The Death of Trade Unionism, and Toward the Birth of a Labor 3.0

David Rolf

This rough draft is being circulated by the author for feedback and discussion purposes only. Permission is not granted to forward, share, cite, quote from, or publish it in any media in part or in whole. The thoughts expressed here are the authors own and do not necessarily reflect the views of any organization. 2012 David M. Rolf

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Introduction

The American Dream is at risk. Half-a-decade of recession has laid bare shocking inequality in

America. Layoffs, wage cuts, regressive taxes, unemployment, and crushing debt have driven millions

of Americans from the ranks of our once robust middle class. For the first time in American history, 90

percent of our children will live less prosperous lives than their elders. The American Dream, never

equally shared in our nations history but always passed along more completely to each subsequent

generation, is increasingly out of reach for most American workers.

The crisis that todays workers face began decades ago. It is the result of a relentless forty-year

assault on the values and institutions that created widespread prosperity during much of Americas 20th

century. Right-wing pundits and corporate apologists say that were broke. They argue that the

hardship that todays workers experience is the unpreventable hangover from decades of reckless social

spending, and our workers inability to compete in a globalized market place. They assure us if we

privilege job creators (e.g. corporations and billionaires) with low tax rates and few regulations that

the market will reward those who work hard. These are the greatest lies of our time.

Americas economy is the largest in the world, and our workers are the most productive. While

globalization has resulted in dramatic job losses due to off-shoring in specific sectors (clothing, textiles,

electronic components, call centers, etc.), it has almost nothing to do with declining or stagnant wages

and in sectors like retail, health care services, hospitality, transportation, agriculture, construction,

government, property services, and personal services, which collectively employ tens of millions of

Americans in jobs which are both un-exportable and increasingly low-wage.

This phenomenon is not an accident; it is the product of decades of right-wing and corporate

policies designed to dismantle the hard won victories of generations of American workers, and

redistribute income and wealth to the wealthy. Even as workers struggle through the fifth year of

recession, our largest corporations post healthy profits, generously reward shareholders, and continue

to increase executive pay. Americas workers, the 99%, have not shared in the current recovery.

The once powerful industrial labor unions that built the mid-century American middle class are

in a deep crisis and are no longer able to protect the interests of American workers with the scale and

power necessary to reverse contemporary economic trends. The strategies and tactics that weve

pursued since the 1947 Taft Hartley Amendments are out-of-date and have demonstrably failed to

produce lasting economic power for workers. We must look to the future and invest our resources in

new organizational models that respond to our contemporary economy and the needs of todays

workers.

Todays legacy unions have an important role to play, perhaps the most important role to play,

in determining whether a new, 21st-century model of worker power will develop. Whats now required

of us in labor is not a sentimental longing for the New Deal, an attempt to turn back the clock to a

different economy and a different era, or a return to the collective bargaining model that worked well in

an era of mass industrial production, vertical corporate structures, and lifelong employment.

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This paper reviews the economic crisis facing American workers, and the role of labor in

producing economic gains for workers. It offers a critique of contemporary labor law, the collective

bargaining model that organizes much of the activities of American labor unions, and the culture and

activities of labor unions themselves. It concludes that, except in a small number of vertically-integrated

or heavily regulated industries, the model of collective bargaining that animated 20th century labor law

is out-of-date and irrelevant to increasing numbers of workers. It also concludes that this model cannot

be revived to the scale and power needed to solve the economic problems facing American workers.

Finally, this paper offers a proposal that todays legacy unions combine their resources to invest

in the future through the creation of two independent, but related, institutions focused on research,

development, testing, funding and scaling new models of worker organization, advocacy and power that

can truly win for todays working people. The proposed institutions would focus on identifying and

scaling projects that meet three key criteria. They must be: (1) powerful enough to change workers lives

economically; (2) scalable to millions or tens of millions of workers; and (3) financially self-sustaining.

Americas 21st Century Economy: We Are Becoming a Low Wage Nation

America is becoming a low-wage nation, and the youre on your own economy has already

arrived. Consider just a handful of the many statistics that illustrate these points.

U.S. income inequality is greater than at any point since before the Great Depression, and

greater than in any of our peer nations.

Family income, which grew roughly equally among all 5 quintiles of income-earners between the

2nd World War and 1979, has grown significantly since 1980 only for the top quintile of income-

earners, and most dramatically only for the top 1%.

93% of the income gains generated by the economic recovery have gone to the top 1% of

income-earners.

The link between worker productivity and wages was broken in the late 1970s; since then,

wages have flat-lined even as worker productivity dramatically increased.

Median family income is now lower than it was 30 years ago.

The middle classs share of national income is at its lowest point in contemporary history.

1% of the U.S. population controls 43% of the nations wealth; the top 5% controls 73%.

Traditional defined-benefit pensions now cover only 5% of private sector workers.

Accordingly, retirement is becoming a luxury for many: Since 1977, there has been a 172%

increase in employment after age 75.

Housing, health care, and college costs have risen between 2 and 7 times faster than wages.

Among black and Latino/Hispanic Americans (our future majority population) median household

net worth, including home equity, is approximately 1/20th that of white Americans.

But not only traditionally oppressed minorities are suffering: even college educated men have

seen a decline in real wages since the late 1960s, and for men with less than a high school

education spending power has declined by 66%.

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Corporations pay well under 10% of all federal taxes, down from historic highs of over 30% in

the middle of the last century; many corporations pay less in taxes than their CEOs receive in

pay, and some corporations pay no federal income tax at all.

Educational debt has almost tripled in the last seven years alone, to nearly $1 trillion, $43 billion

of which is owed by Americans over age 60.

The vast majority of minimum wage earners (77%) are adults, and the vast majority (66%) work

for large, profitable, national or multi-national corporations which have hardly been stingy with

shareholder dividends or CEO compensation.

As of 2006, 31% of American workers were temporary workers, contract-workers, on-call

workers, day laborers, freelancers, and part-timers. This number doesnt even include guest

workers or grey-market/cash-economy workers.

