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U.S. Labor Faces Challenges

Contract negotiations opened in Detroit this week between the United Auto Workers union and U.S. automakers, Ford and General Motors. Chrysler began similar negotiations last week. Many observers see the talks as a crucial test of the ability of U.S. manufacturers and labor unions to survive new economic realities as foreign competition erodes profits and eliminates thousands of jobs.

Ford, Chrysler and General Motors, which have been struggling with foreign competition and dwindling profits, are seeking cuts in labor costs that include wages, retiree medical expenses, and plant closures. United Auto Workers officials say they have already made enough concessions. In 2005, the union agreed to cuts in benefits and retirement buyouts that eliminated thousands of Ford and General Motors jobs. In another deal, labor negotiators agreed to cut wages by half to keep bankrupt auto parts supplier Delphi in business. Many analysts say this set the scene for the future of America's labor movement, whose power and ranks have shrunk steadily during the past two decades.

Unions in Decline

Mark Mix of the National Right to Work Committee, a Virginia-based non-profit organization that advocates voluntary union membership, says labor union ranks are at an all-time low.

"We're looking at about seven-and-a-half percent in the private sector. We are looking at about 40 percent in the government sector in the country. Today in America, about 12 percent of the entire workforce includes themselves in the union membership ranks. That is down significantly since the apex in 1956, which was about 35 percent of rank and file workers in the country," says Mix.

One reason for the decline is that the U.S. manufacturing sector, historically the hub of the labor movement, has been shutting down. It has lost more than 150,000 jobs to downsizing and overseas markets since 2006, according to the American Federation of Labor and Congress of Industrial Organizations, or AFL-CIO, which is the largest U.S. labor federation.

But Florida State University economist David Macpherson says a number of factors have converged to undermine the labor movement.

"One is increased competition and international trade. A second is deregulation in terms of the trucking industry and the airline industry, which tend to be heavily unionized industries,” says Macpherson. “Another factor is the change in the composition of the workforce away from traditionally unionized sectors, such as manufacturing, toward the service sector, which tends to be less unionized. Another is the movement toward the Sunbelt [i.e., the southern and southwestern parts of the U.S.,] which tends to be less unionized than the northeast, as well as resistance from employers to unions."

Critics charge that the labor movement has become outdated by virtue of its failure to adapt to a new economy that can no longer provide the benefits workers received in the past. In the process, labor unions negotiated away workers' rights, says Mark Mix of the National Right to Work Committee.

"They made demand after demand after demand. And in the American marketplace, where there was very little competition back in the 1960s and '70s, management would give in to those demands. And the elements of competition were not in place that made those decisions by corporate executives and demands by union officials basically out of touch with the competitive marketplace,” says Mix. “Now that we have competition in the American marketplace and the automotive industry, we're seeing that giving in to those demands was problematic for an industry."

Union officials contend that many businesses discourage employees seeking union representation. But they also concede that globalization and the outsourcing of unionized jobs caught them off-guard. Patricia Friend, International President of the Association of Flight Attendants, says the labor movement tried to adjust.

"We took strong positions trying to prevent those changes from happening. The reality is that most change you cannot prevent. What you need to do, we've learned I believe perhaps a bit slowly, is you have to have a seat at the table. You have to be able to shape the change and shape the globalization to the best of your ability so that it does the least amount of harm and so that the American worker has a place in the globalized economy," says Friend.

In 2005, the two largest AFL-CIO members split from the federation amid charges that the group focused more on political activism than on organizing workers. In the aftermath, the Change to Win labor movement was formed.

Labor's Future

Many analysts see the split as a turning point in U.S. labor history. And Dean Baker of the Washington-based Center for Economic and Policy Research says it could reinvigorate the labor movement.

"Change to Win certainly has very much organizing new members as a primary goal. So assuming that there is no reunification, which I don't say is impossible between Change to Win and the old AFL-CIO - - there probably will not be - - it wouldn't surprise me at all if Change to Win is a larger labor federation, say five-to-ten years out, than the AFL-CIO. So I think more likely the future of labor lies in the Change to Win direction," says Baker.

Some experts say unions need to be more flexible to adapt to today's labor marketplace. Toward that end, businesses argue that federal labor laws should limit the reach of labor unions, while labor leaders say laws should curtail management interference in their unionizing efforts. Harvard University economist Richard Freeman agrees that labor laws should be revised.

"At my place of employment, the primarily female clerical and technical workers wanted a union. It took them 13 years through the U.S. legal system before they finally got their union. The labor law is set up so that employers have a big say as to whether workers get a union or not in a particular workplace. It was made in the Great Depression in the mid-1930s. It was dealing with mass industrial workers and that's not what we have nowadays,” says Freeman. “So we do need a new labor law and we also need a reformed set of unions who are more imaginative and thoughtful. They're trying, but that calls for big change."

As talks between America's automakers and union officials continue, many analysts say the kind of change unions need to undertake calls for rethinking old bargaining methods and reinventing the nation's labor movement.