Corporate Anti-Union Strategy in America
Labor Day 2014 in the U.S. has come and gone and it should be obvious to all but those with self-imposed historical myopia that American unions and workers are now well into a fourth decade of a strategic retreat.
Retreat is not synonymous with defeat, of course. Resistance and fight-back continues to occur along several fronts—low wage workers’ attempts to unionize, immigrant workers’ protests, minimum wage fights, and scattered islands of resistance by teachers and public workers. But the private sector trade union movement, as well as the vast majority of the still unorganized working class, continues to show little signs of organized resistance in the face of a still growing overtly anti-union and anti-worker offensive by corporate America.
The corporate attack has resulted in a union membership that is now less than half what it was in 1980—when measured as a percentage of the total workforce. Roughly 22 percent were unionized back then; today only around 11.3 percent are. And only 6.7 percent remain in the private sector, formerly the bastion of union strength.
Measured in absolute terms, there are 14.5 million union members today out of a total U.S. workforce of more than 155 million. In 1980, the workforce numbered approximately 90 million and overall union membership was just under 20 million. Had the union movement been able just to hold on to its 22 percent, in 2014, it would have more than 35 million members instead of less than 15 million.
In other words, corporate strategies aimed at undermining union membership ranks have succeeded in not only wiping out more than 5 million actual union members since 1980, but have prevented the unionization of another potential 15 million. One can only imagine the role and influence union labor in America would have today with 20 million more members.
Understanding how corporate America achieved this historic destruction of union ranks is important if unions are to halt further destruction. While a failure of unions to mount an effective strategic defense is part of understanding how and why Union America has lost 20 million members, much of the rollback of union membership ranks since 1980 is attributable to a fundamental restructuring of American Capital. That corporate reorganization began in the late 1970s and enabled the successful implementation of the new strategic offensive by corporate America that followed. Conversely, the failure of unions to similarly reorganize to launch an effective counter-strategic defense is also part of what might be called the “organizational question” that is key to understanding current conditions. The relationships between organizational form and strategy cannot be underestimated. New, more effective strategies require new organizational forms. Corporate America understood this in the 1970s; union labor still hasn’t.
Historically, the corporate reorganizations and new strategies launched in the 1970s had occurred before in the earlier 20th century and several times in the 19th century. Union labor responded on each of these occasion by creating new organizational structures to enable it to confront the new attacks. This can be seen in the defensive strategies introduced by the Knights of Labor in the mid-19th century, the American Federation of Labor in the late 19th, and the formation of industrial unions in the early 20th century. But since the late 1970s, union labor in the U.S. has remained frozen in the past. Both its organizational forms and its strategic response to Capital in America have not changed from the pre-1970s.
The Outcome: Intensifying Class War
A quarter century after that corporate restructuring and corporate strategy reorientation began, gains achieved since World War II had already been significantly rolled back. As one of American Capital’s more famous figures, mega-investor and billionaire, Warren Buffet, observed then: “there’s a class war in this country and my class is clearly winning.” Since Buffet’s observation, labor’s retreat has accelerated. Buffet’s public comment merely ripped the veil from what many workers, and some of their leaders, have known for decades: that a new anti-labor corporate offensive was developed with the assistance of the capitalist State—under Reagan in the 1980s, under Clinton in the 1990s, under George W. Bush, in the 2000s, and still further under Obama.
Today, few would deny that the economic class war in America has intensified, except perhaps for the paid mouthpieces in the business press who still want workers to think that class is not relevant to social relations in America. But the facts and data are overwhelming in their confirmation of the existence of America’s four-decades-long intensifying economic class war. Even the most skilled ideologists of the system cannot hide it any longer. The evidence is pervasive—from the precipitous drop of union membership, the decline in wages and median family incomes every year for the past decade, the collapse of personal savings, the widespread destruction of pensions and healthcare benefits, the loss of millions of jobs to free trade and offshoring, the chronic failure of corporations to invest and create decent paying jobs in America, and so on.
