Introduction
The great recession represent a period of sharp economic decline observed experienced in the global markets. The great recession in the U.S occurred between December 2007 and June 2009. Despite the economic decline being an occasional recurrent incidence, the Great Recession was exception in terms of depth and duration. Since the Great Depression, the Great Recession has been determined to be the longest recession. It surpassed the recessions of 1973-1975 and 1981-1982, which lasted sixteen months. The Great Recession was severe both in decline in jobs, GDP and the average family incomes, which fell by 8%. The great recession crippled the U.S labor movement leading to financial crisis in the country. It began by a dramatic collapse of the US labor markets, which lead to loss of wealth. Loss of wealth in turn contributed to rapid drops in the general expenditure by consumers. The decline in financial markets and consumer consumption prompted the downfall of business investments. The US labor market resulted in rapid employment contraction and loss of 8.4 million jobs (Ohanian, 2017). The paper seeks to discuss the implications of the Great Recession of 2008 on U.S unionization. The 2008 Great Recession influenced adversely on the United States crippling its economy negatively in terms of unemployment rate, median household incomes, and the GDP (Rognlie, Shleifer & Simsek, 2018).
The Implications of the Great Recession of 2008 on U.S. Unionization
Recession Pushed Union Membership Down
The Great Recession resulted in low unionization rate in the labor market. The union membership in the workforce has declined rapidly. According to the Bureau of Labor Statistics, currently, approximately 15.3 million workers in the U.S are in unions. The low union membership has been attributed to dramatic losses of employment because of recession. The union members were excessively affected by the recession partly due to geographic concentration of losses in states that are deeply unionized. For instance, about a million workers in construction jobs lost their employment during the period of Great Recession. The loss of construction job definitely meant the company would lower the rate of unionization itself. Additionally, the loss of jobs by construction union workers is a reflection of the drop in the union membership number in the construction job to a 14.5%. Moreover, workers in manufacturing industries also lost jobs thereby causing the union workers to lose their employment disproportionately. In 2008, the union members in manufacturing industries was represented by 11.4%, however, the number dropped to 10.9 in 2009 because the manufacturing workers no longer had a stronghold union like before. The unionization rate in the private industry also declined to 7.2%. The fraction of information workers in unions also fell to 10.0% from 12.7% ( Kalleberg & Von Wachter, 2017).
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High unemployment Rate due to Low unionization
Absence of union power lead to an increased level of unemployment rate in the country. In addition, it contributed to decreased corporate profits and gross domestic product. Union organizations often play an important role in improving, elevating, and maintaining the economic growth of a nation. However, with the great depression, most unions were weakened thus could not protect workers from layoffs, which resulted in most people losing their jobs and employment. The rate of unemployment in the long-term skyrocketed thereby disrupting lives of millions of Americans. Workers served by stronger labor organizations obtain enhanced protection from layoffs ( Kalleberg & Von Wachter, 2017).
According to Kalleberg and Von Wachter (2017), d uring the great recession, most workers were faced with the challenge of predictability and variability of their working hours. The unpredictability generated negative implications for the security of the family such as loss of employment and the economy. Evidence indicate that approximately 7.5 trillion jobs were lost, which resulted in high unemployment rate in the U.S. The weakening of the labor market organizations contributed to the volatility because they could no longer play their role of protecting workers from such eventualities.
The great recession also resulted in decline in real estate. The securities drooped in value causing affluence of financial institutions and over-leveraged banks in the nation. An estimate of $16 trillion net worth of the American household in the stock market was lost. The net worth of household income declined by 18%. This marked the biggest loss of wealth in fifty years after the wealth accumulation data collected by the federal government ( Kalleberg & Von Wachter, 2017).
Low Unionization resulted in shifting the Bargaining Power to Employers
The financial crisis of the great recession has left the U.S job market in a state of weakness, which is heartbreaking. Since the late 2009, the real wage increases vanished. Reports from the Economic Policy Institute have pointed that since the great recession, the median hourly wages have lowered by 0.4. The wage increase are no longer guaranteed due to lack of security in the labor market. Many workers are pursuing very few jobs and this therefore weakens wages ( Elsby, Shin & Solon, 2016).
