Aug 3, 2022

Much Ado about Nothing?

Unionization has been in the news a great deal recently.  Christian Smalls, the hip hop co-founder of the Amazon Labor Union, and Jaz Brisack, the Rhodes Scholar Starbucks barista and union organizer, are media favorites and Progressive heroes.   Senator Bernie Sanders gushed “that there’s no greater example of the growing grassroots movement for economic justice on the job…[which] could well be the beginning of a resurgent and powerful trade-union movement in this country.”

Are we on the cusp of a game changer or is this much ado about nothing?

Unionization in the US has been in steady decline for decades.  Only 6.1% of private sector workers were union members last year, about one-third of the rate in 1983 when data collection started.  

However, in a July 13th press release, the National Labor Relations Board boasted that the number of petitions requesting elections for union representation so far this year is up 58% from the prior one. A closer look is telling.  At best, the number of petitions this year will reach the peak of 2198 in 2015.  Moreover, the average size of the bargaining units in elections in recent years has been about 60 workers.

Despite all the hoop-la about unionization at Amazon and Starbucks, the number of union elections remains small, and the number of American workers involved in these unionization efforts is tiny.  Bernie Sanders’ ‘resurgent movement’ is a long way off.

However, there might be more to the story.  The Gallup poll indicates that approval of labor unions has been rising since the financial crisis.  In 2021, the approval rating reached 68% of Americans, the highest reading in over 50 years.

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To understand what’s going on, we need to go back to the large and deep recession that followed the financial crisis in 2009.  The recession had a particularly severe effect on the young.  Men and women graduating from school and entering the job market in those years had a tough time finding positions and many spent extended periods of time searching for a first job.   

Economists point out that there are ‘scarring effects.’  The cohort that entered the job market in the crisis was scarred by the experience.  This phenomenon is not new; research shows that there are persistent effects on the employment rates and wages of those who enter the labor market during a recession. Now, over a decade after the financial crisis, many Millenials find themselves approaching mid-life without the experience and know-how that enables them to find high wage positions and satisfying careers.  Moreover, their level of dissatisfaction was exacerbated by the Covid recession in 2020.

The increased interest in unionization on the part of young college educated Americans (starting with the Rhodes scholar barista) is genuine.  There is a generation of young Americans that has been bruised by the ups and downs of the economy.  Recessions are not just temporary blips in economic activity.  Although the overall job market has largely recovered (total non-farm employment in June is just 0.3% less that the pre-pandemic peak), there are many people who have been permanently scarred by the financial crisis and pandemic recessions.

There are some good reasons for the recent interest in unionization.  But as real as the damage done by recession experiences might be, it is unlikely that we are seeing the the start of a revolution in American labor relations. 

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