Meanwhile, on the political front, voting rights are being rolled back in dozens of states. U.S. Constitution First Amendment rights are under constant attack from free speech to rights to assemble and protest. Corporate money continues to corrupt the political system unlike ever before, enabled by a Supreme Court that is more pro-business than ever. Billionaires and their personally financed front organizations are increasingly involved directly in the manipulation of political outcomes; more than 30,000 business lobbyists now roam the streets of Washington like Maryland cockroaches in a dirty bathroom; and rights of habeas corpus and privacy are being gutted by government spying and its corporate sponsors.
Initial Targets: Building Trades, Teamsters, & Auto Workers Unions
Corporate strategy, launched in the 1970s, aimed to prevent successful union organizing that would add new members to organized labor’s ranks and to reduce membership in unions where it already existed. The initial target was the construction, or building trades. In the early 1970s most of the employers in the construction industry were unionized. In many regions, unions had established regional collective bargaining agreements. Given the scope of those agreements, prevailing union solidarity, at the time, among the building trades unions and the power of united labor over the multiple, relatively small construction employers, meant those employers were unable to resist construction union strikes.
In 1970-71, building trades unions went on strike and achieved major, often double digit, wage and benefit gains. These building trade unions’ successes then spilled over to the teamsters union, whose members delivered supplies to building sites and won similar gains. The Teamsters’ success then spilled over to the auto industry, other transport unions, and then to other manufacturing unions. This represented a new phenomenon of what was called cross-industry pattern bargaining and strikes.
In manufacturing and trucking, bargaining agreements were also nationwide. The level of unionization in these key sectors were 50 to 80 percent. National contracts plus pattern bargaining plus high rates of unionization meant union victories in strikes and contracts that spread leapfrog-like across the economy.
Unknown to most union members today, unions in 1970-71 launched what was the largest and most successful strike-bargaining wave in postwar U.S. history. The strike wave of 1946 that followed World War II may have been larger, but there were fewer nationwide contracts and pattern bargaining was not prevalent. The 1946 strikes were largely protests against wartime inflation and the desire to catch up. But, 1970-71 was different in that it was about gains in wages and benefits. The typical contract settlement in the bargaining and strike wave of 1970-71 won more than a 20 percent increase in wages and benefits in the first year of a then-normal three-year contract term. Nothing quite like it had occurred before. And it was set in motion by the building trades unions.
Unable to resist this successful strike-bargaining wave, corporate America turned to its politicians for a temporary solution to check unions’ bargaining effectiveness and newly-attained industrial power. That solution was the Nixon wage freeze and the wage controls that followed and limited wage gains to no more than 5.5 percent a year. A number of the 20 percent plus gains were rolled back retroactively to 5.5 percent or less by the Nixon pay board in 1972-73.
Recognizing the role of the construction unions, construction industry employers began planning a counter-offensive to break the power of the building trades unions. Employers formed what was called at the time the Construction Industry Roundtable (CIR). Simultaneously, other plans by corporate America were being discussed about how to break up unions’ national bargaining and prevent future pattern bargaining across—and within—industries by unions.
The corporate strategy that emerged was to de-unionize the construction industry over time and delimit the ability of building trades workers to picket non-union operations. At the core of the employer de-unionization strategy was to create what were called “double breasted operations.”
In the suburbs, new parallel construction companies were formed that were non-union. Slowly, but steadily, work was shifted from the unionized to new non-union operations and jobs were reduced in the union operations. The worst recession of 1973-75 since the 1930s accelerated the shift to non-union operations.
The Construction Roundtable also sought and received from the courts new decisions that limited the number of workers that could picket a non-union building site. Together with prior legal restrictions on secondary boycotts and hot cargo measures—already embodied in the 1947 Taft-Hartley and 1959 Landrum-Griffin anti-labor laws limiting workers’ ability to effectively strike—the new Court-based limits on picketing further minimized the ability of the unions to prevent non-union workers to continue to access the sites of the non-union double breasted operations. By this combination of measures, by the late 1970s, the power of the building trades unions was fundamentally broken. Union membership began a long period of decline, while organizing new members in the non-union double breasted operations stalled. Region-wide contracts in the construction industry began to break up into small, fragmented bargaining agreements. The building trades unions would never again lead a national strike wave. The initiating source of cross industry pattern bargaining in 1969-71 was checked.
