Now Is the Time for Unions to Go on the Offensive
Despite years of employer attacks, unions still have vast resources at their disposal. This moment of worker upsurge is the time to use those assets to fund aggressive organizing.
Every May Day, labor unions around the world celebrate the heroism of the militant workers of 1886 who led a bloody general strike demanding the eight-hour workday. But there is also another, usually less inspiring, spring ritual of the labor movement: the parsing of union membership data and trends in the annual release by the Department of Labor. After the data release in March, almost always showing a decline in membership, the media and pundits warn that labor is facing an “existential crisis,” predicting unions will soon be irrelevant or bankrupt unless they urgently organize more workers.
This ritual has been observed at least since the early 1990s, when I first started working for the labor movement. It also happens to be, in some significant ways, wrong.
Of course, the decline of union membership is a crisis for workers who don’t have the benefit of union representation, or for union workers who’ve seen their bargaining power erode over the last several decades. And it is a crisis for democracy itself. But the decline in union membership is not necessarily a financial crisis for organized labor, and it is far from an existential crisis.
As a researcher for labor unions, I was always taught to “follow the money” when analyzing companies and industries, to look at corporate finances to understand the strategic posture of the bosses. But what if you follow the money of organized labor?
Unions are required by law to file annual financial reports with the Department of Labor, commonly known as LM-2s, providing detailed information on a wide range of union finances (although it excludes state and local unions solely representing public-sector workers). Union avoidance consultants and outfits like the Center for Union Facts love to mine the reports for anti-union propaganda. Still, the LM-2 reports provide important information for union members and prospective members on union finances.
But the reports are complicated and unwieldy, with some filings running hundreds of pages long, making analysis difficult. This might explain the dearth of studies on union finances from labor-friendly academics and journalists.
Using the financial and database skills I learned as a labor researcher, I created a database with over 150,000 records to analyze labor’s finances over the last twenty years. It leads to some surprising results — and important clues about the real strategic posture of labor.
The Financial Statement of Organized Labor
As figure 1 illustrates, union membership declined by over two million members since 2000, nearly a 13% decline. Union density (the percentage of total workers represented by unions) plummeted from 13.5% of the workforce in 2000 to 10.8% in 2020. But over the same period, the net assets of organized labor (assets minus debt) grew by 153%, increasing from $11.5 billion to $29.1 billion. If labor is facing an existential crisis, it is not reflected in labor’s balance sheet.
How did organized labor dramatically increase its net assets while losing millions of union members? Looking at the financial data from the last decade provides some answers. As figure 2 shows, total union revenues are up 28% since 2010, increasing from $14.3 billion to $18.3 billion in 2020. The revenue increase was driven by higher membership dues per member, rising from $818 per member in 2010 to $1,091 in 2020. Many unions set dues as a percentage of wages, so as union wages rise, union dues also increase.
In addition, significant increases in investment income (up 46%) and rental income from labor’s vast holdings of real estate (up 47%) contributed to an overall rise in revenues. As revenues rose by 28%, total spending on items like paying organizers and funding campaigns did not keep pace, increasing only 17% since 2010.
With spending substantially lagging revenue growth, organized labor was able to book net surpluses every single year, rising from $882 million in 2010 to $2.7 billion in 2020. These net surpluses primarily fueled the rise in assets over the last decade rather than the appreciation of investments on the balance sheet.
Due to a quirk of the LM-2 reporting, labor’s investments are reported at cost, not the market value. As a result, the net assets of organized labor may be significantly higher than reported in the LM-2 filings.
Not only did union spending fail to keep pace with revenue increases, but according to the Census Bureau, organized labor employed 23,440 fewer organizers and staff in 2020 compared to 2010, a 19% decline in the workforce (with a steep drop in 2020 likely due to the pandemic). While organized labor shed employees, average annual compensation increased by 37% since 2010.
