Labor Relations Final
Types of nonunion grievance procedures
"Open door" policy: employees are simply invited to bring their complaint or concern to a manager who will attempt to resolve it Peer-review panels: use fellow employees as decision makers, and nonunion arbitration procedures, which use third-party neutral arbitrators; popular form of union avoidance b/c of how the majority employee panel promises greater neutrality. Ombudsman offices: an individual a company employs to help resolve problems, complaints, or conflicts between or among employees, supervisors, and managers. Typically reports directly to the CEO or head of HRM to remove himself from the chain of command. The flexibility and informality with which the ombudsman can approach this role is one of its distinct advantages
Excluded from coverage under the NLRA...
...are federal, state, and local government employees
Why adopt nonunion grievance procedures
1. As a part of a management strategy to improve the performance of a work force 2. Union avoidance strategy 3. Reduce the risk of litigation from employees
Three components of arbitration
1. Prehearing briefs 2. The Arbitration Hearing 3. The Arbitrator's Decision
Expedited Arbitration
A type of grievance arbitration in which the parties agree to speed the resolution of disputes; bypasses steps in the normal grievance procedure and imposes tight time limits
Lean production
Developed primarily by Japanese firms beginning in the 1960s Was based on the idea of removing slack from the production process and encouraging an intense emphasis on improving quality Exemplified by the Toyota auto company Workers are given responsibility for ensuring quality throughout the production process
Total quality management
Emphasis on quality throughout the production process
Works Councils
European-style unions that meet annually with company management to discuss working conditions and compliance with basic ILO conventions
Codes of Conduct
In-house monitoring of supplier behaviors? Nongovernmental organizations? Consultants? Professional engineering firms? average compliance (0-100) is about 50, and companies continue to decline in scaling
The Impact of Trust on Contract Bargaining and Contract Administration
Level of trust between the parties carries over from contract administration to contract negotiations, and a backlog of unresolved grievances can hurt this dynamic
Multilateral Management Structures
Managerial authority and responsibility are widely shared in the public sector and, as a result, CB in that sector is multilateral, not bilateral, as it is in the private sector Multilateral Bargaining is a negotiations process that includes more than two distinct parties
International Trade Secretarists
Provide information to member unions and coordinate activities across national borders
Scope of Bargaining Units
Tend to follow occupational lines more than in the private sector; city gov is likely to have separate bargaining units for police officers, firefighters, blue-collar workers
The Arbitration Award
The common terms for the arbitrator's decision
NAFTA
Took effect in 1994, it removed tariffs and other trade barriers among the US, Mexico, and Canada. It has been extremely controversial: good for all three countries, bad for pollution compliance, labor, etc.
Judicial approach
a more formal and legalistic approach than the clinical approach
Clinical approach
emphasizes mediation of disputes, informal procedures, and arbitrator discretion in helping the parties develop a working relationship and consistent policies for interpreting and administering a contract
International Framework Agreements
establish basic health and safety conditions and independent monitoring
absolute union wage effect vs relative union wage effect
how do earnings of union workers compare with what union workers would have earned if there had been no unions anywhere in the economy VS how do earnings of union and nonunion workers compare (roughly 15-20%)
Exit-voice model
posits that in response to a deterioration in conditions in the workplace, an employee has two possible responses 1. ameliorate the problem through using his or her voice 2. remove him or herself from the negative situation by using the exit option of quitting
red circle wage rates
stipulations that provide for rate retention for employees whose jobs are evaluated downward because of technological innovation
Protection from arbitrary treatment
unions have pioneered the development of the principle of just cause for dismissal or discipline, grievance procedure systems
Integrated Conflict Management Systems
uses a systematic approach to preventing, managing, and resolving conflicts that focuses on the causes of conflict. Complaints against supervisors, peer disputes, complaints that some part of a company is providing poor service, and disagreements among work groups or teams are some of the reasons why organizations feel the need for systematic approaches to conflict resolution. Also, disputes around IP, sexual harassment, and conflicts of interest yield complex problems
The effect of collective bargaining on wages?
Wu/Wn>1, but... Wu/Wn → 1 over time, particularly in competitive (e.g., international) product markets - increasingly difficult to take wages out of competition - may have much to do with the industries that labor has been able to organize and keep organized (Think: Optimal Marshallian conditions.) Wu/Wn>1 is very difficult to measure - spillovers to the nonunion sector • "threat effects" • "supply effects" - worker and workplace "unobservables"
Mandatory Arbitration Debate
-More efficient and accessible -Employers have way too much control over procedures -Arbitrators have bias toward management b/c they want to get hired again
Alana Semuels's (2018) Reading on "Is This the End of Public Sector Unions in America?" from The Atlantic.
