Labor Relations-B-Power

Chapter4_TheRoleoftheLaborRelationsEnvironment.pdf

Home >Human Resource Management homework help >Labor Relations-B-Power

A CONCEPTUAL FRAMEWORK FOR ANALYZING THE LABOR RELATIONS ENVIRONMENT

This chapter moves horizontally across the three-tiered framework by examining how the external environment in which labor relations develop infl uences the bargaining process and bargaining outcomes at the functional level. The discussion focuses on fi ve key aspects of the external environment: the economic, public policy, demographic, social, and technological contexts of the bargaining relationship.

The external environment affects the bargaining power of labor and management, which determines bargaining outcomes. A union, for example, will be better able to gain a high wage and other favorable contract terms when it has relatively high bargaining power. It is often something in the external environment that determines whether a union has a lot of bargaining power in one situation and little power in another. Thus, we start this chapter with a discussion of how the external environment infl uences bargaining power and the bargaining process. For instance, we trace how a low unemployment rate (an aspect of the economic environment) strengthens workers’ ability to hold out while on strike and thereby gives a union greater bargaining power.

The role of environmental factors is well illustrated by the response of labor and management to heightened international competition and continuing corporate restructuring . A conceptual framework is necessary for understanding how the external environment affected collective bargaining in recent years and in other periods.

This book uses John Dunlop ’ s division of the labor relations environment into three main infl uences: (1) the economic context, (2) the technological context, and (3) the locus of power in the larger society. 1 In addition, this book considers the infl uence of the social context and the demographic context. The underlying theme is that labor and management can infl uence the environment and the environment also infl uences them.

On the one hand, the external environment supplies both incentives and constraints upon labor and management as they work to meet their bargaining

The Role of the Labor Relations Environment

C o p y r i g h t 2 0 1 7 . I L R P r e s s .

A l l r i g h t s r e s e r v e d . M a y n o t b e r e p r o d u c e d i n a n y f o r m w i t h o u t p e r m i s s i o n f r o m t h e p u b l i s h e r , e x c e p t f a i r u s e s p e r m i t t e d u n d e r U . S . o r a p p l i c a b l e c o p y r i g h t l a w .

EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 2/16/2022 6:49 PM via UNIVERSITY OF MARYLAND GLOBAL CAMPUS AN: 1589152 ; Harry C. Katz, Thomas A. Kochan, Alexander J. S. Colvin.; An Introduction to U.S. Collective Bargaining and Labor Relations Account: s4264928.main.eds

90 Part I. Introduction

goals. Thus, it is important to consider how the environment shapes the power of the bargaining parties. On the other hand, the parties to collective bargaining also seek to mold their environment to better serve their needs. Thus, environmental infl uences are not entirely outside human control.

For example, since the 1920s, many employers in the textile, apparel, and other small, soft-goods industries have migrated from the Northeast to the South, partly (if not primarily) to take advantage of a more favorable economic environment (such as lower labor costs).

More recently, many U.S. manufacturing fi rms have opened production facilities overseas or established joint ventures with foreign producers, thereby contributing to an economic environment of sluggish employment growth in the United States in their industries. In this way, these fi rms have directly shaped the U.S. economic environment for collective bargaining.

The ability of involved parties to infl uence their environment is even more pronounced in the case of public policy because, quite simply, organized labor and management are the prime lobbyists who infl uence the public policies that regulate their own behavior. Consequently, in the long run the environment is to some extent infl uenced by the bargaining parties. Only in the short run should the environment be viewed as external and relatively fi xed.

BARGAINING POWER

The external environment affects the bargaining power of labor and management. Three aspects of bargaining power come into play: the total power, the relative power, and the political power of labor and management. Total power concerns the total profi ts available to labor and management. The greater the profi t is, the more is available for labor and management to divide up. Both labor and manage- ment prefer situations with greater total power. Relative power has to do with the relative strength of labor or management; in other words, the ability of either side to gain a larger share of a given amount of profi t. In contrast to preference of both sides for greater total power, the interests of labor and management confl ict with regard to relative power. Political power concerns the ability of labor or management to infl uence governmental actions—the public policies governments adopt that infl uence labor relations or the actions governments take as employers.

The Determinants of the Total Power of Labor and Management

The total power in a given bargaining situation is heavily infl uenced by two factors: the degree of competition an employer faces and the state of the economy. The degree of competition is affected by the amount of competition an employer faces from domestic and international competitors. Firms that face few competitors and thereby exert market power earn greater profi ts and have more resources for labor and management to divide up. In the most concentrated industries, a fi rm will be a monopoly and will earn monopoly profi ts. In this case the total power

EBSCOhost - printed on 2/16/2022 6:49 PM via UNIVERSITY OF MARYLAND GLOBAL CAMPUS. All use subject to https://www.ebsco.com/terms-of-use

Role of the Labor Relations Environment 91

of labor and management is at its maximum and bargaining is made easier by the fact that both high wages and high profi ts can be funded out of the fi rm ’ s monopoly profi ts.

The state of the economy infl uences total power by affecting the level of demand (i.e., sales) and profi ts. Both labor and management prefer less competition and a strong economy.

The Determinants of the Relative Bargaining Power of Labor and Management

The relative bargaining power a union enjoys is heavily infl uenced by its and its members’ abilities to withdraw their labor, usually (though not always) through a strike. Workers are more likely to win higher wages and other gains when they are willing and able to sustain a strike. In addition, once a strike has begun, it is more likely to succeed when the costs of the strike to the employer are greater. Thus, an employer ’ s relative bargaining power is heavily infl uenced by its ability to withstand a strike. The simplest measure of relative bargaining power is the amount of strike leverage each party holds.

Workers can also withdraw their labor through more informal actions, such as working to rule (following rules strictly rather than pursuing effective work practices), the “blue fl u” (large-scale worker absenteeism), and other means of slowing production. The discussion that follows focuses on the effects of strikes that involve workers who fully withdraw their labor. However, many of the points raised below carry over to less extreme forms of labor withdrawal.

How Strike Leverage Infl uences Relative Bargaining Power

The relative degree to which workers and an employer are willing and able to sustain a strike is their strike leverage. To measure each party ’ s strike leverage, one needs to know what costs a strike would impose on each party and what alternative income sources are available to each party to offset any income losses a strike will bring. The discussions of the environmental contexts that follow help us understand what determines strike leverage.

THE ECONOMIC CONTEXT

Economic factors critically infl uence both total and relative bargaining power. Economic factors can be separated into those at the macrolevel (across the economy) and those at the microlevel (relevant only to a specifi c bargaining relationship).

