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Contextualizing Organized Labor in Expansion and Crisis: The Case of the United States

Kim Moody

The relative well-being of the working class depends to a large extent on its state of organization and combativeness. But the ability of unions to improve living and working conditions also depends strongly on the economic, political, and social context in which struggles occur. In discussing the “general law of capitalist accumulation” in Capital, Marx argued that “the conditions which are the most favorable to the workers” are those of “reproduction on an expanded scale, i.e., accumulation.”1 This is more or less what happened in the United States during the long expansion that followed World War II and lasted until the early 1970s. Shaikh, for example, argues that this expansion was based on growing productivity, which allowed for an increase in the rate of surplus value of 24 percent from 1948 to 1976. This, in turn, allowed for a substantial increase in real wages for most of this period, despite a falling rate of profit.2 In this period, the US working class, including both the productive workers who produced this increasing surplus value and the unproductive sections of the class, achieved a growing share of national income at the expense of capital. From 1959 to 1979 the “labor” share of US GDP rose from 68.3 percent to 73.9 percent. Eventually, by the mid-1970s, the declining rate of profit brought the great postwar expansion to an end.3 When expansion returned it would be on the basis of a continued fall in real wages and productivity growth through the intensification of work.

Expansion Returns

A new upward trend in both profit rates and growth began in 1982. McNally argues that this was the result, among other things, of a generalized attack on organized workers that produced wage compression and a rising rate of exploitation, along with a restructuring of capital worldwide and imbalances in the global economy. In addition, there was significant destruction of capital in Europe and North America with the loss of millions of manufacturing jobs.4 In the United States alone, some six billion dollars of real private manufacturing assets were destroyed between 1980 and 1983, while business failures soared from 7,600 in 1979 to 31,300 in 1983. Between 1979 and 1983, some two and a half million manufacturing production jobs were lost.5 In this same period the rate of surplus value jumped by over 9 percent.6 It was this substantial devalorization, and along with it a sharp rise in the rate of surplus value, that produced a renewed period of capitalist expansion in the 1980s.7

This period of expansion and accumulation, however, was very different from that of the postwar years. There was, as Shaikh shows, a continuing rise in productivity following 1982, but this time real wages lagged far behind allowing for a rapid rise in the rate of exploitation.8 Far from rising as a proportion of US GDP, labor income, broadly defined, fell from 73.9 percent in 1979 to 70.4 percent in 2006.9 Whereas profit rates had fallen during the postwar boom, from 1982 until about 1997, by most measures they rose.10 While there were a number of factors that explain this return to growth, it seems clear that it was in large part due to capital’s ability to accelerate the rate of exploitation quickly and continuously, as productivity outstripped wages. Shaikh and Tonak show that the rate of surplus rose by 20 percent from 1979 through 1989. Whereas the average annual rate of surplus value had increased by a modest 0.6 percent from 1948 to 1980, from 1980 to 1989 it increased by 1.8 percent a year. Mohun calculated that this ratio increased by 40 percent from 1979 through 2000 as the value of labor power in the United States plunged.11 Far from providing “the conditions . . . most favorable to workers,” the expansion that began in 1982 was built on the relative and, in the case of the United States, the absolute decline of working-class living and working standards. Capital’s expansion was now predicated more than ever on the decline of labor’s fortunes.

The Collapse of Union Resistance in the United States

From the mid-1960s through the 1970s, much of the industrial world experienced a major labor upheaval. America witnessed its largest labor upsurge since the 1930s, mainly in response to capital’s attack on organized labor, which began in the late 1950s with what Mike Davis calls “the management offensive of 1958–63.” Spurred by falling profit rates, this was specifically an attack on work standards and shop-floor organization in the major, highly unionized industries, notably automobiles, steel, and electrical goods.12 By the mid-1960s, rank-and-file resistance to this management offensive surfaced with a wave of wildcat strikes. Strike levels often surpassed those of the huge 1945–46 strike wave, peaking at just over six thousand strikes in 1974.13 It was an era of worker self-activity in which unofficial strikes, contract rejections, and rank-and-file rebellions within major unions all challenged both the routine of American business unionism and the bureaucratic rule that supported it. Alongside the social movements of the era, and often inspired by and overlapping them, this worker upsurge thwarted the efforts of capital to recoup its falling profits rates for several years. The labor upsurge would continue for a decade and a half.14

The movement’s momentum, however, was broken first of all by two recessions, 1973–75 and 1980–82, in which the eight largest US unions, major sites of the rebellion, lost 2.2 million members.15 Also key to the loss of momentum was the dialectic of constant struggle between rank-and-file activists and leaders in most of these major unions, who, in business-union fashion, resisted the assault from the ranks on bureaucratic rule and increasingly sided with management in the restoration of workplace authority and company competitive priorities. It was a conflict that eventually exhausted both sides and left the leadership unable to mobilize the ranks to resist the employers’ offensive their unions now faced.16 As the momentum of the upsurge wore down, capital moved in with what one union leader called, with unintended irony, “one-sided class war.” And all too one-sided it was, for beginning in 1979, much of the US union leadership, with a sometimes resistant membership following, began a rapid retreat as it simply surrendered in the face of employer attacks, recession, and restructuring.

