An economic analysis of public sector collective bargaining and strike activity

This paper develops a theory of public sector collective bargaining and uses it to investigate the economic determinants of public sector strike activity. The model considers union leaders, union members, bureaucrats, politicians, and voters, with the intention of explicitly recognizing both the constraints placed on the bargaining parties by their constituents and the differences between public and private sector collective bargaining. The empirical results indicate that only in cases where both negotiating parties are motivated by self-interest can we expect frequent strikes and strikes of long duration. The results also suggest that public sector strikes are countercyclical and principally influenced by the business cycle and its impact on state and local revenues.     

Unionization Matters: An Analysis of Post–World War II Strikes

Recent macroeconomic analyses of post–World War II US strikes conclude that union density during a given year does not affect the occurrence of strike activity during that same year, a finding attributed to the institutionalization of collective bargaining after WWII. However, this argument does not take into account two processes that may render new bargaining units more radical than established bargaining units and, hence, more likely to use strikes as a weapon against capitalists. Because macrolevel changes in union density are reflective of the organization or lack of organization of new bargaining units (Freeman and Medoff 1984), the effect of union density on strikes should still be present. However, given the average contract length of two years during this time period (Cecchetti 1987; Vroman 1989), this effect should be delayed by about two years by the presence of total no-strike pledges in most contracts (Perusek and Worcester 1995). An ARIMA time-series analysis confirms that union density has a two-year lagged effect on strike activity in the post–WWII time period, 1947–1977.     

Strike Lengths: Correcting for Prestrike Announcements and the Ratio of Bargaining Size to Firm Size

Anticipating the duration of a labor strike can be vital for both sides of the dispute, as well as outside observers. The methods of a pair of studies using Canadian data are surveyed to analyze labor strikes in the United States from 1992 to 2008. Corrections are made for strikes with predetermined lengths (“one-day” strikes and the like), whose durations are more a function of the prior announcements than of other factors, such as number of employees striking and macroeconomic conditions. Strikes are found to be generally shorter when the striking unit represents a larger portion of the firm’s total workers, a proxy for its bargaining power. This ratio provides a better understanding of the strike dynamics (including expected length) than do sheer bargaining unit size or sheer firm size.     

A simultaneous-equations model of the relationship between public sector bargaining legislation and unionization

This paper estimates a simultaneous-equations model with public sector bargaining laws and union membership treated as jointly-determined variables. The extent of public sector unionization has a significant positive influence on the passage of prolabor bargaining legislation and bargaining legislation has strong, independent effects on the extent of public sector unionization. We gratefully acknowledge the research support provided by Minbo Kim and Parisun Chantonahom.     

Strike activity in the united states: An analysis of the stocks and flows

Evidence indicates that a dichotomy exists between the stocks and flows of strike activity in the United States. Canonical correlation analysis was applied to U.S. strike data from 1955 through 1980 to ascertain whether the economic or sociopolitical models of strikes were more appropriate to the explanation of either the stock or flow of strikes. The economic variables were the most important in explaining variations in the flow while the linear time trend together with the economic variables explained the variations in the stock of strikes. This suggests that strikes begin for economic reasons and that the dimensions of the stock of strikes may be more closely correlated with variables not used in the analysis but exhibit a trend over the period examined, hence a dichotomy between the flow and stock of strike activity.     

Two faces of union voice in the public sector

Summary and Concluding Observations Employee voice through unions is manifest in various ways in the public sector including unionization itself, strikes, political activity, and challenging managerial prerogatives. In each of these areas there are two faces to voice just as there are two faces to unions. Voice can be used in a more influence-peddling and muscle-flexing bargaining fashion to enhance rent seeking and noncooperative behavior with negative effects on productivity, competitiveness, and resource allocation. Voice can also be used more positively by articulating preferences and trade-offs, improving communications, and involving employees and enhancing their commitment to the organization. In all likelihood both faces of voice apply to unions in the public sector just as they do in the private sector. In the private sector, however, the negative monopoly face of unions has been increasingly constrained by competitive market forces such as globalization and trade liberalization as well as by the industrial restructuring to services and the information economy. Rents are obviously harder to obtain when there are fewer rents on the bargaining table. There is little survival value to pricing yourself out of the market now that market forces are more prominent. In such a private sector environment, unions have generally declined, strikes have dissipated, and managerial prerogatives have been enhanced.     

