Labor Law & Economics Chapter 1: Contemporary Labor Relations: Objectives, Practices, and Challenges

Possible reasons for the decrease in union density

1. Employment has declined in unionized industries (manufacturing) while increasing in nonunion industries (services) A. structural/compositional changes (demographics, faster employment growth, more women, increase in education) B. Inability of unionized workplaces to compete in dynamic economy (decline in private sector unionization) 2. Demand for union services has declined A. Demand can decline because unions aren't doing a good job of responding to the desires of a changing workforce (overcoming negative stereotypes in American culture) B. If employers have improved their responsiveness to employees needs, this can reduce demand for union protection and advocacy C. Increased protective legislation (provided a substitute for unions) Civil Rights Act and Equal Pay Act, OSHA, ACA 3. The employer resistance or opposition (most controversial) - rather than investing in unionized plants, U.S. companies often invest in nonunion operations.

Example of labor strikes decreasing the public good (Firestone Tires)

1. Firestone tires caused numerous deaths during two critical periods of labor-management conflict

Important questions when evaluating labor law or union contracts.

1. How do property rights conflict with workers' rights. - Do seniority-based promotion policies strike a good balance? 2. Does the U.S. labor relations system need to be reformed?

How does the U.S. labor relations processes promote Efficiency, Equity, and Voice

1. Increasing the purchasing power of workers and reducing disruptive strike activity (efficiency) 2. Achieving fair labor standards and protection against worker exploitation (equity) 3. Providing democracy in the workplace (voice) However, labor laws in the U.S. may not directly correlate with these three factors. U.S. labor laws specifies how parties must act during bargaining, but doesn't clearly state procedures for the outcome of the bargaining process

Example of this disconnect

1. Individuals who defraud shareholders can be sentenced to 25 years in jail ---- but an employer that violates federal workplace standards (resulting in a worker's death) faces a maximum jail time of only six months.

An example of society's role for labor relations. "We are 99%"

1. Raised awareness for the dramatic increase in income inequality that has occurred since 1980 2. Part of the problem for income inequality = weakening of labor unions 3. income inequality burdens taxpayers and destabilizes society

4 major processes of labor unions

1. The union organization process (how unions are formed) 2. The collective-bargaining process (how contracts are negotiated) 3. The dispute resolution process (how bargaining impasses are prevented or resolved) 4. The contract administration process (how grievances over the application of the contract are managed)

Four learning objectives of this chapter

1. Understand - Why studying labor relations is important and how the subject can be fascinating 2. Define - the objectives of the employment relationship (efficiency, equity, and voice) and of labor relations (striking a balance) 3. Describe - the basic features of the contemporary U.S. labor relations system: A) collective bargaining B) detailed union contracts C) private sector union destiny decline 4. Discuss - Current pressures on the U.S. labor relations system Different sides include: A) Corporate side B) Workplace flexibility C) employment involvement D) Labor side E) Low union density F) representation gap G) Difficulties in organizing new workers

Workplace policies that promote flexibility and productivity

1. decent wage 2. benefit packages 3. policies that dismiss workers only for valid, performance-related reasons

Official policy of the U.S.

1. encourage the practice/procedure of collective bargaining 2. protect workers' rights to join together (negotiating terms/conditions of employment and other mutual aid protection) 3. U.N. = Everyone has the right to form and to join trade unions for the protection of his interests

Because work is a fully human activity, employees are entitled to

1. fair treatment 2. opportunities to have input into decisions that affect their daily lives Lack of minimal standards and nondiscriminatory treatment = contradicts democracy and moral views on human life/dignity.

What might a labor union fight for?

1. improved wages/benefits 2. protection against arbitrary treatment/discharge 3. greater voice in workplace decision making

How can labor unions be beneficial for society as a whole?

1. labor-management relationships that produce well-trained and motivated unionized employees produces thousands of police, firefighters, and other unionized rescue workers. 9/11 terrorist attacks, nurses that work all hours (providing compassionate care)

Three major ways business pressures for competitiveness, quality, and financial returns in the 1980's pressured the collective-bargaining process.

1. the business need for flexibility (efficiency) clashes with lengthy contracts that spell out detailed work rules (equity) - experimentation with shorter contracts, flexible compensation systems 2. Business need for cooperation and employee involvement clashes with the traditionally adversarial bargaining process in which labor and management use aggressive tactics to extract as many gains or concessions as they would allow - culture of joint problem solving, rather than competition 3. The need for both flexibility and involvement is not well served by a process in which contracts are renegotiated every 3 years or so with little productive communication (voice) between these formal negotiating periods.

Why do people oppose labor unions?

