"Our goal is not to divide the labor movement but to rebuild it," said Andy Stern, president of the 1.8 million-member Service Employees International Union. He and Teamsters President James P. Hoffa said their unions would leave the AFL-CIO, paving the way for other unions to follow.
Their action drew a bitter rebuke from AFL-CIO President John Sweeney, who called it a "grievous insult" that could hurt workers already buffeted by the global economy and anti-union forces in Congress.
"The labor movement belongs to all of us," Sweeney said, "and our future should not be dictated by the demands of any group or the ambitions of any individuals."
The Teamsters joined the SEIU, the largest AFL-CIO affiliate with 1.8 million members, in bolting. The SEIU is a union that Sweeney once headed. They said they were forming a competing labor coalition designed to reverse labor's long decline in union membership.
This was not an easy or happy decision, said Stern, once a Sweeney protege.
"Our world has changed, our economy has changed, employers have changed," Stern said. "But the AFL-CIO is not willing to make fundamental changes as well. By contrast, SEIU has changed.
"We know that when you are headed down a road and you know where it ends, you have to get off that road and go in a different direction. Today, we make the first step down that new road.
The joint announcement, the largest schism in labor's ranks since 1930, came as no surprise since weeks of publicly-aired dissension within the ranks preceded it. But it hit the AFL-CIO convention like a thunder clap, nevertheless.
In advance of the dissidents' news conference, Sweeney had chastized them for their defection at a convention also marred by boycott.
"At a time when our corporate and conservative adversaries have created the most powerful anti-worker political machine in the history of our country, a divided movement hurts the hopes of working families for a better life," Sweeney said in his keynote address.
Many union presidents, labor experts and Democratic Party leaders fear the split will weaken the movement politically and hurt unionized workers who need a united and powerful ally against business interests and global competition.
"I think we're on somewhat uncharted and dangerous ground right now with a labor movement that's so weak," Rutgers University professor Charles Hekscher tells CBS News Correspondent Anthony Mason.
Political analyst Larry Sabato of the University of Virginia tells Mason the breakup of the AFL-CIO can only weaken labor's voice in politics. That has Democrats anxious.
"Well, the Democrats ought to be anxious, because the labor unions are still the major bulk of their ground troops in both congressional and presidential elections," Sabato says. "Labor still provides most of the manpower, as well as a big chunk of the money for Democratic candidates.
"To the extent that labor is fighting among itself, then Democrats aren't going to get the full benefit of that manpower and money."
Two other unions — United Food and Commercial Workers and UNITE HERE, a group of textile and hotel workers — joined the Teamsters and the SEIU in boycotting the convention, a step widely seen as a sign that they are also poised to leave the AFL-CIO.
The four unions, representing one-third of the AFL-CIO's 13 million members, are part of a coalition of labor groups vowing to accomplish what the 50-year-old labor giant has failed to do: Reverse the decades-long decline in union membership.
Back in the 1950s, one out of every three American workers wore the union label, reports CBS News Correspondent Cynthia Bowers. These days, that number is just one in ten.