1. Chapter 14 Collective Bargaining and Labor Relations
Human Resource Management: Gaining a Competitive Advantage
Chapter 14
Collective Bargaining and Labor Relations
This chapter covers the important role of labor relations in running a business and the influence of competitive challenges on the nature of labor relations. Global competition has forced a rethinking of core strategies. To be more competitive, companies such as automakers must reduce cost but also improve quality. For example, to do so, GEMA needed to convince UAW workers to cooperate in developing a new model of labor relations. Their employment depends on their efficiency. This common goal is what binds management and labor together in a search for improved competitiveness.
McGraw-Hill/Irwin
Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

2. Learning Objectives
Describe collective bargaining and labor relations.
Identify labor relations, goals of management, labor unions and society.
Explain legal environment's impact on labor relations.
Describe major labor-management interactions: organizing, contract negotiations and contract administration.
Describe new, less adversarial approaches to labor- management relations.
Explain how changes in competitive challenges are influencing labor-management interactions.
Explain how labor relations in public and private sectors differ.
This chapter provides an overview of private‑sector labor‑management relations in the United States, with brief attention to public‑sector differences and international labor relations. Unions can achieve important worker goals, including high wages. However with global competition, high wages without high worker productivity threatens a company’s survival.
Learning Objectives:
Describe collective bargaining and labor relations.
Identify labor relations, goals of management, labor unions and society.
Explain legal environment's impact on labor relations.
Describe major labor-management interactions: organizing, contract negotiations and contract administration.
Describe new, less adversarial approaches to labor-management relations.
Explain how changes in competitive challenges are influencing labor-management interactions.
Explain how labor relations in the public and private sectors differ.
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3. Labor Relations Framework 4 Elements of John Dunlop’s Labor Relations System
Environmental
Context
Participants
Web of Rules
Ideology
John Dunlop suggested a labor relations system that consists of four elements:
An environmental context (technology, market forces, etc.).
Participants (employees and their unions, management, and the government).
A web of rules (rules of the game) that describe the process by which labor and management interact and resolve disagreements.
Ideology (acceptance of the system and participants).
For the industrial relations system to operate properly, the three participants must, to some degree, have a common ideology (like acceptance of the capitalist system) and must accept the roles of the other participants. Acceptance does not translate into convergence of interests, however. To the contrary, some degree of worker–management conflict is inevitable because, although the interests of the two parties overlap, they also diverge in key respects (such as how to divide the economic profits). Therefore, according to Dunlop and other U.S. scholars of like mind, an effective industrial relations system does not eliminate conflict. Rather, it provides institutions (and a “web of rules”) that resolve conflict in a way that minimizes its costs to management, employees, and society. The collective bargaining system is one such institution, as are related mechanisms such as mediation, arbitration, and participation in decision making. These ideas formed the basis for the development in the 1940s of schools and departments of industrial and labor relations to train labor relations professionals who, working in both union and management positions, would have the skills to minimize costly forms of conflict such as strikes (which were reaching record levels at the time) and maximize integrative (win–win) solutions to such disagreements.
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4. Labor Relations Framework
Competitive Challenges
- Legal
- Stakeholder needs
- High-performance
work systems
-Globalization
Goals
-Employees & Unions
- Management
- Society
Union Membership
&Relative Bargaining
Power
A more recent industrial relations model, developed by Harry Katz and Thomas Kochan, is particularly helpful in laying out the types of decisions management and unions make in their interactions and the consequences of such decisions for attainment of goals in areas such as wages and benefits, job security, and the rights and responsibilities of unions and managements. The labor relations framework depicted in Figure 14.1 incorporates many of the ideas discussed so far, including the important role of the environment (the competitive challenges); union, management, and societal goals; and a separation of union– management interactions into categories (union organizing, contract negotiation, contract administration) that can have important influences on one another but may also be analyzed somewhat independently. The model also highlights the important role that relative bargaining power plays in influencing goals, union–management interactions, and the degree to which each party achieves its goals. Relative bargaining power, in turn, is significantly influenced by the competitive environment (legal, social, quality, high-performance work systems, and globalization competitive challenges) and the size and depth of union membership.