It was the United Auto Workers (UAW), long considered one of the country’s most effective unions, that led the retreat in November 1979 when its leader, Doug Fraser, of “one-sided class war” fame, agreed to major concessions at the Chrysler Corporation, even before the US Congress passed a Chrysler “bailout” that required concessions from the unions. From that time on, one union after another agreed to wage cuts and freezes as well as changes in working conditions, almost always without a fight. This essentially political choice would lay the basis for further retreat.17

The surrender of 1979 led to a dramatic collapse in almost every major form of trade union activity across the US economy. This collapse began even before the 1980–82 recession took hold, and well before Ronald Reagan fired fifteen thousand air-traffic controllers when their union, PATCO, struck in August 1981. Between 1979 and 1983, union membership in the private sector fell by 26 percent. Although largely due to the recession, this loss revealed that concessions alone could not stop employment reductions.18 New organizing, which might have helped stem the continued loss of members, declined by more than half as organizing efforts were abandoned. From 1979 to 1981, the total number of strikes dropped by almost half, while the number of strikes involving more than a thousand workers had fallen by two-thirds by 1984. Negotiated annual wage increases in major collective bargaining agreements in manufacturing dropped from 6.1 percent in 1981 to 1.5 percent in 1984, falling far behind inflation even as the annual rate of increase in the Consumer Price Index fell by more than half.19 Concessions, however, were not only about wages. A third of all concessionary agreements reached in 1982 involved changes in work rules designed to increase productivity. By 1983 changes in work organization had been conceded in auto, steel, meatpacking, tires, petroleum refining, and air and rail transport.20

The virtual collapse of union activity and resistance was at least one reason the rate of surplus value rose by over 9 percent between 1979 and 1983 alone, by far the biggest increase for any five-year period in the entire postwar era. This represented a real increase in the mass of surplus value of $520 billion over a brief period. The growth in the rate and mass of surplus value would continue throughout the 1980s, bringing an increase in real surplus value of $1.2 trillion from 1982 through 1989, a 70 percent increase. Meanwhile, fixed capital assets grew by a more modest 48 percent, allowing an increased rate of profit.21 Concessions on wages and benefits could explain some of such a significant shift in income, but major changes in both the structure of industry and the organization of work were also required to sustain the period of growth initiated in 1982.

Industry Restructures

The failure to unionize the US South after World War II opened the door to the creation of a competitive, low-wage region for American industry. Basic industry in the United States began its journey away from the highly unionized Northeast and Midwest into the largely rural South at the close of the war. Between 1947 and 1972, value added in manufacturing grew by nearly four times in the South compared to just under twice in the country as a whole. Between 1972 and 1989 this Southern growth rate slowed to 60 percent, but nevertheless remained over twice that for the nation as a whole.22 The shift to the low-wage, nonunion South played a significant role in depressing the value of labor power in the 1980s and beyond. The regional wage differentials made further moves from highly unionized states, particularly in the Midwest, well worthwhile. In 1979, the hourly wage differential between the South as a whole and the Northeast and Midwest was about 10 percent. For those states that saw a large part of the shift before and after 1979, the wage gap in that year was 15 to 16 percent between Georgia, North Carolina, and Tennessee, major gainers, on the one hand, and Michigan and Illinois, significant losers, on the other. By 2000, the percentage of payroll employment in manufacturing in North and South Carolina, Arkansas, and Mississippi surpassed that of Michigan, Illinois, and all of the states of the upper Midwest and the Northeast. In that year, union density was 3.5 percent in South Carolina, 3.2 percent in North Carolina, 6.2 percent in Mississippi, and 7.5 percent in Arkansas, compared to 21.5 percent in Michigan and 18 percent in Illinois.23

Industry-wide bargaining in the form of wage and benefit patterns or master contracts had been organized labor’s major means of reducing labor market competition and increasing worker incomes since the end of World War II. Tempted by wage differentials and pushed by growing competition at home and abroad, firms began to break away from existing industry agreements or wage/benefit patterns in order to strike their own deals or escape unionization altogether and improve their own position in the increasingly competitive world economy. As productivity and profitability necessarily differ between firms in the same industry at any given moment, the desire to break away from the imposed labor costs of pattern bargaining in a period where competition is increasing is almost irresistible. This is particularly true where new firms with higher productivity levels or lower labor costs enter the industry, as was the case in auto, meatpacking, and trucking, or where international competition intervenes, as in textiles, garments, and textiles, which will be examined below. Such trends contributed to the decentralization of collective bargaining in those industries that had established some form of industry-level bargaining. The number of union contracts to be negotiated and administered rose from 120,000 in the 1960s, when union density was about 30 percent, to 180,000 in 2006, with density down to 12 percent, less than 8 percent in the private sector.24

In the 1980s, systems of “pattern” and “master” agreement bargaining that had held wages up since the late 1940s broke down in most key industries, including automobiles, meatpacking, steel, coal mining, and road haulage. Beginning in the late 1970s and accelerating in the 1980s, the automobile industry moved south, led primarily by Japanese and European firms.25 As the Big Three and their suppliers consolidated, outsourced, and shrank, UAW membership plunged from a high of 1.5 million in 1970, when a majority of members were auto, aerospace, or agricultural implement workers, to 355,000 in 2010, with only about half the members from its traditional core industries.26

Unions in meatpacking faced a similar fate as new, aggressive firms like IBP and ConAgra entered the industry in the 1970s and shifted its center from the East and Midwest to the South and the West. By the mid-1980s the meatpacking union’s pattern settlement had shattered, and in real terms average union wages fell from $10.65 an hour in 1979 to $6.68 in 1990.27 Coal miners similarly saw more and more employers abandon their national agreement with the Bituminous Coal Operators Association after 1981.28