-The Janus decision immediately makes null the fair-share provisions, overturning a 1977 case, Abood v. Detroit Board of Education. In that case, public-school teachers in Detroit who opposed public-sector collective bargaining argued that they should not have to pay fees to the union. The Abood decision prohibited public-sector fees from using union fair-share fees for political causes like lobbying, but found that unions could use those fees to cover the cost of collective bargaining, which produced economic gains for union members. -The labor movement has been trying to prepare for this decision, and say that Janus does not have to be the end of public-sector unions in America. In some states that have turned right-to-work or passed laws restricting unions' power in recent years, unions have been able to continue to add members and convince people to pay dues, they say. UDW had to prove it was providing a valuable service to members and their clients that went above and beyond bargaining over pay, Moore said. It launched a home-care registry after Harris v. Quinn that matched workers with potential employers, and started offering free CPR and dietary classes to discuss with workers how to feed clients with special dietary needs. It got involved in advocating on issues that affected members, like immigration reform and bail reform. It held meetings so that isolated members could meet each other and talk about issues that affected them. And it did all this on a budget that was 30 percent lower than what it had been before the decision. -Teachers have walked out of classrooms in West Virginia, North Carolina, Colorado, Kentucky, Oklahoma, and Arizona, to protest salaries that haven't kept pace with inflation. The Trump administration has similarly issued executive orders that seem aimed at weakening unions, which could also motivate workers to join or rejoin unions. -Left-leaning states have also tried to prepare for Janus by passing laws that will make it easier for unions to recruit members, even if they can't collect agency fees. In California, for example, unions now have the right, thanks to a new law, to meet with new public employees as soon as they start working. A second new law keeps private the phone numbers and email addresses of employees of public agencies, so that anti-union groups will have a harder time convincing them to drop out of unions. -First, in 2011, Governor Scott Walker passed Act 10, which dramatically curtailed collective bargaining for most public-sector workers and required that unions be "recertified" every year by a majority of people eligible to vote, counting people who didn't vote as a "no." Wisconsin then became a right-to-work state in 2015, preventing unions from collecting fair-share fees from private-sector employees who chose not to join the union. -But MTEA has been focused on building a better union that is focused not just on wages and benefits, which it isn't allowed to bargain for, but instead on social justice and issues that are important to teachers. The union has gotten more teachers involved by talking not just about the union benefits teachers, but also how it benefits students. -The union has organized on behalf of issues that affect students: reversing a state requirement limiting recess and getting the district to agree to smaller class sizes. It has convinced the School Board in Milwaukee to declare the district a sanctuary district, meaning it will oppose efforts to detain and deport undocumented students.
Steelworker's trilogy
-encouraged the use of arbitration and insulated many arbitration awards from judicial review -established the principle that the courts would not review disputes that were arbitrable (judicial deference to arbitration) -articulated that collective bargaining between labor and management establishes a form of democratic governance of the workplace
Reasons why grievances are filed
-management isn't living up to collective bargaining agreement -disagreements about employee discipline -things frequently happen that were never anticipated by the parties when they were negotiating the labor agreement -a way of demonstrating their concern about issues that are not addressed in the collective bargaining agreement
Paglayan Reading on Public Sector Teachers
1. Teachers got collective bargaining rights in states that already paid teachers well. 2. Mandatory collective bargaining did not increase teacher pay or education spending. 3. It's tougher to strike in states that mandate collective bargaining with teachers. 4. Red state teachers have less to lose from going on strike.
Union pressure campaigns
1. in-depth research 2. union campaigns build coalitions with other unions, communities, and NGOs around the world to target the company's image, its suppliers, or its customers globally to pressure the company into improving labor conditions 3. boycott 4. global divestment requires a large amount of resources, funding, and long-term trust between unions
Corporate Social Responsibility Unit
A component to large MNCs that helps them deal with the pressures and attacks that come from a company exploiting workers/taking away jobs/etc
Grievance Mediation
A neutral third party is asked to mediate a dispute. The process is highly informal and does not involve written transcripts, briefs, attorneys, or written opinions
U.S.-Colombia Trade Agreement (2012)
Agreement that both the U.S. and Colombia will continue to maintain in domestic law the right to freedom of association and the right of workers to engage in collective bargaining. Also, no more child labor or forced labor. However, these benefits were curtailed and undermined in Colombia.
Teamwork production systems
Another approach to work organization that focus on reorganization of the production process to increase the participation of workers in decision-making Sociotechnical systems design, which emphasized analyzing workers and the technology used in the production process as an integrated system Teamwork systems require a fundamental reorganization of the workplace b/c they replace multiple and narrow job classifications with jobs that are broader in scope, that involve workers in making decisions, and that require investment in training - On-line self-managed teams working without direct supervision. - Exemplified by Volvo team-based production.
Fractional Bargaining
Bargaining that occurs at the work group level outside the formal grievance procedure. That is, informal bargaining with the supervisor to modify or even to ignore provisions of the agreement that do not suit the group's particular needs
The impact of collective bargaining on the relative distribution of pay?
