Outsourcing and union power

The outsourcing of union work and jobs either diffuses or diminishes union membership, depending on perspective and situation. The correlation of trends in union membership to trends in union power, while less than perfect, has until recently been relatively strong over the past sixteen years. The fact that as diverse a sample of unions as AFSCME, SEIU, and UAW have chosen to make outsourcing a prominent labor/public relations issue suggests that the correlation continues to be perceived by the union movement to be significant, notwithstanding the efforts of the “new” leadership of the AFL-CIO to break that link with respect to union political power by “taxing” member unions and their members to contribute both money and militancy to the 1996 election cycle. Although outsourcing may lead only to the diffusion of union membership either within or between unions, as opposed to the diminution of union membership, this fact has not received a great deal of attention. The net effect on total union membership of outsourcing from one union employer to another union employer is unclear, although the effect on the membership of the union at the outsourcing employer is not. The redistribution of membership within a union as a result of outsourcing is likely to have little immediate impact on union power. However, as even the best case scenario presented above suggests, it may have significant long-run deleterious effects on union bargaining power by taking labor out of a sheltered market and putting it into potentially competitive market. This is particularly likely to be the case when outsourcing (1) places the outsourced work into a different industry or wage contour and (2) creates the possibility of moving from sole-source to multiplesource supplier arrangements. The redistribution of membership between unions as a result of outsourcing is unlikely to have a major impact on union power broadly defined. It can have, however, serious deleterious effects in terms of the power of an individual union, as suggested in my “competitive case” scenario. The fact that one union’s losses due to outsourcing may be another union’s gain is of little consolation to the losing union. That act, in and of itself, may make the threat of outsourcing a potential union “Achilles heel” at the bargaining table by placing it into competition with some other, perhaps unknown, union as well as possibly nonunion competition. The most obvious threat to union power comes from outsourcing that diminishes union membership overall by transferring jobs from union to nonunion employers. The willingness and ability of employers to move work/jobs entirely out of the orbit of union control constitutes, in terms of power and particularly union bargaining power, a revisitation of the phenomenon of the “runaway shop.” It may also be viewed as a proactive form of hiring permanent replacements for (potentially) striking workers. The union options in dealing with such a challenge are to endeavor to preclude outsourcing through legislation or collective bargaining or to chase the work by organizing the unorganized, hopefully with the help of the unionized outsourcing employer. Neither option may be easy, but as the 1996 auto industry negotiations suggest, the former may be less difficult than the latter. The possibility that outsourcing from union to nonunion employer may provide unions with the power to organize from the top (outsourcer) down (outsourcee) cannot be entirely ignored as the issue of supplier “neutrality” reportedly was raised in the 1996 auto negotiations. The adverse effects of outsourcing on union political and financial power, by virtue of its impact on the level or distribution of union membership, can and may well be offset by an increase in union activism—as measured by dues levels, merger activity, organizing commitment, and political action. The adverse effects of outsourcing on union bargaining power are more problematical from the union standpoint. The effect of outsourcing, whatever its rationale or scenario, appears to be to put union labor back into competition. Thus, outsourcing constitutes yet another challenge to the labor movement in its ongoing and seemingly increasingly unsuccessful battle to take and keep U.S. union labor out of competition by proving itself able and willing to organize to the extent of the market and standardizing wages in that market.     

The community as a source of union power

In recent years, the labor movement has expressed interest in using the community as a source of union power in dealing with employers. This paper explores labor’s historical relationship with the community, examines the emphasis on more effective uses of the community in core union activities, identifies the communities with which labor aligns itself in coalitions, and discusses the strategies employed to form alliances with community groups. Finally, an analysis of some of the key barriers and limitations that affect prospects of the formation and effectiveness of union-community coalitions is presented. The author acknowledges and is grateful for the research assistance of Trudy Labovitz and Ellen Hufnagel. Also, appreciation is expressed to the following persons for valuable comments on an earlier draft: Roger Ahlbrandt, Jr., Robert Atkin, Paul Clark, Donald McPherson, Robert Perloff, Vida Scarpello, and Gerald Schoenfeld.     

