Weakening the Democratic Base- Part 2: Labor Unions

      Originally, I was a little hesitant about writing this piece because most of my research indicates that labor unions are, by and large, losing their political influence in the country.  But, there are two ways of looking at the trend away from unionization.  While it is true that union membership is declining across most sectors of the economy, their financial clout through contributions, PACs, and organizations in addition to their “off the books” provision of volunteers to register and get voters out indicates that they continue to have considerable political clout, albeit with fewer people with which to do it.

      Most importantly, Americans live in a considerably different world today than that which existed in the 1930s.  Our current Federal labor policy is rooted in laws written in that decade.  Since then, many of the protections that unions sought for workers, are now mandated through legislation or through regulation.  Avoiding the argument over the efficacy of regulations, it is clear to see that many reasons for unions in the 1930s- pay, benefits, worker safety- are now achieved not through membership in a union, but by legislative fiat.  For example, with pay, we now have minimum wage laws with many states mandating one in excess of the Federal mandate.  Worker health and pension benefits through employers came later after World War II, but the tax code created the conditions that provided for employer-provided health benefits and the tax code also allowed for the creation of 401(k) plans and the like.  With worker safety (and again, we can argue about the efficacy of some of these regulations), OSHA regulations have largely stepped in and displaced union work rules in ensuring safety in the workplace.  In short, there is less need for unions today because the conditions that allowed their formation and proliferation in the past no longer exist to the degree that they existed in the past.

      Additionally, the more the Republican Party emphasizes the negative effects of unions, the less they will be accepted.  This can be considered a grand “union education strategy.”  There are numerous studies in the blogosphere showing that belonging to a union does not significantly increase worker wages to the degree they claim.  It is true that union workers make, on average, more than non-union workers in comparable jobs.  However, the difference averages somewhere between a 0-10% increase in wages.  In truly competitive markets, unions have even less power to dictate wages and benefits.  Because of the competition, increasing wages necessarily decreases company profits thus making them less competitive and they soon either go out of business, or they shed jobs to become more economically competitive.  In fact, studies indicate unionized companies have overall profits 10-15% below their non-union counterparts and that shareholder returns are decreased by about 10%.  While the left may decry the alleged “obscene” profits of companies and executive pay, the decreased profits and the decreased shareholder returns simply translates into less investment which, in turn, decreases jobs.   It has been estimated that unions basically tax companies about a 30% decrease in capital investment and research and development.  That is the reason for the failure of the American auto makers that necessitated Obama’s intervention.  When people turned away from SUVs towards more fuel efficient vehicles due to increased gas prices, the American auto makers were caught with their pants down.  Their high union wages and benefits packages diverted tremendous capital from research and development of hybrids and the like. This stands in direct contrast to their Japanese non-union counterparts who stepped in to fill that need in the market.  While Obama and company can tout their auto bail out as a success, it less a success than a great catching up at the expense of the tax payer.

      Ironically, unions, which rely on employment, actually decrease jobs and job creation.  Studies show that in newly union organized companies actually experience job losses averaging 5-10%.  When we talk about new companies forming or smaller companies expanding- small businesses that are the drivers of job creation in this country- among non-union companies, the job growth rate averages 3% per year.  For unionized companies meeting this criteria, their job growth rate is a negative 3% per year.  Furthermore, by essentially creating labor cartels, unions and their effects on economic recovery have historical examples.  During the recessions of 1982 and in 1991, states with high union memberships experienced slower rates of recovery that lagged far behind those with a low percentage of unionized members.  And speaking of the Great Depression, it is estimated that unionization accounted for about 50% of labor and business losses in the 1930s.

     People like Donald Trump and other isolationists point to foreign countries as the source of job losses in this country.  But why?  One of the main reasons is that the cost of labor in other countries is considerably lower than that in the United States and that problem is exacerbated by union demands.  From 1977 to 2008, unionized manufacturing jobs in the US decreased by 75%.  However, overlooked in this loss of manufacturing jobs is the fact that in the same time period, non-union manufacturing jobs decreased only 6% in this country.  Clearly, unions have played a direct and substantial role in driving manufacturing jobs overseas.  Unlike manufacturing, the construction industry, until the housing collapse, saw tremendous growth in this country.  From 1977-2008, union construction jobs decreased 17% in a booming sector of the economy.  In the same time frame, non-union construction jobs increased 159%. 

