Unions Could Benefit in the ‘New Economy’

As Labor Day arrives, many trade union leaders are heralding the gains Teamsters made in the recent strike against United Parcel Service of America. The time is ripe, they argue, for further advances. Low unemployment rates traditionally strengthen labor’s hand, and a sympathetic public is all too aware that profits have been surging as wages have stagnated.

Others caution against making too much of labor’s “victory” against UPS. The struggle there was atypical, they say, partly because UPS managers often hail from the ranks, and because the company eschewed the usual route of hiring replacement workers. More important, labor will not be able to generalize its gains because we are in a “new economy” in which international competition and an inflation-wary Federal Reserve Board effectively cap wage growth.

As usual, there is some merit to both sides. Yet both fail to note that the new economy opens up opportunities for labor, particularly if unions continue their reengagement with grass-roots organizing that characterized their heyday.

Why is the new economy helpful? Labor traditionally has worried that international openness would dampen wages by exposing U.S. workers to competition from workers in poorer countries. There is reason to be concerned. As economist Dani Rodrik argues in an extraordinary new book titled “Has Globalization Gone Too Far?,” trade liberalization may have many benefits, but it has indeed managed to sharply reduce labor’s bargaining power.

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But if wages were the end-all of international competition, Haiti would be surging and the United States would be sagging. In fact, what internationalization and the new economy have done is elevate the importance of speed and service, reduce barriers to communication and enhance the role of regions. Each can aid labor if it understands the changes.

First, speed and service. In today’s just-in-time world, inventories are low and businesses, interconnected by complex chains of supply and demand, profit most when they get their products to market quickly. A strike at one key firm can disrupt these business chains and sabotage the larger economy, leading to cross-cutting pressures for resolution of the labor conflict.

This was certainly the case at UPS, where nudges from the administration and complaints from other businesses pushed UPS back to the negotiating table. Speed also means that other firms can rapidly fill strike-opened niches, as Federal Express and others tried to do during the recent UPS conflict. All this gives incentives to settle, provided labor is strategic in the choice of targets.

The second important factor is access to rapid communication. In the media-intensive and Web-connected new economy, news is instantaneous, and “spinning” the story before others do is key. In stark contrast to the debacle of the air-traffic controllers strike of 1981, the Teamsters strike against UPS was supported 2 to 1 by the public--despite numerous strike-induced inconveniences and the union’s odious history.

The reason was simple: The fight was cast as a battle against the sort of temporary employment that frightens many Americans. Although the truth was more complex--UPS part-timers are relatively well-off and other issues were important--the broad, solid appeal resonated.

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A third factor in the new economy is the growing importance of regions. As tariffs fall and national boundaries matter less, regions--such as Silicon Valley or northern Italy--have become the effective economic units. These industrial powerhouses are bound together not by political authorities but by business clusters. Such interlocked businesses have reasons more significant than labor costs to remain in a region. The resulting reduction in capital mobility can improve labor’s chances.

According to Kent Wong, director of UCLA’s Center for Labor Research and Education, unions have begun to recognize these trends. The Teamsters stressed that UPS’ competitive advantage was exactly the speed and service delivered by a highly trained and organized labor force.

The AFL-CIO, under President John Sweeney, has begun to recast its message around the broader theme of economic justice. And new organizing has moved away from a single-shop approach to more geographic-based drives, such as the multi-union, multi-industry effort to organize the building trades in Las Vegas, or the various labor-community campaigns for living-wage laws (ordinances that seek to regulate salaries in companies doing contract work with local governments and thereby prop up the regional floor for wages).

Unions are engaged in other transformations as well. Labor organizations, like any good enterprise in the new economy, have learned to combine sound research with strategic action--and to focus more on market share (i.e., gaining more members) and less on immediate profit (i.e., wage gains for existing members). The resulting organizing drives, in keeping with the changing demographics of the work force, have often paid special attention to minority and female workers.

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Economists now speculate that the United States, after suffering a difficult decade of restructuring, may be poised to ride the new economy into a period of sustained growth. It is useful to recall that the previous long boom, which stretched from World War II until the late 1960s, was marked by collaborative relationships between companies and unions.

In the new economy, businesses have found that networking with other companies is often the key to success--and that collaborations with their own work forces can build trust, enhance loyalty and raise productivity. If a business-labor partnership can be restruck--and if labor can adjust to, rather than resist, the new economy--then the future for workers may be brighter than the immediate past.

Manuel Pastor Jr. can be reached by e-mail at mpastor@cats.ucsc.edu