The Labor (Day) Supply Chain 2023

Monday of course marks the annual Labor Day holiday both here and in Canada. Starting in 2011, I have written a column on the state of the labor supply chain in conjunction with this event. It was popular enough that I have continued in each year since. It's a lot of work, but well worth it.

It has been a decent past year for labor in some way, with worker shortages everywhere, pressuring supply chains, giving labor some clout and momentum - but starting from a low base. Still, this is naturally (and finally) pushing blue collar wages higher, as we'll see below- but not enough for most to keep up with inflation.

The percent of total US workers that are union members was 10.1% in 2022, to me surprisingly down from 2021's 10.3% and 10.8% in 2020 - acccording to the most recent data from the US Bureau of Labor Statistics. I say surprsing because conditions seemed to in Labor's favor, and there is strong backing in the Biden administration.

As many of you know, US unionization membership is now dominated by public sector workers such as police and teachers.

Unionization rates nationally in the public sector were at 33.1% in 2022, down from 33.9%, in 2021, But that is about five times greater than the rate of just 6.0% in the private sector, down from 6.1% in 2021.

All this of course continues the powerful long-term trend of a steady union decline since the Labor Department started reporting on it in 1983, when overall unionization was at 20.1% and 16.8% in the private sector. Those numbers themselves were well down from previous decades before this metric was officially tracked by the government.

I will note part of that decline in private sector unionization rates is due to the loss of millions of US manufacturing jobs since 1983, as manufacturing is clearly more organized than the service sector, but that is far from the only factor. Unions have clearly lost appeal to many, especially in the South, where many new manufacturing factories have been headed for more than two decades.

Together, there were 14.3 million private and public sector employees in a union in 2022, up from 14.0 in 2021. While union jobs rose 1.9% last year, overall jobs were up 5.3 million, so the percent of the workforce in unions declined again.

And compare that to the 17.7 million union members in 1983, when the total US labor force was much smaller.

There are also huge differences between states. South and North Carolina (1.7% and 2.8%, respectively) had the lowest unionization rates in 2022. The next lowest rate was in South Dakota (3.1%). Eleven states had union rates below 5% in 2022, three more than in 2021. Two states saw union rates of more than 20% in 2022: Hawaii (21.9%) and New York (20.7%). But both those states saw union rates decline last year.

The percent of US manufacturing workers that are union members rose a tick to 7.8% last year, from 7.7% in 2022. But that is still way down from 8.5% in 2020.

Ponder that - just about 1 in 13 US manufacturing workers are unionized today, versus 17.5% in 1994. According to unionstats.com, 38% of private sector manufacturing workers were in unions as recently as 1973.

Don't think this downward union trend is only a US phenomenon. Unionization rates in labor-loving Sweden, for example, have fallen from about 95% in the mid-1990s to around 68% today. Many other countries mirror US unionization rates more closely. Unionization in France - generally considered very supportive of labor - has fallen to just under 8% of all workers, and just 5% in the private sector. Union membership is higher in the UK, at about 23.1%, but that's down from more like 40% in the mid-1990s.

In July, there were about 9.1 million non-supervisory manufacturing workers in the US, up from 8.9 million a year ago. That is well up from the bottom of the recession in 2009, when we fell to about 8 million shop floor workers, meaning we've added about 1.1 million manufacturing jobs since then - not a lot in 14 years, but better than a decline. In 2004, there were just over 10 million factory floor workers - we're down about 900,000 positions from that level, and much more from the 1990s.

According to the BLS, the average hourly wage for shop floor manufacturing workers was $26.46, in July, up from $25.09 in July 2022, for a gain of 5.5%. Not bad, but is it keeping up with current inflation?

That wage is also up from the $19.28 per hour in July 2013, or a rise of 37.1% over 10 years. That's a cumulative average annual growth rate of 3.2%. So wages have risen modestly, about equal with inflation until the last 18 months, and thus not enough to improve a worker's lifestyle, especially with healthcare costs taking more and more of the paycheck.

Meanwhile, there has been very steady growth in warehouse jobs in the past decade, though they represent just a tiny fraction of manufacturing positions. There are now about 1.66 million non-supervisory warehouse workers in the US (as of June), actually down about 4% from the 1.73 million in 2022, but from up 16.0% from 1.43 million in June 2021.

The number is substantially higher than the 601,000 warehouse workers in 2013, meaning a rise of 176% over 10 years - but even with that growth they only represent about 17.5% of manufacturing floor jobs - though that percentage is rising. Warehouse jobs were 13.9% of manufacturing workers in June 2020. I will note some jobs at plant warehouses are counted as manufacturing positions.

In terms of wages, average non-supervisory pay for warehouse workers was $22.97 per hour in June, versus $21.54 in June 2022 - a rise of a strong 6.6% in a year. However, the average warehouse wage is about 15.1% less than the average manufacturing rate, but the gap was 18%, June last year.

Pay for warehouse workers was at $15.35 in June 2013, meaning DC wages have risen 49.6% over the past 10 years - and almost all of that starting in 2017. That's an annualized rate of 4.1%, a perentage point more than the growth in manufacturing wages, the result of much improved pay hikes in recent years. That 1% more compounded over time is a big deal.

Meanwhile, labor strikes, once such a commonplace event, have almost disappeared, at least outside the teacher ranks.

Last year, there were 22 major work stoppages (involving more than 1,000 workers) in the US, about the same as the 21 in 2021, according to the BLS. But that compares with 69 in 1986, 276 in 1976 - and 470 in 1952. There have been just two so far in 2023.

Almost all of those major strikes were outside of manufacturing, we will note, and include things like teacher strikes in big cities and healthcare worker actions. Manufacturing strikes accounted for just 2% of employees idled by major strikes last year.

The activity on unionization of Amazon was quieter in the last year than in 1H 2022. That year featured the first and I believe still only Amazon US fulfillment center, on Staten Island in New York City, to organize. However, now more than a year after that vote in April 2022, the facility is still operating without a union or a contract, as Amazon is still legally protesting the vote and not recognizing the union.

Then in April there was the bizarre story of what was reported by most media outlets as 84 Amazon delivery drivers in Southern, CA joining the Teamsters. But there was something fishy about this from the start. The drivers actually were employed by one of Amazon's contract delivery service partners (DSPs), not Amazon, and the company's ownership oddly seemed to support the unionization. Then Amazon later said it had earlier stopped doing business with this DSP for performance reasons, leaving all to wonder what was really going on.

After more news on a "strike" by this questionable union that was seemingly without a point, the story appears to have gone away.

Relative to the"right to work" states front, Michigan repealed its support for the law this year, under which employees can't be compelled to join unions. Once mostly found only in Southern and some Western states, recently some in the Midwest have jumped on the bandwagon despite furious opposition from labor. There are now 27 such states, but no new ones appear to be on the horizon, or close to going the other way. Michigan's retraction was the first in a long while.

There's a lot more, but I am well out of space. The issue for labor is still not yet "stop the robots," but it will be soon enough.

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