Collective bargaining has an amazingly narrowing egalitarian effect! Where does this egalitarian effect come from? -"rate for the job" in occupations or firms—in the covered sector—narrows the wage dispersion by gender, race, disability, etc. But, on what does this narrowing effect depend? -Coverage! -Union coverage mediates the relationship between collective bargaining and wage inequality. • The nonunion pay distribution is not normal, but positively-skewed. • Both the mean and the median are slightly greater in the covered sector.
The Arbitrator's Decision Criteria
Discipline for Just Cause: most labor agreements contain a clause stating that management has the right to discipline or dismiss employees only for just cause; Progressive Discipline: if the arbitrator concludes that the act did happen, he/she must decide whether the company discipline imposed was appropriate -Progressive discipline: penalties increase in a stepwise function -Corrective discipline: underlying idea here that discipline should do more than just punish. It should correct behavior Past practice: Arbitrators will rely heavily on the custom and past practice of management policy as a guide they make decisions about grievance cases The Impact of Public Policy Considerations in Arbitration: The expansion of employment laws since the 1960s has raised concerns about whether grievance and arbitration procedures should be responsive to the public policies that govern employee rights.
How Marshall's Conditions Operate in the Public Sector
Employees have more bargaining power if... 1. It is difficult to substitute other factors of production for labor. - Machines for teachers? Public employees are probably stronger in this regard. 2. Demand for the final good is relatively inelastic. - Where government is the sole provider, public employees are stronger. 3. Supply of other factors of production is relatively inelastic. - There is no clear difference between the public and private sectors. 4. Labor costs are a small share of total costs. - Public employees are weaker on the fourth condition, since labor is a large factor in total cost. - Ratio of labor to total costs varies from 60-70% for teachers to 90% for firefighters.
Multinational Corporation (MNC)
Engages in economic activity in more than one country. One key variable that influences the business strategy of an MNC is the wage levels at various potential production sites and in various countries. They also need to consider legal, cultural, institutional environments in new countries and how to deal with them. Key decision they face is how much to centralize labor relations decisions (1950s to 2000, handled this problem through decentralization).
Global Supply Chains
Firms like Apple, GE, GM sell products that can be easily transported globally and/or that sell to global markets have global supply chains. The development of global supply chains offers economic development and business opportunities to developing countries and to other companies that supply parts or carry out manufacturing on a contract basis for the household-name firms. MNCs look to set up contracts with lowest bidder in these countries while maintaining quality and delivery requirements
Seniority Rights
For employees, important to allocating benefits and job opportunities to workers For employers, important b/c these rights restrict the discretion they have in carrying out their personnel functions For public officials, EEO
U.S.-Jordan Trade Agreement
From 2001, both countries were committed to "reducing barriers for services, providing cutting-edge protection for intellectual property, ensuring regulatory transparency, and requiring effective labor and environment enforcement." Walmart and Target quickly established factories in Jordan and in the first year of the trade agreement Jordan increased its exports by 213%. FIRST U.S.-FOREIGN TRADE AGREEMENT WITH LABOR PROVISIONS. However, the countries agreed that they would not resort to dispute resolution if doing so would lead to blocking trade.
The Duty of Fair Representation
Harkens back to a 1944 Supreme Court decision that in return for exclusive representation, the union has the duty to represent all members of the bargaining unit "without hostile discrimination, fairly, impartially, and in good faith"
The Drive System
Hiring, firing, and general supervision of labor were all controlled by the line foremen who were given substantial power under this system Paternalistic labor relations
Modular production
In modular production systems, much of the assembly work is done by the employees of different subcontractors who work inside the factory directly on the assembly line This approach separates the multinational corporation from responsibility for much of the assembly work and pays lower wages to most of the work force doing the assembly work Unions in factories that use modular production must try to represent employees of multiple different companies in the same factory, which creates problems with the coordination of negotiations and opens up the possibility that the employer will play one group against another in seeking to reduce labor costs
The Arbitration Hearing
In the arbitration hearing, the parties present their positions and evidence to support their cases After opening statements, evidence, closing statements, the parties can present their views in a post-hearing brief (most popular in highly technical or complicated disputes)
Prehearing Briefs
In these briefs, the parties can present their views of the issues and describe the evidence that supports their position In some cases, the parties jointly present prehearing stipulations to the arbitrator, which outlines an agreement between the parties about one or more of the facts or issues in dispute
Public Sector Arbitration
Interest arbitration has been criticized on the grounds that the availability of these procedures reduces the parties' incentive to bargain, thus imposing a chilling effect on the negotiations process. The parties avoid making compromises they might otherwise be willing to make because they fear the arbitrator will split the difference between their stated positions Final-offer arbitration appears to be used less often than conventional arbitration
Union federations
an international federation of national trade unions organizing in specific industry sectors or occupational groups
Union networks
are groups of unions at a shared multinational employer that come together to create a transnational union structure with the goals of sharing information, coordinating activity, and bargaining with an employer on a transnational level. They create long-term relationships between unions to share information about a common employer
implied obligations doctrine
assumes that the union recognition clause requires management to negotiate changes in terms and conditions of employment even in the absence of an express contract provision that covers the issues involved
supply effect
by raising wages, unions may induce unionized firms to cut back on employment and these displaced workers seek employment in nonunion firms and industries. These estimates of the relative union wage effect means there may be an overstatement of the differential between union wages and the wages that would exist if there were no union
job control unionism
focus on specific jobs rather than to the characteristics of the worker, which is popular in the US labor movement
Participation Programs BAD ASPECTS
Productivity: - Programs work at first, but benefits diminish over time. - Uncertainty over productivity benefits of programs; other factors affect profits. Work life: - Quality circles were only directed at improving productivity, not work life. - People don't like being in teams. - Results in "Team Taylorism" & "management by stress". - Conflicting interests of workers and management are ignored. - Unclear how much workers benefit in job security and wages.
