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  First Thoughts

    Dan Gilmore


    Supply Chain Digest

Sept. 3, 2021

The Labor (Day) Supply Chain 2021

Our Annual Review on the State of Labor in the Supply Chain


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 strange yet positive year for labor, with worker shortages everywhere, pressuring supply chains - and recently again leading to stockouts on store shelves. In the last measure we have, there are some 10.1 million current US job openings, versus just 8.6 million persons looking for work. Usually, there are more job seekers than available spots. This is naturally (and finally) pushing blue collar wages higher, as we'll see below.

The percent of total US workers that are union members was 10.8%, up by 0.5 percentage point from 2019, according to the most recent government figures, reversing the trend of declining unionization. We'll have to see if this continues, under a Biden administration that has pledged to support labor.
I will note it appears the rise last year may be largely a factor of large job losses in the restaurant and entertainment sectors, with generally low rates of unionization, shrinking the denominator of the percentage calculation, rather than a jump in unionized workers.

Gilmore Says....

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

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And union membership is now dominated by public sector workers such as police and teachers.


Unionization rates nationally are at 34.8% in the public sector, up from 33.6% in 2019, and just 6.3% in the private sector, up just barely from 6.2% in 2019, with the drop in restaurant jobs again probably driving that gain.

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 some 6-7 million 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 2020, down from 14.6 in 2019, as the overall labor market shrunk last year. But 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 (2.9% and 3.1%, respectively) had the lowest unionization rates in 2020. The next lowest rates were in Utah (3.7%), South Dakota (4.2%) and Tennessee (4.4%). Eight states had union membership rates below 5.0% - the same number as last year. Two states had union membership rates over 20.0% in 2019: Hawaii (23.7%) and New York (22.0%).

The percent of US manufacturing workers that are union members fell to 8.5% last year, down from 8.6% in 2019. Those numbers are a bit lower than the percent of manufacturing workers covered by union contracts, such as those that opt out in right-to-work states, with coverage of 9.3% last year.

Ponder that - less than one in 11 US manufacturing workers are unionized today, versus 17.5% in 1994. According to, 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 66% today. Many other countries mirror US unionization rates more closely. Unionization in France - generally considered very supportive of labor – has fallen to just 7.9% of all workers, and even lower in the private sector. Union membership is higher in the UK, at about 23.2%, but that's down from more like 40% in the mid-1990s.

In July, there were about 8.60 million non-supervisory manufacturing workers in the US, down from 8.46 million a year ago. That is still 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 600,000 manufacturing jobs since then - not a lot in 11 years, but better than a decline. In 2004, there were just over 10 million factory floor workers - we're down just about 1.4 million positions from that level, and much more from the 1990s.

That obviously had general downward pressure on wages, though the lack of wage growth isn't nearly as bad as I would have guessed, based on all the media reports.

According to the BLS, the average hourly wage for shop floor manufacturing workers was $23.86 in July, up from $22.87 in July 2020, or a solid 4.3% growth year-over-year, as wages are finally starting to come in above inflation.

That's also up from the $18.29 per hour in July 2009, or a rise of 30% over 11 years. That's a cumulative average annual growth rate of 2.25%. So wages have risen modestly, about equal with inflation, 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, though they represent just a tiny fraction of manufacturing positions. There are now about 1.25 million non-supervisory warehouse workers in the US (as of June), about up 5.9% from 1.18 million in June 2020, after being flat in June 2020 versus 12 months previous (due to pandemic).

The number is substantially higher than the 637,000 warehouse workers in 2010, meaning a rise of 96.2% over 11 years - but even with that growth they only represent about 14.5% of manufacturing floor jobs – though that percentage is rising. Warehouse jobs were 13.9% of manufacturing workers in June 2020. I'll will note some jobs at plant warehouses are counted as manufacturing positions.

In terms of wages, average non-supervisory pay for warehouse workers was $19.56 in June, versus $18.43 in mid-2020 - a rise of a very strong 6.1% in a year. However, the average warehouse wage is about 22% less than the average manufacturing rate, but the gap was 24% last year.


Pay for warehouse workers was at $15.37 in June 2010, meaning DC wages have risen only 27.2% over the past 11 years– and almost all of that starting in 2017. That's a annualized rate of 2.2% gains, the result of much improved in recent years.


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

Last year, were 8 major work stoppages in the US, the third lowest number since 1947, according to the BLS. And there weren't any strikes involving more than 1,000 workers in 2020, down from 25 in 2019. But that compares with 69 in 1986 and 276 in 1976.

Almost all of those major strikes were outside of manufacturing, we will note, and include things like teacher strikes in big cities.

Almost every year, there is a strike or organizing effort called by some "labor's last stand," such as the failure of the UAW to organize workers at a Tennessee Volksgagen factory in 2018.


I don't think there was such a scenario in 2020, but we got something like it in Apri 2021, when workers at an Amazon fulfillment center in Bessemer, AL, voted down a proposed union by an overwhelming margin. Many thought a Yes vote would serve as a catalyst for organizing at other Amazon sites, none of which are unionized in the US.


So this was quite a blow to labor, but we'll note the National Labor Relations Board is reviewing challenges by the union and could order a new vote soon.


I will also note there is current major strike, kicked off Aug. 10, by unionized workers at a Mondelez Int'l bakery in Portland, Ore., that has since spread to two other bakeries and three distribution facilities in Colorado, Illinois, Georgia and Virginia. Workers are opposing changes to work schedules, overtime and healthcare sought by Mondelez in contract negotiations

There were no additions in the number of "right to work" states in 2020, 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.

But there is currently a bill in the Senate - “Protecting the Right to Organize Act” (PRO Act) - that it appears would outlaw right-to-work status in any state. This would be a significant change and be a huge victory for labor if it passes and is signed into law.

The battle over California's controversial and absurdly complicated AB 5 legislation continues on. Greatly simplifying, the law makes it very diffcult for a worker to be paid as a contractor, forcing companies to classify them as employees instead, and thus entitled to benefits, unemployment insurance, etc.


The supply chain issues? The law would mostly likely eliminate the notion of contract truck drivers or independent owner-operators, with big impacts on costs and capacity, the latter as trucking firms possibly could leave the state.


Contract drivers are especially common in drayage operations at California ports. The even bigger question: will this type of law make its way to other states - or be struck down (for truckers at least) due to laws giving the federal government control of all trucking regulations?


In January, US District Judge Roger Benitez issued a temporary restraining order protecting 70,000 independent trucker owner operators in the state from AB5 enforcement. Subsequently, the California Truckers Association (CTA) has petitioned the US Supreme Court to invalidate the law.


This is another huge issue that likely will be resolved one way or another in 2022.                          


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

Any reaction to our summary of the labor supply chain 2021? Let us know your thought at the Feedback section below.

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