Goal Attainment
- Employees& Unions
- Management
- Society
Union Structure
& Administration
Union&Management
Interactions
- Organizing
- Negotiating
- Administering
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5. Goals & Strategies
Society- labor unions' major benefit to society has been balancing power and institutionalization of industrial conflict least costly way.
National Labor Relations Act (NLRA, 1935) provides a legal framework conducive to collective bargaining.
Management- decides to encourage or discourage unionization.
Labor Unions- seek to give workers formal and independent voice through collective action in setting employment terms and conditions.
Labor unions' major benefit to society throughout history has been the balancing of power and the institutionalization of industrial conflict in the least costly way. The National Labor Relations Act (NLRA, 1935) sought to provide a legal framework conducive to collective bargaining. Management must decide whether to encourage or discourage the unionization of its employees. Based upon issues of wage cost, flexibility, and labor stability, as well as ideology, management must decide. Labor unions seek to give workers formal representation in setting the terms and conditions of employment.
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6. Union Structure, Administration & Membership
National and International Unions
Craft unions
Industrial unions
Local Unions
Responsible for contract negotiations and day- to-day contract administration, including grievance procedure.
AFL-CIO
Not a union but rather an association that advances shared interest of its member unions at the national level.
Most union members belong to a national or international union. In turn, most national unions are composed of multiple local units, and most are affiliated with the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO). The largest national unions are listed in Table (The National Education Association, with 3,200,000 members, is not affiliated with the AFL-CIO.) An important characteristic of a union is whether it is a craft or industrial union. Craft unions are those that organize members of a particular skill or trade, such as electricians or plumbers. Industrial unions are made up of members who work in any number of positions in a given industry, such as the auto or steel industry. Local unions are frequently responsible for the negotiations of a contract as well as the day‑to‑day administration of the contract, including the grievance procedure. The AFL‑CIO is not a union but rather an association that seeks to advance the shared interest of its member unions at the national level. It represents labor's interests in public policy issues and provides numerous services to its members, in terms of research and education.
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7. Provisions of Collective Bargaining Contracts
Special groups
Employee benefit plans
Functions, rights & responsibilities
Establish & administer agreement
Table 14.1 Shows typical provisions in collective bargaining contracts.
Establish & administer agreement
Employee benefit plans
Wages
Plant Operations
Job or income security
Paid and unpaid leave
Special groups
Functions, rights and responsibilities
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8. Union Security Check-off Provision Right-to- Work Laws Closed Shop
Maintenance
of Membership
Union
Shop
Union security depends upon its ability to ensure a stability of members and dues. Unions typically negotiate two contract provisions that define the relationship an employer has to employees and that are critical to a union’s security or viability. Check-off provision is an automatic deduction of union dues from an employee's paycheck.
A closed shop is a union security provision under which a person must be a union member.
A union shop requires a person to join the union within a certain length of time after beginning employment.
An agency shop is similar to a union shop, but does not require union membership, only that an agency fee be paid.
Maintenance of membership requires only that those who join the union remain members through the life of the current contract.
Right‑to‑work laws—As a function of the Taft‑Hartley amendment to the NLRA, states may decide to make mandatory union membership (or even dues paying) illegal.
Agency
Shop
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9. Reasons for Decline in Union Membership
Structural Changes in the Economy
Substitution with HRM
Worker Views
Increased Employer Resistance
Substitution by Government Regulation
Union Actions
Wages for union members are typically 10-15% higher than non-union.
Employers are increasingly resisting unionization. Almost one-half of large employers in a survey reported that their most important labor goal was to be union-free. Unions are making new attempts to organize new memberships and to provide new services. Union membership has consistently declined since 1950 and now union membership in U.S. is roughly 12% percent of all employment and 6.9% of private-sector employment.
Reasons for this decline include:
Structural Changes in the Economy—These changes include decline in core manufacturing and increase in the service sector.
Increased Employer Resistance—Almost 50 percent of large employers in a survey reported that their most important labor goal was to remain union-free. Unions' ability to organize whole industries has declined, and therefore wages are rarely taken out of competition. Additionally, studies have shown that if a union wins an election, it is frequently the case that managers lose their jobs (see Figure 14.4 for the increase in employee resistance to union organizing).