In 2009, a shockingly-high 24% of American workers were employed in low-wage jobs (those for

whom full-time employment adds up to roughly 200% of the Federal Poverty Line), but if current

trends continue, by 2020, 48.2% of workers will be in low-wage jobs.

Contrary to the perspective of allies who believe that education is the panacea to the decline of

the American middle class, 17 of the 20 fastest-growing occupations require a high-school

education or less.

American Unions

Organized labor has played a crucial role in improving American workers lives since before the

Declaration of Independence, but the forms and strategies of worker organizations have changed

significantly over time. History shows that each new era of economic organization in America, from the

early, colonial agrarian system, to the industrial revolution and the 20th century Fordist economy, was

accompanied by the emergence of new models for worker organization and new strategies for building

worker power. Though it is widely acknowledged that Americas 20th century industrial economy has

given way to a new era of economic organization, one that is globalized, decentralized, and where the

employment relationship has changed dramatically, for a variety of reasons, labor unions still function

under an early- 20th century model. This has led to decades of declining power and increasing

irrelevance to todays workers.

Labor 1.0:

In colonial America, skilled craftsmen organized guilds, which functioned to produce skilled

workers for small, pre-industrial workshops, and to control industry wages and working conditions. The

early American industrial revolution and the advent of the wage-labor system transformed the American

labor market and undermined the power of guilds as viable worker organizations. The new economy

required new forms of worker organization and new strategies to build worker power. During the 19th

and early 20th centuries, many models of labor activity and activism flourished, with widely varying

goals, strategies and effectiveness. Worker organizations included secret societies, Eight-Hour Day

Clubs, exclusionist craft guilds dedicated to preserving the economic privileges of white, male skilled

workers, anarcho-syndicalist multi-industry unions, anti-sweatshop crusades, and socialist political

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organizations. Labor 1.0 was a period of 150 years where workers and worker advocates developed

vastly different and competing models for achieving their aims.

Labor 2.0:

The second major era of American labor organizing, Labor 2.0, developed during the second

industrial revolution in America, and accompanied the emergence of Fordist models of production and

rapidly expanding industrial economy. The 1935 National Labor Relations Act (or Wagner Act), which

serves as the primary model for all of our nations collective bargaining laws was enacted amidst a

national landscape of massive industrial strikes, a great depression, fears of a growing Communist

movement abroad (and a comparatively small one here), and a broad political commitment to national

economic recovery. That law helped give birth to the American labor movement of the 20th century and

enshrined collective bargaining as the dominant mode of worker organizing.

The Wagner Act established the principle that a majority of workers in a workplace could choose

exclusive union representation and that their employer would have to bargain with their union over

wages, hours, and employment conditions. The Act essentially nationalized, legalized, normalized and

bureaucratized a particular regime of labor and industrial relations in the private sector, one based on

majority rule, the balancing of the interests of labor and capital, regulating strike activity, and

emphasizing a core set of employer-based bargains and workplace-based rights.

The unions, old and new, that organized millions of workers over the subsequent two decades in

turn helped give birth to the American middle class. In what were then the most industrialized and

populous regions of the country union collective bargaining transformed the nature of employment and

the quality of jobs available to wage-earners.

Workers in dominant industries like steel, automobile, aerospace, paper and rubber

manufacturing, mining, transportation, telecommunications, broadcasting, groceries, hospitality, and

construction saw their wages grow faster than inflation, established new benefits such as employer-paid

health care and pensions, and joined the middle class. At its height, the labor movement represented

close to 40% of American workers through collective bargaining.

Over time the 20th century collective bargaining model grew to include public employees and

health care workers, and even large non-union employers and non-union economic sectors set wages

and benefits in response to union standards. Unions may only have negotiated legally on behalf of 38%

of workers through collective bargaining, but they were setting standards for the nation.

Union political power gave worker organizations a seat at the table in determining election

outcomes, in influencing national economic policy and in participating in governing coalitions in state

capitals and city halls across much of the country. Not only did Democrat Franklin Roosevelt famously

say that if I were a worker in a factory, the first thing Id do is join a union, but Republican Dwight

Eisenhower also said Only a fool would try to deprive working men and working women of their right to

join the union of their choice.

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What a complete contrast from the America we live in today.

Labors Dramatic Decline

Today, union membership has been declining, continuously, for the past 50 years. Union

membership in the private sector now stands at a paltry 6.7%, approximately what it was at the

beginning of the 20th Century, prior to any modern labor laws and before the birth of most of todays

largest unions. The absolute number of private sector workers in unions now stands at 7.9 million,

approximately half of what it was in the late 1970s. This is because the legal, economic, cultural, and

political world in which todays unions grew and thrived has largely disappeared. And, for a variety of

legal, cultural, and political reasons, todays unions have been unable to innovate or adapt.

The growth of Americas industrial unions was fueled in important ways by a number of factors

that are not present today. The growing industrial economy of the late 19th and early 20th century was

dominated by large, vertically integrated companies that used Fordist models of production. Workers

could often expect life-long employment in a single industry or even with a single employer, and had the

power to shut factories down to achieve bargaining goals.

Labor organizations were feisty and competitive, striking against each other as often as they

struck against employers. Disciplined Communist Party-trained organizers were dispatched as union

organizers to help build proletarian institutions to challenge capital. Mobsters seeking new profit

centers after the repeal of prohibition helped organize unions to steal from their treasuries and extort

employers. Organic worker militancy (e.g. sit-down strikes) was often carried out against the direction of

national union leaders.

But most of all, during that era, we also had laws and government policies that encouraged

collective bargaining as a way to avoid crippling strikes and stabilize industrial production during

depressions, world wars, and the cold war.

