The AFL-CIO's Disintegration and Its Possible Implications
disintegrated on Monday July 25, 2005-somewhat ironically, the 50th
anniversary of its integration. Four member unions representing
roughly one-quarter of AFL-CIO membership announced their departure
from the federation. They are led by Teamsters president James
Hoffa and Service Employees International Union (SEIU) head Andrew
Stern, both of whom disagree with the strategies of AFL-CIO
President John Sweeney. Many observers see this is the beginning of
the end, but it may instead be an essential phase for the rebirth
of American labor. Here's how these events should be
membership has been in sharp decline for decades.
approximately 1 in 12 private sector workers is a union member,
compared to 1 in 5 back in 1983.
have become increasingly political and partisan. Hoffa
characterized the status quo strategy as "throwing money at politicians." He went on to
suggest that the breakaway labor movement would be, "more
bipartisan.... We're not going to be afraid to back a
At the heart of the current split was whether
the AFL-CIO should focus on growing its membership via recruiting
(as Stern and Hoffa demanded) or continue as a political
organization under Sweeney's leadership.
and productivity are rising. Economists agree that higher wages
are caused by higher worker productivity, which is the increasing
output per hour of products with real value to consumers. From the
microeconomic point of view, pay of any kind is ultimately linked
to the worker's marginal product, and the macro data bear this out.
For example, compensation per hour grew by an average of 2.2
percent per year from 1950 to 1980, while output per hour grew by
an average of 2.4 percent. From 1981 to 2000, both compensation and
productivity continued to rise, at rates of 1.1 and 1.8 percent per
year, respectively. Since 2000, productivity growth has surprised
forecasters with robust rates often exceeding 4 percent- notably,
while union power has continued to fade. The lesson is that
national strategies aiming to enhance paychecks involve
skill-building, education reform, and pro-growth economic policy
and have very little to gain from the old approach of negotiating
over a fixed pie of company income.
percent of non-unionized American workers are interested in
their workplaces, according to new survey by Zogby,
and only 16 percent would definitely vote to unionize.
This is strong evidence
that unions are unrepresentative of the interests of most American
workers, who like their jobs. The paradigm of conventional union
organizers-the 1950s-style lifetime employer-simply isn't
meaningful in today's workplace negotiations. Indeed, the
simplistic framework of management-versus-labor does not represent
the conventional wisdom that entrepreneurs are essential and that
capital income and labor income are closely related. Thanks for
this change go partly to the unions that fought in the past for
things like profit-sharing and stock options, which define the
workplace reality for many Americans today.
movement is identified with huge companies under duress. The
demise of companies like General Motors, with its exorbitant health
care costs, and United Airlines, with its bankrupt pension plans,
does not reflect well on the unions themselves. Yes, the unions
negotiated aggressively for workers at those companies years ago,
but the overly generous health care and pension promises they "won"
were not victories in hindsight. They made the companies less
competitive, and in the end, the promises could not be met. If
"unionized" continues to equate with "uncompetitive," unions will
to have lost touch with their main interest. The recent fight
against Social Security reform is a case in point. Organized labor
essentially ruled out all solvency solutions for the troubled
program, save one: higher taxes on labor through the payroll tax.
What kind of special interest advocates higher taxes on its chief
interest? AFL-CIO hostility to immigration, as well as its
incessant demand for a higher minimum wage, are also contrary to
the interests of many low-skill workers and their unions.
disintegration is not the result of declining union membership and
may actually be the only alternative to further decline. As a
metaphor, one need look no further than the economics of
monopolies. Monopolies tend to produce lower levels of output than
competitive industries. A diverse constellation of labor unions has
the advantage of representing new and neglected perspectives and
may achieve better results for members. Certainly, the vast
majority of American workers who are not union members can imagine
ways to improve their workplace environments, but organized labor
does not have the flexibility to represent these diverse interests
in its present form.
disintegration of the AFL-CIO, organized labor may surprise
everyone by advocating for policies dear to the majority of
American workers, such as flex-time, pension and benefit reforms,
and retirement solvency, and thus growing anew. Meanwhile, the
eternal fight to protect against abusive employers must and will
continue, and it would be incorrect to see the break-up of the
AFL-CIO as a weakening of that principle. Finally, Congress is
likely to welcome young voices in the labor movement as it
considers the institutions for the 21st century workforce.
Tim Kane, Ph.D., is
Bradley Research Fellow in Labor Policy in the Center for Data
Analysis at The Heritage Foundation.