Decline of the United Auto Workers Union (UAW)

Introduction

“What does labor want? It wants the earth and the fullness thereof. There is nothing too beautiful, too lofty, and too ennobling unless it is within the scope and aspiration of labor’s aspirations and wants. We want more schoolhouses and less jails more books and less arsenals more learning and less vice more constant work and less crime more leisure and less greed more justice and less revenge in fact, more of the opportunities to make childhood more joyful womanhood more beautiful and manhood more noble”.

(Samuel Gompers, 1893)

Organizations that deal with corporations, firms and other organization for the benefits of the workers on the behalf of members of union are generally termed as ‘union’. There are present different types of unions for example trade union, represent workers who do a specific type of job e.g. the American Federation of Labor-Congress of Industrial Organizations (AFL-CIO). Then there is industrial union that indicates workers in a specific industry. United Auto Workers (UAW) is a good example of industrial union (Brent Radcliffe, 2011).

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A large number of economists consider union as monopolies in the labor market. They believe that the rise in the wages of members, at the expense of unorganized labor is the main impact of union. These researchers analyzed the negative impact of unions on the productivity, employment, and the subsequent crowding of the nonunion zone. In addition there are present another group of economist who believe that unions have positive affecting both politically and economically. These skilled analysts noted that unions could increase retention of skills and developments.

“When a market is national or international, with output produced in one plant competing with that produced in other plants, independent bargaining by individual locals would lose unions their monopoly power, as locals would compete for jobs through lower wages. . . . The result would be a reduction in wages to more or less competitive levels”.

Unions can help in the achieving higher productivity and better management by increasing morale of workers, reducing labor turnover, and cooperation. Unions also help in providing well-organized workplace for better results. This is very much true that unions reduce profit (Richard B. Freeman and James L. Medoff, 1984). In today’s globalized world, there is great need of union for number of reasons e.g. there is great increase in compensation, workers are hired according to their ranks, the gap between labor and management decreases both in terms of wages and in representation. There are present different viewpoints on the necessity and efficiency of unions. The problems faced by UAW at General Motors had raised the issue on the importance of unions in the future and in the modern society. In 1998, a harsh fight raged between the company and union. To remain competitive in the market the companies needed to change their strategies and increase their competence. Lower-cost outsourcing is very usual in the companies. Outsourcing involves the selling off business divisions in order to have a more focused and profitable company. United Auto Workers struggled for the union jobs.UAW were against the outsourcing (Korey Harlyn Coon, 1999).

In the United States, the workers who have a stab to make unions are usually fired. If the management saw workers engaged in any collective activities, they are consistently harassed and stressed. The workers are permanently replaced if found in such activities like struggling for their rights (Bronfenbrenner, 1994). Stipend earners or salary earners has started an organization for the protection of their combined interests while dealing with their company and this organization is known as labor union. Generally, in the industrialized countries the unions are widespread. In the last 30-40 years, in most countries, there is large decline in the unions (representing workers). In 1950s, the unions of the United States represented about one-third of all workers but today less than 15 percent of the workforce represents the unions. In the private zone the labor force is less than 10 percent (in the late 90s the unions represented 30-40 percent of public sector workers). In the past decades the workers union was considered as very strong force in the United States but these days the situations are opposite (Comstock, 1994).

The industrial unions of the United States have large number of unionized workers. The workers of the industrial unions have large variety of occupation (within one or more industries). United Automobile Workers (UAW) is an excellent example of industrial union. The most important American automobile companies have both skilled and unskilled workers and in these companies, UAW has separate contract for workers. However, the industrial unions started by arranging workers in the single industry or set of allied industries. In the tractor and earthmoving equipment industry (Caterpillar and John Deere), UAW also represents workers. At the end of 1990s UAW across the country added different groups such as Graphics Artists Guild (3,000 members), the National Writers Union (5,000 members), and various service, technical, and graduate student employees at more than 20 colleges and universities.

Decline of Union

The history of union membership in the United States has noticeably changed. In US for almost 200 years, the unions (in some forms) have been in existence. Until 1930s, the union’s membership did not gained significant position. In 1953, the union membership rose from 3 percent to 26 percent of the labor force in United States and in 1962 declined to 21 percent. The most ingenious and flourishing auto industry, the United Auto Workers (UAW) had faced tremendous decline by losing thousands of members in the 70s and 80s. At that time there were hardly six percent union workers who were engaged in product manufacturing (subtracting non-manufactures like nurses, civil servants, police, teachers, etc) because without base membership is not retained (David Macaray, 2008). In United States (1953), the union membership increased from 3 percent to 26 percent and declined to 21 percent in 1962.

The quick expansion in employment in the nonunion organizations (governmental, finance, trade etc) is one of the factors responsible for decline of union. During the great depression, 1929-1933, another half million union members were dropped. The new deal era (1933- 1939) brought new legislation which helped in increasing members. The Auto Workers and the Machinists unions were top ranked that showed largest increase in the members of union during wartime but after the war (Leo Troy, 1965). In shaping the union, the legislation plays a key role. The workers can perform their work without any fear of wages any other problem.

