I. The evolution of public sector collective bargaining
A. The 1960s and early 1970s -‑ increased government growth, civil disobedience, and passage of laws favorable to public sector collective bargaining led to growth in public sector unionism.
B. The mid‑ and late 1970s: the taxpayers' revolt -‑ examples in New York and San Francisco received tremendous national attention and helped fuel taxpayer resistance to further growth in public budgets.
C. The early 1980s -‑ PATCO and the emergence of a hard line against both private and public sector employees.
D. The mid‑ and late 1980s: stability and some gains ‑- increased attention on the plight of public education.
E. From the early 1990's on the public sector was under intense pressure to shrink – reinventing the role of Government.
II. The legal regulation of public sector unionism
A. Federal employees -‑ first received right to organize and to negotiate over employment conditions other than wages and fringe benefits under President Kennedy.
B. State and local employees -‑ some states give their employees the right to organize, while other states do not.
1. Legal regulation of the right to strike -‑ no state provides public employees with the right to strike equivalent to that specified by the NLRA for private sector employees. Many provide impasse resolution techniques and a few provide a limited right to strike.
2. Frequency of strikes -‑ strikes least likely to occur in states that have compulsory interest arbitration.
3. The bargaining rights of supervisors -‑ public sector supervisors are usually able to organize with legal protection.
III. Differences in the bargaining process between the public and private sectors
A. On net, the demand for public services is relatively price inelastic so increases in labor costs should lead to relatively small declines in employment.
B. Shifts in the demand for public services -‑ the long-run demand for labor in the public sector is much more elastic than the short-run demand for labor.
C. Strike leverage -‑ public employers are advantaged by the penalties imposed in some states on striking public employees. The public employer also often does not lose revenue during a strike.
D. Financial resources of governments are limited by law or political will.
IV. Public sector bargaining structures
A. Highly decentralized often at the local level.
B. Typically a specific occupation such as teachers or police.
V. Management structure in the public sector
A. Management structure is multilateral because of many management representatives and their diverse interests.
B. Example of all the parties that are involved in one way or another in the management of public schools.
VI. The effects of public sector bargaining on outcomes
A. Wages and other compensation outcomes -- the public sector union‑nonunion wage differential is typically in the range of 5 to 15 percent.
B. Union effects on public sector budgets and public administration.
VII. The use of interest arbitration
A. Does interest arbitration perversely affect collective bargaining?
1. The chilling effect -‑ parties may expect the arbitrator to split the difference, thus avoiding compromises between the parties.
2. Possible narcotic effect -- little evidence of pervasive chilling or narcotic effects.
3. Evidence suggests that interest arbitration leads to modestly higher wage settlements and more favorable contract terms.
VIII. Participatory programs and work restructuring in public schools
A. The history of school reforms -‑ reforms came in response to pressures to improve public education. There was a perception that Japan and Germany were more economically competitive because they had better trained workers.
B. 2000: Educate American Act and the Improving America’s Schools Act both increase national education standards in the U.S.
C. The "low-cost hierarchical strategy" v. "decentralization‑participation" school reform strategy -- former gives strict control to administrators, whereas the latter gives more control to teachers, parents, and students.
1. Some of the programs include school improvement teams, lead teacher programs, and school-based management.
2. A number of school reforms include efforts to establish greater accountability.
IX. Normative premises of public sector collective bargaining
A. Criticisms of public sector bargaining -‑ labor will achieve too much power if granted the right to organize.
B. Virtues of public sector bargaining -‑ all employees have a right to improve their work conditions through collective bargaining.
Chapter 13 -- Discussion Questions and Answers
1) What factors contributed to the growth of public sector unions and public sector collective bargaining in the 1960s?
Growth in government budgets
The example of civil disobedience and protest of the civil rights movement
Passage of legislation more favorable to public sector collective bargaining
2) There is debate over whether public sector unions have more power than those in the private sector. Evaluate the power of public employee unions in terms of Marshall's conditions.
Substitution by other inputs -- some public sector employees (such as police, firefighters, and teachers) provide services that are not easily replaced by machines or other new technologies. Note: That is not true for public employees such as clerical workers or groundskeepers.
Final product demand elasticity -- the demand for the final product (public service) is relatively price inelastic, since government agencies do not usually go out of business or move geographically to reduce labor costs.
Elasticity of supply of alternative inputs -- public sector employees do not differ greatly from their private sector counterparts.
The share of labor costs in total costs -- public employee wages account for a substantial portion of public budgets.
3) Describe the structure of most public collective bargaining.
Collective bargaining in the public sector tends to be highly decentralized, occurring often at the city or agency level and involving only one occupational type of employee. Sometimes governments across jurisdictions exchange much information. There is increasing pressure for more centralization at the local level due to the increasing share of local public sector budgets that come from state government sources.
4) Discuss the pros and cons of giving public sector employees the right to strike.
Pros: Like private sector employees, public employees should have the right to withhold their labor services to express their demands. Why should employee rights differ depending on which sector someone works in? There is little evidence that public employee unions wield enormous power; wage differentials are not extremely large between union and nonunion employees in the public sector.
