🤿 Sunday Deep Dive: Unions...What's Been Going on & Why Legal Should Care

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Legal Operations
Industry Insights

Trade unions are having a moment. 2021 saw a wave of worker activism that led NBC News to dub it the ‘year of the worker’. 2022 has brought a flurry of headline-worthy trade union victories that seem to herald a new era for US workers. Labor shortages, a pro-union administration, and a stronger focus on workplace equality and mental health are driving the shift. And yet, it’s not completely certain that what we’re witnessing is the start of a comeback narrative. In this deep dive, we take a closer look at what has been going on, why it’s happening, and what’s next for American trade unions.

What’s all the fuss about?

On April 1st, workers at an Amazon warehouse in Staten Island, New York, voted in favor of unionizing, making them the first-ever Amazon workers to do so in the US. Corporate America wishes it was all an April Fool’s Day joke. There are a few good reasons why.

First, Amazon spent $4.3M on anti-union consultants in 2021 and still couldn’t keep the unions at bay. That doesn’t give much hope to less powerful companies trying to avoid the same fate. Second, unionization is contagious. Organizers for the union movement at the Amazon warehouse in Staten Island say that workers from 50+Amazon buildings have reached out to them following their victory. A similar pattern is playing out a Starbucks. Since August, when one of their cafes voted to form the company’s first union, 200 outlets have indicated that they want to have a union election and 24 have voted in favor of unions.

Meanwhile, at least 2 Apple stores have filed requests to take a vote on unionization. And union elections have been successful at the New York Times (where tech workers formed one of the biggest tech unions in the US), MIT (where grad students unionized), and the SoHo branch of outdoor store REI.  

One of the reasons these elections have captured the imagination of organizers across the country is that they were such outright victories. Pro-unions votes were:

  • 88 to 14 at REI in Manhattan
  • 25 to 3 at Starbucks in Mesa, Arizona
  • 404 to 88 at NYT (tech workers)
  • 1914 to 986 at MIT (grad students)
  • 2564 to 2131 at Amazon in Staten Island

These numbers are inspiring to workers but it’s no surprise that they give companies the cold sweats. Employers pay union workers one-third more than non-union workers and research shows that public companies lose 10%+ of their market value in the months after employees vote to unionize. Amazon’s operating expenses increased by ~$150M for every 1% of their workforce that unionized.

In the case of Starbucks, shares slid 12% in April as Wall Street forecast that the company will keep pouring cash into anti-union efforts. At the same time, by holding off the unions, the cafe chain is damaging its employee-friendly brand. A survey found that 4% of consumers plan to stop visiting Starbucks if they fail to reach an agreement with workers.

Are we in the middle of a unionization wave?

It sure sounds like it! Interest in organizing is booming. Petitions to form a labor union have gone up 57% in the last 6 months. The broader population is feeling more positive about unions too. According to a poll, 68% of Americans approve of unions — the highest percentage since 1965. Gen Zers and young millennials show the highest approval at 77%, which suggests the pro-union workforce is only going to grow.

But it’s difficult to tell if the latest wave of union action is a blip or a revolution. Union membership has been in a steady decline for the last 40 years, including during the pandemic. In 2021, 10.3% of U.S. employees were union members. That’s compared to 10.8% in 2020 and 20% in the early ‘80s. And although young people approve of unions, only 4.3% of 16 to 24-year-olds actually belong to one.

Plus, for every high-profile union win, there are losses. About a month after the success of the April 1st vote at Amazon, workers at a second warehouse in Staten Island soundly rejected unionization in a clear-cut vote. Workers at a Hershey candy factory in Virginia also voted against unionizing in March, despite complaints that it was difficult to get time off. The same happened at HelloFresh food-packing warehouses in California, where workers were earning less than the living wage. And organizers at an Amazon warehouse in Alabama have twice failed to gain enough votes to unionize. Even the unionization of 200 Starbucks cafes sounds far less dramatic when you consider that there are ~9k Starbucks outlets.

As optimistic as workers may feel after the Staten Island vote, Amazon is yet to sign a contract. Experts say that less than 50% of union certifications lead to a contract. The company could drag out negotiations until workers no longer have the will to continue.

Before we dive further

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What’s behind all this union action?

Labor shortage

  • There is an array of factors that could be contributing to the current mood around unions. The most obvious is the current labor shortage. At the end of February, there were 11M job openings in the US. This shift in power from employers to employees is reflected in pay. Wages have increased almost 6% in the last year. Amazon increased its minimum wage in September and even offered signing bonuses of $3k to attract new staff. When jobs are plenty and labor is short, workers are more comfortable confronting their employers and making demands.

New attitudes to work

  • The labor market has also been upended by the so-called Great Reconsideration. It’s not clear whether it was the anxiety of a fast-spreading, killer disease, the boredom of lockdown, or the convenience of working from home, but the pandemic has changed the way that people think about work. Employees are demanding better work-life balance, more flexibility, the option to work remotely, more fulfilling work, more money, more mental health support — the list goes on.

