Magazine | August 12, 2019, Issue

The Next Union Era

People celebrate the passage of the minimum wage for fast-food workers during a rally in New York City in 2015. (Brendan McDermid/Reuters)
Cutting government mandates could help unions better serve workers

Dressed in crisp, deep indigo jeans, a suit jacket, and a dress shirt, David Rolf — former president of one of the most aggressive locals of the Service Employees International Union (SEIU) — looks more the part of a Silicon Valley CEO than that of a union boss. And while the 49-year-old has brought several hundred thousand people into organized labor, he has little optimism that the business model of the 20th-century union movement will survive. “While unions can be a transformative force in the lives of workers, too often labor leaders seem like they’re trying to find a time machine to make their business model relevant again, instead of changing it,” he says.

By every account, unions are in steep decline. In the 1950s, nearly 30 percent of workers had union contracts. Today, that number is 11 percent: about 35 percent of government workers and 6.5 percent of private-sector workers. And the decline seems irreversible. Eight years of the Obama administration — which staffed every relevant agency with people deeply sympathetic to unions — had next to no impact on their deterioration. Today, with both an administration and a Supreme Court unsympathetic to unions, a revival seems even less likely.

Indeed, while changes in both the nature of work and anti-union government policies abetted organized labor’s decline, Rolf is right to observe that the union business model may be an even bigger problem. Although tweaked during the 1940s and ’50s, the fundamental structures, rights, and powers of unions remain largely those set by the 1935 National Labor Relations Act (NLRA), which still specifies nearly every aspect of the way these entities operate.

The resulting system makes unions simultaneously too powerful and too weak.

On the one hand, once a collective-bargaining agreement is reached, individual workers have no choice but to be covered by whatever contract the union negotiates. Workers under union contracts cannot deal with employers on their own and, in non-right-to-work states, must either pay a portion of dues or make an approved alternative contribution. Employers operating under collective-bargaining agreements must either “partner” with a difficult-to-get-rid-of union in nearly every aspect of their business or banish almost all employee organizations from formal participation in their enterprise. 

But this doesn’t make unions all-powerful: Their executives face minute scrutiny in almost every aspect of their business, can face felony charges if they sell anything of value to employers, and, in right-to-work states, must provide workers the benefits of a union contract without collecting a penny of dues. As a practical matter, unions cannot hold equity positions in companies they organize. They also must organize on a “bargaining unit” basis and, with a few exceptions, work with employers individually rather than simultaneously negotiating with every employer in a given industry (which was common in the United States during the 1950s) or even with every big employer in a given region (common in parts of Europe and Latin America). Furthermore, while organizing rights are protected under law, it’s probably easier than it should be for employers to get rid of people trying to organize. In short, nobody has a reason to love the current state of affairs.

Even if organized-labor groups have opposed conservatives on many issues, there’s no reason anybody should consider their decline a good thing altogether. By any measure, the drop in union participation has correlated with falling real wages for less skilled workers, a continuing decline in male work-force participation, increases in wealth inequality, and a not-coincidental massive growth in the size and scope of government. The decline of unions has also run parallel to America’s loss of other “mediating bodies” — the invaluable nongovernmental voluntary associations that unite individuals in common causes and foster social capital. While the heyday of unions was hardly a utopia — nonwhites, gay people, and women faced pervasive workplace discrimination, which some unions shamefully abetted — it did represent an era of fast-improving living standards for many of the same people who have the greatest reasons to be economically frustrated today, even in an economy with full employment. Unions, at their best, have also provided valuable services, including job training, benefits administration, and a sense of group solidarity. Revised business models could provide many society-wide benefits and overcome the serious deficiencies in the current model. 

One alternative idea Rolf has written about is a still-conceptual “AARP for Workers” — a national, self-sustaining voluntary organization that advocates public policies intended to raise wages and improve life for working- and middle-class people who feel left behind in the economy. Some of the policies that Rolf likes are more conservative-friendly than one might guess: He is in favor of lower payroll taxes, stands against corporate-welfare handouts, and spouts free-market, urbanist talking points on housing policy.