For decades now, the Wagner Act, a state-of-the-art law for the economy of 1935, has worked

against unions, and failed to protect workers in any meaningful way when they attempt to organize into

a union. There are now many more workers who have no legal right at all to form a union than there

are workers with a union. This includes everyone from low-wage supervisors at fast food chains to

registered nurses in many nursing homes to millions of workers with no fixed employment relationship

(contract, contingent, temporary, freelance, and guest workers) to public sector workers in the South

and Southwest, and farm workers in 49 states. Not to mention the workers for whom organizing is a

practical, if not legal, impossibility: those who work for small businesses and those who live in the

majority of the country where unions are no longer organizing at all, or in industries with no established

union.

In cases where workers are eligible to organize labor unions, the rules governing union elections

have been so narrowed and tilted in favor of employers that employers have strong incentives to

engage in anti-union activity. The remedies for workers who experience retaliation are so weak that

many businesses consider the fines levied by the Labor Board as punishment for illegal retaliation to be

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a basic transactional cost of doing business. With this type of legal environment, it is no surprise that the

number of Union certification elections is at an all-time low.

The laws governing strikes have also significantly impacted union power, which, in turn, has

diminished workers belief in the power of collective action. Strike activity one measure of whether

workers have faith that collective action can improve their lives is now virtually non-existent: there

were 11 large strikes in 2011, down from hundreds each year from the 1940s through the 1970s. The

recent losing strike at Caterpillar Inc. by workers represented by the International Association of

Machinists (IAM), at a company that made $4.2 billion dollar in profits last year is illustrative. Despite

massive profits, and increases in CEO pay, Caterpillar forced workers to accept major concessions.

The right wing has begun a state-by-state assault on public sector bargaining rights. In 2011, six

states repealed collective bargaining laws for public sector workers. While workers in Wisconsin, Ohio,

and Michigan may prevail over their Republican Governors and restore bargaining rights, it is unlikely

that those rights will ever be restored in Indiana, Arizona, and Tennessee. Meanwhile, the list of right-

to-work states where unions are forced to provide bargaining and other services to non-members who

dont pay dues rendering them functionally bankrupt only continues to grow.

We have not been able to change the anachronistic labor laws that have hemmed in union

activism, prevented innovation and undermined workers. This is not for lack of trying. Our hopes for

labor law reform have been dashed every time in the last four decades that there has been a Democratic

president and a Democratic super-majority in Congress. Without labor law reform unions shrink,

thereby diminishing our power and making labor law reform an even more remote possibility in the

future. The failure of the Employee Free Choice Act is merely the most recent repetition of what some

have likened to labors Charlie Brown Moments with Democrats playing the role of Lucy holding the

football, offering hope for labor law reform for which they will never be able to find the class solidarity

or party discipline to deliver.

Another part of the problem is the media and culture war waged against organized labor. Our

organizers, labor leaders and union activists often think of ourselves as heirs of John L. Lewis, Walter

Reuther, Martin Luther King, Jr. and Cesar Chavez, leading workers through heroic struggles for dignity

and justice. But, to the extent that unions are even covered in the news or referenced in pop culture,

we are caricatured as weak, ineffective, selfish, self-interested, internally-focused, adversarial, anti-

business, anti-innovation, partisan, corrupt, irrelevant and obsolete. While this characterization is one-

sided and unfair, we should be honest enough to admit that too often, those stereotypes have a strong

basis in reality.

Most of the time unions are internally focused and do speak only to, and for, our own (ever

shrinking) membership base. It would be hard to argue with a straight face that the AFL-CIO or Change

to Win are viewed by anyone as the legitimate voice of American workers in the same way that AARP,

say, is viewed as the legitimate voice for American seniors, the NRA for gun-owners, the Chamber of

Commerce for businesses, Planned Parenthood for womens health, etc. Do fast food workers in

Phoenix or security officers in Charlotte look to Rich Trumka or Joe Hansen for direction on voting for

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candidates, advocating on Congressional issues, making consumer purchases, or enforcing workplace

rights? Do they even know who Rich Trumka and Joe Hansen are?

Finally, we should never underestimate the political, legal, and cultural impact of the complex of

anti-union foundations, think-tanks, business associations, public relations firms, union avoidance

consultants have had on our movement. The union avoidance industry helps businesses keep unions

out of their workforce, while hundreds of right-wing publications and media outlets promote viscerally

anti-union views. Anti-union think tanks and legal foundations exist in nearly every state, and thousands

of national, state and local business associations lobby against any pro-worker legislation and policies.

Many Republican elected officials want to establish national right-to-work laws and prohibit meaningful

collective bargaining, and too many Democrats behave with complete indifference to the labor

movements survival.

The reality is that for all intents and purposes, the 20th Centurys model of American labor

relations is gone. Although individual unions in specific industries and in an ever-shrinking number of

states and cities may survive for years to come, it will generally be with shrinking memberships,

declining economic power, and on defensive bargaining and political footing.

Some of our friends on the left or the center-left, often in academia, have offered a number of

purported cures for union decline: unions should be less corrupt, more diverse, more internally

democratic, more militant or more cooperative, do more for progressive political causes or hold

Democrats more accountable or work in more bipartisan ways, involve the members more, provide

better and more responsive member services, spend more on organizing, be more industry-focused,

focus more or less on social issues, practice regional solidarity etc., etc. These are all good things, or at

least can be.

But even if unions succeed at most of these objectives (succeeding at all would be impossible

because some are contradictory), the results of their efforts would be insufficient. The most successful

union reformers still find their locals shrinking and under assault. Unions that come close to possessing

most of these saintly characteristics have found it no easier to organize new members or succeed at

other objectives, much less to do so at the astounding scale that would be required to reverse labors

decline.

The Wagner Act regime, and collective bargaining as we knew it, is dead.

Why We Cant Solve These Problems On Our Own

Certainly, one would think, Americas unions and its labor leaders must have a plan? Certainly

we must be working to develop new theories, new strategies, new forms of worker power, new tools for

lifting up the working poor, and a comprehensive, generational plan to build a new middle class for the

21st Century? Right?

