posted August 7, 2014
American Unions at Strategic Impasse, Part 2: Three Contemporary Examples

In a preceding Part 1 of this series, it was argued that US Union Labor’s basic strategic focus since the late 1970s has reached an impasse. After more than three decades, it is increasingly evident that US Unions’ strategies for organizing, collective bargaining, and political action have clearly failed—as evidence mounts of a steady long run decline of union membership, a chronic decades-long disappearance of union jobs, falling real union wages, accelerating destruction of negotiated basic pension and healthcare benefits, and the continual growing disregard for union workers’ interests and rights by politicians. Global parallels were noted, given the decline in union labor elsewhere in the advanced economies of Europe, Japan and other OECD economies. Part 1 then issued a call for a fundamental discussion and debate by all ranks of union workers in the USA on how union strategy must change to avoid the virtual elimination of union labor in the USA and elsewhere in another decade.

Key events in the USA in the past year continue to indicate the growing ineffectiveness of current Union strategies in areas of organizing, bargaining, and political action. These latest events have occurred, moreover, in the former strongholds of US unionism in the past—i.e. in the former bastions of US unionism in the auto industry, at the giant aircraft maker, Boeing Corporation, and among railroad workers in the New York City area. In this Part 2 of the series, ‘American Unions at Strategic Impasse’, three specific events in the past year—in auto, aircraft manufacturing, and railroads—are examined as examples of continuing failure of Union organizing, bargaining, and political strategy in the USA.

Strategic Failure #1: Volkswagen Autoworkers

For several decades now the United Auto Workers (UAW) union has attempted to organize workers by means of US government conducted National Labor Relations Board (NLRB) elections—and has failed at almost every effort.

As recently as the year 2000, the UAW had 470,000 members—36% of the workforce—organized. That fell to 302,000 and 24% during the so-called ‘boom economy’ years from 2001-07, as auto companies abandoned unionized factories and left for the Southern US states, Mexico and elsewhere. UAW attempts to ‘organize the South’ via NLRB elections between 2000-07 failed repeatedly.

The recession of 2008-09 wiped out another 110,000 union auto jobs, reducing auto union membership still further to 192,000. Four years later, by 2014, the union had gained back only 23,000 of the 110,000 jobs lost since the recession (and the more than a quarter million jobs lost since 2000). Auto industry production and profits have recovered since 2009, but not union membership.

As the UAW has weakened organizationally, it has turned increasingly to bargaining concessions, including extreme versions of ‘maintenance of membership’ (MOB) agreements called VEBAs (Voluntary Employee Benefit Agreements). With VEBAs the union gave up bargaining health benefits with the auto companies altogether, allowing the companies to dump their underfunded health plans onto the union itself, which now had the sole burden of somehow providing declining healthcare coverage for its remaining members by solely administering the plans. At the same time, the Union further agreed to more ‘two-tier’ wage and benefits coverage for newly hired workers, including hiring tens of thousands of ‘temporary’ workers with little or no healthcare or pension benefits as well as at lowered wages. Such concessions t have made it even more difficult in turn to organize workers in the non-union Southern plants.

On the other hand, with these same concessions in hand UAW leaders turned to a strategy of ‘organizing the employer’. This led to the dawn of the era of so-called ‘union-company neutrality agreements’. In exchange typically for some form of concession, unions would get a company to agree, formally or informally, to remain neutral and not aggressively oppose the union when it attempted to organize a remaining non-union operation of the company. Concessions in exchange for the neutrality occurred where the union negotiated with the company in operations already unionized, or where the union assured the company it would ‘go easy’ on the company in bargaining once it organized the non-union operation. Despite concessions, however, neutrality agreements almost always have failed as an organizing strategy; and have resulted in further decline in bargaining effectiveness as concessions granted companies served to worsen an already decline in bargaining effectiveness for other reasons.

The latest example of organizing via neutrality agreements was the defeat of the UAW’s organizing effort at Volkswagen in Tennessee last February 2014. In the VW case, with the help of the German IG Metall union, the UAW was able to convince VW management that it, the UAW, would cooperate with VW by agreeing to a German-like ‘Works Council’ at the plant, were it to successfully unionize the VW’s Tennessee plant. A Works Council would allow VW management to bypass the union and go directly to the workers to discuss and change working conditions. This would establish a kind of ‘dual representation’ that has not been allowed in the US since the 1920s, when dual representation and works councils at that time were used to prevent bona fide unions representing workers.

