HRM 4570 ILR Homework 1
Rain Ashbell
4HRM4570ILRCh2.3WhatDoUninosDoOnlineLecture2019-20audio1.pptxChapter 2 Part 3
What do Unions do?
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 3 What do Unions do?
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To understand labor unions and labor relations it is imperative to understand the beliefs of the different schools of thought
These provide the keys to a reasoned than a stereotypical understanding of labor unions
It is important to explicitly compare collective bargaining to these alternative methods
For determining wages and other terms and conditions of employment
The Continued Relevance of Labor Problem
All workplaces need rules. In addition to standard rules of behavior and performance, these rules also include compensation, benefits, policies, and procedures.
To understand labor unions and labor relations it is imperative to understand the beliefs of the different schools of thought
These provide the keys to a reasoned than a stereotypical understanding of labor unions
It is important to explicitly compare collective bargaining to these alternative methods
For determining wages and other terms and conditions of employment
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Workplace governance: Determines the nature of the balance that is struck among efficiency, equity, and voice
Workplaces need rules
Rules include compensation and benefits policies and procedures
It is called workplace governance because of the focus on how workplace rules are determined
The Continued Relevance of Labor Problem
Workplace governance determines the nature of the balance that is struck among efficiency, equity, and voice.
Workplaces need rules
Rules include compensation and benefits policies and procedures
It is called workplace governance because of the focus on how workplace rules are determined
And though it is called workplace governance because of the focuses on how workplace rules are determined, the ramifications are much broader and determine the quality of life for retirees, spouses, dependents, and communities.
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Analyzing workplace governance
Provides the context for evaluating whether unions are good or bad
Possibilities for creating workplace rules
Competitive labor markets
Human resource management
Worker control
Bargaining with independent employee representatives
Statutory government regulation
The Continued Relevance of Labor Problem
Analyzing workplace governance is particularly instructive for understanding labor relations because it provides the context for evaluating whether unions are good or bad.
Unions are assumed good if they achieve a better balance among efficiency, equity, and voice than do alternative mechanisms.
Unions are assumed bad if alternative mechanisms strike a better balance.
The five major possibilities for creating workplace rules or for governing the workplace are as follows:
Competitive labor markets
Human resource management
Worker control
Bargaining with independent employee representatives (labor unions)
Statutory government regulation.
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Laissez faire reliance on competitive labor markets includes two central critical features:
Mainstream economic theories
Common-law legal rules that protect individual liberties to enter contracts
Workplace rules will favor management
When labor demand is low and/or labor supply is high rules will favor employees
The Continued Relevance of Labor Problem
Laissez faire reliance on competitive labor markets includes two central critical features:
Mainstream economic theories
Common-law legal rules that protect individual liberties to enter contracts
Workplace rules—broadly defined to include implicit and explicit rules governing compensation, benefits, working conditions, and performance standards—result from self-interested individuals interacting in competitive markets.
Workplace rules will favor management
When labor demand is low and/or labor supply is high rules will favor employees
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In the human resource management model of workplace governance
Managers establish employment conditions
One possibility for governing the workplace is to replace the unilateral authority of the HRM or worker control models with a system of shared, bilateral authority in which employee voice is independent of managerial authority.
The major example of this shared control mechanism is collective bargaining.
The Continued Relevance of Labor Problem
In the human resource management model of workplace governance, managers establish employment conditions. They are perhaps constrained to a range of alternatives established by the marketplace, but within this range managers choose specific terms and conditions of employment.
One possibility for governing the workplace is to replace the unilateral authority of the human resource management or worker control models with a system of shared, bilateral authority in which employee voice is independent of managerial authority.
The major example of this shared control mechanism is collective bargaining.
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Workplace rules can be set by government regulation
Ideally this system protects everyone
Standards can be determined by rational debate rather than bargaining or market power
The Continued Relevance of Labor Problem
Workplace rules can be set by government regulation. Major U.S. examples of governing the workplace include the Fair Labor Standards Act (to establish a minimum wage and maximum work hours), Title VII of the Civil Rights Act (to provide equal opportunity), and the Occupational Safety and Health Act (to establish minimum safety standards).
