The Decline of Labor, the Increase of Inequality

By Rich Yeselson

etween the end of the Second World War and the early 1970s, the American labor movement was one of the reliable signposts that defined the parameters of American life. But if history has taught us anything, it’s that these signposts of our culture, economics, and politics are continually fading, even as we assume they will remain planted deeply in our social soil. After all, what could ever top an IBM Selectric for rapid, easy to correct writing? What social and economic organization was more “natural” and thus permanent than the “peculiar institution” of chattel slavery throughout the Western hemisphere during the 18th and into the 19th centuries? The sun never set on the British Empire—until it did after 250 years. America’s labor unions, once a stalwart of the American economy, are now in similar danger of fading into oblivion, and with them, America’s defense against increasing income inequality.

No less a figure than Dwight Eisenhower assumed an America that would always have strong unions. In a speech before the AFL during his campaign for president in 1952, Eisenhower declared: “Today in America, unions have a secure place in our industrial life. Only a handful of unreconstructed reactionaries harbor the ugly thought of breaking unions. Only a fool would try to deprive working men and women of the right to join the union of their choice.”

This seeming eternality of American labor’s economic and political strength correlated almost precisely by year to the period which some economists now call the “Great Compression,” one of lower income for the wealthiest Americans and higher income for those below them. Timothy Noah, relying on the work of economists Claudia Goldin and Robert Margo, describes this period in his book about American inequality, The Great Divergence (2012), as one in which “incomes became more equal and stayed that way.” Union density peaked at about 1/3rd of the non-farm workforce in the decade following the Second World War. Well over a majority of workers in the core industries of mining, manufacturing, and transportation were unionized. States like Alabama and Tennessee had “low” union density rates in the high teens that were equal to the “high” density rates of “union states” like Michigan today.

George Meany at the International Ladies' Garment Workers' Union (ILGWU) cooperative housing dedication, 1962. (Flickr)

By the early 1970s, labor had slipped a bit from its peak density to somewhere between 25% and 29% (depending on whose statistical analysis you believe). It was still a robust economic actor in mining, manufacturing and transportation—the auto, steel, and trucking unions, the United Auto Workers, Steelworkers, and Teamsters, still had significant leverage in these key sectors of the economy. And labor was increasing its membership within the growing cohort of government workers on the federal and state levels. Indeed, labor remained so confident of its position that in 1972, George Meany--the brusque, cigar smoking president of the AFL-CIO whose office window offered a view of the White House--famously said in an interview in US News And World Report, “Why should we worry about organizing people who do not appear to want to be organized?” Meany believed labor to be so hegemonic that institutional growth was beside the point.

Unions were then the most important interest bloc within the Democratic Party, its presidential candidates all but required to start their campaigns at Cadillac Square in Detroit, the spiritual and literal home of the powerful UAW. But the great sixties uprising against the war in Vietnam, Southern apartheid, and the gender norms and hierarchical assumptions of the postwar consensus, pitted the aging leaders of organized labor against a new generation of leftists, many of whose members saw “Big Labor” as just another alienating, authoritarian bureaucracy no different from corporations, universities, or the government itself.

"America’s labor unions, once a stalwart of the American economy, are now in similar danger of fading into oblivion, and with them, America’s defense against increasing income inequality."

During the 1972 election, Meany’s AFL-CIO, enraged by George McGovern’s opposition to the Vietnam War and the influence of the New Left and the counter-culture that permeated his campaign, remained neutral rather than endorse the Democratic candidate. Organized labor was so important to the Democrats that the wily Republican president, Richard Nixon, had courted Meany over several rounds of golf and sought to identify the administration with what Nixon and his top aides took to be the cultural symbols of blue collar, white manhood. The Federation’s neutrality was his reward. The New York Times acknowledged labor’s power in exaggerating it, noting, as quoted by Jefferson Cowie in Stayin’ Alive, his history of the 1970s working class, that labor was, “the unmovable boulder in Mr. McGovern’s path toward the presidency.” (In truth, for many reasons, McGovern’s odds of defeating the incumbent Nixon were quite low even if the Federation had endorsed him.)