What remained was the need for corporations to break up nationwide bargaining agreements in manufacturing and transport—in trucking, airlines, and portside dock longshoring on the coasts, in particular and, thereafter, to break up pattern bargaining within an industry, such as existed in the auto, steel, and other segments of the manufacturing sector. Corporate America began planning to promote new legislative initiatives in Congress that would deregulate the trucking and airline industries. And for manufacturing unions—like the auto workers, steel workers, meatpacking, and other industries—the core approach was to allow U.S. industrial plants to atrophy by providing little new investment to revitalize the ageing and increasingly globally uncompetitive plants.
Feeble efforts in 1978 by unions and pro-union Democrats in Congress (today an extinct species) to reverse construction employers’ prior successes in limiting picketing and expanding double breasted operations were thwarted in Congress by the legislative defeats of the Situs Picketing and Labor Reform bills. In 1979, another element was added to the corporate/government strategic shift: the Chrysler Corporation bankruptcy and bailout.
Having refused to re-invest in its increasingly outmoded auto plants in the U.S., the Chrysler auto corporation could not compete. It ran deeper into the red and asked the U.S. government for a bailout. President Carter quickly agreed and conceded to the company’s demands that auto workers would have to contribute to the bailout by reducing labor costs. Either that, or lose tens of thousands of union jobs and perhaps all the jobs—if the company went completely bankrupt. As in the case of the building trades unions and members who witnessed their jobs flowing to non-union operations, auto workers were bullied by company and government alike to agree to the myth that wage cuts and job reductions were needed to save jobs. Thus, the Chrysler case was the pilot for concession bargaining on jobs and wages in order to retain company operations in the U.S. The outcome of the Chrysler case was not lost on other multinational U.S. corporations. It would become the template for the downsizing of U.S. union membership, as well as the break up of nationwide and pattern bargaining in the U.S. manufacturing unions.
In the trucking industry, the national over-the-road trucking agreement was broken up in the early 1980s, enabled by the Jimmy Carter-era legislation. Smaller, non-union trucking companies proliferated. The intensifying competition between trucking companies meant more pressure on business costs and a focus on cost cutting. That, in turn, meant the reduction of wages in the industry and permanent layoffs to cut labor costs, meaning fewer union members. It was the construction industry double breasted operation strategy applied to trucking and the teamsters unions. Not only would building trades unions no longer set off cross industry leapfrog pattern bargaining, but the Teamsters union would no longer be allowed to transmit its pattern of matched gains in wages and benefits from construction to the manufacturing and transport sectors. Cross-industry and internal pattern bargaining in the trucking industry was broken, as well as the idea of a nationwide trucking agreement that gave unions significant leverage and bargaining power.
The transition described in the trucking industry was smoothed by the especially cooperative Teamster union leadership at the time. The militant Jimmy Hoffa was by now long gone and the mafia boss, Tony Provenzano, was in control of the Teamsters union. The U.S. government and industry’s man within the union agreed to virtually all proposals to break up the union’s bargaining power, as new employers entered the industry due to deregulation and competed in a race to the bottom in wage cutting, hiring of non-union drivers, and union member layoffs. A similar evolution occurred in the East and Gulf Coast dockworkers unions.
The next step was to generalize the Chrysler Solution throughout manufacturing in order to weaken the manufacturing unions—especially in auto, steel, and meatpacking unions. This required getting the U.S. government to provide massive investment tax credits and, more importantly, to allow those credits to apply wherever corporate investment occurred, including offshore.
The re-directing of investment from the manufacturing intensive union states in the North would lead to the de-industrialization of the historic U.S. manufacturing belt in the Northeastern and Great Lakes region states to the runaway shop phenomenon in those regions to a corresponding collapse of union membership in manufacturing in the Northeast as companies fled to, and re-established operations in the largely non-union sunbelt states. This strategy of re-directing investment by means of new corporate tax incentives would later be wedded to free trade to redirect the investment even further, beyond U.S. borders and later to Mexico and then Asia in the 1990s.
