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Time path of strikes. United States Number of strikes declines sharply in mid 1970s Hits post WWII low in 1985, levels out at less than 50 per year. Europe Incidence of strikes also declined starting in the 1980s. Theories of strikes. Joint cost model

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time path of strikes

Time path of strikes

United States

Number of strikes declines sharply in mid 1970s

Hits post WWII low in 1985, levels out at less than 50 per year.

Europe

Incidence of strikes also declined starting in the 1980s

theories of strikes

Theories of strikes

Joint cost model

Low union and firm costs of a strike will lead to a greater incidence of strikes

Explains why strikes more common in durable manufacturing, concentrated industries where lost sales, production can be made up

If costs are unequally divided, the party that bears the largest costs will make the biggest concessions

theories of strikes3

Theories of strikes

Joint cost model

Firm preparation before strikes

Build up Inventory, Production

Possible with durables (autos, steel, electronics)

Not possible with nondurables (bakery, dairy, UPS next-day service)

Prepare strike plan (decide between using exempt or replacement workers or shutting down, security, legal)

During strike

Raise prices—moderate consumer demand to shorter supply

Replacement labor used in a small proportion of strikes

After strike

Deferred sales, stepped up production

theories of strikes4

Theories of strikes

Joint cost model

Union preparation before strikes

Strike fund—built up from dues

Organize workers to man picket lines, train on legal and illegal behavior

During strike

Disburse strike funds (fraction of previous earnings, receipt may be tied to participation in the picket line or other union activities)

Part-time jobs

Public assistance

UI, Food stamps, Welfare, Local

After strike

Union must be able to contact workers

Vote on contract

Take up open jobs

theories of strikes5

Theories of strikes

Example of strike preparation in the automobile industry: Gunderson and Melino, Journal of Labor Economics 5 (January 1987)

Firms prepare a strike plan in case negotiations break down (as do Unions)

In 70% of strikes, firm suffers no production loss

theories of strikes6

Theories of strikes

Information dissemination model: imperfect or asymmetric information leads to strikes

Consistent with evidence that strikes are more common in firms with highly variable stock prices

Note —both of these views of strikes fit within the Hick’s model—they explain why resistance and concession curves have differing shapes

slide7

LeRoy “The PATCO Strike: Myths and Realities.” and “Lengthening Duration of Permanent Replacement Strikes: Public Policy Implications.” IRRA 49th Annual Proceedings

Time path of strikes in the U.S.—sharp decline in the 1980s

1981: Reagan fired all striking air traffic controllers for violating federal law prohibiting strikes. Replaces them permanently with workers who did not honor the strike

Is PATCO responsible for decline in strikes?

slide8

LeRoy “The PATCO Strike: Myths and Realities.” and “Lengthening Duration of Permanent Replacement Strikes: Public Policy Implications.” IRRA 49th Annual Proceedings

Is PATCO responsible for decline in strikes?

Increase in use of replacement workers since 1970

Between 1935-1970, frequency of permanent replacement strikes varies between 0.4% and 2.3%

After 1970, frequency varies from 1.2% to 5%

Irony: Reagan halted BLS reporting of strike data in 1981 at time of PATCO strike

In 15-30% of strikes, replacement workers are used, so most replacement workers are temporary

Increase in length of strikes using permanent replacements since 1970

Not obviously a change due to PATCO strike

Replacement strikes are still relatively rare

slide9

LeRoy “The PATCO Strike: Myths and Realities.” and “Lengthening Duration of Permanent Replacement Strikes: Public Policy Implications.” IRRA 49th Annual Proceedings

Is PATCO responsible for decline in union density?

