What is the Role of Unions in Generating Economic Growth and the the Creation of Good Paying Jobs

This past week two separate states – New Hampshire and South Carolina – took two separate directions on the issue of workers’ rights and unions.

The New Hampshire legislature voted against a right-to-work bill that would have prevented public and private sector unions from charging fees to nonmembers for the cost of collective bargaining. In South Carolina, a right-to-work state with the lowest union participation rate in the United States, nearly 74 percent of the Boeing Company’s 3,000 hourly staff who assemble 787 Dreamliner jets and other parts at the company’s plants around Charleston, voted to not recognize the International Association of Machinists.

The implications of the Boeing vote far outweigh the one in New Hampshire. Companies like Boeing have historically been largely organized – 40 percent of Boeing’s Washington State workforce of 70,000 is unionized; and last week’s vote essentially gave them a green light to build on their decade long strategy to develop a non unionized workforce, outside of Washington State, to manufacture their future aircraft models, such as its best-selling 737 and the so-called New Mid-Range Aircraft.

This is a growing trend, highlighted by recent U.S. Department of Labor data, that shows that the number of union members employed in manufacturing fell more than 50 percent from 2000 through last year, even though manufacturers added 236,000 jobs in 2016. A 2016 City Journal article (https://goo.gl/hReyht) shows where the jobs are going. States that began 2008 with right-to-work laws generated 60 percent of the nation’s new private-sector employment above the pre-recession employment peak, even though they are home to only 41 percent of America’s population. Some of these states with laws less friendly to unions, ironically, have been better for union jobs. Thirteen of the 22 states that were right-to-work in 2008 have more private-union jobs today. Though these state’s union workforce is a much smaller percentage of the overall workforce.

A December 2016 Washington Post article (https://goo.gl/124k6g) also showed that across the Northeast and in urban centers like Los Angeles and Dallas, only one county in seven has seen factory jobs increase since 2011. Their research also shows that counties in newer right-to-work states, such as Indiana, Kentucky, South Carolina, Georgia and Michigan have seen the most growth in manufacturing since 2008.The most coveted jobs in this category are linked to new manufacturing jobs in sectors where products are complicated, often large and include new content that requires continuing research and development. They also pay people a good wage. Think transportation, especially the building of cars, trucks and aircraft.

The Big Picture

Overall, the Bureau of Labor Statistics recently stated that the total share of U.S. workers who belong to a union fell to 10.7 percent, down from 11.1 percent in 2015, and could go lower in the next few years. This is from a high of more then 20 percent in the early 1980s. As America lost about 8.7 million private-sector jobs by the nadir of the economic downturn that began in late 2007 and continued until mid-2009, private-sector union membership began dropping in late 2007, too, but it kept on falling for another two years after the recession ended.

By the time membership started rising again, in 2012, private unions had shed 15 percent of their membership, or 1.2 million people. Since then, though the nation has regained all the jobs lost in the recession and added 5 million more, private labor unions remain 700,000 members short of their 2008 enrollment. (unionstats.com)

As tough as the post-2008 period has been for private unions, their public-sector counterparts have had it even worse. (The public sector employs about half the 14.6 million U.S. union members and public employee unions employ represent nearly 36 percent of government workers.) Since the recession state and local budgets have remained under intense pressure, as tax revenues have grown only haltingly and government costs – especially employee costs – have risen fast, producing a near-continuous squeeze on finances. In response, state and local governments have slashed about 700,000 jobs. Unionized government workers bore the brunt of cuts, with membership down about 660,000 workers, or 8 percent, since 2008.

Looking ahead, things could get worse. The U.S. Supreme Court punted Friedrichs v. California Teachers Association last year and a appointment of Neil Gorsuch to the Court may have support a different outcome when several similar suits, pending in lower courts, advance with the intention of eliminating a nearly 40-year-old Supreme Court precedent that allows unions to impose fee requirements on non-members, making it harder for unions representing teachers, police and firefighters, and other government workers to maintain their power by affecting their pocketbooks.

In Defense of Labor

Private sector unions have historically played a large role in America’s success. The Labor of Bureau Statistics recently highlighted that union jobs pay about 27 percent more in weekly wages than their non-union counterparts and federal data also show union workers with families contribute an average of 15 percent less for health insurance costs than non-union workers.

Additionally, 90 percent of union members work full-time during a time in which 6 million Americans are working part-time but want to work full-time. This is the highest level in 30 years and a consistent thorn in the side of Federal Reserve Chair Janet Yellen’s work to stimulate economic growth. Some experts believe this is a “new normal” for America – a permanently high number of part-timers.

Research by Lawrence Mishel and Matthew Walters highlights how unions have a substantial impact on the compensation and work lives of both unionized and non- unionized workers. They concluded that unions raise wages of unionized workers by roughly 20 percent and raise compensation, including both wages and benefits, by about 28 percent. And unions reduce wage inequality because they raise wages more for low- and middle-wage workers than for higher-wage workers, more for blue-collar than for white-collar workers, and more for workers who do not have a college degree. And lastly, unionized workers receive more generous health benefits than non unionized workers.

