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Canadian Labor Laws Are Not the Answer for the American Labor Movement

An article published by Bloomberg last week rehashed an old argument.  It dealt with the continued slide of the American labor movement (“The Real Reason for the Decline of American Unions” by Kris Warner).   American union density (the percentage of workers who are union members) fell from 11.8 to 11.3 percent in 2011. That is down from 30 percent 50 years ago and is the lowest in the post Wagner Act era.

Here’s my response, for what it’s worth.

The premise of the article is that the “real reason” for the decline is weak American labor laws. It’s so risky for employees to exercise their right to unionize that few dare try. The law intended to protect workers from employer reprisals has no teeth, and employers and employees alike know this. The fact that American employers fire workers in 25% of union organizing campaigns is met with a shrug by Republicans and employers, who spend billions of dollars lobbying against labor law reform.  The author cites the well known survey by Harvard’s Richard Freeman and Joel Rogers (What Workers Want), which found that 32% of nonunion American workers would vote for a union if given the chance, and 90% of existing union members would vote to remain in the union if put to a choice. Overall, 44% of Americans would like to be unionized, but only about 11% are.   Freeman calls this “a remarkable institutional failure in the country’s labor laws.”

Unionization Rate

The argument presented in the Bloomberg piece is that the situation would change dramatically for American workers and unions if the U.S. adopted the Canadian model of labor law. Although Canada and the U.S. share similar economic and social models, Canadian union density has not experienced the same decline. According to Warner, “Differences in labor law and public policy” between the two countries, “are at the root of this disparity.”  He demonstrates the divergence in the familiar Chart reproduced above, which shows the trajectory of overall union levels between the two countries for the past century.

It has long been argued by legal scholars that if American workers enjoyed the stronger labor laws in effect in Canada, that unionization would surge. I doubt that. This is a dated story that has become more folklore than fact.

Mr. Warner’s summary of Canadian laws is accurate. It is true that strikers here cannot be permanently replaced, at least not until a strike has dragged on for some time. Labor boards in Canada do indeed act more swiftly and effectively in dealing with employer reprisals against workers for exercising their right to unionize.  We do have ‘first contract arbitration’ in Canada, although it is hardly ever used in practice. Some jurisdictions in Canada still use a Card-Check model for testing employee wishes, rather than a mandatory vote model used in the USA. The Card-Check model permits unions to prove support by having a majority of workers sign union membership cards rather than win a hotly contested and divisive vote. This process mostly avoids the long, nasty, often illegal campaigns waged by American employers to dissuade unionization. Studies confirm that unions are more successful in organizing new workers under a Card-Check model than under a Mandatory Vote model. But most workers in Canada are now governed by a Mandatory Vote model. True, the Canadian vote model is far preferable to the ridiculous, months long campaigns permitted under the American NLRA. Votes in Canada are usually held within a week or two of the union’s application.

However, all of these benefits of the Canadian model have in fact not saved Canadian unions from a similar fate to their American brethren. They have only slowed the decline. It’s true that Canadian union density has held near 30 percent while the American rate has fallen to 11 percent. But most of the explanation for this lies in the heavily unionized public sector, where employers barely resist unionization efforts. Teachers, nurses, public administrators are able to unionize in Canada, and they have done so in huge numbers.  In the USA, many states prohibit collective bargaining altogether, or prohibit it for large segments of public employees.  Public sector union density in Canada is over 70 percent. The spike in the chart above beginning around the 1970s reflects the beginning of public sector unionization in Canada. The private sector is a very different story. Union density in the Canadian private sector is only about 15 percent, roughly where the U.S. was in 1990.

The following Chart shows the important story.

It tracks Private Sector union representation over the years.  Note any similarities?  Canada is following the same trajectory downwards.  We just lag the U.S. by a couple of decades.  It is true, no doubt, that our laws have traditionally and still do protect private sector workers better than the American law. Canadian laws would protect more American workers from reprisals for trying to unionize, and maybe even result in some modest gains for the labor movement.

However, far more important is the fact that the Wagner model upon which both the Canadian and American models are based was designed to facilitate collective bargaining in large industrial workplaces, and fewer and fewer of those workplaces exist in the two countries.  The exodus of manufacturing jobs is not the result of labour laws.  It was the anticipated result of our governments’ decisions to pursue free trade.  Everyone knew free trade would mean the end of large manufacturing factories in Canada and most of the Northern USA. The political dream was to replace those jobs with high skill, white collar, service and technology jobs.  Combined with the higher Canadian dollar, the end of trade tariffs removes most of the reasons for foreign businesses to locate their manufacturing plants in Canada.  Those types of jobs aren’t coming back.

