Most Successful Unions

By Mark P. Cussen, CFP®, CMFC, AFC | January 15, 2013 AAA

Labor unions have sprung up in every sector and subsector of the U.S. economy to provide workers and professionals with a means of banding together for collective bargaining purposes. But some have had more success in accomplishing their objectives than others, both today and throughout history. Government intervention has squashed the efforts of some unions to strike, such as the Pullman car railroad workers' strike in the late 19th century. But some unions have been enormously successful at getting their members excellent wages, benefits and working conditions.

Professional Athletes
Unions of professional athletes, such as the NBA and NFL unions, recently won substantial concessions from league owners and forged lucrative new agreements. The average NBA player now earns $4.79 million dollars per year, while the average professional football player is getting by on $2.36 million. The 2011 NBA lockout resulted in the players receiving a slightly smaller amount of total revenues (a drop from about 57% to 51.15%), though each team could exempt its franchise player from the salary cap.NBA players remain the highest-paid group of professional athletes in the world.

The NFL union prevented the team owners from reducing the players' portion of league revenues by 18%, which the owners had initially stated was one of their chief goals. The players' union was instead able to secure revenues ranging from 40 to 55% for various sources of game and media revenues. It also walked away from the bargaining table with another billion dollars for retired veterans, more days off, fewer weeks of practice and a genuine salary floor. Veteran players also saw a 10 to 12% increase in their wages.

Teachers
Many teachers' unions have done well at securing favorable conditions for their members. For example, teachers from the city of Chicago walked off the job and forced the closing of several school districts, leaving about 350,000 children without school for seven days while they negotiated with the city for better pay and working conditions. The union won a 17.6% pay raise over the next four years and also received a guarantee that any teacher who is laid off will be given preferential hiring status for any new job openings in the district. Additionally, a detail was omitted from the deal that had originally linked teachers' compensation to their performance. The union was quick to give much of the credit to the community, which backed the teachers in surprising numbers despite the fact that their kids missed several days of school as a result of the strike.

United Auto Workers
For decades, the UAW effectively dominated the auto industry in America. The union began its run during the Great Depression, when it won concessions for workers with sit-down strikes. By the forties, the UAW had completely unionized the big three automakers making it impossible for Ford, Chrysler or General Motors to hire employees in any way other than according to the terms specified by the unions. The UAW also employed a shrewd method of negotiation known as "pattern bargaining." The union would request a substantial increase in wages for workers from one of the three automakers most likely to concede. Once the target company agreed to terms, the UAW would then negotiate similar deals with the other two companies. This strategy worked well for decades and prior to 2008 the average UAW employee was earning approximately $70 an hour with a whopping seven weeks of paid vacation per year. The gravy train finally came to an end in 2008 when Chrysler and GM went bankrupt and the UAW was forced to accept much lower wages to allow both companies to remain in business.

The Bottom Line
Labor unions in America have operated with varying degrees of effectiveness over the decades. Some unions have secured vital increases in pay and benefits for their workers while others have been less successful. For more information about labor unions, visit www.aflcio.com.

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