NEW YORK, NOV. 2 -- When labor negotiations failed at this city's daily newspapers in 1978, nobody questioned what would happen next.

"It meant there would be a strike," said George McDonald, president of the Allied Printing Trades Council, the umbrella organization for unions at most of New York's newspapers. "And that meant the papers were going to be crippled."

For 88 days they were. With more than 1 million union members in the 1970s, New York was still the ultimate union town. But not anymore.

With Daily News delivery trucks rolling across the region since the current strike began Oct. 25, the unions' muscle appears to have atrophied beyond repair.

"The recent past for private unions in New York was bad," said Leo Troy, professor of economics at Rutgers University and an expert on union-membership trends. "But the future will certainly be worse. The decline is permanent and irreversible. By some time in the next century, the private-sector unions that once ruled the city will be extinct."

That refrain has been repeated in working-class cities nationwide as manufacturing jobs fled such highly organized, expensive and inflexible northern urban centers as Buffalo, Pittsburgh, Detroit and Chicago and headed to the South or to other countries where labor was cheap.

Battered by the combination of imports, competition from nonunion workers and the pressure of a growing recession, union jobs are in eclipse throughout the country.

New York City, where unions have always controlled entire industries such as construction and shipping and have elected mayors for generations, no longer is composed of the social, political or industrial fabric that made labor seem invincible for decades.

"You can certainly make the argument that labor has lost power, if you view power as members," said Jan Pierce, vice president of the Communication Workers of America, which last year successfully struck NYNEX, the regional telephone company, over who would pay the increasing cost of health benefits. "But we still have victories, and we still have clout."

That cloud has faded fast, however, according to many people here. The remarkable growth of such service industries as insurance, banking and real estate helped to bring labor to its knees over the last decade. According to the regional office of the Bureau of Labor Statistics (BLS), more than 350,000 new jobs have been added to the city's economy in that time, and nearly all were in fields with little or no union representation.

During the same period, the city lost at least 150,000 manufacturing jobs, the vast majority of which were positions moved out of a city made too expensive by the cost of housing, high taxes and heavy wage-and-benefit packages negotiated by unions.

"It was never a monolithic factory town like Buffalo or Detroit," said Samuel Ehrenhalt, regional director of the BLS. "But there is no question that there was a time when manufacturing and heavily unionized industries were essential to the city's economic health. Today, they are not. At one point in New York City, right after World War II, more than 1 million of the city's 3 million jobs were manufacturing, and all were unionized."

Since that war, New York has lost 700,000 manufacturing jobs, virtually all union positions. That is more people than worked in Detroit at the height of its auto-manufacturing supremacy in the 1950s.

Unions members also have very different conceptions of themselves than they once did, with far fewer of those who retain manufacturing jobs regarding themselves as blue-collar workers.

"In many cases, the union agenda had not been in step with most of its membership," said Esther Fuchs, a professor of political science at Barnard College and an expert on municipal politics and labor. "Many members long ago decided that they are part of the middle-class and not the working class. Many vote Republican. The unions have not been able to respond to this change."

In New York, unions still have an important say in city politics, particularly as the power of other institutions such as the church, organized political parties and schools has declined.

But the 1980s were difficult for organized labor here, and with a recession at hand, most analysts say the coming years will be no easier. The beginning of a new approach to organized labor in America, they say, came with the election of President Reagan in 1980 and his firing of unionized air-traffic controllers when they struck a year later.

"It marked a complete shift in public opinion," said Jo-Ann Mort, a spokeswoman for the Amalgamated Clothing and Textile Workers Union, which represents 260,000 people in the United States and Canada. "It was never considered a real option to just ignore the employees and hire new ones. Now, it is done all the time."

The idea, once unquestioned, that a strike would prevent customers from patronizing a company no longer is true. Union drivers have been on strike at Greyhound for nearly a year, but dozens of its buses roll into this city every day and few passengers seem to care who is driving. Eastern Airlines is operating in the second year of a strike by machinists.

At the Daily News, management officials said they delivered 1.06 million of their usual 1.15 million newspapers Friday, although the paper remains hard to find on newsstands and its quality is spotty.

"It's a very scary time for workers here," Mort said. "But if you don't have a voice to represent you, there aren't a lot of other places to turn."