Microeconomic Infl uences on Total Bargaining Power

Microeconomic factors infl uence the total bargaining power of an employer or a union through the effects competitive conditions exert on a fi rm. The greater the market power of a fi rm (i.e., the less competition it faces in the markets in which it competes), the greater will be the profi ts that fi rm earns. When profi ts are greater, there are more resources for the parties to divide based on their relative

EBSCOhost - printed on 2/16/2022 6:49 PM via UNIVERSITY OF MARYLAND GLOBAL CAMPUS. All use subject to https://www.ebsco.com/terms-of-use

92 Part I. Introduction

power. A fi rm ’ s market power is affected by the degree of domestic and international competition it faces.

Labor and management have a common interest that affects total power. Both sides want the company to have market power (if other factors are held constant that affect the relative power of labor and management). The existence of this potential common interest explains why unions sometimes join with management to push for government regulations that will increase the market power of their company. For example, the United Steelworkers union frequently joined with steel companies to lobby the federal government to restrict steel imports and to impose higher tariffs on steel importation.

MICROECONOMIC INFLUENCES ON RELATIVE BARGAINING POWER

Microeconomic factors are market forces that shape the amount of monopoly power a fi rm has. They include the number of competitors in an industry and the ease with which new fi rms can enter an industry. These microeconomic factors infl uence the relative bargaining power of labor and management through the ways they affect the parties’ strike leverage and the elasticity of demand for labor (the wage-employment trade-off ).

Management ’ s Strike Leverage

The more an employer is willing and able to sustain a strike, the more likely a union will be to settle a strike before achieving all of its goals. Employee strike leverage derives from the how much a strike infl uences fi rm profi ts. The greater the profi ts a fi rm loses during a strike, the more ready it will be to give in to labor ’ s demands. During a strike, a fi rm ’ s profi ts are shaped by a strike ’ s effects on production and sales. Figure 4.1 diagrams the principal determinants of an employer ’ s strike leverage: the ability of workers to harm production, sales, and

PRODUCTION SALES PROFITS

Essentiality of striking workers

Availability of substitute workers

Alternative production sites

Capital and other continuing costs

Availability of inventories Effects of the strike on

competitors

Figure 4.1. Determinants of management ’ s strike leverage

EBSCOhost - printed on 2/16/2022 6:49 PM via UNIVERSITY OF MARYLAND GLOBAL CAMPUS. All use subject to https://www.ebsco.com/terms-of-use

Role of the Labor Relations Environment 93

profi ts and the ability of management to fi nd alternative ways to maintain produc- tion, sales, and profi ts.

The effects of a strike on production: Once a strike has begun, the fi rst indicator of workers’ bargaining power is the degree to which the strike has impaired production and/or service. Workers who succeed in halting production because there are no readily available labor substitutes—supervisors, employees in another plant, strikebreakers, or automated equipment—have substantial strike leverage and bargaining power. In other words, these workers are essential to the production process. Craft workers, who are typically very diffi cult to replace because of their skills, often have signifi cant strike leverage. For example, the high skill levels of electricians and repair machinists help explain why they earn so much more than production workers in the auto, steel, and textile industries.

The effects of a strike on sales: The power of a striking work group is tempered, however, if the halt in production does not lead to a reduction in sales. Employers can sever or at least weaken the link between production and sales if inventories are high or if alternative sites can be used to produce what normally would be produced at the site of the strike. Whether alternative production is available is infl uenced by the bargaining structure (whether the other sites are covered by the same union or contract) and by the extent to which other workers at other sites join or support the strike.

The effects of a strike on profi ts: Finally, even if a strike stops production and sales, the fi rm may not necessarily experience a serious decline in profi ts. For example, fi rms with relatively high ongoing capital or interest expenses have a harder time withstanding a loss of income caused by a strike. This helps explain why construction workers, who can temporarily halt costly construction projects, have so much bargaining power. In contrast, fi rms facing a strike that also shuts down all the competitors’ operations have an easier time withstanding strikes because their lost sales and profi ts may be largely postponed rather than permanently forgone. Firms that have substantial savings or alternative income sources (such as from other lines of business) can more easily absorb the costs of a strike. Later sections of this chapter discuss how the recent growth in employers’ nonunion operations has improved their strike leverage through this channel.

The Strike Leverage of Unions

Consider the other side—the strike leverage of unions. A union ’ s strike leverage is determined by the ability and willingness of the work force to stay out on strike. The longer workers are willing and able to stay on strike, the greater the bargaining power of the union representing those workers will be and the more likely the union will be to win favorable employment terms from an employer, assuming that other factors are held constant.

Alternative sources of worker income: The willingness of workers to stay out on strike is heavily infl uenced by the degree to which alternative sources of income are available to the striking work force. Obviously, workers in unions that offer ample strike benefi ts can better afford to stay out on strike than those in other unions can. Likewise, when workers can more readily fi nd temporary or part-time work that supplements union strike benefi ts or when they have accumulated substantial savings or assets, they are more able to sustain a strike action.

EBSCOhost - printed on 2/16/2022 6:49 PM via UNIVERSITY OF MARYLAND GLOBAL CAMPUS. All use subject to https://www.ebsco.com/terms-of-use

94 Part I. Introduction

Worker solidarity: Another set of factors that infl uences the strike leverage of workers beyond the microeconomic environment is the attitude of union members. Workers’ feelings of solidarity with one another infl uence whether picket lines will be honored and pent-up frustrations about the conditions that precipitate a strike will infl uence workers’ willingness to stay out. In brief, strikes are highly emotional undertakings that depend on numerous factors, not simply the microeconomic environment.

The U.S. airline industry provides a good illustration of how microeconomic factors affect bargaining power. In recent years (see Box 4.1 ), union power in this industry has been increased by a wave of mergers among the major airlines. This has led to better collective bargaining outcomes for airline employees.

The Wage-Employment Trade-Off

Higher wages often bring cuts in employment. Thus, unions may in some cases choose not to raise wages as much as they could. This is called the wage- employment trade-off.

