Business unionism is unionism that focuses on “bread-and-butter” issues (such as wages, benefits, and job security) so that workers get a larger slice of the economic pie. U.S. unions, which practice business unionism, have traditionally avoided trying to influence the running of the company, and they provide little input to management on strategic decisions such as how to market a product or what types of new business to enter. It is rare to see U.S. union members on a company’s board of directors.14 U.S. labor laws reinforce this tendency by making wages, hours, and working conditions mandatory topics for bargaining. This means that management is obligated to bargain on these issues in good faith.

In contrast to unions in some other countries, U.S. unions tend to be organized by type of job. For instance, truck drivers are often members of the Teamsters Union; many public school teachers are members of the National Education Association; and most autoworkers, with the exception of autoworkers in foreign transplant plants, belong to the United Auto Workers, no matter which automaker employs them. Because most unions represent employees from multiple employers, they are typically arranged into locals governed by a national body. Each local consists of the union members in a particular geographic location. The local has its own officers and is generally concerned with day-to-day labor practices and disputes. The national organization ties these locals together, governs how locals are organized and operated, and, most importantly, establishes policy for contract negotiations.

The AFL-CIO, formed by the merger of the old American Federation of Labor and the Congress of Industrial Organizations, is a confederation of many different unions. Because it represents so many workers (approximately 11.6 million), the AFL-CIO has a tremendous influence on federal labor policies.15 It also provides support to individual national unions and mobilizes support for laws that are beneficial to working people. Finally, the AFL-CIO resolves disputes between national unions.16

In 2005, four large unions representing 4 million employees voted to disaffiliate from the AFL-CIO and become independent. The unions that left the AFL-CIO were the Service Employees International Union, the International Brotherhood of Teamsters, the United Food and Commercial Workers Union, and Unite Here, a union of apparel and hotel workers. These unions wanted the organized labor movement to spend more time and money recruiting new members.17 Shortly afterward, the Laborers, Carpenters, and United Farm Workers unions joined this group of independent unions and formed Change to Win. Currently, Change to Win is a confederation that represents seven unions with 5.5 million members.18

Unions and management are the dominant players in the U.S. labor relations system. Generally, the U.S. government takes a neutral role, allowing the players to make the rules that govern their particular workplace. The mechanism of choice for developing these rules is collective bargaining. Under a collective bargaining system, unions and management negotiate with each other to develop the work rules under which union members will work for a stipulated period of time, usually two or three years. Work rules include any terms or conditions of employment, including pay, work breaks and lunch periods, vacation, work assignments, and grievance procedures.

Unions that are legally elected by workers in the United States act as the sole representative of those workers’ concerns to management. Although unions may compete for recognition, once one is recognized, individual employees cannot choose to be represented by another union.

The product of collective bargaining is a labor contract that spells out the conditions of employment and work rules that affect employees in the unit represented by the union. Because both parties enter into the contract voluntarily, one party can use the legal system to enforce the terms of the contract if the other party does not fulfill its responsibilities.

Labor contracts are an important feature of the U.S. labor relations system. In many other countries, such as Germany and Sweden, working conditions and employee benefits are codified into labor laws, but in the United States labor and management have historically established workers’ economic benefits without government interference.

U.S. labor laws view labor and management as natural adversaries who will disagree over the distribution of the firm’s profits. For this reason, rules have been put in place so that the pie is distributed peacefully.

In a sense, the U.S. labor relations system is modeled on the U.S. court system. In a court, “justice” may be considered the result of the clash of adversaries, with the district attorney representing the plaintiff’s interests and the defense attorney representing the defendant’s interests. Similarly, “economic justice” may be considered the result of negotiations between the union (the advocate of the employees) and management (the advocate of the firm’s owners). Although this adversarial model worked well for many years in the United States, it has recently become an obstacle to union–management cooperation, which has grown in importance as both labor markets and product markets have become more globally competitive.

As Figure 15.1 shows, 11 percent of the U.S. labor force is unionized.19 This is down from a peak of about 35 percent in 1945. In addition, only 6.6 percent of the private-sector workforce in the United States is unionized. There are several reasons for this decline: the shrinking base of blue-collar industrial jobs (the traditional area of unionization) due to automation and foreign competition; the increase in employment legislation that provides workers with remedies that address their needs; and the aggressively hostile labor relations strategies of many companies, which have made it difficult for unions to organize workers. Other possible reasons for declining union membership are an increasingly educated workforce, as well as the highly publicized legal problems of some union leaders.

Despite shrinking union membership, unions continue to be an important part of the U.S. labor relations system because they establish wage and benefit patterns that influence nonunion employers. In this way, unions indirectly affect about 40 to 50 percent of the U.S. labor force. In fact, many employees of nonunion firms benefit from the upward adjustments in their wages and benefits that their employers make to prevent a union from organizing their workers. Unions have also pioneered worker safety measures and antidiscriminatory labor practices. Unless the underlying causes that gave birth to unions are abolished—low wages, unsafe working conditions, health hazards, arbitrary firings, and layoffs—it is a safe bet that unions will not disappear.

As the percentage of unionized workers in the private sector has declined, the percentage of unionized workers in the public sector has increased substantially. This increase is due in part to the expansion of local government in the 1980s and in part to organizing efforts that have targeted both public-sector and service-sector employees.20

Currently, the union membership rate for public-sector workers, which includes those working for federal, state, and local governments, is 36 percent, more than five times higher than the membership rate in the private sector. In addition, since 2010, unionized workers in the public sector represent a majority of all unionized workers in the United States.21

Unions in the public sector are in many ways a special case of labor relations, because although public-sector employees are more likely to be organized than private-sector ones, public-sector workers tend to have less bargaining power. There are two main reasons for this difference.

First, governmental power is diffuse. The typical private-sector firm is organized hierarchically so that there is one individual at the top who is in charge. However, governmental bodies in the United States have been intentionally structured so that power is divided among the legislative, executive, and judicial branches. This makes it more difficult for public-sector unions to negotiate and bargain collectively, because the employer’s representative often has only limited authority. For instance, a city employees’ union may bargain with the mayor’s office for higher pay, but the money for the higher salaries has to be appropriated by the city council, which may not concur with the mayor.

The second reason public-sector unions have less power is that many governmental entities severely restrict their employees’ right to strike. The reasoning is that the government is a monopoly provider of essential services such as police protection, garbage collection, and highway maintenance. If its employees were to go on strike, there would be no one else to provide these essential services. States differ in restrictiveness on this issue. For instance, Colorado forbids strikes by any state employees, including teachers. In contrast, New York, Michigan, Wisconsin, and some other states give some of their employees the right to strike in certain circumstances.

Because their right to strike is limited, public-sector unions have taken the lead in devising and experimenting with new ways to negotiate, including mandated arbitration and mediation. Their limited economic power has also made public-sector unions less likely than private-sector unions to put pay issues at the top of their agendas. For instance, teachers’ unions often focus on such issues as class size, job security, and academic freedom rather than straight salary issues.

Although having government as an employer can present difficulties to unionized workers, it also brings certain advantages. One is that union members, by virtue of the fact that they are also voters, have some political power over their employer. Because voter participation in nonfederal elections is often low in the United States, a well-organized public-sector union can be a powerful force in local politics. In fact, even national candidates court public-sector union support. A second advantage stems from the very diffusion of power we discussed earlier. This makes it possible for the union to play one branch of government against the other in certain circumstances. For instance, a union may be able to achieve a bargaining victory because it has the support of a city council member whose vote the mayor needs on some unrelated issue.