Fat Steve's Blatherings

Thursday, August 04, 2005

Another Stratfor Report, On Unions

      I can't find anywhere where they're up on the Web, so once again, I post it in full.

The Labor Split: Defining the Battlefield
By Bart Mongoven

      Two of the United States' largest unions -- the Teamsters and the Service Employees International Union (SEIU) -- announced July 25 that they are pulling out of the AFL-CIO.  Three other major unions said the previous day that they would boycott the 50th annual meeting of the AFL-CIO.  These five unions, united under a reform agenda called Change to Win (CTW), claim that the AFL-CIO has failed to react to the changing dynamics surrounding public policy development, and as a result, has become rudderless and ineffective.

      The CTW unions, led by SEIU head Andy Stern, claim that they have a new and unique strategic approach to strengthening unions and improving wages, benefits, security and health of workers.  They claim their approach reflects the changing times and represents organized labor's best chance to regain relevance in policymaking.

      At the center of its strategy is CTW's contention that Washington - allegedly as a result of the election of President George W. Bush and a Republican-controlled Congress -- no longer can act as the center of the policymaking universe for successful liberal causes.  Implicitly, the CTW strategy also assumes that globalization (read, trade liberalization and its consequences) is occurring and for political reasons cannot be reversed; therefore, a successful labor strategy must deal directly with globalization rather than try to reverse or stem it.  Further, despite union leaders' talk about consolidation and oligopoly in the U.S. economy, the CTW approach assumes that self-contained successes at a single company are insufficient, and that labor will achieve its objectives only if workers are united across entire industries.

      As the rebelling unions lay out their plans, the CTW message comes across primarily as a critique of AFL-CIO, with a tone and style that suggest the AFL-CIO is not doing any of the things that CTW calls for.  This is untrue: The AFL-CIO is indeed trying to increase union membership, broaden its appeal and globalize its activities.  CTW's real contention is not that the AFL-CIO lacks the proper goals, but rather that it has the wrong understanding of the battlefield upon which it plays.  The critique is akin to that of conventional forces attempting to fight a guerilla insurgency.  Though some of its leading loyal members (e.g., the Steelworkers) have recognized the new playing field and are working in it, the AFL-CIO does not yet appear to have grasped what it means to fight in a world with a different trade structure, and with limited power in Washington.  CTW thinks it has.

      CTW supporters and leaders argue that labor is going to have to stop acting simply as a special interest lobby and become an activist movement.  The group's leader, Stern, suggests that labor must cease to think of public policy as something that emanates from Washington and is forced by government upon corporations.  Rather -- as consumer, human rights and environmental activists increasingly are coming to understand -- the best chance for liberal constituencies to bring about the changes they want is to work toward their objectives outside the government realm, he says.

      CTW argues that labor will have to work with business, not government, and gain commitments from entire industries at a time, rather than looking for victories within single companies.  This is the heart of the strategic divergence between CTW and the AFL-CIO.

      CTW appears to view victories over individual corporations as means to an end: achieving across-the-board victories throughout an industry.  AFL-CIO, meanwhile, has allowed itself to view company-specific agreements as victories.  This is implicit in, and to an extent driven by, the AFL-CIO's organization.  Workers in a single industry are often represented by a number of unions, varying according to the employer.  A victory by a union against one employer, therefore, will reflect the strategic objectives of the workers only for that one company, rather than for workers throughout the industry.  CTW argues that the labor movement needs a central, unified leadership that will approach a single employer with the demands of all workers in an industry in mind and then use the agreement with one company as a lever against all companies in the industry.  This is not a new strategy, but it is quite difficult to do given the number of competing AFL-CIO unions and the structure of the organization.

      Paradoxically, if CTW follows through with this plan, the strategy will require that labor begin by focusing on one company at a time in an industry (but with objectives that stretch across an entire industry or even across the labor movement).  This is most clearly visible in the emerging campaign against Wal-Mart, an issue on which Stern has staked considerable amounts of his credibility.