To be sure, most of Rolf’s politics are decidedly progressive. But even if some policies that the proposed group would likely favor — such as much higher minimum wages — are bad public policy overall, they undoubtedly offer benefits to the people likely to join such an organization. Any group has a right to advocate for its interests. There’s simply no reason ordinary working people shouldn’t have a professional association just like those that exist for doctors, lawyers, engineers, realtors, and nearly every industrial interest under the sun.

While the kind of organization Rolf describes would require no new laws — just money and organizational talent — it probably wouldn’t be enough to offer a new future for labor by itself. Several other ideas also deserve consideration. The most obvious is that of “works councils” — joint management groups created with the cooperation and input of employers. Elected by employees for set terms, members of works councils have the power to meet and confer with employees and may deal with work rules, but they do not engage in full-on collective bargaining over wages and benefits.

Such arrangements, relatively common in the United Kingdom and nearly universal in large enterprises under Germany’s mandatory system of industrial “codetermination” — a requirement that works councils exist and workers’ representatives sit on the boards of large enterprises — are mostly illegal in the United States under section 8(a)(2) of the NLRA. While the idea of mandatory codetermination as envisioned by the likes of Senator Elizabeth Warren (D., Mass.) would be destructive to the principle of private ownership, simply allowing works councils should be an unobjectionable policy. Back in 1995, the House of Representatives passed the TEAM Act to do just this; reviving something like it should be a simple matter.

In addition, as Harvard Law School’s Benjamin Sachs has proposed, unions should be allowed to “unbundle” their services so that they can advocate political causes without bargaining collectively. This could help give workers a stronger political voice without the necessity of getting involved in every workplace issue. Unions and employers should also be free to reach contracts that involve only some aspects of work — say, benefits and work rules but not wages and job tenure — and unions should be free to sell a range of services to anybody who wants to buy them, employers included. This could both remove understandable employer objections to the current all-or-nothing nature of American unionism and provide unions themselves with other ways to advocate for their members. Unions might sell their significant benefits-administration expertise to employers or even operate as nonprofit, democratically run staffing agencies that have a mission to benefit both their employees and the companies with which they contract. 

In addition, “unbundled” unions could overcome the fundamental unfairness implicit in the current system. Ideally, under such a system, right-to-work would be a two-way street: Employees should not have to join unions they don’t want to, and unions should not be obligated to provide anything to those who do not pay dues. 

Finally, labor organizations, employers, states, and local governments should be able to do what former SEIU president Andy Stern and I have proposed: apply for waivers from federal labor rules. Such waivers, modeled on those already common in education and health care, could allow experimentation with unbundled entities as well as with works councils before they roll out nationally. For example, waivers could also allow for the expanded use of “hiring halls” — entities run by labor organizations that provides recruits for project-based work to a unionized employer — which are currently allowed only in the maritime- and construction-trades industries. Such waivers might also allow private-sector flex time in lieu of overtime or region-wide collective bargaining. Even different mandatory-benefit structures — such as an allowance for an employer to provide a “lightweight” health plan that doesn’t comply with the mandates of the Affordable Care Act, in return for a generous family-leave benefit — might be possible under a waiver. 

While labor unions can have value, their current structure in the United States serves almost nobody well. As much as anything else, organized labor needs individuals who like Rolf not only want to organize but also see the need to be innovative in the very way that labor organizations do business. A revived labor movement — one that is able to break away from government mandates devised in another era — could make unions an influential and positive political force. 

This article appears as “Free Labor” in the August 12, 2019, print edition of National Review.

Eli Lehrer is president and co-founder of the R Street Institute, a free-market think tank. He lives in Herndon, Va., with his wife, Kari, and son, Andrew.

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