Offshore Threats Curb Labor Unions

A rise in threats to close plants and move corporations overseas is stifling U.S. union organizing, says a federal trade study carried out by Cornell University labor experts. The report calls for new labor protections and says the offshore trend has kept wages flat, blocking U.S. workers from making real economic gains in a booming economy.

The study, contracted by the U.S. Trade Deficit Review Commission, was conducted by Kate Bronfenbrenner, director of labor education research at Cornell University and a faculty member at the university's School of Industrial and Labor Relations. It was titled "Uneasy Terrain: The Impact of Capital Mobility on Workers, Wages and Union Organizing."

The study determined that international trade and investment policies, combined with ineffective labor laws, have created a climate that has emboldened employers to threaten to close their plants to avoid unionization, a practice that is illegal under the federal Fair Labor Standards Act.

"Employers are using the global economy to intimidate workers from organizing by putting out the threat that they plan to move their operations overseas," Bronfenbrenner said. This could be in the blatant form of a memo or speech to workers stating point-blank that if they unionize the company will close, or come in the form of more subtle intimidation, such as circulating newspaper clippings of similar plants that have closed around the country.

The researchers used surveys, personal interviews, documents and electronic databases to collect detailed information on the extent, nature and impact of plant closings threats and actual shutdowns within the U.S. private sector of the economy for more than 400 National Labor Relations Board certification union-election campaigns that took place in 1998 and 1999. The study found that overall, more than half of all employers made threats to close all or part of their plants during union organizing drives. The threat rate was significantly higher, 68 percent, in more mobile industries such as manufacturing, communication and wholesale/distribution. The threat rate in less mobile industries, like construction, health care, education and retail, was lower at 38 percent.

Only 3 percent actually carried out their threat to close or move, Bronfenbrenner noted. However, threats to close plants appear to work in stifling union drives, she said. The win rate for union campaigns at companies that threatened to close plants was 38 percent, compared with the 51 percent win rate at units where no such threats were made. This disturbing trend can be reversed or slowed, Bronfenbrenner said, if strong and enforceable labor standards are part of U.S. trade agreements, and U.S. tax laws include disincentives to discourage companies from moving their operations out of the country. The researchers also propose stiffer penalties for employers who violate U.S. labor laws during organizing campaigns.

"This economic boom won't last forever," said Bronfenbrenner. "Absent a union voice, things will begin to unravel. Wall Street celebrates the fact that wages haven't gone up in years. But if American workers aren't doing well, what good is our prosperity? And what is going to happen when things go bust?"