What’s the Role of Unions in the 21st Century?
Unions have historically formed to ensure fair wages, benefits and better working conditions for their members. They negotiate with businesses and governments on behalf of employees, who either work a particular type of job or in a particular industry. They’re a powerful force in California politics, pushing for a statewide $15 minimum wage, increased paid sick time and greater workplace safety in the COVID era.
But membership, particularly in the private sector that makes up 84% of the labor force, is at historic lows.
Today, unions represent just 16% of California’s more than 15 million workers. At the same time, Californians continue to experience the greatest economic inequality in generations — made worse as the COVID recession dealt the biggest blow to lower- and middle-wage workers.
The Newsom administration says that unions must be part of the solution for reducing economic inequality. But do unions reduce the wage gap? Or do they raise costs on businesses? And why have unions succeeded in organizing the public sector but struggled to gain traction in the private sector?
What is the role of unions in a 21st century economy? And will workers embrace them?
Membership Has Been Declining for Decades
The birthplace of many national labor movements, California hit its unionization peak in the 1950s, with more than 40% of the workforce unionized. The state has been a trailblazer, carving new paths for collective bargaining. Notably, labor organizing led by legendary activist Cesar Chavez brought wins such as the 1975 California Agricultural Labor Relations Act, establishing the right of farmworkers to form and join unions, a first in the nation.
Since then, California has consistently organized more workers than the nation, particularly in education and health care. In part, that’s because California hasn’t followed a wave of conservative states in passing so-called right-to-work laws, meaning employees cannot be required to join a union in a unionized workplace. But California’s membership rates trail states like Hawaii, where 23.7% of workers are unionized, and New York, at 22%.
Like union membership across the country, the reach of California’s unions has been declining, reaching a historical low of 14.7% in 2018. The reasons are many and controversial.
Experts agree that there’s been slower growth in industries with traditionally strong unions, such as manufacturing. Labor organizers often point to fierce corporate opposition against workers who try to organize, and a lack of federal penalties for intimidation or retaliation. Corporations point to declining relevance for workers who are suspicious of alleged corruption or greed within unions. Plus, unions increasingly prioritize spending on lobbying over recruitment, said William Gould IV, a Stanford Law professor who studies labor and discrimination law. “Unions today are spending roughly one-third to one-fifth of what they expended during the ‘30s, the ‘40s or the ‘50s when it comes to union organizing.”
Unions tout an uptick in membership over the last few years — in 2020, 16.2% of California’s workers were in a union — but that’s far from a recovery.
How Are Unions Adapting to Changing Workplaces?
As technology companies have created entire new sectors, like app-based gig work and online retail, new labor fights have emerged as well.
In 2019, unions sought to codify a California Supreme Court decision known as the Dynamex case, which set a high bar for when companies can categorize workers as freelancers. Assemblymember Lorena Gonzalezintroduced Assembly Bill 5, which would require an estimated 2 million workers, from gig workers to truck drivers, to be reclassified as employees — rather than independent contractors — and thus entitled to full employee benefits and workplace protections.
Rideshare companies Uber and Lyft sought a compromise, holding backchannel negotiations with the Teamsters and Service Employees International Union. In an open letter, Uber Chief Executive Dara Khosrowshahi and Lyft co-founders Logan Green and John Zimmer offered to form a new association to advocate for the drivers’ interests, among other incentives. Democrats and the California Labor Federation, the state’s association of unions, held firm.
That August, Gov. Gavin Newsom signed an executive order tasking a panel of labor and business representatives to draw up a new social compact for workers in a 21st century economy. Around the same time, Newsom signed AB 5 with a message making clear that he wanted to see more “pathways for more worker to form a union, collectively bargain to earn more, and to have a stronger voice at work — all while preserving flexibility and innovation.”
Uber, Lyft and other gig companies responded with Proposition 22, a ballot measure that exempted many gig companies from AB 5. They spent a record-setting $206 million while labor groups put $20 million into the fight. Prop. 22 passed with 59% of the vote.
