Are unions actually growing? | This Week in Business

This Week in Business is our weekly recap column, a collection of stats and quotes from recent stories presented with a dash of opinion (sometimes more than a dash) and intended to shed light on various trends. Check every Friday for a new entry.

The workers of IGN this week announced plans to unionize, with 87% of eligible employees having already signed union authorization cards.

It's the latest example of the unionization trend that's sweeping the US. Or is it?

STAT | 6% - The percentage of private sector workers in the US who were members of a union in 2023, according to the Bureau of Labor Statistics. That's a figure that has steadily declined from 16.8% in 1983, the earliest year for which the BLS has such statistics.

Well, at least people are more pro-union these days for sure.

STAT | 57% - The portion of respondents in GDC's 2024 State of the Game Industry survey who supported unionization.

STAT | 56% - The portion of respondents in the IGDA's 2014 Developer Satisfaction Survey who supported unionization.

There's a little bit of apples and oranges there in that the IGDA specifically asked about forming national unions of game developers while the GDC question was just about whether they thought workers in games should unionize. And even within the GDC's annual polls, the number bounces around within a few percentage points each year.

But it sure does seem like unions are growing these days, doesn't it?

Part of that is no doubt a matter of perspective, because we're seeing things from the view of the games industry, where we've gone from zero unions in the US to a scattering of outfits representing developers in Zenimax, Activision Blizzard, Sega, and a number of other operations. The number of people represented by those unions still isn't massive, but it's a start.

Another part is likely that the gaming media is also increasingly unionized, with IGN joining the staff of Polygon and Kotaku (and the many outlets their parent companies own) in unionizing. Media workers of the past couple decades tend to be well-acquainted with the perils of exploitive management and precarious employment, so I don't think it's a stretch to suggest the coverage of the unionization push has been shaped and amplified in part by people who keenly understand how desperately it is needed.

(This is not a bad thing, incidentally; even journalists aiming to be "objective" need to draw a line between good and bad at some point or they actively tip the scales in favor of the latter.)

The above might explain why someone would see unionization as a growing trend in gaming specifically, but it does a little less to explain why people would think unions in general have gained traction in the US when the numbers say that's not the case.

For help answering that, we reached out to Suresh Naidu, a professor of economics at Columbia who has previously written about the US labor movement and its role in addressing inequality .

"I think COVID really changed something with people's relationship to work. A lot of people felt abandoned by their employers."Suresh Naidu

"I think COVID really changed something with people's relationship to work," Naidu says. "A lot of people felt abandoned by their employers. And I think even before that, with Bernie Sanders, the idea that unions were a good thing was rising among millennials and gaining traction. COVID really set it off, and subsequently, the super-tight labor market and the Biden administration pushing unions in some directions created a perfect storm where the idea was in the air."

So if the idea has been in the air, why isn't that translating to increased union membership yet? Naidu says a big part of it is the way unions form in the US, where the National Labor Relations Board needs the pro-unionization workers to win an election in their workplace, one that employers will often contest vigorously.

"Often the biggest obstacles to unions winning is that employers will fire anyone that expresses some interest in unionizing," he says.

While that isn't actually legal, in a world where jobs are as precarious as ours, it's not overly difficult for an employer to fabricate a reason for dismissal. And it's not like blatantly firing people is the only way to put a thumb on the scale.

When Raven Software QA pushed for a union election, Activision Blizzard raised its minimum hourly pay for all non-unionizing QA staff. It also sent managers and security to monitor an employee walkout, and threatened to block employees from internal communication platforms where they were talking about their pay, hours, and working conditions. The NLRB found merit in complaints about all those union-busting tactics.

"So it's just total trench warfare to try to organize a new shop," Naidu says. "But with COVID labor shortages, that option wasn't there as much. That's been one of the thing's going into this; it's a lot harder for employers to fire workers that are interested in unionizing."

Given the abundant layoffs across the industry for the last year and change, it doesn't look like we can expect a tight labor market to drive unionization in the near-term. So what could actually move the needle and push that unionization number up?

The good news is that historically, Naidu can point to three different factors that have helped unions grow. The bad news is that the word "historically" is carrying an awful lot of weight there.

First, there's federal labor law. In the 1930s, Naidu says The Wagner Act established the National Labor Relations Board and made union organizing legal, which helped the situation, to say the least. While Naidu says the law has been "gutted" ever since, it obviously was a key driver for unions almost a century ago.

Second, there was World War II and reducing employer hostility to unions. Naidu says in the 1940s, unions made significant gains because government contracts required union protections, and the government was spending so much on the war effort that companies couldn't afford to leave that much money on the table.

Short of sweeping and forceful new legislation coming from a historically inactive Congress or a devastating war, what could actually goose the unionization rate? That's the third thing, and it's a little more manageable in scope.