Cons: The government is sovereign and should not give up its decision-making authority granted it by the citizens and the legislature. Public employees produce essential services which the public would be hard pressed to do without during a strike. Public sector strikes would impose high social costs.
5) To what extent do you think the lessons about union and employee empowerment learned from the private sector carry over to the public sector?
There should be substantial carry over from private sector experiences to the public sector as many of the same issues arise whatever the sector. For example, the limits of piecemeal reform, and the advantages to more systematic change extend to both sectors. Similarly, the reasons why labor and management often find it so difficult to move away from past practices – difficulties in establishing trust, political issues inside both organizations, and the need to overcome fears of a loss in employment security—exist in both sectors.
6) Describe the reforms that have taken place in public education in the late 1990s. Discuss the reasons for these reforms.
During the 1990s there has been an increasing perception that American students are not being as educated as students in many foreign countries, specifically Japan and Germany. The fear that under educated children must some day take over our workforce has pressured the government, starting with President Bush and continuing with President Clinton, to reform the public schools to ensure that children become well trained for futures in the workforce. Much of the reforms aimed at reducing drug dependency, high school truancy rates
, and the rate of illiteracy among high school graduates.
The reforms have come under the title “Goal 2000.” Two main programs, the Educate America Act and the Improving America’s Schools Act, lay out the curriculums that are to be followed to ensure that children are up to new national educational standards. All of this is being done with a new emphasis on federal control instead of the control of education traditionally exercised by local governments.
I. Industrial relations in Germany
1. Board representation -‑ law mandates that employees elect representatives to supervisory boards. Work councils -‑ codetermine many personnel matters.
B. Union representation and structure -‑ unions generally active in social and political issues.
1. Collective bargaining in Germany -‑ highly centralized and multiple unions allowed.
2. Low strike rate in Germany. What is the cause? Is it codetermination or fear of instability? Exception -- working time reduction was a major strike issue in 1984.
C. Vocational and apprenticeship training of young workers. Often cited as one of the key sources of Germany's economic success.
II. Industrial relations in Japan
A. Enterprise unions -‑ include both white- and blue-collar employees.
B. Union and employer federations -‑ engage in political lobbying but are not involved in collective bargaining.
C. The lifetime employment principle -‑ a noncontractual promise not to lay off its employees; covers roughly one‑third of the work force.
D. Pay determination in Japan -‑ annual spring wage offensive sets pattern. Pay variation at the workplace is strongly linked to seniority.
E. Blue-collar workers receive regular performance appraisals, and their annual bonuses and promotions are linked to these evaluations.
F. Broad job definitions -‑ provide flexibility.
G. The role of consultation in Japanese industrial relations system -‑ informal way to settle disputes.
III. Industrial relations in multinational firms
A. Problems created by multinationals for management and labor -‑ problem for management is how much to centralize the industrial relations function in the face of much diversity. For labor, the problem is how to counteract employer's ability to shift production.
1. The pressure of diversity -- firms confront cultural, legal, and institutional diversity.
2. The degree of industrial relations
centralization -‑ diversity poses control and coordination problems. Recently, there has been a shift to greater centralization of the industrial relations function.
B. The power advantage provided to management by multinational operation -‑ management maintains the power to shift production and capital across national borders.
C. Multinational unionism
1. The difficulties unions face -‑ differences in culture, law, and institutions limit cohesion and solidarity of union members from two countries.
2. Examples of multinational unionism -‑ international trade secretariats.
IV. Expansion of Trade Pacts
1. Removes trade barriers and tariffs among the U.S., Mexico and Canada.
2. What will the effect be on U.S. labor when U.S. firms can employ cheaper labor in Mexico?
3. Transitional Adjustment Assistance program provides training to workers who lose their jobs due to the trade pact.
B. The European Union
1. Central goal of integration among the 15 member states is to allow the free movement of workers, products, and investments across national boarders.
2. Removes tariffs and standardizes currency and taxes.
3. Exactly how industrial relations will be integrated will be the focus of much debate and controversy in the years ahead.
V. Pre-Integration Structure in the EU.
A. Structure of industrial relations in the EU member countries differs
-– different unionization rates, living standards, and laws. This poses potential problems for the future.
B. EU regulation of the "social dimension" -‑ includes regulations, directives, and possible eventual laws that will govern employment and industrial relations policy in the 15 EU countries. Example includes Social Charter.
C. The Social Dimension - the Social Charter gives all workers in the EU the right to form and join unions and to resort to collective action.
D. Labor's concerns about integration -‑ fear that living standards in countries with high unionization rates will go down.
E. Management concerns over European Integration -‑ fear restrictions and heightened labor costs that might follow from increased EU regulations of industrial relations.
VI. Industrial relations in developing countries -‑ workers and labor unions in these countries are often denied the right to join unions.
A. Industrial relations and political change in Poland -‑ the fragmentation of Solidarity.
B. Industrial relations and political change in Korea -‑ massive political protests; labor at the center, demand for independent trade union movement.
VII. Should the U.S. import industrial relations practices from abroad?
A. Some Japanese practices appear to be transferable (e.g., Japanese transplants in the auto industry).
B. The debate over quality circles -- biggest fad of the 1980s has limited success.
C. The debate over works councils and codetermination --
is some form of these procedures appropriate for the U.S.?
