Labor Rel-Private versus PLR

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409

FUTURE CHALLENGES

One key fi nding of this book is that changes in the external environment are challenging many traditional collective bargaining practices in the United States. Since the 1980s, there has been much experimentation in labor relations among a signifi cant number of companies and unions and worker advocacy groups. At the same time, confl icts have emerged between a number of unions and employers and the nation has experienced a signifi cant decline in union representation.

Which of these three developments will dominate labor relations in the future? Will experiments with new forms of worker voice and representation, participation, and labor-management partnerships diffuse and become the foundations for a new model of U.S. industrial relations? Or will unionism continue to decline and will new models of representation fail to grow as labor and management remain locked in a stalemate over the future of national labor policy?

Or will the profound changes occurring in the work force, the nature of work, the role of the corporation, and the relationship between work and family life result in broader changes in employment and regulatory policies that reshape the labor relations system of the twenty-fi rst century? These are some of the key questions facing policymakers and labor relations professionals today. As we examine these issues in this chapter, we identify some different paths labor relations might take in the years ahead and share our own views on these questions.

When considering future possibilities, it is necessary to examine the various channels through which the government can infl uence the conduct of collective bargaining. The most important federal statute that affects collective bargaining is the National Labor Relations Act. Government labor policy includes administra- tion of this statute and other statutes dealing with collective bargaining such as the Railway Labor Act.

The nation ’ s labor policy is also shaped by an array of regulations that govern employment conditions, training, and other aspects of the labor market. Labor relations and employment conditions also are affected by economic and social policies. The social security system, for example, affects the earnings and retirement decisions of workers. And state and local government laws and ordinances are

The Future of U.S. Labor Policy and Labor Relations

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EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 3/3/2022 3:58 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

410 Part V. Special Topics

playing more and more signifi cant roles in the regulation of employment practices, in large part because of the political stalemate over federal policies.

Thus, national labor policy, defi ned broadly, includes general economic and social policies, labor relations policies, and employment and human resource policies. Table 16.1 outlines the key components of our current national labor policy.

THE HISTORY OF GOVERNMENT-PROMOTED LABOR-MANAGEMENT DIALOGUE

There have been very few successful efforts to create a national dialogue about labor policies in the United States. We review the major efforts to create

Table 16.1 Selected components of national, state, and local labor policies

(A) General economic and social policies

(B) Labor relations policies

resource policies

Aggregate monetary and fi scal policies

Railway Labor Act Wage and hours legislation (e.g., Fair Labor Standards Act, Davis-Bacon Act)

Incomes policies Norris-LaGuardia Act Equal employment opportunity laws, regulations, and enforcement efforts

Trade policies Wagner Act Occupational Safety and Health Act

Immigration policies Taft-Hartley Act Employee Retirement Income Security Act

Antitrust policies Landrum-Griffi n Act Unemployment insurance system

Regulation of multinational corporations

Civil Service Reform Act of 1978, Title VII of Civil Rights Act of 1964

Social security system

Environmental protection policies

Postal Reorganization Act of 1970, Public Law 91-375

Workers’ compensation system

Energy policies State employee bargaining laws and policies

Job Training Partnership Act and related employment adjustment programs

Productivity improvement and capital formation policie

Programs to improve labor-management cooperation

Industry regulatory policies (hospitals, transportation, etc.)

Family and medical leave policies

Welfare policies Living wage and state minimum wage policies

Corporate governance regulations

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The Future of U.S. Labor Policy and Labor Relations 411

labor-management dialogue and the results of such efforts below. We also look at an emerging trend toward expanding the array of voices engaged in discus- sions about the future of work and the future of labor policy.

National-Level Committees

From the 1930s through the 1990s, labor policy discussions were largely limited to representatives of business, labor, and, in some cases, government. While input from other groups and the public was sometimes sought, serious debates and efforts to reach compromise or consensus tended to come down to discussions among these three large groups. At the turn of the twentieth century, for example, various national investigative commissions examined labor conditions and problems. National labor relations commissions issued reports in 1880, 1902, and 1915. The 1915 commission, for example, cited the absence of industrial democracy and inadequate working conditions as two of the most serious social problems of the time. The reports of these commissions were used as background material by those who wrote the New Deal labor legislation in the 1930s. 1

Other labor-management committees were created during wartime. Presidents Woodrow Wilson and Franklin Roosevelt created national war labor boards to promote labor peace and wage stability during World Wars I and II, respectively. These boards were generally successful in fulfi lling their mandate during wartime. Both, however, failed to keep labor and management working together at the national level after the wars. In 1945, for example, following the end of World War II, President Truman called labor and management representatives together in a national conference to try to work out principles for continuing the cooperation achieved during the war. But efforts to reach an accord broke down over labor ’ s demand for a commitment to union security and management ’ s demand for some stated limit on the scope of labor ’ s infl uence over employment issues.

While every president from the 1930s through the 1960s established one or more top-level labor-management advisory committees to deal with various issues, this tradition was abandoned in the 1970s and has not been renewed. Instead, several private national-level committees have been formed in recent years.

Some of the committees that functioned with government encouragement continued to meet privately after the public effort dissolved. For example, the top-level committee that functioned in 1974–1975 when John Dunlop was secretary of labor continued to meet under private auspices with Dunlop as chair for years after he left offi ce. This group discussed various labor policy issues beyond collective bargaining problems. Their view was that collective bargaining issues are best discussed at more decentralized levels between the parties that are directly involved. Bargaining issues, they believed, are too controversial to be settled through national labor-management dialogue.

In 1985, Malcolm Lovell, a former undersecretary of labor, established the Collective Bargaining Forum, a group composed of top union and corporate leaders. The forum, which continued to meet until 2005, discussed long-term strategies for improving collective bargaining. Box 16.1 includes excerpts from one of the forum ’ s reports.

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412 Part V. Special Topics

BOX 16.1 Toward a New Labor-Management Compact

In 1988, the Collective Bargaining Forum (an informal working group of major union and corporate leaders) adopted a statement of principles. The statement includes the following:

We recognize that the institution of collective bargaining is an integral part of American economic life. We recognize that unions cannot be expected to expand their work with management to improve the economic performance of domestic enterprises and to help those fi rms adopt to technological, market, and other changes, if they are not accepted by employers and public policy makers as having a legitimate and valued role in the strategic decisions of the enterprise and in public policy making. It was also clear to us that employ- ers need to expand their cooperative efforts with unions to revitalize U.S. industry and retain and expand opportunities for secure well-paid jobs for American workers. . . . The Forum, therefore urges adherence to the following principles:

Acceptance in practice by American management both of the legitimacy of unions and a broader role for worker and union participation.

