My current understanding is that the labor unions that arose during and after the Industrial Revolution quickly grew to powerful organizations that heavily defined the working environments of their time. What factors drove their decline to their present-day representations?
Are you talking about only the USA? Because there are still powerful unions in many countries in Europe. In fact, some countries don't have minimum wage laws because everything is collectively bargained. I think you should make this more specific.
This question requires much more detail than time allows me here, but in a nutshell, Americans bought into the idea that unions were contrary to their best interests. Why this is so is the subject of much argument.
There was certainly a backlash from business in the wake of the NLRA. Post WW2, this backlash culminated in the Taft-Hartley Act, which, among other things, ensured that employers would be allowed to present their case to workers during a union election.
The US Chamber of Commerce and other groups worked to portray unions as anti-American. PR campaigns painted union leaders as 'red' or otherwise pro-communist. (nb: this was not always wrong.) See E. Fones Wolf, Selling Free Enterprise for a great take on this.
The labor movement itself had loads of divisions. Racial, gender, and class issues permeated union membership and often kept it from being the consolidated force of its opponents' nightmares. See (among a bazillion other great books) Letwin, The Challenge of Interracial Unionism, Arnesen, Waterfront Workers of New Orleans, Gilmore, Gender and Jim Crow, and Cohen, Making a New Deal.
Those divisions were played upon by some employer and gov't actions. Workplace gerrymandering was common, ensuring that workers of different racial/ethnic backgrounds were mixed, in order to ensure no unity. See Halpern, Down on the Killing Floor and A. Lichtenstein, Twice the Work of Free Labor For great takes on this.
Some workers simply didn't want a union. Why this happens is contentious topic, but Lawrence Richards argues that this is happening more today because of years of antiunion propaganda on the part of business and business organization. See his Union-Free America for more.
The answer for your question is the subject of libraries full of books and articles. I hope this helps a bit.