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Making a research on the following topic it is worth to identify what labor unions are, and why employees need them. Actually, every industry has labor or trade unions. A labor union can be defined as a commercial entity of workers or employees, which have a common interest in the process of their professional activities concerning their demands and requirements, such as wages, working hours, vacations, the conditions of employment, benefits, etc. (Braun, 2009). As a rule, labor unions are responsible for negotiating with employers. The formation of labor unions goes back to the industrial revolution; and it is a result of the labor movement, when workers and employees struggled for their rights. According to the research, labor unions help employers and employees to solve different conflicts, such as economic, political, ethic, and others. No industry can operate successfully without some well-established labor unions. The available research proves that in a new technological era, workers and employers are prone to build their professional relations on the basis of a better communication, interaction, problem solving and dialogue. 

Labor Unions` Challenges

The operation of labor unions was not always smooth and easy, because those that have power do not often want to satisfy the workers` needs and demands. From the research and information done on this issue, it has become clear that there are five most important challenges facing labor unions in five-ten years in the United States (Milberg & Winkler, 2009). They are as follows:

  • New technologies
  • Foreign direct investments
  • Financial markets
  • Multinational enterprises
  • Liberalization and deregulation

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According to the research, globalization is the main threat to labor unions. New technologies have emerged in all spheres of human life, and labor unions do not stay apart from this process. Globalizing the economy requires new methods and ways of designing and operating labor unions (Guscina, 2007). Firstly, many labor unions are not innovative enough, and they are operating like many years ago. They need to be changed according to new technologies and innovations in regards to the modern web-based software. Secondly, officials and union locals have to increase their interest to utilize the software in order to succeed in future. It is important for labor unions and their members to create some web-based services, such as the online journal and back up services in order to upload important documents and files, to keep a diary or to back up the certain files. This would give the opportunity to labor unions to create a secure online space, which is important in the process of their work. Thus, implementing web-based services, labor unions will have a better feedback from their members and will diminish the cases of losing important data and documents (Milberg & Winkler, 2009). Thirdly, many important documents are being kept for years, and it is hard to renew them in case they are lost. The Internet Grievance System (IGS) has been recently designed to improve the work of labor unions and to satisfy the sophisticated demands of their members and leaders. Though this system that is not new its software has overcome many revisions during the last years. That would give them the opportunity to improve labor unions` operations and results. Therefore, new technologies and innovation programs play an important role in the successful operation of labor unions nowadays and in the nearest future.

The second challenge effecting labor unions is the foreign direct investments. First of all, it should be mentioned that due to globalization of economy, the foreign direct investments may have a negative effect on the US labor unions (Braun, 2009). Workers overseas are doing a similar job for lower wages in the developing countries, thus, reducing the wages for the American citizens. The research asserts that workers in these countries have no right to unionize. This right has been fought for and won by the United States unionized workers in their long labor union struggle. There is an opinion that by the US foreign direct investments many union workers are hurt, because the workers in developing countries are not protected by their local labor unions. On the other hand, some scholars consider that the foreign direct investments rather help than hurt the American union members, because new job opportunities are being created. Thus, from this point of view, the foreign direct investments may create a competition according to which union members should be more innovative in creating new employment opportunities, where they can have higher wages than they used to have at their works they have lost. This fact should be taken into consideration in future with an aim to improve the labor unions` influence and operations.

Secondly, very often foreign direct investments are not internationally competitive. In the past, governments of developing countries tried to substitute the local production for import. The situation has been changed recently, when they have become eager to protect their national economy and prices for the foreign production being lower than for domestic (Braun, 2009). Thus, the labor unions` members are facing a challenge to be hurt by lowering their wages. To prevent this situation, it is important to make a competitive international direct investment in future. Thirdly, foreign direct investments may bring benefits to labor unions only, if they are well-planned and managed.

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Financial markets are the third challenge effecting labor unions over the five-ten years in the United States. One of the consequences of this is the fact that the labor union power is confronting some dramatic changes, which occur in the financial markets, as well as the whole economic environment. Secondly, financial markets generate some general conditions of the income distribution among labor union members that might lead to the unemployment and inflation. Labor unions have less power to satisfy their members` demands and needs. According to the research, labor unions have to be more sensitive to the changes in the domestic and international financial markets in order to improve their power in future (Milberg & Winkler, 2009). Thirdly, the members of national labor unions often cannot meet their objectives because of the globalized effects on financial markets.

Multinational enterprises are another threat for labor unions. First of all, many scholars concern that multinational corporations often avoid some labor negotiations (Guscina, 2007). Thus, they are simply moving the available job opportunities away to developing countries, where the labor costs are less than in the USA or any other developed countries. Today, many Americans are doubtful whether it is worth to export jobs and to sell them back in the domestic market. The first problem of the offshore outsourcing is challenging for labor unions, because they cannot take part in negotiations and actually cannot influence on different decisions. Secondly, labor unions in the countries with the repressive governments are usually obliged to negotiate contracts terms only, where the protection of workers and employees is minimal. Therefore, labor unions cannot have power to protect workers as they can do it in the domestic market. Thirdly, insourcing is also challenging for labor unions today, because many foreign corporations (mostly the foreign automakers) have built plants in the United States (Milberg & Winkler, 2009). For example, Toyota makes about one third of its profits in the American market. It is obvious that in future the multinational enterprises are likely to continue to expand, that is why labor unions are prone to figure out some new strategies and programs to protect the American workers` rights regardless in what country they are working.

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The fifth most important challenge facing labor unions in five-ten years in the United States is liberalization and deregulation. According to the research, globalization may put the pressure on labor unions, what can lead to deregulation and liberalization (Braun, 2009). The theoretical literature shows that labor unions react on deregulation and liberalization by reducing their power. The empirical research asserts that globalization affects labor market institutions, that often leads to deregulation and liberalization ((Milberg & Winkler, 2009). Relocation of labor markets encourages, therefore, deregulation and liberalization of labor unions, decreases their power and increases the earnings’ inequality of their members. Due to these negative effects, labor unions are losing their union members and power. Milberg & Winkler (2009) argue that the international competition is an important factor explaining deregulation and liberalization of the U.S. labor unions today. Thus, there is a threat that in the nearest future labor unions may turn from protected and regulated institutions into liberal and deregulated organizations. That is why in order to improve the situation, the government and labor union professionals must investigate the proper methods and programs with the aim to prevent the negative effects of globalization.


According to the research, it has become obvious that labor unions have been facing many problems during the last decades that might trigger many changes in future. Globalization and international competition decline the role of labor unions. Government authorities and labor union leaders have to be more sensitive to the changes and to protect union members in the current technological environment, where the foreign direct investments, financial markets, multinational enterprises and liberalization and deregulation of labor unions may lead to the lack of their power. Workers and employees have to be protected at their workplaces now and in the nearest future. The fact that labor unions have been shedding the members during 5-10 years is the most telling evidence that the organized labor in the USA is losing its power. Only the professional approach to this problem can change the situation to better.

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