The key point is that there are employment effects from wage increases. Unions sometimes take these employment effects into consideration and moderate their wage demands. For example, unionized apparel workers received only modest

BOX 4.1 Airline Industry Consolidation Leads to Increases in Airline Union Power and Employee Pay

A good example of how employees and unions benefi t from industry concentration (i.e., a microeconomic factor) is provided by the U.S. airline industry. At a recent meeting of airline company and union-side attorneys, it was noted that the recent merger wave among airlines would likely lead to better collective bargaining outcomes for airline unions and employees. An attorney who represents several airline unions summed it up by pointing out that airline consolidation gave the four remaining national carriers (American, United, Southwest, and Delta) more “pricing power” over their customers, which enabled them to boost profi ts and raised employees’ expectations for wage increases and benefi t improvements. Recent contract settlements have validated this observation. For example, on November 20, 2015, United Airlines and the Air Line Pilots Association (ALPA) agreed to a two-year contract extension that gave pilots a 13 percent pay increase in 2016, followed by annual increases of 3 percent and 2 percent. These increases raised the hourly base pay of United pilots above what pilots at American and Delta airlines earn.

Sources : Larry Swisher, “Post-Merger Airlines Size Ups Pressure on Contract Talks,” Daily Labor Report , March 11, 2016, C-1; and Michael Sasso, “United Deal Said to Boost Pilot Pay in Bid for Labor Peace,” Daily Labor Report , November 25, 2015, A-5.

EBSCOhost - printed on 2/16/2022 6:49 PM via UNIVERSITY OF MARYLAND GLOBAL CAMPUS. All use subject to https://www.ebsco.com/terms-of-use

Role of the Labor Relations Environment 95

wage increases in their collective bargaining agreements in recent years, in part because they feared that any higher wage payments would cause apparel fi rms to more aggressively shift production offshore or outsource production domestically to nonunion plants or fi rms. This trade-off between wages and employment is another important microeconomic infl uence on bargaining power and outcomes.

Marshall ’ s Four Basic Conditions

Unions are more likely to consider the employment effects that result from a wage increase when these effects are greater. Marshall ’ s conditions explain why a wage increase leads to large reductions in employment in one situation and to only small reductions in employment in another is explained.

In his seminal analysis of the relative bargaining power of labor and management, Alfred Marshall argued that unions are most powerful when the demand for labor is highly inelastic —that is, when increases in wages will not result in signifi cant reductions in employment in the unionized sector. 2 Marshall proposed four basic conditions under which the demand for union labor would be inelastic: (1) when labor cannot be easily replaced in the production process by other workers or machines; (2) when the demand for the fi nal product is not sensitive to changes in the price of the product; (3) when the supply of nonlabor factors of production is not sensitive to changes in the price of the product; and (4) when the ratio of labor costs to total costs is small. 3 Let us address each of these conditions in turn.

The diffi culty of replacing workers: The fi rst condition, the degree to which workers are diffi cult to replace , depends on the production technology. The more diffi cult it is to replace workers with machines or other workers, the less apt the workers will be to fear they will be displaced.

Unions can try to limit how easily management can introduce new technology by raising the costs of substituting other factors of production for union labor, but they face a dilemma when they consider that strategy. Although collectively bargained constraints on technological change may keep unions from losing employment, slowing the rate of technological change may also constrain the rate of productivity growth, limiting the long-run potential for wage increases.

The demand for the product: Workers face less of an employment decline from raising wages if the demand for the product produced by these workers is not sensitive to the price of the product. This sensitivity (what economists call the elasticity of product demand ) is a second key condition Marshall identifi ed. This condition is somewhat different from the other three in that it is infl uenced by consumer preferences and not by the actions of the fi rm or the union. The elasticity of product demand depends on the willingness of consumers to substitute other products.

A modern-day illustration of this principle is the threat imports pose to union power. Lower-priced imports become more attractive to domestic consumers when wages and prices in the domestic unionized economy increase. The auto, apparel, steel, and electrical appliance industries are all recent cases in point.

The supply of other production inputs: Marshall ’ s third condition is the responsiveness of the price of other inputs in the production process to the demand for those inputs (what economists call the elasticity of supply of other factors of production ). When an

EBSCOhost - printed on 2/16/2022 6:49 PM via UNIVERSITY OF MARYLAND GLOBAL CAMPUS. All use subject to https://www.ebsco.com/terms-of-use

96 Part I. Introduction

employer turns to alternative inputs so it can employ less union labor, unions will be better able to push up wages (with less fear of employment cutbacks) if the price of other inputs rises a lot as their use increases. Thus, the more inelastic the supply curve for alternative inputs is, the greater union power is. Whereas Marshall ’ s fi rst condition concerns the degree to which it is technologically feasible to substitute machines or other factors of production for unionized labor, his third condition has to do with how costly production inputs are that can be used as alternatives to union labor.

Labor ’ s share of total costs: Marshall ’ s fourth condition is that unions are more powerful when labor costs are only a small proportion of total costs. This condition has often been restated as the importance of being unimportant . An employer is less likely to resist union pressure if a given wage increase affects only a very small proportion of the total cost of the product. Thus, a small craft unit, such as the skilled maintenance employees in a plant, is often less likely to meet management resistance to its wage demands than a broad bargaining unit that represents all production and maintenance employees would. 4

Bargaining in the public sector demonstrates the diffi culties unions experience when labor costs constitute a large proportion of total production costs. Labor costs for local government often account for between 60 and 70 percent of the budget, and in some jurisdictions the labor costs for occupations such as fi refi ghting run as high as 90 percent of the budget. When local government offi cials seek to control total budget costs, they take a very hard line in collective bargaining because the wages and salaries of public employees are their largest controllable cost.

Do Unions and Workers Care about the Wage-Employment Trade-Off?

All of Marshall ’ s conditions are based on the assumption that workers and unions are concerned about the employment effects of wage increases. When union members are willing to accept a slow rate of growth in employment or a decline in the number of union jobs as a trade-off for higher wages, the sources of power discussed above are less important.

Perhaps the classic example of a union that ignored the employment effects resulting from wage increases was the United Mine Workers of America (UMW) in the 1940s. UMW president John L. Lewis demanded high wage increases while giving employers a free hand to invest in labor-saving technology. The result was that although mine workers’ wages increased, employment in the industry declined sharply throughout the 1940s and into the 1950s. 5 Despite this decline, the union ’ s leaders did not soften their demands for higher wages.