"The first ingredient to getting a union in any given workplace is you need a collection of workers attached enough to the workplace and to each other to be able to convince 50-75% of their co-workers that organizing a union is a good thing," Naidu says. "That kind of stable workforce is almost a prerequisite."

Uh-huh. So how's the game industry at that whole "stable workforce" thing?

STAT | 23% - The portion of developers who had three-to-five employers in the past five years, according to the IGDA's 2021 Developer Satisfaction Survey.

That's not helpful, I take it?

"It does hurt," Naidu confirms. "I do think it does make it harder if you have a high level of turnover. It doesn't make it impossible, but it makes it an uphill slog because you kind of need a core organizing committee of people willing to ride through the whole campaign, going from getting 30% of people to sign a petition to even start the election process, then you need to win 50% + 1 of that [in the election], and the employer is fighting you the whole way. It's hard to do that when workers are constantly churning through the company."

In a sense, anti-union employers are incentivized to treat their employees worse

The awful irony here is that the things you would expect are most likely to drive developers to unionize – low pay, long hours/crunch, poor working conditions, frequent layoffs – are all things that undermine the stability and energy employees need to organize their workplaces. So in a sense, anti-union employers are incentivized to treat their employees worse.

"Absolutely that happens," Naidu says. "You can imagine if you make the job crappy – particularly for workers that do have other options – you don't have to worry about a union because they'll just bounce and go to another employer.

"But that said, as you get some tenure inside of a company, there are particular code bases and particular practices that make an employee with experience in the company valuable, so too much of that turnover is pretty costly for a company. So I think they'll do it, but they can't do it all the way because it will remove the returns of having an experienced workforce."

There are also other potentially complicating factors at work here, such as the growth of remote work. We suggest that having people's daily interactions moderated exclusively through computers could be detrimental to the sort of social ties that are key to labor organizing forming effectively, which would make it a little odd how many employers are pushing return-to-office policies.

Naidu responds by saying its too early to know precisely what impact remote work is having on labor organizing, but he counters that Slack is "an enormously powerful organizing tool when you can protect it from being monitored by employers."

"I think worker interactions in online spaces might be able to substitute for meeting in person," he says. "I also think the subject of who is able to work remote and ensuring that's a workplace amenity shared equitably creates a new demand for what unions can do."

That's the sort of policy that unions can negotiate in a contract, Naidu says.

Bringing things back around to the IGN unionization and what unions can actually do for members, Naidu notes that unions like Newsguild-CWA (which IGN is unionizing with) have struck deals mandating "massive" severance packages in the case of layoffs to disincentivize them as a strategic move.

That strategy could also be expanded to require giving laid off employees shares, he says, so a significant layoff could dilute the value of shares and offset any spike in share price from the layoff news.

He also suggests American unions could adopt hour-sharing agreements more common in Germany. Instead of laying off people, such agreements could see the company keep everyone, but only work them for three days a week instead of the full five, ensuring they retain some income and have the ability to supplement it in other ways with their extra days off.

The rest of the week in review

QUOTE | "A small equity stake" – Bob Iger, describing the portion of Epic Games that Disney received in exchange for $1.5 billion, which he described as "Disney's biggest entry ever into the world of games."

STAT | 4 – The number of times Epic has raised at least $1 billion by selling off equity in the company since 2020. Despite this repeated ten-figure fundraising and Epic already having sold off 40% of the company more than a decade ago, Tim Sweeney continues to have a controlling stake in the company.

QUOTE | "For a while now, we've been spending way more money than we earn, investing in the next evolution of Epic and growing Fortnite as a metaverse-inspired ecosystem for creators." – Sweeney last September, explaining that he had to layoff more than 800 people because the company went overboard chasing its vision of the metaverse instead of focusing on running a sustainable business.

Now do we think Epic is going to use this $1.5 billion sustainably, or is it going to spend all of it (and then some) on this "all-new games and entertainment universe" merging Disney and Fortnite? Because I don't want to have to write about another 800 Epic developers' lives being upended.

STAT | 44 – The number of employees let go from Hidden Path Entertainment this week.

STAT | 44 – The number of employees in this Hidden Path Entertainment staff picture who aren't sitting in the front row.

STAT | 3 – The number of layoff stories we had this week, with Hidden Path Entertainment joined by Visual Concepts Austin and Crop Circle Games in cutting staff.

STAT | 7 – The number of investment and acquisition stories we had this week, with people putting money into Epic Games, Nitro Games, Stoke Games, and Eggspace Entertainment, and the acquisitions of Jagex, Acquire and Wangyuan Shengtang.

Acquisitions often aren't good news and I don't pretend this in any way balances out what people are going through. But it's good to remember despite the drumbeat of layoff stories that there are still a whole lot of people interested in investing in games.

And since it's financial reports season, it's also worth noting there are still a whole lot of people interested in spending their own money on games.

