HRM 4570 ILR Homework 1
Rain Ashbell
2HRM4570ILRCh2.1UnionsGoodorBadOnlineLecture2019-20audio1.pptxChapter 2 Part 1
Labor Unions: Good or Bad?
Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
McGraw-Hill/Irwin
Hi Class, Welcome to Industrial and Labor Relations. Today we are going to discuss Chapter 2 Part 1 Labor Unions: Good or Bad?
Workplace governance, or establishing workplace rules, determines the nature of the balance that is struck between efficiency, equity and voice. The five major possibilities for creating workplace rules are explored in detail, individually, and in a historic context. To illustrate these possibilities, important dimensions of the “labor problem” are presented in this chapter.
Beliefs on the cause of the labor problem differ between four schools of thought: mainstream economics, human resource management, industrial relations, and critical (or Marxist) industrial relations. These beliefs are very important for understanding labor relations and labor unions because the perspectives of each of these schools yield four different views of labor unions. The industrial relations viewpoint shapes existing U.S. policies on collective bargaining. A thorough understanding of this school of thought is essential, and this understanding is achieved by contrasts with the other three schools.
However, labor unions are not purely workplace institutions. There are various categories of theories of the labor movement based on the social roles of labor unions. Some of these theories are discussed in the context of the workplace. Others move into political, psychological, and spiritual arenas.
This chapter shows many possible ways of structuring the employment relationship. Whether unions are good or bad depends on how one thinks labor markets and the employment relationship work.
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Explain the four distinct schools of thought about the employment relationship
Understand how different views of labor unions are fundamentally rooted in the basic assumptions of these four schools of thought
Discuss various roles of labor unions in the employment relationship and in society
Learning Objectives
We have 5 learning objectives for this chapter.
1st. Explain the four distinct schools of thought about the employment relationship—mainstream economics, human resource management, industrial relations, and critical or Marxist industrial relations.
2nd. Understand how different views of labor unions are fundamentally rooted in the basic assumptions of these four schools of thought.
3rd. Discuss various roles of labor unions in the employment relationship and in society.
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Identify alternative methods for making workplace rules
Compare employee representation through labor unions to other methods of workplace governance
Learning Objectives
4th. Identify alternative methods for making workplace rules.
5th. Compare employee representation through labor unions to other methods of workplace governance.
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The mainstream media in the United States reinforce important stereotypes of labor unions
Unions are implicitly devalued as:
Representatives of producers rather than consumers
Proponents of collective rather than individual actions
Strikes and corruption are repeated topics discussed in news
Convey images of worker greed, inflation, consumer inconvenience, and violence
Foundation
The mainstream media in the United States—that is, the major TV networks and newspapers that are themselves corporations concerned with making profits—reinforce important stereotypes of labor unions. In general terms, the media report on issues from a consumer rather than worker perspective while emphasizing the accomplishments of business leaders and entrepreneurs.
Unions are implicitly devalued as:
Unions are portrayed as Representatives of producers rather than consumers
Unions are viewed as Proponents of collective rather than individual actions
Strikes and union corruption are repeated topics discussed in news
They Convey images of worker greed, inflation, consumer inconvenience, and violence
It is important for you, as students of labor relations, to recognize your own stereotypes of labor unions and to replace them with an informed understanding of the central issues in labor relations, and to appreciate multiple perspectives on labor relations and labor unions.