In three major industries, deregulation, a neoliberal innovation of the late 1970s, aided restructuring and the fragmentation of collective bargaining. The first industry to experience deregulation was air transportation. Here the system of pattern bargaining at the major airlines was rapidly dismantled. Between 1978, when airline deregulation was passed by Congress, and 1988, only a little more than half of the new collective agreements covering the unionized workforce saw any wage increase. More than a quarter of settlements included a wage freeze or cut, while one in five introduced a two-tier wage system. As a result, average real wages of airline mechanics fell by about 40 percent from 1979 to 1989, while flight attendants lost almost half their monthly income in the same period.29

In road haulage, following deregulation in 1980, the Teamsters’ National Master Freight Agreement, which had covered 277,000 workers in 1979, saw this drop to 160,000 by 1985 and Teamster earnings fall by 11 percent in real terms from 1979 to 1983. Deregulation had opened the industry to new competition, particularly from Southern-based giants such as Overnite and J. B. Hunt.30 Telecommunications workers also fell victim to the new neoliberal atmosphere when their employer, the American Telephone and Telegraph, was broken up as a result of a 1984 challenge in the courts to its monopoly status, ending the national agreement and forcing the Communications Workers of America to deal with seven regional telecom companies as well as the residual AT&T itself.31

Three more key unionized industries saw their bases rapidly eroded by the larger global restructuring already under way. Job losses in textiles, garments, and primary metals accounted for 80 percent of the decline in production-worker employment from 1980 to 1990, due largely to imports.32 In textiles and garments, the unions lost almost all their traditional industrial base. In the steel industry, beset by international competition for some time, production worker employment fell from 342,000 in 1979 to 171,000 in 1984. The following year, the United Steelworkers’ pattern agreement with the major steel companies was terminated by the employers.33

By the end of the 1980s, the structure of industry and that of organized labor and its bargaining practices had been substantially altered. Bargaining was highly decentralized and, hence, more competitive. The political and social climate in which the unions functioned had also changed dramatically. The social movements of the 1960s and 1970s had faded and the “Keynesian” era had been replaced by an increasingly aggressive neoliberalism. The ideas of Hayek and Friedman had been given a power boost by the centers of capital in the 1970s through organizations such as the Business Roundtable, a coalition of the leaders of the nation’s biggest corporations in industry, commerce, and finance founded in the mid-1970s.34 As one journalist put it, “During the 1970s, business refined its ability to act as a class.”35 These developments were followed by the election of Ronald Reagan in 1980 and the dominance of neoliberalism in US politics. But capital’s power grew not only in the political arena; the 1979–82 defeat of organized labor had allowed it to increase capital’s power in the workplace as well. And in the 1980s business wasted no time in reorganizing work in an effort to increase productivity and profitability even more.

“Our Most Valuable Asset”

Continuous gains in surplus value and profitability could not be sustained on the basis of ad hoc concessions from the unionized sections of the workforce alone. The productivity increases of the 1980s were not primarily due to technology, old or new. Here periodization is important. Investment in equipment and software actually grew more slowly in the 1980s than in the 1960s, 1970s, or 1990s in real terms. In manufacturing it grew by only 18 percent in the 1980s, almost half the level for the private sector as a whole and far less than in any other decade from 1960 through the 1990s. Manufacturing productivity, on the other hand, rose by almost 5 percent a year in that decade.36

Thus, with unions weakened and resistance low, capital turned away from capital investment as the main source of increasing productivity and profitability to reorganize work. Ideas that had been around and largely ignored for some time were now reformulated and taken up by managers desperate to compete and continue to improve profitability. These managerial innovations came in a cluster in the mid-1980s, as rapid as the union decline of 1979–82. Virtually all were about intensifying work through various types of work reorganization schemes, motivation techniques, and/or methods of control. While “human resource management” (HRM) had a gestation period in which it overtook “personnel,” it was in 1984 that the two major statements of this new approach to controlling and motivating the workforce were published. The two major schools of HRM were represented by the publication in 1984 of Strategic Human Resource Management by Formbrun et al., representing the University of Michigan school, and Managing Human Assets by Beer et al., representing the Harvard version. The two schools were allegedly differentiated, respectively, as the “hard” and “soft” versions of HRM.37 The mantra of all was that the employee, as individual, was the company’s most valuable asset.

In the same year, Atkinson published his model of the “flexible firm.” This placed a new emphasis on peripheral workers, contingent work, and outsourcing, a design that seemed to contradict the notion of the employee as a firm’s most valuable asset.38 The effectiveness of these new management approaches in sustaining the expansion that began in the 1980s is debatable. What matters is that they provided management with new, or at least refined, tools with which to introduce change and cheapen and/or intensify work. Furthermore, the ideology that underlay HRM and flexibility was designed, as Keenoy argues, to “undermine, if not destroy, the institutional basis of collectivism and legitimate the transition to an individualized unitary concept of the employment relationship.”39 Their uptake was a reflection of management’s hunger for new ways to motivate or simply push the workforce to perform more efficiently, as well as for an ideology appropriate to the new demands of international competition.

