Even With Trump’s Support, U.S. Labor Is Singing the Blues

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By Thomas Hemphill

The U.S. Department of Labor’s Bureau of Labor Statistics (BLS) released its annual report on union membership last week, and the numbers are not favorable for the U.S. labor movement.  The BLS calculated (from data collected as part of the Current Population Survey) that union membership in 2016 was 10.7 percent, down 0.4 percent from 2015.  This percentage loss translates to a decline of 240,000 union members since 2015.  In 1983, the first year for which comparable union data is available to the BLS, the union membership rate was 20.1 percent; the 10.7 percent rate represents a 46.8 percent decline in American union membership over the ensuing 34 years.  Moreover, as of 2016 there are 14.6 million union members, as compared to 17.7 million union members in 1983.

Interestingly, private and public sector union membership in 2016 is now approaching parity, as approximately 7.4 million private sector workers and 7.1 million public sector workers are union members. Yet the union membership rates are significantly skewed, as the public sector union membership rate of 34.4 percent is over 5 times that of private sector union membership (6.4 percent).  There is empirical evidence that supports the argument that union members are paid higher wages than their non-union counterparts.  For 2016, the BLS reports that median weekly earnings of nonunion workers – $802 – were only 80 percent of union workers ($1,004).

But declining membership is not the only concern for organized labor, as state Right-to-Work (RTW) legislation has re-emerged as another threat to union survival.  RTW legislation prohibits so-called union security agreements, or other forms of agreements between employers and labor unions, that govern the extent to which an established union can require employees’ membership, payment of dues to a union, or fees as a condition of employment, either before or after being hired.  In a June 2015 report issued by National Economic Research Associates, and sponsored by the U.S. Chamber of Commerce, an analysis of economic data from RTW states showed that, especially in heavily unionized industries such as manufacturing, businesses are more likely to locate in states with RTW laws.  The report also found evidence that RTW laws have a direct, positive effect on employment, output, and personal income.

Since Oklahoma became the 22nd state to allow RTW (after voters passed a Constitutional amendment) in late 2001, there was a decade-long hiatus before Indiana (2012) and Michigan (2012) became the 23th and 24th States to enact such legislation.  Three other States quickly enacted RTW legislation in succession: Wisconsin (2015), West Virginia (2016), and Kentucky (2017), becoming the 25th, 26th and 27th RTW States, respectfully.

Missouri’s Republican-controlled legislature has been busy this January moving RTW bills through its House and Senate, with recently elected Governor Eric Greitens (R) pledging to sign RTW legislation.  Likewise, New Hampshire is also on track to pass RTW legislation in 2017, as the State Senate passed its bill earlier this month and it is expected to be taken up in the House in the next few weeks.  New Hampshire Governor Chris Sununu (R) has said he will sign RTW legislation into law.

Not surprisingly, RTW legislation is a highly partisan issue, with Republicans generally in favor and Democrats strongly opposed to its’ enactment.  Yet, in 2017, Republicans control both legislative chambers in 32 states, with 24 of these 32 states having Republican governors.  Enacting RTW legislation requires control of both the executive and legislative branches of government.  In those states without RTW laws and a Republican controlled government the stars have aligned, and legislative efforts this January – beginning in Kentucky – have been to rapidly vote this legislation out of state legislatures and send it for the governor’s signature.

The National Labor Relations Board (“board”), which has been criticized for being an activist, strongly pro-union agency during the Obama years, is getting a new acting chair.  Phillip Miscimarra, a Republican board member was named acting chair by President Trump last week, and will remain on the board until his term expires on August 17, 2018.  In a statement, Miscimarra said: “I remain committed to the task that Congress has assigned to the board, which is to foster stability and to apply the National Labor Relations Act in an even-handed manner that serves the interests of employees, employers and unions throughout the country.”

President Trump will also have the opportunity to name two new members to the board, as there are two unfilled seats.  Under the new chair, and a majority of board members being Republican appointees, the days of the board seeking to expand and reinterpret existing federal labor rules, such as its controversial decision in 2014 to charge the McDonald’s Corporation as a “joint employer” in a series of unfair labor practice complaints filed against the company’s franchisees (even though the franchisees were privately owned and legally separate businesses) will become a fading memory under a newly reconstituted board.

Traditionally, the American manufacturing sector has provided a fertile ground for supporting and expanding union membership.  However, this sector has shed nearly five million jobs since 2001, declining from 17 million to just over 12 million in 2016.  In addition, many manufacturers are located in RTW states where union efforts to organize have been less successful.  Recent growth in U.S. service sector employment is, however, accompanied by low unionization rates.  For 2016, this low unionization rate is reflected in the finance industry (1.2 percent), at food services and drinking places (1.6 percent), and in professional and technical services (1.6 percent).

While President Trump has pledged his Administration’s support for bolstering American manufacturing and investing in the nation’s infrastructure, while the construction industry has a high unionization rate (13.9 percent in 2016), Trump’s policy efforts will not dramatically reverse this long-term trend of declining national unionization rates, but may help to stabilize private sector unionization rates and prevent the national unionization rate from slipping below 10 percent by the end of this decade.

[Originally Published at RealClearMarkets]