The UAW in the VW case offered to break with that historic union opposition to works councils, in exchange for neutrality in organizing the Tennessee plant. The agreement was informal, no doubt ‘brokered’ in part by IG Metall, the German Autoworkers Union on behalf of the UAW. What the VW neutrality agreement represented was a major concession by the UAW. In exchange for a partial UAW representation right to negotiate wages and other benefits, the union would ‘share’ other representation with the works council. It was a case of trading traditional union exclusive rights to represent workers for membership gains—i.e. a new kind of organizing strategy.

Despite the neutrality agreement the union lost the election at VW’s Tennessee plant by a vote of 712-626, largely as a result of conservative, anti-union politicians mobilizing media and political opposition, both within the State and out of state, against the union.

What the Volkswagen case showed is that even if a local company indeed remains neutral, that does not mean other capitalist forces outside the company, and not party to the agreement, will not intervene to offset the neutrality. That’s what happened at VW. What the UAW failed to realize at VW is that today unions are up against a mobilized capitalist class in the USA. The UAW organizing strategy is based on assumptions that arrangements that prevailed in the 1950s and 1960s—when capitalists agreed to play by certain rules of compromise that were established in the 1930s and 1940s—still exist today. But those assumptions are wrong. The conditions have fundamentally changed. And those rules are long gone. Organizing strategy based on NLRB processes—with or without neutrality agreements—is yesterday’s strategy.

The VW example shows that no concession can ensure neutrality. It also shows that effective organizing is not possible without community mobilization. The UAW refused to mobilize the community in support of the organizing drive and election—unlike corporate interests that had no qualms about doing so.. Many in the community reportedly offered to help the UAW in the election. But the UAW apparently refused their offers. That was a fatal mistake.

As traditional NLRB processes and neutrality agreements have failed, the NLRB and other unions have pinned their hopes on reforming the employer-dominated and controlled NLRB election process by getting Democrat party friends in the Obama administration and Congress to pass ‘card check’ reforms to the process. ‘Card check’ refers to a revised NLRB process whereby elections maybe bypassed if a majority of workers sign a ‘card’ indicating they want the union to represent them.

Card check became the no. 1 demand of the UAW and other unions who threw their support to Obama and Democrats in the 2008 election, providing more than $400 million in campaign contributions to Democrats in 2008 alone in the process as well. But Democrats after 2008, never even bothered to vote ‘card check’ out of Congressional committee, let alone put it to a vote on the floor of Congress for a vote. Card Check has always been ‘dead on arrival’ so far as Democratic Party politicians have been concerned.

Nevertheless, despite politicians’ refusal to act on ‘card check’, since 2009 the UAW has continued to spend millions of dollars on helping elect Democrat politicians and has courted the Obama administration more intensely than ever before. It even reversed its former position opposing free trade agreements and now supports Obama administration efforts to expand free trade—even though that trade, ironically, has cost it at least a 100,000 of the 255,000 union members the union has lost since 2000.

As the UAW organizing strategy was being defeated at Volkswagen in Tennessee another former bastion of US unionism was simultaneously experiencing a similar crisis. This second event was the forced bargaining concessions that were imposed on workers at the Boeing Aircraft plant in Seattle, Washington by their management, with the collusion of their own machinist union national leadership and with the added intense pressure of Democrat politicians at all levels of government.

Strategic Failure #2: Boeing Aircraft Machinists

In late 2013 Boeing management threatened the national union leadership with plans to move production of the next generation 777x commercial aircraft to its recently established non-union South Carolina operations. The company offered to keep production in Seattle, where 32,000 workers were union, but only if the union agreed to reopen the contract, which was not due to expire until 2016, and if workers agreed to the following concessions in a new 8 year contract: freeze new pension contributions and replace them with phony 401k personal retirement plans, increase workers own contributions to healthcare, and raise wages only 0.5% per year over the 8 year new contract. All this was demanded despite the company making a record 648 planes in 2013, $5 billion in profits, enjoying record high stock prices, awarding $10 billion in stock buybacks to its shareholders just weeks before, and having a record backlog of $400 billion in new plane orders.

