Can Unions Survive?

Front matter

em

Pe te ..

KANRA

Part Two

4. The Need for Labor Unions to Organize Traditionally Nonunion Personnel 59

5. Enhancing Organized Labor’s Economic and Political Power 89

6. The Need to Reform the National Labor Relations Act 126 Epilogue 156 Notes 159 Bibliography 189 Table of Cases 202 Index 207 vii

ACKNOWLEDGMENTS

The foundation for this project began to develop while I was a graduate student at the New York State School of Industrial and Labor Relations at Cornell University. The outstanding professors at that institution introduced me to the historical, economic, and sociological concepts that are relevant to an understanding of the current plight of labor unions. I must particularly acknowledge my indebtedness to Professor Jean McKelvey, who established a learning environment that inspired each student to strive for academic excellence.

I am greatly indebted to Niko Pfund, my New York University Press editor, who initially encouraged me to write this book and who provided many suggestions that significantly improved the final product. An unnamed external reviewer also made many beneficial suggestions. Dina Gold, my research assistant, provided exemplary editorial assistance that transcended anything I had the right to expect. Marion Crain, Paul Weiler, and David Silberman reviewed the entire manuscript and made helpful comments. David Foss conscientiously made the editorial changes in the final manuscript.

I must finally thank my wife, Katey, who not only provided crucial encouragement, but also read each chapter and suggested important editorial changes.

Part One

I. OVERVIEW

THE INDUSTRIAL SYSTEM, it seems clear, is unfavorable to the union. Power passes to the technostructure and this lessens the conflict of interest between employer and employee which gave the union much of its reason for existence. . . . The union belongs to a particular stage in the development of the industrial system. When that stage passes so does the union in anything like its original position of power.’

[I]f there were no unions, workers would merely reinvent them. Without some kind of strong institutional voice to represent them, millions of individual workers would be completely at the mercy of giant corporate bureaucracies whose only interest is to maximize profits by minimizing the cost of labor. With all their shortcomings, the unions are the only organized voice in America that working people have.’

Every year, several hundred thousand unrepresented American employees are discharged without good cause. Millions more are laid off by companies that transfer their production jobs to lower wage facilities in the South or in Mexico and other developing countries. When employees at firms like Greyhound and Eastern Airlines walk out to protest wage and benefit reductions, they are permanently replaced and their representative labor organizations are destroyed. Senior personnel who participate in strikes against firms like Trans World Airlines have their hard-earned positions filled by new workers and less senior co-workers who cross the picket line during the labor dispute. Employees who strike technologically advanced corporations like AT&T discover that their employers can continue to maintain basic operations without the assistance of their regular workers. The waning economic power of organized labor makes it increasingly difficult for unionized employees to maintain beneficial compensation levels and to preserve long-term employment security.

Most unorganized workers exercise no meaningful control over these critical areas.

During the past decade, deregulation and government budget problems have led to a decrease in enforcement of health and safety laws. As a result, thousands of American workers are seriously injured each year in industrial accidents that could have been prevented through mandated periodic safety inspections. In September 1991, twenty-five workers perished during a fire at a chicken processing plant in Hamlet, North Carolina.” Their nonunion facility had not been inspected by safety and health officials for more than a decade. The locked fire exits that would have been easily discovered during a walk-through inspection prevented the escape of the persons trapped in the burning building. Conscientious shop stewards would not have permitted those safety law violations to continue.

Although the Employee Retirement Income Security Act* requires private corporations to fund their pension plans in an actuarily sound manner, millions of workers are discovering that their bankrupt and dishonest employers did not make the requisite fund contributions." Individuals who expected reasonable pension benefits are receiving substantially reduced retirement checks. If the retirement programs of these employees had been jointly administered by union and management trustees, it is more likely that the statutorily prescribed premiums would have been paid.

