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Another possible indicator of an emerging new economy is shifting balances of power between collectivities of workers and their employers. As Exhibit 2.4 shows, the rise of the old economy was accompanied by a dramatic increase in union membership in the United States. At the middle of the twentieth century, roughly one in three American workers belonged to a union. In the latter part of the century, however, membership plummeted, and despite a short-lived increase in union membership in 2007 and 2008, by 2017, only 11% of workers belonged to unions. Overall, the decline of unionization in the private sector has been particularly sharp; less than 7% of private-sector workers belonged to unions in 2016. The one exception to the general pattern of decline has been in the public sector. According to the Bureau of Labor Statistics (2020), government sector unions remain vigorous and have even grown, representing almost 34% of government employees in 2018. But, as we discuss next, even in this sector the union movement is being challenged.

Exhibit 2.4 Percentage of American Workers Who Were Union Members: United States, 1930–2016

Source: Bureau of Labor Statistics.

One reason for falling union membership is that a declining proportion of the workforce is employed in manufacturing, the sector in which unionization has traditionally been strongest. In addition, as American manufacturing employment has contracted, employers have become increasingly willing to close facilities or to relocate both within the United States and abroad, so that unionization in the manufacturing sector has declined. In some cases, employers have moved away from areas where unions are strong to those where they are not; consider the shift of automobile manufacturing away from the union stronghold of Detroit to nonunion states in the South. In other cases, efforts to unionize have been stymied by threats to close shop and by actual relocation. Free trade agreements such as the North American Free Trade Agreement (NAFTA) have made it easier for companies to move across borders, largely because those agreements often do not contain strong protections for labor organizations (Luce 2014). The development of complex supply chains, with major producers being supplied by a network of smaller companies scattered across the globe, has also contributed to union decline. Not only are the supplier companies small and mobile (making them hard to organize), they are also less economically secure, which in turn discourages collective bargaining. Still, nonmanufacturing workers do join unions in many other countries (including Canada). And the decline of unionization in the United States has occurred not just in sectors exposed to capital mobility but also in sectors such as transportation and construction that cannot relocate. So, the real reason for declining unionization may be the failure of American unions to organize workers in the growth sectors of the new economy (Milkman 2006).

American unions have been criticized for their lack of emphasis on organizing new groups in the post–World War II era, but even when they try, unions often meet with failure. One hindrance they face is that laws in the United States have made it comparatively difficult. Although American workers won the right to organize with the New Deal–era Wagner Act (which also established the basic legal framework for collective bargaining in the United States), numerous restrictions have since been placed on unions and union organizing activities. The Taft–Hartley Act of 1947 was particularly important in this regard. This piece of legislation, strongly backed by an anti-labor, postwar U.S. Congress, prohibited some of the most effective strategies that had been used to expand the reach and power of unions, most notably the closed shop (in which all workers at a particular place of employment are required to be union members), the sympathy strike (in which workers in one industry strike in support of workers in another), and the secondary boycott (in which unions attempt to persuade others not to do business with a particular firm whose workers are on strike). Even more importantly, Taft–Hartley made organizing new groups of workers much more difficult by authorizing states to pass “right-to-work” laws (which prohibit unions from making paying dues or fees a condition of employment), by strengthening employers’ ability publicly to speak out against and resist unionization drives, by permitting strikebreakers to vote in union certification elections, and by making the process of union certification far less flexible than it had been.⁴

As anti-union pressure from conservative groups and politicians grew in recent years, a number of new states (some of which were traditional union strongholds) passed right-to-work legislation: Indiana (2011), Michigan (2012), Wisconsin (2015), West Virginia (2015), and Kentucky (2016) (Greenhouse 2019). In general, postwar U.S. labor policy has not favored new union formation, and the National Labor Relations Board, which regulates collective bargaining, has become more conservative in its rulings over time (Gould 2007). It is also the case that employers have become increasingly determined to maximize profits and push up share prices, leading them to take a much tougher stance toward union organizing and wage demands (Greenhouse 2019). In some cases, this involves the use of the “carrot”; that is, making union membership less attractive by providing, voluntarily, some or all of the good labor conditions that unions gain for their members (Milkman 2006). In others, it involves the “stick”; that is, aggressive efforts to block unionization through methods such as firing organizers and the use of experts to develop strategies of keeping unions out (Bronfenbrenner 2009, Head 2004).

