116 3rd St SE
Cedar Rapids, Iowa 52401
From John Deere and ADM to Starbucks — and a national rail strike averted only by an act of Congress — organized labor has been making plenty of waves this year.
Workers at Cedar Rapids’ Ingredion have been out on strike for more than four months.
Two years after the pandemic began, employers are struggling to find workers. But are unions striking more than usual this year?
Peter Orazem, economics professor at Iowa State University whose expertise includes labor economics, spoke with The Gazette recently about what’s happening with unions — and what’s on the horizon for organized and non-organized labor.
Q: Union strikes have been making some big waves in headlines this year. But has 2022 had more strikes than usual?
A: “The number of strikes is not that big (this year). The ones happening are more publicized, perhaps.
“The U.S. Bureau of Labor Statistics has been tracking the number of large stoppages with 1,000 or more workers since 1947. In 2021, there were 17. In 2020, there were 10, and there were more strikes in 2019, 2018 and so on.
“ (This year,) there have been 21 large strikes — a little more than last year and 2020.
“Strikes are just generally not that common, and there may be reasons some of these get more publicized. The problem is we don’t know if there’s an increase or decrease in smaller strikes.”
Q: How do the trends this year compare to the last couple decades?
A: “There were 39 (strikes) in 2000. Unions have generally been declining in relative importance to the labor market. If you go back to the 1980s, you had (strike) numbers in the hundreds.
“After the big recession in 1980 and 1981, the number of strikes plummets and it’s stayed down since then.
“In 1980, there were 187 strikes with more than 1,000 workers.”
Q: Do you think the seeming increase in strike activity is a matter of perception?
A: “I believe so. The fact that we had a John Deere strike here in Iowa made it more visible for us.
“There have been a few large public school stoppages, a few related to graduate students. Then there are the more traditional ones. There are more, but not the traditional manufacturing strikes like we had with John Deere.
“If you look at the economic conditions for strikes, they’re quite strong right now in part because firms are not able to fill all their positions. We’re still near 4 million unfilled vacancies a month.
“Historically … in a traditional month, we’d have maybe 300,000 unfilled vacancies. In September 2022, we had 4.3 million unfilled vacancies.
“It’s going to be quite easy to push for wages and benefits when the firm is begging for additional workers. You don’t want to be on strike if you think the strike is going to last a long time. It’s expensive not to be paid.”
Q: There seems to still be a certain amount of pushback from some employers. What’s giving employers such as Starbucks and railroads, for example, the confidence to not yield to union demands quite so quickly?
A: “Starbucks is not in a traditionally unionized sector.
“One of the reasons Starbucks wouldn’t be a traditional unionized shop is that a lot of the workers are there part time or don’t anticipate working there for an extended period of time. Your incentives to join a union are typically related to upfront costs in exchange for a long-term return. If you’re only going to work at Starbucks for a year, that’s not a great incentive to pay union dues.
“While Starbucks (makes) the news, it’s still relatively few places that have voted for a union.
“The traditional strengths of the unions are places where you have long-term employees in a relatively stable industry in firms that have some amount of market power so they can pass the prices on to their customers. Starbucks is not the only coffee shop.”
Q: Do you think the increased attention for unions in traditionally non-union sectors is signaling some broader changes here?
A: “I think some of it is hype you’re seeing in the media. How much attention has been paid to relatively few union votes at Amazon? I think only one has been successful.
“Organized labor is bucking against a long-run decline in representation of labor. But the actual union gains over the last few years have not been very large.
“The traditional strong sectors for union have been decreasing as a share of the total labor market. Where unions have been particularly strong is in the public sector. State and local governments, teachers have very high proportions of unions.
“Manufacturing as a share of the total labor market has been decreasing.
“That said, I do think that if you’re going to go on strike, this is a good time to go on strike. You’re not going to be replaced by a lot of people who are begging for jobs. The unemployment rate is atypically low.
“Inflationary environments like we have now are more likely to end up with strikes because you have a lot of uncertainty about what the value of the dollar’s going to be two or three years down the pike. That uncertainty tends to lead to impasse. The employer and employees may have different perceptions as to how long inflation is going to last.”
Q: We have the labor shortage and inflation. Are there any other factors contributing to the confidence leading to more strikes?
A: “The fraction of the workforce that’s quitting is also atypically high coming out of the pandemic. We had 4 million quits in September this year. The monthly average was about 2.9 million before.
“People aren’t as nervous about leaving their current employer as they were in the past. That also tends to lead to greater incentive to risk a strike. You’re not as tied to your current job, and if you want a part-time job to weather the storm during a strike, there are a lot of part-time (vacancies) going begging right now.”
Q: Given the uncertainty of inflation, what emboldens employees to leave stable employment?
A: “It’s mainly older workers that dropped out of the labor market. Mostly younger workers have returned, but you don’t have a lot of competition with people who are seeking your current job.
“If you look at immigration, we have about 1.8 million fewer immigrants in the U.S. than what we would’ve had if the pandemic hadn’t occurred. The things that make you nervous in normal times just aren’t at play in the current labor market.
“This is a really strange labor market. It used to be that about 5 percent of job openings didn’t get filled within that month. Now it’s 42 percent.
“Nominal wage increases are quite high. The last number I saw was 5 percent year over year. That’s a pretty good year, relative to what was true about wage increases before the pandemic, where 1 or 2 percent was the norm.”
Q: How does the labor shortage bode for future economic growth?
A: “I think it’s a strong headwind against economic growth, and in Iowa it’s worse than in most places. Our labor force participation rate has recovered more slowly than other states, and that’s because we’re an atypically old workforce.
“If you look at why supply chain disruptions have been so persistent, it’s not microchips — it’s workers. If you can’t fill 4 million jobs a month, that’s a lot of production that’s not happening.”
Q: Are you seeing any other interesting labor trends this year?
A: “The drop in immigration is the one people have spent the least amount of time paying attention to. Neither the Democrats nor the Republicans seem compelled to want to relax restrictions on H-1B visas to make up for lost immigrants starting in 2020 through the current month.
“It’s really hard for me to figure out how we’re going to resolve the unfilled vacancies if we don’t try to increase the number of H-1B visas to make up for that drop in immigration during the pandemic.
“Iowa’s in an even tougher position there. We’re not a state people typically move to.
“Absent immigration, I think it’s going to be real hard for Iowa firms to attract people from other places. We’re just not going to have natural growth of the population sufficient to make up for those lost vacancies.
“I think we should stop making ourselves look unpleasant to people who don’t look exactly like us. We have to be much more aggressive to attract people to this state.
“The unsuccessful search rate in Iowa is 10 percent, versus 7 percent for the U.S. as a whole. We’re having a tougher time filling vacancies compared to other states.”
Q: What else is on the horizon for organized labor?
A: “Organized labor has certainly been trying to expand to other sectors. The Service Employees International Union has been trying to move into retail sectors, which are not traditional union strongholds.
“Unions are seeing they have to start targeting these non-traditional places in order to make any substantial gains, otherwise they’re going to lose relevance.
“You’ve got manufacturing, which is doing reasonably well in the U.S. But we might have some issues if you, for example, move from traditional assembly line manufacturing in Detroit to building electric vehicles, which are much less labor intensive and use a lot more software engineers than high school graduates.
“There may be a substitution away from workers who are the traditional strength of unions. They’re going to have to start moving to more college graduates (for membership).”
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