Post-recession pattern: Union ranks continue to dwindle
July was a good month for factory workers in Anderson, Ind., where a Honda parts supplier announced plans to build a plant and develop as many as 325 jobs. But it was a grim month in the Cleveland suburbs, where an industrial plastics firm told the state of Ohio it was closing a plant and laying off 150 people.
Nearly all of the Ohio workers belonged to a labor union. Workers at the Indiana plant don't. Their fates fit a post-recession pattern: American factories are hiring again, but they're not hiring union members.
Manufacturers have added half a million new workers since the end of 2009, making the sector one of the few bright spots in an otherwise weak recovery. And yet there were 4 percent fewer union factory workers in 2012 than there were in 2010, according to federal survey data. On balance, all of the job gains in manufacturing have been nonunion.
The trend underscores a central conundrum in the “manufacturing renaissance” that President Obama loves to tout as an economic accomplishment: The new manufacturing jobs are different from the ones that delivered millions of American workers a ticket to the middle class over the past half-century.
It used to be that factory jobs paid substantially better than other jobs in the private sector, particularly for workers who did not go to college. That's less true today, especially for nonunion workers in the industry, who earn salaries that are about 7 percent lower than similar workers who are represented by a union.
By one measure — average hourly earnings — a typical manufacturing worker now earns less than a typical private-sector worker of any industry. Throughout the 30 years before the recession, the reverse was the case.
The changes likely have allowed U.S. manufacturers to compete better in the global economy and, in the process, to start hiring again. Conservative economists say that as American companies pay workers less, the firms' costs go down and they become more attractive to investors.
Unions, contends James Sherk, a senior policy analyst at the conservative Heritage Foundation, have not been able to sell themselves as a “value proposition” in the manufacturing sector. “Unionized firms are not getting the investment,” he said. “Where investors see the opportunity is nonunionized firms.”
On the other hand, depressed manufacturing pay means that middle-class consumers, whom many economists see as the engine of economic growth, have less money to spend.
The typical nonunion factory worker earned less in 2011, after adjusting for inflation, than he or she did in 2009. There's a reason individual workers are taking these jobs nonetheless: They don't have much leverage to demand higher salaries, because there continue to be far more workers looking for manufacturing jobs than actual jobs to fill. The unemployment rate for manufacturing workers was 7.5 percent in December, according to the Labor Department.
Union leaders and liberal economists say the decline in unionized factory jobs is a result of efforts by conservative policymakers to limit the power of labor groups. They argue that the ripple effects on workers' wages hurt people across the economy, not just those who work in manufacturing or belong to unions.
“The big problem is that when you look at the wage gap we used to see between manufacturing and nonmanufacturing, that's getting smaller,” said William Spriggs, chief economist for the AFL-CIO. Factory workers, he said, spend less than they would if wages were higher, which reduces domestic demand for goods and services: “That's what we've been doing in the United States for the last 30 years,” he said. “We've been cannibalizing our own consumer base.”
Manufacturing is the industry that many Americans most associate with unions, but the industry has moved away from unionization for decades. There were 12.5 million nonunion manufacturing workers in America last year, the same number as in 1977. In contrast, there were 1.5 million employees represented by a union in 2012 — 6 million fewer than in 1977.
By the end of last year, barely one in 10 manufacturing workers belonged to a union or was represented by one. Thirty years ago, that number was one in three.
Those figures come from the government's Current Population Survey. The survey releases union membership data monthly, and the Labor Department is to publish an annual report summarizing its findings for 2012 this month.
Sherk, the Heritage Foundation researcher, got a jump on that report by compiling the government's monthly statistics. His calculations, based on 11 months of data, show that nonunionized manufacturing employment grew by about 700,000 net jobs from 2010 through 2012, a 6 percent increase. Unionized manufacturing jobs declined by 60,000, or about 4 percent. (Those numbers differ slightly from the Labor Department's calculation of overall manufacturing job growth because they are drawn from different economic surveys.)
A majority of union jobs today are government jobs — and those jobs, too, have taken a beating from the recession. There were nearly 230,000 fewer public-sector union workers in America in 2012 than there were in 2011, Sherk calculated from the Current Population Survey data.
Two factors are driving that decline, Sherk and union leaders agree. States and local governments have laid off workers in recent years to fill budget shortfalls caused by the recession and weak recovery. Public employment is down by more than 600,000 jobs since mid-2009.
The data don't make clear what, exactly, is driving the decline in union manufacturing jobs even as the industry expands hiring.
It does not appear to be regional: The states with the fastest post-recession factory job growth include a mix of relative union strongholds, such as Washington state, and lightly unionized states such as South Carolina. They also include Indiana and Michigan, where Republican governors recently signed “right to work” laws.
It's possible that recent manufacturing job creation was concentrated among smaller firms, which are less likely to be unionized.
Jared Bernstein, an economist at the Center on Budget and Policy Priorities and a former Obama adviser, theorizes that big manufacturing firms, which are more likely to employ union workers, can afford to invest in new automated equipment to help fill their demand. That would leave smaller firms to do the bulk of the industry hiring.
“Robots don't join unions,” Bernstein said, “and smaller shops aren't buying robots.”