Even more important than these managerial prescriptions was the rapid introduction of “lean production” in the United States during the 1980s. Termed “management-by-stress” by critics Parker and Slaughter, this characterization captured the way in which these new production norms reduced inputs while increasing output. This import from Japan combined teamworking, continuous improvement, speedups, just-in-time delivery, multitasking, extensive outsourcing, “reengineering,” and Total Quality Management (TQM) to produce a constant tightening of the production system. It was not a replacement for mass production or Taylorism, as many of its exponents argued at the time, but a means of removing barriers to faster production with fewer workers.40 The introduction of lean norms in the United States was led by Japanese firms adept at it. Between 1979 and 1989 Japanese auto companies opened eleven “lean” assembly plants in the United States, only two with a union workforce, while the US Big Three closed nine unionized assembly plants. With the UAW failing to organize these new plants, by the end of the 1980s 39 percent of the industry was nonunion. In the parts sector of the industry non-union facilities proliferated as outsourcing increased, bringing the nonunion workforce to 76 percent of that sector.41

The new competition from Japanese firms producing in the United States forced the US automobile companies to introduce lean methods as rapidly as possible.This typically involved the carrot of employee participation or labor-management cooperation, schemes that were rapidly embraced by most union leaders. Although originated in 1982, it was, once again, in 1984 that General Motors negotiated its fully elaborated “Jointness” program, giving the union representation on a complex of committees meant to consult, though not bargain, on production problems and plans.42 The following year, NUMMI, the GM-Toyota joint venture, was opened in California with the entire range of lean production procedures and record-breaking speeds of production.43 From their incubation in auto, lean norms, including TQM and other “quality” programs, “reengineering,” teamworking, and the extensive outsourcing associated with lean production, spread across manufacturing in the 1980s. Estimates of the extent of lean methods vary from at least one-quarter of all US firms to 80 percent of industrial firms having some version of these by the early 1990s.44

Lean methods would spread beyond manufacturing in the 1990s. In 1993, for example, lean hit the telecommunications industry at US West in the form of reengineering, reorganization, and flexibility. In the same year, AT&T adopted its “Workplace of the Future” program of labor-management cooperation and lean reorganization.45 Greenbaum’s study of office work found that by the early 1990s, TQM, “broadbanding,” work reorganization, “reengineering,” and flexibility were invading office work.46 In the 1990s they had spread even to the nation’s healthcare industry. As Kumar wrote about US hospitals, “Over the years, they have adapted Lean Manufacturing, Six Sigma and supply chain strategies in order to become more efficient.”47

Did lean production, enabled by HRM, TQM, and employee involvement, aid the sustainability of the 1980s expansion? I would argue that it did. Smith’s review of the literature on the effectiveness of lean methods shows that most studies judge it more effective than older production methods or other strategies, such as downsizing, in terms of productivity.48 While overall productivity growth during the 1980s was not impressive, in manufacturing, where lean production was now common, it was. There, productivity rose by 37 percent or 4.6 percent a year from 1982 to 1989, twice the average rate for the 1960s and 1970s. In the automobile industry, incubator of lean production, it rose by 47.4 percent from 1980 through 1988, an average of 5.3 percent a year.49

Smith’s review of the literature also concludes that “the most significant contemporary attempts to legitimate the contemporary social order all invoke the lean production model” (emphasis in original).50 In other words, not only is the cluster of new techniques associated with lean production more successful in terms of productivity measures, but it also plays an ideological role in legitimating the competitive arguments put forth by management. It thus seems clear that working under lean conditions, driven by new management tactics, and, given the reality of plant closures, fearful of job loss, US workers in manufacturing not only involuntarily initiated the expansion that began in 1982 after the collapse of union activity but sustained it through the 1980s under a regime of work intensification and a continuing fall in real wages.

There was, to be sure, some resistance to all of this. High-profile strikes in the 1980s at Hormel in Minnesota, Watsonville Canning, International Paper, and the shipyards at Jay, Maine; the successful mobilization strategy at NYNEX in the Northeast in 1989; and the massive civil disobedience in the UMWA strike against Pittston, also in 1989, all signaled that the labor movement was not quite dead yet.51 In some unions, notably the New Directions Movement in the UAW and the Teamsters for a Democratic Union (TDU) in the International Brotherhood of Teamsters (IBT), rank-and-file reform movements fought consistently against the increasingly cooperative attitudes of the leadership toward new management methods.52

Nevertheless, the level of resistance and even of conventional strikes in the 1980s remained low. Aside from the exhaustion of the upsurge discussed above and the obvious fear of job loss that prevailed in many restructuring or shrinking industries after the 1980–82 recession, two other economic factors allowed for a low level of resistance from the ranks. The first was the relatively low level of inflation that followed the recession. The Consumer Price Index would fall from a high of 13.3 percent for 1979 to 3.8 percent in 1982 and then to 1.1 percent in 1986, rising again to 4.6 percent at the end of the decade.53 While this was high enough to wipe out real gains in wages, it was far below the rising levels of the 1970s. Second, compensating for the loss of real buying power was what Shaikh calls “the extraordinary fall in the interest rate,” which, among other things, allowed working-class families to continue consuming through the accumulation of household debt.54 This relative lack of grassroots resistance also allowed most union leaders to accommodate to labor- management cooperation and subsequent implementation of lean production norms. In the face of continually falling union density in all but a few industries, the survival “strategy” of the leaders of most large unions in this period and beyond was based on three practices: bargaining concessions not only on wages but on benefits and working conditions as well; various forms of labor-management cooperation or “partnership” usually associated with lean production methods; and union mergers to bolster falling membership figures.55 The first two represented accommodation to capital’s new management strategies and practices, while the latter tended to reduce the urgency of new organizing for many unions.