Acceptance in practice by American unions of their responsibility to work with management to improve the economic performance of their enterprises, in ways that serve the interests of workers, consumers, stockholders, and society.

Encouragement of a public policy which assures choice, free from any coercion, in determining whether to be represented by a union and which is conducive to labor-management relations based on mutual respect and trust at all levels.

Acceptance by American corporations of employment security, the continu- ity of employment for its work force, as a major policy objective that will fi gure as importantly in the planning process as product development, marketing, and capital requirements.

The Forum also developed a Compact covering procedures needed to put its principles into practice. This compact suggests a new set of obligations and responsibilities that transcend and expand traditional collective bargaining relationships. The Compact states, “Our purpose is to formulate standards or ‘rules of the game’ with respect to certain fundamental aspects of the relationship.” The Compact suggests standards for governing joint efforts to improve the economic performance of U.S. enterprises: acceptance of unions within companies and in U.S. society; the promotion of employment security, worker participation, and worker empowerment; improved confl ict resolution; diffusion of innovations in labor management relations; and development of common positions on public policy issues.

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The Future of U.S. Labor Policy and Labor Relations 413

Overall, national business-labor forums have had little direct effect on the practice of collective bargaining. Several factors have made it diffi cult to change labor relations through national-level dialogue in the United States. These include the highly decentralized structure of U.S. collective bargaining, the absence of a unifi ed strategic view within the labor movement or the business community over labor issues, and, in some cases, deep-seated ideological disagreements between labor and business leaders over labor policy. On the other hand, these forums build personal and professional relationships among top-level business and labor leaders that can be drawn on to address problems or respond to national crises. Nevertheless, the absence of any functioning national dialogue forums may limit the nation ’ s capacity to mobilize broad-based support for labor policies in the future.

Local and Regional Government Dialogues

There have also been efforts to promote labor-management dialogue at the local and regional levels of the country. These labor-management committees usually include representatives from labor and management and community politicians. Almost all have been started with the leadership of one individual. 2 The Jamestown, New York, committee, for example, developed largely out of the efforts of the former mayor of the city.

Area (local or regional) committees have tended to grow out of an economic crisis, such as plant closings. This was the motivation in Jamestown. In a few communities, such as Toledo, Ohio, the initial stimulus was a high number of strikes.

Area committees have mobilized community resources to attract new business and have encouraged local education institutions to respond better to industrial needs. Area committees also have attracted federal and state economic development funds. Such committees, however, rarely have been able to convince employers or local unions to change collective bargaining practices. Plant-level managers and union offi cers often reject the recommendation of area committees that they institute collective bargaining on the grounds that they interfere with their preroga- tives. Nonetheless, involvement in civic affairs has proven to be a useful network- building activity for local union and management leaders. Relationships developed

While the companies and unions that signed this Compact generally remained committed to it throughout the years the forum was active, the Compact generated little attention with other companies and unions and, like other national groups, had a limited lifespan.

Source : Labor-Management Commitment: A Compact for Change, Views from the Collective Bargaining Forum,” U.S. Department of Labor, Bureau of Labor Management Relations and Cooperative Programs, Report No. 141, 1991.

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414 Part V. Special Topics

through involvement in community affairs have helped many union leaders build coalitions with immigrant groups, religious leaders, and elected offi cials that have supported organizing campaigns and bargaining processes.

The Limits and Contributions of Labor-Management Dialogue

Our participation in a variety of national and area labor–management committees has left us with ambivalent feelings about their potential contributions. None of these efforts seem to be producing reforms suffi cient to stem job losses or slow declines in union membership, none have changed the attitudes of employers who are ideologically opposed to unionization, none have produced a new coherent strategy to foster employee participation, and none have produced a consensus about what changes are needed in national labor policy. They have, however, been helpful in solving specifi c problems and building trust among leaders who otherwise might not know each other. The decline in the number of these network-building forums, therefore, is another worrisome development in U.S. labor relations.

Concern about the future of work has led a number of groups, from the U.S. Department of Labor to universities such as Cornell, MIT, and others, and various think tanks and foundations to bring diverse stakeholders together to discuss ways to improve the future of work. These meetings often include labor and business leaders but are not limited to these two groups. They tend to include men and women, immigrants, racial minorities, entrepreneurs, representatives of various new worker advocacy groups, and experts in new emerging technologies. The growing popularity and number of such gatherings signal a recognition that the voices of all of these groups (and perhaps others) will be heard in future discussions of labor and work force policies.

LABOR POLICY REFORM EFFORTS

American labor law does not change often or easily. The National Labor Relations Act was passed as one of the last major reform efforts of the New Deal. It took the deep economic and social crisis of the Great Depression and the fear that American-style capitalism might be at risk to build the political support necessary to pass that legislation. In 1947, in response to a wave of strikes, the Taft-Hartley amendments to the NLRA were passed to rebalance power by limiting the use of secondary boycotts, closed-shop clauses, and other actions deemed to be unfair union bargaining practices. A series of widely publicized union corruption scandals are what led to the Landrum-Griffi n Act in 1959.

Efforts to update or amend labor law in the absence of a deep crisis have been largely unsuccessful. For example, in 1977 the Carter administration failed to pass labor law reforms aimed at stiffening the penalties for employers that violate the rights of workers in organizing campaigns. There has been a general stalemate in efforts to reform and update national labor policy that dates back almost forty years to the failed effort to enact labor law reform in 1977–1978.

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The Future of U.S. Labor Policy and Labor Relations 415

The Dunlop Commission

An important attempt was made to resolve the long-standing impasse over labor policy when the Clinton administration took offi ce in 1993. The new administration established the national-level Commission on the Future of Worker-Management Relations (known as the Dunlop Commission, since former labor secretary John T. Dunlop chaired the commission) to recommend ways to update national labor policies in ways that would improve the nation ’ s competitiveness and raise workers’ standards of living.