1. they believe there's a better alternative way to seek efficiency, equity, and voice "the invisible hand" theory states that managers won't balance these 3 things 2. Corporations have significantly more bargaining power (in theory)

Exceptions to employment-at-will

1. violates anti-discrimination laws 2. violates a labor union contract 3. firing an employee for refusing to do something illegal for the company There are very few exceptions, which allows U.S. employers to not have a good reason to fire someone. employment-at-will views workers more like economic commodities than humans

Quality of life change overtime

1.Earlier agrarian and crafts-based societies quality of life for an individual/families = property 2. Now = modern families are completely dependent on jobs, not property Working adults spend much of their lives at work "The workplace is the single most important site of cooperative interactivity and sociability among adult citizens outside the family. Because individuals spend so much time in a work environment, the quality of employment and the nature of the workplace is extremely important.

"Neoliberal Market Ideology" (AKA, Voluntary, Market-based economic transactions

An ideology that privilege property rights over workers' rights - because basic economic theory shows that competitive markets and well-defined property rights are optimal for achieving efficiency. - The key right of workers is the ability to quit jobs they don't lie, and labor unions should not enjoy any special legal protections.

Are labor unions a "bygone era" for the U.S. now?

Kind of Unions represent less than 12% of the U.S. workforce. However, this is still a large number of workers in many of the country's leading companies even unusual industries like phone companies, legislative proposals for bargaining rights, debates over pay for performance unionized teachers) Walmart, or local hotels also have employees that want to unionize All managers and business professionals can benefit from learning about labor relations, regardless of union presence. - Studying labor relations ca help business leaders appreciate historical, social, and political influences on business with the realities of managing a business in a complex world

Examine this statement. "Many argue that labor law is outdated because few business features remain true since WW2 (mass manufacturing, sharp distinctions between manual (blue-collar) and managerial (white-collar) workers, and America's domination of world markets)"

The business climate of the 21st century is characterized by flexible production methods, rise of knowledge workers, blurring between brawn/brains, and intense global competition.

How do non-union employer pursue goals of being cost-effective and profitable?

They try to remain union-free through preventive labor relations strategies These strategies can range from "aggressive union-busting tactics that scare workers away from unions) to "progressive HRM tactics that seek to make unions necessary"

Worker's Perspective vs Employer's Perspective of labor unions

Worker's Perspective = Labor relations are about A) collective work-related protection B) influence c) voice Employer's perspective = labor relations are about A) managing relationships with employees and labor unions in ways that promote organizational goals - these goals include 1. profitability (private sector) and 2. cost-effective service delivery (public sector)

What about unionized employers? Could they use the same strategies as non-unionized employers?

Yes 1. They may undermine labor unions by using these same strategies w. However, most deal with their unions, constructively (primarily through collective bargaining, adhering to the union contracts, and resolving disputes through grievance procedures. (Competitive pressures are transferred to the bargaining table)

What does the U.S. labor relations system attempt to balance?

balance the objectives of 1) employees 2) employers 3) society

The greatest challenges in labor relations arise from __________

conflicting goals Clashes between (efficiency ----- equity and voice) Companies prefer paying lower wages, but employees desire higher wages Employees want security, but managers want flexibility

Foundation of any work-related subject is the objectives of ______

the employment relationship Examples: 1) What do you want to get out of work? 2) How do you want to be treated? 3) Do you want to have control over your job? 4) What does your employer want? Essentially - What should be the goals of work?

When the collective-bargaining process results in terms that are approved by both upper management and union members, the provisions are written down and bound into a __________

union contract - legally enforceable collective-bargaining agreement UAW and GM in 1937 = one page long UAW - General Motors = hundreds of pages long

The key measure of the state of organized labor is __________

union density

Statistics on the representation gap

1. 1/3 of nonunion workers would like a union in their workplace union density rate of 40% in the private sector Difference between the desired union density rate of 40% and the actual private sector rate of 10% is the private sector representation gap.

Surveys/Statistics about the "voice" of workers in America

1. 63% want more influence over "company decisions that affect your job or work life" 2. Individuals indicated that they would enjoy their jobs more if they had a greater voice in the workplace 3. Businesses would also be more competitive if more employees had greater voice influence

How might a labor union serve as a Democracy?

1. Allows labor unions to promote decent working and living conditions that free/equal citizens deserve 2. Provide a voice for workers in the political field

"Fight for 15 movement" Summary

1. April 14, 2016, fast-food workers walked off the job or didn't report to work 2. Occurred in Milwaukee, Atlanta, Denver, Boston, Minneapolis, and Seattle. - Eventually grew to Chile, Thailand, and France (thousands of workers in over 300 cities participated) 3. Fought for higher minimum wages and better working conditions 4. Supported by social media 5. Use collective action to enforce change

U.S. labor relations system (in a nutshell)

1. Based on the belief that labor and management should freely interact and resolve their conflicts that appropriately respects the rights of each party involved 2. Balance property rights, efficiency, equity, and voice.