Nevertheless, new organizing became a major issue in the 1990s as several unions turned seriously to new organizing techniques. As a result, significant leadership changes would take place in the AFL-CIO, as Service Employees International Union (SEIU) president John Sweeney beat old-guard standard-bearer Lane Kirkland and TDU-backed Ron Carey became president of the Teamsters, leading to one of the most important anti-lean strikes of that decade at UPS in 1997. Grassroots militancy in the face of drastic lean methods would explode once again on the prairies of the Midwest, this time at A. E. Staley in Decatur, Illinois.56 Yet the basic practices of labor-management cooperation adopted by most business union leaders in the 1980s would continue into the 1990s.

With resistance low, productivity gains would increase somewhat, in some recovery years very rapidly, real wages would continue to fall until a brief reprieve in the late 1990s, and increases in the exploitation of labor would remain a central factor in the expansion of the 1990s, as Mohun’s figures on the rate of surplus value cited earlier indicate. In that decade and later, financial and overseas profits would play a growing role in holding up profits as the epicenter of capitalist investment moved from West to East, above all to China, until the drop in the mass of profits that began in late 2006.57

To summarize the analysis, the collapse of union resistance beginning in 1979, intensified by the recession that followed, sparked the recovery that began in 1982. Accelerated industrial restructuring undid “pattern” bargaining, labor’s first line of defense since the end of World War II, undermining resistance and contributing to the continued fall in real wages. The introduction of “lean production” methods enabled significant productivity increases, first in manufacturing in the 1980s and then more generally in the 1990s. The combination of these trends produced a fall in the value of labor power, contributing to the sustainability of the expansion over this whole period.

US Labor in the Early Twenty-First Century

Despite the recession of 2000–01, in the early years of the new century, US capital would continue to be favored by a continued fall in the value of labor power. In the first several years of the new century, real wages remained essentially stagnant, while productivity rose by more than 20 percent from 2000 through 2008. The gap between the two grew, indicating a further fall in the value of labor power.58 Union membership, however, after rising slightly in the late 1990s, began to slip again with the recession of 2000–01, falling from 16.3 million in 2000 to 15.4 million in 2006, with all of the loss in the private sector.59 First year increases in union negotiated agreements averaged 3.5 percent from 2001 through 2007, generally staying slightly ahead of inflation and clearly somewhat better than the average worker.60 But with union density down to about 8 percent in the private sector, these agreements had less and less influence on working-class incomes overall. While there was, as always, some resistance in the years before the Great Recession, the level of strike activity continued to plummet in the new century, falling by more than half from 392 in 2000 to 119 in 2009, a record low.61 The most important developments in organized labor in the first few years of the twenty-first century up to the “Great Recession” of 2008, however, were the changing nature of the unions, the increasing centrality of the SEIU, the split in the AFL-CIO, and the virtual “civil war” that exploded in 2009 between several important unions.

The first thing to note is that the unions that faced capital in the twenty-first century were very different from those of the late 1970s. For one thing, the industrial distribution of union members had changed significantly. Unions in traditional strongholds such as steel, auto, transportation, and apparel all lost members as employment dropped or shifted south, or held their own through mergers or absorptions of smaller unions. Union density in manufacturing had fallen from 32.3 percent in 1980 to 14.8 percent in 2000 and would fall further to a little over 11 percent in 2007, while density in a small number of service industries grew, most notably in hospitals, where it grew from 13.8 percent in 2000 to 15.3 percent in 2007, twice the level for the private sector as a whole.62

The industrial shift meant that union members had changed in terms of occupations and demographics as well. In 1978, 65 percent of union members were in manual occupations in manufacturing, mining, construction, transport, and telecommunications. By 2008 fewer than half were in those industries. There were by then as many workers in health and education services as in manufacturing. Women now comprised 48 percent of union members, whereas in 1978 they were less than a quarter. In 2008, while the proportion of African American members remained the same as in 1983 at about 12 percent, the percentage of Latinos had doubled from just under 6 percent to just over 12 percent. Between 2000 and 2010 half a million Latinos had joined unions.63 This reflected the growth and increased importance of immigrant workers in the US labor force and in the unions. If the decline of unionism in manual occupations symbolized labor’s weakening position in the economy, the industrial and demographic shifts brought some new strengths.

The first of these was the rising importance of immigrant workers in the United States referred to above. In 2000, the AFL-CIO abandoned its past restrictionist policy on immigration and came out in favor of amnesty.64 Recognizing the centrality of immigrant workers in its industries, the Hotel Employees Restaurant Employees (HERE) took the lead in organizing the Immigrant Workers’ Freedom March in 2003.65 An even more graphic reminder of the importance of immigrant labor came on May 1, 2006, when five million immigrants demonstrated across the United States for immigrant rights, many taking the day off of work. The Los Angeles waterfront was paralyzed, half the nation’s meatpacking operations closed, and construction was hit hard in areas of high immigrant population such as Southern California.66 Immigrant workers would also play an important role in the growth of the SEIU, which became the largest union in the AFL-CIO as the new century unfolded. Membership gains in the private sector came mostly in growing service-sector industries such as food services, hospitality, and health care.67