The commission was charged with answering the following questions:

1. What (if any) new methods or institutions should be encouraged, or required, to improve workplace productivity through labor-management cooperation and employee participation?

2. What (if any) changes should be made in the present legal framework and practices of collective bargaining to increase cooperative behavior, improve productivity, and reduce confl ict and delay?

3. What (if anything) should be done to increase the extent to which workplace problems are directly resolved by the parties themselves rather than through recourse to state and federal courts and government regulatory bodies? 3

The commission issued two reports: (1) a fact-fi nding report in which it reviewed the current state of labor-management relations and arrayed the evidence presented to it; and (2) a fi nal report and recommendations that outlined its proposals for reform. 4 Box 16.2 summarizes the major recommendations in the fi nal report.

However, the Dunlop Commission ’ s recommendations gained no support from business, labor, or government offi cials. Why was this the case? Two reasons can be suggested.

First, the recommendations sought to fi nd a compromise within the existing framework of the National Labor Relations Act that would be acceptable to both business and labor. Essentially the compromise was to loosen the constraints on employee participation fi rms could implement in nonunion settings (something of great interest to the business community) and to strengthen the protection of workers seeking to organize a union. The evidence presented in the commission ’ s fact-fi nding report documented the need for both of these changes. But neither labor nor business were willing to make these compromises in their positions.

Second, the shift in control of Congress from a Democratic to a Republican majority that occurred in November 1994 in the midst of the commission ’ s work ended any hope that it could build enough support for a change in national labor policy. This shift in political power further polarized the positions of both business and labor. Labor leaders made the judgment that they could not get the Republican Congress to seriously consider any changes in labor law that might benefi t workers or unions; thus, they preferred to remain with the status quo. Business leaders concluded they could go to Republicans in Congress directly and lobby for only the changes in labor law they favored; thus, they preferred to see the commission ’ s recommendations ignored.

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416 Part V. Special Topics

BOX 16.2 Recommendations of the Dunlop Commission

• Facilitate growth of employee involvement in workplace improvement teams or committees by clarifying Section 8(a)(2) of the NLRA.

• Continue the ban on company unions. • Reduce the scope of exclusions from NLRA coverage for supervisors and

managers. • Authorize use of pre-hire agreements when an employer opens new

operations. • Hold union representation elections before legal challenges to bargaining

units from either employers or unions are resolved by the NLRB. • Use court injunctions to remedy discrimination against workers in organizing

campaigns. • Use mediation and, when necessary, arbitration to resolve disputes over fi rst

contracts. • Increase the access unions have to employees during the organizing process. • Encourage companies to adopt alternative dispute resolution (ADR)

programs. • Support voluntary use of arbitration to resolve disputes over statutory rights. • Require arbitration systems to meet specifi c standards relating to quality and

due process. • Encourage employee participation in the development/administration of ADR

systems. • Forbid agreements that make arbitration for statutory disputes a condition of

employment. • Simplify and standard the legal defi nitions of “employee,” and “independent

contractor.” • Use an economic realities test to separate independent contractors from

employees. • Use an economic realities test to determine the employer of contingent

workers. • Expand “single” and “joint” employer defi nitions to clarify whether one or

both employers are responsible for complying with labor law. • Expand the use of negotiated rulemaking by the NLRB when developing

new workplace regulations. • Promote self-regulation of workplaces where high-quality ADR systems are

in place. • Create national and local forums to promote ongoing learning and dialogue

between labor and management.

Source : Final Report and Recommendations of the Commission on the Future of Worker Management Relations (Washington, D.C.: U.S. Department of Labor, 1995).

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The Future of U.S. Labor Policy and Labor Relations 417

The key conclusion from this experience is that no compromise deal exists that would be acceptable to labor and management within the existing structure of labor law. Thus, neither leaders in Congress nor in the Clinton administration demonstrated an interest in or a willingness to take up these issues on their own in the face of the ongoing stalemate between labor and business. In fact, the issues once again went off the national agenda altogether, along with most other employ- ment policy issues. 5

When Barack Obama was elected in 2008, the labor movement hoped to achieve labor law reform by promoting the Employee Free Choice bill, which would have allowed card check recognition (see chapter 3 ) to suffi ce as a dem- onstration that a majority of workers in a bargaining unit wanted representation. While the House of Representatives passed the bill, it failed to muster the sixty votes needed in the Senate to break a Republican fi libuster against the bill.

ALTERNATIVE DIRECTIONS FOR FUTURE NATIONAL LABOR POLICY

If major reforms in collective bargaining will not come from the normal policymak- ing processes of government or from labor-management committees, one might reasonably ask what might lead to such changes.

One answer to this question is that changes must come from outside the interest-group structure that perpetuates the current system. Recall that the ideas behind the New Deal labor relations system did not come from organized labor or business; they came from the institutional economists who had studied labor problems for over thirty years before the Wagner Act was passed. It may be that we are in a similar situation now. The logjam over labor policy will require ideas that in the short run may not be completely acceptable to either (or certainly not to both) labor or management but that need to be developed by people or groups willing to consider new approaches to labor policy. We will consider this as one potential direction for future labor policy.

There are three possible strategic directions for future national labor policy. One approach would continue the labor policies of the last twenty years. The emphasis would be on further deregulation of product markets and reliance on the market to determine employment conditions. This strategy would emphasize the policies shown in column A of Table 16.1 and deemphasize the policies in columns B and C.

Alternatively, the strategy could focus on the policies in column B and marginally reform the National Labor Relations Act by attempting to revive the deliberations started in the Dunlop Commission or by reintroducing a modifi ed Employee Free Choice bill or some other bill that revises but does not fundamentally change or expand on the doctrines in existing law.

A third policy approach would recognize that much more fundamental changes in national policies are needed and would see labor policy reform as part of a broad effort to promote a new social contract for the workplace that updates the full range of employment practices to refl ect changes in the economy, in

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418 Part V. Special Topics

technologies, in characteristics of the work force, and in how work is done today. If stakeholders could reframe the policy debate and broaden who is involved in the debate, it might be possible to remove the label of “special interest politics” that has been used to describe labor policy discussions. A broad policy debate has the potential to address the fading belief in the American Dream, a dream that had held that each generation should experience an improved standard of living.