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Unfortunately, wrong. So far there is no plan. There seems to be no plan to make a plan. And, in

what one might at first blush consider the very definition of insanity (Einstein: Insanity is doing the

same thing and expecting a different result), unions perform essentially the same four core activities,

often in exactly the same way, as they have for the last fifty years.

Once costs such as payroll, administrative overhead, real estate and supporting staff functions

(research, communications, etc.) are allocated to the principal activities they support, the primary four

activities of American unions over the entire history of our decline -- activities upon which we spend

90% or more of our budgets -- are:

1. Representing workers through collective bargaining, contract enforcement, benefit

administration, and otherwise tending to the relationship between unions and their

members. In most local/regional union structures (where 65%-75% of the movements

resources are aligned) this set of activities often represents 70% or more of union

budgets. If a union does nothing else, it does this.

2. Electing Democrats. (Because, of course, Republicans would be worse).

3. Advocating and lobbying the government at the local, state and federal levels on behalf

of members issues and concerns, and to enact progressive economic and other policies.

4. Organizing new workers into collective bargaining units. Well, actually very few unions

do this, and fewer do it well, but for some of the largest and/or most strategically

important unions (SEIU, AFSCME, UNITE HERE, UFCW, Teamsters) organizing workers

into new bargaining units under the Wagner regime maintains a significant activity and

budget allocation.

Under the existing model, these four activities are all necessary and important. After all,

members rightfully expect their contracts to be bargained and enforced, the real-life consequences of

allowing anti-union politicians to take office are clearly very high, unions have a duty to advocate whats

best for their members and for workers in general, and at least the most strategic unions feel that its an

important part of our core mission to organize the unorganized.

The problem is that these necessary and important activities are clearly insufficient to either

rebuild the middle class or change the course of trade unionisms death-spiral. If simply doing them at

a bigger scale, or better, or more efficiently were enough, unions like SEIU would have done so.

In SEIU weve done better than most. We more than doubled our membership, from 1 million

to 2.2 million workers from 1996-2010. But only a tiny fraction of our dramatic growth was true private

sector growth through new organizing. Over 600,000 of the new members during this period of time

were organized by expanding public sector labor laws to include publicly-paid low-wage contract

workers such as home care and child care workers. Over 200,000 were not newly organized at all, but

were members of independent unions that affiliated with SEIU. We gained tens of thousands of

members when Puerto Rico, Colorado, and California passed pro-union legislation that granted

bargaining rights and improved state labor laws. Finally, there was significant bargaining unit growth,

often due to Medicaid caseloads in the home care sector.

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In SEIU, we budget close to a quarter billion dollars each year on new organizing, but in our most

wildly successful years dont come close to growing enough to offset either the growth of our industries

(so our density shrinks) or the decline of the overall collective bargaining model (so U.S. unionization

continues to shrink). No other unions have been successful at organizing at close to the same scale, and

only a handful even bother to try. And many of our own victories are politically fragile: witness the

threats to, or outright elimination of, collective bargaining rights for many public, home care, and child

care workers in the Midwest.

The insanity, organized labors primary focus on operating and expanding the 20th Century

model of collective bargaining and organizing, and our reliance on electing and lobbying Democrats

becomes easier to understand when you look at the funding, legal, political, and cultural constraints on

unions.

Essentially all of our resources, approximately twelve to fifteen billion dollars a year, come from

member dues generated by collective bargaining. Without a contract, we have no dues, and without

dues we have no survival strategy or resource base from which to operate.

Union activities are also constrained by a set of important actors that demand, expect, and

require certain types of union activity, while prohibiting other types. Union members, the first priority

of any union, rightly expect good contracts, strong contract enforcement, accountable and responsive

leadership and staff. Union officers who dont meet this core set of expectations will find themselves

voted from office, or under internal political siege, or worse, will find their unions subject to lawsuits or

decertification campaigns.

There are also significant political demands on our time, attention, talent and budgets. We

must win elections (one need only look to Wisconsin for the consequences of losing). We must defeat

anti-worker legislation. We must maintain and manage relationships with other unions. And we must

support political and community allies to support larger social justice issues, and if we want them to be

there for us in our time of need.

We are also constrained by our relationships with employers. Employers will agree to negotiate

and collaborate with us on some things, including wages, hours and working conditions. Sometimes

they will work on joint partnership efforts for benefits or productivity. But almost never on the overall

strategic direction of a company, industry or economy.

Our ability to engage in certain types of organizing or representation strategies is significantly

constrained by the agencies and courts that regulate our work. Not only does the NLRB provide little in

the way of effective enforcement for the right to organize, but federal statutes, Labor Department

regulations, and various court precedents combine to prohibit some of the most effective union tools.

Secondary strikes and boycotts, mandatory membership, aggressive corporate campaigns, job security

for workers during economic strikes, pension fund shareholder activism, and generating union revenue

outside of member dues are all either prohibited or sharply constrained. Court decisions have imposed

a duty of fair representation, turning too many unions into workplace public defenders for bad

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employees, and have restricted unions ability to use dues to fund activities not directly germane to

collective bargaining.

While it is controversial to say, our internal democracy also presents constraints. Functionally, it

disincentivizes risk and innovation while rewarding replication of ineffective strategies. At the local

union level we have direct democracy by members in good standing, slate voting is common, non-union

workers have no voice, and elections are won or lost almost entirely on the strength of collective

bargaining performance, staff accountability around contract enforcement and member

communications, and the perception of union leaders as (variously) strong, charismatic, effective and

honest. Thus theres very little incentive for risk, experimentation, dramatic change, or veering from the

collective bargaining model we already operate.

For elections at the International union level, many of the same factors exist (slate voting,

members-only elections), but per capita voting dominates, meaning that giant voting blocs tend to be

held by leaders who are from large locals in union-strong industries and states where the perception of

labors decline is lowest and the illusion of continued strength highest. And on the rare moments they

are contested, elections are generally won or lost by internal political calculus about the relative

benefits to local unions of different candidates for office and by slate formation and loyalty. Again, no

incentive for risk, experimentation, dramatic change or veering from the collective bargaining model.

