An editorial entitled Very Old Labor: Unions need a vision for the new global economy discusses the underlying reason for the breakup of the AFL-CIO:

The AFL-CIO, the giant union consortium formed in 1955 by George Meany and Walter Reuther, is breaking apart this week in a dispute over how to revive labor’s lagging fortunes. The tragedy is that neither faction is offering an agenda that will make workers more prosperous in our increasingly competitive global economy.
Instead, we are witnessing a fight over who gets to preside over a declining labor movement…
…Mr. Sweeney promised to pour hundreds of millions of dollars into electoral politics to stop the Gingrich revolution. He staffed AFL-CIO headquarters with activists from the political left…and made the union consortium a wholly owned subsidiary of the Democratic Party.
A decade later we can see how that turned out. Democrats remain in the House and Senate minority, and union membership continues to decline across the American economy. The unionized share of the total U.S. work force has been sliding steadily for years, and was down again last year to 12.5%…In the more dynamic private sector, only 7.9% of employees now carry the union label.
Service workers President Andy Stern wants to arrest this decline by diverting more labor resources into union organizing, especially at such large employers as Wal-Mart. One of his rebel allies, Terence O’Sullivan of the Laborers International Union, wants to more aggressively use union pension funds and financial assets to influence corporate decisions and gain seats on corporate boards. Mr. Sweeney doesn’t oppose either idea, but he also wants to pour cash into Congressional lobbying and Democratic coffers. Mr. Stern replies that this money will largely be wasted until unions increase their member ranks, and for our non-union money he’s probably right.
What’s missing on both sides, however, is a vision of economic opportunity that might actually make workers want to join a union in the first place. Tactics aside, both factions continue to believe in the idea of unions that arose in the Industrial Age: Greedy management versus the exploited working man, seniority over flexibility, fixed benefits and strike threats over working with management to keep a U.S.-based company profitable and innovative in a world of growing competition. On the political front, both factions favor trade protection, higher taxes and government help to enforce restrictive work rules. This is the agenda of Old Europe, where jobless rates are above 10%, and it merely offers more economic insecurity in the U.S. as well.
What the labor movement really needs is a new generation of leaders who understand the emerging competition to U.S. workers from the likes of India and China. Rather than oppose imports to protect textile jobs that can’t be saved, such leaders would work to reform education so future Americans can compete in the knowledge industries that will grow the fastest. They’d also work to make pensions and health insurance transportable from company to company, so a worker wouldn’t be trapped by benefits in a job or industry he didn’t like. They’d be partners with management, not antagonists.
Without such a new vision, Big Labor will only continue its slide. All the more so given new Labor Department rules, recently upheld in court after an AFL-CIO challenge, requiring that unions disclose more details about how they spend hard-earned member dues. Some of the nation’s largest unions will now have to disclose their spending by specific categories, such as political donations, grievance proceedings, or organizing. This sunshine will expose just how much labor money is being wasted on political activities that have little to do with improving workers’ lives…
…their real obstacle is the reality of the modern global economy. Until they offer workers something more than class warfare, circa 1955, they will continue to decline.

Other stories on the breakup can be read here and here.

ADDITIONAL INFORMATION:
Bankrupt pensions, extraordinary healthcare insurance benefits, outrageous demands by private and public sector unions, hidden union spending on politics, lousy decision-making by some management teams as well as misguided incentives and marketplace meddling by government have been discussed previously on Anchor Rising:
Public Sector Issues
Misguided Incentives Drive Public Sector Taxation
A Call to Action: Responding to Government Being Neither Well-Meaning Nor Focused on the Public Interest
Bankrupt Public Pensions: A Time Bomb That Will Explode
Why Truly Free Markets & Timely, Transparent Information Are Needed to Protect the Freedom of American Citizens
RI Public Pension Problems
The Cocoon in which Entitled State Employees Live
The Union’s Solution for the Future: Get More People in Unions
Bankrupt Public Pensions, Part II
How Public Pensions Make People Well-Off at Taxpayers’ Expense
Public and Private Unions
Rhode Island Unions Again Resist True Pension Reform
“Shut Up & Teach”
Union Political Activity
Learning More About How Dues Paid To Big Labor Are Spent
Pension Fund Politics: How the AFL-CIO Violates Its Fiduciary Responsibilities
Now Here is a Good Idea
Paycheck Protection: Allowing You to Keep Your Own Hard-Earned Monies
Private Sector Issues
Government Meddling Creates Marketplace Distortions, Increasing Long-Term Costs
If You Won’t Deal With Economic Reality, Then It Will Deal With You
Underfunding Pensions, Public and Private, can Hurt Taxpayers
Why Truly Free Markets & Timely, Transparent Information Are Needed to Protect the Freedom of American Citizens
Outrageous Employee Compensation Liabilities Continue to Haunt General Motors; Will American Taxpayers End Up Paying the Bill?
Why the Big Three Auto Companies Could Easily Fail
Airline Industry: How Government Meddling in Marketplace Costs Taxpayers & Consumers
The Ongoing Squabble Between General Motors & the United Auto Workers Union
It Won’t Work
Corporate Welfare Queens: Destructive Parasites Which Deserve to Die