1 Environmental/Contextual Issues Social, Legal, Economic and Political

2 Social Environment for Collective Bargaining in the U.S. Individualism –Rights of individuals superior to other rights –Property rights as a derivative of individual rights –Corporations are legal individuals Chartered by state Collectivities of shareholders Perpetual life Limited liability

3 The Employment Relationship An economic exchange transaction –Between two individuals –Basically, perceived as no different than purchasing a commodity

4 Unions and Individualism Collectivities –Collectivizing what we view as natural individual economic transaction –At a disadvantage vis-à-vis those exercising rights Corporations – legal individuals Employees – actual individuals Skeptical About Governmental Protection

5 Other Values Europe –Class – based collectivistic values in Europe Asia –Confucianism based principles of obligation and harmony

6 Implications of Social Environment for Collective Bargaining Strong management and employers –Property rights –Individualism –Job provider –Resistance to unionism Unionism –Struggle for legitimacy –Difficulty in staying organized

7 Legal Environment Basic Principles of Legal Environment –Accessible –Wide Coverage –Public –Mandatory Procedures

Legal Framework8 Historical Overview : Conspiracy Doctrine : Decline of Conspiracy Doctrine - Legal Focus on Union Tactics –Through 1870’s: Damage Suits –1880’s - early 1930s: Injunction \55: Legal Environment Favorable to Unions and CB 1947\55 - Present: Legal Environment Neutral to Pro-Employer

9 Basic Legal Framework National Law in U.S. for Private Sector –Mixed Federal\Provincial in Canada Employee Choice Some Exclusions –Some Employers Railway Labor Act –Some Employees Broad Definition of “Labor Organization” Representation by “Bargaining Unit” –Majority Rule –Exclusive Representation Administration by political appointees (on NLRB)

10 Basic Legal Framework (cont.) Unfair Labor Practices Bargaining –Limited to terms and conditions of employment in U.S. –Broader in Canada Use of Economic Weapons to Determine Outcomes Administration by an administrative agency –NLRB in U.S. –Comparable bodies in Canadian

Legal Framework11 Basic Legal Framework (cont.) Determining Representation –Elections in U.S. –Elections and card checks Recent Legal Issues –Organizing –Duty to Bargain –Striker Replacement –Employee Involvement in Nonunion Firms

12 Implications of Legal Doctrine Union Organizing –Evolution Employer noninvolvement, Employer involvement but required to permit union on premises to present views, Union exclusion –From presenting views, 1953 –From coming on premises (generally) –Development of employer union resistance tools by mid-1950’s

13 Implications of Legal Doctrine (cont.) Bargaining –Board not involved in determining terms and conditions of employment –Mandatory and nonmandatory subjects Corporate restructuring –Defaults to an adversarial system –Bargaining power Implementation at impasse Strikers and replacements Flexibility in paying strike replacements –No subsystem to prevent employer pyramiding legal rights to deunionize

14 Implications of Legal Doctrine (cont.) Remedies –Little disincentive Delay Minimal government involvement –Favors economically stronger party

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16 Economic Environment Macro-Level Focus –Determinants of Union Growth Shifts in Structure of Employment Business Cycle Micro Level Focus –Labor and Product Markets\Firm skilled - hard to replace workers inelastic demand for union product inelastic supply of substitutes for union labor ratio of labor costs to total costs (“importance of being unimportant”) –Take Wages out of Competition - Organize the Product Market

17 Product Market Successful organization of product market key to union success during period –Autos –Steel –Airlines –Trucking –Paper –Construction Union Taking Wages (labor costs) Out of Competition

18 U.S. Employment (absolute numbers in 1,000’s) SOURCE: U.S. Bureau of Labor Statistics

19 Product Market Implications –As entry increases, union power declines Wages and labor costs –If employers can remove themselves from unionized sector, union power declines spatial limitations –Longshoring –Public Employment Post 1975 –Increasing foreign competition - “nonunion” autos: less than 5% market share in late 60’s to roughly 35% today steel: increase in worldwide capacity –Deregulation - airlines and trucking

20 Product Market (cont.) Employer Removal - rubber Spatial Characteristics - longshoring

21 Microeconomic Principles Consumer Welfare –Efficiency is desirable –Efficiency is determined by low prices to consumers –Work is for the purpose of generating income so that individuals can consume Labor supply –Labor an input to production

22 Implications More competitive product markets due to entry of unorganized firms reduces union power Unionized employer capability of removal from union sector reduces union power Both happened in period

23 Political Environment Political linkages –Unions – Democratic Party –Employers – Republican party Republican party rise over last 25 years –Favorable to Business Flexibility –Reduction of Legal Constraints Minimalist government

24 Linkages to Other Three Environments Social –Reinforces individualism Legal –Legislation – Appointments Administrative Judicial Economic –Fewer constraints on business –Willingness to let “market” work