As the American labor movement begins its second century, it is confronted by challenges that threaten its very existence. In 1954, union members constituted 35 percent of nonagricultural labor force participants. By 1980, this rate had declined to 23 percent, and by 1991, union membership represented a mere 16 percent of nonagricultural workers.’ Labor organizations that had won 70 to 86 percent of representation elections conducted by the National Labor Relations Board during the 1940s and 61 to 75 percent of the elections held during the 1950s° prevailed in fewer than half of the elections held during 1991.° If this downward trend continues, unions will represent a mere 5 percent of private sector personnel by the year 2000.*°

Many people believe that labor institutions possess too much power, support economically inefficient work rules, and provide representational services that are not needed by individuals employed by contemporary business enterprises. Employers disseminate information designed to convince white-collar and professional employees that labor organizations benefit only working class persons. In “‘classless’”’ American society, the vast majority of individuals consider themselves part of the ubiquitous “middle class”; no one wants to be characterized as “working class.”

A significant factor contributing to the erosion of public support for unions is the highly publicized disclosures of illegal behavior by some labor officials.’ A federal court recently placed the Teamsters Union in a trusteeship to root out corrupt officials; numerous union leaders have been tied to underworld crime families; and various business agents have been imprisoned for the embezzlement of union welfare funds. When labor officials are involved, media stories frequently employ pejorative terms such as “organized crime” and “racketeering” to describe their conduct. When business leaders misuse client or company funds, however, the less opprobrious term “white-collar crime” is generally used.

The unconscionable sweatshop conditions that were pervasive in the early twentieth century have been substantially eliminated, and the labor movement has directly or indirectly’? established fundamental industrial justice in the workplace. As a result, the moral fervor of the crusading union sympathizers of the past is rarely seen today.** The charismatic instigators of social reform and economic equality who previously inspired millions of workers to unite in progressive labor organizations are gone, and few current labor representatives are able to generate similar intensity.

Many contemporary union leaders exude a complacency typified by former AFL-CIO president George Meany, who frequently indicated that he was not overly concerned with the level of union membership: |

Why should we worry about organizing groups of people who do not want to be organized? If they prefer to have others speak for them and make the decisions which affect their lives, without effective participation on their part, that is their right. . . . I used to worry about the size of the membership. But quite a few years ago I just stopped worrying about it, because to me it doesn’t make any difference.”

Numerous lower level union representatives exhibit a similar ideological insouciance.

Changing demographic, industrial, and technological conditions have also undermined labor cohesiveness and effectiveness. During the past several decades, the composition and location of the labor force have dramatically changed. The participation rate for women, traditionally employed in unorganized occupations, has significantly expanded.** The labor force participation rate for minority persons has also increased.” Labor organizations that have not been historically responsive to the needs of female and minority employees must modify their bargaining objectives to appeal to these new labor force entrants.

One of the most striking demographic trends over the past two decades has been the migration of employees and jobs from the Northeast and North Central areas of the country to the South and Southwest. The population and industrial migration from the Rustbelt to the Sunbelt is likely to continue. More than half of all union members presently reside in Rustbelt states.’ Unions will have to recruit members in other regions if they are to retain their economic viability.

The increased incorporation of new technologies in the workplace has significantly altered the structure of the American economy. The substitution of capital for labor in the manufacturing area has cost many organized blue-collar personnel their jobs and generated a concomitant increase in nonunion white-collar positions. The employees performing unskilled production functions lack the capacity to exert substantial economic pressure against their automated and diversified employers, and labor organizations have difficulty using traditional bargaining techniques to enhance the employment rights of those individuals.’

The technological developments that have significantly modified the structure of the American economy have contributed greatly to the internationalization of the global economic system. By the year 2000, several hundred multinational corporations will dominate world trade. The developed nations provide the capital-intensive technologies, the consumer markets, and the distribution systems, while the developing countries provide low cost labor. The proliferation of low cost “export platforms” has caused the export of many blue-collar production jobs. If labor organizations want to meaningfully influence the employment policies of international businesses, they must coordinate their efforts with unions located in the other countries in which those enterprises operate.

Demographic, industrial, and technological changes do not entirely explain the decline in labor union membership over the past thirty years in the United States. Many of the same industrial and technological phenomena have also occurred in Canada, yet the labor movement there has not suffered a similar fate. Approximately 35 percent of Canadian employees are union members, and 45 percent continue to be covered by collective bargaining agreements.” Even the membership rosters of industrial unions such as the Steelworkers and the Automobile Workers have continued to grow during the past twenty years.”*

A major distinction between American and Canadian business entities is the great antipathy United States employers have exhibited toward the organizational rights of their employees. A recent survey found that 95 percent of private sector companies in the United States actively resist labor organizing efforts.” Corporations have developed sophisticated election appeals designed to convince workers that labor organizations merely exact exorbitant dues in exchange for minimal benefits and diminish the professional image of those whom they represent. More aggressive anti-union techniques transcend behavior manipulation and involve overtly unlawful tactics in violation of federal labor law. Key union supporters are regularly discharged, and express or implied threats are made regarding the loss of employment security that would result from unionization.” It has been estimated that legal and unlawful management opposition to employee organization accounts for as much as 40 percent of the declining success rate of unions in National Labor Relations Board representation elections.”

