Thanks to Sheldon Alderton, a LinkedIn contact & group member of Charles Krugel’s Labor & Employment Law & Human Resources Practices Group (3,900-plus members). As a followup to the recent Construction Dive article quoting me, Sheldon recently asked me questions about the viability of labor unions going forward. I’ve decided to turn Sheldon’s questions & my answers into a blog & LI post. Below are his questions & my answers.
Hey Charles, I was super intrigued by the Construction Dive article you were featured in about labour shortages and union labour power. I worked on the tools for 10 years before going to university and ultimately starting a career in construction technology. I never once worked for a union. Mainly because one didn’t exist for the trade I was in (architectural sheet metal). That said, tons of friends did and still do. In university I studied political philosophy with the hopes of law school (then the pandemic happened).
I’m curious to hear your thoughts about the labour movement and it’s relevancy in the future of work. Labour jobs are incredibly interesting to me because they cannot be fully automated and things like UBI [universal basic income] need not apply. How do you think labour can stay relevant going forward? Especially given the massive decline in people entering skilled trades jobs. If unions do lose power, how can we ensure workers have their say against industry? Curious to hear your thoughts! Cheers, SA
Sheldon Alderton (He/Him)
Hey Charles!
Hope your Friday is off to a great start! I had another thought today while listening to the morning news (I’ll have to find the exact story later).
We are seeing more investment firms and mega-corps buying up construction companies. Berkshire Hathaway for example is getting into the home building industry by buying up tons of small to midsize home builders – I talk to people from these companies almost daily. Do you think this will have an impact on labour and skilled trades? If so, how? Looking forward to your thoughts!! SA
Here’s my response:
Thanks for the great questions & your interest Sheldon!
In the U.S., I’m not convinced that labor unions can stay relevant going forward. Relative to organized labor’s viability, there’s at least two sides to unions to consider (there’s at least two sides to almost everything I guess).
The first side is the traditional representational aspect of labor unions. That relates to representing members in disputes with employers & in negotiations over the legally mandated wages, hours & conditions of employment. Going back decades, unions have been at odds with themselves over the representation of underrepresented classes of people; I.e., legally protected classes, like ethnic minorities, women, the disabled, veterans, non-Christian religions, etc. Labor unions have a long history of prejudice against these groups; so much so that they’ve lost a great deal of credibility with these increasingly emerging segments of society. Unions have lost so much ground that it’s possible that the damage done is irreparable. Moreover, there’s not a lot of empirical evidence that unions make employees more successful or secure. Union jobs tend to be higher paying & generally provide better benefits (see https://www.bls.gov/news.
The second side to labor unions is that they’re a business themselves, & many labor unions are poorly run. You only need to examine union pension plans to see that many unions are in dire financial straits. Many plans are severely underfunded, & their debts far exceed the value of their assets. See this article as an example of one huge fund’s problems: https://www.
Consequently, because of this confluence of bias & fiscal mismanagement, there aren’t many businesses, or employees, who want to do business with unions. Any group of employees or any business that desires unionization has to factor higher operating costs and the union’s pension debt (assuming one exists) into their decision. If they don’t, they run the risk of federal ERISA/MePPA penalties (Employee Retirement Income Security Act amended by the Multiemployer Pension Plan Amendments Act (MPPAA)). These penalties can be staggering for a business of any size ($259k for a small family owned bakery–see: https://www.
I suppose that you can add a third element to this, & that’s improved human resources management. In industrialized nations, HR management has improved, & continues to improve. Furthermore, at least in the U.S., there are constantly new laws passed that ostensibly improve the relationship between labor & management, or at least “level the playing field.” These laws also increase equality for historically underrepresented classes of workers to obtain work & compensation on par with their while male counterparts. However, we still have a ways to go. As indicated by the U.S. Bureau of Labor Statistics most recent statistics, females still earn only 82-cents for every dollar a man earns (https://www.bls.gov/opub/reports/womens-earnings/2020/pdf/home.pdf). Progress happens in the U.S., just very slowly.
Often, I get inquiries from business owners about purchasing a unionized business or getting into a unionized industry. My answer is usually the same, be extremely careful. Do your due diligence.
Generally speaking, unions are much more expensive and difficult to work with than non-represented employees or industries. If you’re a business owner or operator looking to get into a unionized business or industry, do your research before making any costly decisions. Research if the union or industry has a multiemployer pension plan & whether that plan is underfunded or fully funded. Review the pension plan’s annual statements. Learn about the union’s finances, & research how many unfair labor practice charges & arbitrations have been filed by the union. Unionfacts.com is probably the best place to start when researching a union or a unionized industry. If as a business owner, you don’t want to do your due diligence on your own, then hire someone to do it for you. If you don’t do the requisite due diligence, then don’t get into a unionized business or industry. Once you’re unionized, it’s extremely difficult to get out & you’ll continue to pay or lose money. In some respects, unions are “legalized racketeering.” More specifically, you’re paying the union to protect your business from your own employees & from the union.
I suppose that one way unions can stay relevant is to better manage their pension plans. I don’t know how realistic this is when you consider the amount & years of mismanagement that’s occurred. Bankruptcy in an option for some of these pension plans though the workers will bear the brunt of the damage via diminished payouts. Alternatively, unions can get out of the ERISA regulated retirement plan business, & focus on employer offered & employee controlled 401ks & traditional representation. Focusing especially on the representation of underrepresented classes of people, & bringing their wage rates into greater parity with those of white males may be labor’s last & best chance for relevance (https://blog.dol.gov/2021/03/
Over the past 30 years, there’s also been an increase in workers & labor associations. These associations aren’t unions in that they’re not necessarily membership or dues driven. They don’t directly negotiate with employers or employer associations. Instead these labor associations engage in boycotting, picketing, political action & legal representation of underrepresented or unprivileged employees & job seekers without seeking certification by the NLRB (National Labor Relations Board). These associations are typically nonprofits, & some of them are even funded by employers, unions, academic grants & other fundraising. Here’s one example of such an organization: https://www.
Regarding the construction industry & trades, & large conglomerates buying up businesses, I don’t think that this will favorably impact organized labor. Large companies have greater resources to wear down unions. Companies can relocate operations, outsource labor, engage in expensive & prolonged anti-organizing activities, & ultimately improve their human resources management, or pay their employees more & provide better benefits. Improving HR management or increasing compensation is almost always an effective way to combat organized labor, labor associations & employee complaints.
Hope this helps & feel free to followup.
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