Organizing Low Wage Workers Performance and Prospects

Posted: Thursday, 2 March 2006

Introduction

This presentation will focus on the role of unions as part of the answer to the growing problem of low paid and precarious work, looking at past performance and future prospects, including some reflections on what strategies hold the most promise. These include an expanded union role in training and benefits provision and a shift to multi-employer organizing and bargaining.

The Problem of Low Wages

Over the past 25 years – since the early 1980s – the real (inflation-adjusted) value of the median hourly wage (half earn more/half less) has been almost stagnant, rising a bit for women and falling a bit for men. Today (2005), half of all workers earn less than $17 per hour. Half of all women earn less than about $15 per hour; half of all men earn less than about $19 per hour.

Almost all wage growth has been in the top half of the wage distribution and most of that has been at the very top. The share of all wages going to the top 1% of wage and salary earners (roughly those making more than $150,000 per year), rose from 9% to 14% over the 1990s.

Earning less than two thirds of the median wage – or less than about $11 per hour – is often regarded as a poverty wage. This is about enough for a full-time, full year worker to earn a poverty line income for a single person in a larger city.

About one in four of all workers and one in six adult workers earn less than a poverty-line wage. For full-time workers who are not students, the proportion is more than one in five for women, almost half of all young workers, and about one in five among visible minority workers.

Low wages are transitory for some, but about two-thirds of low paid adult women and half of low paid adult men remain persistently low paid.

The problem of low wages is greatly compounded by the growth of precarious work. Many low wage workers in terms of hourly wages are also in temporary and contract jobs – and often experience unemployment – and/or are in part-time jobs with erratic work schedules. In short, many low wage workers also have very irregular hours.

Comparative data for the OECD show that Canada is second only to the US as a low wage country. The proportion of workers who are low paid (less than two thirds of the median wage) is about double the level in continental Europe and far higher than in the Scandinavian countries (where incidence is less than 10%).

The main reason is the weakness of unions among low wage workers, combined with the low level of statutory minimum wages. In Sweden, by contrast, where the majority of even private services workers belong to unions, the pay gap between (mainly women) in private services like retail and hotels and (mainly men) in blue collar jobs is modest, and the pay gap between the top 10% and the bottom 10% is much narrower. Collective bargaining tends to compress wage differences among unionized workers so widespread collective bargaining raises the wage floor and narrows wage differences.

The problems of poverty and family income inequality (after taxes and transfers) are compounded if there is a continuing low wage problem and the distribution of wages is highly unequal. This puts far more pressure on the tax/transfer system. Also, countries with highly unequal wages tend to have little political appetite for highly re-distributive taxes and transfers.

The problem of low wages as linked to poverty and growing inequality has been increasingly noted by social advocacy groups such as Campaign 2000 and CPRN in Canada – but the potential offsetting role of expanded collective bargaining has been relatively minimized compared to policies such as increasing transfers (e.g. earned income tax credits) and raising minimum wages.

The Role of Unions

The great majority of low wage workers are to be found in sectors of the economy/job market where unions are very weak. Some (mainly men) are in low paid parts of manufacturing and construction, but most – especially women – are in low wage private services – retail trade; hotels and restaurants; business services like cleaning and security; plus social services usually not directly delivered by governments – such as child care, elder care, and community services.

Union density overall in the private sector has slipped to under 20% (19.3% in 2005; down from 21.3% in 1997) and is still relatively concentrated among men in larger establishments in manufacturing, resources, utilities etc. (even though density is shrinking among blue-collar men).

Between 1997 and 2005, total private sector employment rose by 1.8 million but the number of private sector union members rose by just 182,000 or by about one tenth as much as total job growth. (Data from Statistics Canada Labour Force Survey). The good news compared to the US, the UK, and Australia, etc. is that private sector unions are not shrinking in ABSOLUTE terms – so resources are still available to turn things around – but the long-term trend is a slow decline in density.

There is significant membership and organizing potential among low wage workers. For example, one in five men and one in three women workers are employed in usually low paid sales and service occupations and this proportion has been slowly increasing over the past 20 years.

Only about one in ten of all low wage workers (defined as those earning less than two thirds of the median wage) belong to a union. Union density is about 14% in trade and in non professional business services, and is just 8.5% in accommodation and food services.

That said, union density has been fairly stable in low wage sectors and has even been increasing in terms of absolute numbers because of some combination of growth of employment in unionized firms, and organizing of non union workers.

For example – while density slipped slightly in trade between 1997 and 2005 – from 14.8% to 14.1% – the number of union members in the sector rose from 263,000 to 319,000. There are significant concentrations of union workers in the grocery sector, as well as in liquor stores.

In accommodation/food services, density has been stable but very low (8.6% to 8.5%), but union membership (mainly in big city hotels and some resorts) has risen from 67,000 to 78,000.