      In Stern's vocabulary, Wal-Mart is both a noun and a verb.  He decries the threat of the "Wal-Martization" of the entire U.S. economy, by which he means that to compete with Wal-Mart, companies will have to participate in a "race to the bottom" -- that is, hire people at the lowest wages possible and with minimal benefits so as to provide customers with lower prices.  Stern also argues that Wal-Mart pushes demands for lower prices onto its suppliers, who respond by cutting benefits, reducing starting wages and, in some cases, moving manufacturing to less-expensive countries.

      Finally, Stern says that Wal-Mart's approach is rippling across the global economy.  It is putting wage pressure on the Chinese suppliers who replaced the U.S.  suppliers ten years ago.  It is placing demands on Asian clothing manufacturers that threaten to undercut the possible gains globalization can bring to workers in developing countries.  Changing Wal-Mart, according to Stern, is central to CTW's success, and CTW has advocated labor spend $25 million to finance "large, multi-union movement-wide campaigns directed at reversing the Wal-Marting of our jobs and our communities by large low-road employers."

      As it stands, SEIU has invested considerable time and money in a Wal-Mart-focused campaign, represented at the Walmartwatch.org website.  The approach Stern has taken shows his understanding of the shifts in the policymaking process and provides a glimpse of the way much policymaking likely will be done for the next decade.  SEIU is working with environmental organizations, human rights groups, consumer organizations, women's groups and civil rights groups to develop a broad-based strategy to take on the retailer.  The coalition acts as a force-multiplier: Wal-Mart has specific vulnerabilities on myriad issues and can be attacked from multiple directions at once.  Under this strategy, the workers that the SEIU wants to unionize ideally would hear about the class action suit filed on behalf of female employees (one of the largest class action suits in history), about various environmental allegations, and the human rights complaints and then begin to seriously consider whether they are better off organized.  At the same time, SEIU will demand the company change its practices to make union organizing easier.

      Meanwhile, environmental organizations will press for the company to change the environmental behavior of their suppliers, and human rights advocates will demand Wal-Mart report on the chain-of-custody of its products to ensure the company does not encourage child labor or sweatshop labor.  The environmental and human rights critiques will threaten to spoil Wal-Mart's image in the minds of the jury pool that will be hearing the class action lawsuit.  The SEIU contends that under this kind of pressure, Wal-Mart can be forced to make concessions on all fronts.

      Ultimately, from SEIU's perspective, the Wal-Mart campaign is designed to place pressure on the company to accept organized labor, but also to turn it into a force for change across the economy.  Any concessions Wal-Mart makes will place pressure on its competitors to make similar concessions -- and to make sure the playing field is level, one can imagine Wal-Mart would want to be at the forefront of a movement to make sure that Target, K-Mart, Costco and other competitors abide by the same rules.  At the same time, SEIU will structure any agreement with Wal-Mart to advance labor's goals with Wal-Mart's suppliers, and it will make concessions regarding labor issues at the corporation in return for Wal-Mart pressing pro-union policies upon its suppliers.

      The lesson that Stern is teaching is that the economy has changed.  Trade barriers are coming down, and the United States' comparative advantage does not generally lie in those areas where unions are strongest.  Unions can grow by improving their organizing in those industries where jobs cannot be sent overseas, and by globalizing unions on an industry-by-industry basis.  CTW is not going to abandon lobbying and federal policymaking entirely -- it will play defense and work with the AFL-CIO to defend those advances they have made in the past.  However, CTW does not view traditional government policymaking as offering the solution to labor's woes.  In acknowledging this, the coalition by necessity increasingly will behave like familiar activist groups.

      If they are successful, whether against Wal-Mart or elsewhere, the CTW unions may bring to the public's recognition the degree to which old notions of regulatory public policy development must be jettisoned.  The policies passed into law by elected representatives are important, but that is not where the majority of regulatory public policy is being developed.  Instead, policy development is being decentralized: It is being determined by private agreements between companies and between companies and stakeholders.

      The CTW unions appear to have grasped this.



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