Street Smart Economics | The scales of justice are weighted against workers
According to a recent Gallup poll, 71% of Americans approve of labor unions, the highest approval rating since 1965. And worker organizing has led to unionization of stores at a number of well-known, profitable companies. The problem is that many of these new unions have yet to win a first contract. One important reason: national companies like Starbucks, Amazon, REI and Trader Joe’s, as well as local companies like New Seasons and Voodoo Donuts, are taking advantage of shortcomings in US labor law to drag out the negotiating process until workers either give up or worker turnover undermines support for the union.
The record
Although government agencies do not keep track of how long it takes a union to successfully negotiate its first contract, a number of studies make clear it can take a very long time. For example, John-Paul Ferguson analyzed more than 8,000 successful union elections over the years 1999 and 2004. He found that in 44% of the cases, the newly created union failed to negotiate a contract during the first year of bargaining. And that first year is key — if negotiations drag on for more than a year, the company has the right to challenge the union’s right to represent the workforce.
John Kallas, Dongwoo Park and Rachel Aleks examined 226 successful National Labor Relations Board, or NLRB, representation elections that occurred in 2018. In 63% of the cases, the union was unable to negotiate a contract within the first year of bargaining. In fact, there was no contract after two years of bargaining in 43% of the cases. And, it is important to emphasize neither of these studies is able to provide information on how many unions gave up, never achieving a first contract.
Robert Combs took a different approach in his study of time to a first contract. He analyzed cases where a contract was actually negotiated, more specifically, 391 completed contracts over the years 2005 to 2022. He found it took an average of 465 days to first contract. Moreover, the average time grew for contracts signed in the later years of the study. It was over 500 days for contracts ratified from 2020 to 2022.
A bad deal for workers
This corporate strategy of delaying negotiations to thwart unionization is a violation of the National Labor Relations Act, the foundational statute governing private sector labor law. As the labor lawyer Jason Vazquez explains, “Section 8(a)(5) of the [National Labor Relations] Act mandates that an employer must ‘bargain collectively with the representative of his employees,’ which is further elaborated in Section 8(d) as a duty to ‘confer in good faith with respect to wages, hours, and other terms and conditions of employment.’”
However, as Vazquez adds: “Although that concept of good faith bargaining is central to the entire statutory framework, the Board’s conventional remedy for transgressions of it is a largely empty one: an administrative order instructing the employer to bargain, or, in other words, to do what it was already statutorily required to do.” Sadly, Vazquez’s characterization of NLRB actions is spot-on.
Take Starbucks, for example. Approximately 350 Starbucks stores have successfully unionized since late 2021. And yet, not one location has a first contract.
The company has used a variety of excuses to avoid bargaining. Because Starbucks has demanded that negotiations take place store-by-store, many Starbucks Workers United locals want hybrid store bargaining sessions to allow national union representatives to participate. Starbucks has refused to participate in such sessions.
The result, as Mallory Gruben and Don McIntosh write in the Northwest Labor Press, is that “around the country, when the two sides meet in person to bargain, Workers United starts a Zoom session, and Starbucks negotiators walk out.” And that includes stores in Portland and Eugene. The NLRB has taken a position on this standoff. In March 2023, a regional director dismissed the company’s objections, ruling that “the union’s insistence on hybrid bargaining was not unreasonable, burdensome, or in bad faith.”
The story is much the same even when the union agrees to the company’s demand for fully in-person bargaining. The experience of the union at a Starbucks store in Santa Cruz, California, is typical. The workers unionized the store in January 2022 and have yet to hold a bargaining session. As a member of the union negotiating team explains: “So they’ll send us a date, and we’ll try to schedule it, because our negotiating team is from different places. If we can get everybody on board, they’ll then come back and say that date won’t work, and we go through the whole process again.”
Not surprisingly, in April 2023, the NLRB issued a sweeping statement finding Starbucks guilty of multiple labor law violations. In particular, it found the company guilty of refusing to engage in good faith bargaining with its unions at 85 stores.
Amazon operates using a similar playbook. Workers at the company’s giant Staten Island warehouse, known as JFK8, voted to join the Amazon Labor Union (ALU) in April 2022. The ALU has repeatedly tried to begin contract talks with the company but to no avail. And in July 2023 the NLRB found Amazon in violation of the law because of its refusal to bargain with the union.
The law is clear — companies need to bargain in good faith with their unionized workforce. The NLRB has found Starbucks and Amazon in violation of that law. But since the NLRB refuses to take any action against the companies that have financial consequences, they freely ignore NLRB admonishments to stop doing what they are doing. No wonder the list of companies stonewalling unions is a long and growing one.
It doesn’t have to be this way
To some extent, the NLRB is toothless by choice. In 1970, the U.S. Court of Appeals for the D.C. Circuit reviewed an NLRB finding that Tiidee Products, a manufacturer of metal and plastic parts for mobile homes and trailers, had violated several sections of the NLRA, including the section requiring the company to engage in good faith negotiations with its recently formed union.
The Court confirmed the violations and responded positively to the union’s complaint that NLRB remedies were inadequate to change company behavior. The Court noted that “Effective redress for a statutory wrong should both compensate the party wronged and withhold from the wrongdoer the fruits of its violation” and encouraged the Board to pursue “make-whole” remedies that would require the company to pay its workers the likely additional wages and benefits they would have received if the company had followed the law.
Sadly, no Board, despite its changing membership over the years, has proven willing to pursue such a remedy. Jennifer Abruzzo, the current General Counsel of the NLRB, is hoping to change this. In July 2022, she urged the Board to develop the required methodology for a make-whole penalty and has called for its use in almost a dozen cases since. Unfortunately, the current Board has repeatedly chosen to delay consideration of her request to a “later date.” This is just one of many examples of how U.S. labor law fails to provide workers with the workplace protections they are supposed to enjoy.
Rather than wait to see how behind-the-scenes negotiations play out, unions and their supporters need to seize the moment. We need to actively pursue opportunities to educate community members about the ways in which U.S. labor law favors companies over workers. And then build on that effort to mount a public campaign to pressure Board members to adopt make-whole penalties to ensure good faith bargaining by companies. Finally, recognizing that there are limits to what changes in labor law — as important and needed as they are — can achieve, we must continue our efforts to build strong democratic and community-responsive unions and ever-larger labor-community solidarity campaigns in support of their organizing efforts.
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