Distinction between public and private sector unionization

Density rising in the public sector, despite PATCO

Not clear why enforcement of anti-strike rules in public sector should affect legal strike activity in the private sector

hutchens lipsky and stern unemployment insurance and strikes journal of labor research 13 fall 1992

Hutchens, Lipsky and Stern, “Unemployment Insurance and Strikes.” Journal of Labor Research 13 (Fall 1992)

Test of the joint cost model: Strikes are more common when the combined firm and union costs of the strike are lower

If costs are unequally divided, the party that bears the largest costs will make the biggest concessions

hutchens lipsky and stern unemployment insurance and strikes journal of labor research 13 fall 199211

Hutchens, Lipsky and Stern, “Unemployment Insurance and Strikes.” Journal of Labor Research 13 (Fall 1992)

Unemployment Insurance benefits provided

to strikers in New York and Rhode Island after 8 weeks and 7 weeks respectively

Stoppage of work: 24 states allow benefits if the firm does not cut production as a result of the strike

Innocent bystander: If you lose your job as a result of the strike but are not a direct participant

hutchens lipsky and stern unemployment insurance and strikes journal of labor research 13 fall 199212

Hutchens, Lipsky and Stern, “Unemployment Insurance and Strikes.” Journal of Labor Research 13 (Fall 1992)

Why would unemployment benefits for strikers affect incidence of strike?

Lowers cost for workers

If incomplete experience rating, implicit subsidy of strike

If UI benefits untaxed (have been taxed since 1979) implicit subsidy of strike

Innocent bystander rule has unknown effect

Magnitude of effect may depend on amount of UI benefit

hutchens lipsky and stern unemployment insurance and strikes journal of labor research 13 fall 199213

Hutchens, Lipsky and Stern, “Unemployment Insurance and Strikes.” Journal of Labor Research 13 (Fall 1992)

Results

Work stoppage rule has no significant impact

New York and Rhode Island have no significant impact

Innocent bystander rule lowers frequency of strikes

Magnitude of benefits raises incidence of strikes

hutchens lipsky and stern unemployment insurance and strikes journal of labor research 13 fall 199214

Hutchens, Lipsky and Stern, “Unemployment Insurance and Strikes.” Journal of Labor Research 13 (Fall 1992)

Conclusion

Lowering cost of strikes to workers (more UI benefits) increases incidence of strikes

what lowers costs to the firm one option maintaining production during strike
What lowers costs to the firm?

One option—maintaining production during strike

slide16

Singh and Jain. “Striker Replacement in the United States, Canada and Mexico: A Review of the Law and Empirical Research.” Industrial Relations 40 (January 2001)

Arguments for or against restrictions on the use of replacement workers

For

Lessens chance of picket line violence

Shortens strike or lowers likelihood of strike (raises cost of strike for firm)

Replacement workers may be used to decertify the union

Replacement workers allow firm to avoid its duty to bargain collectively

Leads to poor employer-employee relations

slide17

Singh and Jain. “Striker Replacement in the United States, Canada and Mexico: A Review of the Law and Empirical Research.” Industrial Relations 40 (January 2001)

Arguments for or against restrictions on the use of replacement workers

Against

Gives too much power to unions

Puts small firms at a disadvantage (less able to absorb strike costs)

Inconsistent with free market, right to property

use of replacement workers

Use of replacement workers

United States

Mackay Radio and Telegraph Co. (1937)

San Francisco radio station struck, brings in workers from other places to keep station functioning

Although section 13 provides nothing in the Act shall be construed so as to interfere with or impede … the right to strike, it does not follow that an employer, guilty of no action denounced by the statute, has lost the right to protect and continue his business by supplying places left vacant by the strikers. And he is not bound to discharge those hired to fill the places left by strikers, upon the election of the latter to resume their employment, in order to create places for them

unfair labor practices and economic strikes
Unfair Labor Practices and Economic Strikes
  • ULP Strikes are called to press for reversal of violations of the NLRA
    • Failure to bargain in good faith
    • Discrimination on the basis of union sentiment
    • Failure to recognize the union
  • Only temporary replacements can be used in ULP strikes
  • ULP Striking employees are unconditionally entitled to reinstatement at the end of the strike
  • NLRB decides on ULP vs economic strike status
unfair labor practices and economic strikes20
Unfair Labor Practices and Economic Strikes

Economic Strikes are called to press for wages, benefits, or working conditions

  • Permanent replacements can be used in the case of economic strikes
  • Replacement workers also have rights—cannot be fired after the strike if they were promised a long-term job (Belknap v. Hale (1983)
economic strikes

Economic Strikes

Even though they are not obligated, most employers rehire strikers

Trained

Known

Avoids friction between union and replacement workers

If do not hire back all strikers….