      The contention that unions create or protect jobs is simply not true.  Additionally, perhaps the fastest growing union in terms of clout- SEIU- actually has adopted a policy in certain instances of not demanding higher wages for those they organize in exchange for company promises not to campaign against their organizing efforts.  Hence, in their zeal to expand their membership in order to increase revenue through dues and, thus, political clout, they basically sell their potential members up the proverbial river.  And, in fact, the three leading independent spenders for the Democratic Party and providers of volunteers for Democratic candidates were all public worker unions- SEIU, AFSCME, and the NEA.

     Furthermore, the economy on a whole is changing to one that is more knowledge-based.  In the past 50 years, the largest growing segments of the labor force were professional, technical, and managerial positions.  All three of these do not readily lend themselves to unionization and collective bargaining.  That is because collective bargaining actually decreases and discourages innovation and rewarding individual initiative.  Perhaps that is why today public worker unions account for greater than 50% of all union memberships.  That is because government is largely bureaucratic and lacking in innovation and government essentially has no competition.

     In fact, in addition to the declining number of union members in this country (28% of the workforce in 1952 versus 13% in 2008), their loyalty to the Democratic Party has waned from its zenith in the 1960s.  According to a Gallup poll (Gallup has been polling union membership and political affiliations since the 1930s), in the 1960s, 69% of union members identified with the Democratic Party versus only 58% today. Meanwhile, Democratic identification in non-union households has remained steady and declined from 51% to only 48% a generation later.  Furthermore, the majority of that change has occurred among white union members who have shown a decline from 66% in 1965 to 51% in 2008.  When cross-referenced against other factors in voter behavior such as gauges of social conservatism, these other factors play a greater role in party affiliation among union members than mere membership in a union alone.

     Several Gallup polls also illustrate the schizophrenic nature of voter beliefs and opportunities for Republicans to exploit that schizophrenia in the electorate.  In 2009, they note that 66% of respondents stated unions help their members while 51% stated that unions hurt the economy overall.  The greatest decrease in union membership support occurred among those who described themselves as politically independent.  In that same poll, 48% of respondents overall approved of unions which was a drop from 59% in the previous year.  In August, 2010 Gallup reported that union approval among Americans had sunk to a new all-time low.  In March of 2011, they reported that public worker unions, who now accounted for more than 50% of all union members, had the strongest affiliation with the Democratic Party and that it was strongest at the state rather than the local or Federal levels.  Finally, an April, 2011 poll, in relation to the events in Wisconsin showed that 48% of respondents agreed with the public workers unions versus 39% approving of the governors (not only in Wisconsin).  However, support was greatest among Democrats followed by the young then Northeasterners.  Most importantly, even though 48% agreed with the public worker unions, an even larger percentage of respondents disapproved of raising taxes.

      That is the hope for the Republican Party- to highlight the fact that as unions gain in wages and as they get sweetheart benefits packages- those things are paid for by the public through taxes.  Republicans and conservatives can cite all those studies about how unions actually decrease jobs and do not necessarily increase wages and they may get through to a certain segment of the population.  However, in the end, there are more tax payers than there are public worker union members and their sympathizers.  Emphasizing these facts is a winning proposition for Republicans.  The events in Wisconsin were less a backlash against Republican, conservative, or even Tea Party ideals than it was a culture clash between a dying and weakening constituency (and they know it) and political and fiscal reality.  It simply came to a head in Madison, Wisconsin.  The only thing that forced it was the deepening rift and polarization of the political parties.  To illustrate the hypocrisy of this alleged backlash, look no further than Boston.  In Massachusetts, the legislature also stripped public workers of certain collective bargaining rights.  Although not to the extent of the Wisconsin law, still there was limited protest and virtually no MSM coverage of this.  All the major news outlets were not camped outside the Massachusetts legislature like they were in Wisconsin.  There was also less protesting.  Well, maybe there was, but we cannot tell because there was not major coverage.  And the difference?  The Massachusetts legislature is controlled by the Democratic Party and the Governor happens to be Democratic, unlike Wisconsin.  Wisconsin was a flash in a culture war between the unions and the tax payers of that state- a battle won by Scott Walker and the Republican legislature on behalf of the Wisconsin taxpayer.  Given these trends, do we now sit back and let nature take its course?  Each battle is different and each state is different, but the principles are the same.  Do we support and seek the approval of the unions, or do we continue to stand up for the taxpayer?  The answer is obvious and the strategy is simple.