Ideally this system protects everyone
Standards can be determined by rational debate rather than bargaining or market power
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What determines which system of workplace governance is best?
Preferred system of workplace governance are rooted in how one thinks the employment relationship works
Two important governance mechanisms for balancing the goals of employers and employees:
Statutory government regulation
Labor unions
The Continued Relevance of Labor Problem
What determines which system of workplace governance is best?
Preferred system of workplace governance are rooted in how one thinks the employment relationship works
If one believes that the employment relationship is characterized by unequal bargaining power as in the industrial relations school, there are two important governance mechanisms for balancing the goals of employers and employees:
Statutory government regulation—try to establish labor standards, but it does not involve employee voice.
Labor unions—try to counter corporate bargaining power and also provide voice that is independent of managerial authority.
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Solving labor problems
U.S. political and legal thought during the 1800s and early 1900s
Dominated by laissez faire views consistent with the mainstream economics school
The supremacy of the freedom to enter any type of economic relationship
Collective bargaining was an important model of workplace governance in the postwar period
The nonunion human resource management model came to dominate in the latter part of the 20th century
This transformation resulted from the growth of nonunion companies
The Continued Relevance of Labor Problem
How to solve the Labor Problem?.
U.S. political and legal thought during the 1800s and early 1900s was dominated by laissez faire views consistent with the mainstream economics school, especially the supremacy of the freedom to enter any type of economic relationship—including employment—without government or union interference.
Collective bargaining was an important model of workplace governance in the postwar period, but in the latter part of the 20th century,
the nonunion human resource management model came to dominate in the latter part of the 20th century.
This transformation resulted from the growth of nonunion companies
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With little threat of unionization or new employment laws
The finance has trumped human resources in many organizations
Contemporary labor relations continue to be dominated by laws of industrial relations school’s principles
The Continued Relevance of Labor Problem
With little threat of unionization or new employment laws in the United States,
finance has trumped human resources in many organizations.
Contemporary labor relations continue to be dominated by laws of industrial relations school’s principles
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The United States and other developed and developing countries continue to struggle with the modern equivalent of the labor problem
Workers in many occupations want a stronger voice in the workplace, and there is increasing recognition that this is a fundamental human right
The Continued Relevance of Labor Problem
Despite the rise of the nonunion human resource management model and the reemergence of the free-market model, the U.S. labor relations is founded on the beliefs of the industrial relations school in the context of the early 20th-century labor problem.
The United States and other developed and developing countries continue to struggle with the modern equivalent of the labor problem
Workers in many occupations want a stronger voice in the workplace, and there is increasing recognition that this is a fundamental human right
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The four schools of thought and the labor problem discussion reveal:
The evaluation of labor unions fundamentally depends on the nature of work
How labor markets operate
The nature of employment relationship conflict
The importance of employee voice
What do U.S. Unions do?
The four schools of thought and the labor problem discussion reveal:
The evaluation of labor unions fundamentally depends on the nature of work
How labor markets operate
The nature of employment relationship conflict
The importance of employee voice
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In mainstream economics
Unions are harmful because they are monopolies that impair economic efficiency
The preferred method of workplace governance is reliance on competitive markets
Review: Four Schools of Thought
In mainstream economics unions are harmful because they are monopolies that impair economic efficiency. Unions may exist, but they are bad.
The preferred method of workplace governance is reliance on competitive markets.
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In the human resource management school
Unions are an indication that management is not creating motivated and efficient workers via firm-created human resource management policies
Unions may exist, but they are unnecessary
Review: Four Schools of Thought
In the human resource management school,
unions are an indication that management is not successfully creating motivated and efficient workers via firm-created human resource management policies.
Unions may exist, but they are unnecessary.
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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
Review: Four Schools of Thought
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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From an industrial relations perspective
Higher wages and reduced profitability represent a socially beneficial redistribution of income
Labor laws protecting employees’ rights
Form unions were passed because of the beliefs that labor market competition is not among equals
That it is not wise to rely on managerial benevolence
That employee voice is important in a democratic society
What do U.S. Unions do?