Is the decline of the American labor movement symptomatic of a terminal condition? Will the country continue its inexorable transition toward the end of the union era? As white-collar employees and technological innovations supplant blue-collar workers and industrial behaviorists humanize employment environments, some observers conclude that union representation will no longer be necessary.” Others, however, predict that labor organizations can be rejuvenated if they revolutionize their objectives and modernize their tactics.” Before examining the future viability of trade unions, it would be beneficial to acknowledge the impact unions have upon the employment conditions and rights of employees.

When most people think of the benefits provided by labor organizations, they generally consider the economic gains achieved by unionized employees. Such a view is reinforced by empirical data demonstrating that organized workers earn more than their unorganized cohorts.” Not only do represented personnel usually receive higher wages, but they also tend to be covered by more generous benefit programs. They are more likely to have health coverage and pension plans. Many have dental and eye coverage, and some even receive limited legal care. The ability of labor organizations to increase labor costs above market levels is normally attributed to the “monopoly” effect that enables unions to restrict the group of individuals who may be employed by a particular firm.

Unorganized employees benefit indirectly from the successful bargaining activities of labor organizations. Their employers frequently provide compensation and fringe benefit packages that are competitive with those enjoyed by unionized employees to dissuade them from organizing.” These employers recognize that if the benefits they pay their workers fall too far below those earned by unionized personnel, their employees may contemplate organizational activity.

The economic gains achieved directly and indirectly by labor organizations should not be overemphasized. Through the collective voice exerted by organized groups, workers are also able to advance nonmonetary interests.” For example, collective bargaining agreement provisions generally preclude discipline except for “just cause.” In the absence of such a contractual restriction, private sector employers are free in the United States to terminate or otherwise discipline employees for good cause, bad cause, or no cause at all, unless such action contravenes a specific statutory proscription.” Because private corporations are not “‘state actors’’—i.e., they do not function as governmental entities—they are not subject to the substantive and procedural limitations imposed on federal, state, and municipal employers under the United States Constitution. As a result, private sector employees enjoy no free speech or due process rights vis-a-vis their own employers.

Contractual clauses typically establish orderly layoff and recall procedures. Specific terms often require the application of objective promotional criteria. Seniority provisions normally determine shift, transfer, and vacation preferences. Other employment rights and benefits that would normally be left to employer discretion may similarly be defined in collective bargaining agreements. When unionized employees are not satisfied with the manner in which contractual terms are interpreted and applied, they may seek redress through grievance-arbitration procedures.

Business enterprises depend on the input of three fundamental groups: investors, managers, and workers. As each of these groups competes for a greater share of profits and for more control over corporate decision making, individual employees are at a distinct disadvantage. Investment capital is a highly mobile commodity. For this reason, companies seeking investment capital provide prospective stock or bond holders with detailed information regarding the proposed venture.*’ Federal and state securities statutes also protect investors by mandating the disclosure of relevant financial data to anyone thinking of providing monetary support. When investors become disenchanted with the performance of a particular corporation, they can simply sell their shares and transfer the proceeds to different ventures.

Professional managers may similarly protect their own interests. Those with relatively unique skills can negotiate long-term contracts that provide “golden parachutes” in case the business relationship is terminated prematurely. High-level executives are normally acquainted with their counterparts at other business entities, and they can use those contacts to locate other employment opportunities if they decide to leave their current firms.

Rank-and-file employees do not enjoy such privileges. They are fortunate to have one or two job opportunities at any given time. Prospective employers feel no need to give them detailed information regarding firm affairs. Once workers accept employment with a specific company, they enjoy minimal mobility. They have limited information about other job openings and the transaction costs associated with relocation may be substantial. When workers change jobs, they may lose some or all of their pension rights, and they must forfeit seniority, thus significantly jeopardizing their future employment security.