Chapter 14 -- Discussion Questions and Answers
1) Briefly describe how codetermination works in Germany.
Codetermination procedures are mandated by the German federal government and consist of two essential parts -- employee representation on company boards and works councils. In board representation, employees are required to elect representatives to the supervisory board which is responsible for controlling managerial performance and appointing top line managers. These employee representatives are elected proportionately from the blue- and white-collar workers. Two or three seats are also reserved for union members. This process allows for a great deal of employee and union involvement in business strategies and decisions.
Works councils have the right to information, consultation, and codetermination as well as to help determine any changes in the work process. Works councilors are elected by all the employees of a firm, regardless of union affiliation, but they generally work closely with union officers. These councils may sue an employer for breach of contract but cannot call a strike.
2) Describe three significant ways industrial relations in Japan differ from industrial relations in the United States.
Both white- and blue-collar workers are represented by the same union in Japan. Only the top managers are not represented by a union. Supervisors often take an active role in union affairs and new employees automatically become members of the union.
The principle of lifetime employment is also different from the employment practices of the U.S. Many large Japanese firms will transfer employees laterally or into training in order to avoid layoffs. The Japanese firm might also transfer some of its employees to other firms within its trading group in order to avoid layoffs. Lifetime employment is not guaranteed through contracts, but the firm will promise to try to avoid layoffs. Some layoffs, however, do exist. Many Japanese workers are employed in firms that do not practice life time employment.
Japanese workers (in large firms) are typically paid on a salary basis and receive regular performance evaluations. This is in contrast to the U.S., where virtually no unionized blue-collar workers go through an evaluation process. In Japan, jobs tend to be broadly defined.
3) What are some of the factors that make it difficult for unions to coordinate their efforts across national borders?
The wide diversity of cultures, law, and institutions makes multinational unionism extremely difficult. The diversity of worker ideology and ideals about work makes unionism on a multi-national basis very burdensome. Legal regulations and political and social institutions also vary widely across international borders. Coordination across unions is made difficult because of the wide differences that exist in union structure and jurisdiction.
4) Why are some unionists worried about European integration? What are some of management's concerns regarding European integration?
Unionists are concerned that a harmonization of labor standards across Europe will bring a lowering of wages and other employment conditions. While integration may bring some benefits to workers, especially workers and unions with lower labor standards, workers in high-wage countries may suffer.
Management in Europe and multinational corporations favors the liberalization of trade to be provided through market integration. Management, however, worries that European-wide regulation of employment issues will bring restrictions and higher labor costs. Management also is worried that centralization of the regulatory processes will lead to inflexibility in the design and administration of labor relations.
5) What role did unions play in the democratization of Korea and Poland? What are the implications for public policy in developing or developed countries of the links between unions and democratization?
In both countries unions played a key role as a force promoting democratization. Eventually major political changes occurred in both countries in part in response to democratization pressures and individuals were elected to national political leadership positions who had the support of the trade union movement. Economic pressures posed challenges for these and other political leaders to meet popular demands in the face of major economic restructuring.
I. The history of government‑promoted labor‑management dialogue
A. National-level committees -‑ industrial relations commission as early as 1880 deplored working conditions advocated industrial democracy.
B. The Dunlop Commission - no compromise between labor and management could be found.
C. Local and regional government dialogue efforts -‑ usually the result of economic crises.
D. The common limits of national and area labor‑management committees -‑ most have failed to produce a new coherent strategy to foster restructuring.
II. Alternative directions for future national labor policy
A. Strategy 1: reliance on deregulation and the market -‑ objective is to increase product market competition.
1. The case for further deregulation -‑ market forces are efficient in allocating labor, and deregulation will increase competitive practices.
2. Criticisms of a market and deregulation policy approach -‑ too many workers are left in a weak bargaining position. Labor is more than an economic commodity.
3. The potential consequences of further declines in union membership -- a reinforcing cycle of intensifying conflict, little innovation, and declining competitiveness is possible. Eastern Airlines is a classic example.
4. The costs to workers of adjusting to economic changes -‑ painful transition confronts those displaced older workers who have to accept low-wage jobs. Market forces alone do not fully smooth the adjustment process.
5. What will be the U.S. comparative advantage in world trade -- low wages or high skills? In the long run, U.S. economy and workers' interests may be better served if employers believe in human resource investment.
B. Strategy 2: the promotion of traditional collective bargaining
1. This strategy requires marginally reforming the NLRA and giving unions more bargaining power.
2.This approach may not respond to all the competitive challenges the country confronts.
C. Strategy 3: A new industrial relations system
1. Changes in the strategic, functional, and workplace levels.
2. More information sharing, contingent compensation, employment security programs, union and employee participation, and flexible work organization.
III. Strategy 3 also requires changes in economic and social policies
A. Adhere to goal of NLRA to promote collective bargaining.
B. Legal impediments to participation -‑ supervisors need to be given the right to organize.
C. The need for changes in other government policies -‑ promotion of economic expansion and productivity growth.
D. Management values and strategies ‑- need a more positive attitude toward unions.
E. The role of business strategies -‑ not all strategies are consistent with the new industrial relations systems (e.g., low-cost production strategy).