Labor relations scholars have long debated the role the wage-employment trade-off actually plays in collective bargaining. Arthur Ross argued that political factors rather than employment consequences shape the wage policies of unions. Ross also claimed that workers’ wage demands are heavily infl uenced by the comparisons they make with the wages of other workers or unions (what he called “orbits of coercive comparisons”), a practice that gives union leaders some leeway in defi ning their wage goals. 6 John Dunlop had a very different view of union wage policy. He claimed that unions do consider the employment conse- quences of their wage demands and that they may even try to maximize the employer ’ s payroll. 7

EBSCOhost - printed on 2/16/2022 6:49 PM via UNIVERSITY OF MARYLAND GLOBAL CAMPUS. All use subject to https://www.ebsco.com/terms-of-use

Role of the Labor Relations Environment 97

Concessionary bargaining from the 1980s on offers evidence that unions and workers do consider the employment effects of higher wages, particularly when higher wages might lead to a plant closing. Yet as Ross asserted, political factors played an important role in shaping whether and to what extent employment was a concern in wage bargaining. The willingness of workers to accept concessions and what they won in exchange for those concessions was affected by many factors, including business and union strategies.

MACROECONOMIC INFLUENCES ON TOTAL AND RELATIVE BARGAINING POWER

Economists refer to unemployment and the growth in national product or productivity as macroeconomic factors. The overall state of the economy affects bargaining power through a variety of channels. A fi rm is likely to be earning higher profi ts (greater total power) when the economy is strong and demand is growing. Both sides prefer periods of economic growth because these periods can sustain high wages and profi ts.

A union ’ s strike leverage depends in part on the availability of jobs—both for the striking workers and for their spouses or other family members who might help support the strikers. The higher the unemployment rate, the less likely striking workers or family members will be to fi nd substitute employment and the more likely it is that a striking worker ’ s other family members will be on layoff. Thus, during the upswing of a business cycle (as the unemployment rate declines), unions generally gain strike leverage. Conversely, during periods of increasing unemployment, the relative power of unions declines. The factors at work here include the need of striking workers for alternative income sources and the vulnerability of employers to strikes when product demand is high. During periods of slack demand, employers may, in fact, welcome a strike because they can then lower their inventories and use the strike as a substitute for layoffs.

Wage Flexibility over the Business Cycle

The connection between macroeconomic conditions and bargaining power is supported by evidence that the rate of wage increases in the economy responds to the business cycle. Wages rise more quickly when the economy is growing and they increase more slowly (or fall) when macroeconomic activity is sluggish.

However, declines in product demand and increases in unemployment have been shown to have a weaker downward effect on collectively bargained wage increases than on wage increases in the nonunion sector. 8 Unions tend to aggres- sively resist wage cutting, and it is harder for union employers to cut wages or moderate the pace of wage increases during recessionary periods than it is for nonunion employers. The fact that union wage rates are often set in multiyear agreements (labor contracts in trucking and the auto industry, for example, have traditionally been for three years) makes union wages less responsive than nonunion wages to changing economic conditions.

EBSCOhost - printed on 2/16/2022 6:49 PM via UNIVERSITY OF MARYLAND GLOBAL CAMPUS. All use subject to https://www.ebsco.com/terms-of-use

98 Part I. Introduction

POLITICAL POWER

The bargaining power of labor and management is infl uenced by their respective political power through a variety of channels. As mentioned above, one illustration of how politics matters is through the infl uence of public policies on the mac- roeconomic policies that affect the total and relative power of labor and management. Yet, as discussed in chapter 3 , the legal system and public policies critically shape labor relations. The political power of labor and management matters because that power infl uences the laws and public policies that regulate labor relations.

Public policies also directly affect income through social welfare policies such as the minimum wage and social security pensions. This is another channel through which political power affects the bargaining power of labor and management. Political power also infl uences employment terms and conditions through its effects on the roles federal, state, and local governments play as employers (see Chapter 13 ). However, in the United States, the government does not exert substantial direct effects on employment terms and conditions in the private sector, especially when compared to the role of government in many other countries (see Chapter 15 ).

THE LEGAL AND PUBLIC POLICY CONTEXT

Law and public policy infl uence the legal standing of unions, the bargaining power of unions, and employment conditions. This section describes specifi cally how laws do this.

The Legality of Unionism and Union Activity

Public policy determines how easy it is for unions to form and sustain themselves. Imagine what would happen in a country where unionism was deemed to be illegal and workers were sent to jail if they tried to form unions or to conduct strikes. One would expect that under such a public policy there would be few unions and that organized representatives of workers would be able to do very little. What would be the long-term consequences of such policies, and would such a regime be sustainable?

If unions and union activity were outlawed, one would expect workers to have little infl uence that could provide a counterbalance to other powerful social forces. What happened in Poland, however, reveals that such a system can lead to confl ict between workers and the government. The Solidarity union led a successful challenge to the Communist government in Poland. Unions were later active in the overthrow of governments in other Eastern European countries and in the former Soviet Union countries. Unionism in this region of the world thus promoted more than just the improvement of the working conditions of Polish workers. Events there and in other parts of the former Communist bloc remind us of the role unions can play as a democratic force in society.

Banning unions is one extreme. Legally requiring union membership is the other extreme role that public policy may play. No democratic government has chosen to follow this course. Instead, public policies about unionism in the United States and other democratic countries have taken a middle course. Considerable

EBSCOhost - printed on 2/16/2022 6:49 PM via UNIVERSITY OF MARYLAND GLOBAL CAMPUS. All use subject to https://www.ebsco.com/terms-of-use

Role of the Labor Relations Environment 99

variation exists among democratic countries regarding the regulations about which workers can join unions and how they can do so. In many countries, the regulation of unions has changed much over the last twenty-fi ve years.

The NLRA ’ s Effects on Bargaining Power

The NLRA and state statutes governing public and agricultural employees in the United States do more than just give unions the right to exist. These acts infl uence the processes and outcomes of collective bargaining through their regulation of the actions of workers, unions, and employers during collective bargaining. For example, the NLRA grants unions the right to strike and obligates employers to bargain in good faith. Without these policies, the bargaining power of unions might be severely weakened.

The NLRA infl uences the bargaining power of workers and employers in many ways. For instance, as discussed in Chapter 3 , the Taft-Hartley amendments to the original NLRA made it illegal for supervisors to join unions that represent production workers. 9 In taking away the protection of the law, this amendment led to the demise of the numerous foreman unions that had formed.

The Effects of Direct Regulation of Employment Conditions

In the United States, certain employment conditions are regulated in more direct ways than collective bargaining is. Federal laws regulation overtime hours, unemployment insurance, pensions, and many other issues. These regulations are clearly important because they set employment terms. They also are important because of their indirect effects on bargaining power. For instance, the fact that workers in some states can collect unemployment insurance while they are on strike makes those workers more able to sustain strike action and increase their bargaining power than workers in states without this policy. 10 Unions in the United States and other countries support legislated minimum wages and minimum standards for other employment conditions. In recent years, unions in the United States have been strong supporters of campaigns to raise the minimum wage and campaigns for a “living wage” (see Chapter 6 ).