The three policy approaches are discussed in more detail below.

Strategy 1: Reliance on Deregulation and the Market

One strategy for national labor policy would involve extension of the deregulation wave that began in the late 1970s and has continued to some degree ever since. The primary objective of deregulation is to increase competition in a product market. Thus, this fi rst strategy would seek to further limit federal regulations.

The federal government has been reducing regulation of the labor market since the mid-1970s. From 1960 to 1975, the number of employment regulations administered by the U.S. Department of Labor tripled. 6 However, except for the WARN Act of 1989 and the Family and Medical Leave Act of 1993, no major new labor regulations have been enacted since 1975, when the deregulation era began.

In addition, over the last forty years, funding for many social welfare and employment programs has been frozen, reduced, or conservatively administered. 7 The federal budget for employment and training activities, for example, was cut substantially until it received a major infusion of funds as part of the Obama administration ’ s stimulus bill that was designed to counter the effects of the Great Recession of the late 2000s and early 2010s. Another example of cutbacks is the fact that the number of Occupational Safety and Health Administration employees was reduced by 25 percent in the early 1980s alone. Although President Obama rebuilt staffi ng for both OSHA and the Wage and Hour Division of the U.S. Department of Labor during his eight years in offi ce, the number of inspectors has not kept up with the growth in the labor force or the number of workplaces covered under these laws. Welfare benefi ts were dramatically altered in the 1990s by placing lifetime limits on the length of time individuals would qualify, imple- menting work requirements, and eliminating benefi ts for many immigrants. Thus, under this fi rst policy approach, funding cuts or freezes such as these would continue to be enacted for programs that affect workers.

The Case for Further Deregulation

Why not extend deregulation policies and allow market forces even freer rein to determine employment conditions? The basic argument in favor of product market deregulation and limited labor market regulation is twofold. The fi rst part of this argument is that market forces allocate labor extremely effi ciently, in part because of the pressure the market puts on labor and management to maximize profi ts.

A second part of this argument is that if market pressures are blocked, ineffi cient practices can develop. If that happens, society will bear the cost of the output

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The Future of U.S. Labor Policy and Labor Relations 419

that will be lost from misallocated resources. In addition the parties who will absorb the costs of later adjustments to market pressures may need help from federal or state governments at some point. Some would extend this argument to further suggest that today ’ s global economy makes regulation of domestic labor or product markets futile since businesses can outsource work to lower-cost or less-regulated countries if regulations become too burdensome on businesses. 8

Even if one does not like the outcomes market forces generate, it is not clear that appropriate alternative policies can be successfully designed or implemented. This is another recommendation for limited regulation of product and labor markets.

Criticisms of a Market and Deregulation Policy Approach

Those who argue for reliance on market forces and a deregulation policy approach presume that the market will lead to outcomes that society will fi nd acceptable. Recent debates over trade agreements (see Box 14.4 on the Trans- Pacifi c Partnership Trade Agreement) have focused on the gap between the higher-income segments of populations, who tend to be the benefi ciaries of free trade, and the middle- to lower-income workers who absorb a disproportionate amount of the losses of jobs and income due to international free trade. These distributional aspects of deregulation strategies are now recognized as issues that need to be addressed even by those who generally favor this strategy. Similarly, attention has focused on the limited health care benefi ts Walmart gives its employees and accusations that in many other ways, Walmart has taken advantage of its market power by not paying wages or benefi ts suffi cient to keep a signifi cant number of its employees off food stamps and other forms of public assistance (see Box 16.3 ). Critics worry that an unregulated market will lead to a “Walmartization” of the U.S. employment system.

Normative arguments against reliance on the market alone to determine employment conditions were articulated in the early years of this century by institutional economists of the Wisconsin School. The institutionalists stressed that labor is more than an economic commodity and that confl icts of interest between employees and employers are inherent and enduring. Put simply, competi- tive labor markets may leave too many workers in a weak bargaining position with their employers and give workers too little job security.

For these reasons, the early institutional economists supported policies designed to allow workers to accumulate what they called “property rights,” that is, the longer a person ’ s tenure on a given job or with a given employer is, the more rights they should have in times of layoffs or other changes that might affect their employment. The institutionalists believed that such a policy would be equitable. Moreover, they argued that if the workplace is to refl ect the democratic values of the broader society, employees should have a chance to infl uence management decisions that affect employment conditions.

The Potential Consequences of Further Declines in Union Membership

One might also wonder what will happen if union representation continues to shrink. If union decline continues, management ’ s abuse of its power might

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420 Part V. Special Topics

BOX 16.3 Employment Law and Labor Relations Issues at Walmart

Starting in 2002, a large number of class actions were brought against Walmart for violating state-level wage and hour provisions by failing to pay for overtime work or for work done during required meal or rest breaks. In an early case, a California jury forced Walmart to write a check for $172 million, to be split by 116,000 Walmart Inc. employees who were forced to work through their allotted 30-minute unpaid meal breaks. The world ’ s largest retailer owes these individuals $57 million in wages for missed meal periods, in addition to $115 million in punitive damages. After review of Walmart Inc. ’ s documentation, it was ruled that corporate leaders have been aware of the situation since 1998 and have taken steps to conceal the issue. That case was followed by convictions for similar violations in Massachusetts, Minnesota, and other states and led to a series of multi-state settlements that cost the company nearly $1 billion. Walmart has since invested in new technology to alert cashiers when it is time for their meal breaks and to automatically shut down registers if employees do not leave on break after a certain period of time.

Walmart also encountered legal diffi culties concerning the hiring and working conditions of undocumented workers at its facilities. A raid of twenty-one Walmart stores in 2003 resulted in the arrest of 250 undocumented immigrant workers by the Department of Homeland Security ’ s Bureau of Immigration and Customs Enforcement. Walmart may face both civil and criminal penalties for their failure to abide by U.S. immigration law.

Walmart has also been targeted by Walmart Watch, a union and community coalition, in a campaign to increase wages and has experienced one-day walkouts on Black Friday, the big shopping day following the Thanksgiving holiday.

