Unions and Business: How do they Blend?

Amid declining membership, organizing defeats, and mismanagement, some union bosses find themselves at a crossroads. In attempts to maintain their outsize political influence among historically low union participation, they’re pushing tactics that have negative consequences for workers and businesses.

Dig deeper: A new study illuminates how unions leverage the government to circumvent the long-established policies of the National Labor Relations Act (NLRA). This federal law was designed to nationalize labor policy, creating a cohesive labor relations system extending across state borders. However, the labor environment is undergoing significant changes.

Voices diminished: Labor standards boards, which can set work rules without meaningful input from workers, are increasingly influencing the workplace. These boards represent a shift in how labor policies are formed and implemented, demonstrating a new dynamic in the relationship between workers, unions, and government.

• Lack of employee participation: Workers may be represented without meaningful input, which diminishes their voice in the decision-making process.

• Expands state and local government power: Several states and local governments have adopted these boards, dramatically altering local labor practices and setting precedents for future labor policies.

• Limits innovation: Because these boards are intended to impose the same standards on all employers in an industry, they reduce incentives to innovate and become more efficient — meaning fewer jobs and lower growth.

Playbook: Unions use various additional methods to maintain influence, including:

• Sectoral wages: Unions push for standardized wages in targeted industries to make it easier to organize workers. This strategy is often used where unionization has previously failed.

• Ballot initiatives: Unions use ballot initiatives to enact laws that raise labor costs and reduce competition, like eliminating tipped wages, to indirectly support union goals.

• Labor peace agreements: State and local governments force employers to sign agreements that limit their ability to resist organizing, often as a condition for government contracts or financing.

• Foreign law: Unions leverage foreign regulations, like Germany’s supply chain law, to pressure U.S. companies into compliance with union-friendly standards, bypassing U.S. labor laws.

• Abusing the proxy process: Unions buy company shares to introduce shareholder resolutions that pressure companies to adopt pro-union policies, using SEC rules to strengthen their influence.

Bottom line: These union tactics are more about maintaining political influence than delivering for workers. Leveraging government to bypass established labor laws creates uncertainty and produces an unpredictable regulatory climate.