The Last Gasps of American Labor

The strike by the United Auto Workers (UAW) may succeed in forcing the Big Three automakers—GM, Ford, and Stellantis—to agree in part or in whole to the union’s demands, and comes at a time when the militancy of organized labor is greater than it has been in decades. But even if the union were to triumph on every one of those issues, it would still not be enough to reverse the decline of organized labor in the American private sector. That is a tragedy for the country, because if private sector unionism cannot thwart the unrelenting efforts of employers to drive down wages, the American middle class will become extinct, with the exception perhaps of unionized public employees.

It is no coincidence that the “30 glorious years” of mass prosperity that followed World War II coincided with the high point of trade union membership and pro-union government policies, in Western Europe as well as the U.S. The U.S. had the bloodiest labor violence of any Western country between the Civil War and the New Deal, with the National Guard, Army, or private detectives commonly used to crush railroad, mine, and factory workers on behalf of corporations. In American courts, meanwhile, unions were often treated as illegal conspiracies.

The prosperity of American industrial workers of the 1950s like those in the automobile industry was not the result of radical technological change. Work on the assembly line was not that different in 1950 than it had been in the 1920s. What workers had in the 1950s that they lacked a generation before was power—the collective power of trade unions, without which isolated individual workers have no leverage in negotiations with giant corporations over wages, hours, and benefits. Between the 1950s, when a third of the American workforce was unionized, and the 1970s, productivity growth was translated into widespread wage growth because unions forced employers to share more of their profits with workers, along with managers and shareholders.

Today, however, only around 6% of the private sector workforce is unionized in the United States. The decline of unions in industries like meatpacking has meant the return of low wages and conditions like those exposed in Upton Sinclair’s The Jungle (1904). Service sector industries like fast food, which can provide decent jobs when they are unionized in other countries, offer poverty wages in America. Low wages and unstable schedules undermine stable family formation and community involvement in sports leagues and religious congregations among America’s 21st-century proletariat, just as they did in the 1800s and early 1900s. Unable to join the middle class through work alone, many workers in post-union America, like those of the pre-union era, work several jobs or turn for income to part-time gigs, which include not only stints for Uber or Lyft but also crime and prostitution (in its high-tech legal form as OnlyFans).

The decline of unions also changes our politics. Without the massed power of organized labor to counterbalance the influence of organized business in politics, the two parties serve rival business lobbies and affluent households. Corporations and banks and wealthy donors, along with nonprofits and the universities that they bankroll, celebrate race and gender characteristics which divide the working class while opposing unionization efforts that transcend those divisions.

Whether most American workers in the private sector in the future become prosperous middle-class citizens or struggling, insecure serfs will depend largely on the power of unions. Unfortunately, a revival of organized labor in the private market faces numerous obstacles, including inadequate federal labor law, transfers of production to American “right-to-work” states or foreign countries, and high levels of unskilled immigration.

Labor Law and Workers’ Rights

The major obstacle to a revival of private sector unionism is American labor law itself. With the exception of rail, transit, and airline employees covered by the Railway Labor Act of 1926, American workers seeking to join a union are governed by the National Labor Relations Act of 1936—the Wagner Act, named after Robert F. Wagner, a U.S. senator from New York. The Wagner Act was actually the second attempt by Congress during the presidency of Franklin Delano Roosevelt to promote collective bargaining. It was passed in 1935 when the Supreme Court struck down most of the National Industrial Recovery Act (NIRA) of 1933 as an unconstitutional delegation of power from Congress to the presidency.

The NIRA and the National Recovery Administration (NRA) that enforced it were not “fascist,” as libertarian propagandists often claim. Rather, the NIRA quite sensibly sought to avoid one-size-fits-all rules for business and labor regulation imposed by government, in favor of a high degree of self-regulation by business associations, which under government supervision would set codes of fair competition. Such self-regulation by industry with a government veto exists to this day with state bar associations, the American Medical Association, and various university accrediting agencies. The NIRA system, in which the government’s role was limited to ratifying sectoral codes, envisioned a more flexible system than the alternative, in which authorities in Washington engage in top-down regulation of all industries and all labor markets.

The most controversial part of the NIRA proved to be Section 7a, a provision guaranteeing workers the right to bargain collectively for wages, benefits, and working conditions. Section 7a was spared by the Supreme Court when it ruled that most of the NIRA was unconstitutional, going on to inspire the National Labor Relations Act/Wagner Act of 1936, which restated the right of workers to collective bargaining. The Wagner Act also outlawed employer-controlled company unions and established an elaborate system for union elections by employees under the supervision of the National Labor Relations Board (NLRB).

The mobilization of the U.S. economy during World War II boosted union membership because the Roosevelt administration encouraged unionization of defense contractors. In 1950, the so-called Treaty of Detroit—collective bargaining agreements negotiated between Walter Reuther’s UAW and General Motors, and also Ford and Chrysler—was another victory for American organized labor. At its peak, about a third of the workforce (mostly male, at a time when many married women were homemakers) belonged to a union.

