Are Unions Certain to Decline Further?

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Last week United Auto Workers, one of the country's largest labor unions, offered workers in a Chattanooga, Tenn., the opportunity to join its ranks. The union, looking to springboard from this Volkswagen  (NASDAQOTH: VLKAY  ) factory into expanding the auto labor movement throughout the southern U.S., was hoping that the 1,300 workers would support them on this first step. 

They did not. The vote failed 712-626 against unionization. 

On one hand, this should be far from surprising. The American South is historically one of the least unionized regions in the U.S. Just 5.6% of workers are unionized in Tennessee, half the national average of 12.6%, yet above every other Southern state save Alabama (9.8%).

Yet UAW has since cried foul, claiming intimidation by union opponents such as Republican Representative Robert Corker. But the labor movement may have a bigger obstacle to overcome: the potential death of the American union. 

Are unions dying?

While unions are still receiving a great deal of public support, membership has been slipping for quite some time. Since 1983, unions have lost nearly 20% of their members, dropping from 17.6 million to 14.5 in exactly 30 years.

While public sector union numbers are expanding, gaining 1.5 million new members, the private sector has been shrinking drastically. Even with a minor rebound up to 7.3 million in 2013, unions are far from the vibrant organizations they once were.

This lack of vibrancy is translating into a lack of influence -- simply put, if union workers make up a smaller share of the workforce, why should companies listen to the concerns raised by the few? 

Union members themselves can be critical of their parent organizations. While perhaps anecdotal and biased, dozens of members identify themselves as consistently in a "love/hate relationship" with their unions. 

Between criticism within and lagging membership without, is it any surprise that only 1 in 10 U.S. workers belongs to a union?

Why are new members so hard to come by?

While this is not necessarily true in all industries, auto manufacturing unions have to make a tough sale to prospective new members. In the case of UAW, the workers they would have represented were already making a decent wage, between $20 and $30 an hour, with the opportunity for bonuses and benefits (position dependent). In a state with such low living costs, what do these workers need with a union?

Harvard economist Richard Freeman has commented that unions tend to experience bursts of growth during economically trying times. This is, he says, due to "a crisis period when people are upset." Despite this potential relationship, union membership has not grown in the wake of a recent recession.

This could be because of the surge of employment opportunities in traditionally non-union sites. Yet even in states with a strong union presence, membership is falling off in all classic industry unions. 

Is there a future for unions?

Perhaps, but it requires a new breed of union. 

Unions have historically focused on addressing issues in a single industry. With industries diversifying a great deal since the heyday of the union, it may no longer be possible for unions to be as strictly focused. A new wave of unions seems to understand this, seeking to build a coalition across several distinct industries. For example, the National Domestic Workers Alliance has built support by building a coalition among all those who work in someone else's home (e.g. housekeeping services, assisted living, etc.).

While building diverse unions such as the NDWA will dilute directly implementing reform for a single industry, it will allow unions to be more reactive and not as dependent on poor conditions in a single industry to create opportunities for new members. 

This does not mean that old unions will die out completely in the next few years. There has been a light increase in membership in several service industries. But with job conditions changing rapidly, this increase will not be enough to sustain even this slightly reinvigorated set of unions.

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 27, 2014, at 10:02 PM, neamakri wrote:

    Auto manufacturer costs for a union worker in Detroit $75. Non-union in Mississippi $35.

    Here's an interesting story. In Waco, Texas (10 years ago) Firestone closed a tire plant. The quote from the union boss was "I just don't know how our men are going to find another $45 an hour job." Guess what? That's why the plant closed! They were making 2x or 3x the local wages. Duh!

    Okay, workers had a real need for unions in the 1950's because companies were abusing workers. Then for the next 40 years unions used gangland tactics to squeeze companies dry. Look at the results in Detroit today.

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Kurt Avard

A January 2014 addition to the Motley Fool team, Kurt Avard prefers to focus on the "dark" side of business and how it interacts with politics. Rarely writing on the same thing twice, he feels that, if he manages to convince you that the two are inexorably linked, he has adequately done his job. Follow him on Twitter @kurtsavard

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