What Biden’s Union Push Means For CEOs

When Amazon warehouse employees in Alabama overwhelmingly voted down an April unionization vote, it seemed nothing more than a sign of the times. Unions have almost never had less appeal among private-sector workers than they have now.

In 1945, an estimated 35% of U.S. workers belonged to a union. By 2020, just 6.3% of wage and salary earners in the private sector were members, according to the U.S. Bureau of Labor Statistics. Except in a few industries, it’s the rare CEO today who deals with unions.

But that’s about to change if the White House has anything to say about it. President Joe Biden has made it very clear that he intends to aggressively honor his campaign promise to be “the strongest labor president you have ever had.” And then some.

Biden signaled his intent within hours of his inauguration, demanding the resignation of Trump-appointed NLRB General Counsel Peter Robb and Deputy General Counsel Alice Stock (the general counsels really run things at the NLRB, and their terms extended beyond the start of the new administration). When they refused to resign, Biden fired both—an almost unprecedented move for a new administration—and named Jennifer Abruzzo to the top post. Abruzzo was most recently legal counsel for the Communication Workers of America union, which gave 98.5% of its political donations to Democrats in 2020.

Biden then appointed Marty Walsh, former president of the Boston Building and Construction Trades Council, as his Secretary of Labor. Among other things, Walsh, who served as the labor-friendly mayor of Boston, has signaled he will look to change the relationship companies have with gig workers by providing them access to consistent wages, paid sick time and access to health care.

Perhaps most significantly, Biden also set up a White House Task Force to “mobilize the federal government’s policies, programs, and practices to empower workers to organize and successfully bargain with their employers,” according to a White House statement.

Signaling the group’s importance, Vice President Harris was tapped to run the operation. Members include 13 cabinet officials and various agency heads. “The President and Vice President believe that the decline of union membership is contributing to serious societal and economic problems in our country,” says the White House.

Union influence on Biden Administration policy isn’t always transparent. With documents obtained through a Freedom of Information Request, The New York Post found that the supposedly apolitical Centers for Disease Control (CDC) engaged in intimate consultations with and adopted verbatim language provided to it by the powerful American Federation of Teachers Union regarding school re-openings. “Thank you again for Friday’s rich discussion about forthcoming CDC guidance and for your openness to the suggestions made by our president, Randi Weingarten, and the AFT,” wrote Kelly Trautner, AFT’s senior director for health issues in an email to CDC.

Translation: CEOs should expect a new wave of aggressive union-friendly activity, including:

• A push to reclassify contractors and gig workers to upgraded employee status’, with increased benefits (and costs)
• Increased funding and enforcement of OSHA rules and regulations
• Attempts to organize new industries and professions
• Increased unionization of government agencies
• Preferences for union employers in government contracts
• Rollbacks on employee confidentiality restrictions

For CEOs, this isn’t about wages. This is about agility. In a dynamic, fast-changing economy, unionized organizations and industries can be sclerotic and slow to change and evolve—problematic for both companies and workers. The flexibility afforded by low rates of unionization undoubtedly contributed to the U.S.’s relatively fast recovery from the 2007-09 recession—at least compared to our union-friendly European counterparts—which was good for everyone who participated in the economy (companies will hire faster when they know they can downsize quickly if needed).

For individual employers, unionization is often accompanied by diminished trust and a poisoned relationship between employers and employees, given their newly “adversarial” relationship. Strict union rules on compensation frequently reduce productivity by reducing incentives for innovation or efficiency. Unionization may also make it difficult to recruit and retain motivated employees who value being rewarded based on individual performance or productivity.

Research also shows that union operations cost 25-35% more than non-union operations even before accounting for union-negotiated increases in wages and benefits due to expenses related to grievances, regulatory compliance issues, legal costs, coverage to pay for employees attending to union business and more.

Signaling his support of (and from) unions, President Biden officially launched his presidential campaign from a union hall in Pennsylvania. The love was returned, with $27.5 million in labor union political dollars flowing to his campaign (compared to less than $360,000 that went to the incumbent, Trump). Keep in mind that Biden hadn’t been a particularly strong union advocate in the Senate nor as Vice President. But union leaders were betting he would be better than Trump on their issues.

Unions couldn’t be happier as the Biden Administration is paying back the support it received from them in a big way. The new Administration is not merely throwing unions a lifeline, but firmly putting its thumb on their side of the scale. President Biden has declared unions a public good deserving of broad governmental support. So far, he’s been as good as his word.