Unions also play a pivotal role both in securing legislated labor protections and rights such as safety and health, overtime, and family/medical leave and in enforcing those rights on the job. Because unionized workers are more informed, they are more likely to benefit from social insurance programs such as unemployment insurance and workers compensation. Unions are thus an intermediary institution that provides a necessary complement to legislated benefits and protections. Additionally, unions lead any and all efforts to fight for workers’ lost wages and mitigate the impact the informal economy has on the region’s quality of life. (In 2015 the Milken Institute concluded that approximately 14 percent of L.A.’s economy is informal.)

California – Union Strong

A recent report from the Bureau of Labor Statistics shows union influence in the entire CA workplace grew slightly last year. Union membership grew along with the state’s job market, up 65,000, or 2.6 percent, in a year, while nationally, membership is down 237,000 or 1.6 percent. This is a silver lining – since 2007 unions have lost more than 1.3 million private sector members, of which 181,305 were in CA. Overall, even though CA leads the nation with 2.55 million union members statewide (New York is second with 1.9 million), CA’s union membership is only equal to 15.9 percent (16.5 percent in L.A. and ) of the state’s workforce (1989 was its peak at 18.9 percent), compared to New York’s 23.6 percent.  The majority (53 percent) of public sector workers in California are unionized. LA’s rate is comparable.

In the L.A. region the best known representative of labor is the Los Angeles County Federation of Labor, which helps lead three hundred and forty-five affiliates representing more than 800,000 members. The largest of its union workers groups is the 75,000 home care and nursing home workers, then 45,000 nursing workers who are L.A. County workers represented by the Service Employees International Union, then 30,000 teachers, along with 28,000 members working in the film and television industry.

But, as Harold Meyerson, a labor expert, opined in a 2014 L.A. Times Op-Ed (Labor’s new reality — it’s easier to raise wages for 100,000 than to unionize 4,000), “the American labor movement is morphing into something new. Its most prominent organizing campaigns of recent years — of fast-food workers, domestics, taxi drivers and Wal-Mart employees — have prompted states and cities to raise their minimum wage and create more worker-friendly regulations. But what these campaigns haven’t done is create more than a small number of new dues-paying union members. Nor, for the foreseeable future, do unions anticipate that they will….they also have recently begun investing major resources in organizing drives more likely to yield new laws than new members. Some of these campaigns seek to organize workers who, rightly or wrongly, aren’t even designated as employees or lack a common employer, such as domestic workers and cab drivers.” Organized labor’s successful push for minimum wage increase will most likely be a case study on labor’s rise or decline a decade from now.

A bright spot in L.A.’s labor market is LA Metro’s Measure M, which will invest $120 billion in rail, buses and roads in the region. This will help boost CA’s construction sector, which lost 40 percent of its jobs during the recession. It is now expected to be the fastest-growing sector this year, with 8.1 percent job growth, according to a recent report from the Los Angeles County Economic Development Corporation. Specifically, the new Crenshaw/LAX Transit Corridor and the Regional Connector to a pedestrian bridge in Universal City, at least twelve Metro construction projects are underway and six more are coming up. And many of those projects should employ new workers.

In 2012 L.A. Metro’s Board of Directors approved a Project Labor Agreement with the Los Angeles/Orange County Building and Construction Trades setting a target for 20 percent of the jobs on projects costing going to apprentices. (It only applies to construction projects valued at $2.5 million or higher.)

This is creating new opportunities for people who have not been in the construction career arena before, developing a pipeline of new talent to fill the jobs left but a expected wave of retirees and most importantly placing Angelenos in careers and not just jobs. Metro and the trade unions’ agreement also calls for hiring 40 percent of workers from economically disadvantaged areas and 10% of workers hired from the ranks of long-term unemployed, chronically homeless and returning veterans from recent wars.


The Great Recession and the slow moving recovery have reshaped the map of labor in the United States. Companies, like Boeing and Toyota, are taking advantage of this shift by transitioning the development of their workforces into states with a lower cost of living and pools of younger workers who require lower pay and less benefits. (i.e. – Seattle’s cost of living is 30 percent higher than South Carolina.)

This is good news for right-to-work states that need more blue-collar work opportunities with good paying wages. CA on the other hand needs to look beyond the growth of service-sector jobs, primarily in trade, transport and business services that will never pay workers enough to get ahead and work with policymakers at the local, state and federal levels to grow more private sector middle-class jobs.

The first question is – should policymakers double down on the importance of unions and other structures that will help workers earn more – this includes advocating for higher wages, better legal protections for part-time workers, and more robust retirement and health benefits. Or go the federal route by advocating for anti-trust policies that could address some of the growing monopolies that have led to industry consolidation and job loss across the U.S. Or focus on workforce development programs, trade policy, regulatory burdens and taxes at the local, state and federal levels that is eased would stimulate more middle-class job opportunities and skilled workers. I believe the answer is all of the above.