Environmental/Contextual Issues

1. Environmental/Contextual Issues Social, Legal, Economic and Political

2. 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

3. The Employment Relationship • An economic exchange transaction • Between two individuals • Basically, perceived as no different than purchasing a commodity

4. Unions and Individualism • Collectivities • Collectivizing what we view as natural individual economic transaction • At a disadvantage vis-à-vis those exercising rights • Corporations – legal individuals • Employees – actual individuals • Skeptical About Governmental Protection

5. Other Values • Europe • Class – based collectivistic values in Europe • Asia • Confucianism based principles of obligation and harmony

6. 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

7. Legal Environment • Basic Principles of Legal Environment • Accessible • Wide Coverage • Public • Mandatory Procedures

8. Historical Overview • 1806 - 1842: Conspiracy Doctrine • 1842 - 1932: Decline of Conspiracy Doctrine - Legal Focus on Union Tactics • Through 1870’s: Damage Suits • 1880’s - early 1930s: Injunction • 1932 - 47\55: Legal Environment Favorable to Unions and CB • 1947\55 - Present: Legal Environment Neutral to Pro-Employer Legal Framework

9. 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)

10. 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

11. 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

12. 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-1950’s

13. 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

14. Implications of Legal Doctrine (cont.) • Remedies • Little disincentive • Delay • Minimal government involvement • Favors economically stronger party

16. 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

17. 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

18. U.S. Employment(absolute numbers in 1,000’s) SOURCE: U.S. Bureau of Labor Statistics

19. 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 60’s to roughly 35% today • steel: increase in worldwide capacity • Deregulation - airlines and trucking

20. Product Market (cont.) • Employer Removal - rubber • Spatial Characteristics - longshoring

21. 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

22. 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

23. 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

24. Linkages to Other Three Environments • Social • Reinforces individualism Legal • Legislation • Appointments • Administrative • Judicial • Economic • Fewer constraints on business • Willingness to let “market” work