From an industrial relations perspective
Higher wages and reduced profitability represent a socially beneficial redistribution of income
Labor laws protecting employees’ rights
Form unions were passed because of the beliefs that labor market competition is not among equals
That it is not wise to rely on managerial benevolence
That employee voice is important in a democratic society
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In critical industrial relations thought
Unions are either management tools of worker suppression or worker tools of power and revolution, though neither of these are mainstream U.S. beliefs.
The desired mechanisms for governing the workplace are worker control or socialism
Review: Four Schools of Thought
In critical industrial relations thought,
unions are either management tools of worker suppression or worker tools of power and revolution, though neither of these are mainstream U.S. beliefs.
The desired mechanisms for governing the workplace are worker control or socialism.
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What do U.S. Unions do?
So what do U.S. unions do?
John F. Kennedy said in 1960
Employees, represented by free and democratic trade unions of their own choosing, participate actively in determining their wages, hours and working conditions. Their living standards are the highest in the world. Their job rights are protected by collective bargaining agreements. They have fringe benefits that were unheard of less than a generation ago.
Our labor unions are not narrow, self-seeking groups. They have raised wages, shortened hours and provided supplemental benefits. Through collective bargaining and grievance procedures, they have brought justice and democracy to the shop floor. But their work goes beyond their own jobs, and even beyond our borders.
Our unions have fought for aid to education, for better housing, for development of our national resources and for saving the family-sized farms. They have spoken, not for narrow self-interest, but for the public interest and for the people.
-- John F. Kennedy, Aug. 30, 1960
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Unions
raise wages,
increase the probability of receiving health insurance and other employee benefits,
facilitate the receipt of social insurance benefits,
reduce income inequality, and
negotiate for grievance procedures with just cause discipline and discharge provisions
What do U.S. Unions do?
So What do U.S. Unions do?
In sum, Unions
raise wages,
increase the probability of receiving health insurance and other employee benefits,
facilitate the receipt of social insurance benefits,
reduce income inequality, and
negotiate for grievance procedures with just cause discipline and discharge provisions
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Evaluating the effects of unionism
Unionized workers in the U.S. are generally estimated to have wages approximately 15% higher than comparable nonunion workers.
This is called the union wage premium
Research finds that unions increase the likelihood of employee benefits, seniority right.
What do U.S. Unions do?
Evaluating the effects of unionism
Unionized workers in the U.S. are generally estimated to have wages approximately 15% higher than comparable nonunion workers.
This is called the union wage premium
Research finds that unions increase the likelihood of employee benefits, seniority right.
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Evaluating the effects of unionism
Union wage premium
Research finds that unions increase the likelihood of employee benefits, seniority right
The research evidence supports the presence of a shock effect
The presence of a union shocks managers out of complacency
Forces them to develop better managerial practices
What do U.S. Unions do?
Evaluating the Effects of Unionism.
Unionized workers in the United States are generally estimated to have wages approximately 15 percent higher than comparable nonunion workers. This is called the union wage premium. Research finds that unions increase the likelihood of employee benefits, seniority right. Unions can be hypothesized to lower productivity by using their power to negotiate restrictive work rules and by introducing time-consuming decision-making procedures.
The research evidence supports the presence of a shock effect: The presence of a union shocks managers out of complacency and forces them to develop better managerial practices and policies that improve workplace efficiency, including more formal human resource policies such as training programs, and objective rather than subjective selection tests.
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2-22
Unions have other important effects in the workplace
Voice gives workers an alternative to quitting when they are dissatisfied with a job
Improve employee awareness of employer-provided and government-mandated policies
Labor unions can also provide a sense of community in the workplace
Counter some negative psychological effects of the lack of ownership in one’s work
What do U.S. Unions do?