Meany later lost his affection for Nixon, but labor’s decreased membership and the determined effort of business to defeat, rather than accept unions as a quotidian feature of capitalism, accelerated the decline in its economic and political power. For several years, this decline was masked by a large outpouring of rank and file militancy fueled by a new workforce influenced by the lingering political and social resistance of the movements of the 1960s. Signature strikes occurred at the biggest GM facility in Lordstown, Ohio, throughout the lettuce and grape fields of California, in the textile mills of the Southeast, and even, in an unauthorized “wildcat” strike of the rank and file in several major cities, the US Post Office.

But this was not nearly the explosion of working class resistance, featuring general strikes and frequent police and company violence, which dominated the nation’s headlines in 1934 and again in 1937, or even what occurred in 1946, when over 10% of the workforce struck out of fear that wages would not keep pace with postwar inflation and that their unions would not be as secure under peacetime conditions. By the middle of the 1980s, history had fooled the present again: the “secure place” of American labor which Ike had spoken of so confidently in 1952, turned out to be, in fact, evanescent. By 1991, union density had declined to just 16%. (It is now about 11%.) Manufacturing and mining employment, after a brief spurt, also declined, subtracting as well millions of members of the most politically and economically influential unions (There are some scholars who believe that the change in the composition of the labor force is an overestimated feature of union’s decline, but even they concede that it is responsible for, at least ¼ to ½ of it.) In 1976, labor helped to elect Jimmy Carter, the most indifferent, if not hostile, Democratic president to the concerns of labor since Grover Cleveland. In 1978, despite the most massive lobbying drive in union history, Carter placidly watched a modest labor reform bill overwhelmingly pass the House, but then be filibustered to death by Republicans and Southern Democrats in an overwhelmingly Democratic Senate. The bill would have increased the paltry penalties on companies who illegally sought to defeat organizing drives, expedited union elections, and allowed union organizers limited access to the workplace. Despite its best efforts, unions could not match business’s determination to thwart the bill. (Subsequent legislative efforts during the Clinton administration to outlaw replacement workers and, during the Obama administration, to ensure card check union elections failed far more decisively and with less fanfare.) Late in 1979, labor joined management in pushing for the (first) Chrysler bailout, which came at the high cost of providing a precedent for the breaking of collective bargaining agreements and destroying wage standards that had been in place for decades. Deregulation, supported by Carter and even Edward Kennedy, gutted unionization and wages in the trucking industry.

International Ladies' Garment Workers' Union (ILGWU) address a crowded hall at Madison Square Garden, 1958. (Flickr)

The 1980s were no better, beginning with Ronald Reagan’s emblematic firing in 1981 of 14,000 striking air traffic controllers and their subsequent legal replacement with new hires, a ruthless demonstration of the limited power of even a union of skilled workers in a critical industry. It also displayed the limits of institutional union solidarity, as various calls for a militant response by the members of the AFL-CIO resulted merely in a massive, yet entirely pedestrian, march in Washington on Labor Day weekend, 1981. During 1981-82, Federal Reserve Chairman, Paul Volcker, engineered a massive recession—the worst at that point since the Great Depression—to “wring” inflation out of the economy. The result was unemployment that peaked at 10.8% and decimated major unions. In response to these setbacks, labor leadership decided in 1984 to preemptively endorse union stalwart, vice president Walter Mondale, for the Democratic nomination.

But unity during this fallow moment had radically dissimilar results to 1948 when the postwar labor movement, enraged by the anti-union Taft Hartley Act of 1947 yet as powerful as it would ever be, went all in to support beleaguered Democratic incumbent, Harry Truman, and helped him to an upset victory over the Republicans. The decision to unite around Mondale, however, could not prevent one of the most overwhelming defeats in American political history, a 49 state to one pounding of Mondale by president Reagan. Over the course of the 1980s and into the 1990s, a series of mostly defensive strikes in mining and manufacturing facilities around the country--from Arizona copper mines to a meat packing plant in Minnesota to farm machinery facilities in Illinois--resulted in defeats and the replacement of striking workers with replacements (or scabs, as they are known within labor)

