South-Western Economics  
Hoffa Cements Lead With Growth Promises
Subject Union membership
Topic Labor markets
Key Words Teamsters, union growth, layoffs, organizing, union locals, strike, pay, net assets
News Story

James P. Hoffa, son of legendary Jimmy Hoffa, is likely to win the Teamster union leadership election in late 2001. That would give him a five-year term (to add to the two years he has already served). Mr. Hoffa promises tremendous growth in the union, as well as political independence and financial stability. His opponent, Tom Leedham, wants centralized organizing efforts and tougher contracts.

The toughest promise for Hoffa to keep will be increasing the size of the union. Membership has fallen from 1.55 million in 1990 to 1.4 million in 2000. The main culprits appear to be layoffs of union workers, the transfer of business abroad, and the loss of the near-monopoly on delivering automobiles to dealers. Critics of Mr. Hoffa also allege that the local organizing efforts of the Teamsters could be better coordinated.

Mr. Hoffa counters that he has helped union locals organize fuel, dairy, and car haulers. He has also mounted a strike against Overnite Transportation Co., which carries the loads of multiple clients on one truck. He is organizing with other unions and plans to increase cooperation between the locals and the union's headquarters.

On other issues, Mr. Hoffa has increased the union's net assets significantly, although they could be used up in an aggressive organizing campaign and in paying for the election and government oversight. However, he vows to reduce the pay of the top union officials. Politically, Mr. Hoffa is reaching out to Republicans, not just Democrats, in an effort to have them listen to what organized labor wants.

(Updated July 1, 2001)

Questions
1. The level of union membership can be explained by the demand for, and supply of, union services. In the past decade, Teamster membership has slipped by about 150,000.
a) What demand side factors might explain this? Refer to the news story.
b) What supply side factors can you identify that might have been influential?
2. Mr. Hoffa promises that, if elected, he will increase union membership.
a) How can he induce an increase in demand for Teamster union services?
b) How can he increase the supply of services?
Source Carlos Tejada, "Hoffa Likely to Get 5-Year Teamsters Reign," The Wall Street Journal, May 18, 2001.

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