It is ironic that the individuals who possess the least mobility normally exercise only marginal control over their employment destiny. Unorganized workers are generally powerless to negotiate with employers over their wages, hours, and working conditions. They must accept the terms offered or look for alternative employment. If they are directed to submit to drug testing or to engage in particularly arduous tasks, they have no real choice but to submit or forsake employment with that particular employer. This loss of personal freedom results directly from the considerable inequality of bargaining power that exists between the individual employee and corporate managers.

The substantial decline in union strength over the past several decades has deprived most workers of meaningful collective representation. If labor organizations become wholly ineffective, many employers will undoubtedly exploit their employees by retaining an excessive portion of profits, maintaining substandard working conditions, and subjecting low-level personnel to arbitrary treatment. In the absence of a viable labor movement, federal and state legislators will be less inclined to support statutes protecting worker interests.

Although industrial democracy restricts managerial freedom, it can also enhance economic efficiency. Nonunionized employees who are dissatisfied with their working conditions can only demonstrate their displeasure through resort to the “exit voice.”’” When disenchanted people voluntarily terminate their employment, their employer must assume the costs associated with recruiting and training other workers. In contrast, the collective bargaining process provides employees with the opportunity to modify unsatisfactory conditions.** To the extent individuals are permitted to influence employment conditions and business decisions that impact on their economic futures, they are more likely to have a personal commitment to the enterprise. They are more inclined to agree with the final determinations made, and as a result to be more cooperative and productive workers. Unionization not only benefits employees and employers, but also society as a whole.

Although some labor organizations have not always acted as responsible employee representatives, most unions have worked appropriately to advance the rights of workers. If employee organizations can no longer enhance the employment conditions of employees, we will witness a return to traditional master-servant relationships. Individual employees will be unable to influence the terms of their employment, and employers will be able to impose arbitrary conditions. If the balance of power between labor and management is to be maintained at all, labor unions must be preserved. This book explores the actions required if labor organizations are to be rejuvenated.

Chapter 2 traces the historical development of labor organizations in the United States from social and professional orders to business institutions. This background provides a broad perspective on the current plight of unions and an understanding of the measures labor unions must take if they are to function as vital forces in the 21st century. Chapter 3 focuses on the actual extent of union decline and examines the demographic, industrial, technological, sociological, and international trends contributing to that deterioration. Chapter 4 discusses the need for unions to improve their public image and to develop innovative techniques to organize occupations that have traditionally been unreceptive to unionization. Chapter 5 analyzes the means by which labor organizations may increase worker empowerment and advance their employment conditions. It also examines how international union cooperation must be developed to counterbalance the activities of transnational business enterprises. Finally, chapter 6 focuses on the National Labor Relations Act. Specifically, it considers the need for congressional action to revitalize the NLRA by enhancing the organization and collective bargaining rights of employees, deterring unlawful employer conduct, and reaffirming the legislative objectives underlying the original 1935 enactment.

During the Colonial period, there were relatively few free workers.’ The great majority of laborers were either slaves or indentured servants. As trade and commerce expanded, there was an increased demand for unconstrained workers. Skilled craftsmen who established small stores preferred to hire nonindentured individuals whom they could lay off when business slackened. As the terms of indentured servants expired and numerous craftsmen immigrated to the New World from Europe, lured by the comparatively high wages paid for skilled labor and the glowing accounts of life in America, the number of unencumbered wage earners steadily increased.

In most early shops, there was no well-defined distinction between the interests of the master and the other workers. Journeymen hoped to become master craftsmen, and apprentices looked forward to the attainment of journeyman status. The product market was localized, and the master bargained directly with customers regarding product pricing. Because of the relative scarcity of competent skilled labor, masters could generally establish noncompetitive prices. As a result, wage rates tended to exceed those available in Europe. This did not, however, guarantee beneficial employment conditions for all journeymen and apprentices. They still had to be concerned with competition from slaves and indentured workers. When business declined, nonindentured workers were frequently laid off.