An Illustration of Government Employment Regulation: Pensions

Pensions provide an example of how government has infl uenced employment conditions. The Employee Retirement Income Security Act (ERISA) of 1974 has had profound effects on pensions. The act (1) specifi es minimum standards for vesting of pension contributions; (2) requires more detailed reporting and disclosure of information about the plan to both employees and the government; (3) requires that all future liabilities be fully funded on an annual basis and all past unfunded liabilities be amortized; and (4) establishes an insurance protection program for workers affected by plan terminations. The costs of the termination insurance are met by a tax on existing plans.

The major policy problem ERISA created is the potential risk to the government that occurs when major multiemployer plans are terminated. Box 4.2 provides

EBSCOhost - printed on 2/16/2022 6:49 PM via UNIVERSITY OF MARYLAND GLOBAL CAMPUS. All use subject to https://www.ebsco.com/terms-of-use

100 Part I. Introduction

BOX 4.2 Troubles Facing a Large Multiemployer Pension Plan and the Infl uence of Recent Federal Legislation

In January 2016, a New Jersey–based Teamsters local pension fund became the third multiemployer pension plan to apply for Treasury Department approval of benefi t suspensions. The massive Central States Pension Fund became the fi rst multiemployer plan to fi le for a rescue under the Multi- employer Pension Reform Act (MPRA) when it fi led its application with the Treasury Department in September 2015. The MPRA, enacted in 2014, is a federal law designed to help fi nancially troubled multiemployer plans avert insolvency by suspending the accrued benefi ts of plan participants. Supporters of the MPRA had successfully argued that without the law, some pension plans would become insolvent and the obligations of such funds would then transfer to the Pension Benefi t Guaranty Corporation, a federal agency established to support pension funding, and possibly bankrupt that corporation.

Critics of the MPRA claimed that it allowed profi table companies to escape pension obligations. CNN reported the case of a retired UPS driver who was told that his Central States Pension Fund benefi ts would decline from $2,903 to $1,462 a month due to cuts allowed under the MPRA. It was noted that although UPS has earned high profi ts, it was able to withdraw from the Central States Pension Fund in 2008 (with a payment of $6.1 billion). UPS set up its own pensions fund, but it did not include retirees. Retirees’ pensions continued to be covered by Central States. However, the Central States Fund has struggled in recent years to meet its obligations to UPS and other workers under the pressure of an aging work force (currently there are fi ve retirees for every active worker).

The MPRA gives the U.S. Treasury Department the authority to decide if benefi t cuts are fair. The U.S. Treasury used that authority to review a proposed rescue plan and its associated benefi t cuts with the help of Ken Feinberg, a renowned mediator. Following Feinberg ’ s recommendation, the Treasury Department rejected the proposed rescue plan in May 2016, asserting that the proposed benefi t cuts were too extreme for some benefi ciaries and that even if the proposed cuts were imposed, they would not assure the solvency of the beleaguered pension fund. Congress did not pass legislation that would have provided an alternative to the plan Feinberg rejected. In the absence of an acceptable funding rescue plan, the future of the Central States Fund is uncertain, as is the question of whether it will be able to meet its pension obligations.

Source : David Brandolph, “Third Multiemployer Plan Files Rescue Proposal,” Daily Labor Report , January 26, 2016, A-9; Katie Lobosco, “Why 8,737 UPS Retirees Are Bracing for Pension Cuts,” CNN Money , October 27, 2015, http://money .cnn.com/2015/10/27/retirement/ups-pension-cuts-central-states/ ; and David B. Brandolph, “Treasury Rejects Central States Pension Rescue Plan,” Daily Labor Report , May 6, 2016, A-8.

EBSCOhost - printed on 2/16/2022 6:49 PM via UNIVERSITY OF MARYLAND GLOBAL CAMPUS. All use subject to https://www.ebsco.com/terms-of-use

http://money.cnn.com/2015/10/27/retirement/ups-pension-cuts-central-states/

Role of the Labor Relations Environment 101

an account of the controversy surrounding a proposed and then rejected rescue plan for the Central States multiemployer pension fund. As you will see, the rescue plan was infl uenced by recent laws that allowed pension funds to lower retiree benefi ts under certain circumstances.

ERISA is an example of government efforts to regulate pensions, a key employ- ment condition. It also illustrates the diffi culties the federal government has faced in its work to ensure that workers consistently receive fair treatment with regard to pensions.

The Role of Trade Policy

Trade policy is another way that public policies infl uence the economic environ- ment. Debates about recent proposals to further liberalize trade policies illustrate the controversy surrounding these matters. President Obama ’ s support for free trade sparked heated debates over trade policy as the nation faced large trade defi cits and a loss of employment in the industries most threatened by foreign competition and imports (see Box 14.4 ).

The Labor Movement ’ s Criticism of the NLRA

Union leaders frustrated with declining union membership and new organizing diffi culties have begun to question the value of the NLRA. Labor leaders (and others) argue that NLRA decisions and representation elections take place only after enormous delays, caused in part by the lack of commitment to the original purposes of the NLRA. These leaders allege that such delays are the result of employer practices such as fi ling numerous challenges and requests for postponement and that these practices thwart the original intent of the NLRA that timely and fair elections take place. These critics argue that NLRB enforcement procedures operate to the advantage of management and against the original purposes of the law.

Labor leaders blame their lack of success in organizing on weaknesses in the NLRA and management ’ s stepped-up union-avoidance tactics. They now debate which would be better for unions and workers: making major changes in the NLRA or eliminating it completely. 11 Adding complexity to this debate is the fact that in some cases, U.S. unions have clearly benefi ted from the NLRA and its administration by the NLRB.

THE DEMOGRAPHIC CONTEXT

The changing nature of the labor force has also caused many to ask whether collective bargaining is obsolete. It is thus important to examine the nature of those changes and to explore their implications for collective bargaining.

Changes in the demographic characteristics of workers and jobs will infl uence the needs and expectations of workers. These, in turn, may affect an individual ’ s interest in union membership or willingness to stay out on strike.

EBSCOhost - printed on 2/16/2022 6:49 PM via UNIVERSITY OF MARYLAND GLOBAL CAMPUS. All use subject to https://www.ebsco.com/terms-of-use

102 Part I. Introduction

Labor Force Trends

Since World War II, the U.S. labor force has grown at an unprecedented rate, largely as a result of the postwar baby boom. However, the labor force grew more slowly in the 1990s than it had in the previous two decades as a result of a decline in the birth rate.