The scale of new organizing, however, was not sufficient to prevent overall shrinkage from 2000 to 2006. The number of NLRB representation elections involving new organizing dropped from 3,162 in 1999 to 1,503 in fiscal year 2008.68 NLRB elections had been declining for many years as that route to representation was undermined by employer resistance. A number of unions had turned to pressuring employers for “neutrality” agreements and “card check” schemes with some success. These are procedures in which an employer agrees to a simple majority show of authorization cards for recognition. Although organizing targets tend to be larger in these campaigns and the number recruited larger, the incidence of these new types of “voluntary” organizing tactics deployed remains small, rising from 227 to a high of 420 in 2001 and then falling to 258 in 2004, never amounting to more than 15 percent of all organizing efforts. What was clear was that the general level of new union organizing had been down for some time.69

In terms of growth, the great success story of the period was the SEIU, which had grown from 981,331 in 1995 to 1.8 million in 2009.70 Its most famous campaign was Justice for Janitors, drawing on the new immigrant workforce, which won a high-profile victory in 1990. By 2008 SEIU had gained representation for 225,000 building service and security employees. Some of this growth came from mergers, such as the 1998 absorption of New York’s huge health care workers’ Local 1199, which brought in 125,000 members. Another major source of growth was the 365,000 home and child-care workers organized between 1996 and 2007. This was largely the result of political deals struck with governors in several states, due to SEIU’s generous donations to the campaigns of these governors. In 2004, it had even given half a million dollars to the Republican Governors Association. SEIU was the biggest political donor in the AFL-CIO. In the 2007–08 election cycle, SEIU raised more than sixty million dollars in political contributions.71

In the name of more effective organizing and political clout, however, SEIU president Andy Stern transformed this union into a highly centralized, top-down organization. Beginning with the “New Strength Unity” program in 2000, more and more authority was given to the president while local unions were merged, so that by 2009 57 percent of the union’s members were in fifteen “mega-locals.” Trusteeships, where local unions are placed under the direct rule of the national union, were a frequent tool in this transformation, with twenty-six locals facing control imposed by the president between 2000 and 2007.72 Stern also adopted what many viewed as an extreme version of labor-management cooperation schemes which he called “value-added employer relationships.” The theory being, he wrote, that “improved quality, increased corporate revenues, and increased workers’ skills and opportunities should lead all to more equitably distributed financial rewards.”73 Linked to that is an effort to move away from workplace organization, the battleground of the last three decades, and substitute call centers for shop stewards as a means of dealing with growing on-the-job pressures, a direction that seems to be the exact opposite of what is needed. All of this was presented as the strategy for growth and renewed union power. This model would become increasingly controversial.74

Frustrated by the unwillingness of the AFL-CIO to prioritize organizing above all else, SEIU’s Stern and the leaders of the Teamsters and Carpenters formed the New Unity Partnership in 2003 to pressure the federation to adopt a more aggressive organizing policy and a basic reorganization of the AFL-CIO and its unions. Unable to move the AFL-CIO, in 2005 six unions, again led by SEIU, left the AFL-CIO to form their own Change to Win (CTW) Federation.75 At first it might have seemed as though the new federation was organizing where others had failed. In the two years prior to the recession, US unions were actually growing. In 2007, unions had a net gain of 311,000 members, 133,000 in the private sector, while in 2008 they gained 428,000, 151,000 in the private sector. The largest increase from 2006 through 2008 was in healthcare services, the major base of the SEIU, where union membership increased by 214,000.76 Despite SEIU’s gains, CTW as a whole, after slight growth from 2006 to 2007, actually lost nearly half a million members from 2007 to 2008.77

The aggressiveness of the SEIU leadership toward other unions went beyond the formation of CTW to spark a virtual civil war in organized labor. Much of this centered on the highly controversial efforts of the SEIU to raid a number of unions. One was the California Nurses’ Association (CNA), which was successfully competing with SEIU in recruiting nurses not only in California but around the country. Another major target of SEIU aggression was UNITE-HERE, the recently merged union of garment and hotel workers. This ended in a split in UNITE-HERE, with perhaps a third of its members leaving to join SEIU.78 The CNA, for its part, went on to lead the merger of three nurses’ unions to form the National Nurses United in 2009 with 150,000 members.79

As Stern aggressively merged dozens of SEIU into giant “mega-locals,” he ran into resistance. The strongest opposition to forced mergers and to Stern’s increasing willingness to cut deals with healthcare systems in order to gain members came from the leadership of SEIU’s militant 150,000-member United Healthcare West (UHW). When Stern moved to put this rebel local into trusteeship in 2009, the leaders and thousands of UHW members left SEIU to form the independent National Union of Healthcare Workers (NUHW). As UHW’s membership was technically under agreements signed by the SEIU International, however, the members were not able to simply transfer their loyalty. NUHW suffered a serious setback in 2010 when it lost a representation election for forty-five thousand workers at Kaiser Permanente, the huge California-based healthcare system. Nevertheless, it went on to win representation for some ten thousand healthcare workers by mid-2011.80

Eventually, after alienating much of the leadership of both federations, the SEIU reached truces with UNITE-HERE and CNA and Stern resigned as SEIU president. The war against NUHW, however, continued.81 If the worst of labor’s “civil war” was over by 2010, it had arguably been a factor in the unions’ loss of the one piece of legislation they most sought from the Obama administration, the Employee Free Choice Act, which would have made union organizing somewhat easier. Despite growth in some areas, the US labor movement as a whole had entered the recession in disarray.

