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Thursday, January 31, 2013

So where do I break even in this deal?

The Bureau of Labor Statistics (BLS) released its Union Members Summary for 2012.  It shows a 2011 to 2012 decline of 0.5% in American union membership from 11.8% to 11.3%.  American unions lost almost 400,000 members from 2011 to 2012, dropping from 14,764,000 to 14,366,000.  For some perspective, unions represented 17.7 million Americans or 20.1% of the labor force in 1983.

The more interesting numbers are in Table 1 (Union affiliation of employee wage and salary workers by selected characteristics), which has a breakdown of union membership by age group.  For 2012, the percentage of union membership breaks down as follows:

                                                                 Percentage employed
                   Age Range                               belonging to unions
                   16-24 years                                          4.2%
                   25-34 years                                          9.5%
                   35-44 years                                         12.5%
                   45-54 years                                         14.0%
                   55-64 years                                         14.9%
                   65 years and over                                 9.1%

What stands out most in these percentages is the difference between younger workers and older workers.  For those between 45 and 64 years of age, union membership has a pretty tight range between 14 to 15%.  However, union membership really drops off to 9.5% for those 25 to 34 years of age and goes all the way down to 4.2% for those 16 to 24 years of age.  These two youngest groups represent the ages when most people will be settling into their chosen career fields, so these workers represent the future of most unions.  When union workers 65 and over make up nearly the same proportion of those employed as those between 25 and 30 years, it indicates a real problem for unions.

So what explains this difference in union membership between younger and older workers?  Depending on where you stand, it could be found anywhere along the spectrum from union-busting politicians in right-to-work states to job-destroying union leaders like those that forced Hostess into bankruptcy.  However, the simplest explanation may be that younger workers no longer see the benefits of unions outweighing the costs.  The combination of trying economic times and a generation of workers who are the most savvy and well-informed consumers in history makes for a difficult market for unions trying to sell themselves as a necessary service.  Joining a union is no longer automatic, and unions must show these younger workers what they get for their monthly union dues.

The greater "cause" of American labor may not resonate with younger workers, who may view unionism as antiquated as suffragism or abolitionism.  Add to this the real possibility that those in the 45-64 years age range will have a better standard of living than younger workers, and you see why a younger person might look at unions with some cynicism.  Someone entering PSPRS since January 1, 2012 might wonder why he should join a union that has bequeathed him a longer working career, higher contributions rates, and a worse retirement.  He will be starting his career already in the hole, so the union will need a really good sales pitch to convince him of the benefits he receives from union membership.

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