This and several other factors is leading to profound changes in the composition of the labor force in the United States. In 2012, Generation X (those born from 1965 to 1980) surpassed the Baby Boomer Generation (those born from 1946 to 1964) as the largest segment of the labor force. Only three years later, in 2015, the Millennial generation (born from 1981 to 1997) overtook the Gen Xers. The Millennials are expected to represent an even larger share of the work force in the years to come as the 40 percent who are still in school begin to move into the work force.

Will these demographic shifts affect labor relations in the United States? Some analysts speculate that because they will have come of age in a time of precipitous decline for unionism, Millennials will be skeptical of collective bargaining. However, there have been some signs that they may be embracing collective action in the workplace. A highly public vote to authorize a union by the Millennial workers at Gawker , a new-media outlet, was soon followed by a vote for authorization at Salon.com , another such site. These events indicate an enthusiasm for unionism among some younger workers.

The Millennials may face divergent pressures. It is forecast that half of them will earn a college degree. 12 Those without higher education will face an increasingly precarious labor market in which full-time jobs will become less common and part-time and more contingent work will increase. Those with a college degree will enter a highly competitive labor market in which they may be expected to change jobs frequently, a trend that may make traditional union organizing even more diffi cult. The gap that is widening in wages between workers with college degrees and workers with no college degrees will also likely exacerbate income inequality and perhaps also income differentials by race unless the current tendency for African Americans to attend college less frequently than whites is reversed.

Any look at the changing work force of the United States must consider the impact of immigration. Particularly signifi cant is the rising number of unauthorized immigrants who are working in the country. In 1990, the number of unauthorized immigrants living in the United States was 3.5 million. That number increased steadily until 2008, when it leveled off at about 11 million. 13

A majority of immigrants are of working age, and indeed their entrance has provided a partial solution to the problem of an ageing work force. It is estimated that unauthorized immigrants account for 5.1 percent of the labor force. Most labor organizations in the country are attempting to reach out to these workers, abandoning the nativist tendencies of the past. This outreach is diffi cult, however, partly because many immigrants work in the agricultural sector, which the NLRA does not protect.

EBSCOhost - printed on 2/16/2022 6:49 PM via UNIVERSITY OF MARYLAND GLOBAL CAMPUS. All use subject to https://www.ebsco.com/terms-of-use

www.Salon.com

Role of the Labor Relations Environment 103

IS THE U.S. ECONOMY DEINDUSTRIALIZING?

The increase in the number and share of service and part-time jobs has spurred an intense debate. Barry Bluestone and Bennett Harrison claim that the growth in these jobs signals a decline in the manufacturing base of the U.S. economy (they call the process deindustrialization ). They further argue that these shifts in job composition go hand in hand with increasing inequality in the income distribution. The better-paying jobs such as skilled trades, steel, and auto production jobs, they claim, are disappearing and are being replaced by lower-paying service jobs. 14 The spread of corporate downsizing led Bennett Harrison to conclude that American corporations are becoming “lean and mean.” These developments may have contributed to the growing income inequality that is occurring in the United States.

On the other side of the debate are analysts such as Robert Lawrence who hold that the growth in the number of service and part-time jobs has been a response to the availability and desire of workers who want those jobs and have the right skills for them. 15 These observers see this as a sign of health in the U.S. economy and compare the job growth in the United States in recent years to the sluggish employment growth in Europe over the same period. 16 There is also a middle position in this debate: some say that deindustrialization is not happening but at the same time point to many persistent problems in the U.S. labor market. 17

The issues at stake in this debate are of enormous importance. If one decides that the labor market is relatively healthy, there is little reason to seek government policies to alter the outcomes in that labor market, but if one believes that the labor market is in trouble, there is every reason to seek federal policies to redress an imbalance. Furthermore, any answer to the questions of whether deindustrializa- tion or income inequality are taking place will affect government policy toward collective bargaining and many other labor market institutions.

The shift to a larger service sector and more part-time and home-based employ- ment has two indisputable implications for collective bargaining and union organizing. First, since part-time workers have looser attachments to a single employer than others (they are often employed only temporarily), union organizing among them is more diffi cult and probably requires nontraditional techniques. It is not surprising that the labor movement has vigorously opposed the growth of temporary and home-based work. It is unlikely, however, that labor ’ s opposition will have any effect on the growth in these types of employment relationships. Thus, if unions are to organize these workers, they will need to develop policies and strategies that are tailored to their particular needs. One strategy that unions have discussed is providing associate member status or individual forms of rep- resentation to these workers. 18 Other solutions may be developed outside the United States, since the growth in temporary, part-time, and home-based work is a problem labor movements all over the globe are facing.

Second, the ease with which striking service workers can be replaced makes it diffi cult for unions to acquire bargaining leverage through strikes in those

EBSCOhost - printed on 2/16/2022 6:49 PM via UNIVERSITY OF MARYLAND GLOBAL CAMPUS. All use subject to https://www.ebsco.com/terms-of-use

104 Part I. Introduction

sectors. Several unions that represent service workers have been experimenting with strategies for broadening support for their demands through community groups such as churches. Service unions also have been experimenting with working to rule and other strategies that can increase leverage against employers without taking strike action.

THE DEMOGRAPHIC PROFILE OF UNION MEMBERS

The average union member is more apt to be working in industries, occupations, and regions in which the demand for labor is either declining or is growing at a slower pace than elsewhere in the economy. In addition, women, whose labor force participation is increasing rapidly, are underrepresented in the unionized sector.

These developments pose many challenges for unions. The traditional constituency of unions—male, blue-collar, manufacturing, mining, construction, and transporta- tion workers living in the Northeast or North Central regions—is declining in signifi cance. Current union members are on average older and less well educated than the new entrants to the labor force. Unions may have diffi culty adjusting to the demands of a younger, more vocal constituency.

Demographic Challenges for Unions

Demographic diversity can affect union policies. Once people join unions, they tend to try to shape union policies to refl ect their own preferences. This process of political representation becomes troublesome to unions when members’ views change rapidly. The very purpose of a union is to pursue the common goals of its members through the exercise of collective power. Thus, the more rapid the demography changes and the more heterogeneous the union constituency becomes, the greater the potential for internal confl ict and the more diffi culty the union will have in trying to establish bargaining priorities.

New union members sometimes have a diffi cult time creating an effective political base. This is a problem that sometimes confronts newly hired, younger workers as they try to infl uence the existing, often older, union leadership. Women, racial and ethnic minorities, and any other new group that moves into union jobs faces the same challenge. Until these groups can establish an effective political base and pressure union leaders, it is not likely that unions will give their needs as high a priority as they might desire.