Finally, we dont cultivate and develop our own talent pool as a highly functioning organization

should. One tends to become a labor leader by accident, starting with experience as a rank-and-file

activist or young union staffmember, progressing through the ranks by working hard at the four

activities at hand (again: bargaining, organizing, politics, lobbying).

We expect our young staffers and new rank-and-file activists to focus only on tomorrows urgent

deadlines. They should demonstrate blind loyalty to their elders and to the unions culture and

traditions; they should show an equal amount of distrust for the boss and to any change in workplace

rules or practices. They should master the arcane arts of parliamentary procedure and collective

bargaining law. They should learn to engage in a combination of inter-union solidarity and defensive

jurisdictional battles, and they should build friendships and alliances within their local and international

unions, or their central or state labor councils.

If an activist or staff-person is principled, bright, ambitious, and if (s)he repeats these activities

every day for 15 to 20 years, it is likely that (s)he may become a labor leader at some level: a member of

a union executive board, a union officer, a senior union staff-person, or an international union or labor

federation official. Of course, no one from outside the movement, who hasnt gone through this

decades-long conditioning, need apply. This means that when our leaders are seasoned enough to take

office, they are largely incapable of thinking outside of the paradigm in which they were trained.

All of these constraints -- our revenue stream, our legal duties and rights, member

expectations, and our relationships with politicians, employers, allies, and the government, combined

with our internal democracy and our leadership development model, begin to explain labors insanity,

or, why we have continued to pursue the same activities, despite every indication that they have failed.

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Within our organizations, no matter how smart, strategic, creative, talented, unifying, ethical or

principled individual labor leaders are, as long as we are constrained by the legal, cultural, and political

systems in which we must operate, we are unlikely to succeed at the required level of transformational

activity. And, therefore, no contemplated course of action that requires union leaders to significantly

alter our behavior is likely to succeed to scale because our behavior is itself overdetermined by the

institutions and systems within which we operate.

The Death and Rebirth of a Powerful Worker Movement

In his book of case studies on how great companies stumble and ultimately fail, How the Mighty

Fall, Jim Collins traces five key stages in the progression from organizational health to organizational

death that could easily be applied to the recent history of unions:

1. Hubris due to past success.

2. Undisciplined pursuit of more.

3. Denial of risk.

4. Grasping for salvation.

5. Resignation to irrelevance or death.

Anyone who has worked in or with unions in recent decades should see a familiar pattern of behavior in

these stages. Though Collins work focuses exclusively on publicly traded corporations, the labor

movement could easily be one of his case studies.

Today, in much of the labor movement, we are now past the point of denial of risk. At least

some of us are still grasping for salvation. The question is how, acknowledging that the constraints that

make change within the ranks of organized labor itself nearly impossible and almost certainly doom

todays legacy collective bargaining organizations to death on some timeline (faster or slower based on

geography and industry), can we learn from other organizations that have stared death in the face and

plot some strategy, not for a revival, but for the birth of a new movement for a new century?

Through the Valley of Death

There is a lot that we can learn from business innovators and entrepreneurs who have

successfully remade dying corporations. For example, in his 1996 book Only the Paranoid Survive, Intel

Co-Founder and CEO Andy Grove borrows a mathematical concept to describe the ways in which giant

shifts in the environment can challenge the future of a a company or an organization. He calls these

moments Strategic Inflection Points.

A strategic inflection point is a 10x event, development, or confluence of events and

developments over time, which result(s) in a significant change in the progress of a company, industry,

sector, economy or geopolitical situation. An inflection point can be considered a turning point after

which a dramatic change, with either positive or negative results, is expected to result. Most strategic

inflection points appear slowly, and are often not clear until events are viewed in retrospect. Denial is

often present in the early stages. Executives are often the last to know.

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There are many examples of companies that experienced and survived a strategic inflection

point. When Intel was faced with the influx of low-cost Japanese memory chips in the early 1980s, it

shifted its entire business model away from memory and into microprocessing, where it is still the world

leader. When Apple was losing tens of millions of dollars a month and had seen its market share in

personal computers drop to 6% and its stock price to $34 a share, it bet the farm on a new generation of

product development that today has made it the most valuable company on earth. When IBM lost its

leading position in personal computers it reinvented itself as a market-leading consulting firm.

Whats true about the stories of each of those companies is that when it became clear they

were experiencing a dramatic shift in their environment, they acted. Top talent and massive resources

were devoted to figuring out a future survival strategy. Old lines of business were shut down to make

room for new ones. Research and development budgets grew. Those of us who are outsiders to Apple

Inc. may never know how many failed prototypes were cast aside before the iMac, the iPod, the iPhone

and the iPad went to market, but we can appreciate that a relentless focus on the future was required

to transform these companies from fundamentally at risk of failure to once again leading their industries

or sectors. In each of these cases, notably, success came with a new product line or even in an entirely

new sector (e.g. Apple as an entertainment company, IBM as a consulting company, and Intel as a

producer of microprocessors) not a revival of an old one.

According to Grove, organizations experiencing these inflection points must focus relentlessly

on whats on the other side of the crisis. They must avoid attempting to replicate the strategies that

made them successful before the change. Companies must not hold on to old business models too long.

And they must act with significant scale: Dont, he says, act too little, too late. The key to

transformation is a wholesale reallocation of resources away from old model to whats next.

It is not clear exactly when the 20th Century American labor movement entered its strategic

inflection point. It may have been the Taft-Hartley Act, the Kohler strike, our failure to win labor law

reform under President Carter, PATCO, or NAFTA. It may also have been the confluence of these events.

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But its worth drilling down on Groves key points. Whats now required of us in labor is not a

sentimental longing for the New Deal, an attempt to turn back the clock to a different economy and a

different era, or a return to the collective bargaining model that worked well in an era of mass industrial

production, vertical corporate structures, and lifelong employment.

