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The Weakening of Unions

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Institutions like unions once curbed employers’ exercise of market power. But over the past 40 years unions have become weaker. There are multiple reasons for this. The change in the structure of the economy—the move to the fissured marketplace (described in the next subsection) and to the service-sector economy—may make unionization more difficult than it was during the industrial era, when a larger fraction of workers was employed at large plants. Social attitudes, too, may have changed, especially in the United States, where 40 years ago notions of class struggle were less deeply ingrained and where the idea arose in the middle of the 20th century that everyone belonged to the middle class. At least for a while it seemed acceptable for corporate leaders to garner for themselves an outsize portion of the corporate pie; the notion of just deserts was captured by labeling the pay as incentive pay, a deserved reward for the efforts that executives were exerting on behalf of the company from which all allegedly benefit. Notions of rugged individualism countered the idea of collective action. (Opinions about unionizing are perhaps beginning to change as the stark imbalances of market power are becoming more evident. A recent poll by Data for Progress [Hertel-Fernandez 2020] shows that unions are actually quite popular.)

Moreover, in a world of globalization (discussed briefly below in this introduction), the power of unions to win wage increases—or prevent wage decreases—was greatly circumscribed. If workers do not see any benefits from the unions, it is not surprising that they are less inclined to support them.

These explanations, however, do not really get to the heart of the reason for the decline in unionization in the United States, because most of these changes in the structure of markets (whether originating from changes in technology or the structure of demand) apply to other advanced countries, too, and in some of those countries unions remain strong and vibrant. The critical explanation is the legal assault on unions—the change in the rules of the game and the way the rules are enforced.

The rules of the market have been rewritten to decrease the power of workers and to increase the power of firms (see Stiglitz et al. 2015, Rewriting the Rules of the American Economy).4 Lax enforcement of antitrust laws and the failure to update competition laws to respond to the new threats to competition (e.g., the new contracts that restrain competition) have played an important role in the reduced levels of market competition described earlier.

States have passed right-to-work laws that attack the power of unions and both they and the federal government have made it more difficult to unionize. (See, for instance, the infamous Supreme Court decision in 2018 [Janus v. American Federation of State, County, and Municipal Employees], that made it more difficult for unions to collect fees from nonunion members in the public sector—and that thus enshrined the right to free-ride.)5

In recent decades the National Labor Relations Act (NLRA) has been unable to fulfill its objectives, which are, as described by the NLRA website, “to protect the rights of employees and employers, to encourage collective bargaining, and to curtail certain private-sector labor and management practices, which can harm the general welfare of workers, businesses and the U.S. economy.” Workers face significant challenges to expressing their free choice to unionize, while management can intervene significantly, almost without impunity, as a result of inadequate remedies (Sachs 2010).

What matters, of course, is not just the law itself, but also how the law is enforced. Federal enforcement of labor standards and collective bargaining rights has declined. As Mark Stelzner (2017) writes, “Even though employers have increased the degree to which they break labour law, workers have decreased their utilisation of the National Labor Relations Board (NLRB) and the strike” (231). Stelzner argues that this seeming paradox is explained by “three central changes in federal labour law and norms from the middle of the 20th century to the present: the usage of permanent replacement workers, adjudication of the main federal labour law—the National Labor Relations Act—and change in administration of the NLRB—the body charged with overseeing the National Labor Relations Act” (231).

A first step in reform would be to recognize the multiple and subtle ways in which employers can impede unionization and reverse these changes.6 In our democracy, of course, we may not always be able to prevent the appointment of antiunion members to the NLRB, so legislation should be designed to limit the ability of the NLRB to undermine the intent of the NLRA unless it gets a mandate from Congress to do so.

Inequality and the Labor Market

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