PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

The 40-Year Decline in Labor Union Membership and the Modern Economy

By at 24 January, 2020, 11:58 am

by Raymond J. Keating-

The latest report from the U.S. Bureau of Labor Statistics shows that the long, breathtaking decline in labor union membership continued in 2019.

The number of labor union members registered 14.57 million in 2019. That was down from 14.74 million in 2018.

As a percent of employed, the 2019 level came in at 10.3 percent, and that was down from 10.5 percent in 2018.

In terms of the private sector, the number of union members fell from 7.578 million in 2018 to 7.508 million in 2019, and as a share of private-sector employed, 2019 came in at 6.4 percent in 2018 and 6.2 percent in 2019.

Even public-sector union membership dropped in 2019. The number declined from 7.167 million in 2018 to 7.066 million in 2019, with the percent of public-sector employed falling from 33.9 percent to 33.6 percent.

This is all part of a much longer downward trend for labor unions. According to unionstats.com, the number of union members came in at 23.54 million in 1979. Forty years later that declined to 14.57 million. The percent of employed fell from 24.1 percent to 10.3 percent.

The private sector accounts for the bulk of that decline. In 1979, the number of private-sector union members stood at 15.12 million, dropping to 7.508 million in 2019. As a percent of employed, the decline was from 21.2 percent in 1979 to 6.2 percent in 2019.

As for the public sector, there were 5.868 million labor union members in 1979, which came in at 37 percent of public sector employment. While fluctuating along the way, there was growth up to 2009, when there were 7.897 million labor union members in the public sector, or 37.4 percent. But since then, the move has been down. Again, labor union members in the public sector in 2019 registered 7.066 million, or 33.6 percent of public sector employment.

So, labor union membership has been in decline in the private sector for 40 years, and in the public sector for 10 years. That happens to be good news for workers, entrepreneurship, businesses and our economy. After all, labor unions in effect seek to de-link compensation and productivity (such as emphasizing seniority over value created); and seek to lock in workers to union jobs (few unions emphasize going into management or becoming an entrepreneur).

That’s in part why labor union influence is problematic, at best, for businesses, for workers, for consumers, and for the economy. Reduced labor union membership and influence means a more dynamic workplace and workforce. And that is precisely why SBE Council, and many organizations in the business and free market community oppose the Protecting the Right to Organize (PRO) Act (S. 1306 and H.R. 2474). In the following coalition letter signed by SBE Council, the harmful effects of the PRO Act are outlined. For example, the bill would:

“…force all private sector workers to pay fees to labor unions, whether they wanted to support them or not. This would effectively invalidate all state Right-to-Work laws and would deny First Amendment rights to these workers. This provision hurts workers because right-to-work laws have benefited workers. From 2008 – 2018, for example, the percentage growth in the number of people employed in right-to-work states was 10.8%, while the percentage for those in forced-unionism states was much lower at 5%. Invalidating these laws would, therefore, hurt workers and employers, but would provide more dues to unions.”

The PRO Act would severely undermine and restrict the “gig economy,” and codify the Obama-era ambush elections rule. The bill also codifies another Obama-era relic: the anti-entrepreneur “joint employer” rule.

The low value of labor union membership to workers is a big threat to labor union bosses. So much so that they need the forceful power of government – through regulatory or legislative actions such as the PRO Act – to force workers to join unions, rather than voluntarily join them on their own.

In a dynamic and modern economy such as the current one, workers are inherently empowered to make their own decisions, negotiate on their own, and yes, even start businesses if they want to. Labor unions are quickly becoming a relic of the past, as demonstrated by the breathtaking decline of membership over the past 40 years.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

 

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