Economic Development and Strikes: A Comparative Analysis*

Theorists of class conflict have debated the nature of the relationship between economic development and the incidence of strikes. The liberal perspective contends that such developments as the growth in size of corporations and the separation of ownership from control enable modern management to institutionalize industrial conflict in the form of collective bargaining. In contrast, writers in the radical perspective argue that conflict will increase in late industrialization owing to such forces as the bi-polarization of classes and an increase in union strength. The present paper tests these structuralist theories by using data from a sampling of seventy-one nations representing a wide range in economic development. A polynomial regression analysis indicates that strike volume, a chief measure of overall strike activity, follows a parabolic curve—increasing until a GNP per capita of about $4,700 is reached and then declining. No support is found for the radical thesis of an upswing in strike activity at high levels of economic development. The findings on control variables indicate that the inflation rate and mass-media development have significantly positive effects on strike activity. Finally, a democratic political climate tends to lower strike volume.     

Inter-industry strike frequencies: Some pooled cross-sectional evidence from canadian secondary manufacturing

This note reports the results of a pooled cross-sectional time series regression of strike frequencies in Canadian secondary manufacturing for the years 1969, 1971, and 1974. The basic conclusion is that a bargaining model approach performs well for interpreting work stoppages associated with contract negotiations, but provides a less than satisfactory explanation of mid-term and unorganized strikes. The research reported in this paper was supported by a grant from Labour Canada. We wish to thank Harry Grosskleg of Labour Canada who provided the strike data; Ingrid Strauss, Kathy Meredith, and Mark Muth for research assistance; and Leonard Laudadio and an anonymous referee for helpful comments. The paper is an abbreviated version of Jones and Walsh (1983).     

The determinants of strikes over time and across industries

This paper presents a pooled time-series, cross-section analysis of strike activity across 27 major industry groups over the years 1970–1980. While numerous studies have analyzed the time-series behavior of strike activity and fewer studies have analyzed the cross-sectional pattern of strikes, little work has been done to combine both perspectives into one empirical analysis. This paper improves on this by incorporating variables into one regression model that is capable of explaining both dimensions of the variation in strike activity. The regression results suggest that strikes over time and across industries are affected by a wide range of economic, organizational, institutional, occupational, demographic, market structure, political, and other variables.     

Strike strategies and the minimum effective union

Research has shown that in an industry-wide strike, a union must be able to reduce output “by a substantial percentage below competitive levels” to impose hardship on producers. But a union may also be effective by pursuing selective strikes. If some producers are struck while others are free to operate, then the targeted producers may bargain with the union, and holdouts can be targeted for strikes. This article analyzes the effects of selective and general strikes on both a competitive industry and a duopoly. If there are side-payments among producers, then general strikes are easier to mount. If there is no mutual aid among employers, then selective strikes are less costly to implement. It is also shown that strikes are easier to mount in a duopoly than in a competitive industry. This may contribute to union formation and collective bargaining in noncompetitive industries. The analysis is modified to allow for firms of different sizes. The results show that unions must be able to remove more output from larger firms than smaller ones, suggesting that union formation may be focused more on larger firms. The author thanks Mark Loewenstein, James Fain, and Campbell McConnell for thoughtful comments and suggestions. The author gratefully acknowledges a research grant from the College of Business Administration of the University of Nebraska. I am responsible for any remaining shortcomings.     

AFTER TAFT-HARTLEY: The Legal-Institutional Context of U.S. Strike Activity, 1948 to 1980

This article examines how the legal-institutional context created by American labor law has impacted the frequency, issue composition, and economic damage of strike activity since the passage of the Taft-Hartley Act. Emphasis on the legal-institutional context complements conventional perspectives of strike activity which focus on business cycle and political-organizational interpretations. A new labor law index is developed to measure the legal-institutional context, and it is comprised of five components: number of pro-labor laws, National Labor Relations Board unfair labor cases filed, use of antilabor injunctions, labor mediation, and labor arbitration. For the period of 1948 to 1980, high values on the labor law index reduced overall strike frequency, reduced some types of control-related strikes, had no effect on economic strikes, and decreased working time lost to strikes, especially in the monopoly sector. These findings suggest that the legal-institutional context of the post-Taft-Hartley period has served to regulate and delegitimize expressions of labor unrest that most seriously challenge capitalist interests.     

The effect of strikes on shareholder returns

Relationships between labor disputes and shareholder wealth are examined through analysis of 91 strikes between 1951 and 1973. Stock market reactions to strikes of different durations are analyzed through a market model methodology. Different market adjustments are found for short, intermediate, and long duration strikes. Shareholder returns prior to strikes are below market returns for firms in the short strike category, approximately equal to the market returns for firms in the short strike category, approximately equal to the market for firms in the intermediate strike duration category, and above the market for firms in the long strike category. After strikes, shareholder returns decline for firms in the short and long strike duration categories.     

