The Implications of the Great Recession of 2008 on the US Unionization - Essay Example

The Implications of the Great Recession of 2008 on U.S. Unionization The Implications of the Great Recession of 2008 on U.S. Unionization In his book The Great Recession: Market Failure Or Policy Failure?, Hetzel (2012, p. 1) posits that the great recession that formally started on December 2007 and ended on June 2009 "Came as a shock". In retrospect, the global economy was progressive though there were minor interruptions during the insignificant recessions of 1990 and 2001. In this respect, a recession was unprecedented. Hetzel (2012) attributes the great recession of 2008 to extreme risk taking by banks. Within a very short time, banks were able to create money by means of issuing loans and subsequently exploited the situation to push up costs in real estate (Hetzel, 2012). In other words, banks issued too much loans directed in real estate and as a consequence, prices were pushed up. In addition, Hetzel (2012) notes that debts grew faster than income and in the long run more people were unable to service their loans. This followed a financial crisis as the situation pushed banks to near bankruptcy and closure. One of the areas in the economy greatly affected by the recession of 2008 was employment sector. In light of the fact that a huge percentage of workers is presented by unions, this discussion elucidates the implications of the great recession of 2008 on U.S. unionization. To understand the implications of the 2008 great recession on U.S. unionization, it would be of significance to first describe unionization prior to the recession. According to the Bureau of Labor Statistics, the percentage of workers represented by unions was at the highest level in the 1950s at 35 percent of the entire workforce (Hetzel, 2010). In 1983, figures from the Bureau of Labor Statistics shows that 17.7 million workers were unionized (Hetzel, 2010). This figure represented 20.1 percent of the total workforce in the U.S. In 2009, Hetzel (2010) notes that the figure had dropped to 12.3 percent of the total workforce. Though the number of union members was reducing from the 1950s, the rate was stringent in 2009 and 2010 after the great recession of 2008. In 2010 for instance, approximately 612,000 union memberships were lost (Tilly, 2010). Before explicating the implications of the 2008 recession on U.S. unionization, it would also be important to demonstrate its impact on the rate of unemployment. Tilly (2010), in a documented material directed to the Global Labor University Conference in Berlin in 2010, asserted that the rate of unemployment peaked in the period following the great recession of 2008. In fact, Tilly (2010) notes that unemployment rate rose to more than 9 percent in 2009 and has never plummeted below that rate since. This is an indication that a great number of employees lost their jobs during this recession. It is worth noting that the U.S. has two unions in the mainstream representing workers. These unions include "The AFL-CIO and the Change to Win federation that broke away from the AFL-CIO in 2005" (Tilly, 2010, p. 2). In the context of both public and private sectors, the probability of workers in the public sector to join unions was approximately five times higher than that of workers in the private sectors in the period preceding the financial crisis of 2008 (Tilly, 2010). A good example of workers in the public sector inclined towards joining these unions were teachers. Before the financial crisis of 2008, unionized workers earned higher salaries than nonunionized workers. United Food and Commercial Workers Local 876 (2009) notes that unionized workers working on permanent basis earned an average of $886 on weekly basis while nonunionized workers earned an average $691 on weekly basis. Conversely, employers spotlighted on taking advantage of the financial crisis to enforce temporarily leaves of absence on employees and limit workers benefits (Hetzel, 2012). As a result, proportion of union members plummeted as more workers were forced on go on leave, discharged from their positions, and others were forced to work under imposed anti-union regulations. To illustrate this decline, the proportion of unionized employees plummeted from 12.4 percent to 11.8 percent between 2008 and 2010 (Tilly, 2010). In an online article published in In These Times, Moberg (2011) clearly outlines the effects of the great recession of 2008 on U.S. unionization. According to Moberg (2010), the loss of jobs among unionized workers had an impact on the power of unions. Low membership translated to weakness in terms of negotiating power and thus inability to protect workers from oppressive labor rules and guidelines formulated and implemented by the government. Unions, according to United Food and Commercial Workers Local 876 (2009), are responsible for negotiating workers pay and thus unionized workers earned 28 percent more than nonunionized workers in 2008. Low membership contributed by lay-offs and forced leaves of absence of unionized employees reduced the unions influence or power to negotiate better pay for their members. Prior to the 2008 recession, Hetzel (2012) illuminates on the fact that unions were regarded as defenders of labor rights particularly among the middle class. As the effects of the recession became more evident, Hetzel (2012) points out that unions spotlighted much attention to attracting more employees working for the government. This was attributed to the fact that most of the job losses were in the private sector. Conversely, unions had to attract more members in order to maintain their influence and power. Sherk (2010) posits that in 2009, 834,000 union memberships were lost in the private sector and 64,000 members from the public sector added into the unions membership. The effects of the recession