Union Deterrence and Recent NLRB Action
Public support for unions is near long-term highs, at levels not seen since the 1960s. A majority of workers say that they support increased unionization at their own company. Yet private sector unionization rates have been steadily falling for decades, from about one third in the 1950s to 6 percent in 2022. What explains this gap between unions’ favorability ratings and union membership? This blog post discusses the National Labor Relations Board’s recent decision in Cemex Construction Materials Pacific, LLC, how it relates to the economic forces influencing unionization, and how it reaffirms a basic principle of U.S. labor law: if the majority of employees in a bargaining unit want to be represented by a union, then that union should be recognized.
Since 1935, the National Labor Relations Act has protected the right of workers to collectively bargain for higher wages and improved working conditions, and to do it without fear of reprisal. The National Labor Relations Board (NLRB) has been entrusted with upholding the provisions of the Act, ensuring that workers who are covered by the Act and have elected to join a union are able to do so. The NLRB consists of members who are nominated by the President to five-year terms. At present, the NLRB has four board members and one vacancy; two members have been appointed by President Biden.
Evidence shows that unions provide wide-ranging benefits for workers and the overall economy.[1] Not only are they associated with higher wages among members,[2] they also provide workers with greater benefits and improved job satisfaction. Empirical evidence shows that unionization can increase productivity[3], and economic theory gives clear explanations for these effects, such as more efficient risk sharing between workers and firms, reduced worker turnover, and increased incentives for training. Unions have been shown to contribute to narrowing of gender and racial wage gaps. And, economists have recognized that unions are important to increasing workers’ labor market power, mitigating the effects of imperfect competition in labor markets[4], providing workers with a larger share of earnings, and reducing income inequality.
Despite these broad benefits for the economy, firms often go to considerable lengths to oppose unionization. Evidence suggests a likely reason; union wage gains and benefits come primarily at the expense of owners’ profits. Over time, an entire industry has formed that uses both legal and illegal methods to dissuade workers from unionizing. Anti-union consultants, mandatory meetings, and employee surveillance are among the common methods used to discourage workers. Alleged illegal tactics such as firings and harassment have led employers to be charged with unfair labor practices in over 40% of elections. Penalties for such practices have historically been low relative to other types of labor law violation. Often, the penalty for unfair labor practices has amounted to no more than setting aside the election and requiring it to be re-run. These weak remedies may lead unfair labor practices to be even more prevalent than official data currently suggest, and contribute to the large gap between what workers want in representation and what they obtain.
The recent decision by the NLRB in Cemex Construction Materials Pacific, LLC requires that workers’ true preferences are respected and upheld. The new framework outlined by this decision covers many cases in which a majority of workers have already demonstrated their desire for union representation, either by signing cards or a petition. In these cases, firms retain the ability to call for an election in lieu of voluntarily recognizing the union. However, their ability to pressure employees is now much more limited. Under Cemex, if an election is requested following a majority petition, any finding of an employer’s unfair labor practice that would normally require setting aside the election and rerunning it will instead lead the NLRB to order the employer to recognize the union. As NLRB Chair Lauren McFerran stated upon release of the new framework, “[u]nder Cemex, an employer is free to use the Board’s election procedure, but is never free to abuse it—it’s as simple as that.”
Although the Cemex framework undercuts employers’ ability to engage in some unlawful behaviors, union deterrence remains an issue. Cemex addresses only cases where a majority of workers have already signaled their support for a union; in other cases, employers may still be inclined to engage in unlawful action to unlawfully oppose unionization. Cemex also does not address all forms of deterrence, since many activities that deter unionization are legal. For example, firms that oppose unions may find ways to delay elections. When elections are close, firms may contest the validity of individual ballots to get under the majority threshold. And, even after a successful election, firms mays deter unions in later steps of the process, by stalling achievement of first contracts for months or years, and shifting work to their non-union establishments.
Other recent NLRB action focused on some of these issues. For example, in August the NLRB issued a Final Rule that eliminates delays in the election process and makes it more difficult to postpone pre-election hearings. It updated its standards on assessing the lawfulness of work rules, making it more difficult for firms to set overly-broad rules that prevent workers from exercising their rights. It also restored a longstanding definition of protected unionization activities, renewed limitations on firms’ ability to change terms and conditions of work while negotiations are underway, restored protections for employees who stand alongside their non-employee colleagues, and reaffirmed long-held standards for identifying when workers’ rights have been violated. Each of these actions affirms workers’ legal right to organize under the NLRA.
In short, union deterrence is a likely substantial contributor to the decline in unionization, even as public approval of unions has grown. The Cemex decision, along with these other decisions, limits firms’ ability to engage in some types of deterrence, and could contribute to greater unionization in the future, consistent with trends in public opinion. Additional legislative steps that limit union deterrence, such as passing of the Protecting the Right to Organize Act (PRO Act), could also help to reduce barriers to expanding unionization in America.
[1] A corresponding theoretical literature also suggests ways in which unions may have costs to the overall economy, arising from forces such as increased capital-labor substitution, slower technology adoption, or reduced employment growth (e.g., Kaufman 2004). Empirical evidence on many of these phenomena is limited, in part because they may be challenging to measure, and in part because workers may vote to unionize based on the preexisting productivity of their establishment (Dinlersoz and others 2017). Evidence does suggest that establishments that unionize see slower employment growth and higher rates of exit in subsequent years, in large part as a result of firms shifting production to their non-union establishments (Wang and Young 2023).
[2] The unadjusted union wage premium among full-time wage and salary workers is currently 18 percent (BLS 2023). Papers such as Blanchlower and Bryson (2004) or Gittleman and Kleiner (2016) that estimated adjusted union wage premia on all unionized workers typically find premia of 10 percent or more. Other papers such as Frandsen (2021) estimate the union wage premium only on newly-unionized workers using election data; these papers find premia near zero. However, Knepper (2020) suggests that a union premium of 7% to 10% for these workers comes mostly in the form of benefits and pension contributions, which are unobserved in most other studies.
[3] This study estimates productivity effects of unionization in Norway, but the mechanisms that lead to increased productivity are likely also applicable to the U.S. context.
[4] This study measures the union density wage premium and its relationship to labor market concentration in Norway, but its theoretical framework is also applicable to the U.S. context.
