Unions Focus on Fast Food Worker Battle

NEW YORK (TheStreet) -- As the Great Depression began to lift in the late 1930s, unions in heavy industry changed the face of the country. The turning point came in 1935 with the passage of the Wagner Act in Washington. 

The act legalized workers' right to unionize, bargain collectively and strike, and created the National Labor Relations Board to stop companies from interfering with union organizing. Workers' pay went up and workplace conditions improved.  But some business historians say the high wages and good working conditions won in those days later caused manufacturing to leave the U.S. for Asia.

In the wake of the Great Recession, the history of American unionization may be rewritten. Unions are targeting fast food and retail industries that may find it harder to move than auto plants did, but which may also prove impossible to organize. Plus, retail costs might rise substantially if companies need to pay higher wages.

How much of an impact will unions make in 2014 and beyond? That's what some of the country's biggest employers, from Wal-Mart  (WMT) and Target  (TGT) to McDonald's  (MCD) and Yum! Brands' (YUM) Kentucky Fried Chicken are wondering this holiday season.

Investors should be asking that question as well.

The Service Employees International Union, or SEIU, has been a primary mover in the new round of labor agitation. This week, the SEIU is backing actions by fast food workers in 100 cities aimed at raising the minimum wage. Their goal is a wage of $15 an hour.

Unions called their events "flash strikes" in that they're not permanent walk-outs, and union funds can make up the lost wages.


The SEIU is also backing Our Wal-Mart, which claims not to be a union at all but which organized Black Friday protests around the country last month. The United Food and Commercial Workers, or UFCW, also supports Our Wal-Mart. 

Union drives in the 1930s, 1940s and 1950s attracted large numbers of workers.  The relative success of unions like the United Auto Workers is well known.

The NLRB has largely prevented the recurrence of events like the 1937 Battle of the Overpass, in which Ford (F) organizers were beaten in front of the Ford Rouge plant. When the late Nelson Mandela toured the U.S. in 1990, he made a point of visiting a Ford plant and accepting a lifetime membership in the UAW, crediting unions with making the U.S. "a leader of the world."

Since the heyday of unions in the 1950s, membership has declined substantially.  According to the Bureau of Labor Statistics, only 6.6% of private-sector workers and 35.9% of public-sector workers now belong to a union.

Unionization remains a hot-button political issue, and both sides remember the history.

Employers resist union demands about wages and conditions.  Republicans, traditionally aligned with business interests, have responded by working to kill the NLRB by refusing to approve nominees to its board. Democrats, more sympathetic to unions, have pushed back.

President Obama made several recess appointments to fill the NLRB board without Senate approval.  But these appointments were ruled unconstitutional by an appeals court this summer. In November, Democrats used the "nuclear option" to eliminate the Senate filibuster on executive branch appointments.  That means that future NLRB appointments won't be held up.


Now the NLRB is functioning and it acknowledged some complaints against Wal-Mart last month.

Another big difference between today and 1937 may be in the media, whose reporting about the new round of union agitation is divided along partisan lines.

It's not just Fox protesting the latest round of labor agitation. So is most of the business press.  Fast food and Wal-Mart are ubiquitous in American life, so consumers are very interested in the outcome.

Public support for unions, while higher than it was during the crash of 2008, is still near historic lows with only 54% supporting union rights and 39%, close to an all-time high, opposing them.

With unemployment at 7% and labor markets starting to tighten, 2014 will be a hard year for big employers trying to hold the line on wages, and consumers looking for a cheap meal.

At the time of publication the author had no position in any of the stocks mentioned.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.