Is Organized Labor A Decaying Business Model?


Many organizing groups would prefer to fund themselves through membership dues, if at all possible, but it is difficult to collect such funding from individuals at scale in the absence of automatic dues deduction.

Some organizing groups, such as the United Farm Workers UFW during its early period, have proven that it is possible to fund a movement while relying heavily on voluntary dues from low-income members. But the UFW also leaned heavily on in-kind donations and full-time long-term volunteers serving as staff, which reduced their overall costs.

Government funding used to play a larger role in funding organizing than it does today. Legislation enacted as part of President Lyndon B. Today, some organizing groups receive workforce development and training funds for services they offer to their members, if not for the organizing work itself. Organizing groups that are connected or affiliated with organized labor may also receive some financial support from central labor councils or specific unions, although the amount—and whether the funding is regular or ad hoc—varies widely.

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Moreover, unions are struggling to maintain their own power and resources at the moment, 11 so they are not a reliable solution to the funding problems of non-union organizing groups. The impediments organizing groups face when trying to raise earned revenue—whether charging for services or operating a business—are perhaps more complicated. The community organizing funding study found that, for the one-third of community organizing groups that generated earned revenue, such revenue encompassed The most significant source of funding for organizing groups is foundations.

The community organizing funding study found that community organizing groups depend fairly heavily on philanthropic support: As far back as , a study by J. Craig Jenkins and Abigail Halcli found that foundations gave only 1. Half the foundations interviewed agree. Moreover, foundations themselves are also increasingly encouraging groups to become more self-sufficient. Raising money from wealthy individuals rather than foundations has a different set of benefits and problems, but relies on the networks of individual staff, which may not include many people with a lot of wealth.

Many nonprofits outside of the organizing sector struggle to fund themselves, of course, but organizing groups may have a particularly difficult task. As already mentioned, organizing groups are heavily dependent on foundations, but they may be even more dependent on foundations than the typical nonprofit. This will be discussed in more depth in the next section of this report.

Is Organized Labor a Decaying Business Model?

This business model problem for organizing groups is not new—arguably, organizing groups rethink how to fund themselves at least every decade. As traditional union organizing struggles, however, the need for non-union organizing groups to be larger, more powerful, and more of a political force is only rising. For decades, unions have been the primary way that workers made their voices heard in the American political system—whether fighting for the Affordable Care Act, the minimum wage, or unemployment insurance. Moreover, they have played a crucial role in funding and fostering other forms of activism, including the civil rights movement.

Yet the percentage of workers in unions is declining, from Public sector unions were granted a brief reprieve in Friedrichs with the death of Justice Antonin Scalia, but most observers believe that another case like Friedrichs will come back to the Supreme Court at some point in the near future. At a time of such uncertainty for unions, the need for robust and powerful organizing outside of unions is even more stark.

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The complete manuscript examines the organized labor business model from the perspectives of the economic and political influences of. The traditional organized labor business model, as we have known it over the past century, is not sustainable in its present form, and will become less relevant, .

Non-union organizing has significant potential , 29 but it needs to be able to grow. In an effort to try to reduce their dependence on foundations, organizing groups have begun to become more creative in their revenue generation. See Tables 1 and 2 for a typology of organizing group efforts. Some of the revenue generation efforts are attempts to find a more productive way of getting revenue from activities that organizing groups have long engaged in—for example, membership dues or canvassing.

The community organizing group Kentuckians For The Commonwealth , for example, doubled its membership and tripled its grassroots fundraising between and using goals at every level of the organization and regular outreach to membership both through mailings and through one-on-one contact. They are now trying to increase their membership even more and expand their monthly sustainer donation program. A number of groups raise revenue by offering services to their members, with fees paid by members, non-members, companies, the government, or others. Certain groups have long provided some for-profit services as a core part of their model.

