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Insights from the 11-07-23 Commercial Pulse Report – Labor Union Impact on Public & Private Sectors

November 7, 2023 by Emily Garman

Since the COVID-19 pandemic, the U.S. labor market has shifted. Compared to pre-pandemic levels, there are more people employed yet a lower labor force participation rate, higher quit rates and more job vacancies which results in a tight labor market. A tight labor market is empowering workers, and they are exercising that power in the form of worker strikes.

In addition, new technologies such as in the auto industry and new business models such as streaming in the entertainment industry, are creating driving the need for employers to address changes to worker contracts. Inequality in the employer/employee relationship over the past few years has fueled worker unrest and they are now exercising their power in a demand for higher wages and benefits or a greater share in profits.

2023 is proving to be a landmark year in terms of the number of strikes as well as union elections. The result of these strikes has proven beneficial to workers with employees at major companies receiving significant increases in yearly compensation and benefits.

Labor union participation rates have been declining since 1983 and reached historic lows in 2022, however, the number of workers represented by unions increased for the first time since 2017. The United States is experiencing a shift in states and unionization rates with some historically low union states experiencing significant growth. While unionization rates in total are decreasing across most industries, others are increasing their union efforts and demanding and achieving results.

It is a challenging environment for employers and employees as inflation and high interest rates put pressure on the United States economy. As unionization rates have declined it has increased income inequality and lead to reductions in middle class income.

This pressure on many employees in the United States has driven union approval rates to the highest levels since the mid 1960’s, with the majority of adults seeing the decrease in unions as a bad sign for the country and the labor force.

What I am watching:

The power and effectiveness of union walk-outs and strikes is being recognized in the United States workforce. Earlier this year, UPS and the International Brotherhood of Teamsters representing more than 300,000 UPS employees, negotiated and approved a new 5 year-contract with more than 86% support. The union’s president stated, “the contract was the most lucrative ever at UPS and would serve as a model for other workers.”

The success of this effort has resonated in the economy with most notably the United Auto Workers staging walk-outs across multiple auto manufacturing plants which has resulted in a tentative contracts with the three Detroit automakers. The results of unionization are being recognized and union efforts are spreading across multiple industries. With employees realizing there is power in numbers it is anticipated that unionization rates will continue to grow as employees seek equal representation in the labor force.

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The latest insight, tips, and trends on all things related to commercial risk by the team at Experian Business Information Services. Please follow us on social media.

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