The Relevance of Organized Labor

Posted on Jan 25, 2013 | 10 Comments

Two statistics: Union membership in the United States, it was reported this week, is down to 6.6% of workers in private companies, the lowest level since World War II. The share of the national income going to workers is also at its lowest point since World War II.

Labor professor Gary Chaison told Bloomberg: “American workers feel as if the contract between them and their employers doesn’t work any more, but they’re not turning to unions.”

This is hardly a new phenomenon. More than 30 years ago, three prominent American labor leaders called on Peter Drucker for his counsel. One was president of a union of government employees, the second of a union in a primary industry, and the third of a mass-production union. “Each came with his own specific concerns,” Drucker recalled in The Frontiers of Management. “Yet each one asked—and fairly soon—whether the labor union still has a function in America or is becoming irrelevant.”

In Drucker’s view, the answer was not encouraging for his guests. The problem was not, in his opinion, union busters (though there were plenty of those out there—and still are). Instead, other factors were primarily at play.

One was that union members, by investing heavily in the stock market through their pension funds, were not merely employees but also owners, creating conflicts of interest. Another was that unions had managed to accomplish much of what they’d set out to do when the labor movement took off in the 1930s.

“The true strength of the labor movement in developed countries has been moral: its claim to be the political conscience of a modern secular society,” Drucker noted. But this was harder to be when organized labor became a powerful interest group and its members were relatively well paid.

Finally, Drucker argued, unions didn’t have many economic gains left to win. “Once 85 percent of national income goes to employees, the labor union has lost its original rationale: that of increasing the share of the national income that goes to the ‘wage fund.’” Drucker wrote in his 1980 book Managing in Turbulent Times. “All one labor union can do is increase the share of its members at the expense of other employees.”

Therefore, Drucker believed that unions needed to recast themselves as the entities that united the goals of the worker and the enterprise. Unions should be reestablished as “the embodiment of the ultimate identity of interest between employer and employee,” he wrote.

As things turned out, few unions took Drucker’s advice as fully as he’d have liked. But, as statistics show, Drucker also was writing at a time when wages were much more favorable for the worker.

What do you think? Do we need a revitalized labor movement if workers ever hope to see their wages rise significantly?


  1. Maury Sweetin, Drucker MBA'94
    January 26, 2013

    While Labor is responsible in part for its decline, there are two more influential factors, e.g.:
    1) Post-manufacturing environment due to automation and outsourcing has dispersed and reduced thenumber of potential union members

    2) Republican Administrations and their supporters such as Chambers of Commerce, etc. at least since Reagan, have been successful in deluding potential members into believing that they are better served as “rugged individualists” who who will be taken care of by their companies.

  2. Mike Grayson
    January 26, 2013

    Labor unions are overflowing with corruption. In 2012 the Justice Departed arrested union officials for embesslement, extortion, bribery, racketeering, money laundering, fraud and witness tampering.

    American citizens should never be “forced” to join a union and pay dues. This defies common-sense and our principles of life, liberty and the pursuit of happiness. While I am not anti-union, I am certainly anti-corruption. Any legislation that gives even more power to a union should be looked at as deepening existing corruption.

    It is time for right-to-work laws in every state. Workers should have the right to collective bargaining, but not forced to join a union. And business owners should have the right to expect employees to be effective and productive, something a union often undermines.

    • Mike Grayson
      January 26, 2013

      Please excuse the typo – it should have been “Justice Department”.

  3. George L. Williams
    January 26, 2013

    Drucker told us in the 80′s: Employers who mistreat their workers are begging for unions. Since the Money Boys “moved inside” corporate America, after first attacking it from the “outside” (Boesky to Romney), the mistreatment of workers from the top down inside corporations shifted to “steroid” levels. Today’s workers in corporate America must “fit” some pre-determined culture which can vary from fascistic to some other Frankenstein-like social environment — all reigned over by “HR” stooges. The nightmares must be endured on pain of losing a “job” in this expanding job desert that emanates from the 2008 meltdown.

    Something infinitely larger and stronger than a “union” will have to be concocted to break the power corporations have over “contributors”! It will take the combined might of government and citizen groups to overcome the new powers that reign through money and manipulation of global politics.

  4. Alba Patricia Valencia
    January 26, 2013

    According with the neoliberal ideology, the labor unions do not have a vital role to play to see their wages rise significantly, because: 1) Neoliberalism as the dominant theory, requires conversion efficiency and competitiveness. 2) The design of global economic space opens the free entry of capital and foreign investment. 3) The design of global economic space opens the free entry of capital and foreign investment. 4) The role of Government favors deregulation subsidies and privatization it. 5) Export platforms are created or called NICs. 6) Technology provides significant advances over, displacing labor, and 7) because the gentrification of services promotes the dismantling of union gains, started from about the year 1970.