The machinists national union leadership praised the Boeing offer and, although the local leaders of the union saw no reason for a vote on a contract that had not yet ended, forced a vote on the new concessions on the Seattle local union membership. To their surprise, however, that local membership voted down the proposal by 2 to 1 margin on November 13, 2013. In what has become a typical maneuver by national union leaders of late, the national leaders then quickly scheduled a second revote—this time for the January 1 holiday weekend when hundreds of workers were away.

In the interim to the vote, Boeing management was given free air time on local TV to present its case and local media and business groups warned thousands of jobs would be lost in Seattle if the workers didn’t agree. MOB now meant not just trading wage increases for retaining benefits. It now meant massive wage and benefit concessions in addition to real wage cuts. Concessions were the ‘stick’. In exchange, the ‘carrot’ was a verbal promise of no loss in the existing 32,000 union jobs in Seattle, plus a possible growth of 8,500 union members to make the new 777x plane. National machinist union leaders clearly decided that reducing wages and benefits are an acceptable organizing strategy—i.e. trading retaining and getting new members for deep reductions in wages and benefits and locking workers into a long term contract so they cannot change them. This may reflect the latest, most desperate variant of union labor organizing strategy in the 21st century.

Once again, the Boeing events show that, as in the UAW case, the failure of union bargaining strategy and the failure of union organizing strategy are now further coinciding—with the failure of each exacerbating the other.

Furthermore, both the UAW and Boeing machinist cases show that the failure of political strategy was also an integrated part of the general failure. In the Boeing case, Democratic governor, Jay Inslee, spoke out publicly advocating workers agree to the onerous terms. It would mean retaining jobs in Washington State, he claimed. Liberal Democrat Senator, Patty Murray, added publicly that the new contract would “guarantee thousands of good-paying jobs and billions of dollars in economics growth”, as she simultaneously approved of $8.7 billion in tax cuts for the company passed by the majority of Democrats in Washington State.

Facing this groundswell of opposition from the company, media, local politicians, Democratic governors elsewhere offering incentives to move Boeing to their state, other unions offering to take the 777x jobs, and their own union national leadership, a second vote over the January holiday weekend saw 8000 fewer union workers voting on the contract. It passed this time by a mere 51% to 49%.

The bankruptcy of union strategies for organizing, bargaining, and political action in the Boeing case is most clearly revealed by the outcome today, eight months after the concession contract with Boeing was forced on the Seattle machinists and their members. To recall, the massive concessions were to have in exchange for retaining membership in Seattle, and adding a potential 8500 new jobs for the new 777x plane. That was how Democrat politicians and national leaders ‘sold’ the contract. However, contrary to the original plan and the promises made, this organizing-membership retention strategy has recently collapsed.

In late July 2014 it was publicly announced by senior executives at Boeing the company “plans to build its next generation 787 Dreamliner plane “exclusively at its nonunion factory in South Carolina”, according to the Wall St. Journal (July 31, 2014). Moreover, all future production increases will be allocated to this facility—not to the unionized Seattle operations. The key phrase is ‘all future production increases’. It suggests strongly that new planes, including the 777x, will now likely be built in the non-union South Carolina plant. So much for promises of 8,500 new union members in exchange for massive wage and benefit concessions made last January. Or for promises of protecting union jobs and members at the Seattle plant. As old plane production in Seattle is replaced by new production in nonunion South Carolina, Seattle union membership will no doubt begin to decline by 2016. But the wage and benefit cuts will undoubtedly remain for the 8 years of the new contract.

Whether relying on company dominated and controlled NLRB processes, on neutrality agreements that never work, on fantasy expectations for card check, or concessions to trade off wages and benefits for union membership—none of the preceding ‘strategies’ for resurrecting collapsing union membership in the USA in the past decade have proven even remotely productive. Moreover, such approaches to organizing have only exacerbated the already otherwise growing failure of MOB union bargaining.

As both the UAW-Volkswagen and Boeing cases this year reveal, the failure of union organizing strategies have driven national union leaders into offering even more concessions, in the naïve hope that doing so might restore union membership losses. Meanwhile, traditional MOB bargaining is itself on its last legs. Wage concessions bargained in exchange for maintaining pension and health care benefits in recent decades is coming to an end, as remaining pensions are phased out for 401k plans and as Obamacare soon eliminates union negotiated healthcare plans circa 2018. Trading off even more concessions in exchange for membership gains only exacerbates and accelerates the already growing failure of MOB bargaining, while proving concessions in exchange for membership is not an effective organizing strategy.

