There are three central challenges facing U.S. manufacturing today: wages are too low, employers invest too little in their workers, and the sector lacks meaningful credentials or job-matching institutions allowing dislocated workers to find new manufacturing jobs that capitalize on their skills.
As I wrote yesterday on the United Auto Workers' vote at the Chattanooga Volkswagen plant, the union began to develop a nontraditional argument during that campaign for why unions make sense in U.S. manufacturing. The UAW emphasized the cooperative union-management relationship that would result from "works councils," which may only be legal in the United States if there is a union.
Today I want to further develop another nontraditional argument for why unions in U.S. manufacturing would benefit workers, employers, and the the nation as a whole.
Before discussing the union vote at VW further, I want to first focus on those three challenges facing U.S. manufacturing to explain why unions could strengthen the sector more broadly in the future:
1. First, wages. Long gone are the days when manufacturing paid high school-educated workers far above the wages and benefits enjoyed by workers in other parts of the economy. Yes, manufacturing still pays better — but only about 7.4% better controlling for worker education, experience, and other characteristics, according to recent estimates by Keystone Research Center labor economist Mark Price for the Brookings Institution.
As Steven Rattner pointed out in a recent New York Times commentary, manufacturing wages have fallen more than other wages in the current economic recovery. Even in the higher wage U.S. auto industry, according to Rattner, wages are now well below those in Germany. Keeping wages low is not the solution for U.S. manufacturing and, in fact, it is part of the problem.
2. Second, investment in skills. Too many U.S. manufacturing employers invest little in their workers. Apprenticeship programs, common in the 1960s in manufacturing, have almost disappeared. (There are anecdotal reports of some new ones.) Manufacturing now accounts for nearly two out of five jobs in the temporary help industry (p. 4), another symptom of the Walmart-ization of manufacturing work.
3. Third, credentials and job-matching institutions. For all practical purposes, U.S. manufacturing has none. To be sure, the National Association for Manufacturers has pursued a widely publicized effort to promote skills standards. But there's not much evidence yet that employers have embraced these standards or are willing to pay more for people with credentials.
There is, on the other hand, lots of evidence that manufacturing workers with skills-in-demand do not easily find new positions that capitalize on their skills. Even in industrial maintenance and precision machining occupations, for example, unemployment rates were well above the national average during and shortly after the Great Recession. Only about one in five dislocated manufacturing workers in these occupations regains employment in manufacturing in the same occupational cluster by the time of the next displaced worker survey, up to three years later. (For more on this, see Critical Shortages of Precision Machining and Industrial Maintenance Occupations in Pennsylvania's Manufacturing Sector by Keystone Research for the Pennsylvania Department of Labor and Industry.)
Declining wages and benefits ... little investment in skills and reliance on "disposable" workers ... no effective institutions that enable skilled manufacturing workers to find new jobs.
These three structural factors underlie the widespread reports of skills shortages in U.S. manufacturing. These structural factors also threaten the economic performance and innovative capacity of U.S. manufacturing employers going forward.
In light of these factors, unions, rather than being "the problem," could be the solution for U.S. manufacturing. To be seen as the solution, it may help manufacturing unions to borrow more from their union friends in the building trades.
Why building trades unions, you ask? To understand why, let's play Jeopardy briefly.
Ignoring right-wing and liberal elitist stereotypes for a moment, what might the question be if the answer is "building trades union"? How about: "What is a union that lifts regional wages and benefits, promotes employer investment in skills, and supports industrywide credentials and job-matching institutions?" Exactly the features needed by U.S. manufacturers to eliminate skills shortages, support more widespread adoption of good job strategies, and promote innovation.
In sum, I'm suggesting a union model that borrows heavily from building trade traditions might be viable in U.S. manufacturing going forward. Based on this, maybe the feature of the VW campaign that might be emphasized in another union vote is not "works council" — which is very unfamiliar in the United States — but a new apprenticeship program that VW has already implemented.
A UAW-VW partnership might be more effective than the company could be on its own to spread apprenticeship within the United States, first down the VW supply chain and to nearby lower-wage manufacturers struggling to find qualified workers. In addition, a union appeal based on investing in the skills of the next generation of manufacturing workers, and supporting employers in taking the good jobs "high road," might resonate more with workers than the more alien concept of "works councils."
Indeed, there is already an organic U.S. movement — the "maker movement" — that might help glue together, and provide grassroots leaders for, an upsurge of skill-based manufacturing unions.
"Makers" of the U.S. unite: You have nothing to lose but your low wages.