The Great Recession provided employers with more bargaining power, leaving workers at the mercy of the markets. With low availability of jobs, workers take on any job that they can get. Most employers have focused more on less paying jobs with minimal benefits. In addition, the employers are focusing on jobs that depend greatly on independent contractors, scanty wage increase, and controlled costs through layoffs. Economist hope that employers should do better and offer workers with stable employment and fringe benefits as well as real annual wage increase. However, evidence shows that a wage increase seems unlikely because employers are still experiencing the trauma caused by the Great Recession to let the money get out of hand lest they experience huge financial loss again. The lasting impact of the Great Recession on labor markets is what is at stake ultimately. Since economic declines are a recurrent occurrence and thus, most companies fear losing their finances ( Elsby, Shin & Solon, 2016).
Elsby, Shin and Solon (2016) states that h aving tighter markets would promote improvement of workers bargaining power in the labor market. Tighter markets refers to those environments that companies can offer younger workers with competing jobs, business are able to pay a little more wages to retain employers, and where an individual can quit their current job with a practical expectation to get another.
Great Recession has slowed down the Labor Market
The Great Recession has affected the labor market by slowing its recovery. The increased decline in the rate of unemployment is a reflection of the persistent weakness in the labor market. The recession discouraged workers and the number of people believing less in labor unions rose significantly. This resulted in decline in the rate of workers participation in the labor force. The number proportion of workers reporting to work part-time due to economic factors remains substantially high. The labor market has not only been slow in the aftermath of the Great Recession but the Capital investment has also been low. The anticipated drop in investment has promoted the significant decrease in the projected output. This is an indication of a lack of profitable opportunities for investments because the companies’ profits have picked up and businesses have extensive cash reserves. Furthermore, the measures of productivity have also dropped significantly (Rognlie, Shleifer & Simsek, 2018).
Americans no longer Support Unions
The financial crisis led to dramatic low public approval of unions, since it could not protect workers during the time of economic crisis. The Great Recession has created an apprehensive relationship between the American public and the labor unions especially those representing the employees in government workforce. Various perception exist regarding the reason why Americans no longer support labor unions. For instance, evidence shows that Americans have been unsure about labor unions due to the brief success of organized union at the end of World War II. It has been pointed out that the lack of support for labor union is not because of the financial crisis struggle but rather by the strategic errors of the unions themselves. The rise of a conservative political vision in the working class category has influenced the course of the labor movement in the American society. The labor movement caused many working class members never form a class-consciousness obtained from their union membership. The reason for this behavior was that the American workers are still doubtful of the labor unions. Other evidences reveal that many of the American workers lack understanding of their lives via union identity. For instance, workers in private industries have never had the experience of strong unionization. On the other hand, workers in public industries experience significant challenges to their growth since they require this association to develop the working class solidarity ( Kalleberg & Von Wachter, 2017).
Conclusion
The Great Recession affected negatively on the U.S economy. It had significant implications on the U.S unionization. For instance, it pushed down the union membership whereby there was substantial decline in the percentage of U.S workers especially in private sector that were willing to participate in the labor union membership. Low unionization contributed to high rate of unemployment in the U.S, shifted the bargaining power to employers, slowed down the labor market, and it caused Americans to lose faith in the labor unions thus most did not support the unions. Therefore, the Great Recession had negative impacts on the U.S unionization by resulting in the decline of union membership hence affecting the economy of the nation.
References
Elsby, M. W., Shin, D., & Solon, G. (2016). Wage adjustment in the Great Recession and other downturns: Evidence from the United States and Great Britain. Journal of Labor Economics , 34 (S1), S249-S291.
Kalleberg, A. L., & Von Wachter, T. M. (2017). The US Labor Market During and After the Great Recession: Continuities and Transformations. RSF .
Ohanian, L. E. (2017). The Great Recession in the Shadow of the Great Depression: A Review Essay on Hall of Mirrors: The Great Depression, the Great Recession, and the Uses and Misuses of History, by Barry Eichengreen. Journal of Economic Literature , 55 (4), 1583-1601.
Rognlie, M., Shleifer, A., & Simsek, A. (2018). Investment hangover and the great recession. American Economic Journal: Macroeconomics , 10 (2), 113-53.