Rather, we need to figure out -- with much help from outside of the labor movement-- whats

on the other side of our Valley of Death, what new activities we should reallocate resources to, and

what new organizational model could work. In doing so, we need to consider perspectives other than

those of incumbent top labor leaders, challenge the inherent inertia in our organizations with fear, and

avoid the temptation of trying to go back to what worked in an earlier era when our current top leaders

were at the beginning of our careers.

In order to undertake a wholesale allocation of resources ultimately billions of dollars of

resources we first have to align our top talent and real dollars into figuring out whats next. Not, in all

likelihood, a single silver bullet, but rather a disciplined approach to research and development,

experimentation, and prototyping in search of a formula for a 21st century workers movement that can

become Labor 3.0.

I recently had an opportunity to talk with Grove and asked him to consider the path of the labor

movement in light of our decline and how we could aspire to build a new American middle class for the

21st century. Grove, one of the fathers of the late-20th century technology revolution, responded first

that he didnt consider himself arrogant enough to think (he) can solve that problem. Then he offered

two pieces of advice that are worth considering: Focus relentlessly on the outcomes you are seeking;

treat everything else as secondary, and fund the projects that everyone else wants to bury.

In terms of the relentless focus on outcomes, there are three key features that must be essential

elements of any new model of worker organization or activities designed to take the place of collective

bargaining.

1) The organization or activity must be powerful enough to transform workers lives for the

better economically.

2) The organization or activity must be scalable to millions or tens of millions of workers in

order to eventually lead to the creation of a new middle class.

3) The organization or activity must ultimately be financially self-sufficient and produce

sufficient revenue to support its own work.

Everything else old behaviors, old structures, old leaders, old laws needs to be secondary to these

three outcomes.

A few points of light?

Amidst all of the bad news for American labor, there may be some good.

Over the last several decades, there has been a marked lack of academic scholarship oriented

toward the future of worker power (rather than the past). There has been little bandwidth in our major

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unions for open inquiry and discussion about an alternative future. Unions and other progressive

investors have spent few resources for pro-worker innovations, experimentation, new social

entrepreneurships, or experimentation, and no real venture capital to fund new models to make work

pay and build independent workers organizations.

That may be starting to change. Membership, political and advocacy organizations, progressive

foundations, think tanks and academic centers at universities, and individual social entrepreneurs and

activists have begun to engage in debate, policy work, activism, and organizing that addresses the needs

of todays workers, and the imbalance of power in our society.

Here are a few examples of some of this emerging work.

Hundreds of worker centers have been founded all over the country. Worker Centers are

organizations that fight for worker justice among non-union workers, often those excluded legally or in

practice from formal labor markets and labor laws. While not yet sufficiently powerful to change

workers lives on the scale required, and not yet financially self-sufficient, (they depend almost entirely

on outside donations, largely from foundation funders), they are a promising hub of activity, and their

leaders should be engaged and challenged on the key questions of economic power, scale, and

sustainability.

Some progressive foundations are funding projects about the future of work and future forms of

worker organization. The leaders of foundations like Rockefeller, Ford, Casey, and OSI should be

engaged and challenged to imagine a much larger effort that pushes the comfort zones of traditional

philanthropy in unleashing potentially disruptive economic and political forces in the service of a rebirth

of the American middle class.

Political and advocacy organizations outside the formal labor movement have begun online

organizing about core economic issues that in years past were treated, on the progressive side of the

aisle, as the prerogative of organized labor and its closely-held alliances. Organizations like Rebuild the

Dream and Moms Rising now reach millions of Americans to engage them in online activism and

fundraising around economic issues and holding elected leaders accountable, and their leaders should

be engaged and challenged to figure out a strategy for wielding real economic power.

Think tanks and progressive centers of academic research are turning their attention to income

inequality in a serious way. From traditional left-of-center beltway think tanks like CAP and EPI, to the

Roosevelt Institute and the Century Foundation, to specific projects underway at universities like

Columbia and Georgetown, to state fiscal analysis institutes, to work being done by individual

progressive scholars and academics, there is now the beginning of a movement among academic and

think tank researchers to confront the growing income inequality and decline of the middle class.

Individual leaders, activists, and intellectuals, have begun to write, speak, advocate and organize

around this set of issues. Examples include:

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Recent popular economic books by Robert Reich, Joseph Stiglitz and Paul Krugman that offer

progressive analysis whats happened to Americas workers and middle class.

Nick Hanauers and Eric Lius efforts to refute the basis of trickle-down economics by writing and

speaking about a new middle-out economics based on growing the economy by growing the

middle class.

Peter Murrays foundation-funded effort to promote new forms of scalable functional

organizing that take the best lessons from unions, AARP, Planned Parenthood, etc. and apply

them to new organizations on essentially a venture capital model.

Andy Sterns ongoing leadership in convening business leaders, academics, investors, and union

leaders to find joint business/labor high road strategies and experiment with new financing

sources for pro-worker advocacy.

And there are a number of other interesting organizational efforts:

The B-Corp movement to redefine business success as including community and social

benefits to workers, consumers, and the environment, not just shareholder value.

Renewed efforts by New Yorks Working Families Party to expand nationally and create

independent political accountability around worker issues.

Initiatives by the Emerald Cities Collaborative to unite labor and environmental interests to

create high-wage green jobs.

The American Values Project, a Democracy Alliance-based efforts to frame a populist,

progressive, and majoritarian narrative to counter the Fox News/U.S. Chamber/Heritage

Foundation economic frames that dominated U.S. political discourse over the last 40 years.

Within SEIU itself, a number of new initiatives and experiments under development hold some

promise, including efforts to organize low-wage fast food and retail workers in New York and Chicago,

and the Fair Economy campaigns to change the media and political environment around jobs, work and

inequality in 16 cities around the country.

And of course the Occupy Movement of 2011 gave a name and a voice to the 99%, and

confronted the corrupt nepotism between Wall Street, banks, corporations and U.S. policymakers.