In non professional business services, density has been stable (falling slightly from 15.0% to 14.5%) but membership has risen from 50,000 to 73,000 in a fast-growing sector. This probably reflects organizing of building services workers and security guards.

There has been a significant increase in union density since 1997 among usually low-paid workers in ‘caring services’ – usually part of the broader public sector, where governments contract for or subsidized services by not-for-profits and commercial operations (both of which are usually included in the private sector). Union density has risen from 31.4% in 1997 to 38.6% (in 2003) among child care and home support workers, and from 50.8% to 54.1% among health support staff. Both of these are fast-growing areas of employment.

It is impossible to fully separate out growth in union membership arising from job growth in unionized firms, and growth from new organizing. To some degree, membership has grown and density has been fairly stable in low wage jobs because these are areas of growing employment.

We do know from the work of Charlotte Yates and background research for the CLC organizing conference in 2003 that recent organizing has been relatively concentrated in smaller firms and in low wage sectors, especially among women in community and social services (where both public and private sector unions have been expanding). We know that youth, women and workers of colour – who tend to be lower paid – are aware of the union advantage and are now more significantly attracted to unions than are men (especially higher-paid men). We know that there have been some recent organizing successes among lowerpaid workers.

However, the evidence is that the organizing rate – the proportion of non union workers organized into unions each year – is low, and is declining. In Ontario, just over 11,000 workers were organized last year, down from an annual peak of more than 30,000 under the Rae NDP government. In BC, just 1,500 workers were organized last year, down from about 10,000 per year under the NDP government.

In some years in the 1990s, we reached a peak of organizing up to 70-100,000 workers per year. That level is much lower today. Much of the reason probably lies in changes to labour legislation – from card check to votes in a climate which allows for employer intimidation; lack of protection of workers against employer reprisals; and, lack of first contract arbitration.

However, even under good laws, the organizing rate was not high enough to offset a gradual decline in density and new strategies will probably be needed on top of the needed progressive changes to labour legislation.

Reflections on the Economic Context for Union Organization and Representation of Low Wage Workers

Unionization provides clear economic benefits to low wage workers, above and beyond access to the rights and protections of a collective agreement. In private sector sales and service occupations, for example, union members earn an average of $15.41 per hour compared to $11.47 per hour for non union workers, a wage advantage of more than one third (which is even higher for women). (See Andrew Jackson. “Gender Inequality and Precarious Work” CLC Research Paper #31 available from www.clc-ctc.ca.) Health benefits and pension coverage are extremely low among low paid, private sector non union workers, whereas most unionized workers, even in low wage sectors, usually manage to obtain some benefits’ coverage.

Despite clear economic benefits, it is very difficult to organize low wage workers for a number of reasons. Normally, there is intense competition for even low wage jobs because of the shortage of secure, well-paid work, the inadequacy or non-availability of social assistance and EI benefits, and because the skill content of most low wage jobs has been designed and shaped in such a way as to make workers readily replaceable. In short, low wage workers have relatively little bargaining power and this is compounded by employer control of an individual’s work schedules and ability to take reprisals against union activists. Rapid turnover in the workforce of low wage employers like Wal-Mart makes it very difficult to establish a community of interest among workers.

It is also extraordinarily difficult for unions to raise wages and benefits (and to improve working conditions) if organizing does not lead to bargaining structures and outcomes which change the economics of low wage industries on a sectoral and/or local labour market/community basis. If – as is normally the case – low wage employers are running labour intensive operations in a highly competitive environment, raising wages in a single firm or establishment will be very difficult and may force layoffs or even bankruptcy or closure of an employer. Profit margins of many low wage employers like Wal-Mart are very dependent on low labour costs because mark-ups over costs are low. Many low wage employers exist to provide labour services – such as cleaning or security – at the lowest possible cost, and contracts are frequently tendered to the lowest cost provider. As a rule, in the low wage sectors, employers have decided, or been compelled by competitive pressures, to pursue a low cost/low wage strategy where they are prepared to tolerate high worker turnover (which can be as high as 80% annually at operations like Wal-Mart), and are not prepared to invest in skills.

In some cases, unions may be able to win better wages by pushing an employer in the direction of a higher wage/higher skill/higher productivity strategy. For example, some retailers like Costco and Home Depot pay higher than average retail wages and can charge somewhat higher prices by providing better customer service. In low end manufacturing, unionization might prompt greater employer investment in new machinery and equipment and training in an attempt to raise productivity so as to pay higher wages. In the economic literature, there is strong evidence that much of the union wage premium comes, not from reduced profitability, but rather from higher productivity.