In short, the demographic context of union membership affects collective bargaining, the attitudes union members have toward their jobs, and the skills workers bring to the job. If unions do not successfully organize the new members of the work force, their membership will decline even further. If unions do succeed at organizing the new workers, they will face pressures for change—both within their organizations and at the bargaining table. In any event, it is clear that any analysis of collective bargaining must account for the demography of the labor force.

EBSCOhost - printed on 2/16/2022 6:49 PM via UNIVERSITY OF MARYLAND GLOBAL CAMPUS. All use subject to https://www.ebsco.com/terms-of-use

Role of the Labor Relations Environment 105

THE SOCIAL CONTEXT

How does the American public see the union movement? Is society supportive of or hostile to unions? These are aspects of the social context that can affect industrial relations.

Polls that include questions about unions reveal fl uctuations over time in the public ’ s image of unions. Gallup polls, for example, show a decline in the share of the population that approves of labor unions since the high in 1965 of 71 percent. However, public support for unions has improved in recent years. The percentage of the public that approves of labor unions, according to the Gallup Poll, increased to 58 percent in 2015 (see Box 4.3 ). Gallup polls also show that when asked where their sympathies were in recent labor disputes, more of the public was sympathetic to unions than to companies. Gallup polls also show that the public views big business as a bigger threat to the country in the future than unions.

BOX 4.3 Public Approval of Labor Unions—Evidence from Polls

Recent Gallup polls had identifi ed the following public attitudes toward unions:

1. Do you approve or disapprove of labor unions? 58% Approve 36% Disapprove 7% No opinion

2. Would you, personally, like to see unions in the United State have more infl uence than they have today, the same amount as today, or less infl uence that they have today? 37% More infl uence 24% Same amount 35% Less infl uence 4% No opinion

3. In your opinion, which of the following will be the biggest threat to the country in the future—big business, big labor, or big government? 27% Big business 8% Big labor 61% Big government 4% No opinion

Sources : Data for Questions 1 and 2 are from a Gallup poll conducted in August 2015. Data for Question 3 are from a Gallup poll conducted in December 2005. Lydia Saad, “Americans Support for Labor Unions Continues to Recover,” Gallup Organization, August 2015 www.gallup.com/poll/184622/americans-support-labor-unions-continues- recover.aspx .

EBSCOhost - printed on 2/16/2022 6:49 PM via UNIVERSITY OF MARYLAND GLOBAL CAMPUS. All use subject to https://www.ebsco.com/terms-of-use

www.gallup.com/poll/184622/americans-support-labor-unions-continuesrecover.aspx

106 Part I. Introduction

At the same time, responses to other questions regularly asked in the Gallup and other polls reveals that the level of public confi dence in organized labor (and big business) are consistently and substantially lower than public confi dence in the military, churches and religion, the Supreme Court, and public schools. But although it is skeptical about union leaders, the American public has continued to express strong approval of the functions unions perform in representing worker interests. Polls show, for example, that a majority of the population approves of unions in general and believes in the right of workers to join unions of their own choosing. 19 Thus, the majority of Americans apparently accept the legitimacy of unions as a means for protecting the economic and job-related interests of workers.

American workers also seem to have a dual image of trade unions. On the one hand, the majority of workers see unions as big, powerful institutions that have signifi cant infl uence in political decision making and with elected offi cials and over employers and union members. The majority also take a skeptical view of union leaders’ personal motivations. On the other hand, an equally large majority of workers see unions as helpful or instrumental in improving the working lives of their members. Evidently, then, most U.S. workers are skeptical about the political activities of trade unions but accept their collective bargaining activities.

THE TECHNOLOGICAL CONTEXT

Technological change played a major role in workers’ early efforts to unionize. It also is clear that our economy is in the midst of technological changes that will have huge effects on future employment conditions. Yet many people still disagree about how and why technology infl uenced early unionization and what current technological changes imply for the future of labor relations.

The Historical Debate over the Infl uence of Technology: Commons versus Marx

Both Karl Marx and John R. Commons believed that workers were spurred to join unions by technological change, the shift from craft systems of production to the hiring of wage labor, and the rise of the modern factory system. But they disagreed sharply over exactly why changes in technology and the organization of work had that effect.

For Marx, the critical event in industrialization was the chasm that capitalist methods of production opened between workers and the owners of the means of production. That chasm, according to Marx, would inevitably result in a worsening of working conditions, a sharp decline in corporate profi ts, and the emergence of a revolutionary class consciousness among workers. Followers of Marx argue that the loss of control that workers experienced as a result of the shift in production methods and ownership is what led them to form unions. To those observers, collective bargaining was, and is, a continuing battle between workers and managers over control of the production process. Harry Braverman

EBSCOhost - printed on 2/16/2022 6:49 PM via UNIVERSITY OF MARYLAND GLOBAL CAMPUS. All use subject to https://www.ebsco.com/terms-of-use

Role of the Labor Relations Environment 107

built on this argument and claimed that technological change typically leads to a lowering of the skills required in jobs (deskilling) as part of this battle for control. 20

Commons, in contrast, observed that the shift in production methods was itself a product of an expansion of the market brought about by urbanization and new transportation methods. For Commons, as the market expanded and the ownership of production changed, workers came up against a host of competitive menaces such as prison labor or child labor. Workers then turned to unions to protect themselves and to improve their standard of living. Commons and his students, such as Selig Perlman, argued that unions and workers sought income security and job security rather than control of the production process. 21 Thus, although Marx and Commons differed sharply in their interpretations of unions’ objectives, both saw the rise of capitalism as the spur to unionization.

For Clark Kerr, John Dunlop, Frederick Harbison, and Charles Myers, it was the process of industrialization and not capitalism per se that led to changes in the relationship between workers and employers that, in turn, led to unionization. 22 They argued that modern technology produced a need for rules that governed relations between workers and employers. Collective bargaining and contractually negotiated rules were a logical way to formalize and structure the rules required in modern industry. Within this framework, specifi c technological changes are important for collective bargaining because they bring changes in the relative bargaining power of management or labor. In this regard, the industrialization thesis is closer to Commons ’ s ideas than to those of Marx.

The Infl uence of Microelectronic Technology on Skill Levels

The recent expansion in the use of microelectronic technology has reignited the debate over the effects of technological change and the possibility that the economy will become stuck in a perpetual state of high unemployment. To some, this technology can open the way to less hierarchical work that requires higher skill levels and leads to further growth in real incomes. To others, the new technology is being used to wrest control away from the work force and to deskill workers now just as new technology allegedly was used in the past. 23 To still others, the inevitable consequence of the microelectronic revolution is high unemployment.