LISTEN TO "'Fair Treatment, Fast Food, and the Fight of the Coalition of Immokalee Workers"—Joshua Johnson's interview of Susan Marquis and Marley Moynahan on NPR's 1A from January 25th, 2018.
SUSAN MARQUIS: How Florida farmers challenged that they are not just tractors in regards to tomatoes Fair Food Program stopped the persistent program of slavery-like conditions in Immokalee, Florida Would have to get up way before dawn and fighting for a job for THAT DAY. Get on bus. To get minimum wage for that day, you have to pick at least 5000 lbs of tomatoes At high risk of being beaten or at least yelled at for slacking, needing a break/bathroom Places before Florida for these farm worker prepared them for this activism (Came significantly from Haiti, as well as Central America) through community action. They had the tools and ideas to change the workplace. They recognized that they had a shared experience and, therefore, developed a voice despite their differences in spoken language Started to understand their proximity within the supply chain/the money flow: started getting the attention of the buyers to change their positions by partnering with them. The money is at the top of the supply chain. Asked that they asked for literal "penny per pound more" and that Fair Food Program is implemented Not all companies are giving into the Fair Food Program: Companies like Wendy's frame the movement as a problem. Companies like Wendy's have relocated their growing and has done little to monitor their supply chains. Still rampant abuse on all types of farms -- corporate or small organic Fair Food Program.org can provide consumers with information and transparency about which producers are abusive or not
The effects of unions and government policies on wages
Short run: -reduction in the scale of output and employment -an increase in the price of the product -a substitution of capital for labor Long run: -job security -work rules -health and safety -training
The effect of collective bargaining on profits?
The Theory: "Unions, through their rent-seeking activities, are likely to influence the functional distribution of earnings by shifting surplus from 'profit' to 'pay,' i.e., extracting a share of economic surplus, thereby reducing the profitability of the firms with whom they bargain." The Evidence: • Collective bargaining lowers profits. - The effect could be mitigated by higher productivity, but is generally not. - The effect could be mitigated by higher prices in some product markets, but not in most competitive settings. Whether or not this should concern you depends on what unions do to... investment! The Issues: • On what assumption is the theory critically dependent? • If the theory is correct, is collective bargaining bad for the economy? Profits --> Investment • Is the reduction in profits simply a distributional transfer from capital to labor? • Or, are strong unions effectively diverting profits or retained earnings away from investment?
The effect of collective bargaining on health & safety
The Theory: • By and large, controlling for industry, unionized workplaces should be safer than nonunion ones. - Unions can negotiate safety provisions into bargaining agreements. - Unions can encourage the formation of joint union-management safety committees at the plant level. • But, unions can also push for compensating wage differentials, the effect of which is ambiguous! The Evidence and the Issues: • In the net, unions appear to gravitate to more dangerous workplaces, and then to make them safer. • Many/all of the challenges to measuring hold here, too. • In this case, the theory is so compelling!
What impact does collective bargaining have on productivity?
The Theory: • Unions/CB reduce productivity via... - restrictive work practices, e.g., forced staffing ratios - industrial action, particularly sporadic "guerilla" action - reducing investment, e.g., less new technology or less capital overall - adversarial labor relations that shrink the profit pie • Unions/CB raise productivity via... - Wu/Wn↑ leads the firm to shift resources from labor to capital - improved monitoring, in which the union essentially serves as an agent of the employer - more employee voice and due process, reducing quits, absenteeism, and boosting HK investment - union "shocks" management and reduces managerial lethargy The Evidence: • Results are highly dependent on the country, the time period, and the sector. • In the net, unionized workplaces in the US are probably marginally more productive than nonunion ones, even after controlling for size, sector, etc. • So, what's the answer? - It takes two to tango. - There is a wide diversity of labor-management relationships, bargaining structures, etc.
