Labor Union

I

Introduction

Labor Union, association of workers that seeks to improve the economic and social well-being of its members through group action.

A labor union represents its members in negotiations with an employer over all aspects of an employment contract, including wages and working conditions. These contract negotiations are known as collective bargaining. By giving workers a united voice, a union can often negotiate higher wages, shorter hours, and better fringe benefits (such as insurance and pension plans) than individual workers can negotiate on their own. When an employer and a union cannot reach an agreement through the collective bargaining process, the union may conduct a strike (organized work stoppage). Or, an employer may prevent workers from entering the workplace in a lockout.

In many countries, labor unions have official affiliations with political parties and seek to bring about social change through legislative and political action. In other countries, including the United States, no formal ties of this kind exist. The United States has a tradition of so-called business unionism, in which the main goal of the labor movement is to improve wages and working conditions. Unions in the United States, however, often engage in political activities. These activities include lobbying for legislation that furthers the aims of the labor movement and providing financial support to political candidates who are friendly to union causes.

In the early 19th century all aspects of the employment contract, including wages and hours of work, usually resulted from direct negotiation between employers and individual workers. Because of the imbalance of power, such negotiations favored employers. Labor unions began to form in the 19th century to help relieve the damaging effects of industrialization on workers, especially the long hours and low pay that factory work entailed. The earliest organizations of workers in the United States appeared in New York City and Philadelphia, Pennsylvania, shortly before 1800. These organizations represented the crafts of printers and shoemakers.

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Social and political sentiment against unions was widespread in Europe and North America at first. Many governments considered unions to be illegal associations or conspiracies in the restraint of trade. However, after 1900 unions gained strength and governments began to make efforts to prevent industrial strife.

The U.S. Congress began to pass labor relations laws in the 1930s, as part of the social and political reforms constituting the New Deal. These laws gave workers in the private sector of the economy the right to bargain collectively through a union. They also established procedures outlining how workers can select a union to represent them in the collective bargaining process, and they outlawed unfair practices by employers. Public-sector workers—government employees—began to gain most of these rights in the 1960s. Many public-sector workers, however, still do not have the right to strike.

Prior to the 1930s, fewer than 13 percent of nonagricultural workers in the United States belonged to unions. By the early 1950s, about a third were unionized. A steady decline in union membership began in the 1960s, and the decline accelerated in the 1980s. In 2004, about 12.5 percent of wage and salary workers, or about 15 million workers, belonged to unions, according to the United States Bureau of Labor Statistics (BLS). The sharp decline in union membership in the private sector meant that only 7.9 percent of private-sector workers, about 8 million workers, were unionized in 2004, according to the BLS, which is part of the Department of Labor. The decline in union membership has also occurred in other developed countries. In Britain, the Trades Union Congress represents nearly 7 million workers, or about 30 percent of the nonagricultural workforce, but its power and membership declined during the 1980s and 1990s. In France, union membership fell by more than one-third from 1985 to 1995, and in 2000 unions represented less than 10 percent of wage earners there. Unions represented about 25 percent of Germany’s nonagricultural workforce and about 65 percent of Italy’s.

This article deals primarily with unions in the United States. For information about the history, role, and organization of unions in Canada, see Labor Unions in Canada. For a history of the labor movement in the United States, see Labor Unions in the United States.

II

Why Workers Join Unions

In the United States, workers can become members of a union by voting to certify a union as their collective bargaining agent. Voting typically occurs after 30 percent of the workers petition for a certification election. The union wins the right to represent the workers if it obtains the votes of a simple majority (more than 50 percent) of the workers who will make up the bargaining unit. If the union wins the certification election, management has a legal obligation to bargain in good faith with the union chosen by the workers. Workers who become dissatisfied with their union representation can use the same process to petition for a de-certification election.

Some states give workers the right not to join a union even if they work in a unionized establishment. These laws, called right-to-work laws, prohibit unions from requiring that workers become union members as a condition of employment in unionized firms. In 2000, 21 states had right-to-work laws.

If agreement on the terms of the employment contract cannot be reached through collective bargaining, the union has the right to strike. A strike occurs when union members withhold their labor from the firm, effectively shutting down operations. The firm can also initiate a lockout, which prevents union workers from entering the firm’s premises. The federal government can delay a strike action in industries considered vital to the public interest, such as railroads. It does so by ordering a cooling-off period, during which the workers must return to work. The cooling-off period typically lasts 80 days.

Various factors influence the extent of union organization. The most important factors are the economic situation, the legal environment, and the success of union organizers.

A

The Economic Situation

Because workers in the United States can freely choose whether to join unions, economists argue that workers will vote for certification only if the union can make the worker better off. However, improvements in employment conditions come at a cost. The union’s demands—for higher wages, shorter hours, or more valuable fringe benefits—typically raise the firm’s costs of production. These higher costs may encourage the firm to cut back on its employment, perhaps by laying off some workers or by subcontracting with cheaper labor markets in other states or countries.

The transfer of union jobs to nonunion workers, a phenomenon known as the runaway shop, occurred in the textile industry during the 1950s and 1960s, when many New England textile manufacturers moved their factories from the unionized Northeast to the nonunion South. Today this phenomenon also occurs as outsourcing, in which an employer subcontracts work to a nonunion firm to lower labor costs. This potential reaction to higher labor costs can severely limit the extent of union power. Some unions, especially in the crafts, have negotiated contracts that prohibit such subcontracting.

When considering whether to join a union, a worker must evaluate the tradeoff between better employment conditions and a higher likelihood of layoffs. From this perspective, a union has the greatest likelihood of success in an economic environment where the firm is least likely to respond to increases in labor costs. Firms that sell goods and services for which there are few substitutes, for example, typically can easily pass on cost increases to consumers and earn higher profits. These firms, which have some degree of monopoly power, usually can best afford to pay the increased costs of the union demands.

B

The Legal Environment

The legal environment, which permits certain types of union activities and prohibits others, also influences the extent of union organization. States with right-to-work laws have much lower unionization rates than other states. In the United States, the states with the lowest unionization rates are North Carolina, South Carolina, South Dakota, and Arkansas—states that have right-to-work laws. In 2000 the unionization rate in these states ranged from 4.44 percent to 6.7 percent. The states without right-to-work laws and with the highest unionization rates were Alaska, Hawaii, Michigan, New York, and New Jersey, with rates ranging from 21.8 percent to 26.5 percent.

Union political activity has succeeded in some areas in creating a legal environment that benefits both unionized and nonunionized workers. As a result many workers today, even those who do not belong to unions, enjoy the benefits that union members have. For example, most developed countries, including the United States, have enacted various forms of protective legislation to guarantee worker rights and provide standards for the workplace even in nonunion settings. Protective legislation sets minimum wages, maximum hours of work, and conditions for triggering overtime pay. Other forms of protective legislation limit workers’ exposure to risky working conditions and hazardous substances and grant workers the right to receive unemployment compensation, disability insurance, and old-age pensions. Numerous laws in the United States and other countries, enacted from the 1960s on, prohibit employment discrimination on the basis of race, ethnicity, sex, age, and disability. Such legislation extends to the entire work force—unionized and nonunionized—provisions that are typically found in collective bargaining agreements. The extension of provisions that unions once fought for has lessened the incentive for today’s workers to join a union.

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