Reinventing the Union

Can the new economy be organized?

The splintering of the AFL-CIO this week was prompted largely by the fact that the U.S. economy has changed -- with the service sector growing and manufacturing declining -- but the labor movement hasn't.

Andy Stern, a leader of the dissident unions and president of the Service Employees International Union, is betting that by targeting the 92% of the service-industries workers who aren't unionized and offering them a compelling message, he can effect that change. Employers -- and skeptics -- believe the infighting will make workers even more disenchanted with the labor groups and underscore the unions' declining clout.

The climate isn't very hopeful. Union membership has fallen steadily in recent decades, particularly in industries that have seen rapid growth. Industries with a long tradition of unionization -- including auto manufacturing, airlines and grocery chains -- now are saddled with huge legacy costs for pensions and health-care benefits and are vulnerable to nonunion competitors. The United Auto Workers, despite repeated attempts, has had very little success organizing the U.S. auto assembly plants of foreign car manufacturers such as Honda Motor Co.

For many workers today, unions seem unable to offer protection against the powerful forces of globalization and technology, which have sent many factory and even white-collar jobs overseas. At the same time, corporate managements with their sophisticated human-resources departments, employee-assistance programs and "cafeteria" benefit choices have successfully countered union claims that workers could do better if they were organized under a bargaining unit.

High-technology industries have proven especially hard for unions to crack. With most manufacturing done overseas, U.S. technology workers generally don't think of themselves as union material. Many are focused on earning stock options and other rewards for performance instead of the wage increases and health insurance that unions typically seek.

When unions have dug in, the victories often have been pyrrhic. Grocery-store workers used to enjoy generous benefits, including health-care coverage at no additional cost and wages of almost $18 an hour. For decades, grocers complied because their competitors had unionized workers that demanded the same compensation. But in the past decade, Wal-Mart Stores Inc. and other nonunionized discount chains have significantly expanded their food offerings. Traditional supermarket chains have rushed to cut labor costs, demanding that workers pay for part of their health-care premiums and top out at lower wages.

The United Food and Commercial Workers International Union fought back in 2003; 60,000 Southern California grocery workers went on strike or were locked out for more than four months. Safeway Inc., Kroger Co. and Albertson's Inc. suffered massive sales losses. And the union gained little ground. New workers lost free health-care coverage and the top pay scale for incoming food clerks fell to $15.10 an hour from $17.90. Grocers still are seeking to cut labor expenses, which account for about two-thirds of their operating costs.

In an interview, Mr. Stern said he realizes the difficulties of organizing workers from disparate industries and says one of his goals is to create different kinds of unions. "First of all, we have to be sophisticated: The 1930s adversarial type unionism isn't going to apply to nurses and reporters and child-care workers," he said. "We need to create a lot of different models of unions."

For example, white-collar contract employees who move from job to job are concerned with how to get and keep benefits. Nurses are worried about staffing and quality of care. Building security guards are more interested in wages.

Among the initiatives Mr. Stern's union is studying are 401(k)-type retirement plans that wouldn't be tied to a particular employer and job-education programs, both of which could help employees as they move from job to job in an increasingly flexible economy.

Labor experts say employers shouldn't underestimate Mr. Stern. The Teamsters, the SEIU and three of their partners in the dissident Change to Win Coalition have been responsible for more than half of the new members brought into the AFL-CIO in the past 10 years, says Mike Asensio, head of the national labor-relations practice at law firm Baker & Hostetler LLP in Columbus, Ohio. They also represented more than half of the petitions filed with National Labor Relations Board to represent employees, he said.

"This is a wakeup call for labor and employers. Tomorrow there will be more organizing efforts and fights at the bargaining table," says Philip Rosen, chairman of the labor-practice group at Jackson-Lewis LLP in New York.

Service Employees International Union president Andy Stern (right) and Teamsters President James Hoffa.

"Some people think [the union split] is good for business, but not for us," said a Texas hotel entrepreneur who didn't want to be identified for fear of becoming the target of labor organizers. He worries that service unions now will step up organizing and that local unions will feel greater pressure to carve out their own power base.