Transitioning economies
The expansion of markets has added a significant number of workers to the global labor force in recent years, adding further competition for available work and putting greater pressure on higher-wage economies
Scientific Management
The first step toward establishing a professional personnel management function Blended economic incentives and industrial engineering techniques to produce the "one best way" of organizing a work process Those who embraced Taylorism in the workplace assumed that tying the individual worker's wages to output could bring the interests of the worker -- economic rewards -- and the interests of the firm -- productivity -- into compatibility Basic principles of Taylorism: - Separate the thinking from the doing. - Simplify and scientifically manage tasks. - Maximize the pace of work. - Established the necessary work structures for Ford's adoption of the assembly line. Strengths of Taylorism: - Enhanced productivity. - Fits emphasis on quantity over quality. - Unskilled workers benefited by sharing productivity gains through collective bargaining and earning middle class wages. Weaknesses of Taylorism: Work life: - Pressure from a changing workforce. - Declining benefits and wage increases. • Productivity: - Pressure from growing international competition. - Demand for higher quality products. - Need for greater flexibility in responding to customers.
State and Local Government Employees
The states that have not yet enacted public sector bargaining laws are primarily located in the South
International Framework Agreements (IFAs)
They are multilateral agreements between a corporation and a union (usually one of the global union federations) to ensure equal standards across a firm at a global level. They establish core labor standards such as the abolition of child labor, nondiscrimination, and freedom of association
Sources of Bargaining Power in the Public Sector
Total power is determined by the revenue available to the parties to be distributed between labor and management in a manner analogous to the role of profits in the private sector The fact that public sector employees do not commonly have the legal right to strike reduces, but does not eliminate, the leverage public employees gain from a strike action or strike threat
The effect of collective bargaining on investment?
Why Is the Impact of CB on Investment So Crucial? -Investment>Capital accumulation>Economic growth -As a result, If unions hinder investment, then they also retard growth and harm competitiveness writ large... The Theory: • definition of investment: e.g., new technology, process innovations, R&D, human capital, etc. - Unions/CB reduce investment directly by delaying the installation of new machinery or by ensuring it is not used to its full capacity. - Unions/CB reduce investment indirectly by making firms ex ante reluctant to sink money into new technologies. - Unions/CB boost investment indirectly by maintaining a wage markup. - Unions/CB boost investment if our focus is on human capital as opposed to physical capital. The Evidence: • Collective bargaining lowers investment in the U.S., Canada, and Europe. • The case is a tad less clear in the U.K. - What might mitigate the negative effect of CB on investment? • adversarial vs. cooperative labor relations • breakdown between physical and human capital • other things?
Structural Challenges?
You need to apply your understanding of conventional collective bargaining to identify and address new labor relations challenges... • within seemingly conventional employment relationships. • that arise from newer, more complicated employment arrangements that strategically or incidentally yield an imbalance in labor market power that hinders both equity and efficiency.
Horizontal alignment
horizontal alignment: extent to which a set of HR practices are coordinated and congruent with one another, cohering to actually complement one another example of horizontal misalignment: team-structured production processes with incentives linked solely to individual performance Litwin paper: NEED this to exist between Functional and Workplace levels
management rights clause
its purpose is to limit the territory of union influence and retain for management the freedom to run the company
Exit-voice-loyalty-neglect model
more loyal employees tended to suffer in silence. This suggests that those who are most loyal benefit the least the neglect response to workplace problems involves lower motivation, commitment, and effort on the part of workers and neglect of their job duties
Residual rights doctrine
neither union members nor their representatives are directly accountable to stockholders. This view holds that unions should not have a right to infringe on the ability of management to act on the owners' behalf, except for issues that management has agreed to share its authority over by way of specific contract language
threat effect
nonunion wage is higher than it would be otherwise because of the threat effect of unionization; thus, estimates on relative union wage effect may understate the absolute effect of unions on wages
The Worker Rights Consortium (WRC)
one of the most active NGOs, has been involved in efforts to improve labor conditions at Foxconn in China, at apparel factories in Bangladesh, and at Nike plants in various countries
Quality circles (QCs)
programs where hourly workers meet as a group with their supervisors outside normal production time to discuss ways to improve quality and productivity Known as an off-line participation program because meetings take place away from the assembly line Successful early on but with time the programs became less effective. Only better after their influence was broadened They are off-line groups that meet with a supervisor to discuss suggestions for production quality improvements. Often used as part of total quality management (TQM) and lean production programs. Exemplified by the "Toyota Production System".
