The case for unions.

• Author: Reilly, Sean
• Position: Labor movement reform - Cover Story

When Safeway told its northern Californian workers earlier this year that it was "redefining"--read "narrowing"--health benefits, the grocery store giant pleaded poverty: Competition from discounters and superstores was forcing it to cut costs.

So imagine the employees' surprise when the supermarket chain announced that its first-quarter profits were 48 percent higher than the preceding year, and that it planned to invest more than $400 million in remodeling old stores and building new ones. Safeway's stock, the company boasted, had soared 51 percent in 1994. Steven Burd, the company's CEO, had taken home a cool $1.26 million, not including his stock options and benefits.

Fortunately, Safeway's workers had someone on their side: the United Food and Commercial Workers Union (UFCW). Sixteen thousand clerks, baggers, and meat-cutters promptly went on strike. About a week later, Safeway agreed to extend their old contract for three years--not a dramatic improvement for the workers, but at least not a retreat.

Such stories of corporate attempts to redistribute wealth in management's favor are all too common these days, but union victories on behalf of the working man are rare. Once a pillar of American industry, labor unions now face irrelevance, if not extinction. From their peak in the fifties, when they signed up roughly one in three American workers, unions now represent only one in six. Not counting public sector employees, the figure is closer to one in 10. If private sector unions continue to decline at the present rate, they will represent less than 5 percent of the workforce by 2005.

That's not just a statistic; that's a potential disaster. With workers' wages falling, benefits disappearing, and safety protections eroding, a viable labor movement is a vital antidote. What Adam Smith wrote two centuries ago in The Wealth of Nations holds true today: "The workers desire to get as much as possible, the masters to give as little as possible. It is not, however, difficult to foresee which of the two parties must, upon all ordinary occasions, have the advantage in the dispute."

Certainly, unions are not a magic bullet for workers' ills. At times they've done more harm than good. Government employee unions have stalled reform by protecting the jobs of poor performers, while many private sector unions have deservedly acquired reputations for greed and corruption. But at their best, unions are one of the few forces left in this country still fighting for a better life for workers.

A Hard Rain's Gonna Fall

Statistics paint a clear picture: American workers are getting a smaller piece of the economic pie. Between 1929 and 1973, incomes for American workers rose an average of 2 percent a year. Since then, they've stagnated, or worse; for the backbone of the blue-collar work force--men with a high school degree or less--wages have fallen at least 20 percent in real terms over the past two decades. Unless it is raised, next year the minimum wage will reach a 40-year low (in real terms). And nearly 20 percent of American workers take home paychecks that leave them below the poverty line.

Benefits are also under siege. The share of workers with employer-paid pension plans declined roughly 25 percent from 1979 to 1988. In the same period, the share of workers under 65 with employer-paid health care dropped from 63 to 56 percent.

That's partly because shifting workers from full- to part-time status, or relying on temporary workers, has become a popular way to cut costs. Temps and part-timers earn 20 to 40 percent less than full-timers for the same work. In fact, a growing number of service industries rely on part-timers as the bulk of their workforce. The largest private employer in the country isn't General Electric or Wal-Mart, it's a temporary agency called Manpower, Inc.

First Union Bank, which operates 117 Washington-area branches, recently announced it was shifting three-fifths of its tellers from full- to part-time status to save customers money, according to a bank spokesperson. Part-time work isn't inherently bad--in fact, for many families it allows for needed flexibility. But when a shift to part-time work means a reduction in benefits--and there's no national health care system to pick up the slack--the change can be catastrophic. And too often, shifts are justified by the need for cost-cutting, even as CEO salaries are going through the roof. First Union's CEO earned more than $1.7 million in 1994.

Like workers' wages, working conditions in many...