coupled with increased membership of government worker forced the unions to change their precedence. The unions agenda was now poised towards crusading for higher taxes geared towards enabling the government to finance and support an array of projects and increase their spending (Sherk, 2010). Further explication by Sherk (2010) shows that unions were originally formed with the main objective of preventing exploitation of workers by employers and bargain for better remuneration for their members. To expound on the original objectives of unions, Sherk (2010) also notes that unions were meant to ensure employees acquire a fair or reasonable share of company revenue. These objectives were ultimately eroded when the unions focused on representing more government workers. Hetzel (2012) notes that the concept of collective bargaining does not apply when the government is involved. In this respect, it can be construed that the great recession of 2008 forced unions to change their priorities and objectives. One of the sectors that was significantly affected by the recession in terms of job losses was the manufacturing sector. As a result of the lost jobs, the percentage of unionized workers in these sectors dwindled significantly after the 2008 recession. According to Moberg (2011), workers were therefore more apprehensive in regards to job security and were thus less likely to unionize during the recession. In extrapolation, the recession of 2008 complicated unionization as it was hard to replace the leaving members in the unions. The implications of the great recession of 2008 on U.S. unionization can also be viewed in terms of public support. Hetzel (2012) brings forward the fact that significant job losses in both the private and public sectors coupled with the high rates of unemployment contributed to reduced public support for the unions. This was in regard to the fact that unions were mandated by workers to champion their rights, ensure job security and negotiate for fair remunerations. There was therefore commiseration on those losing their jobs and the unemployed thus translating to low public support for the unions. Figures from a methodical investigations conducted by Gallup showed public support for unions hit the lowest ever rate of 48 percent in 2009 (Hetzel, 2012). The implications of the 2008 recession on unionization in the U.S. can also be explicated in the context of formulation and implementation of rules and standards in the labor market. As union membership dwindled subsequent to the recession, their influence and power declined and so did their capacity to create and put into practice rules and guidelines aimed at ensuring increased or fair workers remuneration rates (Hetzel, 2012). In 2011, Hetzel (2012) states that only 13.1 percent of workers in the U.S. were unionized. This figure can be viewed to mean that most workers were not represented by a union and hence lacked the ability to negotiate for better pay. In addition, decreased union membership means that unions lack the power to exert due pressure on employers to raise workers wages (Hetzel, 2012). Conversely, one can deduce that the threat-effect of unions has dwindled following the 2008 recession. In other words, employers or companies feel less threatened by unions. In the context of wage disparity, the implications of the recession of 2008 can be extrapolated to have brought to light the factual cost associated with unions in the public sector. Hetzel (2012) brings forward the fact that the hourly wage of government employees were 45 percent higher than that of private sector members. The recession is therefore credited for exposing this huge disparity in wages. It can be argued that this effect contributed to the diminishing public support of unions. In conclusion, the great recession that is formally considered to have started on December 2007 and ended on June 2009 greatly impacted labor unions in the U.S. The number of unionized workers greatly dwindled as a great proportion lost their jobs during the recession. Consequently, the number of new union members was negligible after the recession as people were more concerned about their jobs as opposed to unionizing. Conversely, the union membership in the private sector was overtaken by public sector memberships particularly government employees. As a result, unions priorities changed to advocating for higher taxes and increased government spending. Since even unionized workers were also affected by the recession particularly in terms of job losses, public support of the unions reduced dramatically. Reduced membership and public support translated to reduced power and influence and hence the inability to create labor laws and regulations that could champion better wages for employees. References Hetzel, R. L. (2012). The Great Recession: Market Failure Or Policy Failure? New York, NY: Cambridge University Press. Moberg, D. (2011, Jan 25). Union Membership, and Power, Slip Further in Great Recession. In The Times. Retrieved from http://inthesetimes.com/working/entry/6887/union_membership_power_slip_further_i n_great_recession Sherk, J. (2010, Jan 22). Majority of Union Members Now Work for the Government. The Heritage Foundation. Retrieved from http://www.heritage.org/research/reports/2010/01/majority-of-union-members-now- work-for-the-government Tilly, C. (2010). An opportunity not taken yet: U.S. labor and the current economic crisis. Retrieved from http://www.global-labour- university.org/fileadmin/GLU_conference_2010/papers/95._An_opportunity_not_tak en_yet_U.S._labor_and_the_current_economic_crisis.pdf United Food and Commercial Workers Local 876. (2009). Advocate: A Voice for Working America. Retrieved from http://www.global-labour- university.org/fileadmin/GLU_conference_2010/papers/95._An_opportunity_not_tak en_yet_U.S._labor_and_the_current_economic_crisis.pdf Read More