Federal Employees
they receive the right to unionize and negotiate over employment conditions other than wages or fringe benefits through Executive Order 10988, which President Kennedy signed in 1962. This law, and the extension it received in 1970 by Nixon, was replaced by Congress in 1978 with the first comprehensive federal laws to give collective bargaining rights to federal employees. HOWEVER, this law excluded pay and fringe benefits from the scope of bargaining. CB in the federal sector is now regulated by the Federal Labor Relations Authority Federal employees are prohibited from striking by the NLRA
fringe benefits
unionized workers receive both a wider variety and a higher level of fringe benefits than nonunion workers
Vertical alignment
vertical alignment extent to which a particular bundle or cluster of HR practices comport with the employer's business strategy example of vertical misalignment: service "differentiation"/high-quality business strategy alongside "control" HR model Litwin paper: NEED this to exist between Functional and Strategic levels AND Workplace and Strategic levels
Social Dumping
when MNCs operating in a country like the U.S. can shift production to countries where workers receive hourly wages that are a small fraction of those U.S. and European workers earn and where environmental and other social regulations are weaker.
wage reopener provisions
whereby the contract remains in force over several years but wages are renegotiated at some specified point during the life of the agreement
Multinational Unions
would be able to remove competition across workers in the different locations where MNCs operate CHALLENGES TO THIS CONCEPT: -Communication to its members -Lack awareness about worldwide activities
Labor Law in the Public Sector
• Different laws at different levels of government: - Federal, State, Local. • Limited bargaining rights: - Federal unions can't bargain over wages. - Some states exclude some or all public sector workers from collective bargaining. - "Open shop" rules in some states and federally. • Limitations on the right to strike: - Some states ban public sector strikes, e.g., NY - Other states ban strikes for some categories of workers, e.g., police and fire. - Instead of strikes, usually have interest arbitration. Remember Interest Arbitration? • Usually either one arbitrator or a panel of three. • conventional arbitration: arbitrator can award any terms he or she wants for the CBA. • final-offer arbitration: arbitrator must choose either the union or the employer's final offer—by issue or package. - Sometimes called "baseball" arbitration since it is used to determine baseball salaries. • Interest arbitrators tend to make awards very similar to negotiated agreements. - Most parties negotiate agreements; few go to interest arbitration. • Mostly used in public sector nowadays.
Financialization: some manifestations
• Executive Stock Options • Private Equity Business Model (PEM) - A Measured Take on the PEM • But, three important points omitted - loading up of leverage on the target company - extraction of fees and other rents by the PE holders - the sheer ubiquity of PE! (http://tinyurl.com/ForILR5000) • Stock Buybacks
If you had to work at McDonald's, would you rather work for a company-owned store (i.e., the franchisor) or for a franchisee?
• Franchisees - typically own and manage their own outlets - seek to maximize profit only of their own unit(s) • Franchisors - benefit from sales of all units in the chain • Franchisors are much more concerned about deterioration of the brand, and thus, have greater incentives to comply with workplace regulations that affect customers' perceptions of the brand. • Franchisees will exert relatively less effort to comply with regulations that eat into their units' profits. Franchisees, facing more competitive conditions and holding less of a stake in the brand than the lead company (the franchisor), are significantly more likely to fall out of compliance. Workers employed by lead companies are much more likely to be paid according to the law.
How can we make Participation Programs work? Nose to Tail: Using the Whole Employment Relationship to Link Worker Participation to Operational Performance
• Make sure leaders make organizational and role adjustments. • Recognize that participatory processes are vulnerable to business decisions traditionally under the control of top management. Suggests a need to align participatory processes across all three levels of the employment relationship!
Quick History of Public Sector Collective Bargaining
• Pre-1960s: - Public sector collective bargaining illegal; viewed as incompatible. - Public sector employee associations instead of unions, e.g., NEA. • 1960s and early 1970s: - Rapid growth of unions as public sector collective bargaining is legalized in many states. • Late 1970s and 1980s: - Taxpayer reactions against public budgets, e.g., Prop 13. - Reagan's firing of PATCO strikers. • 1990s and 2000s: - Relative stability in public sector unionization as private sector unions in decline. • Post-2008 recession: - Widespread job cuts in the public sector. - Wisconsin and other states limit public sector collective bargaining. - Debates over teachers unions and education reform.
Financialization: Why should people care?
• Shortens investors' time horizons, creating a wedge between private and social efficiency - Shifts earnings, retained earnings, and other resources from investments in R&D and worker skills to dividends, stock repurchases, etc. (i.e., value extraction cf. value creation) • Increases reliance on and the burden of debt, often placing it on companies with the highest risk of financial distress and bankruptcy • Leads to wide-scale worker displacement— layoffs—meaning the company's decisions are actually being financed by the workforce and the economy-at-large • Undermines economy-wide competitiveness • Exacerbates income inequality, with all of the macroeconomic and social consequences that come with it
What occurred to destabilize the conventional employment model?
