Boundless Business

Organized Labor Relations

The History of Unions

Organized Labor

A union is an organization of workers who have come together to achieve work related goals, such as higher pay and better conditions.

Learning Objectives

Explain the basic function of a labor union

Key Takeaways

Key Points

  • Through its leadership, labor unions bargain with the employers on behalf of union members and negotiates labor contracts with employers.
  • Union members, employers, and sometimes non-members are bound to the final negotiated agreement.
  • In addition to their collective bargaining activities, labor unions provide benefits to their members, organize industrial actions, and participate in political activities.
  • Labor union density has declined in recent decades, particularly in the private sector.

Key Terms

  • collective bargaining: A method of negotiation in which employees negotiate as a group with their employers, usually via a trade union
  • labor union: A continuous association of wage-earners for the purpose of maintaining or improving the conditions of their employment; a trade union.

Labor Unions

A labor union is an organization of workers that have banded together to achieve common goals, such as higher pay, increasing the number employees an employer hires, and better working conditions. The trade union, through its leadership, bargains with the employer on behalf of union members (rank and file members) and negotiates labor contracts (collective bargaining) with employers. Other actions may include the negotiation of:

  • Wages
  • Work rules
  • Complaint procedures
  • Rules governing hiring
  • Firing and promotion of workers
  • Benefits
  • Workplace safety and policies

The agreements negotiated by the union leaders are binding on the rank and file members and the employer and in some cases, on other non-member workers. Union officials can force compulsory union dues from employees, members and nonmembers alike, as a condition for keeping their jobs.

Additional Labor Union Activities

Aside from collective bargaining, activities vary but may include:

  • Provision of benefits to members: Early trade unions often provided a range of benefits to insure members against unemployment, ill health, old age, and funeral expenses. In many developed countries, these functions have been assumed by the state; however, the provision of professional training, legal advice and representation for members is still an important benefit of trade union membership.
  • Industrial action: Trade unions may enforce strikes or resistance to lock outs in furtherance of particular goals.
  • Political activity: Trade unions may promote legislation favorable to the interests of their members or workers as a whole. To this end they may pursue campaigns, undertake lobbying, or financially support individual candidates or parties for public office. In some countries, trade unions may be invited to participate in government hearings about educational or other labor market reforms.

Unions, Wages, and the Future

Unions have generally won higher wages and better working conditions for their members. However, the increase in the salaries is said to have reduced the number of jobs available for union members. Since the 1970s, the proportion of employees who are part of unions has been on a steady decline. Some business thinkers believe that improvement in minimum wage and safety regulations has reduced the need for unions to negotiate.

Unions seem to do better in regulated, monopolistic environments. Economic surveys show that union negotiate salaries that are 15% to 20% higher than nonunion salaries.

Percent of Industries Unionized (USA)

  • Public Sector, 37.4
  • Private Sector, 7.2
  • Life, Physical, and Social Science, 1
  • Community and Social Service,, 16.1
  • Education, Training, and Library, 38.1
  • Health Care Practitioner and Technical, 13.6
  • Health Care Support, 35.6
  • Protective Service, 35.6
  • Building, Grounds Cleanings, and Maintenance, 11.3
  • Office and Administrative Support, 10.3
  • Construction and Extraction, 21
  • Installation, Maintenance, and Repair, 16.4
  • Production, 16.6
  • Transportation and Material Moving, 18.2

Trade union density will vary according to country as well.


Trade Union Density in Different Countries (%): The density of trade unions in different countries.

A Brief History of Organized Labor

The union movement began in the early 19th century and paved the way for the establishment of the modern labor organizations.

Learning Objectives

Outline the increases and declines in the labor union movement of the last 150 years

Key Takeaways

Key Points

  • A large-scale consolidation of unions took place in the 1870s and 1880s. The Knights of Labor became a major force in the late 1880s until its collapse. The American Federation of Labor (AFL) proved to be more durable.
  • Unions grew rapidly from 1900-1919. This period was followed by a long decline. It was brought back to life by the Wagner Act of 1935. During this period, it became normal to find unions in heavy industry.
  • The image of the labor movement was damaged in the 1950s by reports of corruption in its ranks. Labor unions had already been weakened by the introduction of the Taft-Hartley Act of 1947. Union membership in the US was at its highest in 1954, before steady decline in recent decades.
  • Union membership in the US was at its highest in 1954.
  • The history of workers in relation to organized labor has emerged as an area of scholarly interest.