Crisis and Decline, Once Again

The rate of profit began its fall in 2006. By the fourth quarter of that year the mass of profits in the nonfinancial sector fell. This was before the subprime collapse was evident and well before the big financial meltdown of 2008.82 As employers responded to this decrease in profits, unemployment began to edge upward in the first quarter of 2007, when the unemployment rate was 4.5 percent. By March 2008 it was 5.1 percent, with 7.8 million out of work. By October 2009 official unemployment hit 10 percent with 15.6 million out of work, a third of them for twenty-seven weeks or more. If we include the 5.6 million considered “not in the labor force” but who wanted work, the total is more than twenty-one million.83 Some six million private-sector production-worker jobs were lost between May 2007 and October 2009.84

The fate of the unions in this situation was predictable. In 2009 unions saw a net loss of 771,000 members, 834,000 in the private sector, more than wiping out the gains of the previous two years.85 The outcomes of collective bargaining followed the pattern of union loss. First-year wage increases in new collective bargaining agreements rose to an average of 3.6 percent in 2007 for all new agreements and 3.2 percent for those in manufacturing, but by 2009 new wage settlements had dropped to 2.3 percent and 2.0 percent respectively, and by September 2010 they had fallen to 1.7 percent and 1.1 percent. Whereas 14 percent of workers covered by these agreements had received no first-year increase in 2007, by 2010 it was 35 percent.86 The number of strikes, while already very low by the 2000s, fell to an all-time low in 2009 of 119 strikes.87 Management aggression in collective disputes in 2009 and 2010 was evident in at least three lockouts; those of borate miners in California, uranium-processing workers in Illinois, and Red Cross workers across six states.88 To be sure, there was worker resistance as well. The strike figures above included groups ranging from food-processing workers in New York State to nurses in Philadelphia and Minneapolis. Even the UAW, desperately on the defensive in the automobile industry, struck against Bell Helicopter for twenty-seven days.89 But, as in 1979–82, the employers had the upper hand.

Productivity was once again up significantly. In 2009, productivity took several leaps, the biggest being in the second quarter when it grew by 8.4 percent for nonfarm business, as employers shed workers while production rose in the second half of that year. In manufacturing, the third quarter of 2009 brought an unprecedented 16.9 percent jump in productivity. Unit labor costs fell rapidly in manufacturing from mid-2009 through the first three quarters of 2010.90 Looking at these productivity leaps in late 2009, Businessweek’s economic editor explained them as follows: “So people working shorter hours had to do the same work as before, or more. People who kept their jobs had to pick up work of ex-colleagues. Many workers probably put in extra hours that weren’t counted in the statistics in order to get all their work done.”91 He went on to note that this produced the “largest decrease [in labor costs] since the series began in 1948.” While such huge productivity spikes cannot be sustained, it is clear that capital continues to push for the combination of wage restraint and increased relative surplus value as their means of recovery.

In 2011, the attack on working-class living standards moved on to the public sector in accelerated form as Republican governors in several states, responding to the nervousness of state bondholders and the continued desire of businesses and the wealthy for tax cuts, attempted to deprive state and local government employees of collective bargaining rights altogether. The fiscal squeeze found forty-six or fifty states in deficits by 2009, in large part because of cuts on business taxes. The proportion of state revenues drawn from corporate taxes had fallen from 9.7 percent in 1980 to 6.7 percent in 2006. Public workers had faced concessions and staff reductions for some time. By 2009 thirty-four states had begun reducing their workforces.92

This attack had already accelerated in 2004 in Indiana, where Governor Mitch Daniels repealed collective bargaining rights for state workers. The consequence was that union membership among state workers fell from 16,408 in 2005 to 1,490 in 2011. No doubt inspired by events in Indiana, right-wing governors in Wisconsin, Ohio, and Michigan pushed legislation that would abolish or severely limit bargaining for public workers.93 This brought an enormous, largely unexpected reaction in these states, above all in Wisconsin. There the state Capitol Building was occupied for two weeks, with thousands in the street through the week; weekend demonstrations drew seventy thousand union members and supporters in the first week and a hundred thousand in the second. Polls showed that a majority of people across the country opposed depriving workers of bargaining rights, and most of these laws are under challenge in the courts. Nevertheless, Democratic legislators in several states soon joined those trying to repeal the bargaining rights of public workers.94

Underlying the attack on public workers is an effort to reduce the cost of “nonproductive,” though necessary, labor—that is, labor that for the most part does not produce surplus value and, in this case, must be paid out of it in the form of taxation. It is simply another way of accomplishing what direct austerity programs are attempting to do to public workers and the poor in Southern Europe.95 Interestingly, Marx noted that the huge increases in productivity brought about by large-scale industry in the nineteenth century allowed for “a larger and larger part of the working class to be employed unproductively,” mostly as domestic servants in his day.96 Clearly, the problems of accumulation are such that even substantial productivity growth no longer allows such a luxury from capital’s point of view.

With productivity rising, corporate profits reached $1.7 trillion in the third quarter of 2010, the highest amount ever recorded by the government, and an increase of 28 percent over a year before. The biggest part of this increase came from domestic profits and the lion’s share of those from nonfinancial corporations, whose profits grew by 40 percent in that period.97 Certainly, labor, once again, will have played an involuntary role in whatever recovery should follow the Great Recession.