F. Technological strategies -‑ more consistent with new industrial relations practices is a "social technical" approach to new technology. Requires decentralization in decision making and upgrading of worker skills.
G. Union strategies -‑ union leaders fear that the new industrial relations system will co‑opt them into management's way of thinking.
Chapter 15 --Discussion Questions and Answers
1) What are some of the key components of the current U.S. labor policy?
General Economic and Social Policies
Monetary and fiscal policies; income policies; trade and immigration policies; antitrust policies; regulatory policies; national health insurance proposals; environmental protection policies; energy policies
Labor Relations Policies
RLA; Norris LaGuardia; Wagner Act; Taft-Hartley; Landrum Griffin; Civil Service Reform Act of 1978; Title VII; state employment regulation legislation
Employment and Human Resource Policies
Wage and hour legislation; equal employment opportunities legislation; OSHA; ERISA; unemployment insurance system; Social Security system; worker's compensation; Job Training Partnership Act
2) Briefly outline the deregulation-market approach to national labor policy. Discuss some of the strengths and weaknesses of this approach.
Deregulation involved efforts to increase price competition and the ease of firm entry into industries such as trucking, airline, and communications. In addition, benefit levels in a number of social programs were cut. The decisions of the NLRB became more favorable to employers.
The arguments in favor of deregulation are that the market forces are very efficient. In unionized settings market pressures force labor and management to change outdated policies. It is also argued that even if one does not like the outcome of deregulation, there is no clear indication that we would design and implement better policy solutions.
Arguments against a deregulation approach are that labor is more than an economic commodity, that conflict is inherent and enduring, and that without government protection many workers would not be able to bargain with their employers from an equal position. Deregulation has not led to the sort of price competition its proponents said would occur, but rather increased industry concentration has followed deregulation of a number of industries. Deregulation also has led to wage and employment declines and declines in union membership. Society and employees would be harmed if union membership and strength do not rebound.
3) Describe the key features of the new labor policy advocated by the authors.
At The Strategic Level
Information sharing between management and workers
Worker and union participation in business decisions
Extensive worker and management consultation
Close coordination of industrial relations and business and technological strategies
At The Collective Bargaining and Personnel Policy Level
Employment security and continuity
Deep commitment to training and development
At The Workplace Level
Flexible work organization
Grievance procedures with communications and due process supplements
4) How could the government encourage the diffusion of the new industrial relations system recommended by the authors if it chose to do so?
The government could reform the administration of the NLRA to reestablish encouragement for collective bargaining. Ambiguities in legal regulation concerning participation processes, team systems, and union involvement in strategic issues should be removed. The government will also have to actively promote the diffusion of new industrial relations system practices. The government will have to become involved in an extensive employment and training policy to help workers changing jobs or employers. Lastly, this policy must be accompanied by a broad macroeconomic policy which would foster economic expansion, productivity growth, and long-term capital and human resource investments.
5) What do you think are the most important issues that need to be dealt with
through future labor policy?
Students should feel free to list their concerns. These might include increased income inequality, poverty, economic growth and competitiveness, work and family needs, and workforce diversity concerns.
The following are the outlines for the lectures I (Harry Katz) deliver when I teach this course. The lectures follow the sequence of the book, although there is not a strict correspondence between each lecture and each chapter in the text. When I teach the course I hand out to students each lecture outline at the start of each class period so I do not have to write this material up on the blackboard. Furthermore, since students have the outline I can spend more of the lecture time focusing on examples and responding to their questions rather than just conveying the basic material. For each lecture below I also provide some tips concerning the lecture coverage and presentation.
The New Deal System and Its Historical Evolution
I. The three levels of the New Deal system
A. Strategic level
a. Management maintains entrepreneurial authority and discretion concerning investment-- court and NLRA support these limits, e.g., mandatory, permissive, illegal subjects distinction.
b. Union reacts -- concerns itself with
impacts -- consistent with business unionism (acceptance of capitalism).
c. Explain historical roots of business unionism, compare the AFL's philosophy with that of the Knights of Labor and the IWW.
d. Exceptions to narrow business unionism -- e.g., Reuther's request to see the books and set profit rates in 1946, Murray's rejection of this approach note even this late the system is still taking shape.
B. Functional level
a. Describe key features of the NLRA -- right to strike, election procedures, unfair labor practices, duty to bargain in good faith -- laws focus on procedures.
b. Collective bargaining as the cornerstone -- the labor contract and quasi-judicial procedures.
c. The grievance procedure and its administration are at the centerpiece of union representation -- other rights and issues are pushed aside or given lower priority -- describe role of Bethlehem Steel and steelworkers trilogy cases.
d. Compare U.S. grievance procedure to British reliance on custom and practice and wildcat actions.
C. Workplace level
a. Job control unionism -- numerous job classifications and highly detailed work rules, roots in scientific management.
b. Management communicates with the work force through the union, the union manages the work force acting somewhat in the role of bottom-line supervision; quote from George Morris, V.P. of IR for GM, "If we didn't have the UAW we would have had to invent it!!"