Pandemic isolation

  • Furlough policies, lockdowns, and an increase in working from home cut many people off from watercooler banter, after-work drinks, and the camaraderie of the factory floor. Unions can offer a sense of belonging, identity, and community that many of us missed in the last couple of years. Furlough and working from home also disrupted the usual channels of communications through which employees could air grievances, leaving concerns unaddressed.

Politics

  • Unions are benefitting from a pro-labor political environment. President Joe Biden says he wants to be the “most pro-union president … in American history.” Last April, for example, he created a task force specifically to tackle the decline of the unions. And this March, as the Biden Administration prepares to spend billions on infrastructure, it was announced that it plans to give preference to projects that encourage workers to unionize.

Social media

  • Social distancing during the pandemic pushed workers to move conversations about working conditions online. Platforms like Instagram and Facebook make it easier to organize and attract a younger set of workers. In some cases, online union meetings drew as many as 10x more attendees than in-person gatherings. Social media also offers new ways of communicating, such as running polls and sharing videos and allows workers to tap into a broader pro-labor audience.
  • Gen Z for Change is a coalition of progressive digital activists with 500M+collective followers that have been described as a TikTok Army. They tackle issues like climate change and workers’ rights. When Starbucks fired 7 employees who were trying to unionize a store (it’s unclear if that was the reason for their dismissal), Gen Z for Change set up a system that allowed people to spam the company with fake job applications for the 7 open positions using disposable email addresses. They claim that 140k people made bogus applications.

Do unions make things better for workers?

From a pay point of view, the answer is almost certainly yes. In 2019, union members earned average weekly wages of $1095 whereas non-members earned $892. Unions can negotiate for benefits like improved medical coverage and increased parental leave or for conditions such as changes to the way sexual harassment complaints are addressed. They can lobby for favorable government policies and donate to political candidates that will support their members.

However, there is a case to be made that unions harm workers more in the long term. Conservatives argue that unions make companies less competitive and are therefore bad for job growth — but that’s not of huge concern at the moment with so many unfilled positions. Target claims that unions would create conflict in the workplace and reduce flexibility. And Amazon CEO Andy Jassy has said that unions are slow and bureaucratic which makes it harder for employees to push for change.

It’s also worth considering that the current labor market puts employees in a strong position to make demands without going through the conflict involved in forming a union or paying union membership fees. In the 6 months to Feb 2022, 13% of employers improved dental coverage and health and wellness stipends. Another 12% offered improved or new mental health coverage. And 8% introduced unlimited paid time off. Target and Walmart announced last summer that they would offer employees free college tuition. Neither is unionized. And Amazon will now cover travel costs for employees for abortions and other medical procedures. Other companies are getting creative with more frivolous perks, like an office beekeeper.

But the free market hasn’t addressed all workers’ concerns. Amazon is a case in point. One warehouse worker claimed that she was afraid to take toilet breaks in case she missed her targets. Drivers say that they are forced to drive dangerously for the same reason. Amazon workers are seriously injured at an 80% higher rate than workers at other warehouses. And a New York Times investigation found that the company had been underpaying staff at ~180 warehouses for at least 18 months because of problems with their payroll software, leading to staff having cars repossessed or having to sell wedding rings. Cost-cutting work conditions are a tough pill for employees to swallow when their employer boasts a net income of $33B in 2021, up from $21B in the previous year.

What the unionization trend means for legal

The current wave of union activity highlights the fact that a lot of companies are doing a bad job of addressing their employees’ concerns. It might sound like it’s beyond their remit, but the legal department can play a positive, constructive role in improving the employee-employer relationship and avoiding the disharmony that leads to unionization in the first place.

Anjeli Narine, Associate GC at the Massy Group of Companies, put together a list of ways that legal teams can help to improve employee relations. These include:

  • Preparing employee contracts that avoid ambiguity and pre-empt future disputes
  • Assisting with doing due diligence on potential recruits to ensure they are a good fit
  • Insisting that all communications are documented so that all parties have clarity on what has been agreed
  • Asking ‘How was this dealt with in other cases?’ to ensure equity of treatment
  • Keeping up to date on regulations that protect employees' safety and wellbeing

Strong dispute resolution and complaints processes are essential to ensure that employees feel safe and respected.

It’s also worth noting that regulators are paying close attention to anti-union behavior at the moment. The National Labor Relations Board has issued a memo saying that it is illegal under federal law to force workers to attend anti-union meetings, although the regulator has tolerated such meetings in the past. Companies need to be cautious that activities like group meetings or necessary communication monitoring (such as recording calls for training purposes) cannot be construed as union-busting. Legal teams can guide them through those risks.

Both workers and corporate employees will be watching Starbucks and Amazon closely in the coming months. If more locations vote to unionize and succeed in signing a contract, it will certainly turn heads. The threat of unionization alone may change the relationship between workers and higher-ups. In the meanwhile, the economic factors that are pushing union activity could shift. Data from economic research firm Capital Economics suggest that the labor shortage has already peaked and is now easing. Other experts argue that the shortage is here to stay. Either way, the corporate-worker battle is a David and Goliath story, which is just the kind of story that keeps an audience gripped.