One important way in which unions can help push employers towards a ‘high road’ competitive strategy is by themselves helping to raise the level of worker skills. In the hotel and health services industries in the US, unions, mainly representing low wage workers, have negotiated joint training agreements with employers, providing language training and skills training programs which enable workers to progress over job ladders, for example from “back of the house” to “front of the house” jobs in hotels, and to more skilled jobs in catering. In Las Vegas, the hotel workers’ union runs a large training program which serves most of the skills training needs of the hospitality industry efficiently and at low cost, lowering worker turnover and raising the level of customer service. In New York City, SEIU runs a major training program for health support workers (details of US examples of union delivery of training programs for low wage workers can be found on the web site of the Working for America Institute at http://www.workingforamerica.org). In Canada, there are some modest examples of union involvement in skills training of retail and hotel workers. As in the construction industry, union training strategies can also build stronger links between workers and their unions.

In a similar vein, union involvement in the provision of benefits, such as health care coverage and pensions, can promote broader coverage and greater access to benefits at a lower cost. In Canada, the USWA has a health benefits plan which covers some 20,000 workers in mainly smaller establishments at a relatively low administrative cost, and now operates five dental clinics for members and their families. In a limited way, vehicles have been created to provide defined benefit pension plans on a pooled basis, covering many small employers. These union initiatives make it easier to negotiate a modest benefits plan for newly organized workers, and assist in new organizing. Of course, a direct union role in training and benefits provision for workers moving frequently between jobs has long been a characteristic of the construction industry.

While unionization can often be associated with higher productivity at the level of the individual firm, raising low wages will often mean having to raise employer margins through higher prices, which is most readily done by raising wages and prices across an economically relevant sector. This is often referred to as “taking wages out of competition”. For example, pattern industrial bargaining in sectors like auto and steel used to mean that entire national industries competed with one another on more or less the same high and rising wage standard. In low wage services, success has sometimes been achieved by replicating this pattern among locally-rooted services at the level of the local job market. Despite “globalization” and the growing potential to deliver some services from a distance over new communications technologies, it remains the case that most low wage services are inherently geographically rooted so wages can be taken out of competition at the level of a local labour market.

For example, SEIU’s Justice for Janitors Campaigns have set city-wide wage floors for building services workers in the US which are recognized by substantially all contractors in the city or its downtown core. Sometimes, city-wide wage floors have been set for large hotels in big cities, as in New York City and Las Vegas. Centralized provincial or regional bargaining has set multi-employer wage floors in community care and child care services in some provinces, as in sectoral child care collective agreements in Quebec and agreements covering community services workers in BC under the NDP government. Security guards in Quebec have been covered by multi-employer agreements.

Likely, most unionized enclaves in low wage private services exist because union density, while low on average at the level of an entire industry, is enough to gain some leverage at a lower, economically relevant level. This kind of density is most likely to be gained if the union or unions involved can bring about a formal or informal multi-employer bargaining structure with substantially similar collective agreement provisions on key economic items like wages. These kind of structures are common in continental Europe where many employers in a specific sector such as retail or large hotels respect a wage floor negotiated by a union, which is formally or informally extended to even non union employers.

While examples exist in Canada and the US, these kinds of arrangements are hard to obtain because they require a critical mass, often involve strong employer opposition and also often require co-operation among unions which might otherwise be competing for members. Usually all of this entails a well thought out strategic approach to organizing and bargaining, which must be executed patiently over a long period of time, as in the recently successful campaign to organize home support workers in California. However, once a critical mass is reached, density can be readily expanded since unionization of another employer quickly translates into coverage by a multi-employer agreement as opposed to the usual and difficult route of negotiating a first collective agreement.

Campaigns to organize and bargain for workers in an entire sector in a local labour market are often successful by virtue of working closely with community organizations, which themselves link workers with a community of interest who are working for different employers. Sometimes these kinds of campaigns can begin and gain leverage by associations recruiting members and acting as a collective body before obtaining a collective agreement. Many workers lack effective access to basic legal employment rights and standards in the absence of collective representation, as shown by the fact that some 90% of employment standards complaints in Canada are filled after an individual work has left a job or been terminated. However, there are few examples in Canada of community-based worker associations making the transition to a collective agreement.

There is a chicken and egg issue as to whether or not multi-employer sectoral and/or local bargaining should be supported by changes to labour law, in effect compelling broader-based bargaining once some reasonable threshold is reached. On the one hand, this would clearly facilitate the process. On the other hand, legal arrangements are most likely to be shaped by union strategies on the ground. It is difficult to specify precisely in advance what kind of multi-employer configurations would make the most sense in terms of establishing effective wage floors. In some cases they would be local (e.g. hotels, most retail); in some cases they might be provincial (e.g. provincially-funded social services); and in some cases, they might be national or even international.

Conclusion

Unions can significantly improve wages and benefits and provide access to rights for low wage workers. However, union density is very low among such workers and is, at best, stable despite some recent organizing efforts. Organizing is likely to be most successful if the bargaining structures to which it gives rise, can counter the low cost/low wage/high turnover economic strategy of most low wage employers. This can be done to some degree by union involvement in training and, most importantly, by promoting multi-employer bargaining at a level which gives unions some leverage to raise the wage floor.

Related Issues

Role of Unions