II. Eras of system evolution
A. The 1940s: institutionalization
a. Management resistance to broad worker or union involvement in
b. Union acceptance of the fruits of accommodation.
B. The 1950s: managerial initiative
a. Management bounds union gains -- limit to union involvement.
b. Boulwarism at GE -- managerial initiative.
C. The 1960s: rank and file unrest
a. Social and political instability.
b. Shop floor challenges to union hierarchy -- wildcats, blue-collar blues (Lordstown), QWL start.
D. The 1970s: stability and atrophy
a. Tensions in the system -- beginnings of economic stress (recessions and imports).
b. Incremental accommodation -- QWL.
c. In this era and others note the systems stability -- its ability to provide satisfactory rewards to management, unions, and workers -- why were each of these parties satisfied?
E. The 1980s: experimentation and change
a. Concession bargaining -- Pay and work rule concessions.
b. Union organizing problems and shrinkage -- nonunion growth.
c. Participatory pattern -- worker and union involvement linked to restructuring.
d. Note the conflicting elements of this era: On the one hand this is a period of union bashing, yet on the other hand unions are getting some of the very things (participation and employment security programs) they always wanted.
F. The 1990s and on: income and collective representation polarization
a. Growing wage/income inequality in the U.S. and other countries.
b. The “middle” ground of traditional labor relations is becoming less common.
c. Nonunion practices are growing.
d. In the union sector the extremes of conflict or participation also are growing.
In the first class meeting I review the class requirements and a course outline that I hand out to students listing the lecture topics, lecture dates, and the dates when the class will engage in mock bargaining. I also discuss why I think it is valuable for students to have an understanding of industrial relations. The lecture outlined above is my first substantive lecture in the course. It covers some of the material in Chapters 1 and 4 in the course.
I do not give lectures that focus on labor history and the labor law because Cornell undergraduates already have taken separate courses on those topics before they take the introduction to collective bargaining course (ILR 300). If your students have not had preparation in labor history and labor law, you might want to proceed in the following manner. In the first substantive lecture review the material cited in section 1 of the above outline concerning the three-tier framework used in the book (described in Chapter 1 and Exhibit 1). Then spend from two to three class meetings reviewing American labor history and American labor law. The material in Section II of the above outline can be used to discuss American labor history after World War II.
The three-tier framework described in Section I of the above outline and in Exhibit 1 shapes the order of text chapters. I spend much time at the start of the course introducing this framework and Exhibit 1. I tell students that I do not expect them right at the start to fully appreciate the meaning of the framework and its value. I do want students, however, to start thinking about how the environment shapes bargaining processes and outcomes. I also want students to try to appreciate the existence of the three levels of industrial relations activity. I refer to recent strikes or collective bargaining events to illustrate each of the three tiers.
I find that even students who have taken a prior labor history course typically do not have much understanding of events that transpired after World War II, as most history courses skirt or do not get to this period. Discussion of the eras in the post war evolution of American industrial relations also helps prepare the students for the later discussion of the recent changes occurring in American collective bargaining, a topic referred to throughout the text and extensively discussed in Chapters 11, 12, and 15. As I discuss each historical era I try to get the students to point to key historical events in these periods.
The Determinants Of Bargaining Power
A. This lecture begins our movement across the middle level of the
B. We focus on the role that bargaining power plays in shaping the bargaining process and bargaining outcomes, and the influence of environmental factors on bargaining power.
There are two aspects of bargaining power – total power and relative power
II. Total Power
A. Total power concerns the total profits (or economic rents) that are available to labor and management. Both labor and management prefer situations with greater total power.
Total power is heavily influenced by two factors – the degree of competition facing the employer (influenced by microeconomic factors) and the state of the economy (influenced by macroeconomic factors).
Unions try to influence the degree of competition faced by the firm by influencing government regulations (limiting competition)
Unions try to shift the macro environment to stimulate demand through political action.
III. Two major factors influence relative bargaining power.
A. Strike leverage
B. The elasticity of demand for labor -- the wage-employment trade-off.
IV. Strike leverage -- In negotiations the parties will not settle for something far from the potential strike outcome.
A. Each side loses income in a strike -- bargaining power is determined by each side's ability and willingness to suffer income loss.
B. Factors that influence labor's ability and willingness to absorb income losses.
1. Availability of other jobs -- this is shaped by the unemployment rate in the relevant labor market. Note: This provides the underpinnings of the macro-economic relationship between inflation and the unemployment rate (the Phillips curve); when unemployment is low strikers can more easily find replacement work and therefore have greater strike leverage, and are more successful in their wage demands and this contributes to inflation.
2. Union strike funds.
3. Savings (the above factors one through three all have to do with alternative sources of income to the striking employees).
4. Solidarity -- the strike is a communal cause.
5. Anger at management (note factors four and five are psychological in nature and often highly volatile, i.e., not deterministic).
C. Factors that influence management's ability and willingness to absorb losses -- see Exhibit 4-1.
1. Sustainability of production -- how essential are the striking employees? This depends in part on the bargaining structure and who is in the bargaining unit.
2. Strikes' effects on sales.
3. Consequences of strike on profits.
V. Elasticity of demand for labor
A. Why does it matter?
1. Wages affect employment. The greater is the reduction in employment that results from a wage increase, the less workers may be willing to use bargaining power available via their strike threat.
