State of the Union

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Generals huddle in their bunkers hammering out strategies for the next battle, while fighting by well-equipped opposition forces continues door to door, punctuated by brief and tentative ceasefires.

No, this isn’t the latest dispatch from the war-torn Middle East or the Ukraine, and the bunker here is a well-appointed lawyer’s office or a suite at the local Hilton.

But warfare is an apt metaphor for the endless battle surrounding labor relations and the war of words between retailers and unions—a war that is likely to escalate.

Retailing is seen as an increasingly viable route to economic development and job creation in many areas of the country, making the industry and its workers a more attractive target for union organizers. And in an industry that can have a 200% or 300% annual employee turnover rate, union organizers don’t have it easy. But sometimes things go their way. A case in point: The United Food and Commercial Workers (UFCW), which handles retail employees, got a boost from the National Labor Relations Board’s recent decision that a group of 41 cosmetics and fragrance workers at a Macy’s in Saugus, Massachusetts, could unionize. This precedent- setting decision may be a sign of things to come in retail, if unions are allowed to go after specific groups rather than having to organize an entire store.

In Southern California, the UFCW has reached a tentative accord with major supermarket chains covering 70,000 employees from the Mexican border to Monterey County, temporarily averting a debilitating walkout like the one that took place 10 years ago.

But these Californian chains will have to battle the Teamsters when negotiations begin on a new contract for drivers and warehouse workers this time next year.

No One’s Innocent

When there’s Walmart, the poster child for union or anti-union activity—depending on your point of view—and a company that’s been accused of every labor violation short of human trafficking during its decades-long game of cat-and-mouse with the unions. When you have over one million employees, you’re bound to do some things wrong and some things right. I’m reminded of what a judge once told me: “You’re either guilty or not guilty. No one is innocent.”

Clearly, unions nationwide are no longer at the peak of their power. Total membership in the private sector—which peaked at 35% in the 1950s—is down to just 6.6%, according to the Bureau of Labor Statistics. With the income gap widening, many people don’t see the benefits of paying for union membership or believe it will take care of them the way it did their parents and grandparents.

The RWDSU (Retail, Wholesale and Department Store Union), which represents workers at chains like Bloomingdale’s, Macy’s and H&M, and its affiliate the UFCW, which handles grocery workers, do not break down specific membership numbers. However, the BLS reported that in 2013 of the 14.7 million people employed in the retail sector, 675,000 or 4.6% were union members—virtually unchanged from a year earlier. Lack of growth, according to some observers, rests in the union’s failure to organize big box stores like Target and Walmart.

Consequently, today unions are aligning themselves with immigrants’ rights and civil rights groups in an effort to build their base among younger workers. It would be wise for retailers to do the same.

But it’s essential for retailers focusing on diversity to understand that union membership also varies with gender and ethnicity. Men are more likely to be union members than women and Asians and Hispanics are less likely to join than black workers.

The bottom line is economics. It all comes down to whether workers feel unions are worth the trouble and expense in an environment plagued by no- or slow-growth in wages. Or whether unions can regain worker trust after doing relatively little during the last recession to stabilize or grow incomes, reduce layoffs or to be a safe harbor for the middle class—a powerful demographic that unions helped create and whose loyalty they need to survive. However, in a time of social upheaval and a widening income gap, it would be a dreadful and costly mistake for retailers to simply dismiss unions as antiquated or irrelevant, or to adopt a “my-way-or-the-highway” attitude in negotiations.

The Hoffa Legend

The history of the labor movement and its legendary leaders gives us insight into its resiliency. I’m talking about the giants like David Dubinsky of the International Ladies Garment Workers’ Union and Cesar Chavez of the United Farm Workers— a savvy guy who knew the power of social media 40 years before it was invented.

Then we have Teamster icon Jimmy Hoffa. No, I don’t know where he’s buried! His flirtations with the dark side (re: organized crime) tainted the union’s image for years. But he also forged a master freight agreement with motor carriers that covered 450,000 teamsters, and the first time in history an entire industry was bound by one labor agreement. That’s power!

Which brings us to the big questions: Could organized labor regain some of the power it once enjoyed? Can bridges ever really be built between labor and management or are they forever locked in an adversarial dance?

Watching for UFOs

Additionally, employers tend to focus their attention on visible labor organizers. But unions are trying an end run by setting up non-profit “worker centers” also called UFOs—Union Front Organizers. At least one of these UFOs is reportedly backed by the RWDSU.

These centers, although backed by unions, are not bound by existing federal laws and regulations.

They can contact non-union workers at any time and say whatever they want about employers and what the union can do. Faced with all this, companies should be looking for their own alternatives.

One possibility suggested by several noted economists is the formation of works councils to create a worker/management forum that offers people a real say in how companies and stores are run. They have been successfully established in Europe and are now cropping up in China where workers have discovered the joys of capitalism and no longer trust the state to take care of them.

US law has prohibited councils since the 1930s when legislators wanted to save the unions from unscrupulous bosses. But now may be the time to support a strategy that would enable employees and employers to talk through issues in a non-combative environment.

Another suggestion involves employee stock ownership plans (ESOPs) to promote economic equality. A number of companies, including Hy-Vee stores in Nebraska and Publix Super Markets in Florida instituted ESOPs years ago with great success—both on the labor and public relations front.

ESOPs are not a universal cure for labor ills by any means. But the lesson here is that employee ownership and engagement—much like the Japanese Quality Control Circles of the 1980s and their US equivalents—breed loyalty, increase productivity and often bumps up the bottom line.

Building Bridges

I’m neither pro- nor anti-union. I am simply an advocate for building bridges between labor and management to correct inequities on both sides.

First of all, it’s important to treat all employees, union or not, the same way by communicating with everyone regularly and resolving issues before they get out of hand or catch the attention of a shop steward. And make sure grievance procedures are in place at the company or written in very precise language into union contracts

Increasingly, this means tapping into the power of the Internet. Facebook, Twitter and other social media sites are replacing the old time union hall as a place to strategize and air grievances. Smart companies are using the same sites to connect with their employees and to tell their own stories. At the very least, employers need to familiarize themselves with what they can and can’t do during organizing efforts.

  • Steer clear of asking employees about their interest in unions since it can be construed as interrogating them and therefore in violation of labor laws.
  • Make sure employees understand they have a right to make a free choice and do not have to sign union cards. And if they do, it doesn’t mean they have to vote for the union.
  • Groups have a right to picket stores as long as it doesn’t disrupt business or obstruct access to other employees or customers, or take place inside a business.
  • If picketing is to take place, notify the police to determine if permits have been acquired and to have them monitor the situation.
  • Use discretion in confronting picketers or organizers in order to avoid bad publicity since it’s common for groups to contact the media. And be ready to respond to media questions.

This is the short list of do’s and don’ts. Whether or not you’re facing union activity they should be burned into your brain for future reference. Over the next 10 years, it’s been estimated that retail will be the second largest source of new jobs in the US. If that’s not a lucrative enough bulls-eye for organized labor, I don’t know what is.



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