Substitution with HRM—In large nonunion companies, HRM policies and practices may encourage positive employee relations, and therefore union representation is not desired by employees. Substitution by Government Regulation—Employment laws have been passed that reduce the areas in which unions can make a contribution.
Worker Views—The lack of a U.S. history of feudalism and class distinctions has limited the class‑consciousness needed to support a strong union movement.
Union Actions—Corruption, resistance to obvious economic change, and questionable openness to women and minorities have all hurt the perception of unions.
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10. Legal Framework
Wagner Act of 1935 (NLRA) enshrined collective bargaining as the preferred mechanism for settling labor- management disputes.
Section 7 of the NLRA: employees have the
"right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing and to engage in other concerted activities for the purpose of collective bargaining."
Legislation and court decisions that provide the structure within which unions must operate have had an effect upon membership, bargaining power, and the degree to which unions and managements are successful in achieving their goals. The Great Depression of the 1930s shifted public attitudes toward business and the free-enterprise system.
The NLRA specifically excludes from its coverage individuals who are
• Employed as a supervisor.
• Employed by a parent or spouse.
• Employed as an independent contractor.
• Employed in the domestic service of any person or family in a home.
• Employed as agricultural laborers.
• Employed by an employer subject to the Railway Labor Act.
• Employed by a federal, state, or local government.
• Employed by any other person who is not an employer as defined in the NLRA.
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11. Unfair Labor Practices (ULPs)
NLRA prohibits certain activities by both employers and labor unions.
Employers cannot:
interfere with, restrain, or coerce employees in exercising their Section 7 rights.
dominate or interfere with a union.
discriminate against an individual for exercising his or her right to join or assist a union.
discriminate against employees for providing testimony relevant to enforcement of the NLRA.
refuse to bargain collectively with a certified union.
The National Labor Relations Act (1935) prohibits certain activities by both employers and labor unions. Section 8(a) of the NLRA contains ULPs by employers.
Employers cannot interfere with, restrain, or coerce employees in exercising their Section 7 rights.
Employers cannot dominate or interfere with a union.
Employers may not discriminate against an individual for exercising his or her right to join or assist a union.
Employers may not discriminate against employees for providing testimony relevant to enforcement of the NLRA.
Employers cannot refuse to bargain collectively with a certified union (other examples are given in text Table 14.4).
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12. Unfair Labor Practices of Unions
1947 Taft-Hartley Act
outlawed unfair labor union practices.
1959 Landrum-Griffin Act
regulated unions’ actions and internal affairs (financial disclosure and conduct of elections).
Originally the NLRA did not list any union unfair labor practices. These were added by the 1947 Taft‑Hartley Act. These ULPs parallel those listed previously. For example, unions may not restrain or coerce employees in the exercise of their Section 7 rights.
Table 14.5 in the text provides examples of union unfair labor practices such as
Mass picketing in such numbers that nonstriking employees are physically barred from entering the plant.
• Acts of force or violence on the picket line or in connection with a strike.
• Threats to employees of bodily injury or that they will lose their jobs unless they support the union’s activities.
• Fining or expelling members for crossing a picket line that is unlawful.
• Fining or expelling members for filing unfair labor practice charges or testifying before the NLRB.
• Insisting during contract negotiations that the employer agree to accept working conditions that will be determined by a group to which it does not belong.
• Fining or expelling union members for the way they apply the bargaining contract while carrying out their supervisory responsibilities.
• Causing an employer to discharge employees because they spoke out against a contract proposed by the union.
• Making a contract that requires an employer to hire only members of the union or employees “satisfactory” to the union.
• Insisting on the inclusion of illegal provisions in a contract.
• Terminating an existing contract and striking for a new one without notifying the employer, the Federal Mediation and Conciliation Service, and the state mediation service (where one exists).
• Attempting to compel a beer distributor to recognize a union (the union prevents the distributor from obtaining beer at a brewery by inducing the brewery’s employees to refuse to fill the distributor’s orders).
• Picketing an employer to force it to stop doing business with another employer who has refused to recognize the union (a “secondary boycott”).
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13. Enforcement National Labor Relations Board (NLRB) enforces NLRA.
NLRB is a five-member board appointed by the president with 33 regional offices.
