The Role of Unions in the Supply Chain Ecosystem

A union’s purpose is twofold: to protect the rights of its working members, and to bridge gaps in inequality.

These goals occasionally put unions at odds with employers aiming to keep operational costs to a minimum (often at their employees’ expense) while maintaining employment flexibility. Through the power of collective bargaining, unions apply pressure on employers to bring about changes benefiting the company’s employees.

The Evolution of Modern Labor Unions

Labor unions have served as a core component of the U.S. economy since the early 1800s when local skilled workers formed small craftsman guilds and mutual aid societies to regulate entry into their respective professions and maintain certain quality standards.

The rise of Industrial America saw major hardships descend on the working class as growing businesses took drastic measures to boost productivity — including lowering wages, lengthening working hours and taking dangerous shortcuts when it came to worker safety.

In response, workers united locally (and later nationally) to resist unfair treatment by their employers. The National Labor Relations Act (NLRA) was ultimately passed in 1935, effectively barring companies from discouraging or discriminating against union formation and legally requiring employers to negotiate collectively with their unified employees.

Backed by federal support, unions became highly influential. Non-union workers saw wage increases and better working conditions due to the union’s collective bargaining efforts, and by 1950 roughly one-third of all workers in the private sector claimed union membership.

Though union membership and the public’s perception of labor unions has ebbed in the years since a recent surge in pro-union attitudes shows present-day public support as the highest it’s been in nearly 60 years. Today’s unionization levels are likewise steadily increasing, though a flood of new post-pandemic jobs has reportedly outpaced membership growth and lowered the total number of workers represented by unions nationally from 11.6% to 11.3%.

Collective Bargaining Basics: How Union Negotiations Work

Collective bargaining (a right awarded by the NLRA legislation mentioned above) is the official term for negotiations between union representatives and employers to establish standards for employment regarding pay, benefits, working conditions and general policies protecting the work environment.

Every negotiation faces unique challenges, but the typical collective bargaining process follows a familiar sequence of events:

1. Unions and companies form a bargaining unit. This is an individual (or group of individuals) responsible for representing each party’s respective interests. Members of the union bargaining unit are often in elected positions within union leadership, while company representatives usually consist of senior management and C-level executives.
2. Proposals are exchanged. Each party submits its initial offer for the other to review, along with any supporting arguments for the proposed changes.
3. Mediation and arbitration begin. Each party modifies its original proposals (often through several rounds of negotiations) until an agreement is reached. It’s not uncommon for union members to go on strike once their old contract expires and remain on strike until the details of their employment are finalized.
4. A new contract is ratified. Once union and company representatives reach a tentative agreement, their respective groups must sign off for final approval. The union will typically hold a ratification meeting in which members will have the opportunity to discuss the proposed contract changes. Members will then vote to accept or reject it. If the contract is accepted, it will be ratified and any active labor strikes will end. If either party rejects the contract, arbitration resumes.

While the court of public opinion doesn’t get an official vote throughout the collective bargaining process, it can still prove a major influence on decision-makers from both sides. Labor strikes can place employers under intense public scrutiny and cause long-term damage to a brand if the strike is generally accepted as a justifiable measure. Likewise, Employers might use similar tactics to paint strikes and union demands in a negative light to accelerate negotiations.

9 Labor Unions Vital to Today’s Supply Chain

Many of today’s labor unions represent workers who perform essential functions within the supply chain. Several of these groups have recently earned key victories in their fight to improve worker compensation and conditions, including the following:

International Brotherhood of Teamsters (IBT)
Primarily representing airline and freight workers, IBT is one of the industry’s largest labor unions with registered members throughout the U.S. and Canada. IBT led this summer’s historic UPS strike, setting a new bar in the labor movement with a series of record-setting wage increases and making $30B in new money available to UPS employees over the life of the contract.

United Auto Workers (UAW)
Consisting mostly of workers in the automotive industry, the UAW made headlines this week after a historic 44-day negotiation with Detroit’s Big Three automakers. The extended strike secured a guaranteed wage increase, additional employment protections and expanded retirement benefits for nearly 150,000 autoworkers.

International Longshoremen’s Association (ILA)
As the largest labor union of maritime workers in the nation, the ILA fights diligently to protect its members’ employment opportunities. They recently organized protests against Ørsted US — another labor union aiming to steal from ILA’s work jurisdiction.

Transport Workers Union of America (TWU)
The largest airline workers union, TWU’s membership includes 155,000+ transit workers. TWU heavily lobbied Congress in favor of stimulus bills to support its members during the COVID-19 pandemic. This legislation ensured nearly every TWU member stayed at work or was recalled from furlough.

United Steelworkers (USW)
USW represents a variety of general trade workers, including those in steel, rubber manufacturing and even paper and forestry. Recently, the USW joined lawmakers in calling for the passage of the PRO Act, which would further protect workers’ rights to organize and institute harsher penalties when companies impede those rights.

United Food and Commercial Workers International Union (UFCW)
With membership upwards of 1.3 million, the UFCW represents food handlers in grocery, healthcare, packing and handling, distillery and cannabis. The union just achieved a historic victory in a recent contract with Hormel Foods securing significant wage increases and improvements to pensions and 401(k) plans.

International Transport Workers’ Federation (ITF)
The ITF aims to amplify the power of individual labor unions across the globe by uniting transport industry workers — all 18.5 million of them — under one banner. The federation also speaks on behalf of its members on international matters, including recent events in both Ukraine and Palestine.

SMART Transportation Division
The International Association of Sheet Metal, Air, Rail and Transportation Workers boasts over 200,000 members and advocates for fair workplace treatment for a wide range of industry occupations. The group’s latest organized efforts include vocal opposition to the erosion and outright violation of U.S. child labor laws by corporations desperate to avoid paying workers fair wages and benefits.

Brotherhood of Locomotive Engineers and Trainmen
The BLET is the oldest labor union in the Western Hemisphere. Formerly the BLE before merging with the Teamsters in 2004, the organization reached a new agreement with Union Pacific earlier this year guaranteeing completely revamped work/rest schedule protections. The new provisions lock in an 11 days on, 4 days off rhythm for locomotive engineers formerly on call 24 hours a day, 365 days a year.

Supply chain professionals are experts in collaboration and networking; when a strike or new labor deal occurs, it impacts the shipping ecosystem at large. Learn more about how our team manages the evolving challenges within the global supply chain by contacting one of our experts.