It is hard to be “the most pro-union president in American history,” as Joe Biden likes to claim, while also leading an effort to “reimagine and rebuild a new economy,” as he has also promised. That’s because these goals are fundamentally incompatible: America’s unions no longer fit the modern economy.
In fact, in many ways unions actually prevent the economy from evolving. The recently ended International Longshoremen’s Association strike is an illustration. The dockworkers went back to work after getting a 61.5% pay increase, but they are still negotiating “language to protect us from automation,” in the words of the president of the Baltimore local.
Automation stands to make US ports and transportation of goods cheaper and more efficient. And it is easy to see why unions oppose it: Much of the decline in manufacturing employment over the last several decades was due to automation.
And it’s not just the dockworkers. Demands from trade unions are a big reason why upgrading infrastructure is so much more time-consuming and expensive in the US than other countries. UAW and Boeing and machinists union both demanded reinstating defined benefit pension plans, which have made it harder for some firms to invest in innovation.
What explains all this recent friction between workers and management? Neither side is blameless. But unions are structured, and collective bargaining is organized, for an economy that no longer exists.
Unions have always tended to benefit their members at the expense of other workers. But even their members are not getting such a great deal these days. Union membership peaked in the 1950s, at about one-third of the labor force. But the economy was very different then — one-third of the labor force worked in manufacturing. Technology was also less standardized, so each firm produced things its own way. This meant greater returns for longevity, but — since work was more routine — smaller returns to competence. In fact, it was harder for employers to know which workers were more productive.
Unions were built for this kind of economy. They provided job security and set pay by essentially compressing the wages of high- and low-productivity workers.
Now the nature of work has changed; manufacturing jobs account for less than 10% of workers. Changes in technology mean higher returns to competence, and employers are better at monitoring how hard and well people work. Workplace technology has also become more uniform, not just in office work but in manufacturing.
All of these trends make it easier, and often beneficial, to change jobs. This means the old union model — built around protecting jobs — is less valuable to workers. This may be why, despite high public support for unions in general, few Americans actually want to join one, and union membership has been declining.
It doesn’t have to be this way. Not all unions have resisted modernization. Countries such as France manage to complete public works projects with union labor at a reasonable price. And on a more theoretical level, unions still have value.
They should provide more job security, better pay and a stronger voice to workers. Better security could be achieved by reforming unions to be more like guilds — more like the Screen Actors Guild than the UAW, negotiating contracts but leaving room for flexibility. A more modern union would provide not only health insurance, for example, but also wage insurance against job loss, temporary layoffs or reductions in hours.
Unions should also work with employers to offer retraining and apprenticeships. They should be willing to allow employers to cut members’ hours rather than lay them off during downturns, and do some bargaining about base pay and hours, but still allow for high productive workers to be compensated for their contribution, the way movie stars are. Such a framework would fit better with the modern economy and serve workers who need downside protection — but also stand to benefit from a changing economy.
The port strike showed just how naïve and counterproductive it would be to revive unions in their original form while also expecting them to fit in a changing economy. To remain relevant in this 21st-century economy, unions are going to have to let go of some of their 20th-century think
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