How Corporate America Reorganized
By the early 1980s, the anti-union offensive was in full swing. Taking a cue from the construction industry successes, the largest 100 U.S. corporations, mostly multinational businesses, restructured themselves into new capitalist organizations like the Business Council and Business Roundtable. (The Construction Roundtable quickly merged with the larger Roundtable). The Business Council and Roundtable surpassed the previous corporate-business organizations, like the National Association of Manufacturers, U.S. Chamber of Commerce, National Federation of Independent Businesses, etc. in terms of political influence with Congress and the Executive branch of U.S. government. (The preceding business organizations would eventually merge and coordinate with it as well). This organizational revitalization of U.S. Capital occurred around 1978. Not coincidentally, the new ideas for tax incentives to subsidize business abandonment of the north were introduced around this time as well.
This was a new strategic thrust for corporate America. The CEOs of the largest 100 U.S. corporations had traditionally not directly engaged in business lobbying of Congress and the Executive. After the change, surveys showed that CEOs of the largest companies in the U.S. typically spent at least 50 percent of their time in political lobbying.
Concurrent with these changes, corporate America forged new social alliances. Noteworthy were the alliances with the religious right and the direct political fundraisers that also emerged in the late 1970s, as well as the proliferation of various corporate and wealthy investor-financed think tanks that arose at the time. The new corporate strategy would be tested and refined by the think tanks who developed the message handed over, in turn to the expanding ranks of business lobbyists and consultants and to new media outlets (Cable TV, radio) enabled by the deregulation of the communications industry.
What soon became known as the Reagan Revolution in taxation, industry deregulation, deficit cutting of social programs (to offset the loss of revenue due to business tax cutting), etc. were not original to Reagan. These ideas were forged by corporate America as part of its new offensive and organizational restructuring in the years leading up to Reagan’s 1980 electoral victory. Reagan merely popularized and accelerated the implementation of this general corporate strategy, as well as the anti-labor elements of that strategy. In other words, the corporate offensive against unions in America had, from the beginning, an important political-government element that was central to its success in holding back or destroying union membership ranks. It is generally thought that the attack on unions and American workers commenced with the Reagan administration, with his firing of air traffic controllers who went on strike in the early 1980s. But as described, the corporate offensive was in full swing by the time that event occurred.
Union Busters & the NLRB
This political element was expressed in administrative form with the rapid rise and expansion of union-busting law firms and their manipulation of the U.S. executive branch of government’s National Labor Relations Board (NLRB), which was responsible for holding union organizing elections and thus, in turn, union membership gains or losses.
The task of the union-busting law firm was to delay union organizing through the NLRB elections process. This reduced new union membership gains by means of various tactics designed to intimidate workers from unionizing and, where they did vote for unions, prevent unions from ever engaging in bargaining on their behalf.
At the same time, the anti-union law firms also focused on de-certifying (i.e. de-unionizing) unions where they already existed in a company, thus reducing membership as well as preventing membership gains. An entire industry arose dedicated to prevention and reduction of union organizing and, in turn, union membership. That industry is alive and well today.
The NLRB itself contributed directly to the decline in membership. Not only did the Board allow its rules and procedures to be manipulated by anti-union law firms, but the NLRB changed those same rules to enable companies to reduce their union membership ranks even without decertification elections. Unions remained, but were reduced in terms of membership. This was done by declaring that certain job classifications in companies no longer had community of interest with other union workers. Highly skilled workers in the union bargaining unit were in this way arbitrarily declared exempt by the NLRB and moved outside the union bargaining unit.
Temps, Independent Contractors & Bargaining Unit Deletion
Union ranks were reduced further by administrative decree in yet another way. Prior to the 1980s, there were hardly any temp workers in the U.S. However, their numbers rose by the millions during the 1980s. Temps were considered to have no community of interest with the rest of the union workforce and were placed outside it by the courts and NLRB, even though they may have worked side by side with non-temp union workers. The number of temp workers in the U.S. has expanded ever since. A company’s workforce may grow over time, hiring more temps, but the union membership does not. Union membership may actually decline as a result. As a company hires temps, it lays off full-time union members. It’s a variation on the double-breasted operation theme, without starting a second company, and instead by establishing a separate internal non-union workforce. One workforce (non-union and paid 60 percent of union wages on average and 20 percent of union benefits) and the other union. The former expanding, as the latter contracted.