2. Strike leverage gives workers the ability to raise wages; elasticity of demand influences whether workers choose to use their wage raising capability.
B. Marshall's four conditions -- Slope of demand for labor (severity of wage-employment trade-off), go through each condition, illustrate on the blackboard elasticity and the wage-employment trade-off.
C. Does this really matter?
1. Senior versus junior members' interests.
2. Plant closing threat -- workers often must become convinced of the potential employment loss in concession bargaining multiple votes are sometimes needed to get wage concessions, and management spends much of its time in current negotiations trying to convince employees of the employment consequences of any wage increase -- that's what concern for competitiveness is all about.
I like to focus on the nature and sources of bargaining power very early in the course because power is so central to an understanding of industrial relations. The material in this lecture is covered in Chapter 4. The causes of strikes are addressed in Chapter 8. At this point I try to avoid consideration of why strikes occur. My focus is on getting students to think about the central role that strikes and the threat of strikes plays as an influence on bargaining outcomes. I start this lecture by asking the class why the autoworkers' union ends up with more favorable contracts than unions representing laundry workers. The point is that autoworkers have more bargaining power and that power derives primarily from the power of their strike threat.
Students may find it a little difficult and awkward to plunge into a discussion of strike leverage so early in the course, even before they may have a good understanding of what is a union or labor contract. But the value of this approach is that one can then start introducing real-world illustrations of strikes and negotiations into class discussions and students will be able to start explaining what happened in those events. I infuse my lectures throughout the course with reference to strikes that are appearing in the news, and the early location of this lecture helps promote class discussion of current events.
At this point in the course I show the movie Final Offer. This documentary film traces bargaining that occurred in the fall of 1984 involving the UAW in Canada and General Motors. I use this film early in the course because it provides a rich portrayal of the emotion and dynamics involved in collective bargaining. The film could be used later when negotiation processes or concession bargaining are addressed. But use at this point allows one to discuss the sources of bargaining power and strike leverage as they appeared in these negotiations.
Management Strategies and Structure
I. Union and non-union industrial relations patterns -- see
A. For each pattern describe rules and give examples of each type; discuss some of the typical dynamics involved in movements of a company (or plant) from one pattern to another
B. Nonunion patterns
1. Paternalistic -- often owner-operated small business such as grocery or other retail store, small manufacturing plant; owner/manager maintains much discretion with little formality; law (e.g., minimum wage) often constrains policies.
2. Bureaucratic -- typical of large traditional organizations, firm shifts away from paternalism due to size and because of inconsistencies created by discretion; firm worries about unionization.
3. HRM -- used in high-tech firms such as IBM, strong role for corporate founder and company identification; note interrelated nature of the policies; firm worries about unionization but also pursues policies for business reasons.
C. Union patterns
1. Conflict -- "a conflict to the death," sometimes arises during movement to unionization or vice versa during strike with permanent replacements, an unstable and costly pattern, high costs to both sides; examples were Phelps Dodge, Eastern Airlines, Daily News, Greyhound.
2. New Deal -- traditional collective bargaining, focus on the contract and contract administration through the grievance procedure; many firms now try either to go nonunion or to respond to economic pressures through participation; discuss this system extensively in the middle sections of the course.
3. Participatory -- note interrelated nature of policies and similarities to HRM pattern; changes in the role of unions and management in the new system. Is this system stable and can it compete successfully with the alternatives? Discuss this system further in Chapter 12.
II. Business strategies and IR implications
A. Cost minimization -- economies of scale
1. Tight cost control -- wage restraint.
2. Union avoidance -- adversarial.
3. Mobile capital -- seek low labor costs.
B. High-quality, differentiated product
1. Focus on flexibility.
2. Need for quality commitment.
3. Virtues of stability.
C. Life cycle shifts
1. Product life cycle
a. Stage 1 -- innovative product development stage
b. Stage 2 -- mass production, concern for stability
c. Stage 3 -- competition based on labor costs as technology and techniques diffuse (capital is more mobile than labor)
d. Stage 4 -- concern for product quality and flexibility (is there commonly a stage 4?)
2. Competitive pressures -- firm strategy often is made in response to competitive pressures.
III. Management IR structures
1. Size of staff -- concern for IR?
2. Degree of centralization -- corporate, division, plant
a. Degree of common products and common non-IR management.
b. Bargaining power concerns -- management prefers structure and processes that increase its power.
c. Strategy focus -- e.g., decentralize to promote
IV. Degree of specialization
IR specialists v. operating managers in charge of IR matters.
Increase in importance of HRM.
a. IR -- CB, organizing wage administration, contract administration, absentee control.
b. Personnel -- recruitment, staffing, fringe benefits, EEO, OSHA.
It is difficult to understand what is going on in the unionized sector of the American economy in the current environment without having some understanding of the nonunion sector. In this lecture I try to convey to students the notion that there is currently a variety of different industrial relations systems that are available to the firm (and to some extent these "IR patterns" are in competition with one another). Here again I warn students that they are not expected at this stage of the course to fully understand all the issues involved in a comparison of union and nonunion systems. That would be difficult given that at this point students do not yet fully appreciate what traditional union practices are (the New Deal system), let alone understand how participatory union practices differ from those traditional practices. Gaining a more complete understanding of those issues is the task of later sections of the course.