Key Terms

  • CIO: Congress of Industrial Organizations, a former United States trade union federation (also known as the Committee of Industrial Organization) that merged with the American Federation of Labor to form the AFL-CIO in 1955
  • American Federation of Labor: The American Federation of Labor (AFL) was one of the first federations of labor unions in the United States. It was founded in Columbus, Ohio in December 1886 by an alliance of craft unions disaffected from the Knights of Labor, a national labor association.
  • The Knights of Labor: The Knights of Labor (K of L) (officially "Noble and Holy Order of the Knights of Labor") was the largest and one of the most important American labor organizations of the 1880s.

The Emergence of Umbrella Unions

Unions started emerging in the mid-19th century. The 1870s and 1880s saw large-scale consolidation, with the Knights of Labor quickly becoming a major force in the late 1880s before collapsing due to poor organization. The American Federation of Labor (AFL), led by Samuel Gompers until his death in 1924, proved much more durable. It was a coalition of many national unions, and helped resolve jurisdictional disputes, created citywide coalitions that helped coordinate strikes, and after 1907 became a player in national politics, usually on the side of the Democrats.

Rapid growth came in 1900-1919, but was followed by a long decline until the Wagner Act of 1935 led to an invigoration of the labor movement, a development that finally became a permanent factor in the heavy industry. The CIO under John L. Lewis split off and competed aggressively for membership. The AFL was always larger and both federations grew enormously during World War II. After the Communists in the CIO were purged in 1946-1948, a merger into the AFL-CIO became possible in 1955.

The Strength of Labor Unions

The Taft-Hartley Act of 1947 was a conservative measure that weakened the unions, and highly publicized reports of corruption in the Teamsters and other unions hurt the image of the labor movement during the 1950s. Unions formed a backbone element of the New Deal Coalition and of Modern liberalism in the United States. The percentage of workers belonging to a union (or "density") in the United States peaked in 1954 at almost 35% and the total number of union members peaked in 1979 at an estimated 21.0 million. Membership has declined since (currently 14.8 million and 12% of the labor force). Private sector union membership then began a steady decline that continues into the 2010s, but the membership of public sector unions grew steadily (now 37%).


Union membership, 1947-2010: The graph shows steadily declining union membership in the last 6 decades.

Pressures dictating the nature and power of organized labor have included the evolution and power of the corporation, efforts by employers and private agencies to limit or control unions, and U.S. labor law. As a response, organized unions and labor federations have competed, evolved, merged, and split against a backdrop of changing social philosophies and periodic federal intervention.

As commentator E. J. Dionne has noted, the union movement has traditionally espoused a set of values —solidarity being the most important, the sense that each should look out for the interests of all. From this followed commitments to mutual assistance, to a rough-and-ready sense of equality, to a disdain for elitism, and to a belief that democracy and individual rights did not stop at the plant gate or the office reception room. Dionne notes that these values are "increasingly foreign to American culture"... "Labor-based political parties have been an important electoral force in every advanced capitalist country. Every one, that is, except the United States. Elsewhere, these parties were established in the late nineteenth or early twentieth centuries, and, ever since, there has been a great debate about why the American experience was different. "

Current Labor Union Studies

The history of organized labor has been a specialty of scholars since the 1890s, and has produced a large amount of scholarly literature. In the 1960s, as social history gained popularity, a new emphasis emerged on the history of workers, with special regard to gender and race. This is called "the new labor history". Much scholarship has attempted to bring the social history perspectives into the study of organized labor.

Modern Labor Organizations

Labor unions have lost power in the United States over the years and, today, union membership varies by sector.