Unions have other important effects in the workplace
Voice gives workers an alternative to quitting when they are dissatisfied with a job
Improve employee awareness of employer-provided and government-mandated policies
Labor unions can also provide a sense of community in the workplace
Counter some negative psychological effects of the lack of ownership in one’s work
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From an industrial relations perspective
Higher wages and reduced profitability represent a socially beneficial redistribution of income
Unions raise wages, increase the probability of receiving health insurance and other employee benefits, facilitate the receipt of social insurance benefits, reduce income inequality, and negotiate for grievance procedures with just cause discipline and discharge provisions
What do U.S. Unions do?
From an industrial relations perspective
Higher wages and reduced profitability represent a socially beneficial redistribution of income
Unions raise wages, increase the probability of receiving health insurance and other employee benefits, facilitate the receipt of social insurance benefits, reduce income inequality, and negotiate for grievance procedures with just cause discipline and discharge provisions
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Table 2.4 - What Do Unions Do? (handout)
| Dimension | Estimated Effects of U.S. Unions |
| Efficiency | |
| Job Satisfaction | Union Workers are less satisfied on average |
What’s the union effect on job satisfaction? In other words, are union members more or less satisfied with their jobs compared to their non-union counterparts?
Union Workers are less satisfied on average because their working conditions are different. Also, even if union members are less dissatisfied with their jobs, they are less likely to quit their jobs since unions jobs are generally better paid with better benefits. Since these dissatisfied union workers stayed in their union jobs instead of quitting like their non-union counterparts, on average, Union Workers are less satisfied.
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Table 2.4 - What Do Unions Do? (handout)
| Dimension | Estimated Effects of U.S. Unions |
| Turnover | Reduced turnover. |
What’s the union effect on turnover? Are union members more or less likely to quit their jobs compared to their non-union counterparts?
Unions reduce turnover. Union members are less likely to quit their jobs due to higher union wages and better benefits.
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Table 2.4 - What Do Unions Do? (handout)
| Dimension | Estimated Effects of U.S. Unions |
| Productivity | Mixed evidence. |
Some research finds that unions are associated with increased productivity, but other studies find no or negative effects of unions on productivity. The evidence is mixed.
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Table 2.4 - What Do Unions Do? (handout)
| Dimension | Estimated Effects of U.S. Unions |
| Profitability | Reduced profitability. |
What’s the union effects on firms’ profitability?
Unions are found to reduce profitability since unions increase wages
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Table 2.4 - What Do Unions Do? (handout)
| Dimension | Estimated Effects of U.S. Unions |
| Efficiency | |
| Job Satisfaction | Union Workers are less satisfied on average |
| Turnover | Reduced turnover. |
| Productivity | Mixed evidence. |
| Profitability | Reduced profitability. |
In sum, in the efficiency dimension, Union Workers are less satisfied on average. Unions reduce turnover and reduce profitability. The union effect on productivity is mixed.
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Table 2.4 - What Do Unions Do? (handout)
| Equity | |
| Wage levels | Union wage premium Higher wages (15 percent higher on average). |
What’s the union effects on wage levels?
Unionized workers in the United States are generally estimated to have wages approximately 15 percent higher than comparable nonunion workers. This is called the union wage premium.
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Changes in the Union Wage Premium by Industry
Bernt Bratsberg and James F. Ragan, Jr.
ILR Review
Vol. 56, No. 1 (Oct., 2002), pp. 65-83
This table shows the average union wage premium and union premium by industry. For example, the union wage premium in the construction industry is about 31.6%. Unionized construction workers earn 31.6% more compared to their non-union counterparts.
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Union vs Non Union - There is a difference! International Union of Operating Engineers
Please click on the video and watch the union vs. non-union differences.
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Table 2.4 - What Do Unions Do? (handout)
| Equity | |
| Wage distribution | Compressed (less unequal) wage structure. |
What’s the union effect on wage distribution?
Union jobs have more compressed or less unequal wage structure.
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Table 2.4 - What Do Unions Do? (handout)
| Equity | |
| Employee benefits | Increased likelihood of benefits being offered (e.g. health insurance). |
What’s the union effect on employee benefits?