At this point I want students to learn that there are different choices confronting management and unions. Some of those choices entail unionized practices, while other choices involve nonunion operation.
Sections II and III of this lecture discuss how industrial relations as a staff function is handled inside the firm. This is not the most exciting material. I try to liven it up by considering business strategies and their effects on collective bargaining.
I. Sources of union growth
A. Existing bargaining unit grows or contracts
1. Note: This is a particular product of the U.S. legal system of bargaining units and exclusive jurisdiction
2. Unions have faced decline in the U.S. from the 1970s on as a result of the large number of plant closings and employment declines in existing bargaining units, particularly in manufacturing such as steel, textiles, etc.
B. New bargaining unit is created -- involves election process
II. Key features of the organizing process
A. Authorization cards
1. 30% needed for NLRB election
2. If union gets 50% cards signed, management can voluntarily recognize (card check)
B. Union right to circulate literature in nonwork areas on nonwork time
C. NLRB determination of appropriate bargaining unit
1. Considers common interests, administrative feasibility, employer and union interests
2. Craft v. industrial has been source of controversy
3. Labor and management each have strong interests in how the unit is shaped, they each want to shape the unit to help their election chances
1. NLRB goal of "laboratory conditions"
2. Employers often prefer delay -- dynamics of union support
3. Management can give "captive audience speeches"; union can't. Management must supply union list of employee names. What each side says and does during the campaign is the source of many ULP allegations
4. Union corporate campaigns -- e.g., J. P. Stevens.
5. Neutrality clauses in existing contracts -- e.g., GM, Xerox (policy).
E. Election victory does not mean the union will win a contract -- 40% of wins fail to achieve a first contract
III. Process of organizing
A. Individual wants
1. Outcomes -- wages, fringes, job security, health and safety, work rules, etc.; will the union actually improve these?
2. Due process -- assessment, worker-supervisor relations, individual participation in decisions.
3. Evidence shows the family background plays an important role in the individual's reaction to union appeals
B. Dynamic nature of organizing
1. Role of the group -- momentum matters.
2. Role of leaders -- e.g., skilled workers.
3. Unions often must help the lowest paid through standardization of wages and rules.
4. In many campaigns a recent action by management becomes the rallying cry for union -- the union tries to paint this act as a sign of management's betrayal of the work force, e.g., the harsh disciplining of a well-liked or well-known employee.
The steps and labor law in the union-organizing process are important topics in an introductory course. At Cornell, students in the introductory collective bargaining course have already had a one-semester course on labor law. Consequently, I do not dwell in this course on the labor law issues surrounding organizing. You may want to add more consideration of the law to the above lecture.
I have found that it is not easy to convey to students the emotion that surfaces in organizing campaigns or the importance of this process. In a class where you have students that have some real-world work experience you can draw on the experiences of those students who have witnessed election campaigns to relate their intensity. Or, you can describe any personal experience you have had with the election process.
Union Growth and Decline
I. Theories of union growth
A. Business cycle influence
1. Union growth is generally procyclical, e.g., U.S. union membership 1860-1930, other countries, not true in the depression.
2. Why business cycle trend in union membership? Labor has more bargaining power during booms; cite Commons.
B. Critical periods and events
1. Examples 1930s, World War II, 1960s (public sector).
2. Role of law, individuals (strong leaders such as Lewis and others during 1930s, particular events and social forces).
II. Why the continuing decline in union representation after the late 1940s in the U.S.? -- see Exhibit 6-1. Note: There has been substantial U.S. union growth during the depression and World War II, and public sector union growth during the 1960s and 1970s. Explanations for the decline in percent organized in the U.S. after the late 1940s follows. Cite most recent numbers.
A. Changing economic and demographic structure
1. More jobs in South, rural, and West areas; more women, young and old workers.
2. Explains 40% of the decline; see Farber and other studies.
3. Does this really explain decline? Is the union proneness of jobs, regions, or workers really fixed? Couldn't unions have changed their strategies to make themselves more attractive? Note: Not all unions have shrunk (e.g., Sweden, where unions grew to represent white-collar and professional workers).
B. Union suppression by employers
1. Illegal and legal campaign activities, e.g., firing of activists. Note: Freeman statistic -- in union supporters fired for union activity.
2. But didn't overcome even greater employer opposition in earlier periods? Furthermore, note that union decline begins way before the extensive use of consultants and sophisticated employer campaign opposition, which accelerates in the 1970s.
3. Note controversy in the research regarding whether the campaign matters. Is it campaign-focused employer practices that matter or long-run employer policies? See next explanation for the latter.
C. Union substitution by employers
1. "Progressive" personnel policies -- long-run nature of these policies.
2. Why didn't employers in other countries adopt and succeed with such policies? (Maybe they have begun to do so -- note recent union membership declines in Japan, France, Britain, etc. But also note the exceptions to this decline such as Germany and Sweden.)