As the insurance market has changed, however, in part in response to the Affordable Care Act, the Freelancers Union has had to innovate, and is exploring a variety of other paid offerings for members, including new insurance programs. Other organizations offer services that are benefits to their members but may not serve a core function for the organization other than raising revenue. Some groups have been experimenting with a particularly wide range of methods to fit revenue generation into their missions.

NDWA has created Fair Care Labs , an innovation arm of the broader organization that is exploring a variety of ways to help domestic workers and raise revenue, ranging from developing standards for high-road companies to building direct partnerships with companies such as Care. It has also developed an online tool to let people create and customize contracts with their nannies; the program is not generating revenue yet but is set up to allow for that potential. The CIW created the Fair Food Program , a partnership among workers, growers, and major retail brands, to ensure that fruit and vegetables are grown under conditions that are fair to the workers.

Certain corporate buyers, as a part of their legally-binding agreements with the CIW, make an annual support payment to help fund a monitoring organization that oversees the implementation of a set of human rights standards on tomato, pepper, and strawberry farms along the East Coast.

A few other organizations serve this space but are perhaps more likely to work with an online organizing group than a worker center, including the investor New Media Ventures and accelerator Citizen Engagement Lab CEL. In many ways, the activities that these groups are doing —especially those that provide services to members—are the continuation of a trend that some successful political groups have done for many years.

Notably, however, the initiatives of these groups vary significantly in their scope and their potential to grow the organizing groups significantly. At a time when unions are declining and organizing groups need significant amounts of new resources, both types of initiatives are potentially valuable—but meaningfully different. Case Studies of Revenue-Raising by Organizing Groups To get a better sense of the wide range of ways that organizing groups are dealing with their business model problem, it is helpful to look at a few case studies in more depth. The Coalition of Immokalee Workers CIW has sometimes been held up as a model of what scalable forms of worker power may look like in the future.

Yet, there are at least two limitations to the financial sustainability provided by the Fair Food Program. First, the annual support payments, as currently structured, are not sufficient to sustain the growth of the program into new products and regions. The CIW is taking the need to raise sustainable revenue seriously, however. It is far from certain if the program will succeed, however, and a substantial amount of staff time has been invested in developing the label.

The CIW is also trying at least two other mechanisms to raise additional revenue. The first is a fairly traditional fundraising method—developing a base of monthly supporters.

Innovations in Fundraising: How Groups Are Responding

The CIW has a relatively large base of committed consumer activists; it will start by trying to convert them into monthly donors, then expand the pool to people who are not already committed allies. Interestingly, the CIW does not collect any form of membership dues, in part because it is simply outside of the culture of the organization—their membership is poor and that is not the kind of relationship the organization wants to have with its members.

The Labor Movement in the United States

Second, the CIW is exploring ways to partner with smaller grocery stores and restaurants to generate new sources of revenue. It does not make sense for smaller grocery stores coops, regional chains to participate in the Fair Food Program in the same way as larger chains, because they usually lack the market power to influence the conduct of their suppliers. Yet, they are in some ways natural allies to the Fair Food Program, since they often share a constituency of conscientious, ethically minded consumers.

The exact form of the partnership remains to be seen, but the CIW is exploring a number of creative methods. Restaurant Opportunities Centers United ROC-United historically has been funded primarily by foundations—about 95 percent of its budget comes from private grants.

The organization has actively been trying to become more self-sustaining, however, and is exploring a variety of ways to do so. Since many of their projects are in experimental stages, it remains to be seen how much revenue-generation potential they have. First, the organization collects membership dues, and provides various services to members who pay dues for example, training on front-of-the-house, fine-dining serving and bartending.

The services are funded by a mix of private foundation grants, membership dues, and government grants for workforce development, training, and safety. ROC-United is now also exploring services that can be offered to these constituencies for a fee—for example, wine-pairing classes for consumers, and employer training and technical assistance for restaurants that are interested in learning how to transition to higher wages and better benefits.

