Labor Pains, Union Dues

While July saw U.S. employers announce the fewest number of job cuts in six years, declining manufacturing employment has been a cause for concern. Learn not only what the next few years hold and how industry labor compares with the rest of the country’s workforce, but also the current state of U.S. labor unions.



First, some good news for United States business and industry: U.S. employers announced the fewest number of job cuts in six years in July. So far this year, companies have announced 473,636 job cuts, down 26 percent from the first seven months of 2005.

According to a monthly tally compiled by outplacement firm Challenger Gray & Christmas (via MarketWatch), announcements of total job reductions fell by 45 percent to 37,178 for July from 67,176 in June. The latest month’s total is down 64 percent from the 102,971 job cuts announced in July 2005. It is the lowest since 17,241 in June 2000. Job cuts in the auto industry fell in July to just 924 — after nearly 70,000 in the first half of the year.

Challenger also reported that employers disclosed plans to hire 34,537 workers last month, 27 percent more than the same time last year.

For instance, “these are extremely busy days for aerospace, aviation, and defense recruiters,” due in part to “the promise of working with state-of-the-art technology to innovate in areas ranging from commercial aviation, defense missile systems, space exploration, and satellite communications” at such places as Boeing, Lockheed Martin, Raytheon and smaller such employers, according to the Electronic Recruiting Exchange (ERE)’s Inside Recruiting. “And if the pace of hiring for those closely tied industries is any indication, they may rank among the best employment markets for engineers and recruiters alike for years to come.”

Also on the hiring front, PricewaterhouseCoopers’ most recent Manufacturing Barometer found that 58 percent plan to expand their workforce over the next 12 months, an increase over the 43 percent who expected to hire more employees a year ago. However, overall composite hiring for the industry remains flat at -0.1 percent, likely due to cutbacks at large firms.

The not-so-good news: An economic slowdown is being aggravated by inflation and stagnation, described by some Wall Street pundits as stagflation. Fueling the stagnation of the economy is the slowdown in the automobile industry. General Motors, Ford and Daimler Chrysler — The Big Three — are ruthlessly restructuring: trimming payrolls, laying off thousands of workers and closing down or selling off plants — which in turn has “multiplier effects” on industries such as steel, glass, plastics and rubber. Look at the largest auto supplier in the country, Delphi, which is in bankruptcy.

A recent Philadelphia Daily News article headlined “Workers on the Slag Heap of History” describes the devastation enveloping U.S. cities and towns:

The gates of many towns welcome visitors with abandoned factories. And the communities these factories flank tell you more about what is really destroying America than any Wall Street analyst or Washington policy wonk ever could. (The article is no longer available on the newspaper’s Web site, but it is posted on the author’s blog.)

The manufacturing sector lost 15,000 jobs in July, reversing a gain of 22,000 in the previous month, according to the Labor Department’s report this month. Among 84 manufacturing industries, however, a little more than 45 percent were adding jobs.

The following are some revealing facts about the state of industry labor from the Bureau of Labor Statistics:

• Prior to 2000, annual average employment in manufacturing was estimated as more than 17 million. Manufacturing employment last year averaged 14,232,000.

• There were about 1,292 extended mass layoff events in manufacturing last year, resulting in 223,058 separations of workers from their jobs and 242,113 initial claimants for unemployment insurance. These 2005 numbers are the lowest in the 1996-2005 period.

• Last year the unemployment rate of persons most recently employed in manufacturing industries was 4.9 percent. The overall unemployment rate was 5.1 percent.

• Yet while total employment for all industry sectors is projected to increase 14.8 percent over the 2004-2014 period, manufacturing employment is expected to decrease 5.4 percent during the same timeframe.

• From 2004 to 2005, labor productivity — defined as output per hour — grew by 5 percent in manufacturing.

• In 2005, the annual average of weekly hours of production workers in manufacturing was 40.7. In comparison, the private industry average was 33.8 for production and nonsupervisory workers.

• Average hourly earnings of production workers in manufacturing were $16.56 last year, somewhat higher than the average of $16.11 for production and nonsupervisory workers in all private industry.

• In the economy as a whole, manufacturing represents about 11.0 percent of all employment.