Conclusion

A number of conclusions flow from what has been argued above. The first is that the historic link between rising productivity and wages, so valued by Keynesian and institutional labor economists, and so central to collective bargaining theory, has been broken. The liberal economists at the union-backed Economic Policy Institute called the failure of wages to rise when productivity was growing rapidly in 2000–06 “extraordinary.”98 Actually, it had become the norm. In Marxist terms, the most favorable condition for workers, “reproduction on an expanded scale, i.e., accumulation,” had been stood on its head. The conditions for accumulation have become falling real wages linked to increases in productivity—a downward trend in the value of labor power. It is not in the realm of theory that the productivity-wage link was broken, of course, but in that of class struggle—an altogether too “one-sided class war.” The combination of capital’s industrial and neoliberal strategies and practices on the favorable terrain of global restructuring and labor’s weak reaction and largely misplaced strategic choices and practices have broken the link. The “secret” of the 1982 recovery and whatever subsequent expansion follows the Great Recession is found largely in this broken link.

The evidence for this lies not only in the trends in the United States discussed in this chapter, but on a world scale. Labor’s share of income fell not only in the United States but also in the seventeen leading Organisation for Economic Co-operation and Development (OECD) countries, where it dropped from 75 percent in the mid-1970s to 66 percent by 2005.99 Nor was this redistribution of surplus value limited to the developed economies. The International Labour Office (ILO), in its 2008–09 Global Wage Report, argues that real wages have fallen as a share of world GDP at least since 1995 in pretty much the same way as in the United States. Waged labor, they point out, now makes up half the world’s economically active population. That is, this half is now employed for the most part by capital even if many of these jobs are contingent. The world economy, they calculate, grew by 3.3 percent from 1995 to 2007, while wages grew by only 1.9 percent. As a result, labor’s share of income fell, “an indication that increases in productivity have failed to translate fully into higher wages.”100 Capital has succeeded in restraining wages while simultaneously extracting productivity increases on a world scale, thus lowering the value of labor power across the planet. Much of this was made possible by the opening of vast new low-wage areas of the world to investment after 1990.

With a geographic expansion on the scale of the 1990s no longer possible and the incentive for major technological breakthroughs blunted by declining relative labor costs, it is reasonable to assume that capital will continue to be wedded to this strategy for profitability at least until its limits are reached in the physical degradation or rebellion of the working class. Thus, for the foreseeable future, “the conditions which are most favorable to the workers” will not emerge on their own or as a result of the behavior of capital.

The second conclusion has to do with the organized working class itself. Obviously, the strategies of retreat that have characterized the decisions and practices of most US union leaders since the late 1970s have failed. Chief among these were labor-management cooperation or “partnership,” the near-abandonment of the strike as a weapon, the mergers so common in the 1990s, and bureaucratic reorganization along the lines of the SEIU. Even the new organizing tactics based on employer “neutrality” have proved inadequate in a period when most employers who do not already have a union presence are disinclined to remain “neutral.”101 Simple changes in the leadership and even the structures of US unions, as badly needed as they are, won’t be enough if working-class organization is to spread and dig roots in a changed industrial terrain. The workplace, the central battleground over productivity, will be the key to sustained resistance and mobilization. At the same time, more attention needs to be given to the sort of political and social upheaval that has recently spread around the world, from Bolivia to Mexico to America’s immigrant communities, to North Africa and the Middle East, and to Wisconsin—mass, continuous street mobilizations, necessarily involving work stoppages.102

Here it is good to bear in mind the decisions and strategies employed by capital discussed in this chapter. Ultimately, the division of surplus value is not simply a matter of mathematics, technology, or inevitability, but of power. Capital mobilized not only itself but its states and global institutions to bring about the shift in wealth we have seen in the era of neoliberalism. The value composition of capital presents limits, but not absolute limits. Pushing back the borders of profit is, in the final analysis, a matter of organization, politics, and force. Ironically, perhaps the only way capitalism might be forced to “kick the habit” of dependency on wage compression and work intensification is to force capital to shift some of its surplus to labor, perhaps encouraging increased investment in new “labor-saving” technology. The other possibility, of course, is that increased struggle on a mass scale eventually runs up against the limits of capital, in which case far more is involved than the behavior of unions, as we can see in Greece and elsewhere.

Even the growth of unions, however, seldom comes about incrementally. Rather, as Kelly, Clawson, and others argue, union growth is a function of an upsurge in class conflict.103 The precise mechanisms required to create the human agency that makes such an upsurge possible is a matter of considerable debate, but two things seem clear. One is that changes in the way capital organizes labor and the conditions that workers must face have a great deal to do with it, as they did in the 1930s and in the 1960s. This is why the workplace or the “job” is key. The other is that such upheavals transform the very human agents who carry it out, expanding the realm of possibility.

While there is no automatic mechanism that creates such an upturn in worker self-activity, the worker-led resistance that has commenced on a fairly large scale in Europe, Latin America, and more recently in China suggests the possibility of a new upsurge. Even such seemingly disconnected events as the plant occupation at Republic Windows and Doors in December 2008 and the spectacular mass movement in Wisconsin in early 2011 may be signs of things to come.104 It is also worth noting that where the strike has been revived, as in hotels and hospitals, among other settings, it has often worked. The choices made by union leaders and many workplace leaders in the 1980s opened certain possibilities for capital. The question now is: can workers in and out of today’s unions make different choices and bring about different outcomes? Whether America’s weakened labor movement can rise to the occasion, as it did in the early 1930s, when it had hit low levels of organization comparable to those of today, is as much a matter of practice and politics as of economics.

Originally published as “Contextualising Organised Labour in Expansion and Crisis: The Case of the US” in Historical Materialism 20(1): 3–30, 2012.