Corp. found the initiatives to be so successful that they moved hundreds of jobs back to the United States and invested in their unionized workers for higher quality output and increased competitiveness. This is a norm in other industrialized nations; the history of modern European states shows a robust relationship, not fatal incompatibility, between organized labor and firms.
In the United States over the past few decades, unions have become saddled with an unsavory reputation of being ineffective, stubborn components of the economy that prioritize membership benefits at the expense of efficiency. The cozy, symbiotic financial relationship between public unions and elected Democrats hasn’t helped either. Instead of fanning the flames of the management-labor divide, as the unions tried to do with the recall effort in Wisconsin, unions should direct their energy to adapting and becoming cooperative elements in the free market by working with firms to generate productivity.
As the nation grapples with growing inequality, we should not categorically reject the place of unions in our economy. And as technology and changing business models reshape the global economy and feed the growing income gap as they have in the past, unions could prove to be critical at resuscitating the middle class now and protecting workers’ rights in the future.
Hye Mi Ahn is a rising senior at Carleton College, and a Roosevelt Institute summer intern.