Although there were exceptions to this pattern—the successful Teamsters UPS strike in 1997, the Steelworker’s victory at Ravenswood Aluminum in 1992 and SEIU’s successful multi-year “Justice for Janitors” fight in cities around the country--the labor movement, despite the best efforts of several creative strategists, sunk lower and lower. This, too, is subject to historical change. But efforts to dramatically disrupt the bureaucratic structure of unionism in order to increase density and power (the election of the reformer, John Sweeney, as president of the AFL-CIO in 1995, and then the splitting of several large unions from the AFL-CIO to form Change to Win in 2005) failed. And, all told, from the 1970s to the first decade of the 21st century, just as labor’s previous power in numbers and political influence matched the rise of a vast American middle class, its chronic defeats matched widening income inequality in the United States. In a 2012 report entitled, “Unions, Inequality, and Faltering Middle-Class Wages,” Lawrence Mishel of the Economic Policy Institute, in line with many other analysts, estimated that “deunionization can explain about a third of the entire growth of wage inequality among men and around a fifth of the growth among women from 1973 to 2007.”

"...unionization diminished in the US for some of the same structural, macro-economic reasons it has declined in almost every advanced country in the world."

This is a brief summary of the narrative of labor’s modern declension. But why did this happen? Broadly, unionization diminished in the US for some of the same structural, macro-economic reasons it has declined in almost every advanced country in the world. But the decline also occurred for reasons intrinsic to the American political economy—in other words because of the vastly unequal power relationships between corporations and their political allies, and unions and their less reliable political allies. As the influence that labor had on the Democratic Party frayed with its shrinking size, the first order economic effects of inequality were compounded by the second order disappearance of a political alternative to business elites and their advocates in the Republican Party.

With the brief exception of the late 1930s followed by the anomalous period of the Second World War when the government needed the active support of unions to maximize military production, labor has never had a juridical and statist presumption that it should institutionally survive, let alone flourish. For much of its history, and to this very day, the courts, business, and conservative media and politicians have sought to diminish labor’s power, if not crush it outright. With the exception of the 1935 National Labor Relations Act (which opponents immediately sought to undermine and whose legal fate was unresolved for two years), there has never been a statist framework in the US that explicitly sought to ensure labor’s institutional viability across the branches of the federal government and state governments. And without that statist presumption, unions had to confront what historian Nelson Lichtenstein has labeled a special form of “American exceptionalism”: “the hostility managers have shown toward both the regulatory state and virtually all forms of worker representation.” Lichtenstein goes onto note that the absence in the U.S. of “self regulation or cartelization” found in Europe and parts of Asia. Decentralized “competitive disorder” made non-rationalized wage and benefit increases imposed by firm-by-firm unionization (rather than the sectorial model of collective bargaining found in Europe in which the extra cost burdens of unionization was socialized across economic sectors) a great threat to companies and triggered a particularly vicious, sometimes violent, response. The brief period of labor’s zenith did not diminish the desire of its enemies to undermine it—on the contrary, it was a persistent provocation: a reminder of the power business had lost and wished to regain. Thus when, via the decline in manufacturing and a corresponding loss of political influence, unions weakened in the 1970s, the business class seized that moment and, by the construction of politically and intellectually influential think tanks and a massive increase in their congressional lobbying, counter-mobilized to crush them. It only took a decade or so of labor’s increased vulnerability to prove how wrong Eisenhower’s benign notion was that “only a handful of unreconstructed reactionaries” wished to bust American unions. In fact, the entire business class of the United States, large and small companies alike, wished to bust American unions and when, given a chance to do so, seized it.

The structural reasons for union diminution, i.e., trends in political economies that affected the entire advanced world, are well known, if sometimes distorted and misread under the rubric, “globalization.” Yes, millions of first world jobs in manufacturing and mining have disappeared since the Second World War. Manufacturing and mining jobs peaked in 1953 at about a third of total employment. After a steady decline through the 1973-74 recession, they briefly returned to a 22% figure in 1978, but a steady decline from there accelerated in the 21st century. Today, manufacturing represents fewer than 9% of all jobs (although productivity increases make manufacturing a significantly larger share of GDP). Many of these jobs did go overseas. But many others were just lost to productivity gains. In mining, for example, there are, perhaps 80,000 jobs today compared to over a half million—almost all of which were unionized--in the late 1940s and early 1950s. Coal provided close to 2/3rds of our energy then—making the imperious president of the United Mine Workers, John L. Lewis, one of the most powerful people in the country, Now, coal provides under a third of our energy and, as climate change policy becomes more pressing, it is an industry which, like tobacco, has taken on an anti-social cast.

