The Fortune (Mostly Non-Union) 500

Fortune magazine has come out with the latest edition of its list of the 500 largest publicly traded U.S. corporations, and all the attention will be paid to which companies rank higher or lower based on revenue. For the average person, another measure of the performance of those giant corporations may be more relevant: the extent to which they are depressing wage rates by getting rid of unions or continuing to keep them out of their operations.

One way to gauge this is to look at the new 10-K filings that companies have been issuing in recent weeks. Each of those documents—annual reports submitted to the U.S. Securities and Exchange Commission—has a section on employees in which companies have traditionally given an indication of the extent to which their workforce is unionized.

I decided to look at these sections for the top 50 on the new Fortune list. I found that, of that group, only five reported that a majority of their U.S. employees are covered by a collective bargaining agreement: General Motors, Ford, AT&T, Kroger and UPS. An additional half dozen reported that a minority of their U.S. workers have union protection: Verizon (40%), Boeing (36%), General Electric (15%), Costco (11%), AmerisourceBergen (4%) and Wellpoint (“a small portion”). Two companies—United Technologies and Marathon Oil—mention unions but don’t indicate the extent of their presence.

The remaining 35 companies (State Farm and Freddie Mac don’t file 10-Ks) make no reference to unions or declare they are union free. Home improvement retailer Lowe’s almost seems to be gloating when it says:

As of February 1, 2008, we employed approximately 160,000 full-time and 56,000 part-time employees, none of which are covered by collective bargaining agreements.  Management considers its relations with its employees to be good.

And, in the absence of a union, who’s going to tell them otherwise?

A few of the more than 30 companies in the group that don’t mention unions are known to engage in some collective bargaining (the big oil companies, for instance), but it’s interesting that they deem it so insignificant that it need not be mentioned in a document that is supposed to warn investors of potential risks such as work stoppages. Unfortunately, the SEC rule (Regulation S-K) governing what is supposed to go into 10-Ks is not very explicit about disclosure requirements relating to labor relations, but the general principle is that matters material to the financial prospects of the company have to be reported.

It appears that most big companies have reached the point that the union presence in their workforce is not material. That may allow investors and managers to breathe easier, but it explains a lot of what is wrong with the U.S. labor market.

Look here for information on one proposed remedy for declining union density—the Employee Free Choice Act.

Leave a Reply