The U.S. auto industry in the past decade is a prime example of this approach to union-busting. Government data reports only a small part of the surge in temp employment in recent decades, recording only those hired by temp employment agencies. But companies hire at least as many directly, as they do through agencies. Today there are, at minimum, six million temps and probably closer to nine million when on call and leased contract temp workers are included.
Closely related to this approach is another, whereby the company lays off union workers who then become independent contractors. The company then hires them back on an as needed basis. The NLRB considers independent contractors—like temps—as not having a community of interest with the union workers that remain in the bargaining unit. Just as temps gutted membership in the auto and other industries in the past decade, so has the independent contractors exemption gutted union membership in the teamsters union. There are more than 10 million employed as independent contractors in the U.S. today—millions who might otherwise have been in unions. By changing rules and moving skilled workers out of the union bargaining unit, by declaring millions of newly created temp workers in recent decades as ineligible to become union members, and by similarly declaring millions of independent contractors as businesses and thus not workers eligible to unionize, the NRLB has reduced union ranks since the 1980s by millions.
Free Trade, Offshoring, Corporate Tax Cuts
Another trend that reduced union membership by further millions is the development and expansion of free trade agreements. Starting in 1989 with Canada and then Mexico in 1993, free trade resulted in job loss in those highly unionized sectors of the economy, like manufacturing. Here’s how it works.
The offshoring trend gathered initial momentum during the 1980s. Reagan-era tax incentives for businesses to invest—whether within or outside the U.S.—provided a major boost to offshoring. Investment tax incentives originally required investment in the U.S. to claim the tax cut. But no longer during the Reagan era. Now multinational corporations could claim the tax cut regardless of where they invested globally. Not surprising, with the tax cut incentive in place, corporations began moving operations and union jobs offshore in the 1980s. Free trade agreements, like NAFTA, accelerated the process. Free trade meant offshored operations could produce goods abroad that could be re-exported back to the U.S. without paying an U.S. import tax called a tariff. So businesses benefited from the tax cut, from the lower wages offshore, and from the absence of a tariff when they sent the goods back to the U.S. for sale. With this occurring primarily in the highly unionized manufacturing sector, it meant millions of union jobs were lost.
Trade-related union job losses accelerated further after 2000, as the U.S. negotiated a near-free trade deal with China, in the form of giving China Preferred Nation Trading Rights (PNTR). Then in 2005, more free trade agreements were concluded with Central American and Caribbean countries, as well as a series of bilateral free trade deals with South Korea, Israel, Australia, and others.
Tax incentives for investing in plants and equipment had another major impact on union jobs starting with the Reagan tax cuts, then in 1997 with Clinton’s business tax cuts, and again with the Bush-era multi-trillion dollar business and investor tax cuts of 2001-04. Under Bush Jr., the corporate tax changes provided a massive incentive for businesses to lay off workers and replace them with new technology and equipment. This, too, hit manufacturing unions especially hard. The preceding multiple corporate strategies, with State assistance, eliminated seven million manufacturing jobs—predominantly union—since 2000 alone, and millions more before that.
Housing Bubbles, Construction Unions, Lagging Investment
After the financial crash and recession of 2007-09, further developments contributed to union job loss. First, the still relatively unionized construction sector collapsed after 2007, resulting in a loss of more than two million jobs in a few years, many of them union. Construction today remains well below its pre-recession levels, having recovered less than half of its prior peak job level, as the construction industry today has stalled once again. Manufacturing jobs have also failed to fully recover from the severe recession of 2007-09, as U.S. businesses continue to delay investing in the U.S. as they redirect that investment offshore to emerging markets, investing in financial securities markets that produce no jobs, in mergers and acquisitions of other companies that result in fewer jobs, or just hoarding the cash on hand.
