February 8, 2013
Unions had another tough year in 2012 as membership continued to shrink. This is not a new trend. Union membership has been steadily declining for more than 65 years. At the end of World War II one-third of the work force belonged to unions. Today it is 11.3%. There are a variety of reasons why this has occurred. More intense global and domestic competition has undoubtedly played a role. Companies today are unwilling, or in many cases unable, to accede to union demands. Automation in the manufacturing sector has been a factor as machines have taken over the tasks previously done by union workers. The economy has shifted away from manufacturing and more towards services where unions traditionally have been less successful. Finally, younger workers do not feel the need to be represented by a union. Amongst the 16-24 year old crowd, membership is a paltry 4.2%. It rises steadily for every age bracket, and reaches a peak amongst the 55-64 year olds at 14.9%. Unions served a purpose in days gone by, but their usefulness in today’s world is less obvious.
In the private sector union membership is a paltry 6.6%. While unions play an important role in the manufacturing and construction industries, most private sector jobs are service-oriented and union membership is less important. Management positions, bankers, insurance agents, lawyers, sales clerks, computer geeks, and farmers rarely belong to unions.
But in the public sector unions are heavily represented. As shown below, 27% of federal workers, 31% of state government employees, and 42% of local government workers are union members. This outcome should not be surprising given that heavily unionized occupations such as firefighters, police officers, teachers, and dockworkers are typically state or local government employees.
There can be little doubt that unions have been highly successful in garnering higher wages and fancier benefit packages for their members. Indeed, in the private sector, union members collect $900 per week which is 20% higher than the $742 earned by their nonunion counterparts.
But the unions’ very success is now the source of its problem. Both companies and government entities have found that they can no longer afford to pay for the attractive defined-benefit pension plans and lucrative health care packages that were promised at a time when the economic environment was less challenging. While there are occasional scuffles between the unions and corporate America (like the tiff between Boeing and the NLRB a year ago) most confrontations today are being waged by our country’s governors and mayors who are fighting back in large part to stave off bankruptcy.
In 2011 Wisconsin passed controversial curbs on the bargaining rights of public sector employees and forced them to contribute to their pension and health care plans. That legislation triggered massive protests by union workers who forced a vote in 2012 for the recall of Republican Governor Scott Walker. That battle, ultimately won by the governor, played out on a national stage and encouraged other governors and mayors to take on the unions.
In February 2012 Indiana Governor Mitch Daniels signed into law a bill that made Indiana the nation’s 23rd right-to-work state.
In June two California cities — San Diego and San Jose — dealt further blows to organized labor as voters overwhelmingly approved ballot initiatives designed to help shrink bloated municipal budgets by cutting retirement benefits for city workers.
In December the Michigan legislature approved a bill that barred both public and private workers from being required to pay union dues. Michigan thereby became the 24th right-to-work state which is especially striking since Michigan is generally regarded as the birthplace of the modern labor movement.
And so it goes. The die has been cast. Union power has been shrinking and will continue to do so in the years ahead. Each additional state and city that passes legislation curbing the power of unions hastens their demise. And, as older workers who are more likely to be union members retire and are replaced by younger ones who are not, union power is further diluted. The reality is that unions cannot remain a powerful political force as long as their membership roles are shrinking, and right now the rate of decline in union membership is accelerating.
There is no question that at one point in time unions played an important role in improving working conditions. But somebody pays for those attractive wages and gold-plated benefit packages. In the case of government workers those costs are borne by taxpayers. When economic conditions become less favorable and state and local government officials are forced to lay off workers, it is indefensible to argue that union benefits should be untouched.
Stephen Slifer
NumberNomics
Charleston, SC
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