This is a macro view of organized labor’s finances, as though the Industrial Workers of the World’s dream for One Big Union came true. There is no One Big Union (let alone a unified labor movement), but thousands of unions grouped in over a hundred union affiliations. Some unions have doubled down on spending, while others have run large surpluses and kept their spending lower than the growth in revenue. Unions in growing sectors have prospered; other unions have struggled to maintain relevancy in declining sectors.
Still, the assumption is that despite all the differences, it is reasonable to look at union finances in the aggregate because all unions are analytically unified by a core ideology: every worker deserves representation at their workplace by a democratic union.
What does labor’s robust asset and revenue growth over the last decade say about labor strategy? Whether a conscious strategy adopted by labor or simply the result of unions following the strategic and financial path of least resistance, labor’s conservative financial practices are consistent with the theory of “fortress unionism,” a widely debated union strategy advanced in 2013 by Richard Yeselson.
Yeselson argued that, due to the straitjacket of labor law and an “uninterested working class,” labor should not undertake “lengthy and expensive campaigns to organize new sectors” because organizing workers “takes too much time, and it costs too much in money and staff resources to try to do so over that long period of time.” Instead of large organizing campaigns in unorganized sectors, Yeselson counseled that unions should instead “work to buttress the areas in which it is already strong” and “defend the remaining high-density regions, sectors, and companies.”
Labor could leave the fortress walls to build coalitions, revitalize union locals, organize in high-union-density sectors, and invest in alternative labor organizations. Still, beyond that, Yeselson argued that labor should just “wait for the workers to say they’ve had enough . . . [wait] until the day arrives, if it ever does, when the workers themselves militantly signal that they want unions.”
The financial practices of labor over the last decade are indeed reflective of fortress unionism’s defensive strategy, with spending lagging revenue growth, budget surpluses contributing to a near doubling of net assets, and staffing significantly reduced. If labor had rejected the practice of fortress unionism, choosing instead to pursue “expensive campaigns to organize new sectors,” the financial picture would arguably look different. One would expect that large-scale investments in organizing would have been reflected in higher spending rates, increases in staff rather than reductions, the running of deficits rather than surpluses, and a reduction in assets as labor used its cash to finance spending on organizing. Instead, we saw the opposite.
Has the organizing environment sufficiently changed so that organized labor can safely leave the fortress and make large-scale investments in the future? It would seem so. The approval of labor unions is at the highest point since 1965, according to polling by Gallup. Independent worker movements have achieved stunning organizing victories at iconic companies like Amazon and Starbucks, and there is growing media coverage and support for the labor movement. Tight labor markets and the spirit of the Great Resignation have boosted worker’s leverage vis-à-vis companies, and the Biden administration and the Democratic Congress have pushed forward a variety of incremental pro-labor reforms.
Yet the linchpin of organized labor’s strategy to boost organizing, the overhaul of the broken US labor law regime through the passage of the Protect the Right to Organize Act (PRO Act) and its public-sector companion, is stalled in Congress, a victim of the filibuster and “moderate” Democrats. Organized labor may conclude, as they did after the defeat of the last major attempt to reform labor law in 2010, that they are powerless to organize on a large scale under existing labor law, as one prominent labor think tank recently concluded. Instead of doubling down on this historic moment through aggressive (and yes, risky) spending, the leadership of organized labor may prefer to keep its financial powder dry, waiting for just the right moment.
In some respects, labor’s financial practices are not entirely dissimilar from the financial engineering of corporate America. Instead of using their bloated balance sheets to make capital expenditures in the real economy, corporations have concluded that the safer bet is buying back stock or issuing dividends. And for unions that have seen their net assets nearly double over the last decade, the safer financial bet is fortress unionism.
But, thankfully, a growing “militant minority” of labor advocates are calling for a more aggressive and offensive stance, and an implicit rejection of fortress unionism. Those forces argue for a dramatic increase in spending on organizing campaigns, a boost in the funding of alternative labor groups and independent unions, and more militant and disruptive labor activities, such as legal and illegal strikes, secondary boycott activities, and defying restrictive court injunctions on picketing and protest.