What job recovery has occurred over the last five years has been predominantly contingent part time, temp, and contract labor and low paid service jobs. That is, contingent jobs that are historically off limits for unions to organize or are in companies—like fast food franchises, restaurants, retail, etc.—that are notoriously difficult to unionize, given prevailing NLRB rules and practices, corporate anti-union policies, and government-politician disregard. More than five million such jobs have been created since 2009.
Open Shop & Public Worker Offensives
The spread, post-2008, of the open shop into several new states—led and funded by right-wing corporate interests like the Koch brothers, ALEC, and others—was a direct attack on public workers’ union membership in state, city, and school districts. The open shop, erroneously referred to as the Right to Work (for less and without having to join a union), is based on the Taft-Hartley anti-union act of 1947, which authorizes states to pass legislation that makes it illegal to require workers to join a union (the union shop) after working a minimum probation period. The 1947 act also outlawed the closed shop, i.e. the union hiring hall, in which workers have to join a union first before they can go to the hall to get a job at one of the unionized companies. In an open shop no one is required to join the union, even though the union must negotiate for all workers, union and non-union alike.
After the 2007-09 recession, the open shop movement—financed by wealthy businesses and organizations—spread into what were once states in the great lakes region that previously had no such legislation. Once implemented, a certain number of workers who were still represented by unions, nonetheless dropped out of the union in order to avoid paying union dues (even though they continued to benefit from the union contract).
Last, but not least, the deep recession of 2007-09 resulted in record budget deficits in many states, cities, and school districts throughout the country. A wave of conservative governors entering office in 2010 set in motion direct attacks on public workers. Those attacks resulted in laying off unionized public workers to pay for the deficits, even though their wages and benefits had little to do with causing the deficits. That also meant union membership loss. In addition to direct union job and membership loss by means of layoffs, state-wide laws were often changed to eliminate the right to a union shop for public workers as well—even in those states where there were still no general open shop laws in effect. These various forms of attack on public unions, once among the highest in membership percentage, began to drop for the first time after 2010.
From the foregoing, it is clear that the corporate attack on union membership ranks has been broadly implemented, has been ongoing for decades, and continues to evolve into new forms that are even broader and more aggressive. Corporate strategies with regard to tax cuts, free trade expansion, government subsidized offshore investing, runaway shops, the introduction of double breasted operations, restructuring of millions of full- time permanent jobs to various kinds of contingent work, industry deregulation, replacing jobs with new technology-equipment, NLRB rule changes, proliferating anti-labor union busting law firms, making public workers pay for state-local government deficits with their jobs, and the revitalized business-funded and led open shop movement in the last decade—all played significant contributing roles in the decline of union membership ranks. It is not surprising therefore that union membership, which numbered approximately 22 percent and 20 million of a total U.S. labor force of 90 million plus in 1980, has fallen today to 14.5 million and 11.3 percent.
Union strategies for organizing new membership and for simultaneously retaining existing members, have failed in almost every case since the 1980s to check, let alone reverse, the corporate attacks on union membership ranks, which have been incessant since the late 1970s and show no sign of letting up. Should it be allowed to continue for another decade, there may be little left that can be called union labor in America.
Union labor needs to fundamentally revamp its strategic response to corporate America’s continuing attack. Union America needs to take a hard look at its strategic failures of the past four decades—i.e., how it organizes, how to better defend against open shop and attacks on public workers, how to resurrect new more effective ways to collectively bargain, and, not least, union labor must fundamentally review and reconsider its dramatically failed strategy of increasing dependence on the Democratic Party.
The strategy successes of corporate America are rooted in a fundamental organizational restructuring by U.S. corporations that occurred in the late 1970s. This suggests that, if America’s unions are to once again develop new strategies for organizing, bargaining, and political action that work—as unions have done on several occasions successfully in the past—then the introduction of new union strategies capable of checking and reversing corporate successes will also require some form of union restructuring and new organization, beginning at the local union level. What such union restructuring and new organization form might look like is the subject of another essay to come.
Jack Rasmus is the author of Epic Recession: Prelude to Global Depression and Obama’s Economy: Recovery for the Few. He is also the host of the weekly radio show, “Alternative Visions,” on the Progressive Radio Network. His blog: jackrasmus.com.