Update On Unions In The Private Sector

Did you notice that President Obama held a little mini-summit with labor union leaders in Washington on Wednesday this past week?  It didn't get much play in the press, but here is some coverage from Reuters.  Probably Obama's main idea was to assuage the Democratic Party's union allies after having just dissed them with the Trans Pacific Partnership.  But he did take the occasion to restate his oft-expressed view that unions are a positive force for workers in rising up to the middle class:

"I believe when people attack unions, they're attacking the middle class," Obama told attendees of the first-ever White House Summit on Worker Voice.  "We've got to make sure ... working Americans don't get lost in the shuffle," he said. "They can come together and they can win."   

So it's an appropriate time to take stock of the status of the union movement in the private sector.  Have the union-friendly Obama administration and NLRB made any progress in reversing the long-term decline?

The answer is no.  Perhaps the continuing decline would have been even faster if a Republican had been President, but what we have is continuing decline nonetheless.  Here is the latest (January 2015) summary release from the Bureau of Labor Statistics on union membership.  In the private sector, union membership in 2014 slipped another tenth of a percent to 6.6% from 6.7%.  It's not much in any given year, but it's a steady drip, drip, drip.

But how could the steady decline continue when the NLRB is currently so friendly to union organizing drives?  Part of the answer is that workers increasingly work in situations that are very difficult to organize.  Think Uber or, more generally, the so-called "gig" economy.  But an even bigger part of the decline is the distressing tendency of unions to drive their employers out of business or, if not quite that, to make them uncompetitive and cause them to shrink drastically.

A notable example of a union killing off a major employer is currently playing out here in the New York area in the supermarket industry.  The supermarket chain called A&P is now in round 2 of bankruptcy after a previous round just a few years ago.  This time the chain is liquidating.  A&P stores are organized by a union known as the UFCW (United Food & Commercial Workers Union).  At its peak A&P had some 16,000 stores.  The latest pre-bankruptcy count was about 300.  Oh, and that 300 is not just stores under the A&P name.  The current company is basically a roll-up of a collection of the unionized chains in the northeast -- besides A&P, it's also Food Emporium, Waldbaum's and Pathmark.  The 300 is what is left for all of them following round after round of downsizing.

On October 7 the New York Post reported that in recent auctions in the bankruptcy court, only about a third of the A&P stores had attracted bids from other supermarket operators who planned to continue them as grocery stores.  Close to half of the stores either received no bids, or only bids from operators who decline to hire the workers.  Basically, very few people are willing to take on the task of dealing with the UFCW and its onerous work rules.  The latest projection is that nearly half of A&P's current 28,500 workers will lose their jobs by Thanksgiving.

Now it's not like the supermarket business overall is shrinking in the New York area.  The amount of food that people eat is not changing.  Here in Manhattan, two very large and successful chains have recently grown substantially -- Whole Foods and Trader Joe's.  They are non-union.  Two other non-union operations have expanded in the downtown area -- Garden of Eden and Mrs. Green's.  In the outer boroughs and near suburbs, non-union Target has moved in.  One other unionized operator, Fairway, has been growing until recently, but in May announced plans to rein in its expansion -- because it is losing money.   Around the corner from where I live, a unionized operator called D'Agostino hangs on despite the new non-union competition.  All the employees there seem to have chips on their shoulders.  My bet is that they will be gone within a couple of years.

All this is not much different from what has happened in the automotive industry over the past few decades.  In 1979 the UAW had over 1.5 million members, and in 2001 it was still around 700,000.  Meanwhile lots of foreign carmakers opened non-union plants in the south -- Toyota, Nissan, BMW, Mercedes, VW.  When GM and Chrysler went through their bankruptcies in 2009 and thereafter, the UAW lost another 200,000 or so members.  Today, the membership is under 400,000, although it has increased by small amounts in the last few years.  You would think that the UAW would realize that it has a fundamental problem with its business model, and would be seeking to help the employers become more efficient and compete more effectively.  But that's just not their way.  The new head of the UAW, Dennis Williams, is reputed to be "aggressive," and made a point of showing the aggressiveness in the recent negotiations with Chrysler.  How is that going to help Chrysler grow and compete against the Japanese, German and Korean competition?  Now Michigan has a new Right to Work law, and UAW members in that state will start to have the right to opt out of paying dues starting in 2016.  Good luck!

Over at the (unionized) Postal Service, this chart shows that they lost only about 3000 employees last year, after years of losses in the range of 25,000 to 30,000 per year.  But they just lost $1.5 billion in their second quarter, and $600 million in their third quarter.  With losses that big, their ability to sustain the current level of employment of almost 500,000 is very doubtful.  FedEx?  Non-union.

It's a slow decline, but it shows no signs of turning around any time soon or, for that matter, ever.