Skeptics who doubt the positive role of new technology see little evidence of a shift away from the hierarchical forms of work organization. In fact, these modern proponents of the deskilling thesis argue that much of the concessionary bargaining in recent years has demonstrated the efforts of management to increase the pace of work and use new technology to weaken workers’ bargaining leverage and skills. The deskilling thesis proponents also predict that new technology will lead to signifi cant employment displacement and unemployment.

Some behavioral scientists believe that new technologies serve to “unfreeze” existing practices and introduce a variety of options for reconfi guring the organiza- tion of work, career ladders, compensation criteria, and other aspects of the

EBSCOhost - printed on 2/16/2022 6:49 PM via UNIVERSITY OF MARYLAND GLOBAL CAMPUS. All use subject to https://www.ebsco.com/terms-of-use

108 Part I. Introduction

employment relationship. 24 In this view, technology has no single effect on skills or worker power. Instead, its effects depend on the choices decision makers make and the way the new technology is implemented.

RECENT ENVIRONMENTAL PRESSURES ON COLLECTIVE BARGAINING

In the face of the slow but steady economic growth in the United States as the economy recovered from the 2008–2009 fi nancial crisis, a few unions, such as the autoworkers and airline pilots, were able to achieve solid collective bargaining gains. Nevertheless, changes in the external environment put unions at a distinct disadvantage in terms of their bargaining leverage with management. Corporate restructuring and the availability of outsourcing and nonunion alternatives continue to put pressure on unions, and increasing globalization heightened those pressures.

Pressure from Nonunion Competition

Unions face competition from the growing numbers of domestic nonunion fi rms. In industries such as construction, trucking, textiles, and mining, the share of nonunion production has increased substantially. Even in traditional strongholds of unionism such as steel and autos, nonunion fi rms are entering the industry. Nonunion competition has become an even greater threat as employers have become more willing and more able to shift production to nonunion sites during strikes. As a result, unions have become less able to take wages out of competi- tion and their bargaining power has declined signifi cantly.

Heightened International Competition

The growing penetration of imports in several key manufacturing industries and the large trade defi cit carried the issue of the international economy straight to collective bargaining agendas. Foreign workers have become a major competitive threat to organized labor in the United States because it is very diffi cult for unions to take wages out of competition when goods and investments move easily across national and international borders. Perhaps the growth of the multinational companies is the modern-day equivalent of the competitive menaces the Philadelphia shoemakers faced.

Image Problems of Unions

Economic pressures are only part of the story, however. The labor movement encountered a public that is often skeptical about the value of unions and worker solidarity. Fellow workers often crossed the picket lines of strikers, and union members found less support for strikes in the broader community. From the 1990s, when unions sought recourse through the NLRB or the courts to block management practices such as the movement of operations to other sites or the abrogation of collective bargaining contracts during bankruptcy reorganization, they received little help.

EBSCOhost - printed on 2/16/2022 6:49 PM via UNIVERSITY OF MARYLAND GLOBAL CAMPUS. All use subject to https://www.ebsco.com/terms-of-use

Role of the Labor Relations Environment 109

Signs of Innovation in the Labor Movement

The economy, public policy, ideology, and demography had all taken a turn that would hamper the efforts of organized labor. And yet, in the face of all these environmental pressures, the union movement was exhibiting some signs of innovation and adaptation. There has been a broadening of the bargaining agenda and increased union involvement in managerial decision making at some workplaces and union coordination with various rights groups who are seeking reductions in income inequality and an improvement in employment terms for those at the lower end of the earning distribution (see Chapter 6 ). Moreover, the labor move- ment has been engaged in serious soul-searching since the fi rst decade of the new century that has led to a variety of union revitalization measures.

Summary

This chapter examined how the external environment infl uences the bargaining process. The fi ve key aspects of the environment are economic, public policy, demographic, social, and technological factors.

Important economic factors include those that operate at the fi rm level (the microeconomic infl uences) and the state of the labor market and the overall economy (the macroeconomic infl uences). The economic environment is most important through the effects it exerts on the bargaining power of labor and management. Bargaining power is heavily infl uenced by strike leverage and the extent to which an increase in wages leads to a decline in employment (the wage-employment trade-off).

Public policy shapes the rights of the parties and the procedures used in collective bargaining. There has long been a strong preference in the United States for labor laws that give employees, unions, and management the right to directly shape employment terms with limited interference from the government. The most important labor law in the United States is the National Labor Relations Act and its amendments. In addition, some federal laws directly infl uence employment conditions such as pensions and equal employment opportunity rights, although we have relatively less government regulation of employment than other countries do.

Major demographic issues include the increased labor force participation of women that has occurred since World War II. The labor force is becoming more diverse and unions face the challenge of altering their policies to increase their appeal to new workers, many of whom work in the service sector.

The public continues to express support for the general purposes unions serve. When asked about union leaders or their willingness to join unions, however, the public ’ s responses are less favorable.

Technology infl uences employment levels and bargaining leverage. In recent years, there has been much debate about how technology is affecting the skill levels of workers. On the shop fl oor, labor relations play an important role in shaping how well new technology is implemented.

EBSCOhost - printed on 2/16/2022 6:49 PM via UNIVERSITY OF MARYLAND GLOBAL CAMPUS. All use subject to https://www.ebsco.com/terms-of-use

110 Part I. Introduction

How well collective bargaining serves the interests of labor and management often depends on its ability to adapt to changes in the external environment. Economic pressures on the U.S. collective bargaining system have steadily increased in tandem with the expansion in international trade. There are also pressures from the other key environmental dimensions. To help build a better understanding of how collective bargaining could respond to these environmental challenges, the next chapters examine how collective bargaining works.

Discussion Questions

1. Defi ne bargaining power and strike leverage. 2. Several microeconomic factors play a part in the strike leverage of both

unions and employers. Briefl y describe some of these factors. 3. Describe some of the ways the National Labor Relations Act infl uences the

bargaining power of labor and management. 4. Briefl y discuss some of the recent demographic trends in the work force. 5. Is the labor law framework that was adopted in the 1930s still

appropriate? 6. What changes in the industrial environment have placed unions at a disad-

vantage in terms of bargaining power in recent years in most industries?

Related Web Sites

United Mine Workers (UMW): http://umwa.org

Pension Benefi t Guaranty Corporation: http://www.pbgc.gov