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Critical issues in human resources and industrial relations
Growing labor market disparities
Problems of low-wage workers trying to move out of poverty and support families
Corporate pressures for cost control, quality, and flexibility to compete in a global, information-rich economy
The need to educate individuals as lifelong learners because of ever-changing technologies
Problems of work–life balance
The Labor Problem
Let’s first discuss The Labor Problem
A. Today’s critical issues in human resources and industrial relations include the following:
1. Growing labor market disparities
2. Problems of low-wage workers trying to move out of poverty and support families
3. Corporate pressures for cost control, quality, and flexibility to compete in a global, information-rich economy
4. The need to educate individuals as lifelong learners because of ever-changing technologies
5. Problems of work–life balance, especially for working mothers
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Critical human resources and industrial relations issue in the early 1900s was the labor problem
Undesirable outcomes of inequitable and contentious, or oppressive and exploitative, employment relationship
Important dimensions of the labor problem
Long hours, low wages, unsafe conditions, and insecurity
Labor was frequently viewed:
A production input
No different from machines
or raw materials
The Labor Problem
The critical human resources and industrial relations issue in the early 1900s was the labor problem: undesirable outcomes that stem from an inequitable and contentious, or perhaps even oppressive and exploitative, employment relationship.
Important dimensions of the labor problem includes
Long hours, low wages, unsafe conditions, and insecurity
Labor was frequently viewed as just another production input—no different from machines or raw materials.
With mass manufacturing methods emphasizing repetitive, narrowly defined tasks by individual workers to achieve high output, workers had no contact with the final product and minimal control over the content of their jobs
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The poor conditions of the labor problem were a problem for two broad reasons:
The societal or human perspective
People should have better lives
Workers should be able to afford decent housing, clothing, food, and the like
The business perspective
Absenteeism and turnover were costly
Strikes and other forms of industrial conflict
Costly to business and to society
The Labor Problem
The poor conditions of the labor problem were a problem for two broad reasons:
1st. The societal or human perspective suggests that people should have better lives. This is partly an economic issue, that is, workers should be able to afford decent housing, clothing, food, and the like; in other words, equity is important.
2nd. The business perspective askes several important questions. Are the workers motivated? Loyal? Productive? Absenteeism and turnover were costly for businesses.
In addition. Strikes and other forms of industrial conflict that resulted from the labor problem in both the private and public sectors were costly to business and to society more generally.
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Los Angeles teachers go on strike after failed negotiations with district
Here is one example of the labor problem today. Please click on the video and watch Los Angeles teachers go on strike after failed negotiations with district
More than 25,000 teachers in Los Angeles will not be going to work Monday after a breakdown in contract talks. The strike in the nation's second largest school district affects more than 1,000 schools and more than 600,000 students. A funding battle between teachers and the districts follows similar walkouts last year in six states.
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Robots Are Already Replacing Human Workers at an Alarming Rate
Let me give you one more example of the labor problem today. We all know, or at least suspect, that robots are taking people’s jobs, but new research shows the dramatic degree to which industrial robots are replacing human workers and forcing down wages.
Each additional robot in the US economy reduces employment by 5.6 workers, and every robot that is added to the workforce per 1,000 human workers causes wages to drop by as much as 0.25 to 0.5 percent.
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Robots could replace 1.7 million American truckers in the next decade
Here is another example of the labor problem in the near future.
While factory jobs have gushed out of the country over the last decade, trucking has grown and pay has risen. Truckers make $42,500 per year on average, putting them firmly in the middle class.
Carmaking giants and ride-sharing upstart racing to put autonomous vehicles on the road are dead set on replacing drivers, and that includes truckers. Trucks without human hands at the wheel could be on American roads within a decade, say analysts and industry executives.
At risk is one of the most common jobs in many states, and one of the last remaining careers that offer middle-class pay to those without a college degree. There are 1.7 million truckers in America, and another 1.7 million drivers of taxis, buses and delivery vehicles. That compares with 4.1 million construction workers.
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Four Schools of Thought
The Mainstream Economics School
The Human Resource Management School
The Industrial Relations School
The Critical Industrial Relations School
So are labor unions good or bad? To answer this question, let’s discuss the four Schools of Thought about the Employment Relationship
1st. The mainstream economics school or the Chicago school of economics
2nd. The human resource management school
3rd. The industrial relation school or the institutional economics school
4th. The critical industrial relations school or the Marxist school
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Focuses on the economic activity of self-interested agents
Efficiency, equity, and voice achieved through free-market competition
Competition results in the optimal allocation and pricing of resources
The Mainstream Economics School
The mainstream economics school of thought focuses on the economic activity of self-interested agents, such as firms and workers, who interact in competitive markets.