Since then, a California judge has ruled that Prop. 22 was unenforceable and unconstitutional. Uber and others announced plans to appeal. A federal appeals court ruled that drivers for food-delivery companies such as Grubhub can seek penalties for classifying workers as independent contractors before the passage of Prop. 22. Newsom’s former chief of staff Anne O’Leary suggests the fighting won’t stop until both sides compromise.
The latest front is Amazon warehouses. The Teamsters union announced it would mount a campaign to unionize Amazon workers across the country after a failed effort to unionize an Amazon warehouse in Alabama. Workers there could get a second vote.
Labor advocates are already targeting Amazon, which employs more than 153,000 workers. Gonzalez’s AB 701 would make California the first state to require warehouses to disclose any quotas or work speed standards, as well as consequences for workers who fail to meet them. The governor signed the bill.
Do Unions Make Wages More Equal?
There are many factors that contribute to today’s wage inequality, including automation, globalization and the shift from a manufacturing to a service and technology economy, which has spawned high-paid, high-skilled tech jobs while eroding middle-class jobs.
Some researchers point to one additional factor: the decline of unions. A 2018 study from Princeton University found that the erosion of America’s labor unions contributed to at least 10% of the widening gap between rich and poor. At labor’s peak in the 1950s, wealth inequality was at its lowest point in the previous century. But union membership and bargaining power declined over the next 70 years. A 2011 study suggested the disappearance of unions widened the economic divide between low-wage and high-wage earners by 33% for men and 20% for women.
Would increasing the share of union participation in the private workforce shrink today’s wealth gap? The Princeton study theorizes that it would by lifting those at the bottom up: “When unions expand, whether at the national level or the state level, they tend to draw in unskilled workers and raise their relative wages, with significant impacts on inequality.”
Businesses, however, worry that greater union power will impede profits and growth, restricting job opportunities for workers. Research does support that concern, with one study finding unionization slowed job growth in California companies by 4%.
In March 2020, California’s Future of Work Commission sided with the former theory, proposing unionization to combat wealth inequality. It found unionization is a more effective way to reduce poverty than even earning a college degree. “While the probability of low-wage employment is reduced by 33% if a worker has a college degree, it is reduced by 39% if a worker is a member of a union,” commissioners wrote.
Do Unions Raise Costs?
In short, yes. Workers covered by a union contract earn higher wages than nonunion workers, which translates into a higher per-employee cost for business owners.
Unionized workers in California earn on average 12.9% more than similar non-union workers, according to research from UC Berkeley Labor Center. They are also more likely to receive employer-sponsored health benefits and a retirement plan.
Research on the other ways unions may affect businesses is more mixed. An analysis of more than 300 studies of businesses around the world found, for example, that unionization appears to be connected with higher productivity in the education and construction sectors in the United States, but makes no difference in manufacturing.
When it comes to profits, it appears unionization has a negative effect. A meta analysis of unions’ impact on businesses’ profitability found a small correlation. Another study looked at the market value of publicly traded companies before and after they were unionized. It found that a union election victory led to a 10% decrease in the company’s market value.
But, unions aren’t all bad news for businesses’ bottom lines. Whenever a worker leaves a company and needs to be replaced, it’s costly and disruptive for the company, and some research shows that unionized businesses have lower staff turnover. Further, research shows that companies that unionize are no more likely to go out of business than comparable companies that are not unionized.
There are other cost concerns as well. Affordable housing developers have pointed to California’s requirement to use a “skilled and trained workforce” as a mandate to use union laborers, driving up housing construction costs.
What Was the Pandemic’s Impact on Union Membership?
Preliminary data suggests that unionized workers fared better during the pandemic in terms of job security.
According to an analysis of data from the U.S. Bureau of Labor Statistics conducted by the Washington-based labor think tank Economic Policy Institute, union workers suffered fewer job losses, particularly in the leisure and hospitality industry, as well as retail, health care and social assistance jobs.
At the same time, the state’s unionization rate rose, not because there were more union jobs, but because there were fewer jobs overall. In California, the membership rate rose to 16.2% in 2020 from 15.1% in 2019 but that was because the workforce shrank by 1.4 million workers — and a bulk of those jobs lost were non-union.