D. Union substitution by government
1. Substantive regulations such as OSHA, EEO, ERISA.
2. But more extensive government intervention and regulations did not lead to decline in the Scandinavian countries.
3. Analysis of cross state variation in the U.S. suggests that government substitution is not a strong explanation.
E. American ideology and values
1. Lipset -- U.S. workers are individual and not class-oriented, while Canadians are communitarian; not historical absence of aristocracy in the U.S.
2. Are U.S. and Canadian popular attitudes really so different? Is the U.S. so exceptional?
F. Internal union factors
1. Lack of democracy, lack of organizing initiative, little representational imagination.
2. If this is the true explanation, then unions should through internal reform be able to overcome their organizing problem.
III. Recent U.S. labor efforts to improve organizing
A. AFL-CIO organizing institute
B. More aggressive focus on organizing.
C. “Rank and File” organizing approach – use of community groups, and face-to-face contact, and focus on gender equity, and other rights issues.
D. Associate union programs.
E. Union Summers Program
F. Split between AFL-CIO and Change-to-Win.
G. Will any of the above or other tactics reverse labor's decline in the U.S.?
I start this lecture by reminding students about union membership trends in the twentieth century in the U.S. I then turn to general explanations of union growth and decline before focusing on explaining U.S. figures. There, obviously, is a lot one can talk about concerning union growth and decline. I focus on explaining the U.S. decline post late 1940s. I use the categories developed by Fiorito and Maranto. For each type of explanation of union decline I discuss the argument and then consider the various debates surrounding whether this factor explains much of the decline.
In the end, I am left with the view that a combination of a number of these factors seems to explain what has happened. I think employer substitution is particularly important, yet there is clearly room for much discussion concerning why the share of the work force represented by unions has declined so substantially. Along the way in this discussion there is room for much questioning of students concerning what they think is most important. One also can interject frequent reference to comparative developments to gain perspective on U.S. decline.
I finish by talking about the various new organizing efforts as well as the increased intensity of ongoing organizing campaigns. This discussion naturally links in with mention of John Sweeney’s ascendancy to the presidency of the AFL-CIO and the turnover underway in many union staffs.
This then naturally leads into a discussion of the more recent split between the AFL-CIO and Change-to-Win. Union decline and divisions over union organizing strategies and approaches is clearly one factor behind the splint. One can discuss whether the split is likely to further weaken the labor movement or hold the potential for more innovation in organizing and union revitalization.
The key question discussed at the end of this class period is whether these factors have led or are likely to lead in the future to a rejuvenation in union membership.
I. Why is bargaining structure important?
A. Descriptive knowledge of bargaining structure helps one understand how collective bargaining works; among other things it tells you who is represented by a contract or who is at the bargaining table.
B. Bargaining structure is affected by bargaining power and critically influences the power held by each side, i.e., bargaining structure is intertwined with bargaining power.
II. Types of bargaining structures -- see Exhibit 7-1
A. Employee interests covered
1. Craft -- single trade.
2. Industrial -- workers of all skill grades in a unit.
B. Employer interests covered
1. Decentralized -- single plant.
2. Intermediate case -- multiplant but single company.
3. Centralized -- multiplant, multicompany.
III. Determinants of bargaining structure
A. Election unit determination by NLRB
1. Commonality of interests.
2. History of association.
3. Preferences of parties -- e.g., craft severance issue.
B. Bargaining power
1. Union often benefits from centralization -- vehicle to impose standardization and avoid lowest common denominator.
2. But not always -- unions sometimes can whipsaw plants or companies, e.g., big three auto and UAW.
3. Union and employer interests not always opposed --both try to standardize and create cartel, e.g., Coal (UMW and BCOA), clothing and garment industry (unions stabilize industry of small competitors).
C. Common interests v. egos
1. Difficulty across companies in bargaining in an association -- diversity of interests v. gains from coordination or standardization.
2. Strong egos on both union and management sides --negotiators need to continuously prove their worth.
IV. Pattern bargaining
A. Informal centralization -- key settlements such as auto and steel receive much press and other attention.
B. Why patterns?
1. Workers' wants are relativistic and not absolute --workers are concerned with equity, orbits of coercive comparison.
2. Leaders use patterns to legitimate their bargains ‑- company and union leaders must justify their settlements to suspicious members and counteract rivals -- pattern following has legitimacy.
C. Pattern bargaining within plant work force as well
as across plants and companies -- ILM standardization.
V. Recent decentralization in bargaining structure
A. Two types of decentralization
1. From industry, or company-wide agreements downward to more fragmented bargaining structures, e.g., steel -- break up of basic steel agreement in 1986 into company agreements, although pattern following continues
; trucking -- erosion of coverage of master freight agreement with increasing nonunion and owner/operator penetration and union firm withdrawals from national contract terms.
2. Issues being pushed downward from company level to plant level -- e.g., pay varies more widely now across plants, previously the union standardized terms through company-level contractual language. Variation in pay is spreading in some cases through introduction of pay-for-knowledge or gain sharing in industries such as auto, steel.
B. Why is this decentralization occurring now?
1. Cost pressure -- managerial whipsawing.
2. Increased economic variability.
3. New packages -- employment security,
participation programs, work restructuring.