Efficiency, equity, and voice are achieved through free-market competition.
Under some assumptions (such as perfect information), competition results in the optimal allocation and pricing of resources.
Prices in a competitive market reflect the value of what’s being purchased, so outcomes are efficient.
Voice is expressed through freely participating or abstaining from transactions.
The mainstream economics school of thought believes that Competition results in the optimal allocation and pricing of resources
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The conditions of the labor problem are not seen as exploitation
If employees are paid their economic value
Employees are free to quit if they feel they are being exploited
The Mainstream Economics School
The conditions of the labor problem are not seen as exploitation if there is sufficient labor market competition.
Employees are paid their economic value
Employees are free to quit if they feel they are being exploited
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Ensure competition
If market failures prevent competitive markets from working properly
The best protection an employee has against his or her current employer are other employers
As long as there is competition, employment outcomes are not seen as a problem
The Mainstream Economics School
Competition should be ensured if market failures prevent competitive markets from working properly.
The best protection an employee has against his or her current employer is not the government, a lawyer, or a union, but rather other employers. Employees are free to quit their jobs and find other jobs if they feel they are being exploited.
As long as there is competition, employment outcomes are not seen as a “problem” (with its negative connotations).
Outcomes are value-free, so there may be a labor situation (which simply describes the outcomes) but not a labor problem (which implies that the outcomes are undesirable).
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Role of labor unions in the mainstream economics school of thought
Unions are seen as labor market monopolies
Threatening to strike for raise of wages above their competitive levels
The economics view of work is endured only to earn money
Unions are seen as interfering with the discipline of the market by protecting lazy workers
To those who believe in perfect competition
Labor unions are bad
The Mainstream Economics School
So what are predictions of labor unions based on the mainstream economics school?
Unions are seen as labor market monopolies that restrict the supply of labor and interfere with the invisible hand of free-market competition.
The economics view of work is that it is a lousy activity endured only to earn money.
The role of government is not to establish labor standards but only to promote competition.
The role of law is to protect individual freedoms that are necessary for competition.
Therefore, to those who believe in perfect competition and the mainstream economics school, Labor unions are bad or harmful.
Because Unions are seen as interfering with the discipline of the market by protecting lazy workers
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Unions’ monopoly power interferes with the efficient operation of the economy
This view of labor unions rests on some strong assumptions about competitive markets
Resulting in a more nuanced economic model
Labor unions are not singled out
This school applies the same reasoning to other government interventions in the labor market
The Mainstream Economics School
From the mainstream economics school of thought, unions’ monopoly power interferes with the efficient operation of the economy
This view of labor unions rests on some strong assumptions about competitive markets
Resulting in a more nuanced economic model
Labor unions are not singled out
This school applies the same reasoning to other government interventions in the labor market such as minimum wage policies.
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Labor unions are Bad
Unions are harmful because they are monopolies that impair economic efficiency
Threatening to strike for raise of wages above their competitive levels.
Unions are seen as interfering with the discipline of the market by protecting lazy workers.
Market competition results in wages equal to workers' marginal productivity
(i.e., the value of their work).
The Mainstream Economics School (handout)
In summary, the mainstream economics school argues that Labor unions are Bad
Unions are harmful because they are monopolies that impair economic efficiency
Threatening to strike for raise of wages above their competitive levels.
Unions are seen as interfering with the discipline of the market by protecting lazy workers.
Market competition results in wages equal to workers' marginal productivity
(i.e., the value of their work).
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The Human Resource Management School
We then discuss the 2nd school of thought about the labor unions. The Human Resource Management School.
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Formerly called the personnel management school
Believes that the labor problem stems from poor management
Presents a different underlying cause of the labor problem
Solution to the labor problem is better management
The Human Resource Management School
The human resource management school, which was formerly called the personnel management school, believes that the labor problem stems from poor management.
