Unions: Are they losing their clout?

Sunday, April 16, 2006 1:08 AM CDT

By Scott Miller
scottmiller@pantagraph.com

BLOOMINGTON - Employee buyouts at major corporations such as General Motors Corp. are shrinking union membership and leading higher paid baby boomers into early retirement. Federal bankruptcy courts, meanwhile, are considering allowing companies such as Delta Air Lines to void union contracts and cut pay.

In the last two decades, union rolls have dropped considerably. About one in five members of the U.S. work force belonged to a union in 1983, according to the Bureau of Labor Statistics. That number has slipped to one in eight in 2005. In the 1950s, union membership was about 35 percent.

"A lot of things unions used to fight for are now commonplace. The 40-hour work week is standard. All employers must provide a safe work environment. Laws now require fair treatment from bosses," said Bill Walsh, an associate professor of business at Illinois State University. "Unions set the standard and everyone else followed.."

But one union official said declining membership also could be the byproduct of America's fear to organize.

"Do workers really have a fair opportunity to organize? To that I say no. Government continues to give management the upper hand in organization drives," said Ralph Timan, president of the United Auto Workers Local 2488, which represents workers at Mitsubishi Motors North America. He maintains that federal law does not provide adequate job protection to employees who want to form a union.

No matter why, declining membership means a smaller bargaining unit and possibly a weaker union.

Buyouts

GM made big headlines recently when it offered nearly 113,000 hourly workers packages worth $35,000 to $140,000 to leave the company. It's part of the automaker's goal to cut 30,000 jobs by 2008.

Also facing financial difficulty, Ford has said it will cut 25,000 jobs, and industry analysts expect a buyout deal there, too.

The deal will lead many higher-paid, aging workers into early retirement, said Dave Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich. The average active worker costs an auto manufacturer $130,000 a year, while retired workers cost about $15,000 a year, he said.

In other words, GM lost more than $10 billion last year and needs to cut a lot of money.

"We are in a period of major change. It had to come," Cole said.

While the older worker may be the target, Mike Matejka, legislative affairs director of the Great Plains Laborers District Council, said it's not all bad. Workers are receiving money rather than being laid off without pay.

"It's a way for companies to respect seniority. It shows the power of a union contract. You do have to respect seniority," he said.

"In the past, if there was no work, people were laid off. Last hired, first fired," Matejka added. "More companies are looking at workers and saying, 'Who's costing me the most?'"

But Matejka doesn't expect the buyout trend to hit Central Illinois unions.

McLean County has a stable work force mixed with the young and the old, he said.

"I wonder if there are some unique characteristics (at GM) that are not common here," specifically an older work force, he said.

Matejka's concern is not buying out union membership, but shipping jobs overseas.

But no matter the method - buyouts or outsourcing - union membership is shrinking, and ultimately that means less strength at the bargaining table, Walsh said.

Nonunion labor in the auto industry, meanwhile, continues to grow, as companies including Toyota Motor Corp. and Hyundai Motor Corp. increase their U.S. presence.

"In the auto industry, while there are not as many jobs, the UAW still has density," Timan said. "But yes, we need to keep making gains when foreign makers come over here."

Gains may be tough.

Walsh doesn't expect union membership to decline further, but he does predict the face of the union worker to change even more. Retail employees, hospital workers and other service-sector employees will account for larger percentages of union membership as they look for higher pay, better benefits and full-time hours, he said.

"If unions disappear, we would see a gradual decline in how workers are treated by employers," Walsh said.

And in some cases, unions just don't have the power of the strike anymore. A strike at GM, for example, could put the automaker into bankruptcy.

"That's like cutting off your nose to spite your face," Cole said. "They could force GM into Chapter 11 and then hand the fate of their jobs and their pay to a judge."

Bankruptcy

That's similar to what's happening with Delta Air Lines. A bankruptcy court is considering whether Delta can void contracts with the Air Line Pilots Association and cut pay by $325 million.

GM, meanwhile, is seeking federal court approval to force retirees to pay more for their health care.

And Delphi Corp, GM's former parts division and now a major auto supplier, asked a judge to cut pay nearly 40 percent for about 24,000 employees belonging to the UAW.

"When the court starts binding out legal documents, they give corporations the easy way out," Timan said. "We've seen this in the steel industry and the airline industry. When you put things in the hands of the courts, you can't say anything is guaranteed anymore."

And it's not unusual for courts to rule against unions, said John Penn, business manager for the Great Plains Laborers District Council. Bankruptcy courts ruled in favor of management in the past, he said.

"They've gone to federal court to take it away from us. Are we worried? You're darn right we are," Penn said. "We have to be more active, more visible, more active in politics, more active period. We can't keep doing business as usual, but I don't see any break in organized labor. Organized labor is just as strong."

But organized labor may only be as strong as its employer.

Delta has said a strike could signal the company's final days, for example, and with a $10.6 billion loss, GM needs to make cuts or sell a lot more cars.

Unions can't make strong demands when companies aren't making money, Penn said.

"Labor knows when management is making a profit. If they're making a profit, everybody's going to benefit. If they're not making a profit, labor is going to take a freeze," he said.

According to the Bureau of Labor Statistics, the average union worker in 2005 earned $795 a week while a nonunion worker made $622 a week.

Pay slid based on age and experience, but based on that average, union jobs pay nearly $9,000 more each year for one employee than nonunion positions.

It creates an interesting question. Have unions negotiated themselves out of jobs?

"I don't think we've priced ourselves out of anything. Nobody had a gun drawn to their head. These things were all negotiated," Penn said.

When Mitsubishi Motors North America laid off nearly 1,200 workers at the Normal plant in 2004, many were making more than $25 an hour, or around $50,000 a year.

Nearly a year later, despite the layoffs and Mitsubishi's struggle to earn a profit, members of UAW Local 2488 secured a pay raise. Their salaries should rise 5 percent by 2008.

"I don't think we've priced ourselves out as much as this country has lent itself to free trade and the global economy," Timan said, claiming free trade agreements opened the door for American companies to outsource jobs and save a buck on labor.

But salaries are not the biggest bargaining chip on either side of the table anymore, Penn noted.

"At the bargaining table, there are two major issues: health insurance and pensions," he said. "You can never quit fighting for that dignified life after retirement so pensions will be something we'll always fight for."