NLRB’s major functions:
conduct & certify representation elections.
prevent unfair labor practices.
ULP charges are filed and investigated by regional offices.
The National Labor Relations Board (NLRB) has the primary responsibility for enforcing the NLRA. The NLRB’s two major functions are to conduct and certify representation elections and prevent unfair labor practices. In both realms, it does not initiate action. Rather, it responds to requests for action. Some of the other ways are that only businesses involved in interstate commerce are covered by the NLRA and therefore subject to the NLRB. The NLRB may defer to the parties' grievance process instead of holding a hearing. And the NLRB can issue a cease‑and‑desist order to halt a ULP. It may order reinstatement and back pay. The court of appeals can choose to enforce the NLRB's orders.
The Employee Free Choice Act, which President Barack Obama supports, would make major changes to the organizing process. One change would be to eliminate the secret-ballot election and instead simply require that a majority of employees sign authorized cards.
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14. Why Do Employees Join Unions?
Is there a gap between pay, benefits and other conditions of employment that employees actually receive versus what they believe they should receive?
If such a gap exists, is it sufficiently large enough to motivate employees to remedy the situation?
An employee must ask and answer two questions when deciding whether or not to join a union.
Is there a gap between pay, benefits, and other conditions of employment that employees actually receive versus what they believe they should receive?
If such a gap exists, is it sufficiently large enough to motivate employees to remedy the situation?
The outcome of an election campaign hinges on how the majority of employees answer these two questions.
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15. Organizing Process & Legal Framework
An election may be held if at least 30% of employees in the bargaining unit sign authorization cards.
Secret ballot election will be held. The union is certified by NLRB if a simple majority of employees vote for it.
Decertification election may be held if no other election has been held within the year or if no contract is in force.
Certain categories of employees cannot be included in bargaining units-agricultural laborers, independent contractors, supervisors, and managers.
NLRB is responsible for ensuring that the organizing process follows certain steps. An election may be held if at least 30 percent of the employees in the bargaining unit sign authorization cards. If the employer refuses to recognize the union voluntarily, the NLRB conducts a secret ballot election. The union is certified by the NLRB if a simple majority of employees vote for it. Decertification election may be held if no other election has been held within the year or if no contract is in force. The NLRB must define the appropriate bargaining unit and the employees who are eligible to participate in organizing activities. Certain categories of employees cannot be included.
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16. Organizing Campaigns
NLRB may set aside election results if the employer created an atmosphere of confusion or fear of reprisals.
Associate union membership-union receives dues in exchange for services but does not provide representation in collective bargaining.
Corporate campaigns bring public, financial or political pressure on employers during the organizing and negotiating process.
Unions attempt to persuade employees that their wages, benefits, treatment by employers, and opportunity to influence workplace decisions are not sufficient and that the union will be effective in obtaining improvements. Management emphasizes that it has provided a good package of wages, benefits, and so on. It also argues that, whereas a union is unlikely to provide improvements in such areas, it will likely lead to certain costs for employees, such as union dues and the income loss resulting from strikes. Employers use a variety of methods to oppose unions in organizing campaigns. Additionally, note the significant increase in employer ULPs since the late 1960s. The consequence of breaking the law in this situation is minimal. The NLRB may set aside the results of an election if the employer has created "an atmosphere of confusion or fear of reprisals.” Associate union membership is a form of union membership in which the union receives dues in exchange for services but does not provide representation in collective bargaining.
Corporate campaigns seek to bring public, financial, or political pressure on employers during the organizing and negotiating process.
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17. Union and Management Interactions: Negotiation Process
Distributive
Bargaining
- Win/Lose
Intraorganizational
Bargaining
Conflicting Objectives
Different Factions
Integrative
Bargaining
- Win/Win
Attitudinal
Structuring
- Relationship & Trust
Richard Walton and Robert McKersie suggested that labor–management negotiations could be broken into four subprocesses: distributive bargaining, integrative bargaining, attitudinal structuring, and intraorganizational bargaining.
Distributive bargaining occurs when the parties are attempting to divide a fixed economic pie into two parts. What one party gains, the other loses.
Integrative bargaining has a win‑win focus; it seeks solutions beneficial to both sides.
