Why the UAW lost

But the system broke down in the 1970s and ’80s under pressure from nonunion domestic firms (Wal-Mart), foreign companies (Toyota) and new technologies (Microsoft). Government deregulation of airlines, trucks and telecommunications intensified competition. “Rents” — the system’s linchpin — faded and vanished. Prodded by Wall Street, companies increasingly focused on cost-cutting to protect profits. Business became more hostile toward unions. Older, heavily unionized firms grew slowly or not at all; unions had little success in organizing new high-technology sectors.

The upshot: Private-sector unions lost their power to protect jobs and raise incomes. Unions were caught in a vise. If they pressed for higher wages and fringe benefits, they risked destroying jobs. Companies might lose sales to lower-cost rivals; or they might move to anti-union states or low-wage countries. Even protecting existing compensation levels became hard because — in extremis — companies might fail. On the other hand, if unions abandoned traditional bargaining goals, they might infuriate rank-and-file members and be accused of “selling out.”