From: Page 30, Scientific American - May 1999 (News and Analysis - Economics)
Why have American labor unions fared so poorly, whereas those in Scandinavia have fared so well? Part of the answer lies in the political weakness of American unions. In 1947 the U.S. Congress passed the Taft-Hartley Act, which, among other things, permits states to ban union shops if they enact right-to-work laws. The Landrum-Griffin Act of 1959 banned secondary boycotts, limited the right to picket and further strengthened the power of the states to restrict organizing. Even at the peak of President Lyndon Johnson's Great Society in the mid-1960s, when liberal Democrats dominated Congress, the AFL-CIO could not get the union-shop provision of Taft-Hartley repealed. The decline of manufacturing, where unions are traditionally strong, and the shift to service industries contributed to the weakening of unions, but the most dramatic defeat came in 1981, when President Ronald Reagan broke the air-traffic controllers' strike. By 1997 unions accounted for only 14 percent of wage and salary workers, down from 33 percent in 1953.
In contrast, unions in Sweden grew from about 60 percent to more than 90 percent of wage and salary workers in the same period. According to an analysis by Bruce Western of Princeton University of 18 countries in the Organization for Economic Cooperation and Development (OECD), Swedish workers have three things American workers lack. The first is political strength: unions were involved in founding the Social Democratic Party, which has been in power for more than 57 of the past 68 years. The second is national bargaining, in which union federations negotiate nationwide agreements with employer associations. Such negotiations tend to defuse employer opposition to the legitimacy of unions and give unions more say in national economic policy. The third element is the tradition of having unions administer unemployment insurance, which creates a bond between workers and unions and makes employer recruitment of strike-breakers from the unemployed more difficult. Through these means, Swedish unions have been able to insulate themselves from market forces that increase competition among workers and thus greatly increase their power relative to employers.
The three factors -- political influence, strong national bargaining and union administration of unemployment benefits -- have contributed substantially to union strength in OECD member countries, especially in the four strongest -- Sweden, Denmark, Finland and Norway. Of the four OECD members where labor is weakest -- Japan, Switzerland, the U.S. and France -- union political influence is low, national bargaining is weak or nonexistent, and governments (not unions) administer unemployment benefits.Overall, union membership in the industrial democracies reached a high in the late 1970s but has since declined as the new industrial, low-wage countries put pressure on unions in the older industrial nations. Swedish and Finnish unions, however, substantially increased their share of wage and salary workers in recent decades, apparently because centralized bargaining and administration of unemployment benefits gave them protection against globalization of markets.