Mining and Manufacturing Jobs in America


General view of employees at the ceremonies where Bethlehem steel received the Navy “E” award - Nov. 25, 1941. (AP Photo)


Bethlehem steel mill in decline with only one of the many stacks still smoking - 1979. (Wikimedia Commons)


Today, the Bethlehem steel mill is closed down and serves as the backdrop for an arts center almost 20 years after the furnaces went cold. (AP Photo)

In steel, via both job exports and productivity increases, there are 70% fewer jobs in the entire industry today, including supervisors, than the over half million members of the United Steelworkers who, in 1959, undertook against US Steel, the largest single strike in American history.

What did the decrease in manufacturing and mining jobs mean, particularly for unions and for their ability to mitigate income inequality? Powerful unions effected for millions of workers a premium in wages and benefits, estimated by economist Mishel to be 13.6% overall for wages and a 28% higher chance to have employer provided health insurance. The premium is even higher for men and for blue-collar workers, whose unionization rate was over 43% in 1978.

Yet there is an extended effect throughout the economy of the strong union premium. Non-union companies, during the era when private sector union density was strong, maintained higher wages in order to prevent organizing drives among their workers. Moreover, argues Mishel, entire sectors of the economy until the mid-eighties, particularly manufacturing “followed the patterns set in collective bargaining agreements.” So the massive decline in manufacturing and mining jobs decimated the very unions who were sustaining wage rates to millions of non-unionized workers, too—and those unions, in turn, compounded their economic weight via their political influence within the Democratic Party.

But the wide acceptance of the “union rate” was not just an economic protocol, but a cultural norm in favor of something broadly similar to what the historian EP Thompson called in 18th century England a “moral economy of the English crowd.” Without unions to make the case for a form of the modern moral economy, its hold on the popular consciousness waned. In the 1950s, a hit Broadway musical, Pajama Game, was set in a unionized pajama factory. Today, the heroes of popular culture are not those collectively seeking a “seven and half cents” per hour raise, as in the classic song from the musical, but bombastic hyper-individuals, like Donald Trump, declaring that they deserve, by virtue of their genius and wisdom, seven and half billion or more.

Union weakness portended another cultural loss, but also, eventually, a positive transformation. The iconic solidarity that we associate with the tough trade unionists of mid century—think of coal miners in both the US and the UK defending not only their livelihoods, but their communities, their way of life-was itself grounded in a social homogeneity that only sometimes, and, often with much turmoil, gave way to multiracial and bi-gendered solidarity. “Hate strikes” in which white workers walked off their jobs when African Americans joined their shifts, were, for example, common in the UAW, the union most identified with post-New Deal liberalism. The idea that a woman could hold that critical union card in the construction industry was all but unthinkable.

"In the wake of the civil rights movement and the second wave feminism of the sixties, an effort started to integrate the race and gender struggles for equal rights and respect with the collective ethos of trade unionism."

As these white men lost their jobs and those union cards to productivity increases and globalization, the institutional history of their militancy was lost, too. What was then required was the construction of a new institutional history of militancy. In the wake of the civil rights movement and the second wave feminism of the sixties, an effort started to integrate the race and gender struggles for equal rights and respect with the collective ethos of trade unionism. That ethos had, until then, overwhelmingly benefited, however, only white men (and, admittedly, their spouses).

Thus, just as labor and the economic base of much of its membership lost altitude, unions faced the egalitarian necessity to modernize themselves. This was not without complications as it pitted the collectivist power of union contracts against individual legal remedies for racial and gender discrimination. Title VII of the1964 the Civil Rights Act accelerated a much longer struggle by black workers to have full and equal representation within unions. Arguments against racial (and gender) discrimination, especially in building trades and manufacturing unions, that had mostly been ignored by the NLRB, gained salience before the new Equal Employment Opportunity Commission (EEOC). Indeed, Richard Nixon provoked and accelerated this conflict (and thus cleverly split the coalition of the Democratic Party) by putting his EEOC on the side of African Americans seeking fair treatment and access to jobs against the reactionary resistance of construction unions. Job growth in construction and manufacturing declined in seventies and eighties and white males soon fought for the crumbs with African Americans and women.

