South-Western College Publishing - Economics  
Labor Pains Followed By Rebirth of Unions?
Subject Unions
Topic Labor markets
Key Words Union membership, organizing, budgets, layoffs, private sector, public sector
News Story

Union membership rose by 265,000 in 1999 to a level of 16.5 million (13.9 percent of the workforce). Now, private sector membership stands at 9.4 million (9.4 percent of private employees), and public sector membership is 7.1 million workers (37.3 percent of public employees). This increase comes after decades of decline: union membership has declined by one-fourth since 1980 and by 40 percent since the mid-1950s.

The primary causes appear to be twofold. First, the new leaders of the AFL-CIO have made union organizing a priority. They have encouraged member unions to increase the percentage of their budgets that they spend on organizing: the Service Employees International Union spent 47 percent of its budget on organizing and attracted 155,000 workers mostly in health care in 1999. Second, many unionized employers increased their workforces in the face of a booming economy, offsetting the layoffs seen in some unionized firms.

Still, it will take a long time to reverse labor's decline. One observer compared it to turning an oil tanker around.

(Updated March 1, 2000)

Questions
1. In the labor market for unionized labor, the demand for unionized labor reflects employers' willingness to employ unionized workers at each wage rate, while the supply of unionized labor shows the willingness of workers to be unionized and work at each wage rate. Draw a diagram of the market for unionized labor, marking the equilibrium wage and employment level.
  a) How did union organizing efforts affect the equilibrium number of unionized workers? Illustrate on your diagram.
  b) How did the booming economy further affect the equilibrium number of unionized workers? Show the effect on your diagram.
2. Why is union membership higher in the public sector in percentage terms? Think about the factors affecting the supply of, and the demand for, unionized labor.
Source Steven Greenhouse, "Growth in Unions' Membership in 1999 Was the Best in Two Decades," The New York Times, January 20, 2000.

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