STAT | 7 - The number of major gaming companies reporting growing sales and/or bookings on a quarterly and/or full-year basis this week, including Nintendo, Sega, Krafton, Square Enix, Ubisoft, Nexon, and Roblox, which maybe we should look at a little more closely.

STAT | $1.16 billion – Despite posting record revenues of $2.8 billion, Roblox reported a net loss of $1.16 billion for its 2023 fiscal year, continuing a string of losses going back to the company's founding in 2004.

QUOTE | "We report net losses despite generating positive operating cash flows in part because the vast majority of our bookings are deferred and recognized into revenue over the average lifetime of a paying user - which was 28 months in Q4 2023 - while the majority of our expenses are recognized during the period incurred. Therefore, we expect to continue to report net losses for the foreseeable future even as we anticipate generating net cash provided by operating activities." – Roblox explains in its shareholder letter why it's not a problem to be losing more money than it's bringing in.

After all, if you add last year's $742 million in deferred revenue to the bottom line, it would have only lost about $417 million! And if you do the same for its 2024 guidance, it only winds up losing between $473 million and $548 million, so everything's fine, right? Just fine.

STAT | $199 million – Roblox's personnel costs in the fourth quarter, excluding stock-based compensation, according to its supplemental materials release.

STAT | $251 million – Roblox's stock-based compensation expense in the fourth quarter.

I don't expect that's evenly distributed throughout the company, but I would be a little hesitant to take more than half of my pay in shares for a company that was founded 20 years ago, has never had a profitable quarter, and doesn't seem terribly interested in changing that anytime soon. Maybe they're right though and this is totally fine and will never become a problem because they will keep growing revenues infinitely forever and ever.

Of course, given their goal of having one billion daily active users and their current daily active user count of not quite 72 million, they clearly feel there's a lot of runway left before they hit anything approaching a plateau. To put that in perspective, one billion daily active users is like one out of every eight people in the world playing Roblox on any given day, about half the daily active user base Facebook has, or almost four times what Elon Musk claimed Twitter had in November of 2022.

I would say "Good luck with that," but given the abundance of valid criticisms with the platform, I wouldn't really mean it.

QUOTE | "I was in college working at this café I really hated and my friend just happened to dare me because she knew I hated that place. Like, 'Hey I dare you to spend $300 and take this voice over class with me. Would you do it?'" - In one of our Black Voices Progress Report feautres, voice actress Danielle McRae explains what pushed her to start a career in voice work that has seen her appear in World of Warcraft, League of Legends, and Final Fantasy 7 Remake.

QUOTE | "You have to get used to not really knowing who has the same level of comfort around you as others. And there are a lot of people who think they're comfortable around you, but their actions are showing that they treat you slightly differently than people who don't look like you, while many other white people in the industry… I don't want to say they don't see colour, but they're far more comfortable." - Naughty Dog senior artist Del Walker says being Black in games not only requires you to get comfortable being "the other," but to gauge how comfortable others are with you in that role as well.

QUOTE | "It's really not something that we're talking about right now. It's still in the process." - In an outtake of our chat with Take-Two CEO Strauss Zelnick about the company's latest results, he responds to our question about how Zynga's first blockchain game, Sugartown, has been doing since its launch last August.

I know that's a complete non-answer that tells us literally nothing about the game's performance, but I will choose to read plenty into his reluctance to even vaguely address it, thank you very much.

QUOTE | "This is the final post in this thread. Any other posts made in this thread by similar accounts may be malicious actors. Please always verify you are interacting with official Sugartown accounts before taking any actions." - A disclaimer post the Sugartown X/Twitter account has posted more than 100 times since July, because blockchain gaming is a super cool new frontier of video game fun and not at all irreparably saturated with frauds and scams.

QUOTE | "We were looking to create fantasy languages designed for the needs of the game. There was no scientific intent. The languages in Chants of Sennaar are puzzle elements like any others. They were created as part of a game design process, not a linguistic one." - Rundisc's Julien Moya explains why the Chants of Sennaar team didn't consult actual linguists when making up the languages for the language-based puzzle game.

QUOTE | "As the song goes, 'no one knows where they might end up.' I wouldn't trade the person I am now for who I was before cancer, even knowing the price I'd pay. Adversity changes us. Do your best right now to live with intention. Stay true to your values.

"I know it can be really hard, especially given the state of the world and the fast rate of change, especially change that moves us backward. Hold the line on what matters to you. If you can't afford to stand up, that's understandable. So help those who can afford to stand up.

"But take some time to really understand what's important in your life – what matters to you, and where you make a dent in the world. Making a difference doesn't always have to be work or activism. It can be spending precious time with your loved ones or self-care.

"But whatever matters to you, spend your time like you could find out tomorrow that your time is limited. Don't wait until you hear your expiration date to do the right thing, to make a difference, and to live with intention. Never forget that every minute you have matters." – GDCA lifetime achievement award winner Laralyn McWilliams, in a LinkedIn post last year.

McWilliams died at the age of 58 earlier this week.