But the Wagner Act was designed with a flaw. As amended by later law and court interpretations, it requires “enterprise bargaining”—that is, the unionization of each worksite, not each company, unless a company agrees otherwise. This was not a problem in the case of integrated, consolidated steel or automobile factories. But it means that each Amazon warehouse must be unionized one at a time. This presents a huge obstacle to unionization efforts of companies with many worksites. Unionization can also be thwarted by franchise organization, and by the replacement of full-time employees with contractors.

Transfers of Production to Right-to-Work States or Other Countries

Another challenge for American unions is geographic labor arbitrage. In 1947, a conservative coalition of right-wing Democrats and Republicans in Congress overrode President Truman’s veto to enact the Taft-Hartley Act. Taft-Hartley allowed states to pass “right-to-work” laws to outlaw unionized “closed shops” in which all workers must belong to the union and pay dues. Not surprisingly, the first right-to-work acts were adopted by Southern states, with the motive of keeping their workers powerless and luring investment by Northern corporations seeking cheap, nonunion labor. Today 26 states, mostly in the South and Great Plains, along with the U.S. territory of Guam, have right-to-work laws (Wisconsin Democrats recently pushed through a repeal of Wisconsin’s right-to-work law).

Between the 1940s and the end of the Cold War, many U.S. corporations shut down their unionized facilities in the Northeast and Midwest in order to set up new factories in the low-wage, low-tax, anti-union South and Southwest. The end of the Cold War provided American firms with new opportunities for geographic labor arbitrage. Thanks to the opening up of former communist economies like China, along with the abandonment of protectionist policies by many developing countries, corporations in the U.S. as well as Western Europe and East Asia suddenly had a labor pool of billions of workers, many of them lacking civil and political as well as labor rights in authoritarian regimes. In 1999, General Electric CEO Jack Welch declared: “Ideally, you’d have every plant you own on a barge.” Offshoring by corporations determined to minimize labor costs has wiped out much of American private sector unionism, as well as much domestic manufacturing.

Immigration and American Labor

To be sure, most jobs cannot be offshored to other countries. Most Americans even in the mid 20th century worked in the nontraded domestic service sector. Restaurant jobs and janitorial jobs and farm harvesting and maid jobs cannot be outsourced to foreign workers—but they can be performed by immigrants with a variety of legal classifications and varying rights: legal permanent residents, “guest workers” (indentured servants bound to a particular employer or labor contractor), and illegal immigrants.

If you read the op-ed pages of major newspapers and listen to most academic economists and business lobbyists, you regularly come across two contradictory assertions. One is the ritually repeated claim that mass unskilled immigration has little or no effect on wages and does not displace any American workers. The other is the argument that mass unskilled immigration needs to be increased in order to combat inflation. Why are these two statements contradictory? Because the mechanism by which inflation is lowered by immigration is the suppression of wage growth.

Now and then establishment backers of higher immigration levels blurt out the truth. According to FWD.us, a lobby founded by Mark Zuckerberg and other corporate titans advocating for more immigrant workers, “When labor is in short supply relative to demand, employers offer higher wages, which are in turn passed on to consumers leading to rising prices.”

Here FWD.us concedes that labor shortages exist, not because there are jobs that workers already present in the U.S. are unwilling to do for any wage, but because employers are unwilling to pay wages that are high enough to attract American workers, including naturalized immigrants and legal permanent residents.

FWD.us cites a study showing a correlation between lower immigration numbers and the ability of workers to demand higher wages following the COVID-19 pandemic, when immigration temporarily declined: “For example, the correlation between wage increases and the number of new residents was particularly strong in construction and leisure and hospitality, industries where immigrants make up a fifth of the workforce.”

Aren’t wage increases for low-wage construction, leisure, and hospitality a good thing? Not according to FWD.us. Higher pay for low-wage workers is bad, you see, because it raises costs for employers and prices for consumers and might contribute to wage-push inflation.

To prevent the wages of low-income American workers in the service sector from going up, FWD.us calls for flooding the labor market with immigrant workers: “One way out of the [wage-push inflation] spiral, and to stabilize inflation, is to insert new workers into the labor force, moderating the role labor shortages are having on wages.”

The next time that a politician, pundit, or business representative calls for more immigration as a way of reducing inflation, remember how it does so—by making it harder for workers to win pay increases.

Contrary to the employer-class propaganda you are likely to read in The New York Times, The Washington Post, The Financial Times, and other house organs of the economic elite, the post-1960s wave of immigration by low-wage workers has enabled employers to break unions, lower wages, and worsen conditions in many low-wage industries from meatpacking to construction to farm labor. The greatest victims of displacement or the suppression of wage growth by mass unskilled immigration have often been less-educated, low-wage American workers of all races, some of them immigrants themselves or members of historically disadvantaged minority groups. For example, in its book-length study Illegal Aliens: Influence of Illegal Workers on Wages and Working Conditions of Legal Workers (1988), the U.S. General Accounting Office (GAO) observed:

In the post-World War II period, the janitors working in the high-rise districts of Los Angeles, about half of whom were U.S. blacks, had won excellent wages and working conditions under the leadership of the Service Employers International Union (SEIU). But, in the early 1980s a group of aggressive non-union firms, who hired predominantly illegal workers, were able to wrest the best building contracts from the unionized firms. As a result, wages fell and most of the U.S.-born black janitors lost their jobs.

