It's time for labor unions to change

This post was adapted from an essay in the January 6, 2018 edition of Rochester's Democrat & Chronicle.

In a guest essay in Rochester’s Democrat & Chronicle, local union leader Ove Overmeyer advocated

for strong trade unions to strengthen the negotiating position of today’s workers.  I couldn’t agree more.  With unemployment at an historic low, it’s the perfect time for labor to take advantage of their negotiating power through collective bargaining. 

Absent from this argument is any mention of how labor unions should operate in the 21^st Century, leaving me to speculate that Mr. Overmeyer would continue the approach unions pursued during the last century.  I would like to suggest that the union operating model, which is older than Bernie Sanders, is due for an update. 

The booming economy of the 1950’s created a middle class throughout the Midwest and northeastern US underpinned by union workers.  This was the culmination of a decades long battle where labor and business were adversaries.  Union leaders from Eugene Debs to Harry Bridges were jailed for activities that are legal today.

By the 1970’s, however, the impact of a new, more global economy called for a paradigm shift. Union wages and benefits added costs to the manufacture of finished goods that made US industry uncompetitive on a global scale. And so union membership has declined precipitously. In 1950, 25% of American workers belonged to a union. Today, the percentage is less than half that. And, tellingly the percentage among employees of private companies is 6.4% while over 34.4% of public employees are union members. 

If a business had seen such a precipitously decline in its fortunes, it would have to transform itself or face liquidation.  Instead, unions have resisted change.

I am puzzled. Why would anyone think that the 19th Century model honed to perfection 60 years ago will work now?

Further, Mr. Overmeyer’s call for unions to use their political power to advocate for higher minimum wages. This argument suggests a continuation of the entrenched warfare between management and labor and bypasses an opportunity for both unions and their members.

The greatest challenge businesses face today is lack of qualified workers. Manufacturing has become more high tech, requiring math and science skills. Such jobs are plentiful. Rather than advocate for higher minimum wages, unions should focus on training workers for higher paying jobs.  A well-trained workforce would add economic value, expanding the size of our economy.  Rather than fight for a larger share of a static pie, unions should help make the pie larger. 

Were they to position themselves as a solution by transforming into Centers for Human Capital Development, businesses would view unions as beneficial to their business rather than as an adversary.  If unions offered benefits – healthcare, 401K’s – to their members in addition to training matched to employers’ needs, their value proposition would be more attractive to prospective members. Everyone would be a winner: the employers, the employees and the unions. 

Isn’t it time?

The Disunion of 'Dis Union

The dogmas of the quiet past, are inadequate to the stormy present. The occasion is piled high with difficulty, and we must rise -- with the occasion. As our case is new, so we must think anew, and act anew. We must disentrall ourselves, and then we shall save our country.

                                                               ---  Abraham Lincoln


It’s hard to imagine that President Grover Cleveland ordered the US Marshalls and the National Guard to put down an insurrection in this country. The year was 1894 and the insurrectionists were members of the American Railway Union. The troops killed 34 union members and wounded 57. The leader of the ARU, Eugene Debs, was arrested, convicted of violating a federal court order and was imprisoned for six months.

Trade unions have been around for a long time but it was the labor movement of the 1930’s that forged the cultural institutions that survive today vexing corporate executives and state governors alike. Laws signed by Presidents Hoover and Roosevelt gave impetus to larger unions banding together to bargain with employers. It was a period in which attacks against striking workers by US troops and hired thugs gradually came to an end. But, the unions were poorly run and infused with Communists. During the depression, with unemployment at 25% and workers unable to pay dues, they were not very effective.

After WWII, Walter Reuther became head of the UAW, purged Communists from their management to become well administered and powerful negotiators. He set an example for his peers to follow. The booming economy of the time coupled with higher wages and benefits created a middle class economy throughout the Midwest and northeastern US underpinned by union workers.

By the 1970’s, the impact of a new, more global economy called for a paradigm shift. The impetus for that shift was provided by Ronald Reagan who famously disemboweled PATCO, the air traffic controllers union. I think he did it to set a precedent and prove to industrial leaders that they could too.

But, ultimately, it was the market not politics that undid the union. Union wages and benefits added costs to the manufacture of finished goods that made US industry uncompetitive on a global scale. Foreign auto manufacturers seeking to neutralize the impact of volatility of the dollar built their US auto plants in the South where they were less likely to unionize.

I won't go through the history of unions for the past thirty years.  Nor will I reiterate the issues that are well covered in the news of late.  If you have read this far, you probably already know and have an opinion.  Instead, I would like to pose a business question. 

Union membership has declined precipitously. In 1950, 25% of American workers belonged to a union. Today, the percentage is half that. And, tellingly the percentage among employees of private companies is 7.5% while over 36% of public employees are union members.

Now, if a business had seen such a precipitously decline in its fortunes, it would have to transform itself or face liquidation.  Instead, unions have resisted change.  The unions won’t win this war. They might win a battle or two but I am here to tell you that their day is done. The model doesn’t work anymore.

What should they do? Give up? Close up shop? NO! They should transform themselves into 21st Century institutions. Why would anyone think that the 19th Century model honed to perfection 60 years ago will work now?

Unions should be transformed into Centers for Human Capital Development. Instead of an entrenched interest that fights progress; they should be training people for 21st century jobs. Manufacturing has become more high tech. Math and science skills are lacking.  Last year, the NY Times reported that a factory in Cleveland had over 3600 applicants for jobs to run a high tech machine used in fabrication.  Each applicant was tested to see if their math skills were at the ninth grade level.  The company was unable to fill the 100 job openings in a city that has lost over a million manufacturing jobs in the last decade.

If a manufacturing company could come to the union to find workers trained to work in this new environment, they would see a union contract as beneficial to their business rather than an obstacle to be overcome. This new model would work for public employees as well – including teachers.

If unions offered benefits – healthcare, 401K’s – to their members in addition to training matched to employers’ needs, they would find membership an attractive value proposition.  It would take the burden off the employers who contracted with them. 

If unions were to follow this model, everyone would be a winner: the employers, the employees and the unions.

But, entrenched interests have over a century of momentum. Quoting Lincoln again, “As our case is new, so we must think anew, and act anew. We must disentrall ourselves, and then we shall save our country.”

The only question is WHO WILL LEAD?