Despite these numerous employment law disputes and collective protests, Walmart has remained nonunion throughout the United States. It has, however, increased wages in annual increments in 2015 and 2016 in an effort to respond to these pressures and to adjust to tighter labor markets. Although no Walmart employees in the United States are organized, this is not the case in Walmart stores in other parts of the world. Many employees in South American and British Walmart sites are unionized, and every Walmart Supercenter in Germany is organized. In addition, the Quebec Labour Relations Board certifi ed the United Food and Commercial Workers of Canada to represent a Walmart Canada site on August 2, 2004.

Walmart locations in China have become unionized. Prior to 2004, Walmart China had issued statements asserting the futility of unions in its stores because of the openness of direct channels between management and workers. However, in late 2004, Walmart China granted employees the

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The Future of U.S. Labor Policy and Labor Relations 421

right to unionize, and, facing threats from the government-backed All-China Federation of Trade Unions (ACFTU), on August 9, 2006, Walmart announced that labor unions in all sixty of its stores in China would be permitted without backlash to employees. Chinese unions differ signifi cantly from those in the United States, as they traditionally work closely with management and rarely press for higher wages. Since offi cially allowing unions, Walmart China has openly cooperated with the ACFTU by attempting to jointly set up unions in each of its stores. In 2016, however, independent worker groups engaged in strikes at Walmart stores in China, seeking both better working conditions and a more independent union voice.

Sources : “Association for Walmart Emplo yees Provides Information, Services Clearing- house,” Daily Labor Report , November 6, 2005; “Jury Rules Walmart Must Pay $172 Million over Meal Breaks,” New York Times, December 23, 2005; “Maryland OKs Walmart Health Care Bill,” CNNMoney , January 13, 2006; “Missouri Court Certifi es Large Class in Case Claiming Walmart Forced Off-the-Clock Work,” Daily Labor Report, November 3, 2005; “Offi cial Union Set Up in China at Walmart,” New York Times, July 31, 2006.

eventually produce an even more adversarial form of collective bargaining and costly confl ict.

We may now be witnessing some of the longer-term economic and social effects of union decline. Concerns over stagnant or declining real wages, increased wage inequality, and the stresses that long hours of work have infl icted on workers and their families are gaining national attention. Is union weakness part of the explanation for these trends? Recent studies have estimated that as much as 20 to 30 percent of the rise in income inequality since the 1980s can be attributed to the decline in unions and in the bargaining power of workers. 9

Most of the debates over the consequences of union decline focus on economic issues. But unions are also an important institution in a democratic society. The absence of a strong voice for workers in community or national affairs leaves a void that diminishes the quality of political discourse and narrows the range of options that are seriously considered in debates on critical economic and social policy issues.

Costs to Workers of Adjusting to Economic Changes

Any future labor policy will have to address the fact that union membership is heavily concentrated in the oldest industries and among the workers who are most exposed to international competition. Those industries (e.g., steel, rubber, mining) will undoubtedly continue to reduce employment levels and move large numbers of workers across jobs and occupations. Employment adjustments will occur in these industries as a consequence of new labor-saving technology, the development of new products, the adoption of new business strategies, and the movement of jobs to lower-cost countries.

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422 Part V. Special Topics

Many of the jobs being eliminated in older industries are high-wage jobs held by union members. Older workers displaced from these jobs are not well trained to fi ll any of the new high-skilled jobs being created. Older workers who have to accept low-wage jobs must endure a painful transition. Market forces alone may not fully smooth these adjustment processes. 10

What Will the Comparative Advantage of the United States Be in World Trade: Low Wages or High Skills?

The events that followed deregulation of the airline and telecommunications industries suggest that deregulation may greatly reduce workers’ power to fi ght management ’ s efforts to minimize labor costs and oppose unionization. Workers in deregulated industries have experienced widespread pay cuts and have had to make concessions in work rules and reduced employment security. Companies in these industries have had diffi culties sustaining innovations in labor-management relationships. Once product market competition increased after deregulation, management often found it easier to cut labor costs by creating new lower-cost nonunion organizations or by outsourcing work than to compete through managerial reforms and labor-management innovations.

If the government were to promote further deregulation, the minimization of labor costs might spread as a business strategy. However, in the long run, minimizing labor costs may be self-defeating because U.S. fi rms that compete on the basis of labor costs may not fare well in world trade. The problem is that workers in transitioning countries receive very low wages and U.S. fi rms may be unable (or unwilling) to keep wages low enough to compete through low costs with fi rms in transitioning countries.

U.S. fi rms might be more successful if they pursued the comparative advantages that can derived from high technology, commitment skilled and loyal work force, and product innovativeness. Few dispute the proposition that the comparative advantage of the U.S. economy lies in its high-technology, high-quality products and its ability to adapt rapidly. This type of economy requires skilled employees who are strongly committed to their employers. Although reducing labor costs may help save some jobs in the short term, in the long term, both the U.S. economy and the interests of workers might be better served if employers were to invest in the quality of their human resources. However, it does not appear that market forces alone will be enough to push employers to pursue a high-skills human resource strategy.

All the reasons discussed in this section suggest that it is necessary to supplement the market with labor policies. But what should the policies be? There is much debate about this issue. Below we outline two alternative strategies.

Strategy 2: Modest Reforms in the Current Collective Bargaining System

A second alternative for future labor policy is to actively support the types of modest reforms of traditional collective bargaining and labor law that the Dunlop

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The Future of U.S. Labor Policy and Labor Relations 423

Commission recommended. This would require, among other things, minor reforms of the NLRA and the NLRB. Such reforms would make it more diffi cult for employers to oppose union-organizing efforts and make it easier for unions to achieve fi rst contracts after they win a representation election. Restrictions on employee participation in nonunion settings might be relaxed. Alternative dispute resolution procedures might be encouraged to help reduce the backlogs in adjudica- tion when employment laws are violated and to provide access to speedy and equitable enforcement of these laws. The Employee Free Choice bill used this approach in 2009. It would have increased penalties to employers for violating workers’ rights during organizing campaigns, provided for union recognition if a majority of workers in a bargaining unit signed union authorization cards, and provided for arbitration of fi rst contracts if a voluntary agreement could not be reached. There also have been discussions in Congress from time to time about packaging this bill with Republican-backed bills that would loosen constraints on various forms of employee participation for nonunion employees. Neither of these approaches, however, have gained enough support to get through Congress or overcome a threatened veto by a president.

