Rational business people focus on selling products and services that consumers want.  But these same business people also must understand that consumer wants and needs change over time.  In fact, business school case studies are replete with examples of now-defunct organizations, and indeed entire industries, that failed to adapt to changed circumstances.  Is it finally time for unions to recognize that — rather than being hampered by employer interference, weak laws, or other external impediments — they are selling a product that the market no longer wants?

Despite dozens of labor-friendly National Labor Relations Board (“NLRB” or “Board”) decisions over the past four years under the current Democratic administration, organized labor’s market share continues its steady decline.  Figures released in January by the federal government’s Bureau of Labor Statistics (“BLS”) show that in 2012: 

  • America’s unions lost 400,000 members. 
  • The percentage of America’s workforce represented by a labor union fell to 11.3%, its lowest level since the 1930’s. 
  • The loss in union membership is even more acute in the private sector, where only 6.6% of the workforce is unionized, a decline from roughly 35% in the mid 1950’s. 
  • Even in the public sector (where unions often benefit from less vigorous opposition to organizing from the legislators their campaign contributions helped elect), union membership declined to 35.9% from 37% the year before.
  • Despite tremendous growth in the size of the American workforce over the past 30 years, the number of union members in absolute terms has declined by approximately 10% during that period. 

So what has been organized labor’s explanation for these trends?  Rather than reexamining the product they are selling, the public response has been to blame their misfortunes on unfair/unlawful employer interference, “weak” American labor laws, low-wage foreign competition, and Republican legislators. 

While this mantra makes for easy sound bites, the reality may be far more complex, with labor’s “product” simply not as attractive or valuable to today’s workers.  For example, union “protections” may be less important when federal and state legislation prohibits employment discrimination and guarantees minimum wages, overtime pay, leaves of absence, and health care coverage.  Competitive pressures alone likely cause many non-union employers to attract and retain talent (and not merely avoid unionization) by offering equally attractive wages, benefits and other employment policies — without the offsetting cost to employees of union dues.  As the era of the gold watch (and defined benefit pension that grows over decades of service with a single employer) has disappeared, younger workers are less likely to want a career with a single employer; their increased mobility reduces the lure of the rigid union seniority systems and benefits under collective bargaining agreements.  And of course, declines in manufacturing, growth in the service sector, technological advances, and the global economy have also likely contributed to the decline.

In the end, labor’s excuses will not fully explain its lost market share. Unionization rates have continued to decline through both Democratic and Republican administrations in the U.S. for over 50 years.  And it’s not necessarily because our labor laws are ineffective.  Unions have likewise lost significant market share in other developed nations, including Canada, Australia, and much of Europe, whose labor laws and regulations are far different than the “weak” laws that unions decry in the United States. 

While unions like to blame others for their declines, in the end they are selling a product that fewer and fewer people want.  The more progressive and thoughtful union leaders recognize this and are trying different ways to attract new audiences and members. Time will tell whether they succeed.  If not, organized labor’s failure will make for yet another business school case study.