Financialization and the Decline of Organized Labor: A Study of 18 Advanced Capitalist Countries, 1970–2012

Abstract

Is financialization contributing to the slow decline of union density that is occurring across most advanced capitalist countries? Combining insights from literatures on financialization, corporate governance, and comparative political economy, we argue that the growing dominance of finance within advanced capitalism weakens unions through several channels, and plays an important but underappreciated role in the deunionization of national workforces. Using data from 18 advanced capitalist countries over several decades, this assertion is tested against the literature’s existing explanations for declining union density. Results from panel regression models suggest that financialization is an important cause of union decline, but that its particular effects vary between different types of advanced capitalism. The study concludes by arguing that financialization creates new interconnections between firms and finance capital, resulting in business practices that ultimately put downward pressure on union densities across advanced capitalist countries.

Financialization and union decline in Canada: The influence on sectors and core industries

“…These findings can be placed within the broader research context of how financialization is contributing to rising income inequality (Lin and Tomaskovic-Devey, 2013;Roberts and Kwon, 2017;Volscho and Kelly, 2012). But also how financialization is a key driver of union decline across countries (Darcillon, 2015;Kollmeyer and Peters, 2019;Meyer, 2017). In line with these studies, we claim this occurs because new financial ownership structures and short-term investor interests now routinely pressure managers to reduce labour costs, and because firm's growing resort to a variety of financial engineering strategies leads to the restructuring of workforces in ways that undermine unionized employment.…”

“…The aggressive nature of financialized labour relations can be seen in recent waves of corporate downsizing and outsourcing (Appelbaum, 2017; Jung, 2014): the increased use of part-time and temporary employees (Slaughter, 2007) and how firms have sought concessions in employer friendly collective bargaining agreements (Darcillon, 2015). Therefore, it can be hypothesized that the decline of union density is not only attributable to shifts in economic structure, trade or technological change – which are typical explanations of union decline – but also to the short-term interests of financial capital that have profoundly recast corporate priorities and employment relations (Cushen and Thompson, 2016; Kollmeyer and Peters, 2019).…”

“…The growth of finance has also redistributed rewards to those working in the financial sectors and especially to the wealthiest of capital owners (Piketty, 2014). Just as notable has been the impacts on labour markets and labour market institutions (Darcillon, 2015; Meyer, 2017), with growing financialization contributing to the decline of the wage share (Stockhammer, 2017), the erosion of worker solidarity (Grady and Simms, 2018), as well as the decline of union density (Cushen and Thompson, 2016; Kollmeyer, 2018; Kollmeyer and Peters, 2019; Peters, 2011). However, while this literature has clearly established that financialization is a key driver of inequality, we still lack an understanding of how financialization differs across national economies, and how it impacts employment relations across different sectors.…”

Combating Inequality: The Between- and Within-Group Effects of Unionization on Earnings for People with Different Disabilities

“…Unions are especially important for workers from vulnerable groups who often lack voice in the labor market (Freeman and Medoff 1984). Yet, their efforts are filtered through specific institutional arrangements, including policies working against them (Kollmeyer and Peters 2019). Variability in unions' positive influences must be understood against a backdrop of political efforts threatening organized labor (Bound and Dresser 1999;Blanchflower 2007;Freeman 1993;Milkman 2007;Mishel 2012;Western and Rosenfeld 2011;Rosenfeld and Kleykamp 2012;Telles and Ortiz 2008).…”

Power at a distance: Organizational power across boundaries

“…In an analysis of non‐financial firms in the United States, Lin () finds that the more companies were devoted to financial activities (e.g., making financial investments or payments to investors) the more their workforces shrunk, with an especially “devastating effect on blue‐collar production workers” (p. 981). Looking across countries, Kollmeyer and Peters () find that financialization has been associated with declining unionization in OECD countries. They argue that union decline is linked to financialization because of pressures on managers to maximize shareholder value and the mobility of capital away from unionized sectors.…”