Organized labor could be defined as an association of workers united as a single, representative entity for the purpose of improving the workers’ economic status and working conditions through collective bargaining with employers. Also known as “unions”. Organized labor in the US consists of public and private sector unions. New York State has the highest percentage of employed union members in the country, at 26% of the total state workforce. There has been a steady trend in declining number of Union members across the United States, which simultaneously led to the decrease in wages, with no political representation for collective bargaining. Labor unions were a dominant force in the economy in the 1950s, when they represented more than a third of American workers. Today, unionized workers represent about 12 percent of the public workforce, and only 7 percent of private workers. [1] The importance of labor unions has been left for them to defend, given the opposition of neo liberal conservative politics at the Centre. Depressed wages can be associated with outsourcing jobs off shores to the effect of globalization and immigrant labor in the States. At the same time, lowered wages can also be contributed to decreasing union strength, affecting the wages of non unionized workers which in turn lower the collective bargaining potential for unionized workers. According to the US Bureau of Labor Statistics:
- US union membership has declined steadily in recent years
- There were 14.8 million union members in the US in 2011
- That is the lowest number in 70 years – accounting for less than 12 per cent of the workforce
- The peak unionization rate was 35 per cent and occurred during the mid-1950s
- The bureau says that median weekly earnings for union members are significantly higher – $938 per week compared to $729 per week for non-union workers
On the other hand, there have been an increasing number of business associations, non-profit organizations, state and federal initiatives, helping the manufacturing industry in investments, job recruitments, job training and information sharing. Though there are new forms of welfare innovation and small-medium business support systems emerging, the fundamental representation by the unions is lacking. Unions have for long been at the center of Federal Budget Debates and most of the times have signified a rift between the public and private sector unions. While private sector unions cannot go so far in their demands that they drive an employer out of business, government unions face no such brake. As a result, public sector unions have been intransigent in the face of elected officials’ requests for concessions to help close budget gaps. That runs counter to the interests of private sector unions that depend on a sound business environment where their members can find work.[2]
Worker Welfare:
One of the advantages of the public sector unions has been the contribution by the State and Federal Government to the Union Welfare Fund. With respect to the employees of the New York City government, there are various benefits provided like Health Benefit, etc. For rest of the private unions, there are vocational training programs, job recruitment programs etc. undertaken by the NYC Government. Recently, the city government has come up with a new initiative, Workforce1, wherein it prepares and connects qualified candidates to Job opportunities in small businesses in NYC. These Workforce1 centers specialize in healthcare, industrial and transportation fields for job training.
Legislatively, the State and Federal governments have put into place Wage theft prevention Act, Minimum wage Act, Extended Benefits Scheme, Unemployment Insurance Law and Workers’ Compensation and Disability Benefits provided by the government and at times provided by the private insurance carrier.
Review of the Manufacturing job scene in NYC:
The average NYC manufacturing job pays over $12,000 more per year than retail and restaurant jobs, and is more likely to be unionized and provide benefits. In 2005, average wage for the sector was $43,900 and 63% of workers had health coverage. The workforce consists of 78% of ethnic minorities, 64% immigrant and 82% of them living in outer boroughs. In the past few years the manufacturing job loss has declined and the unemployment in NYC has fallen from 9.7% to 9.2%. Manufacturers want to be in New York City to stay close to their market, to collaborate directly with customers and designers, and to draw on the city’s phenomenal pool of labor. In recent years, local manufacturers have refocused from producing high volume goods to more customized, high value goods. ”Manufacturing adds substantially to the city’s coffers and offers gateway employment for non-English speaking immigrants and New Yorkers with little education and minimal job skills. These workers feed into and bolster the city’s disappearing middle class, particularly in the Bronx, Brooklyn, and Queens.” Newsday, Jan. 31, 2005 [3]
Food production has been one of the more stable manufacturing industries. In the 2001 recession, total manufacturing jobs slid 19.4% between 2000 and 2002, while food production declined much less (-7.6%). In wage terms, food makers fared even better. Total wages paid out in manufacturing fell 10.2% between 2000 and 2002, but actually increased by 9.6% in food production over the same period. During the most recent recession, food production held up even better. Between 2007 and 2010, while total factory jobs plummeted 24%, food-manufacturing jobs ticked up 0.8%. As in the 2001 recession, overall manufacturing wages declined 21.2%, but wages in food production inched up by 1.4%.
As large factories shut down or move out of the City, those that remain tend to cater to niche markets. The City lost several large food manufacturers. But these losses were more than offset by an increase in small retail bakeries. These new firms mostly sell to local residents and restaurants. Large firms dominate the U.S. food industry. By contrast, food production in New York City is scattered across many small and medium-sized operations. This makes it easier for local businesses to compete. Over 2011, the average wage in New
Percent Change in Private Sector Jobs by Area, New York State, Sept 2011- 2012
York City’s food manufacturing industry was $47,420. This was about 10% below the overall manufacturing wage ($52,260), and much lower than the City’s private sector average of $81,340. New York City’s food and beverage production industry continues to evolve. Over the past few years, it has absorbed a number of high- profile plant closings. However, as these larger factories shut down or moved out of the City, many smaller food makers have sprung up to take their place. These newer businesses fulfill an essential need, selling mostly to local customers. The asset specificity of Firm A is even more as compared to existing food manufacturing firms in NYC, even though Brooklyn has less of an unemployment percentage than the other boroughs. The difference between old and new firms has been that new firms have relied on independent contractors and freelance work and hence most of them have gone out of business (due to outsourcing). Acme smoked fish being an old firm, has a longstanding relationship with the workers, who are from the neighborhood and are under one union and has fully developed in house manufacturing capacities. Moreover, given the expansion plans of a number of retail food outlets like Whole Foods, Fairway Market etc. there is constant upkeep in the local demand for smoked fish.
What are the variables of discontent in this case if otherwise?
In a long term perspective, with respect to intergenerational occupational and level of education changes in the neighborhood, there could be a shift in the demographic of firm a’s manufacturing workforce., since most of the laborers come from the neighborhood. Thus, it may not have issues with respect to transportation costs of workers but in the future there might be a possibility. Also, to keep up with constant job training, the manufacturing process could suffer a drag, given the nature of ‘Fordist’ kind of production chain. Hence, to reduce the time of on the job training, the workers time could be organized for intensive vocational workshops (firm specific) beforehand. Most crucially, there is no guarantee that the management of acme would still be family run, hence just like the German worker – employer model, greater worker representation in the management could resolve future conflicts, thereby also reducing the marginal and transaction costs in labor welfare in the future.
[1] Declining number of union members affects all workers’ salaries – Washington Times http://www.washingtontimes.com/news/2012/jun/7/declining-number-of-union-members-affects-all-work/#ixzz2A6CPjlff , Patrice Hill, June 7 2012
[2] In New York, a Private/Public Sector Union Rift, Ivan Osorio, June 8, 2012, retrieved from
http://www.openmarket.org/2012/06/08/privatepublic-sector-union-rift/
[3] NYS Department of Labor, Q2 2005