The Rising Popularity of Labor Unions

 

The Battle of the Overpass

I was driving from Detroit to Chicago and listening to music.  When I got closer to Chicago, I dialed into my go to FM station WBEZ, Chicago’s Public Radio Station.   They were airing a story:  Support for labor unions in the U.S. is at a 57-year high. 

The Bureau of Labor Statistics reports that as of 2021, the number of workers belonging to unions is at 14 million — or 10.3%. That is down from 10.8% in 2020. In 1983, the earliest year with comparable membership data, around 20% of workers were in unions, BLS said.

 I have to imagine the union membership might have been higher in the 1960s or 70s.  But it seems 1983 is the earliest year with sound data.  I believe the “right to work” movement was already underway by then.  Employers with unionized workforces were closing factories with unions up north and opening factories in right to work states in the south.  Foreign companies setting up factories in the US for the first time were also open their plants in the right to work states.  The employers were paying the workers a good wage and treating them well so they wouldn’t want to unionize.

The current move to unionize is from workers at Chipotle, Starbucks, and, of course, Amazon.  The workers at Chipotle and Starbucks feel underpaid and cannot make ends meet no matter how many hours they put in.  At Amazon, the wages were a factor but more so, I believe, workers were motivated to organize because of the working conditions.  Amazon is an innovative company in terms of systems that have enabled a major disruption and Amazon’s dominance in e-commerce.  For all the high tech that gets the glowing headlines, Amazon has a reputation for working their distribution workers pretty hard.  Either people love and thrive as associates at Amazon, or they hate it and quit. 

The power of unions is the ability to withhold labor to get workers higher wages and better working conditions.  In the early days of the industrial revolutions worker conditions and pay were awful.  The rise of the unions, the AFL, CIO, UAW, and Teamsters filled a void and brought some power to the workforce.  They withheld labor, they went on strike, management tried to bust the unions with scabs, and eventually the workers prevailed and got better salaries.  In the 1930s, the union battles with management were physical and dangerous.  Seminal events in the history  of the UAW was the Ford Massacre on March 7, 1932 and The Battle of the Overpass which took place on May 26, 1937.  In the 1932 event, Ford Security opened fire on a demonstration resulting in dozens of injuries and four deaths.  In 1937, the Union members led by Walter Reuther were passing out leaflets on an overpass leading to Gate 4 at Ford’s Rouge Complex in Dearborn.  They were confronted Ford Security who beat and injured several union members.  The photos of this later event from James Kilpatrick of The Detroit News swung support from Ford to the UAW leading to Ford recognizing the union in 1941… when the war effort needed stable production from Ford.

After World War II, the US had a near monopoly on manufactured goods.  The rest of the industrial infrastructure of the major European countries was destroyed during the war.  While the US was in the war, the war in terms of combat, never came to our shores.  Our industrial infrastructure was not only intact but churning out munitions, Jeeps, trucks, tanks, and airplanes that helped turn the tide of war was the Allies bombed the Axis’s ability to do the same.  Production in the US was full blast and labor was able to get tremendous gains in salaries and benefits because there was little to no competition except domestically.  It was in the best interest of management and labor to keep the party going.  Concessions were, while negotiated, were given.  As a result, our cost of production was increasing as the rest of the world scraped and fought to achieve productivity and efficiency as they built up their industrial infrastructure from the rubble of the war.  In automotive, my frame of reference for all of this, Japan set the standard with the likes of Taiichi Ohno, Shigeo Shingo, and Kaoru Ishikawa, with Toyota leading the way.  By the times the 1970s came, the US had a disadvantage in terms of cost and quality.  I believe it was David Kearns, the CEO of Xerox who said something like, and I paraphrase, that it was cheaper to buy a Japanese copier and slap a Xerox nameplate on and make a profit selling it for Xerox’s standard manufacturing cost.  US cars carried an average burden just on retiree benefits was $1400 more per car than the Japanese. 

Serious international competition made it much harder for labor to withhold labor any longer and further fueled the right to work movement.  The power of Unions waned and so did their ranks.  The supply and demand of our industrial labor costs were no longer limited to our borders, our wages faced the downward pressure of the global labor markets.  Companies were also outsourcing to cheaper labor markets.  Unions, their power, and value, seemed to be a historic relic.  The Great Recession of 2008-2012 was thought to be the last nail in this coffin.

That changed with the Covid Pandemic which gave rise to the Great Resignation.  Baby boomers, people my age, left the workforce in great numbers.  Truck drivers, airline workers, teachers, and medical professionals retired in great numbers because while they were wanting to work longer, into their 70s, the pressures and burdens of the Pandemic made them call it quits.  The population demographics were such that the population entering the workforce were less than the population retiring. 

There was, suddenly, more demand for labor than the supply.  There was upward pressure on labor rates.  Workers for the Amazons and Starbucks in this country, were feeling unhappy with both their wages and working conditions.  As their power to withhold labor was again possible to achieve better working conditions, there was an uptick in unionization efforts in these service industries.

There has been an uptick in interest, but the unionization has been tough road.  The companies are fighting as hard as they can to keep the unions out hoping the labor market will flip to the demand for labor to become less than the supply. 

It will be interesting to see how this unfolds in the next few years.

 

CNBC