• The economy is no longer self-contained, but embedded in a global economy and under constant competitive pressure. • Women's income has become a substantial component of household earnings/support. • Influx of immigrants in low-end, precarious, service-sector work. • Workers do not expect to stay with a single employer forever, and employers are comfortable laying workers off when they no longer need them. • Many workers are not employees at all. • Corporate boundaries are blurred by the use of subcontracting and franchising, among other arrangements. The old social contract is broken, with ramifications for social insurance, job security, family benefits, and career advancement—and the fundamental balance of power in the labor market!
And, why is this new model inconducive to collective bargaining?
• Unions are national, at best. • Workers jump from employer to employer. • Workplaces are smaller, more likely to be in the service sector, and more likely to employ workers who lack inherent power and even knowledge of their rights. • You have to be an employee to unionize. • Unions are attracted by size and the profit pie, and big, profitable "lead employers" are turning away from employment towards reliance on a complex network smaller business units that provide labor.
What were the salient attributes of the conventional employment model?
• You had a corporate employer and a group of employees that provided their labor in exchange for pay. • The employer operated in a national economy that was relatively self-contained and capable of sustaining standardized wages and working conditions across an industry without handicapping its ability to thrive competitively. • Employment was full-time, long-term, and relatively stable. • Each household had just one person with both feet in the labor market—the (usually male) "bread winner." • The typical workplace was large and usually industrial. • The corporation was a stable, sovereign organization with well-understood boundaries and clearly-defined internal roles—1.) managers or supervisors and 2.) non-managerial workers. • The glue melding all of this together was an implicit social contract—both workers' wages and employers' earnings would rise in tandem with increasing productivity and prosperity
What is alt-labor?
• a colloquial, catchall label for the array of entities or groups aiming to organize and mobilize discontented workers outside of the traditional, NLRA union-organizing model in an effort to protect or extend their rights • including inter alia "worker centers," "worker alliances," associations of nonunion employees, and associations of non-NLRA eligible workers such as freelancers or contracted workers
Financialization
• the ways in which changes in financial/capital markets and institutions have influenced the relationship between management and labor and labor market outcomes more broadly • notion that capitalist firms once made money by producing or trading goods and services but increasingly depend upon financial strategies* for π generation * including trading, buying, and selling companies, selling off assets, using debt for tax advantages, or outright share price manipulation—all strategies intended for making profits without regard to the effects on organizational productivity, quality, innovation, employment, or long-term competitiveness
Josh Eidelson, Alt-Labor Reading
Lacking the ability to engage in collective bargaining or enforce union contracts, these alternative labor groups rely on an overlapping set of other tactics to reform their industries. The ROC teaches workers their rights and also restaurant skills; advises and publicizes model employers; and helps organize protests like the ones at Capital Grille, making customers aware of what goes on behind the dining room. The ROC also lobbies state and local lawmakers for reforms and helps workers take legal action when all else fails. Why are alt-labor groups like the ROC proliferating? To begin with, unions are in crisis... and for an increasing number of U.S. workers, unions are not even an option. Labor law denies union rights to increasingly significant sectors of the workforce, including so-called independent contractors and domestic workers, whose numbers are expected to double as baby boomers enter elder care. At first, traditional unions dismissed alt-labor efforts. Now many have come to recognize workers' groups for what they are: part of the labor movement. Alt-labor groups are limited by having no collective-bargaining rights. They lack some of the rules that reinforce a union's stability: the cycle of contract renegotiations, the requirement to elect leaders and represent all members, and the responsibility of all workers (outside "right to work" states) to contribute to the organization's coffers. Because they mostly count on support from progressive foundations, rather than members' dues, they don't have a stable financial base to build on. Another obstacle: The group's numbers tend to be small relative to the workforce. The ROC, for example, has 5,300 members out of an estimated 200,000 restaurant workers in the city. But workers' groups have some advantages that unions lack. Labor law restricts unionized workers from picketing companies that aren't their direct employers; groups like the Florida farm laborers in the Coalition of Immokalee Workers (CIW), however, are free to organize national boycotts of chains like Taco Bell that buy produce from the agricultural companies that employ the workers. In 2010, after more than a decade of boycotts and legal wrangling, CIW finalized a landmark agreement with local tomato growers and buyers to pay the pickers a higher rate for the fruit they harvest. Last October, another major chain, Chipotle, agreed to a settlement in order to stave off a potential boycott.