UAW played a significant role after World War II, in increasing labor movement, job security, and health care. Many researchers think that cause of decline is both external and internal. In the American economy, there is elementary shift from industrialized to service-based jobs. Globalization has made capital more mobile. Through this, employees got the opportunity to shift from lower to higher wages job. In addition, the political environment favored the economy. Labor law premeditated to protect the rights of labors. Some workers have the thought that by negotiation with the employers they can get better chance of work place. The workers have the feeling that negotiation is better than bargaining. This is because the workers have lost confidence in the ability of unions (Yates, 1998). The internal causes of labor’s decline are believed to be the willingness of workers to enter into a cooperative relationship with capital in the years following World War II. During the war period, the unions did their best to establish peace between labor and corporate leaders. The labor also agreed that they would not interfere in the decisions of management. UAW president Bob king said that ‘The UAW was able to win “tremendous” contracts with employers in the auto, aerospace and agricultural and construction equipment sectors “because all three sectors were almost completely unionized,”

The United Auto Workers Union (UAW) was established in 1935. At this time it had 600,000 members representing the three main auto industries (General motors, Ford and Chrysler). In 1970s, there was great decline in the membership of UAW for some time. The decline indicates that there is great downfall in employment in the automobile and related industries. The UAW was struggling for the jobs of the future generation and not for their own jobs. To achieve their goals they did many strikes. These strikes showed the great decline in the power of the union.

UAW chart.png

graph1: Decline in UAW membership (source Dale Buss, 2011)

The above graph shows the decline in UAW membership from 1979 to 2009. It is very clear that in 1979, the membership was at its peak that is 1.5 million and in 2009; UAW membership fell by 18 percent. According to the annual report submitted by US department of labor the main cause of decline was cut down in jobs (Jerry White, 2010).

Union Busting

The world’s leading automakers, the General Motors and Delphi (biggest auto parts suppliers of the world) had started union busting attack against the United Auto Workers (UAW). In the past decades, the US workers saw the biggest decline in the actual wages. The Delphi, auto parts supplier to GM, went bankruptcy. The company decided to cut the pays of workers from $27.00 to $10.00 per hour. At the same time, the bosses of GM claimed huge givebacks from UAW.

Globalization

Globalization is very important in several aspects. Over the past few years, the international competition has been enormously increased due to globalization especially in the economy sector. The higher prices on the imports have been cut down. Also due to increased competition, the domestic competitors were forced to give great benefits to their unionized workers. In unionized sector, the employment declines while in nonunion industries employment expanded. Moreover, the companies shut down or seal their plant, if union attempts to raise the profit of the workers and start new production in other country where costs are less. Globally the auto industry had become very competitive. In the 1980s, UAW responded to Asian and European growing challenges by abandoning any assault on jobs and on the living standards.

Job Banks

UAW in 1984 started a program called “Jobs Banks,”. The autoworkers get $31 per hour. Each year $70,000 to $85,000 are paid (for not to work) to UAW members. These workers are getting their full pay and all the benefits without working. They do not care about the loss of the company. This practice of allotting funds to the workers cost billions of dollars (approximately $4.5 billion) to the companies.

Health Insurance

The Negotiation of the union with the companies for the health benefits of members of union resulted in the decline of UAW, the auto industry. According to the survey of 2002, UAW wasted money as the big three (General Motors, Chrysler LLC, and Ford Motor) spent nearly $10 billion on health insurance. Roughly, each car pays the cost of $1,500 for health insurance. In this way, the money spent on health insurance is greater than the money spent on the steel for the construction of the car. In contrast to UAW, Toyota has less health insurance.

Assault of Fund

To fill the incursion funds The United Auto Workers (UAW) used nearly $ 1 billion dues of its workers. No other union performs such a pact to fill the strike funds. It was estimated that 30 percent from the pay of UAW member was given to fulfill the assault of fund. Other unions by negotiation with its member full fill this gap (without using the workers dues).

Luxurious Resort

UAW constructed luxurious resort, The Black Lake Resort and Golf club. The finance for construction was drawn from union dues. The UAW union members are allowed to visit the resort.

The labor agreement between UAW and three big automakers

In 2007, a historic negotiation took place between the Big Three automakers (General Motors, Chrysler LLC, and Ford Motor) and the United Autoworkers (UAW). Both the parties were aware of the significant of the agreement. They knew that to survive in this technical era and to compete with of global economy this agreement help them a lot. After the decline in membership, the main aim of the agreement was to protect the jobs and healthcare for the members of union. In addition, the big Three automakers (General Motors, Chrysler LLC, and Ford Motor) committed to lower the wages for some workers. To achieve the dynamic auto sales and to boom their market shares the agreement plays an important role. (John J. Lucas, and Jonathan M. Furdek, 2009)

The recent economic slump had left bad impact on the US auto industry. The majority of Detroit autoworkers are represented by, United Auto Workers (UAW) union. They give allowances on its pay and benefits package. The UAW negotiates with the company to protect this package (Tony Escobar). The growth of non-union workers in the plant is also a cause of decline in UAW membership. Moreover the cars made by foreign companies (whether in the US or elsewhere) are account for more than half the cars sold in this country. It was analyzed that if UAW and other large unions did not get financial and regulatory support from government they will soon be vanished (Gary Becker and Richard Posner, 2008). A survey showed that only one third of UAW members are autoworkers and large percentage of work force is employed by state (includes colleges, universities and health care organizations (Dale Buss, 2011)

Conclusion

Union plays a very vital role in both political and business environment. They exit in many forms in industries. Unions help workers in obtaining better wages and working conditions. There are present two types of unions, federal and industrial. A large number of economists consider union as monopolies in the labor market. Unions can help in the achieving higher productivity. In industrialized countries, the unions are widespread. In the last 30-40 years, in most countries, there is large decline in the unions. In the past there was tremendous growth in the union membership but today its growth is not to that extend.

The United Auto Workers (UAW) had faced tremendous decline by losing thousands of members in the 70s and 80s. In the beginning, there were 1.5 million members of UAW, which declined to 600,000 in 2009. In the past decades, the US workers saw the biggest decline in the actual wages. In 2007, a historic negotiation took place between the Big Three automakers (General Motors, Chrysler LLC, and Ford Motor) and the United Autoworkers (UAW). The recent economic slump had left bad impact on the US auto industry through the collective bargaining process the unions have reinvented themselves.