Unfortunately, it lacked discipline, a rational internal decision-making structure or hierarchy, or real

policy goals, and suffered from adolescent obsessions with camping in parks and hating police. But it

also, for perhaps the first time since the 1960s put the issue of income inequality front and center in the

mainstream media and offered a compelling narrative about how a handful of individual, corporate and

political bad guys broke the economy for the rest of us.

None of this is to say that there are any actual answers yet. Not all of these organizations or

activities are necessarily strategic, well-financed, or even well-run. A meager handful of start-up

projects, research projects, and public initiatives are clearly insufficient to overcome the dominance of

corporate power and a 40-year right-wing political narrative about work and workers. None of these

efforts can yet answer our three key questions about a) economic power to change workers lives b)

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scalability and c) sustainability. But we should be encouraged by their emergence, and even more so

that they are emerging somewhat organically.

Learning the Right Lessons from Our History

Todays legacy unions have an important role to play, perhaps the most important role to play,

in determining whether a new, 21st-century model of worker power will develop. To do that, we will

need to find the right ideas and then fund the right ideas. We can learn from the experiences of

business innovators, or we can look to our own history. But the key is to learn the right lessons from our

history.

The American labor movement has experienced this type of crisis before. In the 1930s United

Mine Workers union president John L. Lewis and the heads of some other major craft unions realized

that their own unions would not survive if the vast majority of unskilled workers in basic industry

remained non-union. The UMW in particular had already experienced decline as a result of

mechanization of mining and would decline further as demand for coal dropped. Lewis understood that

the future of the labor movement lay not with his comparatively small, regional, and craft-based union

(all male and almost entirely white), but with massive industrial organizing among workers (including

the unskilled, and including blacks and women) who had previously been ignored by most unions.

The UMW then invested millions of dollars of its resources (big money at the time) to create and

fund a new organizing vehicle for industrial workers, the CIO, to launch brand new unions (such as the

United Steelworkers) and provide resources to some existing start-up unions (such as the UAW). Both

the resources and the top talent of the UMW migrated to the CIO and to the new unions it was creating.

The results of those efforts speak for themselves: the rapid expansion of the labor movement,

the development of the political instruments that sustained the New Deal, the creation of a middle

class, and the onset of a 40-year period of the most broadly shared prosperity in our nations history.

Lewis and his union brothers found the right idea (in their case industrial unionism), then they

funded the right idea. He was the early labor movements equivalent of Andy Grove at Intel, Louis

Gerstner at IBM, or Steve Jobs at Apple: he recognized the strategic inflection point facing craft unions

at the onset of the Great Depression and made a wholesale transfer of resources away from the old

model to the new.

Now its our turn.

Our John L. Lewis Moment: We Have to Find and Fund the Right Idea(s)

Unions committed to a rebirth of worker power and the American Dream should join with other

strategic partners to create two, new, independent, institutions: One for research and development and

another for funding new and innovative strategies to create a powerful, sustainable, and scalable model

for worker organizing. The first institution should be a new Center for the Future of Workers (real name

to be determined, but for now lets call it the Center), a non-profit strategic research center with a

specific mission to find the right idea(s) for replacing the legacy union movement with new form(s) of

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worker organization. The second institution should be a platform for funding new forms of worker

organization, worker power and worker advocacy (the Fund).

These two institutions should work together to identify, test, fund and scale projects and ideas,

organizing models, and activities that meet our three key outcomes of being: (1) powerful enough to

change workers lives economically; (2) scalable to touch millions or tens of millions of workers; and (3)

financially self-sustaining.

The Center for the Future of Workers

The Center would bring together scholars, analysts, practitioners, organizers, civic leaders,

lawyers and journalists to create serious research, intellectual, policy, and public advocacy platforms for

exploring the future of work, worker organization, worker power and worker advocacy. It would hold

conferences and symposia, publish papers, conduct issue briefings for organizational and political

leaders, attempt to influence mainstream journalism, and measure the actual results of experiments

and start-up ventures as they emerge. It would partner with other think tanks, advocacy organizations,

progressive publications, and academic centers. The Center would, in essence, lead the ideas

revolution that necessarily precedes any actual revolution.

Its areas of inquiry should include:

The evolution of work and the 21st century workforce.

The review of existing research and scholarship around potential future forms of worker

power/organization/ advocacy and the identification of gaps to be filled in with new original

research (which could in turn be done in-house or through partnerships).

The intersection of technology with worker advocacy.

Comparative labor law and policy analysis with global competitor nations.

Possible strategies for business-labor-government alignment to create high-wage jobs and

broadly shared prosperity (B-corps, worker ownership, capital strategies, etc).

Development and evaluation of policy and legal proposals to create new forms of worker

organization, power and advocacy.

Incubation of new ideas for organizational ventures.

Convening the nations leading progressive thinkers, academics, and public intellectuals for

collaboration around new forms of worker power, organization, and advocacy.

For administrative and synergistic purposes, the Center could easily be housed within an existing

non-profit partner organization, so long as it remained independent for the purposes of governance and

direction, or it could stand alone. It could be started with a relatively modest budget (well under

$5M/year).

By Housing the Center outside of any union or federation of unions, it would begin with a set of

advantages not available to a research or policy platform housed inside a labor organization:

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It would be viewed as an independent, non-partisan, intellectually serious endeavor by key

target audiences (journalists, academics, policymakers).

It could bring together collaborators from various sectors that might be unlikely to view the

institutional labor movement as a promising partner.

It could raise foundation dollars and dollars from progressive individual donors by virtue of

501(c)(3) tax status.

It could aggregate resources from a number of unions and other partner organizations.

It would be insulated from internal political winds, budget pressures, or higher-priority

legacy activities within any one union partner.

It wouldnt be vertically controlled by any one union partner, thereby insulating funder-

unions (and other funders) from any political or legal risk associated with its activities or

with the projects and ideas it promotes.