As the flow of the river of membership slows, and the water level of bargaining in the river falls, the rocks of union political strategy also begin to appear. As union membership declines and bargaining proves increasingly ineffective, Unions’ political strategy—based on a dependency on the Democratic Party—proves less effective as well. Democratic party politicians piled on the Boeing workers, siding with management and national union leaders without exception—even though many owe their elections directly to the 32,000 Boeing union members in Seattle. Similarly, despite UAW political assistance to Democratic party politicians, financial contributions in the millions, and even agreeing to support to Obama free trade initiatives, neither card check nor protection of union health and pension benefits have been the result.

The connections between failed organizing, bargaining, and political strategies were even more evident in the recent events involving New York City railroad workers this past summer.

Strategic Failure #3: Long Island Railroad Workers

Long Island Railway unions are responsible for bringing 300,000 commuters from the suburbs into the heart of New York City every day. A strike would bring the city to a virtual halt.

Working without a contract and no raises since 2010, the railway unions’ 5,000 members demanded a 17% wage increase over six years in recent negotiations. More importantly, they initially rejected the prevailing model of MOB bargaining. That included management’s proposals to make current workers’ pay healthcare contributions equal to about the amount of the wage increase management offered—about 2% of pay for older workers—while raising new workers’ healthcare contributions by a higher 4%, and making all workers pay even more for pensions. MOB was thus at the heart of the dispute and negotiations. Also central was union resistance to widening the two-tier unequal treatment of newly hired workers.

The railway case thus raised the possibility of a major break from MOB bargaining in general, wage concessions in exchange for retaining benefits, and unequal treatment of new workers—i.e. all major trends in union bargaining in the USA now for more than a decade.
But instead of relying on the potential power of its own strategic position and its membership over the entire economy of New York City—as they had in successful strikes before in the early 1990s—the railway union leadership turned instead to Democratic Party politicians for assistance. Political strategy was about to trump bargaining.

The leadership sent delegations to Washington DC to appeal to Democrats in Congress, but were rejected by the latter and sent home. They then turned to Democratic Governor, Andrew Cuomo. The deal he proposed, and the unions eventually accepted, was close to management’s proposal: a wage increase of 17% over 6.5 years, or about 2.5% a year wage increase—i.e. just enough to pay now for health care contributions of 2% of pay for the first time. New workers would also pay 2% for healthcare benefits, instead of 4% of pay, but would receive less in wages and much less in pensions. So the result was a traditional MOB, in other words, where the amount of wages given was just sufficient to pay for the increase cost to workers for health care and pension benefits. It was management’s proposal, brokered by the Democratic governor.

The Long Island Railway workers example shows how the potential to reject what has been a failed union bargaining strategy, MOB, in effect for more than a decade now, was unfortunately lost due to reliance on a political strategy that has also been clearly failing for even longer. Relying on politicians instead of themselves and their own strategic potential shows the inherent weakness of union political strategy today—i.e. a dependence on the Democratic Party and its politicians. The best that can be attained is a long term contract locking workers into token wage increases just sufficient to cover ever rising healthcare costs and declining retirement benefits. Politics produces a bargaining outcome that, at best, freezes wages and benefits at existing levels over a long term period. At worst, wages are reduced while benefits are cut even more so. In the end, even benefits gains are lost and years of continual wage concessions are for naught.

The preceding three case examples illustrate the current fundamental impasse in American Unions’ strategy today—in organizing, bargaining, and political action. Moreover, they show how each of the three failures impact the others, mutually exacerbating failure in all. Some suggestions, ideas, and recommendations how this current strategic impasse might be broken will be the subject of the third Part 3 in this series to follow.

Dr. Jack Rasmus
August 3, 2014

Jack Rasmus is the author of the book, ‘Obama’s Economy: Recovery for the Few’, Pluto Press, 2012, and ‘Epic Recession: Prelude to Global Depression, Pluto, 2010. He hosts the weekly radio show, Alternative Visions, on the Progressive Radio Network. His blog is, his website, and twitter handle @drjackrasmus.

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