LISTEN to "'Glass House' Chronicles The Sharp Decline of An All-American Factory Town"—Dave Davies's interview of Brian Alexander
Lancaster, Ohio: About a glass worker factory and its town's collapse Some of this results from a series of conscious decisions by politicians, economists, businessmen -- not just a dinosaur that went extinct Corporate raiding: Carl Icahn bought over 5% and said you either need to make some different decisions or buy me out "Putting it in play" meaning that Icahn People like Icahn says that they make the company more efficient 1987 acquisition of Anchor Hocking by the Newell Corp.: the first thing they do is fire all of the executives and close down the headquarters. So now you have gutted a core group of people that were active in the life of the town. Workers will tell you that Newell was not a bad employer. They were not necessarily unhappy under Newell. But it wasn't the same; it was less of a family atmosphere. Workers who are hourly people and salaried people all say the same thing. They say that the company became somewhat more efficient, that they made money, they made money for Newell, that they were not unhappy under Newell, but it didn't feel like the old Anchor Hocking, and it never would again.
READING: Help for the Way We Work Now By Sara Horowitz
More than half of freelancers surveyed began freelancing by choice, as opposed to financial need, and nearly nine in 10 say they would not take a traditional full-time job if they were offered one. That's because the freelance or gig economy offers American workers the kind of flexibility and independence that was all but impossible to achieve in the past. Instead of watching the clock from a cubicle, freelancers generally set their own hours and are paid for their time. Freelancers, a rapidly expanding share of the electorate, have become a legitimate political constituency, and nobody is effectively speaking up for their needs. In the freelance economy, workers inevitably face periods without pay. But unemployment benefits are not available to most freelancers, so they have virtually no safety net. This portable benefits system would be a new program, but it would not be another government entitlement. Instead, it would be administered by unions, nonprofits, faith-based groups and other community organizations that would collect payments and distribute benefits when freelancers needed them. Little recourse against wage theft
Bargaining Rights of Supervisors
Most states do not exclude public sector supervisors from collective bargaining. This is because many of the functions that supervisors are assumed to have (make independent judgments about critical personnel functions), are handled by civil service employees.
Legal Regulation of the Right to Strike
No state gives public employees a right to strike that is equivalent to the right the NLRA specified for private sector workers. HOWEVER, some states gives such workers a limited right to strike Taylor Law: In NY, this law mandates a "two for one" penalty under which a striking employee is penalized one day's pay for each strike day in addition to the day's pay the employee loses while striking
Hybridization
Organizational forms and practices that are blends between the home-country practices of the MNC and the practices that are common in the country where the MNC is operating
READING: What Private Equity Is— and Why It Matters byEileen Appelbaum and Rosemary Batt
PE's business model is particularly important for labor and employment relations practitioners and scholars, because the law treats PE funds as investors even though they behave as managers of the companies they buy and as employers of workers in those companies. PE's influence also extends beyond the companies it owns—to the communities where its companies are located and to its vendors and their workers along the supply chain In sum, in Private Equity at Work: How Wall Street Manages Main Street, we illustrate the many ways that private equity firms affect the lives of working people —as consumers, workers, retirees, renters, and community members. In some cases, we did find that private equity has provided access to management expertise and financial resources that helps small companies grow. That is because small companies have relatively few assets that can be mortgaged but many opportunities for operational improvements in information technology, accounting, management, and distribution systems. Private equity funds use the assets of the acquired company as collateral, and put the burden of repaying the debt back on the company. In other words, PE firms play with other people's money—money contributed by investors in its funds and borrowed from creditors. Leverage magnifies investment returns in good times—and the general partners of the PE fund collect a disproportionate share of these gains. The results of financial engineering are predictable. When the economy falters, the high debt levels of highly leveraged companies make them much more likely to default on their loans or declare bankruptcy. And in cyclical industries, companies that have to pay rent rather than own their own property are more likely to go under in a recession. The lack of transparency surrounding the activities of PE firms and the funds they sponsor creates important problems for investors in these funds and for the companies they acquire. With the exception of a handful of large private equity firms that are now publicly traded (The Blackstone Group, Apollo Investment Corp., and Carlyle Capital Corp.), PE firms face less stringent reporting requirements and provide far less information to the SEC than public corporations, and very little of what they report is made public The overall solution to private equity's negative consequences is greater transparency, in line with what the SEC currently requires of publicly traded companies. More detailed financial accounting would provide investors, creditors, vendors, suppliers, managers, workers, and unions with information needed to accurately assess how private equity ownership affects their livelihoods. Limiting the amount of debt that can be loaded onto portfolio companies would reduce the risk of bankruptcy of the acquired Main Street companies. Eliminating the capital-gains tax loophole that lets private equity general partners pay the lower capital gains tax rate, rather than the income tax rate, on their share of PE fund profits (so-called carried interest) would make the tax code fairer—and consistent with how other profit-sharing income is taxed.
Participation Programs GOOD ASPECTS
Productivity: - Increased quality if all employees take responsibility for problems. - Increased flexibility of production. - Reduced costs of supervision. - Reduced costs of turnover due to greater job satisfaction. Work life: - More interesting jobs. - Greater autonomy and dignity for workers. - Greater job security and better compensation.