This school of thought presents a different underlying cause of the labor problem: poor management.
The resulting solution to the labor problem is therefore providing better management.
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Human resource management philosophy
Align the interests of workers and the firm via better management
Create motivated and efficient workers
Firms should design and implement better supervisory methods
Selection procedures
Training methods
Compensation systems
Evaluation and promotion mechanisms
The Human Resource Management School
The HRM school suggests that the interests of workers and the firm need to be aligned via better management.
To create motivated and efficient workers, firms should design and implement better supervisory methods, selection procedures, training methods, compensation systems, and evaluation and promotion mechanisms.
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Firms should design HRM policies
responsive to these needs to create motivated and efficient employees.
Voice is typically informal
Unions are considered a sign of unhealthy human resource practices and so a healthy company shouldn’t have one.
The Human Resource Management School
If workers want justice, security, respect, and opportunities for advancement, then firms should design human resource management policies that are responsive to these needs to create motivated and efficient employees.
Voice is typically informal, such as in open-door resolution procedures in which workers individually discuss complaints with their managers.
In the human resource management school, unions are considered a sign of unhealthy human resource practices and so a healthy company shouldn’t have one.
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Role of unions in this school
Distinguish independent labor unions from non independent employee organizations
The term union refers to independent labor unions that are legally and functionally independent of employers and governments
Independent labor unions have the power to:
Elect their own leaders
Collect and spend their own dues money
Establish their organizational objectives
strategies
Lead strikes
The Human Resource Management School
To consider the role of unions in the human resource management school of thought, it is important to distinguish independent labor unions from nonindependent employee organizations:
Independent labor unions—are legally and functionally independent of employers and governments and have the power to elect their own leaders, collect and spend their own dues money, establish their organizational objectives and strategies, and lead strikes.
Nonindependent employee organizations— lack such authority as enjoyed by independent labor unions and are controlled by employers (like the company unions in the United States in the 1920s) or by governments (as traditionally is the case for unions in China).
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Independent unions are seen as adversarial to cooperation
If companies follow this school
Workers will be satisfied and will not support a union
If a company is practicing bad management
Workers will seek unionization to combat these poor practices
Human resource management is seen as a sophisticated antiunion device
The Human Resource Management School
Human resource professionals have greater influence in companies when there is a threat of unionization, but an important objective is often to keep unions out.
If companies follow this school
Workers will be satisfied and will not support a union
If a company is practicing bad management
Workers will seek unionization to combat these poor practices
Critics see human resource management as nothing more than a sophisticated (albeit gentle) antiunion device.
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Independent unions are unnecessary “third parties”
Prevent employers and employees from being amicable
In the 1920s many in this school of thought felt that workers should have some type of voice and representation
Representation would help companies treat employees with respect, create a cooperative relationship
Companies therefore created company unions, or nonunion representation plans
The Human Resource Management School
Independent unions are seen as unnecessary “third parties” that prevent employers and employees from getting “closer together.”
In the 1920s many in this school of thought felt that workers should have some type of voice and representation
Representation would help companies treat employees with respect, create a cooperative relationship
Companies therefore created company unions, or nonunion representation plans
“Company unions” or “nonunion representation plans” were created by the companies in order to meet and confer with worker representatives; but there were no bargaining, and the representation plans had no authority outside management.
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For adherents of the human resource management school of thought labor problems are best solved with effective management practices
In sum, human resource management is seen as a sophisticated antiunion device that substitute workers’ needs for unionization.
The HRM school suggests that unions are unnecessary because effective management policies are best and unions add unproductive conflict.
The Human Resource Management School
For adherents of the human resource management school of thought labor problems are best solved with effective management practices.
In sum, Human resource management is seen as a sophisticated antiunion device that substitute workers’ needs for unionization.
The HRM school suggests that unions are unnecessary because effective management policies are best and unions add unproductive conflict.