This militant minority must contend with the powerful economic incentives that deeply align organized labor with the status quo. The financial performance of labor over the last two decades suggests that labor law reform and large-scale organizing are not a necessary condition for organized labor’s economic viability, at least in the short to medium term. The decline in union membership is not, perversely, an existential threat to organized labor anytime soon.
In fact, the incremental reforms from the Biden administration and Democratic Congress will likely continue the trend of growing union revenues and assets over this decade, even without an overhaul of labor law. If organized labor’s key financial and membership metrics follow the same growth rates as 2010–2020, by 2030, labor will more than double its assets from $35.8 billion to $75.8, while losing nearly 800,000 members.
There’s Still Plenty of Money in Labor’s Banana Stand
The good news, however, is that there are substantial financial resources available for an aggressive and militant alternative to Fortress Unionism. In 2020, organized labor had $35.8 billion in assets, with nearly $14 billion parked in cash and cash equivalents. This does not include the trillions in assets of collectively bargained pension and health funds.
Labor’s balance sheet is not highly leveraged, with only $6.8 billion in debt and other liabilities. However, a portion of labor’s $29 billion in net assets are committed to strike funds, reserves set up by unions to provide financial assistance to members in the event of a strike. Exactly how many assets are allocated to strike funds is unknown: unions have opposed proposals by the Department of Labor for greater disclosure.
But there is financial data on how much unions pay in strike benefits. From 2010 to 2020, organized labor paid out on average $70 million a year in strike benefits, or just 0.35% of net assets annually. This suggests that collectively, organized labor has sufficient assets to support workers engaged in strikes at significantly higher levels while aggressively spending on new initiatives.
Of course, the ultimate power of organized labor is not rooted in financial statements but in the ability to mobilize workers to contest the relationship between capital and labor. But the work of organized labor — new organizing, collective bargaining, strikes and pickets, and political and community campaigns — does require substantial financial resources. And it is evident that financial firepower is available for an alternative to fortress unionism. Labor’s financial assets are unevenly distributed among unions, but that was also the case in the 1930s, when John L. Lewis financed the legendary Congress of Industrial Organizations with funds from the treasury of the United Mine Workers of America.
Will the leadership of organized labor lead the charge for an alternative to fortress unionism? One can hope, but it is unlikely, given that many of the elected leaders and senior management are economically and ideologically aligned with the current system. According to the 2020 LM-2 data, over ten thousand officers and employees received a gross salary over $125,000, putting them in the top tenth percentile of income in the United States (this does not include the generous health, pension, and other benefits typically provided by unions).
Rather than from the top, change is most likely to come from the broad movement of workers striking against global corporations in defiance of their union leadership and winning, such as at John Deere and Kellogg’s; reform movements seeking to democratize their bloated or corrupt union bureaucracies (such as the Teamsters and United Auto Workers); public-sector workers, many without a formal union, disobeying state bans on strikes (like the Red for Ed teacher strikes); members defying the political directives of their union leadership to back left candidates offering real structural change (like the members of the Culinary Workers Union supporting Bernie Sanders in the 2020 caucus); independent unions like the Amazon Labor Union defying conventional wisdom and winning at one of the most powerful companies in the world; and, most critically, the young workers and union organizers who are impatient for change, intolerant of bureaucratic hierarchies, and far more open to consider alternatives to capitalism than a union leadership still trapped in the ideological straightjacket of the Cold War. It is this constellation of forces that could “follow the money” and seize the assets from a labor movement that has failed to seize the moment.
As for the “existential crisis” that is afflicting organized labor, follow the advice of the Danish theologian and early existentialist philosopher Søren Kierkegaard and take a financial leap of faith, a leap of faith in the workers of the world.