Learning Objectives

Analyze the current state of labor unions

Key Takeaways

Key Points

  • Today, most labor unions in the United States are members of one of two larger umbrella organizations.
  • Unions have become an issue in the 2008-10 economic crisis, with the two of the largest automakers receiving $85 billion in loans in order to stay viable.
  • Union membership had been declining in the United States since 1954. In 2007, the labor department reported the first increase in union memberships in 25 years and the largest increase since 1979.
  • The U.S. Bureau of Labor Statistics' most recent survey indicates that union membership in the has risen to 12.4% of all workers, from 12.1% in 2007. For a short period, private sector union membership rebounded, increasing from 7.5% in 2007 to 7.6% in 2008. However, that trend has since reversed.

Key Terms

  • National Labor Relations Act: An act to diminish the causes of labor disputes burdening or obstructing interstate and foreign commerce, to create a National Labor Relations Board, and for other purposes.

What Are the Major Labor Unions?

Today, most labor unions in the United States are members of one of two larger umbrella organizations:

  • The American Federation of Labor–Congress of Industrial Organizations (AFL-CIO); or
  • The Change to Win Federation, which split from the AFL-CIO in 2005-2006.

Both organizations advocate policies and legislation favorable to workers in the United States and Canada, and take an active role in politics favoring the Democratic party but not exclusively so.

The AFL-CIO is especially concerned with global trade and economical issues.

How Are Labor Unions Regulated?

  • Private sector union members are tightly regulated by the National Labor Relations Act (NLRA), passed in 1935.
  • Public sector unions are regulated partly by federal and partly by state laws.

What is the State of Labor Union Membership Today?

Union membership had been declining in the United States since 1954. In 2007, the labor department reported the first increase in union memberships in 25 years and the largest increase since 1979.

Most of the recent gains in union membership have been in the service sector, while the number of unionized employees in the manufacturing sector has declined. Most of the gains in the service sector have come in West Coast states like California where union membership is now at 16.7%, compared with a national average of about 12.1%.

Historically, the rapid growth of public employee unions since the 1960s has served to mask an even more dramatic decline in private-sector union membership. Although most industrialized countries have seen a drop in unionization rates, the drop in union density (the unionized proportion of the working population) has been more significant in the United States than elsewhere.

In general the public sector unions have shown robust growth rates because wages and working conditions are set through negotiations with elected local and state officials. In such settings, the unions' political power thus comes into play. Unlike corporations, the local government cannot threaten to move elsewhere, nor is there any threat from foreign competition.

How Does the Public View Labor Unions?

Public approval of unions climbed during the 1980s much as it did in other industrialized nations, but declined to below 50% for the first time in 2009 during the Great Recession.

It's not clear if this is a long-term trend or a function of a high unemployment rate, which historically correlates with lower public approval of labor unions.

One explanation for loss of public support is simply the lack of union power. No longer do a sizable percentage of American workers belong to unions or have family members who do. Unions no longer carry the "threat effect:" the power of unions to raise wages of non-union shops by virtue of the threat of unions to organize those shops.

Unions have become an issue in the 2008-10 economic crisis with the two of the largest automakers receiving $85 billion in loans in order to stay viable. Some conservatives have blamed the near bankruptcy on unions and their costly labor agreements, including pension and health plans that put the U.S. automakers at a disadvantage to foreign companies. Others point out that the United Auto Workers has made extensive concessions to the car companies over the last 20 years in order to help the companies remain competitive, and allege that the automakers' recent troubles are better ascribed to other factors.

How Did Ronald Reagan's Influence Union Membership?

Most unions were strongly opposed to Reagan in the 1980 presidential election.

On August 3, 1981, the Professional Air Traffic Controllers Organization (PATCO) union—which had supported Reagan—rejected the government's pay raise offer and sent its 16,000 members out on strike shutting down the nation's commercial airlines. They demanded a reduction in the work week to 32 from 40 hours, doubling of wages, a $10,000 bonus, and early retirement.

Federal law forbade such a strike, and the Transportation Department implemented a backup plan (of supervisors and military air controllers) to keep the system running. The strikers were given 48 hours to return to work, otherwise they would be fired and banned from ever again working in a federal capacity.

A fourth of the strikers came back to work, but 13,000 did not. The strike collapsed, PATCO vanished, and the union movement as a whole suffered a major reversal, which accelerated the decline of membership across the board in the private sector.


Union coverage rate in the United States, 1973-2009

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