There is no reason to believe that this policy approach would be any more acceptable or successful today or in the future than it has been in the past. In addition, it may not be fl exible enough to address the full range of employment settings in today ’ s economy. It may therefore be time to propose a broader and more comprehensive approach to labor and employment policy, one that opens new avenues for employee representation and participation in decision making.

Strategy 3: A New Labor Relations System

We believe it is time to open labor law and related employment policies to a period of active experimentation and learning that over time would both support a high productivity, high wage economic strategy for the country and extend labor law protections to workers who are currently excluded from federal labor policies. Innovations in labor relations along these lines could produce valuable improvements in productivity and living standards while also providing equitable due process. However, the new features we propose below are not substitutes for improving basic labor laws to provide easier access to union representation for those who want it.

The broad set of policy changes we propose would support and extend the innovations in employee participation in workplace committees and labor- management partnerships that companies and unions have introduced in recent years. Another goal is to open the law to support further experimentation with the various forms of voice that are emerging among those who work outside standard employment relationships such as independent contractors.

Within companies this new type of labor relations would encourage and support the features listed in Box 16.4 . At the workplace level, it would encourage employee participation in workplace decisions, fl exibility in the organization of

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424 Part V. Special Topics

work, and extensive informal communication between labor and management. The goal would be to avoid the low trust–high confl ict cycle often found in traditional collective bargaining relationships. Another major goal of the new system would be to increase fl exibility at the workplace by moving away from detailed work rules and narrow job descriptions and facilitating employee input into decisions and due process.

The functional level of the new labor relations system would encourage profi t- sharing or productivity gains-sharing and employee stock ownership arrangements. The parties must be careful, however, not to let the move to these “contingent” compensation procedures erode workers’ standards of living. The goal here would be to make wages responsive to current economic conditions and to give employees an economic stake in their enterprise. Employee training and career development

BOX 16.4 Core Components of a New Labor Relations System

Strategic Level

Workers and unions should have access to more information about the state of the business and management ’ s plans for the future

Workers and union representatives should participate in the development of management strategies and business plans

Labor and human resource executives should be better informed about and consulted in actions of other groups (e.g., technology and product development, fi nance, and operation and other management specialists)

Functional Level

Part of compensation should be contingent on group or organizational performance

Greater priority should be given to promoting employment security.

Training and development opportunities should be available to all workers

Workplace Level

Employees should have the opportunity to participate in workplace improvement groups or committees

Rigid work rules should be replaced with more fl exible work systems

Grievance procedures should be supplemented with more options for resolving problems through better communication, problem solving, and other means of ensuring due process

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The Future of U.S. Labor Policy and Labor Relations 425

also would be encouraged. Strengthening employment security programs and income security programs could contribute toward this end.

At the strategic level of the new system there would be a break with the principle that it is management ’ s job to manage the enterprise and the union ’ s job to negotiate over the effects of management actions. Instead, the new system would encourage information sharing and consultation between management and worker representatives. No single form of worker involvement at the strategic level is anticipated, in keeping with the variety of mechanisms already being developed by labor and management. However, the policy would promote use of consultative bodies made up of union and nonunion employees and employee representation on boards of directors.

Legal constraints on the ability of employees, supervisors, and middle managers to participate in decision making should be removed, regardless of whether a union is present or not. As long as employees have the freedom to decide whether to be represented by a union, employee participation should be deregulated and allowed to take whatever form best suits the problems and circumstances of the parties involved. The current law that denies supervisors bargaining rights is outmoded, for example. So too are efforts to draw a clear line of demarcation between managers who are exempt from eligibility for overtime and employees who are paid for the overtime hours they work. These restrictions confl ict with the contemporary decentralization of managerial decision making. Without reform of labor and employment laws, fi rst-line supervisors and middle managers are in an untenable predicament. On the one hand, changes in technology and in personnel policies of many organizations have reduced the power and status of supervisors and given rank-and-fi le employees more infl uence. On the other hand, supervisors are not protected by labor law if they engage in collective efforts to improve their employment conditions.

Given their precarious position, it is not surprising that supervisors so often fi nd ways to block workplace innovations. This resistance to change is likely to continue unless supervisors are involved more meaningfully in processes to change and improve companies.

Likewise, constraints on the mandatory and permissible scope of bargaining no longer make sense. Strategic business decisions have serious consequences for employment and for the income security of workers. Effective employee representa- tion, therefore, requires employee participation in strategic business decisions at an early stage of the process.

These reforms would do more than just improve labor relations. Elected employee representatives would bring another independent voice to corporate governance and a new transparency to human resource practices and policy formation. This would have positive effects on issues ranging from executive compensation to organizational design.

In the new system, the exclusivity unions have as worker representatives would be modifi ed. Employee-management councils, similar to works councils in Europe that provide representation to a cross-section of blue- and white-collar workers, would be allowed. The parties would be encouraged to create consultative

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426 Part V. Special Topics

procedures involving employees from a variety of occupations. These procedures could supplement formal negotiations for employee groups that choose to be represented by a union for the purposes of collective bargaining.

In addition, unions, professional associations, and other organizations would be encouraged to develop a broad range of labor market services for individuals not covered by formal collective bargaining and those who work as independent contractors. Information about a variety of topics, including the labor market, training and education, pensions, health insurance, supplemental unemployment insurance, and legal representation and advice about occupational safety and health could be provided by full service unions or by alternative forms of collective representation. The objective here would be to create the incentives and opportuni- ties for a variety of new labor market organizations and institutions to meet the changing needs of workers and their evolving employment relationships. These labor market institutions would lower the cost of mobility to workers who have to fi nd new jobs in the wake of corporate failures, restructuring, or layoffs. By building this type of institutional infrastructure, labor market policies could then move in the long run to delink benefi ts from individual companies by making pensions, health insurance, and other leave benefi ts portable.

These broader reforms are necessary to catch up with changes in how work is done, particularly types of work arrangements that the National Labor Relations Act did not anticipate. That law was passed to regulate an employment relationship in which employees were managed by a single and easily identifi able employer. Today, a signifi cant and growing number of work settings do not fi t this model. A recent survey suggested, for example, that approximately 15 percent of the work force is employed in some form of contract, franchise, or independent contractor work arrangement. 11 Most of those employed in these settings are currently either excluded from coverage under the NLRA or have diffi culty determining exactly who their employer is if they wish to form a union and negotiate a contract. Any future efforts to update labor law will need to fi nd ways to extend access to some form of voice and representation to these workers.