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Good Enough Substitute?
HRM
Unions
But please bear in mind that HRM always represents the interests of the company and business owners, they can substitute some functions of labor unions, but they’re not a good enough substitute for unions since unions fully represent the interest of the employees. For example, at collective bargaining, unions represent the interests of employees, HRM are on the other side of bargaining table, trying to lower labor costs, while labor unions almost always thrive to bargain for better wages for workers.
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Labor Unions are unnecessary
Believes that the labor problem stems from poor management
Effective management policies are best.
Also, unions add unproductive conflict.
The Human Resource Management School (handout)
In summary, Labor Unions are unnecessary
Believes that the labor problem stems from poor management
Effective management policies are best.
Also, unions add unproductive conflict.
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The Industrial Relations School
The 3rd school of thought about labor relations is the Industrial Relations School.
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Formerly called the institutional labor economics school
The labor problem stem’s from unequal bargaining power between corporations and individual workers
Institutional labor economists accepted modern corporation as an efficient organization
The Industrial Relations School
The 3rd school of thought about labor relations is the Industrial Relations School.
The IR school, formerly called the institutional labor economics school, believes that labor problems stem from unequal bargaining power between corporations and individual workers.
Institutional labor economists accepted modern corporation as an efficient organization
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Institutional labor economists saw many market imperfections
Persistent unemployment
Company towns dominated by a single employer
Lack of worker savings and other safety nets
Large, monopolistic employers with undue influence in markets, politics
The legal system
Compared to the other schools of thought, the causes of the labor problem and solutions are different
The Industrial Relations School
Institutional labor economists saw the following market imperfections:
Persistent unemployment
Company towns dominated by a single employer
Lack of worker savings and other safety nets
Large, monopolistic employers with undue influence in markets, politics, and the legal system
Compared to the other schools of thought, the causes of the labor problem and solutions are different
With greater bargaining power, employers can pay low wages for working long hours under dangerous working conditions. This greater bargaining power allows managers to be autocratic and authoritarian.
When there is a balance of power between labor and management, there is an abundant harvest for both to share.
The industrial relations school believes that, if the labor problem stems from unequal bargaining power, the solution is to increase workers’ bargaining power by forming independent labor unions and pursuing collective bargaining.
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With greater bargaining power, employers can pay low wages for working long hours under dangerous working conditions.
The industrial relations school believes that, if the labor problem stems from unequal bargaining power, the solution is to increase workers’ bargaining power by forming independent labor unions and pursuing collective bargaining.
The Industrial Relations School
With greater bargaining power, employers can pay low wages for working long hours under dangerous working conditions. This greater bargaining power allows managers to be autocratic and authoritarian.
When there is a balance of power between labor and management, there is an abundant harvest for both to share.
The industrial relations school believes that, if the labor problem stems from unequal bargaining power, the solution is to increase workers’ bargaining power by forming independent labor unions and pursuing collective bargaining.
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Within the intellectual framework of the industrial relations school
Unions are a critical part of the solution to the labor problem
A second approach is to look at the empirical research record about what unions do in practice, and whether, on balance, these things are beneficial or harmful and to whom
The Industrial Relations School
Within the intellectual framework of the industrial relations school
Unions are a critical part of the solution to the labor problem
A second approach is to look at the empirical research record about what unions do in practice, and whether, on balance, these things are beneficial or harmful and to whom
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Labor unions are important
The labor problem stems from unequal bargaining power between corporations and individual workers
Necessary to counter corporate bargaining power and to balance efficiency, equity and voice in democratic, capitalist societies.
The Industrial Relations School
In sum, from the perspective of the Industrial Relations School
Labor unions are important
The labor problem stems from unequal bargaining power between corporations and individual workers
Unions are Necessary to counter corporate bargaining power and to balance efficiency, equity and voice in democratic, capitalist societies.
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We have come to the end of our lecture today. If you have any questions, please feel free to email me.
See you next class!
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