Until recently, government workers in the United States have not had to contend with strong antiunion efforts by their employer. Though some states limit public-sector unions in various ways (e.g., New York State’s “Taylor Law,” which prohibits strikes by public employees), government workers in general have encountered fewer obstacles to unionization than their private-sector counterparts, which probably accounts for much higher rates of unionization in the public sector. However, in the aftermath of the financial crisis of 2009, a number of state governments, including states with strong union traditions such as Ohio and Wisconsin, took aggressive action to curtail public-sector unions. Arguing that salaries and benefits paid to current and retired government workers were crippling state budgets, and complaining that union job protections limited flexibility and prevented institutions such as public schools from rewarding merit, governors such as Scott Walker of Wisconsin and John Kasich of Ohio led movements to impose legislative restrictions on public-sector unions. Only Walker was successful, but the challenge to public-sector unions is real. A 2018 Supreme Court decision, Janus v. AFSCME, banned requirements that public employees be required to pay fees to unions that bargain for them, further weakening unions by allowing employees to “opt out” of paying union dues (Greenhouse 2019). Survey data indicate significant support for public-sector unionization rights, and efforts to overturn anti–public sector union legislation are under way. This indicates that the path to limiting the power of collective bargaining in the public sector may be politically risky. However, state governments’ success in limiting public-sector unionization almost certainly will negatively affect the terms of employment for public-sector work (Greenhouse 2011a).

Some analysts have suggested that the new economy has the potential to change relationships between employers and employees for the better and that these new employer–employee relationships reduce the need for the checks that unions place on employers’ inclinations toward exploitation. For example, new management philosophies and new forms of work organization ostensibly promote collaboration and harmony between employers and their workers. Even if this is not what really happens, the belief that this is the case can have significant power. Work in smaller enterprises involves direct face-to-face relationships between workers and their employers, which discourages a “them and us” mentality, and as greater shares of workers are laboring in smaller enterprises, this might be having an influence. In this culture of cooperation, traditional unions may not seem attractive to workers, who may see them as threatening the company’s interests and their jobs. It has also been pointed out that workers are less likely to devote their entire careers to single employers, instead building portfolios and moving from employer to employer. In this context, unions representing particular workplaces appear to become less relevant. Still, portfolio careers are more typical of professionals, who generally move voluntarily, than of less-educated workers, who move because they have to (Kim 2013). A worker who is a victim of job insecurity is likely to view a union job more positively than someone who is building a career by “job hopping.”

The decline of unionization has occurred simultaneously with declining wages and job security (Western and Rosenfeld 2011). Thus, it may not be that changing management practices are making unions unnecessary; rather, it may be that unions have lost much of their ability to negotiate for workers’ interests or to persuade workers that they are better off with unions than without them. Some evidence suggests that unions have lost much of their teeth. For example, American unions’ ability to use the strike to put pressure on employers to raise wages or improve work conditions has largely evaporated. Consider that, according to the Bureau of Labor Statistics, in 1970, 2,468,000 workers participated in 381 mass walkouts. In contrast, in 2017, there were only seven large-scale work stoppages, and these only involved 25,000 workers (U.S. Bureau of Labor Statistics 2018a). Only a surge of successful teachers’ strikes in 2018 defied this trend toward declining union militancy (Greenhouse 2019).

The downward trend in union membership has been witnessed in most industrialized countries outside the United States, but the extent of these declines has been variable. Scandinavian countries have retained remarkably high union membership. Countries such as Australia, Germany, and the United Kingdom have significantly higher union membership rates than does the United States. Neighboring Canada has unionization rates more than double those of the United States (see Exhibit 2.5). Outside the Organisation for Economic Co-operation and Development (OECD), in the developing world, unionization rates have been growing (Luce 2014). Evidence indicates that collective labor rights in most countries prove instrumental in securing higher wages for larger shares of these nations’ workforces, as well as ameliorating causes of social inequality by advancing worker interests in political processes (Kerrissey 2015).

Exhibit 2.5 Trade Union Members as Percentage of All Employees: International Comparisons, 2015

Source: Organisation for Economic Co-operation and Development.

The United States stands out in the international arena because of the combination of dramatic declines in membership and its exceptionally low current levels of unionization. The fact that unions remain important in other advanced economies, and that service workers who are typically unorganized here belong to unions there, is strong evidence that unions can still matter. Early in the twenty-first century, a major national survey found that the majority of unorganized American workers would vote for a union if one were available to them (Freeman 2007). And, while support for unions waxes and wanes somewhat, public approval of labor unions has risen steadily since the Great Recession and now stands at 62%, its highest level in almost two decades (Saad 2018). A recent analysis of survey data on workers’ attitudes found that most workers would like to have more “voice” at work, there has been an increase in the desire to join unions in recent years (including among younger workers), and better educated and minority workers are particularly favorable to joining unions (Kochan et al. 2018). Unions may not be a vestige of the old economy, but whether they will thrive in the new economy depends on whether they develop effective strategies for attracting new members and organizing new sectors of the workforce. It also depends on the resources made available to union organizers and the constraints placed on their actions.