ON LABOR'S RIGHT TO STRIKE

This paper first shows that, under certain conditions, strikes benefit capital at the expense of union labor in the aggregate. It is then argued that observed variations in strikes and labor's right to strike are largely explainable by variations in the profitability of strikes to capital and not explainable by popular alternative hypotheses purporting to explain the existence of strikes. Finally, an explanation is offered for the persistence of labor's right to strike over time and across various political systems.     

Unemployment insurance and strikes

In several states workers who are unemployed because of a labor dispute can collect unemployment benefits. Due to imperfect experience rating, such policies can create a public subsidy to strikes. This study examines whether these policies affect strike activity. In particular, both cross-sectional and fixed effects models are employed to test whether an increase in the public subsidy inherent in unemployment insurance leads to an increase in strike frequency. This research was in part supported through a grant from the W. E. Upjohn Institute for Employment Research. We thank Dan Lovallo and Yoshio Okunishi for excellent research assistance.     

Compensation,employment, and the political activity of public employee unions

It has been hypothesized that because public employee unions are politically influential, they have a bargaining advanatage over their private-sector counterparts. Previous studies, however, have not directly measured the political activities of public employee unions and have instead usually used some type of unionization proxy. This paper uses unpublished data from the International City Managers Association to develop a more direct measure of union political activity. Using this measure, it is found that an increase in union political activity leads to higher compensation and employment for public employee union members.     

Some empirical observations of relevance to the analysis of union wage determination

Six important empirical characteristics of the union sector need to be incorporated into future research on wage determination. These are 1) the extent of unionization, 2) the statistical correlates of unionization, 3) divergent trends in union and nonunion earnings, 4) union/nonunion wage differentials, 5) the determinants of union and nonunion wage change, and 6) wage imitation. Examination of these characteristics suggests the following about union wage determination. Union wages have advanced relative to nonunion since the mid 1950s, despite relative shrinkage of the union sector. Union wage changes show less sensitivity to business-cycle pressures than nonunion. Limited spheres of wage imitation surround certain major union negotiations. These observations can be fitted into recent analyses of wage determination under long-term employer employee relationships, and have relevance for anti-inflation policy. Research for this paper was undertaken while the author was a Senior Fellow at the Brookings Institution and was supported by a grant from the Alfred P. Sloan Foundation. Views expressed should not be attributed to the Brookings Institution, its staff or trustees.     

AN EXPRESSIVE VOTING THEORY OF STRIKES

Union members may vote for a strike even if they do not expect to thereby increase their wages. For under majority voting any one member's vote for a strike is unlikely to be decisive. A union member who obtains a non-infinitesimal emotional benefit from the act of voting for a strike may therefore vote in its favor. This hypothesis can explain the existence of strikes and the conditions which make strikes especially likely.     

The effect of the extent of unionism on union and nonunion wages

This paper provides estimates, derived from micro wage equations, of the effects of unionism on the wages for both union and nonunion labor. These equations control not only for union status, but also include measures of the extent of unionism in product and labor markets. The results suggest,inter alia, that an increase in the extent of unionization in an industry has substantial positive effects on the wages of nonunion as well as union workers. Increases in the extent of union coverage within an occupation, however, have little or no effect on nonunion wages.     

The effect of unionization on safety in bituminous deep mines

This article examines the impact of unionization on safety in underground coal mines. An accident causation model is used to isolate the effect of unionization from other injury rate determinants. Results indicate that union mines experience more disabling injuries per year than nonunion mines,ceteris paribus. Previous studies attributed higher union injury rates to poor nonunion reporting practices. The data examined here suggest that other factors, including the UMWA’s job bidding system, low productivity, labor characteristics, and other institutional factors contribute to high injury rates at union mines. The authors acknowledge the helpful comments of Michael G. Finn, Clark G. Ross, and C. Louise Nelson. This research grew from work funded under contract DE-AC05-760R00033 between the Department of Energy and Oak Ridge Associated Universities. The views expressed and responsibility for errors or omissions belong to the authors.     

Do HRM practices influence the desire for unionization? Evidence across workers,workplaces, and co-workers for Great Britain

We investigate the desire of nonunion workers in Great Britain to become represented by unions. Comparing our results to those from the United States, we find that workers in Great Britain are less likely to desire unionization and express lower dissatisfaction with their influence at work. The determinants of the desire for unionization are estimated controlling for a wide variety of individual and workplace variables. The roles of human resource management and employee involvement are isolated. We identify direct work-place and worker-level effects of these practices in reducing the desire for unionization and an indirect effect operating through the influence of employee relations, a major determinant of the desire for unionization. Also, we identify characteristics of co-workers that are associated with desire for unionization and examine the role information revelation may play in managerial strategies to forestall unions.