- unions raise wages of unionized workers (by roughly 20%) and compensation including benefits by 28%;
- Unions help reduce wage inequality b/c "they raise wages more for low- and middle class workers than higher wage workers, more for blue collar workers than white-collar workers, and more for workers who do not have a college degree."
- Unions set a pay standard for other non-unionized employers to follow;
- Probably the most important area that unions help is in fringe benefits, things like paid leave, health benefits, and employer paid pension plans. 1
Saturday, September 22, 2012
Blog #37 - Unions
This week, we have spent some time looking at the reasons that unions exist, including the following reasons:
In the video that we saw on Friday, the Amalgamated Steel workers tried initially to work together with Carnegie Steel until Andrew Carnegie and his business partner, Henry Clay Frick, decided to break the union and lock them out in the summer of 1892. As the video said, the whole world was watching to see what would happen between the most powerful steel company in the country and its most powerful union. After the strike was broken, wages decreased by almost half (which also could have been caused by the Depression of 1893 - something the video failed to mention). But, what the professors in the film did emphasize was that workers felt that once they worked a job for a while, they felt like that there job is theirs. The battle at Homestead was between who was to control the resources of the country - labor or management, and the owners won this war even though the workers defeated the Pinkertons. 2
Labor unions did not gain official or legal security until the Wilson administration in 1914 and then even more security during the Great Depression under President Franklin Roosevelt in 1935 with the Wagner Act and in 1938 with the Fair Labor Standards Act (which established the minimum wage, overtime pay, and ended child labor for good). Since that time, workers wages had increased and union membership had increased until the 1950s (1/3 of the workforce) and falling to a low of 12.1% of the workforce in 2008 when union membership came back up, according to the Washington Post. Most of these gains in union membership, according to the article, were NOT in the private sector but in government jobs. As the economy crashed in 2008, private sector workers lost their jobs but unionized workers, for the most part, did not because of their contracts signed before the crash began. 3
Since the 1980s, states and Congress and the presidents have worked to weaken union regulations and security by allowing "open shop" laws - which require workers to not have to join a union if they work in an unionized industry. These laws, called "right to work" laws, are spread throughout the U.S., but Michigan is not one of these states. These laws build off of an anti-union law called the Taft-Hartley Act passed in 1947 after World War 2, and currently 23 states have their own "right to work" laws. 5
The question now is, have unions outlived their usefulness? Back when wages were terribly low and union membership was at only 7% of the workforce, workers forming together and collectively bargaining made sense to get better working conditions, wages, and benefits. 3 But critics have always charged that these union benefits come at the expense of higher prices passed on to the consumers by the unionized companies. Critics also charge that having union contracts prohibit businesses and government agencies from making changes (meaning firing workers, lowering wages and eliminating benefits) when times are tough like they are now, and this lack of flexibility can force some companies out of business or have to eliminate jobs by outsourcing them overseas -thereby defeating the purpose of union protection in the first place. 6
However, manufacturing jobs have disappeared over the past 30 years, and unskilled laborers have had to get more education and skills just to get a job. Plus, we're seeing the size of the middle-class shrink as the size of union membership shrink since the mid-1960s. It took almost ten years to raise the minimum wage in 2007, and most families cannot survive on that alone. Currently, Republican governors like our own Rick Snyder and Wisconsin's Scott Walker have worked at restricting the legal rights of unions - whether for skilled or unskilled workers - rights that have been guaranteed for almost 80 years. 4 Michigan workers are organizing a ballot initiative called "Protect Our Jobs" that would make collective bargaining a constitutional right in Michigan. You've probably even seen some of their commercials on TV in the past few weeks as well as commercials against this proposal. Could more people benefit from being unionized if companies would let them? Could unions make a resurgence if times were better? Or does that only happen when times are bad?
So my question for you is this: have unions outlived their usefulness? Why or why not? Use the ideas above to answer the question, and look at the sources linked below. There's lots of good information out there on unions. If you find another source, please site it in your comment.
Your comment is due Monday, Sept. 24 at the beginning of class, 200 words minimum!
1. http://www.epi.org/publication/briefingpapers_bp143/ "How Unions Help All Workers," Lawrence Mishel and Matthew Walters, Economic Policy Institute, August 2003.
2. "The Homestead Strike," 10 Days That Unexpectedly Changed America, DVD. 2006.
3. http://www.washingtonpost.com/wp-dyn/content/article/2009/01/28/AR2009012801621.html "American Union Ranks Grow After Bottoming Out," Peter Whoriskey, The Washington Post, 1/29/2009.
4. http://www.theatlantic.com/business/archive/2012/06/who-killed-american-unions/258239/ "Who Killed American Unions?" Derek Thompson, The Atlantic Monthly, June 2012.
5. National Right to Work Legal Defense Fund. http://www.nrtw.org/en/about
6. http://www.heritage.org/research/reports/2009/05/what-unions-do-how-labor-unions-affect-jobs-and-the-economy "What Unions Do: How Labor Unions Affect Jobs and the Economy," James Sherk, The Heritage Foundation, May 2009.