Future Uncertain for Labor Unions

In the early days of the USA as a Republic, unions tried for monopoly control over the local supply of labor by advocating the ‘closed shop.’ Employees have had adversarial relationships with their employers since Colonial times. By 1810, unions utilized and practiced: collective bargaining, minimum pay rates, enforcement of closed shops, strikes, picket lines, unity of both skilled and unskilled workers and harmony among locals. Some labor ‘firsts’ occurred in Philadelphia; the first recorded labor strike, the first labor newspaper, the first city central body of unions, and the first labor union political activity

The AFL was formed in 1881, a federation of various national trade unions. Samuel Gompers, the leader of the AFL, was instrumental in helping union membership grow to 500,000, slightly less than 2% of the labor force by the beginning of the 20^th century.  Membership increased to more than 6% by 1917 and to 12% by 1935.

Government support for unions came by the passage of the Davis-Bacon Act in 1931. This statute required contractors of all federally financed construction to pay ‘local prevailing rates.’ This law has cost taxpayers billions of dollars over the years. Union membership progressed to 14.8 million by 1950 and to 30.9% in 1960.

Membership dropped to 12.8% in 2000 and to11.6% in 2007.  Currently, union membership is between 6% and 7% nationally. California, with almost 2.5 million members and New York with almost 2 million members are the most unionized states. Coincidentally, these two states also have the highest public debt.

Continuing their current strategy, private sector unions are descending to a level of undistinguished achievement. Is there a strategy that would foster future growth? In order to achieve greater credibility and effectiveness, here are some ideas:

1. There must evolve a relationship change between employers and employees. Why should the people that sign the paychecks be adversaries (the enemy) and the people that take the dues be friends? SEIU bosses spent $69 million of member’s dues on Democratic causes in the 2012 election cycle.
2. Adopt the attitude that each person and every department in a company is dependent on compensation related to productivity. Working groups usually perform at the level of the least productive worker or unit; that is bad for the unions and bad for employers. Union protectionism of unproductive workers because they pay their dues is a false principle.
3. Shed the notion that government, or business or unions will fund retirements of 25 to 50 years after the working years. Government at all levels and businesses of all sizes are wallowing in debt because they over-promised on healthcare and retirement benefits and under-delivered. We can’t tax ourselves into oblivion because misguided politicians have made promises they expect their successors to keep. Take personal control now.
4. Years of work must be longer; retirement must be at age 70 or above and individual contributions must be higher. When Social Security was created in 1935 average male life span was 60, in 2010 it was 76.
5. Defined contributions, such as 401-K plans, not defined benefits must be a key rule. Many employee investment vehicles are based on annual returns of 7% but typical quality investments are yielding 2.5% to 4% in today’s economic environment.
6. Union work rules should always lead to one or more of the following: increased productivity, greater safety, higher quality or better attitudes.
7. Stay married; dividing retirement savings provides each partner with about half of their planned ‘nest egg’

Union membership continues to decline and is now about 7% of the national workforce. Zig Ziglar says, “If you always do what you always did, you will always get what you always got.”