Leading the way is likely to be SEIU, whose rise parallels that of Mr. Stern, who became one of the youngest local presidents in the movement in 1977, when at age 27 he was elected to head the SEIU's Pennsylvania Local 668.

Under Mr. Stern, unions have had some luck organizing janitors and home health-care workers, particularly on the coasts. His union in particular has had success using a combination of community-based, political and public-relations tactics to sign up workers.

Among Mr. Stern's efforts to modernize union organizing has been his move to tap the power of the Internet through the Web site purpleocean.org3. There, SEIU tries to reach out to members and nonmembers alike, preaching the need to expand health-care coverage and other protection for 21st-century workers.

The SEIU also has shown a willingness to use some unorthodox tactics. In one instance, a group of janitors in Washington, D.C., attempting to organize, wore red T-shirts and whipped out Coke cans filled with ball bearings just across the street from a popular restaurant not far from the White House.

Mr. Stern also has had success organizing fragmented industries. The union had only about 1,000 janitors in the Newark, N.J., area and had done little to keep pace as corporate flight from Manhattan led to a boom of new offices in New Jersey. Mr. Stern knew he couldn't run a typical recruitment drive, targeting one janitorial contracting company at a time: In this fragmented industry, any that agreed to higher pay would be quickly undercut by nonunion rivals. So SEIU tackled whole markets at once.

In 11 New Jersey counties, it told contractors that they wouldn't have to raise pay until the SEIU got 55% of those in their area to go along. The union then mounted strikes and rallies by would-be members and took other actions to try to force contractors to comply. The first 55% trigger point was reached in 2001, and the union contracts took effect. By the end of this year, the SEIU will represent about 70% of northern New Jersey janitors, whose pay now ranges up to $11.75 an hour, plus benefits.

To bolster recruiting, Mr. Stern has moved many headquarters staff members out to the field. He has focused on recruiting immigrants, including those from Russia, Armenia and South America.

In 1999, the SEIU organized 74,000 home health-care workers in Los Angeles County, Calif., alone. The majority of physicians that have affiliated with unions have done so with the SEIU. As part of that campaign, it pushed for legislation to protect health-care workers from being exposed to AIDS or hepatitis from needle sticks and organized meetings with members of Congress to protest the long hours worked by nurses and their lagging pay. One proposal was that hospitals would be required to consult with nurses in setting staffing levels and would be forbidden from making overtime mandatory.

One of its locals in Ohio, which is driving the unionization of nonprofit hospitals, recently released a study challenging Ohio's nonprofit hospitals to justify their tax-exempt status, saying they have grown hugely profitable. The move was aimed at indirectly benefitting workers by giving them a stronger bargaining stance.

"What you see today is pockets of workers in various industries that have been difficult to organize, from retail to health care, despite the fact that there seems to be a strong case that can be made for union representation in those industries," said Marick F. Masters, a professor of business administration at the University of Pittsburgh.

To gain more clout, some experts say the union needs to offer affiliate memberships, which would give members all union benefits except for collective bargaining or grievance protections. The American Federation of Teachers has done so for years, offering associate members publications and insurance and union credit-card programs, inviting them to meetings and to participate in lobbying.

Indeed, Lawrence Katz, a Harvard University labor economist, says surveys show there is "a pent up demand for unions among workers," a suggestion that either unions are failing to capitalize on potential demand or the combination of government policy and employer resistance is taking its toll. "There is a view," he adds, "that people want something that looks more like a voice in the workplace -- and less like collective bargaining and conflict with management."

Back at the Chicago convention hall yesterday, minus the delegates and officers from the SEIU and Teamsters, AFL-CIO's executive council tried to put on a good face on the situation as they sat on a two-tiered dais before a royal blue background. "I think these guys realize they've been dealt a serious blow," said George Spence, an aircraft mechanic with American Airlines in Chicago and member of the Transport Workers Union, Local 563. "I think they're trying to remain upbeat." One delegate from Kansas City approached the microphone and said, "As dysfunctional as we may be right now, we're a family."