    De acuerdo con la ideología neoliberal, los sindicatos no tienen un papel vital que desempeñar para tener la esperanza de ver un aumento significativo en sus salarios, porque: 1) el Neoliberalismo como teoría dominante, exige reconversión de la eficiencia y la competitividad. 2) El rediseño del espacio económico mundial abre el libre ingreso de capital y de inversión extranjera. 3) La función del Estado favorece la desregulación de los subsidios y la privatización. 4) Es urgente y necesario bajar los costos para poder competir en los mercados internacionales. 5) Se crean las plataformas exportadoras o denominados NICs. 6) Tecnología presenta adelantos más significativos, desplazando mano de obra, y 7) porque la elitización de los servicios favorece el desmonte de las conquistas sindicales iniciadas aproximadamente desde el año 1970.

    • Alba Patricia Valencia
      January 26, 2013

      A last note. With the global economic crisis globalization and social and political conflicts increasing, a process that can get to the point where global social explosions of entire areas and workers are a threat or a reality yet. However, under the pressure of neoliberal hegemony and a majority of politicians from different countries trading (persuasively) that is splendidly for the economy it is for jobs and for the country. Under this slogan, the salary earnings have decreased, work has increased and we have more prone to falls and ruin.

      Otra observación. Con la globalización económica mundial las crisis y los conflictos sociales y políticos aumentan, un proceso que puede llegar hasta el punto en que las explosiones sociales mundiales, de regiones enteras del mundo y de trabajadores, sean una amenaza o ya una realidad. Sin embargo, bajo la presión de la hegemonía neoliberal ya hay una mayoría de políticos de diversos países que negocia (convenidamente) que lo que es bueno para la economía lo es para los puestos de trabajo y para el país. Bajo este lema, los ingresos salariales los han decrecido, el trabajo ha aumentado y estamos más propensos a caídas y derrumbamientos.

  5. Maverick 18
    January 28, 2013

    There has been more of a dissapearance of union jobs than of union members. The causes are primarily technology and international trade. I remember Walter Reuther addressing the subject of automation long before the PC and cell phone came along. He was worried about machines eliminating manufacturing jobs, but he never forsaw what information technology would do to non-manufacturing jobs and the service sector. No more stenographers, typists, publishing assistants, secretaries, travel agencies, etc, Now every knowledge worker is tasked to be IT knowledgeable and do his/her own support. Further, knowledge workers were never the target of union organizers. What remained of manufacturing, mining, and the traditional union targets, moved offshore to an excessive degree. Just go to Walmart to see today’s status. Clothing, shoes, toys, houehold items, electronics, and most everything else manufactured is from Asia. These imported items are being sold by Walmart employees, many of whom are underemployed, but who resist unionization in hopes of retaining the jobs that they have. The biggest mitakes made by unions have been their failure to recognize where technology, markets and public policy have been going and adapting their organizing and union maintenance strategies accordingly. I still consider Walter Reuther to be the best union spokesperson and union leader of the post WW II period. It is a shame that he didn’t live longer. He might have led the union movement in a more productive direction.

  6. Robert Kozlowski
    January 28, 2013

    I read this article on Saturday when it was first posted. There were no reply’s so I saved it to see if there were any Socialist-Liberal-Progressive Party anti-capitalist followers still in denial of reality. Indeed there are, Mary S. and George W.
    In California the public sector unions are alive and thriving, on the taxpayers dollar. That is why the state is near BK and several cities have declared BK.

    The manufacturing was pushed offshore by the above public sector, by useless rules and regulations and excessive taxation. At one time, mid 60′s and 70′s, there was not a product that was not manufactured in California, from autos to homes, to industrial equipment to food processing. Most all of it is gone, forced out by the bureaucrats and the public sector unions that rule the state.

    My experience with unions, at trade shows, is that they want the most amount of money for the least amount of work. That matrix works if you don’t have to make a profit, but are parasites supported by taxes and forced fees, i.e. exhibiting at a trade show. Try putting on a theatrical production without a union, it’s not possible. What unions control they ruin.


  7. Labor law posters
    January 28, 2013

    In the past, unions provided employees shelters. But things have changed, in my opinion. What protect employees now is labor law and employment law. A revitalized labor movement sounds a little radical for me. Maybe we should not expect our wages rise significantly in such a slack situation. We do the best we can do and expect things to get better.

  8. What Peter Drucker Would Be Reading | The Drucker Exchange | Daily Blog by The Drucker Institute
    February 6, 2013

    [...] Comment of the Week:  when we asked what ails the labor movement and what might revitalize it, reader Maverick 18 had this to [...]


Leave a Reply