Labor unions have existed in the United States since the nation’s founding, with the concept first brought to America by the European immigrants who settled in the New World. Labor Unions are groups of workers who come together to collectively advocate for safer working conditions, higher compensation, better hours, and reasonable benefits. The Federal Society of Journeymen Cordwainers is regarded as the first labor union born in the US, officially forming in 1794. The formation of this union was the shot heard around the country, sparking unions across different industries and cities. As companies gained power throughout the 1800s, consolidating multiple types of tradespeople in single factories, unions began forming alliances amongst each other — unions of unions. These groups of workers fighting for their rights would become the working class’ greatest hedge against exploitation.
As union membership grew into a significant voting bloc, union members began pushing for legislation to protect their labor rights. The creation of the U.S. Department of Labor and federal civil rights legislation is partly due to the advocacy efforts of labor unions. Of these “unions of unions,” the AFL-CIO is by far the largest and one of the most influential. The organization traces its roots back to the formation of the AFL in 1886, and it’s still heavily engaged in political spending and lobbying today. Recently, the AFL-CIO has deployed yet another means of achieving large-scale progressive change: shareholder activism.
Labor unions use many techniques to advance their goals. One of the most well known techniques is striking, in which union members refuse to work until their demands are met. When employers treat workers like they’re disposable, strikes try to prove to them that they are not. What makes labor strikes so effective is a process called “collective bargaining” — which involves union members banding together in order to put more weight into their demands. Ultimately, collective bargaining plays a part in all union negotiations, which means it can also be used to accomplish things through shareholder activism.
In 2021, AFL-CIO submitted shareholder resolutions to several major companies — including Amazon, Activision Blizzard, and Electronic Arts — aiming to reform hiring practices in order to increase diversity in the workforce. These resolutions came fresh off the heels of the 2020 racial justice movement, while many institutions were reckoning with criticisms of racial discrimination, including the AFL-CIO.
The AFL-CIO’s proposal is similar to the “Rooney Rule” adopted by the NFL, which requires hiring managers to interview at least one non-white and non-male candidate for open positions. Unfortunately, these resolutions were rejected on the grounds that they constituted “micromanagement.” While the AFL-CIO was not able to pass the reform they were hoping for, they still made incremental progress by directly negotiating for other diversity policies after the shareholder proposals were dropped. This signaled that shareholder activism could be an effective tool for labor unions to use in conjunction with their existing collective bargaining methods.
In 2022, the AFL-CIO went after Amazon again, this time with a shareholder proposal aimed to address the unfair and unsafe conditions that factory workers must endure. In the statement, the AFL-CIO calls for a report on Amazon’s exceedingly high turnover rate, citing not only negative effects on the company’s worker acquisition costs, but also the fact that their “human capital management practices” are misaligned with Jeff Bezos’ goal to be the “Earth’s Best Employer.” This second attempt at shareholder activism errs on the side of caution — pushing the business case rather than just the social justice case.
As shareholder activism matures, we are likely to see more economic framings of social issues. Of course, labor unions exist to look after the best interests of their workers, but it’s important to keep in mind that the success of the employer is critical to a well-paid and well-benefited employee. While treating employees well is the right thing to do from a humanitarian standpoint, it’s the costs associated with a high turnover rate and the potential gains of happier, more loyal, and more productive employees that get the message across to the companies. As the old saying goes, money talks.
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‘Tis the season — the season where some of the largest public companies have their annual general meeting (AGM) and shareholders get to vote on important business decisions.
Let's take a look back at some of the things that happened during last year's AGM season.