6 main subjects of bargaining

1. Compensation - wages, benefits, vacations and holidays, shift premiums, profit sharing 2. Personnel Policies and Procedures - layoff, promotion, and transfer policies, overtime and vacation rules 3. Employee rights and responsibilities - seniority rights, job standards, workplace rules 4. Employer rights and responsibilities - management rights, just cause discipline/discharge, subcontracting, safety standards 5. Union rights and responsibilities - recognition as a bargaining agent, bulletin board, union security, dues checkoff, shop stewards, no strike clauses 6. Dispute resolution and ongoing decision making - grievance procedures, committees, consultation, renegotiation procedures Crucial feature = management's traditional authority is to be replaced with bilateral negotiations

Three objectives of the employment relationship (based on the book)

1. Efficiency - standard of economic or business performance 2. Equity - standard of fair treatment for employees 3. Voice - standard of employee participation

Disconnect between efficiency and the American image.

1. Efficiency = primary objective for business leaders, b schools, b press, politicians - profits are seen as the critical barometer of economic health (not wages) 2. However, in the American social imagination, we are a nation of consumers, not workers

Labor Union

A group of workers who join together to influence the nature of their employment

Why might society encourage unionism?

Because labor unions can help strike a balance between efficiency, equity, and voice

Potential problems with the employment-at-will doctrine.

It allows employers to fire workers for many reasons - or no reason at all. - U.S is unique among industrialized countries in the lack of just-cause discharge protections (lack of preventative measures for arbitrary job loss)

Most of the world's labor relations systems are based on a _______ position

Compromise position - A purist perspective that sees the employment relationship as analogous to a pluralist political society in which multiple parties have legitimate (but sometimes conflicting) interests Compromise = property rights and workers' rights should be balanced

State one example of how each of these terms can be violated. a. Efficiency b. Equity c. Voice

Efficiency = low pay and worker unrest can cause inefficiency (through lack of consumer purchasing power and economic disruptions because of other labor disputes) Equity = long hours at low pay under dangerous/discriminatory conditions violate equity Voice = employer dictation of employment conditions and autocratic supervision (manager has all the power) fail to provide employee voice counters democratic standards (All labor relations systems in all countries seek to balance efficiency, equity, and voice)

Representation gap

Employees say they want more representation in the workplace than they have

How is U.S. labor law criticized by union supporters?

It's too weak 2. Weak health of the U.S. labor movement in 2015 were an estimated 14.8 million. Figure 1.4 (U.S. Union Membership, 1950-2015)

Equity

Fairness in the distribution of economic rewards The administration of employment policies The provision of employee security

True or False? Managers prefer to deal with workers as a group.

False Managers prefer to deal with workers one-on-one, while workers prefer to deal with management as a group.

True or False? The U.S. labor relations system is well accepted among most Americans. Facing little criticism or pressures among the public.

False The U.S. labor relations system faces significant pressures and continues to be criticized from many directions

True or False? U.S. labor relations processes are loosely regulated by the legal system.

False They're tightly regulated by the legal system. 1. The employer has a legal obligation to bargain with the union over wages, hours, and other term (if workers want union representation) 2. Workers cannot be fired/discriminated for support of a union 3. Employers cannot threaten employees or undertake other actions for the sole purpose of preventing unionization.

True or False? Most of the time, the three objectives of Voice, Efficiency, and Equity work together when it comes to the objectives of labor relations.

False? Most of the time, these goals may conflict with one another. Example - Equitable treatment might reduce flexibility and efficiency. - employee voice might make decision making more cumbersome and less efficient. Sharpest conflicts = (Efficiency ≠ equity and voice) Labor relations must strike a balance between these 3 aspects.

Example of how solely focusing on efficiency is bad.

For efficiency's sake, let's say that an employer only hires African American janitors and white managers. This wouldn't be acceptable. Thus, there are boundaries when it comes to equity and voice for these employees.

Can labor strikes deprive consumers of goods and services?

Of course Hospital strikes can increase mortality rates

Efficiency

Productive, profit-maximizing use of labor to promote economic prosperity

AFL-CIO

The American Federation of Labor-Congress of Industrial Organizations - umbrella federation for most U.S labor unions "A Voice for America's Working Families" "Together We Can Make Our Voice Heard" social commentators, labor leaders, and workers want = equity, voice, efficiency equity = fairly distributed outcomes voice = participation in decision making efficiency = profitable and effective production of goods/services

Voice

The ability of employees to have meaningful input into workplace decisions

Industrial Democracy

The belief that workers in a democratic society are entitled to the same democratic principles of participation in the workplace Employee voice is essential for industrial democracy Along with wages/material benefits, work is about dignity, voice, and freedom

Collective Bargaining

Representatives of the employer and the employees negotiate the terms and conditions of employment that will apply to the employees.

"Gloves off economy"

Some employers avoid established labor standards and undermine more reasonable employers.

union density

The percentage of workers who are union members Declined since 1955 from 35% to 6.7% in the U.S.

True or False? Society sets the ground rules for how corporations can make profits

True Thus, it establishes rights and obligations for corporations, unions, and workers (Labor relations systems must resolve conflicts that might impede on unionization)

The starting point for studying labor relations is consideration of the objectives of a _______ _______ _______

labor relations system