So Long, AFL-CIO. Now What?

The unions that split will focus on service jobs that can't easily be shipped overseas

When two of the country's largest unions made history in Chicago on July 25 by breaking with the AFL-CIO, they were voting with their feet. The two unions, the Service Employees International Union (SEIU) and the Teamsters, are part of a six-union dissident group that has staked its future on the idea that recruitment is the key to survival.

The question the dramatic rupture raises is whether the dissidents have a better way than their foes to reverse the decades-long slide that has cut union rolls to just 12.5% of the U.S. workforce. SEIU President Andrew L. Stern and his compatriots think they do. Most manufacturing unions, such as those in autos and steel, have no real plans for coping with globalization. Advantage one for Stern & Co.: Most of the dissident unions operate primarily in services -- the 70% or so of the economy in which jobs can't easily be sent abroad.

Within this world, opportunities for organizing are plentiful. Stern's goal is to focus on the fast-growing, low-wage service jobs that are filled by the bulk of the country's working poor. If labor can recruit enough of these workers, it could lift their wages and benefits in much the way unions brought factory workers into the middle class in the 1930s. To do so, Stern argues that labor needs to merge into a dozen or so powerhouse unions capable of taking on the giant multinationals that dominate many of these sectors. "We need to set high standards in whole industries," Stern said when he announced the split-up.

He has managed to bulk up the SEIU to 1.8 million members by recruiting just these kinds of employees. So far, though, most of his growth has come from easy-to-enroll public workers, such as home-care employees. It's by no means clear that Stern and the other five dissident unions, all poised to quit the AFL-CIO, can fare better in the private sector.


Still, they aim to try. One of the largest campaigns involves a joint effort against France's Sodexho Alliance (SDX ), Britain's Compass Group, and Philadelphia-based Aramark (RMK ), by the SEIU and UNITE HERE, which represents needletrades and hotel workers. All three companies are global service giants with a total of more than 1 million workers engaged in institutional food preparation and other service work that mostly can't be sent abroad. The two unions, which already represent workers at the three companies, have been trying to persuade management to remain neutral during new recruitment drives. The unions are close to deals with all three that will likely add tens of thousands of new members.

The dissidents' true test will come at companies such as Cincinnati-based Cintas Corp. (CTAS ), which has few existing relationships with labor and wants to keep it that way. UNITE HERE has mounted an aggressive campaign to sign up the $3-billion-a-year uniform company's 20,000 eligible workers. So far, Cintas hasn't given an inch. UNITE HERE has "done whatever they can to hurt the company," says Cintas Vice-Chairman Robert J. Kohlhepp.

As U.S. union membership has declined, economic mobility has stagnated for many on the bottom. The breakaway unions hope to put a dent in that trend, but the odds against them are steep.

By Aaron Bernstein, with Joseph Weber, in Chicago

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