Workers in the service sector, offices, and small workplaces that will increasingly dominate our economy will not benefit from collective bargaining under a model designed for the 20th century manufacturing sector.  It’s easy to see why.  Think about a single Starbucks store with 15 employees that

Our Labour Laws discourage collective bargaining in the service sector

gets unionized. Those 15 employees then try to bargain a collective agreement, and Starbucks tells them that they will give them precisely what employees in the nonunion stores receive, and nothing more.  that is lawful hard bargaining under our duty to bargain laws. The employees can then go on strike to put pressure on Starbucks to up their offer.  Do you think that Starbucks Inc. will cave to that pressure?  Of course not.  A strike at one Starbucks store is like a mosquito bite on a bears’ ass.  Starbucks will resist giving the employees more because if it does so, employees at other stores may see a reason to unionize too.

The striking employees will probably give up and quit, or accept a weak agreement. Odds are the union will be decertified, or will walk away. If the workers hold strong, and the union puts up a good fight, the employer can always just shut down the single store altogether and fire everyone, ala Wal-Mart.  At worst, it would be ordered to pay some relatively small amount of damages to the employees if the store closure is found to be unlawful retaliation for the workers’ unionizing.  Another mosquito bite.

This simple dynamic explains why employees of banks, retail stores, offices, and every other small workplace will never be able to bargain a decent collective agreement under our model.  The model only works when workers have enough bargaining power to put pressure on the employer through the threat of a strike that could inflict real economic harm. Workers have that power in the old school large manufacturing factories, mines, transportation companies, and construction sites, and the large pools of workers in the public sector, where the employer has non-economic reasons to avoid strikes.

In workplaces with under 20 employees, union density in Canada is only 13 percent, compared to 52 percent in workplaces with over 500 employees. Canada has lost 250,000 mostly unionized manufacturing jobs in the last 15 years, and few new manufacturing plants are being organized. Less than 5 percent of certification applications file in the past decade in Ontario have been in the manufacturing sector. The majority of union organizing in Canada is in the broader public sector and construction. In the rest of the private sector, prospects for the labor movement are dim, unless our labor law model is updated for the 21st century.

If our governments do nothing but leave the labour law model untouched, Canadian private sector unionization will fall to 10% before long.  It is time to turn the page on the argument that Canadian labor laws could save the American labor movement, even if importing those laws were politically feasible. Sure, our quicker votes and more effective penalties for employer reprisals would be an improvement over the existing American model. Unions would no doubt win more organizing campaigns than they do at present, and this could lead to overall membership growth in the short term. However, in the big picture, it is now abundantly clear that the future of both the American and Canadian labor movements must lie beyond the Wagner model. What that future will, or should, look like is anyone’s guess. But that is where the discussion needs to go.

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2 Responses to Canadian Labor Laws Are Not the Answer for the American Labor Movement

  1. Kris Warner Reply

    February 14, 2013 at 3:55 pm

    Hi David,
    As I follower of your blog I was pleased to see this critique of my blog post on Bloomberg. Unfortunately, I wasn’t able to get into the nuances of the public/private sectors due to space issues, though I do touch upon the subject in the larger report that piece was based on – “Protecting Fundamental Labor Rights: Lessons from Canada for the United States” (http://www.cepr.net/index.php/publications/reports/protecting-fundamental-labor-rights). I’m currently revising that report for journal publication, and have added some additional comments about the public/private sector based on anonymous feedback. If you are interested, I’d be happy to send you the current version for any further critiques. Email me if so. And thanks for this thoughtful post.

    Kris

    • Doorey Reply

      February 14, 2013 at 4:20 pm

      Thanks Kris, not intended as a ‘critique’. The underlying sentiment that American unions would do better with the Canadian laws on unfair labour practices and card-check or quick votes is unassailable. It’s just that it seems those are band-aid fixes. The Canadian evidence appears to be that the Wagner model itself is the problem given the changing economic landscape. I suspect the high Canadian dollar will soon kill much of what’s left of our manufacturing sector, and consequently our private sector union density will continue its decline in line with the American. Our unions here know that, and they are very worried, as they should be, notwithstanding that we have the better laws overall.

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