Must not look like a retaliatory measure based on support of the union, or face a potential ULP charge

Strikers must be considered for open positions and put on waiting list for future openings

Rehired strikers must be paid the same as replacement workers. Can’t be punished for strike in terms of compensation.

economic strikes22

Economic Strikes

Employees lose all rights to rehire or preferential position in the hiring pool in an economic strike if

They have accepted a substantially similar job elsewhere

They engaged in violent activities during the strike

illegal strikes workers lose nlra protection of the right to rehire
Illegal Strikes: Workers lose NLRA protection of the right to rehire
  • Strikes called during the Warning Period (60 day negotiation period)
  • Wildcat strikes: strikes not sanctioned by the union
    • Union may be liable for damages if contract has no-strike clause
  • Sit-down strike—workers refuse to work and remain on the premises
illegal strikes workers lose nlra protection of the right to rehire24
Illegal Strikes: Workers lose NLRA protection of the right to rehire
  • Strikes called during the Warning Period (60 day negotiation period)
  • Wildcat strikes: strikes not sanctioned by the union
    • Union may be liable for damages if contract has no-strike clause
  • Sit-down strike—workers refuse to work and remain on the premises
illegal strikes workers lose nlra protection of the right to rehire25
Illegal Strikes: Workers lose NLRA protection of the right to rehire
  • Secondary strike: In a primary dispute with firm A, the union also strikes firm B that has business dealings with firm A.
      • Hypothetical examples
        • Grocery workers striking Safeway also strike trucking company delivering produce to Safeway
        • Steelworkers on strike against rebar manufacturer convince construction workers at building site to strike to prevent firm from purchasing rebar from the firm
illegal strikes workers lose nlra protection of the right to rehire26
Illegal Strikes: Workers lose NLRA protection of the right to rehire
  • Sympathy strike: honoring picket lines of other unions (treated as are primary strikers
      • Can be permanently replaced if economic strike
      • Temporarily replaced if ULP strike
    • Honoring picket line ok if fear of violence
    • If only part of job (don’t make delivery at one firm on route =>prorated punishment)
illegal strikes workers lose nlra protection of the right to rehire27
Illegal Strikes: Workers lose NLRA protection of the right to rehire
  • Jurisdictional strikes: Striking over which of two or more competing unions should get the work assignment (NLRB is to decide on assignment)
      • Example—plumbers refuse to work because they believe they should both do the plumbing and install bathroom tile on a high rise project.
  • Recognition strike: Union strikes a firm for the right to represent workers already covered by a recognized union
slide28

Singh and Jain. “Striker Replacement in the United States, Canada and Mexico: A Review of the Law and Empirical Research.” Industrial Relations 40 (January 2001)

United States

Legal to use permanent replacements in economic strikes.

Can only use temporary replacements in ULP strikes

Either permanent or temporary replacements are used in 15-30% of strikes

slide29

Singh and Jain. “Striker Replacement in the United States, Canada and Mexico: A Review of the Law and Empirical Research.” Industrial Relations 40 (January 2001)

Canada

Illegal to use permanent replacement workers in all provinces. Illegal to use temporary replacements in four provinces.

There is some element of guaranteed rehiring of strikers at the conclusion of the strike in all provinces

Replacements used in 12-20% of strikes

slide30

Singh and Jain. “Striker Replacement in the United States, Canada and Mexico: A Review of the Law and Empirical Research.” Industrial Relations 40 (January 2001)

Mexico

Right to strike guaranteed

Prohibition against hiring either permanent or temporary replacement workers in legal strikes

Legal strikes involve a majority of the workers, and are geared toward pressuring employer to raise wages or comply with CBA.

Officially, replacements are used in 0% of strikes

Enforcement spotty

slide31

Singh and Jain. “Striker Replacement in the United States, Canada and Mexico: A Review of the Law and Empirical Research.” Industrial Relations 40 (January 2001)

How do bans of replacement workers affect strike incidence or duration?

Effect of legislation

Evidence from Canada (depends on Quebec vs rest)

Increased probability of strike

Increased length of strike

Effect on wages zero or positive

Effect of use of replacement workers (U.S. and Canada)

Raises length of strike

Raises union decertification

Raises incidence of picket line violence

Mixed on probability of strike

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