Recently, workers at Amazon dealt what has been called a “decisive” and “crushing” blow to organized labor, with their proposed union receiving less than 30 percent of the votes cast, according to the federal vote counters overseeing the election. While union officials complain that Amazon cheated by campaigning too hard against the organizing effort, a close look at the election indicates that the better argument is that Amazon workers acted rationally.
The most likely explanation for the union’s drubbing was that Amazon workers had an informed and healthy concern that becoming unionized would make them worse off. This is because, as I have pointed out in a recent article, American labor unions are poorly run from a corporate governance perspective. This lack of good corporate governance means that, even when union management is not corrupt, it is prone to benefit itself at the expense of the rank-and-file workers it is supposed to represent.
Workers voting in union elections resemble shareholders in the sense that both groups are widely dispersed, poorly informed about what their union or corporate representatives are doing, and, even when fully informed, unequipped to monitor and discipline those representatives effectively.
Corporations and capital markets do a lot to reduce these so-called agency costs. Unions do almost nothing, and there is virtually no legal or market check on union officials once they gain control of a workplace. Stunningly, fraud in labor elections is not in itself a criminal activity. The most that the Department of Labor can do is to order a new election. Unions would be more successful in attracting new members and winning elections if the workers they are organizing thought that the unions would faithfully represent their interests in the workplace.
The lack of focus on agency costs in the union context appears to be based on ideological and political considerations that conflate the interests of workers with the interests of union officials. But the interests of workers and union officials diverge in significant ways. Workers are concerned with job security, wages, and working conditions, and union officials are concerned with maximizing the private benefits of their office, sometimes even at the expense of workers.
If unions want to succeed in organizing workers, they should first clean up their own acts. For example, the U.S. Department of Labor’s Office of Labor-Management Standards found that the union that recently tried to organize the Amazon employees in Bessemer, Alabama – the Retail, Wholesale and Department Store Union – “did not retain adequate documentation for reimbursed expenses and credit card expenses incurred by union officers” and did not require officers and employees to submit itemized receipts for meal expenses at union local 513 in Massachusetts. In 2019, Amazon cancelled its plans to build a plant and a corporate headquarters in Queens, New York, after strong opposition from that union. The plans envisioned a 25,000-worker campus in Queens, billions of dollars in revenues for local workers, and hundreds of millions of dollars a year in tax revenues for the city.
The union is no stranger to controversy. A former vice president of its New York hospital-workers union local formally revealed to the Department of Labor that he and others participated in fraud in the 1984 union election in which Doris Turner won a second term as president.  Union leaders expressed serious doubts about Turner’s qualifications, administrative style, and temperament. Other controversies that have turned off workers include the refusal in 1947 of New York-area union leaders to sign the anti-communist affidavits required by the Taft-Hartley Act and divisive internal debates about national issues such as the Vietnam War, civil rights, and, most recently, immigration. It often seems that the union is more interested in the grand policy issues of the day than in the immediate concerns of the workers they are supposed to represent.
The union seems to think that it was somehow cheated out of a win in Bessemer. But in past organizing campaigns, Amazon has explicitly promised not to cut jobs or otherwise retaliate against workers for organizing. Amazon has also promised not to interrogate workers about their union or to spy on workers while they participate in union activities.
The union has commendable progressive values. But it needs more to succeed in its organizing campaigns. Workers may want their dues to be spent promoting human rights and immigration reform, but their more likely and immediate concerns are job safety, job security, pension funding, and wages and working conditions.
The pandemic should have created a robust demand for labor unions here as it has in Europe. Now more than ever, workers need representation to help them keep their jobs and receive coordinated, state of the art protections from Covid-19. The pandemic also has led to rising demand for Amazon products, and the company has been on a hiring spree. Yet still the union failed in its election effort.
This failure may be due to flaws in union elections. Or it may just be that workers have come to realize that unions are poorly managed.
This post comes to us from Professor Jonathan Macey at Yale Law School.