This new system would build on the work practices being used in various union and nonunion settings. It incorporates reform ideas that have been advocated in recent years.

Beyond Labor Law: The Need to Integrate Labor, Economic, and Social Policies

Implementing and diffusing a new labor relations system will require the active support of federal and state policy makers and signifi cant shifts in the strategies of management and labor. Below we outline the steps the government, labor, and management could take to better integrate labor policy with other employment policies and with a high productivity, high wage economic strategy.

Changes in Government Policies

The diffusion of the new labor relations system should be accompanied by changes in federal economic and social policies. An extensive employment and

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The Future of U.S. Labor Policy and Labor Relations 427

training policy, for example, is needed to assist workers who are transitioning across employers or occupations. The unemployment compensation system should be altered to cover a higher percentage of the unemployed and encourage unemployed workers to acquire new skills. Given the decline in defi ned benefi t pensions that has taken place since the 1990s, increases in social security retirement benefi ts or some other retirement savings program are needed. Other employment regulations such as noncompete agreements that some states enforce (and others prohibit) should be modifi ed to reduce the costs to workers when they change jobs. Distinctions in the employment rights of employees, independent contractors, and consultants need to be reexamined to see if they still make sense. Anyone who works should be entitled to the basic protections provided by labor and employment laws, regardless of whether they are labeled employees, independent contractors, or temporary workers.

Macroeconomic policies should promote economic expansion and growth in productivity. One way to do so would be to increase investment in repairing the nation ’ s aging infrastructure, an action that business, labor, and a wide range of economists and engineers all see as much needed and long overdue. Support for basic education and research should be increased in the United States in light of the support given to such activities by our economic competitors.

Given the increased interdependence between work and family life that comes with the rise in labor force participation of women and the fact that parents receiving Aid to Families with Dependent Children must now work as a condition of receiving fi nancial assistance, issues of family and medical leave take on increased importance. The United States is the only advanced industrial economy and the only democracy that does not offer some form of paid leave for workers who need to attend to family needs. There is much debate over the future of the Family and Medical Leave Act. Employers fi nd it too infl exible, too cumbersome to administer, and too diffi cult to integrate with leave policies of individual employers. Family advocates criticize the act for covering only about 55 percent of the labor force (companies with 50 or fewer employees are excluded) and for providing only unpaid leave.

One option for addressing both of these concerns is to establish minimum and fl exible standards for paid leave that apply to more employees and are linked to existing leave policies offered by employers. Many companies do this already, especially in unionized settings where the parties have negotiated leave policies suited specifi cally to the needs of their particular work force and business settings. As discussed in previous chapters, a number of unions and companies have established jointly funded and jointly managed programs to support child care, elder care, and related family services. These are all ways to address the changing demographic profi le and the increased interdependence of work and family that characterizes today ’ s labor markets. Given these labor force changes, these issues will likely be front and center in any future debates over how to modernize American labor and employment law to catch up with the changing work force and the changing nature of work.

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428 Part V. Special Topics

State and Local Government Policies

The sustained impasse in labor policy at the national level has led to increased calls for action at the local and state government level. This is consistent with the history of innovation in social and labor policy in the United States. Most of what was introduced into federal law in the 1930s, such as unemployment insurance, workers’ compensation, wage and hour protections, and even some aspects of collective bargaining law, were developed earlier and tested in states such as Wisconsin, New York, and Massachusetts.

Today we see a similar trend. The enactment of “living wage” ordinances in over fi fty communities is one example. California enacted the fi rst paid family leave act in 2004, followed by Massachusetts and New Jersey. Similar bills are being debated in many other states. Public sector labor relations statutes are another example of the important role state governments play in shaping labor relations for many workers across the country. Given the ongoing national stalemate over labor policy, we are likely to see an increase in efforts to enact changes at the state and local levels. These initiatives should serve as laboratories for experi- mentation and learning that can inform national policy debates at some point in the future.

Government policy alone, however, cannot spark changes in labor relations. The diffusion of a new industrial relations system requires the active support of management and labor.

Management Values and Strategies

U.S. managers will infl uence the diffusion of reforms in labor relations through their values and their business strategies. In a new labor relations system, manage- ment will have to accept a broad role for unions and workers in strategic decision making, yet opposition to unions is a deep-seated value of many U.S. managers. This is a signifi cant barrier to the diffusion of a new system of labor relations.

The Role of Business Strategies

Not all business strategies are equally compatible with the labor relations reforms proposed above. Business competition based on low labor costs undermines the fl exibility and adaptability of a company and the degree to which its workers trust management. However, because unions fi nd it diffi cult to take wages out of competition, many fi rms are tempted to pursue a low-wage business strategy. The distrust that develops in fi rms that pursue low-wage strategies makes participa- tory practices impossible.

Business strategies that move work to different locations in response to varia- tions in labor costs also are incompatible with a new system of labor relations. A low-cost production strategy can divert management ’ s attention away from the need to develop other aspects of their business that would give them a competitive edge. Firms that focus on low-cost strategies tend to give too little attention to developing advantages based on technology, labor skills, and product innovation.

Other business strategies that limit worker trust also need to be avoided if industrial relations innovations are to take hold. When employers buy and sell

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The Future of U.S. Labor Policy and Labor Relations 429

productive assets as short-run ways of raising capital without attending to the consequences of those actions for their work force, workers become less willing to trust that employer. Thus, corporate takeovers that meet only short-term corporate objectives have dysfunctional consequences for labor relations. The ability of employers to make such fi nancial maneuvers should be limited by public policy; alternatively, employers who engage in such behavior should be required to provide compensation to the work force.

Technological Strategies

Technological strategies designed to give management maximum control and reduce the amount they pay workers lead to deskilled and unmotivated workers. Such strategies limit the opportunity for companies to learn from their employees about ways to improve operations.

