Contextual Issues - Michigan State University

Contextual Issues - Michigan State University

Environmental/Contextual Issues Social, Legal, Economic and Political 1 Social Environment for Collective Bargaining in the U.S. Individualism Rights of individuals superior to other rights Property rights as a derivative of individual rights Corporations are legal individuals Chartered by state Collectivities of shareholders Perpetual life Limited liability

2 The Employment Relationship An economic exchange transaction Between two individuals Basically, perceived as no different than purchasing a commodity 3 Unions and Individualism Collectivities Collectivizing what we view as natural individual economic transaction At a disadvantage vis--vis those exercising rights Corporations legal individuals Employees actual individuals Skeptical About Governmental Protection 4

Other Values Europe Class based collectivistic values in Europe Asia Confucianism based principles of obligation and harmony 5 Implications of Social Environment for Collective Bargaining Strong management and employers Property rights

Individualism Job provider Resistance to unionism Unionism Struggle for legitimacy Difficulty in staying organized 6 Legal Environment Basic Principles of Legal Environment Accessible Wide Coverage Public Mandatory Procedures

7 Historical Overview 1806 - 1842: Conspiracy Doctrine 1842 - 1932: Decline of Conspiracy Doctrine Legal Focus on Union Tactics Through 1870s: Damage Suits 1880s - early 1930s: Injunction 1932 - 47\55: Legal Environment Favorable to Unions and CB 1947\55 - Present: Legal Environment Neutral to Pro-Employer Legal Framework 8 Basic Legal Framework National Law in U.S. for Private Sector Mixed Federal\Provincial in Canada

Employee Choice Some Exclusions Some Employers Railway Labor Act Some Employees Broad Definition of Labor Organization Representation by Bargaining Unit Majority Rule Exclusive Representation Administration by political appointees (on NLRB) 9 Basic Legal Framework (cont.) Unfair Labor Practices Bargaining Limited to terms and conditions of employment in U.S. Broader in Canada

Use of Economic Weapons to Determine Outcomes Administration by an administrative agency NLRB in U.S. Comparable bodies in Canadian 10 Basic Legal Framework (cont.) Determining Representation Elections in U.S. Elections and card checks Recent Legal Issues Organizing

Duty to Bargain Striker Replacement Employee Involvement in Nonunion Firms Legal Framework 11 Implications of Legal Doctrine Union Organizing Evolution Employer noninvolvement, 1935-41 Employer involvement but required to permit union on premises to present views, 1941-53 Union exclusion From presenting views, 1953 From coming on premises (generally) 1956 1992 Development of employer union resistance tools by

mid-1950s 12 Implications of Legal Doctrine (cont.) Bargaining Board not involved in determining terms and conditions of employment Mandatory and nonmandatory subjects Corporate restructuring Defaults to an adversarial system Bargaining power Implementation at impasse Strikers and replacements Flexibility in paying strike replacements No subsystem to prevent employer pyramiding legal rights to deunionize

13 Implications of Legal Doctrine (cont.) Remedies Little disincentive Delay Minimal government involvement Favors economically stronger party 14 Selected Data: NLRB Elections; Employment; Unioniz ation; 2003-04 2003 ALL EMPLOYEES Ees, over 16 Union Members Repped by Unions Pc t Union Members (All)

Pc t Repped Ees (All) Total Employ ees in NLRB Elections Total Employ ees in NLRB Elections/Ees over 16 Employ ees in Units Selec ting Union Representation Employ ees in Units Selec ting Union Representation/Ees over 16 Union Members hip Change From Prev. Year Pc t Repped Change from Prev Yr. Pc t of Los s es Replac ed, Membership Pc t of Los s es Replac ed, Represented PRIVATE NONAG EMPLOYEES Ees, over 16 Union Members Repped by Unions Pc t Union Members

Pc t Repped Ees Total Employ ees in NLRB Elections Total Employ ees in NLRB Elections/Ees over 16 Employ ees in Units Selec ting Union Representation Employ ees in Units Selec ting Union Representation/Ees over 16 Union Members hip Change From Prev. Year Pc t Repped Change from Prev Yr. Pc t of Los s es Replac ed, Membership Pc t of Los s es Replac ed, Represented Number NLRB Representation Elections Average No. of Employ ees Per Election

2004 122,358,000 15,776,000 17,448,000 12.9% 14.3% 123,554,000 15,452,000 17,087,000 12.5% 13.8% 151,352 175,722 0.124% 0.142%

62457 81,664 0.051% 0.066% 369,000 304,000 247,000 361,000 16.9% 26.9%

25.3% 22.6% 101,559,000 8,435,000 9,264,000 0.083 0.091 102,560,000 8,205,000 8,956,000 0.080 0.087 151,352 175,722 0.149%

0.171% 62457 81,664 0.061% 0.080% 334,000 253,000 260,000 315,000 18.7%

32.3% 24.0% 25.9% 2457 2719 61.6 64.6 15 Economic Environment Macro-Level Focus Determinants of Union Growth Shifts in Structure of Employment

Business Cycle Micro Level Focus Labor and Product Markets\Firm skilled - hard to replace workers inelastic demand for union product inelastic supply of substitutes for union labor ratio of labor costs to total costs (importance of being unimportant) Take Wages out of Competition - Organize the Product Market 16 Product Market

Successful organization of product market key to union success during period 1945-75 Autos Steel Airlines Trucking Paper Construction Union Taking Wages (labor costs) Out of Competition 17 U.S. Employment

(absolute numbers in 1,000s) Year 1965 2005 Nonfarm Employment 60874 133631 Mfg Employment 16617 14279 Pct of Employment in Mfg. 27.3% 10.7%

SOURCE: U.S. Bureau of Labor Statistics 18 Product Market Implications As entry increases, union power declines Wages and labor costs If employers can remove themselves from unionized sector, union power declines spatial limitations Longshoring Public Employment Post 1975 Increasing foreign competition - nonunion autos: less than 5% market share in late 60s to roughly 35% today steel: increase in worldwide capacity Deregulation - airlines and trucking

19 Product Market (cont.) Employer Removal - rubber Spatial Characteristics - longshoring 20 Microeconomic Principles Consumer Welfare Efficiency is desirable Efficiency is determined by low prices to consumers Work is for the purpose of generating income so that individuals can consume Labor supply Labor an input to production 21

Implications More competitive product markets due to entry of unorganized firms reduces union power Unionized employer capability of removal from union sector reduces union power Both happened in period 1975-2005 22 Political Environment Political linkages Unions Democratic Party Employers Republican party Republican party rise over last 25 years Favorable to Business Flexibility Reduction of Legal Constraints

Minimalist government 23 Linkages to Other Three Environments Social Reinforces individualism Legal Legislation Appointments Administrative Judicial Economic Fewer constraints on business Willingness to let market work 24

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