CRAFT GUILDS

Rudimentary labor organizations existed in the colonies as early as the seventeenth century. They were primarily guilds comprised of

The Historical Foundation of American Labor H artisans who marketed their own products. They endeavored to preserve professional standards by regulating apprenticeship requirements and exerting control over wage rates and product pricing. The few work stoppages that occurred during the colonial period did not involve strikes by workers seeking improved compensation and employment conditions from masters, but protests by master craftsmen against local government regulations that relaxed apprenticeship requirements or established price ceilings.

The first genuine labor strike occurred in 1786, when a group of Philadelphia printers “turned out” in favor of a minimum wage of $6.00 per week. Although the employers initially resisted their demand, the printers ultimately prevailed. Nonetheless, it was not until 1792 that any continuing organization of wage earners was formed. In that year, the Philadelphia shoemakers created a trade union that existed for approximately one year. Other localized craft unions were formed throughout the country. Although many functioned as fraternal social orders, they sought higher wages, shorter hours, the enforcement of strict apprenticeship regulations, and a closed shop precluding the employment of nonmembers.

Initial Judicial Opposition to Organized Labor

Early judicial decisions severely restricted the ability of workers to engage in concerted activity to further their economic interests. Judges found that collective action by journeymen constituted either restraints upon trade in violation of antitrust doctrines or criminal conspiracies against public welfare. Even sympathy strikes and peaceful consumer boycotts were considered illegal.

The first major decision to acknowledge the legitimacy of concerted worker action was Commonwealth v. Hunt.’ Chief Justice Shaw of the Supreme Judicial Court of Massachusetts refused to permit application of the traditional criminal conspiracy doctrine to peaceful group conduct seeking enhanced employment terms. The Court found that allegations that the defendants had agreed among themselves not to work for any master who employed nonunion workers were not alone sufficient to establish criminal liability. The Court further ruled that the mere fact that this association had caused a loss of work to nonunion journeymen was not illegal, so long as inappropriate means were not utilized to injure such nonunion individuals.

i2 The Historical Foundation of American Labor

Early Labor Involvement in the Political Arena

In 1834, the National Trades Union (NTU), the first national labor organization in the United States, was formed. The delegates approved a platform in favor of manual schools, reduced working hours, and the maintenance of established wage rates, but they opposed the employment of women outside the home. Most of the early craft guilds feared that the employment of female workers would undermine guild wage rates, and they generally discouraged the employment of women. Although the NTU constitution expressly excluded political action, it became apparent that many of the organization’s basic objectives could not be achieved without direct political activity. As a result, members formed the Working Men’s Party, the first political party of working people in the world. The new labor party was not received warmly by established politicians who endeavored to divert the activist laborers into conventional party channels. The party sought to maintain its own worker identity, but became defunct by 1931.

Despite judicial hostility toward worker collective action, strikes occurred repeatedly throughout the 1840s and 1850s. Some entailed spontaneous employee walkouts protesting unilateral changes in working conditions, while others were orchestrated by labor groups seeking improved employment terms. These work stoppages usually involved skilled personnel. Some achieved limited success, while others ended in failure.

EGALITARIAN ASSOCIATIONS

In 1866, seventy-seven delegates from various craft organizations met in Baltimore to establish the National Labor Union (NLU). The NLU was a loosely connected federation of national trade unions, city trades assemblies, local trade unions, and reform organizations of various kinds. The leaders of the new worker association opposed strikes, which they said were “productive of great injury to laboring classes,... have been injudicious and ill-advised, and the result of impulse rather than principle.’* They alternatively recommended more frequent reliance upon arbitration committees to resolve labor-management controversies. The NLU sought eight-hour statutes, equal pay for equal work regardless of the race or gender of those performing the work, and full employment and organizational rights for both women and blacks. Nonetheless, William Silvis, one of the NLU founders, indicated that while the NLU was obliged to advance the interests of female workers, he did not think that women belonged in the labor force. He also believed that women who were compelled to work outside the home should remain in traditional female occupations. Although many NLU leaders supported a national agenda, most members were primarily interested in local issues. Following the death of William Silvis in 1869, the organization began to decline. By 1872, it had virtually disappeared.

The Knights of Labor

The Panic of 1873 ushered in a six-year period of economic depression that significantly undermined worker organizing. Many existing craft unions experienced both membership declines and financial hardships. The railroad strikes during the summer of 1877, precipitated by wage reductions, were particularly violent. Federal troops and state militia were called out to restore order. These tumultuous work stoppages provided the public with graphic evidence of the dire consequences associated with deteriorating labor-management relationships. Americans began to recognize that they could not escape the conflicts between labor and capital that had begun to challenge the governments of various European nations.