Attitudinal structuring refers to the relationship between labor and management negotiators.
Intraorganizational bargaining is the consensus‑building and negotiations that go on between members of the same party.
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18. 7 Steps to Prepare Managers for Negotiations
Establish interdepartmental contract objectives.
Review old contract.
Prepare and analyze data.
Anticipate union demands.
Establish costs of various contract provisions.
Make preparations for a strike.
Determine strategy and logistics.
Management's preparation for negotiations is critical to labor costs and productivity issues. The following steps are suggested:
Establish interdepartmental contract objectives among industrial relations and finance, production, and so on.
Review the old contract to focus on provisions needing change.
Prepare and analyze data on labor costs, your own and competitors'. Data on grievances, compensation, and benefits must be examined as well.
Anticipate union demands by maintaining an awareness of the union perspective.
Establish the potential costs of various possible contract provisions.
Make preparations for a strike, including possible replacements, security, and supplier and customer.
Determine the strategy and logistics for the negotiators.
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19. Negotiation Stages and Tactics
Early
includes many individuals, as union proposals are presented
Middle
each side makes decisions regarding priorities, theirs and the other parties
Final
momentum may build toward settlement or pressure may build as impasse becomes more apparent. May involve interaction with negotiators or facilitators
Negotiations go through various stages. The early stages may include many individuals, as union proposals are presented.
During the middle stages, each side makes decisions regarding priorities, theirs and the other parties'.
In the final stage, momentum may build toward settlement or pressure may build as an impasse becomes more apparent. May involve interaction with negotiators or facilitators. More small groups are used to address specific issues.
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20. Management’s Willingness to Strike
1. Can the company remain profitable over the long run if it agrees to the union’s demands?
2. Can the company continue to operate in the short run despite a strike?
Management’s willingness to take a strike comes down to two questions:
Can the company remain profitable over the long run if it agrees to the union’s demands?
The answer is more likely to be yes to the extent that higher labor costs can be passed on to consumers without losing business. This, in turn, is most likely when (1) the price increase is small because labor costs are a small fraction of total costs or (2) there is little price competition in the industry. Low price competition can result from regulated prices, from competition based on quality (rather than price), or from the union’s organizing all or most of the employers in the industry, which eliminates labor costs as a price factor. Unions share part of management’s concern with long-term competitiveness because a decline in competitiveness can translate into a decline in employment levels. On the other hand, the majority of union members may prefer to have higher wages, despite employment declines, particularly if a minority of the members (those with low seniority) suffer more employment loss and the majority keep their employment with higher wages.
2. Can the company continue to operate in the short run despite a strike?
Although “hanging tough” on its bargaining goals may pay off for management in the long run, the short-run concern is the loss of revenues and profits from production being disrupted. The cost to strikers is a loss of wages and possibly a permanent loss of jobs.
Most negotiations do not result in a strike since it is often not in the best interest of either party.
Most negotiations do not result in a strike since it is often not in the best interest of either party.
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21. Management’s Willingness to Strike
7 Factors If Management Is Able To Strike:
Product Demand
Product Perishability
Technology
Availability of Replacement Workers
Multiple Production Sites and Staggered
Contracts
Integrated Facilities
Lack of Substitutes for Product
Management has several factors to consider before taking a strike. The following seven factors are also determinants as to whether management could handle a strike.
Product Demand—If it's strong, there is greater potential loss for management.
Product Perishability—A strike timed with perishability of a crop results in permanent revenue loss.
Technology—A capital‑intensive firm is less dependent on labor for continued operation.
Availability of Replacement Workers—(Note that the Clinton Administration issued an executive order that at the time of publication was under an injunctive order. This executive order prohibits federal contractors from permanently replacing striking workers.)
Multiple Production Sites and Staggered Contracts—These permit the shifting of work from a struck site.
Integrated Facilities—If parts are not available from a struck plant, other facilities may be shut down.
Lack of Substitutes for the Product—A strike is less costly if customers cannot purchase substitute goods.