Unions increases the likelihood of employee benefits. Unionized workers are at least 15 percent more likely to have employer-provided health insurance and pensions than similar nonunion workers.
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Table 2.4 - What Do Unions Do? (handout)
| Equity | |
| Just cause discipline and discharge | Nearly universal in union contracts; rare elsewhere. |
Just cause discipline and discharge are Nearly universal in union contracts; rare elsewhere.
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Table 2.4 - What Do Unions Do? (handout)
| Equity | |
| Public policies | Assistance with exercising rights (e.g., workers’ compensation). |
What’s the union effect on Just cause discipline and discharge?
Unions also assist with exercising workers’ rights (e.g., workers’ compensation).
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Table 2.4 - What Do Unions Do? (handout)
| Equity | |
| Seniority | Increased importance of seniority provision in personal changes. |
What’s the union effect on seniority? Unions Increased importance of seniority provision in personal changes.
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Table 2.4 - What Do Unions Do? (handout)
| Equity | |
| Wage levels | Union wage premium Higher wages (15 percent higher on average). |
| Wage distribution | Compressed (less unequal) wage structure. |
| Employee benefits | Increased likelihood of benefits being offered (e.g. health insurance). |
| Just cause discipline and discharge | Nearly universal in union contracts; rare elsewhere. |
| Public policies | Assistance with exercising rights (e.g., workers’ compensation). |
In sum, in the equity dimension, union wage premium is about 15%. Union members makes roughly 15% higher compared to their nonunion counterparts.
Unionized workplaces have more compressed wage structure.
Unions also increases the likelihood of employee benefits.
Just cause discipline and discharge are nearly universal in union contracts and are rarely found in nonunion workplaces.
Unions also assist with exercising workers’ rights.
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Table 2.4 - What Do Unions Do? (handout)
| Equity | |
| Seniority | Increased importance of seniority provision in personal changes. |
Unions also Increase the importance of seniority provision in personal changes.
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Table 2.4 - What Do Unions Do? (handout)
| Voice | |
| Collective negotiations | Management is required to bargain with a certified union. |
| Grievance procedures | Nearly universal presence of formal grievance procedures with same level of due process and representation. |
What are the unions’ role in collective negotiation? Management is required to bargain with a certified union.
Lastly, there is nearly universal presence of formal grievance procedures with same level of due process and representation.
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2-40
Table 2.4 - What Do Unions Do?
Please study the unions effects on efficiency, equity and voice concerns in Table 2.4 and review what do unions do.
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2-41
Theories of the labor movement
Capture the central debates over the workplace roles of unions
Unions are not purely workplace institutions
A labor movement is a social movement
Workers and unions from multiple workplaces join together to pursue common interests
What do U.S. Unions do?
Theories of the labor movement
Capture the central debates over the workplace roles of unions
Unions are not purely workplace institutions
A labor movement is a social movement in which workers and unions from multiple workplaces join together to pursue common interests, most frequently in the political and social arenas.
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2-42
The labor movement provides a voice for workers in the political arena
Endorse candidates for political offices
Mobilize get-out-the-vote efforts
Campaign on behalf of candidates
Lobby and make donations to lawmakers
What do U.S. Unions do?
The labor movement provides a voice for workers in the political arena;
whereas labor unions, or their associated political action committees,
endorse candidates for political offices,
mobilize get-out-the-vote efforts,
campaign on behalf of candidates, and
lobby and make donations to lawmakers.
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2-43
Perspective to the political and social arenas
A democratic society is seen as a pluralist society
Numerous groups have common and conflicting interest
The labor movement makes important contributions in the political and civil arenas in contemporary democratic societies
What do U.S. Unions do?
From the perspective of the industrial relations school of thought, a democratic society is seen as a pluralist society
in which numerous groups have common and conflicting interests—corporations, consumers, farmers, workers, home owners, and the like.
From a pluralist perspective then, the labor movement makes important contributions in the political and civil arenas in contemporary democratic societies; and the relationship between a vibrant, independent labor movement and a healthy, balanced democratic society must be remembered when evaluating labor unions.
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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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