From the 19th century to the 21st, organized labor in the U.S. often favored the restriction of immigration from Europe as well as from Asia and other parts of the world as a means of defending itself. In the 1920s, Samuel Gompers, the immigrant Jewish founder of the American Federation of Labor, and A. Philip Randolph, the African American founder of the Brotherhood of Sleeping Car Porters and Maids, both supported lowering immigrant numbers in the economic interest of the union members they represented.

But by the 2000s most American union members were public employees like teachers. Their guild credentials and language skills ensured that they were not threatened by immigrant competition in the way that, say, bricklayers and janitors and maids might be. The AFL-CIO, which represents many of these workers, had declined into a partisan cash machine and get-out-the-vote operation for the Democratic Party. Meanwhile, mainstream Democrats shifted from seeking crackdowns on illegal immigration and border security enforcement in the Clinton years to support for more immigration and lenient border enforcement by the 2020s.

Assuming that most immigrants will always vote for the Democratic Party, mainstream Democrats adopted the talking points about the alleged benefits of mass immigration formerly associated with open-borders libertarians on the right and cheap-labor business trade associations.

Once the Democratic Party and the shriveled remnants of American private organized labor abandoned their historic skepticism about low-wage immigration, the temporary result was a bipartisan consensus in favor of the business-libertarian line on immigration under Bush and Obama, which eventually found its nemesis in Donald Trump. The fact that anti-immigrant sentiment has often been driven by racial or ethnic bias is used by gentry liberals and libertarian conservatives to imply that any mention of harmful effects on wages and unions of trade or immigration policies must be motivated by racism and xenophobia.

In 2015, Bernie Sanders shattered the new bipartisan taboo and made the traditional nonracist, pro-labor economic case against wage-suppressing and union-weakening mass unskilled immigration in an interview with the journalist Ezra Klein. When Klein suggested that progressives should consider an open borders immigration policy, Sanders exploded. “Open borders? That’s a Koch brothers proposal … I think, from a moral responsibility, we’ve got to work with the rest of the industrialized world to address the problems of international poverty, but you don’t do that by making people in this country even poorer.” For stating the traditional pro-union position on immigration shared by Gompers, Randolph, Cesar Chavez, and Barbara Jordan, the pro-union socialist Sanders was denounced by much of the woke gentry left for giving aid and comfort to the right.

Multiple factors, then, block a revival of private sector unionism. The legal framework of enterprise bargaining under the Wagner Act means that companies must be unionized one worksite at a time—something that is difficult or impossible in the case of firms with many small and scattered facilities. In traded sector industries like manufacturing, companies can replace unionized workplaces with nonunion work sites in the anti-union American South or in low-wage foreign countries, in the absence of protectionist measures like tariffs or local content regulations.

Firms in domestic service sector industries like fast-food restaurants and construction firms, to be sure, must perform their work locally and are more vulnerable to strikes and threats of strikes. But the advantage this could give unionized workers can be stymied by employers’ ability to hire from the growing pool of legal immigrants, illegal immigrants, and legal guest workers—including the expanding pool of cheap labor the Biden administration has created by passing out work permits to an ever-increasing number of migrants, many of them really economic migrants who have been taught that ritually asking for asylum is the magic password for entry to the U.S. labor market.

As we have seen in the case of some recently unionized Amazon warehouses, there can still be local and limited victories for organized labor under the Wagner Act. And New York and California have revived the idea of wage boards with representatives from labor, business, and government who set minimum wages and benefits and standards for low-wage workers in occupations like fast food. But now that organized labor in the private sector has fallen from a third of the workforce in the 1950s to around 6% today, much more radical structural reforms are needed to restore the collective power of working-class Americans.

Models can be sought in other democracies where sectoral bargaining means that all employers and all unions in a particular industry bargain simultaneously and are bound by the resulting contract. Keep in mind that something like this system was the original vision of the National Industrial Recovery Act. It is also possible to have high levels of coverage by collective bargaining agreements in the absence of high levels of union membership. Union membership is as low in France as it is in the U.S., but most French workers are governed by industrywide agreements between unions and employers.

Absent such radical labor-market reforms at the federal level, most of the U.S.private sector workforce will continue to be atomized, powerless, and at the mercy of employers. A recent Gallup poll shows that public approval of unions has risen from 48% in 2010 to 67% in 2023, with nearly half of Republicans—47%—approving of labor unions. But public policy in America reflects the interests of elites, not the preferences of most voters or the public as a whole. Restoring organized labor in the private sector will continue to be a low priority for most Democrats and Republicans, given the hostility toward unions of many individual and corporate donors in both parties. That’s to say nothing of the hostility to unions from anti-labor small business owners in the GOP, and the relative indifference of college-educated professionals whose priorities are abortion, climate change, and race-and-gender identity politics in the Democratic Party. Even if the UAW wins the present battle, American labor may still lose the war.