Bargaining outcomes also depend on the nature of the bargaining process and relationship, which includes the types of tactics used and the history of labor relations. The vast majority of labor–management negotiations do not result in a strike because a strike is typically not in the best interests of either party. Furthermore, both the union and management usually realize that if they wish to interact effectively in the future, the experience of a strike can be difficult to overcome. When strikes do occur, the conduct of each party during the strike can also have a lasting effect on labor management relations. Violence by either side or threats of job loss by hiring replacements can make future relations difficult.
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22. Alternatives to Strikes
Mediation-Has no formal authority to force a solution; acts as a facilitator for parties.
Fact finder-Investigates and reports on reasons for dispute and both sides' positions.
Arbitration-Process through which a neutral party makes a final and binding decision.
Given the substantial costs of strikes to both parties, procedures that resolve conflicts without strikes have arisen in both the private and public sectors. Because many public sector employees do not have the right to strike, alternatives are particularly important in that arena. Mediation is provided by the Federal Mediation and Conciliation Service. While a mediator has no formal authority to force a solution, he or she acts as a facilitator for the parties, trying to help find a way to resolve an impasse. A fact finder is most commonly used in the public sector. The fact finder's job is to investigate and report on the reasons for the dispute and both sides' positions. Arbitration is a process through which a neutral party makes a final and binding decision. Traditionally, rights arbitration (the interpretation of contract terms) is widely accepted, while interest arbitration (deciding upon the outcome of contract negotiation) is used much less frequently.
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23. Grievance Procedure Negotiation process occurs every three years.
Negotiation & administration processes are linked.
Effectiveness of grievance procedures’ three criteria:
How well are day-to-day problems resolved?
How well does the process adjust to changing circumstances?
In multi-unit contracts, how well does the process handle local contract issues?
Duty of Fair Representation-all members have equal access to & representation by the union.
The grievance procedure is a process developed to resolve labor management disputes over the interpretation and implementation of the contract. The two processes—negotiation and administration—are linked.
The WWII War Labor Board first institutionalized the use of a third‑party neutral, called an arbitrator. The effectiveness of grievance procedures may be judged on three criteria:
How well are day‑to‑day problems resolved?
How well does the process adjust to changing circumstances?
In multi‑unit contracts, how well does the process handle local contract issues?
The duty of fair representation is mandated by the NLRA and requires that all bargaining unit members, whether union members or not, have equal access to and appropriate representation in the grievance process.
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24. Grievance Procedure Arbitration is a final and binding step.
7 criteria arbitrators used to reach decisions:
Did the employee know the rule & consequences of violating it?
Was the rule applied in a consistent & predictable way?
Were facts collected in a fair & systematic way?
Did the employee have the right to question facts & present a defense?
Does the employee have the right of appeal?
Is there progressive discipline?
Are there mitigating circumstances?
Arbitration is a final and binding step. The Supreme Court, through three cases known as the Steelworkers' Trilogy, confirmed the credibility and binding nature of the arbitrator's decision. What types of issues most commonly reach arbitration? Discharge and disciplinary issues top the list. Other frequent issues include the use of seniority in promotion, layoffs, transfers, work assignments, and scheduling; wages; and benefits. What criteria do arbitrators use to reach a decision? In the most common case— discharge or discipline—the following due process questions are important:
Did the employee know the rule and the consequences of violating it?
Was the rule applied in a consistent and predictable way?
Were the facts collected in a fair and systematic way?
Did the employee have the right to question the facts and present a defense?
Does the employee have the right of appeal?
Is there progressive discipline?
Are there mitigating circumstances?
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25. New Labor Management Strategies
3 signs of transformation from adversarial approach to union-management relations.
increasing worker involvement
& high performance work practices and systems
participation
Reorganizing work to increase flexibility
There are signs of a transformation from an adversarial approach to a less adversarial and more constructive approach to union‑management relations.
The transformation includes increasing worker involvement and participation and reorganizing work to increase flexibility. New approaches to labor relations, referred to as high performance work practices or systems, such as greater employee participation in decisions, employee teams, job rotation, multiskilling, and sharing financial gains can contribute to an organization’s effectiveness as well as to workers’ wages and job satisfaction.
Union leaders have frequently resisted such change, fearing an erosion of their influence.
These new approaches (within the boundaries of legality) to labor relations may add to an organization's effectiveness.
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26. Labor Relations Outcomes
Strikes impose significant costs on union members, employers, and society.