Labor Unions
Around mid-century, labor unions represented about a third of all U.S. workers. However, the U.S. labor movement has gone through major changes in recent years, not the least of which was last year’s departure from the AFL-CIO of a handful of major unions, a “schism” that marked “the biggest rift in organized labor in 70 years,” IMT reported around that time.

Membership has been falling for years.

To wit: the union membership rate in the U.S. has declined from a high of 20.1 percent in 1983 to 2004′s 12.5 percent. Last year’s percentage of wage and salary workers being union members remained unchanged from 2004′s, the U.S. Department of Labor’s Bureau of Labor Statistics reported earlier this year.

In fact, according to the latest annual BLS-released “Union Members” report, union membership last year grew at roughly the same pace as overall job growth, leaving the share of U.S. workers in unions in 2005 unchanged at 12.5 percent. This latest report marked a milestone in U.S. union history: for the first time ever, the share of manufacturing workers who are covered by a union is no higher than the share of covered workers in the rest of economy (both 13.7 percent). Manufacturing workers are now no more likely to be represented by a union than the average U.S. worker. Union membership rates are still slightly higher in manufacturing (13.0 percent) than in the economy as a whole (12.5 percent), but if recent trends hold, union membership in manufacturing will also soon fall behind the rest of the economy.

Some highlights from last year’s data are as follows:

• Nearly 15.7 million wage and salary workers were union members in 2005;
• Black workers were more likely to be union members than were white, Asian or Hispanic workers;
• Men were more likely than women to be union members; and
• Workers in the public sector had a union membership rate more than four times that of private-sector employees.

Is unionized labor nearing the end of its course? If it needs an overhaul, how would you suggest U.S. labor unions go about it?

Sources

Job cuts plunge to six-year low
by Rex Nutting
MarketWatch, Aug. 1, 2006

Who’s Hiring, Who’s Firing: Aerospace, Aviation, And Defense Recruiting Takes Off
Electronic Recruiting Exchange (ERE)’s Inside Recruiting, June 13, 2006

Growth is on the Horizon for Industrial Manufacturers, PricewaterhouseCoopers Survey Finds
PricewaterhouseCoopers (via PRIMEZONE), July 27, 2006

Workers on the Slag Heap of History
by David Sirota
The Philadelphia Daily News (via Sirota Blog), March 24, 2006

Labor Department’s Employment Situation Report
U.S. Department of Labor Bureau of Labor Statistics, Last Modified: Aug. 04, 2006

U.S. Department of Labor Bureau of Labor Statistics, Industry At a Glance: Manufacturing

Union Members In 2005
U.S. Department of Labor Bureau of Labor Statistics, Jan. 20, 2006

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Comments:
  • August 15, 2006

    For 25 years I have tried to “unify” self-employed workers in the fashion apparel industry. 99% of them fail because today they cannot survive all alone, and too many are not leaders to build a business with employees. Also there aren’t many jobs left in this industry, at least here in America, but there are a huge amount of opportunities. I’d like to write up a proposal to “Unite” the union that still has a little bit of apparel industry, and suggest that they “unify” these self-employed in “collaboratories” (a word from the software industry).

    What do you people think? The Unions sure need some new ideas and directions. Do you think that this may be a way to go in the 21st century?

    Thanks

    Shirley Willett


  • Nick S.
    August 15, 2006

    Shirley, it seems to me that you are not getting it. Part of the reason why apparel industry moved out of the US… IS the UNIONS. The article almost hits you in the head telling you this. Both Corporate greed and Union greed are the main causes of our manufacturing decline and you advocate to unionize the self-employed?!?!?! This is the best one yet.

    The little guy, the self-employed, has been probably already restructured, maybe let go from a union job, maybe he is too tired to face the hostility of corporate America and he got this little self-employed business together to get away of all this …. and you want to suffocate him with union dues and scare his customers with union demands?

    And if you would find the idiot to sign up to this, what is the union going to do for him: fight against his employer (himself) for better pay, better working conditions and medical coverage? Is he going to have to go on strike against himself? With ideas like this one, few wonder why union membership is in decline. It seems to me that whenever one thinks that the bottom has been reached, that there is no way that you can get a [stupider] concept out there, there is always someone that makes it all possible, showing Murphy’s principle as it relates to intelligence is still valid. (You know that the quantity of intelligence in the world is a constant and the population is continually increasing??)

    I was thinking that management in corporate America is out of touch, but you beat all the expectations.


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