One of the important labor organizations to survive the 1873-79 depression was the Noble Order of the Knights of Labor, established by Philadelphia tailors in 1869. The leaders of this new union realized that the lack of strength that trade unions had exhibited during the depression years was in large part attributable to the lack of real labor unity. They believed that power would come from a consolidation of all labor groups in a single organization that included both skilled and unskilled workers. They welcomed into their ranks all working people, regardless of race or gender, even members of the professions and employers.

The Knights established expansive objectives. They sought to secure for workers ‘‘a proper share of the wealth that they create; more leisure that belongs to them; more societary advantages; more of the benefits, privileges and emoluments of the world.’” The organization called for the establishment of producer and consumer cooperatives, and the creation of cultural orders. It proposed that arbitration procedures be substituted for disruptive work stoppages and advocated eight-hour laws and regulations mandating equal pay for equal work regardless of gender.

The Knights of Labor was a highly structured organization that sought to achieve an amalgam of local unions in a nationwide federation. Since the local union assemblies included both skilled and unskilled workers, they resembled hybrid combinations of craft unions and industrial unions. The sympathy strike became a particularly potent economic weapon, with the collective power of the skilled trades enhancing the clout of the unskilled personnel. The Knights also employed consumer boycotts to further their objectives.

When concerted economic action could not achieve more expansive goals, the Knights resorted to political action. They created various labor parties, which ultimately ran political candidates in thirtyfour of the nation’s thirty-five states. Some labor party candidates were elected to various state and local offices. The individuals occupying such political positions were able to exercise a degree of authority that transcended the influence possessed by conventional labor union officials.

Terence Powderly succeeded Uriah Stephens as Grand Master Workman in 1879. One of his early accomplishments was an agreement with Cardinal Gibbons that acknowledged that the Knights of Labor was a bona fide labor organization, and not a secret revolutionary society that contravened the teachings of the Catholic church. This accord precluded a church ban that would have severely undermined organizational membership.

Not only did Terence Powderly lead the Knights of Labor until 1893, but he also served three two-year terms as mayor of Scranton, Pennsylvania, from 1879 to 1884. After he stepped down as Grand Master Workman, he was appointed by President William McKinley to a post in the United States Department of Commerce. Powderly did not believe in traditional trade unions and considered the strike an ineffectual and detrimental device, but he worked diligently to enhance the rights of workers. When the Knights established funds to support strikes conducted by local affiliates, despite Powderly’s personal opposition to work stoppages, it was agreed that job actions would only be employed when labor and management differences could not be resolved through negotiation or arbitration.

A turning point for the Knights of Labor came when it negotiated employment terms with financier Jay Gould, who operated the southwestern portion of the Wabash Railroad. Gould initially refused to recognize the right of the Knights of Labor to speak for the workers. A strike commenced on August 18, 1885. By the end of the month, Gould had agreed to meet with Powderly and to authorize his executives to negotiate a collective agreement. In early 1886, however, branches of the Gould railroad refused to honor the accord. A strike on the Texas Pacific began on March 1, 1886, but the union was unable to achieve its objective. Gould refused to fulfill a commitment Powderly thought he had made to arbitrate the unresolved issues. When the Knights sought to terminate the work stoppage, the railroad refused to reinstate half the strikers, including those who had been the most active strike supporters. The union thereafter tried to regenerate the work stoppage, but was ultimately forced to acknowledge that the job action had failed.

The Knights of Labor suffered a similar defeat in the anthracite coal fields of Pennsylvania. Union leaders proposed a wage increase, but Lehigh operators refused to bargain over the worker demands. A work stoppage began in September 1887. Workers at nonstruck mines provided sympathy support for the Lehigh strikers, and other coal operators assisted the Lehigh operators by supplying them with coal they needed to satisfy customer demands. Members of the Knights of Labor working for Reading operators who were sending coal to struck Lehigh operators refused to load coal onto Lehigh barges. Railroad employees similarly refused to handle coal being sent from Reading mines to the Lehigh area. The sympathetic Reading miners and railroad workers were discharged, and the affected mine worker and railroad local unions were destroyed.