A socio-technical approach to new technology is more consistent with the new labor relations practices we envision. Socio-technical policies use technology to decentralize decision making in companies and upgrade worker skills. Broadening job tasks and blurring traditional distinctions between white- and blue-collar work opens opportunities for workers to learn and apply new skills. The need to adopt technological innovations will intensify in the future as advances in artifi cial intelligence, machine learning, and robotics affect more jobs and a larger proportion of the work force. Greater worker input in the development and use of these technologies will help ensure that the work force obtains the skills needed to adapt to the way tasks will be changed, to share in the gains in productivity achieved, and to help those who are displaced by technological change to move to the new jobs that will be created.

Is it likely that a majority of U.S. managers will quickly adopt values and strategies that support the diffusion of a new labor relations system? If history is any guide, the answer is clearly no. Most managers are likely to prefer to stay with long-established practices or to adopt change incrementally. Yet with the increase in international and domestic competition, rapid changes in technology, and the interest many workers have in contributing to solutions to big problems in society, the need is growing for extensive changes in industrial relations. Economic pressures and pressures from governments and unions may eventually induce management to make major changes.

Broader Corporate Reforms

Confi dence in American corporations and their top executives fell to historic low points in the wake of the scandals in the 1990s at companies such as Enron and WorldCom, and it has stayed at those low levels ever since. Restoring confi dence in the business community has to be a high priority for the nation and its economy. This may well require giving employees more opportunities to monitor and contribute to corporate governance and managerial strategies and behaviors. This change will become even more critical if human capital and knowledge become increasingly important sources of competitive advantage in modern corporations, as many believe is already happening.

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430 Part V. Special Topics

If employers are to gain value from the knowledge of their employees, they will need to rebuild their employees’ trust. In turn, employees will need to understand the risks they are taking when they join or stay with a particular fi rm. Thus, the nature of employee participation and voice that will emerge out of this historic set of developments could have a profound effect on the future of labor relations.

Will the current debates over corporate reform lead to laws that give employees new rights related to participation and voice? This was the case in the 1930s, when the creation of the Securities and Exchange Commission, which protects those who invest in corporations, was followed by enactment of the NLRA, which protects workers. Whether history will repeat itself cannot be known at this time. If it does, we may witness more profound changes in American labor relations policy and practice than would be predicted by the past two decades of policy stalemate.

Union Strategies

Labor leaders face a similar choice about whether to support the diffusion of a new system of labor relations. At present, the leaders of the U.S. labor movement generally support worker participation and union-management partnerships but they have not developed an explicit strategy for promoting these initiatives. The reluctance of union leaders to strongly support participation in managerial decision making stems, in part, from leaders’ fears that they will be co-opted. Union leaders worry that increased participation will lead them to support management ’ s goals at the expense of promoting the interests of their members.

Union leaders will have to reassess their views and become more visible champions of the new labor relations practices we are proposing if they are to spread across the economy. Without the strong support of the labor movement, it will be diffi cult for management to take the risks associated with introducing new practices. Visible support from union leaders is also necessary to convince public policy offi cials, rank-and-fi le workers, and the public that a new labor relations system is possible. Union leaders’ passive acceptance of new practices is unlikely to suffi ce.

If they do become more heavily involved in strategic business issues, union leaders will have to become more profi cient at communicating with their members about their participation. Otherwise, members will remain suspicious of union leaders’ new roles. In addition, union leaders will have to match their increased participation in business decisions with an increase in member participation in internal union affairs.

Why should labor leaders embrace a new labor relations system and adopt the new roles it requires of them? The answer to this question is quite simple: Union leaders have to do so if they are to represent the interests of their current members effectively and organize new members. Failure to do so will likely lead to further decline in union membership or at best perhaps a leveling off of members. If the labor movement continues to use its current strategies, union membership will

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The Future of U.S. Labor Policy and Labor Relations 431

continue to decline and it will fi nd itself relegated to marginal rather than a central role in economic and social affairs.

The scope of labor relations activity has broadened in recent years to involve more activities above and below the level of traditional collective bargaining. Strategic decisions made at the top of corporations and interactions at the workplace are now as important as the negotiations process. Union leaders, therefore, must acquire the ability to infl uence decisions made at the strategic and workplace levels as well as in collective bargaining negotiations. If they do not, their infl uence over the future of labor relations will continue to decline. But most important, unions, professional associations, and other organizations need to fi nd ways of recruiting and representing the full range of participants in the modern labor force. These new approaches should not require participants to risk their jobs, engage in highly adversarial confl icts with employers, or depend on garner- ing a majority of their peers in a specifi c bargaining unit in order to gain the services, opportunities, and representation they need to succeed in today ’ s labor markets.

To support labor mobility, unions will need to develop new capabilities and new structures. These are needed to satisfy workers’ needs for lifelong learning and retraining, information about job opportunities, and continuous benefi t coverage. Meeting these needs will require unions to recruit members and maintain their membership over the full course of their careers and modify union structures to allow workers to move across unions over their careers. In addition, craft and professional union models that support worker mobility may become increasingly important in the future since they are not tied to a specifi c workplace and may not be as dependent on exclusive representation and formal collective bargaining rights as industrial unions are. One might envision unions of the future as networks that provide a range of services and benefi ts.

Summary

This book began by presenting a normative perspective on work and employ- ment relations and a broad framework for analyzing industrial relations. The text then explored how the strategic choices of the parties interact with environmental conditions to shape labor relations. It seems appropriate, therefore, that this fi nal chapter poses the strategic choices now faced by labor, management, and gov- ernmental decision makers regarding the future of labor relations.

The fi eld of labor (and industrial) relations has a heritage of close connections between research, teaching, public policy, and private practice. The fostering of this tradition would help the parties address the challenges they now face.

Discussion Questions

1. What are some of the key components of the current U.S. national labor policy?

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432 Part V. Special Topics

2. Briefl y outline the deregulation-market approach to national labor policy. Discuss some of the strengths and weaknesses of this approach.

3. Describe the key features of the new labor policy advocated by the authors. 4. How could the government encourage the diffusion of the new labor relations

system we recommend if it chooses to do so? 5. What do you think are the most important issues that need to be dealt with

through future labor policies?

Related Web Sites

Dunlop Commission: http://digitalcommons.ilr.cornell.edu/dunlop/

Commission on Future of Worker Management: http://are.berkeley.edu/~howardrr/pubs/lmd/html/fallwinter_94/commrep. html

U.S. Department of Labor: http://www.dol.gov