The pandemic disproportionately impacted the restaurant, leisure and hospitality industries, which generally have lower union participation.
California’s reopening has since triggered a labor shortage, prompting employers to raise wages. Saru Jayaraman, president of One Fair Wage, which advocates for higher service industry wages, said she’s heard of restaurant workers earning $25 an hour in Los Angeles, far above the state’s minimum wage.
Jayaraman said there’s unprecedented interest among restaurant workers for better work conditions and wages — with or without a union.
Do Union Members Assert Their Rights More?
Unions have helped secure hazard pay, health and safety protections, and support for laid-off workers in the pandemic.
Unionized workers are more likely to assert their right to a safe workplace, such as taking actions such as filing OSHA complaints, according to a study published in September 2020. An analysis of OSHA complaints showed that some high-risk industries with historically low unionization rates, such as agriculture, had relatively few complaints during the pandemic, from March 17, 2020, to May 21, 2021.
In California, unions have played an active role in the reopening process. UNITE HERE Local 11 helped push through a right-to-return measure that required hotels to offer jobs back to workers laid off during the pandemic. The law was aimed at helping an estimated 700,000 housekeepers, cooks, waiters and bartenders.
Labor has also been vocal around employer-mandated vaccine requirements. The California Teachers Association, for example, is supportive of the vaccine but initially didn’t endorse a vaccine mandate on public school teachers. Meanwhile, the union representing prison guards vowed to fight a state order requiring all employees working at health care facilities to be vaccinated.
Which Workers Are in a Union?
Roughly 16%, around 2.4 million, of California workers are union members. An additional 200,000 workers are represented by unions, despite not being official union members. That means 13 million California workers are not in unions.
By and large, most Californians work in the private sector and an overwhelming majority of them don’t belong to unions. That’s true across agriculture, retail, financial and business sectors. In fact, low-wage and unskilled jobs, such as in retail and restaurants, have some of the lowest industry unionization rates.
United Farm Workers, a legacy of Chavez, has a mere 6,626 members in California. In June, the U.S. Supreme Court ruled against organizing efforts by invalidating a California rule that allowed union organizers to meet with farmworkers at their place of work. The union pushed a bill that would allow farmworkers to vote at home but the governor vetoed it, citing inconsistencies and procedural flaws.
According to the U.S. Census Bureau, here’s a look at the union numbers for California workers.
Meanwhile, jobs in education and healthcare have some of the highest unionization rates, both in the private and public sectors, representing more than 40% of all union jobs. Public administration jobs are the second most unionized within the public sector.
The largest union in the state is the Service Employees International Union, with 17 local branches representing more than 700,000 private and public sector employees in healthcare, education, and government, SEIU Local 1000, is the largest public sector union in the state, representing 96,000 state workers.
How Do Unions Form?
Private-sector unions typically form through an organizing committee followed by a campaign to recruit supporters. If organizers hit a 30% threshold of employees willing to enter a union, they submit a petition to the National Labor Relations Board, which covers most private-sector employees.
The NLRB then investigates and certain procedures are followed by the employer and the union aiming to become the bargaining representative. At that point, a vote can take place and the election is decided by a majority of valid votes cast.
Labor advocates say many businesses will try to dissuade workers from supporting unionization. And in Congress, Democrats have been pushing to protect and expand worker organizing drives through the Protecting the Right to Organize Act, or PRO Act.
Not every worker is protected this way. Public-sector employees, agricultural and domestic workers, independent contractors, supervisors and some other employees are excluded from the National Labor Relations Act.
In California, public-sector employees are covered by the state’s Public Employment Relations Board. The quasi-judicial administrative agency administers collective bargaining rules for California schools and state and local public agencies, as well as courts and transit agencies. Public-sector unions have been well established since the 1970s. For instance, 80% of the state workforce is unionized. The rest are not because they’re managers, supervisors or ineligible.
Public-sector workers generally adhere to the same two-step unionization process as the private sector; however, some public-sector workers have an option for a streamlined process. For example, if a union can get more than 50% support from teachers, then the school district has to recognize that union without having an election.
