Labor Unions CE.E.3.3 – Analyze various organizations in terms of their role and function in the U.S. economy.

Labor vs. Management Labor – the workers (labor unions)  formed by the workers so that it would be more difficult to replace experienced workers rather than a single worker Management – the owners of the factories / businesses * trying to make as large a profit as possible

Early National Labor Unions * Knights of Labor – founded by Uriah S. Stephens (1869) * American Federation of Labor (AFL) – founded by (1886) Samuel Gompers * Congress of Industrial Organizations (CIO) – (1938)founded by John L. Lewis

The Knights of Labor eventually declined, but AFL and CIO merged in 1955 to become the most powerful labor union ever, the American Federation of Labor – Congress of Industrial Organizations (AFL-CIO) * today, there are 56 unions that are part of the AFL-CIO, with 12.5 million workers (down from 20 million + in the 1970s)

Important Labor Laws 1. Sherman Anti-Trust Act – used to stop / hinder labor unions by saying they restricted trade with their strikes. Judges issued injunctions to stop strikes. 2. Clayton Act – said that the Sherman Anti-Trust Act could not be used to stop strikes. 3. National Labor Relations Act (Wagner Act) – said it was all right to organize unions and to collectively bargain.

Important Labor Laws (continued) 4. Taft-Hartley Act – prevented federal employees from striking ** outlawed closed shops and let states pass right to work laws  prevented workers from being forced to join unions or pay union dues required workers to join union before they could be employed

** union shops – workers required to join in some time period after hire agency shops – must join union or pay “agency” fee open shops – firms hire union and non-union workers Labor Unions – use collective bargaining to negotiate contracts for workers with the businesses; ** collective bargaining is when representatives for the workers negotiate a contract for pay, benefits, etc. which applies to all workers a) Craft Unions - skilled laborers with the same occupation (example: painters’ union; electricians’ union; plumbers’ union) b) Industrial Unions - workers in the same field with different levels of skill (example: oil workers’ union; United Auto Workers union)

Three goals for Labor Unions through negotiations: 1. better pay 2. better hours and benefits 3. better working conditions If negotiations do not go smoothly, both sides have “tools” or “weapons” they can use to try and get what they want: examples of union weapons: 1. slowdowns – employees do less work 2. strike – workers withhold their labor from the firm 3. picket lines – union members march around plants / factories to discourage other workers from entering to do work

4. boycotts – union urges members and the public to not buy the firm’s products 5. sit-down strikes – union members occupy a plant to prevent other workers from taking jobs 6. union labels – union encourages public to buy only products made by union workers 7. PACs – union forms groups to put pressure on (and to raise $ for) politicians to support union in gov’t

examples of business / management weapons: 1. injunctions – the firm obtains a court order to stop the striking or picketing 2. lockouts – the firm closes the plant to try to force the union to agree to its terms 3. strikebreakers (aka “scabs”) – firm hires other workers to take strikers’ jobs 4. relocation – firm moves plant to another place where workers agree to lower wages / benefits

examples of gov’t “weapons”: 1. mediation – unbiased person listens to each side and suggests a solution (not legally binding) 2. arbitration – (voluntary and compulsory) – solution is determined by an unbiased person (legally binding) Minimum wage – created in 1938 by the Fair Labor Standards Act (aka Wages and Hours Act) ** the first minimum wage was 25 cents/hr, since 2009, it has been $ 7.25 / hr. As minimum wage increases, businesses with minimum wage workers have higher costs of production and have to choose what to do about it.

They can: 1. accept a smaller profit 2. increase prices to their customers 3. pay no more than the minimum wage 4. lay off some workers (“down-sizing”) 5. purchase labor-saving devices 6. replace low-skill workers with higher-skilled workers who are more productive 7. move the firm or some part of production to some low-wage country (“out-sourcing”) 8. close down many minimum wage workers are marginal workers – they have some other means of support (example: teenagers); but others may have to work two or more jobs to provide for their family