The organizing group believes that mobile applications may also hold revenue-generating possibilities, and has already created Top Server , a game that teaches fine-dining and wine-pairing skills, and the Diners Guide , which helps consumers identify high-road restaurants.

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Since tip theft is a serious issue in the industry, the organization is also exploring an application that would let consumers send tips directly to their servers, without credit card processing fees. Finally, ROC-United is expanding its legal program, which provides restaurant workers with legal resources and support. The program helps workers fight wage theft, but also provides some resources to ROC-United—attorneys pay ROC-United referral fees, and members may donate back some of their personal winnings to the organization.

The Industrial Areas Foundation IAF operates perhaps the widest range of large earned-income ventures of any organization interviewed for this report.

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The ventures are incorporated as separate organizations in which the organizing groups have governance roles. Some of the ventures make payments to the IAF organizing groups as a core cost of their work, in recognition of the crucial role of organizing in creating and advancing the ventures. Washington Interfaith Network have developed housing ventures that have built over six thousand affordable homes and apartments. The affordable housing work in New York has been particularly dramatic, and has been the subject of a fair amount of press attention. The Washington Interfaith network also developed the Community Purchasing Alliance CPA , an affiliated cooperative that aggregates the purchasing power of religious institutions, schools, and other nonprofits, enabling them to save money on energy, waste hauling, building maintenance, supplies, and solar installation.

CPA currently has participating institutions, and has helped individual members save thousands of dollars annually and sometimes far more. Yet, the IAF has had to learn, like many other organizing groups, just how hard it can be to run successful businesses. The cooperative, which was founded in , still requires some foundation support, although it expects to break even without foundation support soon. As a result, there are potential reputational costs to the IAF if the ventures do not succeed, which is part of why the IAF tries to be careful when selecting partners to operate them.

The IAF also has a strong membership dues culture. Because IAF affiliates are comprised of institutional members rather than individuals, however, it is somewhat easier for them to collect dues than it is for an organizing group composed of individuals. Given all the innovation in raising revenue for organizing, it is helpful to state outright the goals that fundraising for organizing may have.

Some of the goals for organizing groups are no doubt the same as those for any nonprofit, mission-driven organization.

Is Organized Labor a Decaying Business Model? by Chris Mosquera, published by Outskirts Press

In particular, funding should ideally be:. In addition, there are a number of goals that are particularly important for organizing groups. Ideally, fundraising efforts for organizing—and the money those efforts raise—should:. Some of these goals obviously work together. For example, an organizing group that fosters accountability by ensuring that a lot of its resources come from its members may also find that funding rewards accomplishment, since membership growth is likely to follow organizational success.

The nature of work has changed, and labor unions have failed to evolve with this change, just as dinosaurs became extinct because they failed to evolve with the climatic changes. The book examines the organized labor business model from economic and political influences of labor unions, relative to the domestic and global economy. If organized labor continues in the same manner it has for the last century, then the probability of relevant existence in the next century is very slim, and labor will become the one-century wonder.

Unions must accept the new paradigm, which is the nature of work is changing, and will continue to evolve. The economic forces of globalization are a major contributor to this evolution, as is the shift towards an internet based information society. The traditional blue collar labor business model is being replaced with robotics, technology, outsourcing, and globalization. Big labor is big business, but still stuck in the last century! Unions have failed to accept that the nature of work has changed. Business as usual, usually means that you are out of business.

Market forces are forcing economic changes, and unless labor adapts quickly, it will become irrelevant in the global market. Virtually every product and most services can be performed offshore in low wage countries, or outsourced to lower wage states, using eager low-wage non-union workers. The internet and technology, has created the global hour workday. When it is night in the western hemisphere, it is day in the eastern hemisphere and workers can perform back office functions in the east, ready for the workers in the west the next business day.

Telephone communications is seamlessly transferring calls to worldwide call centers, where cheerful representatives, will answer your concerns in the language you have chosen.