It could be viewed as an honest third-party evaluator of new proposals, ventures, and

models, both those being developed inside of unions and outside.

The Nurse Log Fund

If it is successful, the Center will be the place where we find the right idea(s). Then, like John L.

Lewis and the UMW, well have to fund the right ideas.

In fact, we really wont know whether any ideas are right until theyve been funded, prototyped,

started-up and evaluated. Lots of promising ideas wont succeed. Lots of ideas will prove in practice to

fail a key test: theyll be insufficiently powerful to improve workers lives economically, insufficiently

scalable, or insufficiently sustainable. We simply wont know what works until we try.

Today, new ideas are too often starved as unions continue to allocate resources to our legacy

activities, and because we still havent seen a new model that works. In turn, social entrepreneurs

seeking to change workers lives allocate upwards of 70% of their time and energy into raising

comparatively small sums of money from foundations, rather than on executing their mission. Still

other potential ideas remain unimagined or untested at all because smart, progressive, talented people

who share the labor movements values and care about workers choose to spend their careers not on

worker advocacy, but on some other activity where they can see a clearer path to a successful outcome.

Thats why we need a platform for funding new forms of worker organizations, worker power

and worker advocacy. Whether its an existing idea currently starved for resources or a new idea either

generated by the Center or developed independently by social entrepreneurs, it will be virtually

guaranteed to fail without sufficient start-up funds, sufficient guidance by people with experience

leading successful start-up ventures, and sufficient loving criticism and feedback.

Legacy unions have the resources, and some remnants of power, to become a kind of nurse log

to new forms of worker organization, power, and advocacy. In the study of forest ecology, nurse log

is the term given to a fallen tree that, while it decays, provides nourishment and protection to seedlings

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that in turn grow from its fallen trunk. Thats exactly what todays unions need to do for the seedlings of

the next labor movement: use our decaying resources and power to nourish and protect them.

So lets create a Nurse Log Fund (like the Center, real name to be determined, but for now lets

call it the Fund). The Fund would operate in the world of worker organization, power and advocacy

much like a private equity fund, venture capital firm, or angel investor does in the world of business: to

provide sufficient working capital to target organizations to nurture growth, expansion, new product

development or new leadership.

The Fund would target its investments in start-up or ongoing innovators that meet a specific set

of criteria. It would be led by a management team with expertise in building strong, scalable, self-

sufficient organizations, drawn not just from the ranks of successful labor organizers and leaders but

also from talented leaders from business, non-profits, and government who share our values. This talent

would be lent to new or emerging organizations in which it invests. It would make large-scale multi-year

investments in new or emerging worker organizations (or other new models for power and advocacy),

with the expectation that after an initial 3-5 year investment, the organization must be able to show

real results and measurable progress toward economic power, scalability, self-sufficiency to justify any

future investment. It would be focused on quantifiably demonstrable outcomes and unsentimental

about divesting from efforts that fail.

But it would also expect and encourage risk and experimentation, and understand that failure

will result more often than success. After all, it only took 150 years and dozens of failed theories for the

American labor movement to achieve success in the 1930s; its reasonable to assume that if we allocate

to the Fund much of the legacy union movements discretionary resources (i.e. those not related to

maintaining bargaining-related revenue or political survival until a new model succeeds), it will take

more than a few years until we can finance sufficient experimentation and innovation to find the next

powerful, scalable, self-sufficient model. Well probably need to fund a lot of failure, and learn from it,

to find a successful model.

To succeed, the Fund will need to be capitalized at a level that far exceeds the relatively minimal

resources currently available from foundations and individual donors to start-up experiments in worker

organization, power and advocacy. This will ultimately require hundreds of millions of dollars per year

raised primarily from legacy unions.

Like the Center, the Fund should be organizationally distinct from any one union, for many of

the same reasons: insulating its resources from internal union political demands, allowing for

fundraising scale across unions (and potentially other partners), etc. But especially in the case of the

Fund, it is likely that funding will flow from it to new forms of organizations and experiments that could

easily incur the ire of wealthy and powerful companies (such as organizations engaging in corporate

campaigns) or in organizations with revenue models or other organizing strategies which would be

legally suspect if a union itself were pursuing them. This makes it necessary to have more than an arms-

length relationship between union funders, the Fund, and the new organizations it funds.

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Toward Labor 3.0

The Center and the Fund will be partner organizations. The Center should provide the forum for

intellectual exploration, strategic research, opinion formation, policy development, collaboration,

publication, and evaluation of proposals and experiments. The Fund would fund the actual experiments,

including those proposed by the Center, and could match social entrepreneurs and practitioners with

proposals for new enterprises developed by the Center. But since the Fund would be funding projects in

uncharted organizational waters, including some that would, no doubt, engage in issue advocacy,

political organizing, or even profit-making (e.g. worker co-ops, ESOPs), it should be incorporated

separately as a LLC or other type of organizational structure, not a 501(c)(3).

Together, the Center and the Fund will provide the infrastructure for finding the right ideas and

funding the right ideas that are far less likely to emerge from legacy unions performing legacy activities

under a legacy system. If these new structures succeed, well then have one or more new models of

economically powerful, scalable, and self-sustaining worker organizations.

Time is of the essence here. With each year, we grow smaller and weaker. There is no

guarantee that even starting now and even at a large scale, we will succeed in finding a path toward

Labor 3.0 for the 21st century. But the converse is guaranteed: if we dont immediately begin

experimenting with new models to scale, while we still have resources and talent to do so, the future is

100% predictable and 100% bleak.

Todays unions and labor leaders will be remembered not for the strikes we led, our organizing

wins, the contracts we bargained, or the politicians we helped elect, but rather for whether, and how,

we respond to our own John L. Lewis moment.

# # #

David Rolf, one of the architects of SEIUs successful home care organizing model, is President of SEIU

Healthcare 775NW and International Vice President of SEIU. The views, opinions, and proposals in this

article are exclusively his own.