The acceleration of government employment and the right of government workers to organize provided people of color and women with a new foothold in organized labor, even as the construction and manufacturing unions continue to decline. As the sociologist Jake Rosenfeld lamented in the title of his chapter on this subject in his important book, What Unions No Longer Do, “The Timing Was Terrible.” And this proved especially true for African-American women, who, as Rosenfeld explicates, were unable to consolidate wage gains because the decline of unionization limited their access to the very wage premium unions provided. Thus African American women have fallen farther behind white women’s wages after, for a brief time in seventies, nearly matching them.

Yet, whether from desperation borne of weakness or a genuine reckoning with their discriminatory history, unions today are racially integrated. Shifting from a longstanding opposition and fear of immigration, unions now support immigration reform and have formed powerful coalitions with the Latino communities in large cities like Los Angeles and Las Vegas. Union staff and top leadership contain far more women, people of color and gay people. But this openness to the liberation movements of the sixties and beyond paradoxically arrived when unions have less economic and political strength than at any time since the 1920s. The new labor movement, however, is, will and must be fully cosmopolitan, not merely homogeneously communitarian, as its mid century predecessor was.

But it is also, at present, much smaller and with much less economic and political juice than those mostly white men had when the factories and mills of Detroit and Pittsburgh embodied union power. And labor’s decline in membership is also exacerbated by the regional limitations of that membership. As labor’s effort to expand into low wage Southern and Southwestern states has, mostly, failed, it has been circumscribed within its existing areas of relative strength in the Northeast, Upper Midwest and the West Coast.

Today, over half of the America’s union membership is lodged within just seven states, although these states have only 1/3rd of non-supervisory employment. (Those states are, in order of numerical membership, California, New York, Illinois Pennsylvania, and Michigan, New Jersey, and Ohio.) As Harold Meyerson has recently argued in an essential essay in The American Prospect, the continued anachronism of the American South—a low wage, anti-union, racially fractured business haven within the richest country in the world—exacerbates national inequality. The political implications of labor’s geographic vulnerabilities, both nationally and statewide, are stark. Unions have trouble resisting the efforts of determined rightwing governors and legislatures as right to work laws have been passed even in Wisconsin, the birthplace of public sector unionism and Michigan, the birthplace of the UAW.

Labor’s influence on presidential and congressional elections is also thus mitigated. Virginia, Colorado, and North Carolina are now swing states, but unions lack the numbers necessary to elect candidate who might, in Galbraith’s famous description, countervail the influence of corporations and the increasing impact of plutocrats like the Koch brothers.

Labor’s challenges today are no more ahistorical than its postwar success—history changes. And it remains the most effective institutional bulwark against income inequality. Within its blue state zones of urban power, labor has, effectively, fought inequality via the “fight for 15” led by the still formidable SEIU, and promoted the passage of minimum wage laws in states and cities around the country. Unions, despite their inability to win legislation of direct benefit to themselves, still lead efforts to augment social insurance and regulate companies and banks. Labor wasn’t happy about the Affordable Care Act’s so-called “Cadillac Tax” that might fall on its own membership’s employer provided health care benefits. But it still was the Democratic Party’s leading lobbyist on behalf of the ACA, the most redistributive law passed in recent years. The broader solidarity that unions promote on behalf of the entire working class has more influence than its efforts to directly augment its own power.

The literary critic and paradigmatic “New York intellectual” Irving Howe wrote about the necessity for a “socialization of concern” in the United States. In their heyday, unions were the foremost exponents of the socialization of concern. (Howe’s first book in the late 1940s was about the emergence of the UAW as a major American institution.) And, advancing beyond their previous racism and sexism, unions are, in significant ways, better advocates for such concern today than they were when George Meany was refusing to endorse the March on Washington and, then during the McGovern campaign, railing about the Democratic party being seized by “people named Jack who look like Jill and smell like johns."

So today’s labor movement has adopted a cosmopolitan communitarianism fully in keeping with the demography and possibilities of 21st century America. But the numbers of union members and the dollars in the stagnant paychecks of millions of American workers tell an unhappily congruent story. If, in subsequent years, union membership numbers don’t increase dramatically, workers' paychecks aren’t likely to increase very much either.

TPM Illustration includes photos from Amor Kar and igor.stevanovic / Shutterstock.com