Why Does the Public Sector Have More Unions?
Public-sector unions aren’t like other unions, not just in their membership, but in how they get things done.
A typical union negotiation in the private sector involves bargainers using measures including walkouts and the threat of a strike to persuade a non-governmental entity to commit to the requests from the union membership.
That’s not how negotiations work for public unions, where the process is more like lobbying. Right-leaning policy groups have pointed to core differences between public unions and their private counterparts: Unlike a private corporation, local, state and federal negotiators don’t have the same motivation to control costs in negotiations with public unions.
Public unions “pick their own bosses,” meaning they play an outsized role in organizing, spending and voting, especially in low-level municipal and school board elections.
Unions are also top contributors in state legislative races. For example, the California Teachers Association, the California Federation of Teachers and the California Faculty Association together spent more than $2 million on a variety of 2020 races. The union that represents prison guards in California dropped $4 million, the bulk of which went to just two races.
Here’s a breakdown of the top 15 legislative candidates who have benefited from the most independent spending.
Public unions can have a major impact on policy in a way that private unions can’t. Take the case study of the California Correctional Peace Officers Association, which for decades successfully helped the push for more prisons– and more prison jobs. The number of prisons grew from 12 in 1980 to nearly three dozen by 2000. Along with that lobbying came the labor-backed push for a “three-strikes” law, which passed in 1994.
How Do Unions Spend Their Resources?
Unions bring in money via members’ dues — a small percentage of union worker’s salaries. Unions spend that money in a variety of ways: recruiting new members; providing services, like legal defense, to their existing members; lobbying policy makers; contributing to political campaigns; and more.
Comprehensive numbers are hard to come by, but the California Policy Center, a conservative think tank, estimates that California public sector unions take in $921 million annually.
With the recent death of national AFL-CIO President Richard Trumka, a debate has resurfaced about how unions should best spend their funds. Trumka focused more on forging connections with Democratic leaders and lobbying for new legislation, and less on recruiting new workers to the movement. A leaked internal budget shows that during Trumka’s tenure the federation’s spending on organizing shrunk from 30% of its budget to 10%.
The California Federation of Teachers serves as another example, because its financial documents are publicly available. The union had about $27 million in net assets at the end of 2020. That year, the union”s political committees spent nearly $4 million on candidates, propositions and ballot measures while its strategic organizing committee spent just $85,000 on communications.
But unions are heavyweight contributors in California politics. They were among the top contributors against the effort to recall Gov. Gavin Newsom, particularly health care unions.
How does the public view unions?
Public opinion of labor unions has shifted with America’s economic fortunes. As Americans reeled from the 2007-09 Great Recession, public trust of economic institutions including business, government and labor unions took a plunge. Union approval dropped below 50% for the first time since the 1940s.
By 2020, however, unions crawled back to 65% public approval, though 10 percentage points below peak public support for unions in the 1950s, according to Gallup.
In a 2016 Gallup poll, half of respondents said that organized labor mostly helps the economy, while 41% said it mostly hurts. And in 2018, only 39% of Americans said they would like to see organized labor’s influence grow, while more than half said they’d prefer union influence to remain at the same level or diminish.
This is, in part, due to a changing perception of unions as good for the unionized worker but bad for everyone else. According to a 2018 survey and analysis published by Penn State, organized labor is still largely perceived as “pale, male, and stale” and a drag on the economy.
Californians support bargaining power for workers, with nearly 8 in 10 agreeing that it is important for workers to organize so that employers do not take advantage of them, according to a 2020 PPIC poll. But 7 in 10 say they’re not in a workplace that offers membership in or affiliation with a union, occupation association, worker center, or other group that represents workers.
That broad endorsement for unions, however, didn’t materialize in the Prop. 22 fight: 59% of voters sided with gig companies in keeping workers as freelancers rather than classify them as employees, which would have allowed workers to unionize. Party affiliation was a key indicator.
Today, unions have more traction among younger, minority and lower-income Americans.
The proposed PRO Act has 59% support of Americans, according to a Vox and Data for Progress Poll.
About the Author