Wages and Benefits
In 2010, private-sector unionized workers received 9% higher wages that nonunion counterparts.
Total compensation was 29% higher for union-covered employees because of unions’ effect on benefits.
Productivity effects of unions is debated.
Union workers are more productive than nonunion workers.
Profits and Stock Performance may suffer under unionization if costs are raised.
The effectiveness of labor relations can be evaluated from management, labor, and societal perspectives. Management seeks to control costs and enhance productivity and quality. Labor unions seek to raise wages and benefits and exercise control over how employees spend their time at work (such as through work rules). Each of the three parties typically seeks to avoid forms of conflict (like strikes) that impose significant
costs on everyone. In this section we examine several outcomes. Strikes occur very infrequently.
In 2010, private-sector unionized workers received 9% higher wages than nonunion counterparts.
Total compensation was 29% higher for union-covered employees because of unions’ effect on benefits
Unions are believed to decrease productivity in three ways:
The union pay advantage motivates management to use more capital per worker, which is inefficient. Union contracts may limit workload, and so on. Strikes and other job actions result in some lost productivity. Unions, alternatively, may increase productivity: Unions provide more efficient communication with management, which may reduce turnover. The use of seniority decreases the competition between workers.
The presence of a union may encourage management to tighten up in terms of consistency on work rules, and so on. Profits and stock performance may suffer under unionization if costs are raised or decrease investment by a greater amount.
Unions also typically influence the way pay and promotions are determined.
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27. Wages and Benefits
Besides pay and benefits, unions also typically influence the way pay and promotions are determined.
Whereas management often seeks to deal with employees as individuals, emphasizing performance differences in pay and promotion decisions, unions seek to build group solidarity and avoid the possibly arbitrary treatment of employees.
Although wages & benefits are higher for union members, job satisfaction is lower.
Besides pay and benefits, unions also typically influence the way pay and promotions are determined.
Whereas management often seeks to deal with employees as individuals, emphasizing performance differences in pay and promotion decisions, unions seek to build group solidarity and avoid the possibly arbitrary treatment of employees.
Although wages & benefits are higher for union members, job satisfaction is lower due to less positive perceptions of supervision, promotional opportunities, and the interest and discretion in their work.
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28. International Context
Except for China, Russia and Ukraine, U.S. has more union members than any other country.
Growing globalization of markets will continue to put pressure on labor costs and productivity.
U.S. differs from W. & N. Europe in formal worker participation in decision making.
Except for China, Russia and Ukraine, U.S. has more union members than any other country. A number of potential explanations exist. The growing globalization of markets will continue to put pressure on labor costs and productivity. The United States differs from Western and Northern Europe in the degree of formal worker participation in decision making. Growing globalization of markets will continue to put pressure on labor costs and productivity. Unless labor unions can increase their productivity sufficiently or organize new production facilities, union influence is likely to decline.
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29. Public Sector In 2010 37.4% government employees were union members.
Strikes are illegal at the federal level and in many states for government workers.
In 2010, 6 of 11 major work stoppages were in the public sector.
2010 – 37.4 percent of government employees were union members, and 42 percent of all government employees were covered by a collective bargaining contract. Strikes are illegal at the federal level and in many states for government workers.
In 2010, 6 of 11 major work stoppages were in the public sector.
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30. Summary
Labor unions seek to represent their members’ interests in the workplace.
May witness diminished ability to compete effectively in global economy.
Management in nonunion companies feel compelled to resist unionization.
Union losses in membership and bargaining power in the private sector.
Management and unions are seeking more effective ways of working together to enhance competitiveness while giving employees a voice in workplace decisions.
Labor unions seek to represent the interests of their members in the workplace. Although this may further the cause of industrial democracy, management often finds that unions increase labor costs while setting limits on the company’s flexibility and discretion in decision making. As a result, the company may witness a diminished ability to compete effectively in a global economy. Not surprisingly, management in nonunion companies often feels compelled to actively resist the unionization of its employees. This, together with a host of economic, legal, and other factors, has contributed to union losses in membership and bargaining power in the private sector. There are some indications, however, that managements and unions are seeking new, more effective ways of working together to enhance competitiveness while giving employees a voice in how workplace decisions are made.
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