The concept of organized labor groups, or unions, began as far back as the late 1700s when printers and other artisans such as cabinet makers and carpenters joined together in refusing to provide goods unless they were allowed to work fewer hours and were paid more for their time. In the early 19th century, recorded efforts were made by unions either through strike actions or negotiations to pursue better working conditions.

IN PICTURES: Dealing With 9 Coworker Personality Conflicts

The emergence of labor unions rose steadily in the early 20th century - some without much success - but working groups joined together in citywide and statewide federations, gaining in numbers and eventually garnering the support from Congress needed to make changes.

Fast forward to the present. Union numbers in the private sector are steadily diminishing and public unions are facing major hurdles because of financial deficits and strong-arm politics. What are the factors causing the decrease in union numbers? Do unions still have an importance in the American workplace? Or will they disappear altogether?

Supply and Demand
One should understand the history and the events that prompted the rise of unions before casting judgment on their importance. In the late 1800s, America was in the midst of an unprecedented industrialization when manufacturing of goods more than doubled in the 20 years between 1880 and 1900, as did the demand for products such as steel, coal and fabrics. Likewise, the ensuing years saw an influx of immigrants, many of whom filled the need for jobs. But hours were long and conditions were often unsafe and unsanitary as in the case of the deadly Triangle Shirtwaist fire in New York in 1911. This tragedy in which 150 lives were lost was one of the factors that paved the way for changes in safety regulations in unionized companies.

By the end of World War II, more than one-third of Americans employed belonged to a union. Business strategies changed, however, and that number dropped to around 20% in 1980 and to 11.9% in 2010. While union efforts remained steadfast, management was feeling increased pressure by foreign competition and became less willing to accede to higher wages and heftier benefits packages. After all, they didn't have to keep production in the United States and more and more jobs were lost to overseas outsourcing and manufacturing plants. (Learn what both the supporters and critics have to say about this growing global trend, check out The Globalization Debate.)

U.S. Union Membership

Year Workforce In Unions
1945** 35%
1983* 20.1%
1990* 16.0%
2000* 13.4%
2010* 11.9%
*Source: Department Of Labor Statistics

Age of Automation
As technology and its uses expanded, the need for actual manpower lessened in a wide sector of American business. Unions tried with limited success to keep employees in the workplace, but management found ways to utilize machination rather than man. This kind of cost-cutting measure eliminated tens of thousands of jobs.

Service Industry
Traditionally, the service industry has held fewer union positions so as more and more jobs in fields such as hospitality, food service, etc. grew in demand, the need for unions did not. (In a recession, financial industry personnel are often hit hard. Find out how to avoid getting the ax, see Top 6 Ways To Recession-Proof Your Job.)

Bad Press
Corruption in industry, politics and the public and private sectors are nothing new. However, as Americans grew hungrier for more and more news, and that news became more readily accessible, it brought with it a more prevalent outcry against corruption in unions, which ultimately hurt the labor movement. Generations of young workers, unlike their fathers and grandfathers before them, grew skeptical of organized labor and chose against it, thus further sapping unions of their power. Besides, by the late 1990s, unemployment rate was at a mere 4%, the economy was thriving and life was good for most Americans, so unions were merely a passing thought. (Loosening labor restrictions has both good and bad effects for a country and its workers. See The Economics Of Labor Mobility.)

Economic Upheaval
How things can change! Thanks to serious troubles in the banking industry, globalization, a real estate slide, record unemployment and a decline in home-grown goods and services, Americans are in what economists call the greatest financial crisis since the Great Depression of 1929. Add to that the seemingly endless spending by government (from municipal to national), which has resulted in a multi-trillion dollar deficit, and a reluctance as a whole by the governing bodies to compromise on the needs of the working class, and what you have is a shift in the sentiment for unions. A 2007 Pew Research Center poll, in fact, showed that 31% of Americans had an unfavorable opinion about unions, with 58% in favor. And in February of 2010, a poll showed that only 41% had a favorable opinion and 42% had an unfavorable opinion. A remarkable sway in three or so years and a remarkable history of organized workers.

IN PICTURES: A Bigger Salary Or Better Benefits?

The Bottom Line
The future of unions in America is hazy, at best. While they have served a great purpose in insuring safer, more humane conditions for workers, as well as in helping workers feel less powerless against management, there has been a very succinct shift in the emphasis of American business needs and wants. But if history has taught us anything, the American working spirit will somehow prevail.

Related Articles
  1. Markets

    What Is the Labor Market Conditions Index?

    The Labor Market Conditions Index is a new Fed indicator to track labor statistics. How useful is it?
  2. Entrepreneurship

    Company Policies you Did Not Know Might Be Illegal

    While you need an employee handbook to maintain law and order, trying to enforce illegal policies can land you in hot water.
  3. Economics

    5 Developed Countries without Minimum Wages

    Find out about five developed nations that have no federally regulated minimum wage and how these countries use unions to ensure workers are paid their due.
  4. Personal Finance

    The Top 5 Most Unionized Industries

    Unions don't have the membership numbers that they once did, but they are still a vital part of several different important industries.
  5. Stock Analysis

    The 10 Biggest Strikes In U.S. History

    American workers have striked to demand better pay, working conditions and benefits. Here's a list of the biggest U.S. work stoppages.
  6. Personal Finance

    Most Successful Unions

    Labor unions have existed in the U.S. for quite some time, but not all have been as successful as these three.
  7. Personal Finance

    Are Labor Unions Effective?

    This article examines some of the pros and cons associated with organized labor.
  8. Personal Finance

    The History Of Unions In The United States

    Although the overall power of labor unions may not be what it once was, they still maintain a great deal of influence in the United States.
  9. Personal Finance

    Is Striking The Best Option?

    Sometimes striking can do more harm than good. Here are a few examples where things have gone from bad to worse.
  10. Personal Finance

    Know Your Rights At Work

    David Siegel of Westgate Resorts says he'd fire his employees if Obama wins. Can labor laws protect employees from this?
  1. Do businesses in states with right-to-work laws have demonstrably less deadweight ...

    Deadweight loss from union activity is believed to represent as much as 0.04% of the gross domestic product (GDP) as of 2 ... Read Full Answer >>
  2. What are the major expenses that affect companies in the airline industry?

    The major expenses that affect companies in the airline industry are labor and fuel costs. Labor costs are largely fixed ... Read Full Answer >>
  3. What inputs are considered to be factors of production?

    Factors of production are inputs used to produce an output, or goods and services. They are resources that a company requires ... Read Full Answer >>
  4. How does someone commit featherbedding?

    Featherbedding describes the practice where businesses hire more workers than are necessary to carry out particular tasks. ... Read Full Answer >>
Trading Center