The Future of Organized Labor

This summer Americans witnessed an event that has become increasingly rare - a strike with a happy ending for workers.

After a 15-day Teamsters walkout that paralyzed the United Parcel Service - and many businesses that rely on it - management blinked. Though final contract details are still murky, the union prevailed in its key demands.

UPS workers will remain in the multi-employer Teamster pension plan. Thousands of part-time UPS workers will move into full-time jobs. Instead of getting bonus pay tied to company profits, full-time workers will get a pay hike that is equivalent to 3 percent a year and part-timers will see their pay rise approximately 7 percent a year.

The settlement hardly signals a turnaround in the fortunes of American labor, however. The long-term trends that have weakened unions remain firmly in place.

Decline of union clout

Union membership must start growing again if organized labor is to wield the clout it enjoyed in the early post-war period.

By international standards, union membership in the United States is low, and it continues to shrink. In the mid-1950s about 1 worker in 3 on non-farm payrolls was a member of a union - and membership rates were even higher in the private sector. But by the mid-1990s fewer than 1 worker in 6 had a union card. In the private sector, just 1 worker in 10 is a union member today.

Industries that were once union strongholds, like coal mining, auto assembly, and trucking, have shrunk or been challenged by powerful nonunion competitors. (UPS and the federal Postal Service, which dominate package delivery, have been unionized for decades, but they now face competition from nonunion upstarts like Federal Express.)

Even worse, unions have failed to establish a toehold in most of the nation's fastest growing industries, such as financial and business services.

Unions are conspicuously less confrontational than they once were. Labor disputes only rarely result in major strikes, which helps explain the news media attention lavished on the UPS dispute.

In 1970, approximately 30 potential workdays out of every 1,000 were spent in idleness as a result of labor disputes. Last year just two days out of every 1,000 were lost to strikes. Worker replacement, as in the two-year-old Detroit Free Press strike, and the threat of company bankruptcy, as occurred when Eastern Airlines went under, make strikes a less effective union weapon.

Many of the fringe benefits workers enjoy today - especially employee health benefits - are the product of aggressive union bargaining in the 1950s and 1960s. But the glory days of big management concessions are past.

In all but two years since 1983, union wage increases have trailed nonunion gains. During the last year, hourly pay among nonunion workers rose more than a percentage point faster than union pay.

Nonunion employers now set the pace in determining compensation patterns. They have required workers to share the cost of important fringe benefits, like pensions and health care. Union bargainers have been forced to follow suit.

Bleak picture for low paid

The most troubling aspect of the current labor situation is slow wage growth for poorly paid and middle-income workers and an astonishing rise in compensation for a handful of workers with exceptional skill or lofty positions in corporate hierarchies.

For reasons that experts only partly understand, workers with average and below-average pay have lost bargaining power, both inside and outside of the unionized sector. Company owners and highly skilled workers have gained profits and wages at the expense of workers further down the totem pole. Low unemployment has slowed this trend, as it did in the late 1980s. However, there is no sign that the long-term trend has been reversed.

Median pay has trailed inflation for more than two decades. In the past couple of years, wages have risen faster than prices. And unemployment has dipped to a 23-year low, forcing employers to fill job vacancies by offering higher pay.

But wage earners' recent good fortune is due mainly to a robust economy, not union clout. Sadly for most American workers, the outcome of the UPS strike does not change this picture.

* Gary Burtless is a senior fellow in economic studies at the Brookings Institution in Washington.