Technology,international competitiveness,and union behavior

Union opposition to a free trade agreement with Mexico affirms the conventional wisdom that international trade damages the union movement. This study uses data from the March and May CPS for 1984 to 1987 to investigate this issue for production workers. The results indicate that union wages are not influenced by greater trade at medium union densities. However, at low union densities, greater imports (exports) reduce (increase) wages with the opposite pattern occurring at high union densities. The union wage pattern is consistent with product market considerations playing a strong role at low union densities and end game considerations playing a strong role at high union densities. In general, nonunion wages are not significantly impacted by greater trade. After controlling for imports and exports, nonunion wages are much greater in internationally competitive industries while union wages are not significantly greater in competitive industries. Nonunion wages appear to be more influenced by efficiency wage considerations. Thus, a Mexican free trade agreement will have little influence on union wages and should increase nonunion wages. I thank Wally Hendricks, Larry Kahn, Dan Rickman, and Doug Dalenberg for their very useful comments. All remaining errors are my own.     

How international trade affects union wages: New evidence

We reexamine the effect of import competition on union wages using the NBER Industry Data for Imports and Exports by SIC category 1987– 1994 (Feenstra, 1996). We find that the effect of import share on union wage levels and wage growth is zero by the end of the twelve-year period covering 1983– 1994. These results suggest that although import competition initially reduced union wages in the late 1970s and early 1980s, by 1987 union wages were largely unaffected by import competition. Apparently, the diminished import effect results from increased union strength over the period, particularly in highly organized industries. The authors appreciate the comments of Barry T. Hirsch and Wm. S. Mounts. David Macpherson aided in the development of our CPS data sets.     

Union democracy in the international typographical union: Thirty years later

The International Typographical Union, long cited as the one deviant case to Michel’s “iron law of oligarchy,” is examined thirty years afterUnion Democracy to determine whether or not democracy can survive in the face of today’s hostile environment. An analysis of events occurring within the union as well as the results of a case study of a large ITU local indicate that an unfavorable environment poses unavoidable challenges to democracy. The author thanks Ed Gross, Phil Kienast, Dennis Quinn, Terry Mitchell, Bob Aulerich, and Northwest Typographical Union #99 for assistance at various stages of this research.     

The division of union rents

In this paper, a median voter model that recognizes the trade-off between higher wages and lower levels of employment is presented. It is argued that a seniority-based layoff rule creates the opportunity for mutually beneficial side-payments between older and younger workers. As a result, older workers reap more of the rents of unionization than do younger workers. The resulting distribution of union rents is found to be consistent with existing empirical evidence. We would like to thank Mike Baye and Gene Grossman for most useful comments on earlier versions of this paper. Any remaining errors, of course, are solely our responsibility.     

The compensation of national union presidents: Moderating effects of union size

Over the last forty years numerous reseachers from the fields of economics, finance, and human resources management have proposed and empirically evaluated a number of models in efforts to identify determinants of executive compensation. Recently, similar research efforts have been undertaken to identify compensation determinants for union officers, both at the local and national levels. As an extension of these works, this study found measures of union financial strength, job complexity, performance and tenure in office to be directly related to national union presidents’ compensation. Although union income and relative union member earnings were the strongest determinants of officer compensation for the sample of unions as a whole, analyses of three subgroups of unions based on size revealed very different findings for large as opposed to small and medium-sized unions.     

States and the nuclear power. An international perspective

This paper analyzes the evolution of public policies on nuclear energy from an international perspective highlighting an interesting sociological paradox: the opposition to nuclear power contributed to the development of the environmental movement; and at present, the promoters of this kind of energy are including environmental arguments in their discourses, the fear of climate change and the reduction of CO₂. Although the Kyoto Protocol does not accept this kind of energy as a clean development mechanism (CDM), its promotion is carried out on the basis of environment objectives, so that the nuclear lobby is obtaining more social acceptation thanks to the environmental discourse in the last four decades. For this research, the nuclear policies at an international level are analyzed inside a wider research about the nuclear debate financed by Encuentro Foundation (Spain).     

The changing scope of union organizing

This paper presents a profile of the change in the scope of union organizing and provides empirical support for the numerous observations about the declining importance of jurisdictions in the selection of organizing targets. The scope of organizing is measured in terms of the distributions of the NLRB certification elections of 18 selected unions for 1973–1975 and 1983–1985. Diversity and concentration in organizing and its impact on election outcome are examined. The authors thank Azia Merchant for his assistance.     

The inflation-unemployment trade-offs of union members

Social preference functions between inflation and unemployment are estimated for individuals classified by union status using Gallup Poll presidential popularity data. We expected union members to assign higher weights to unemployment and lower weights to inflation than those who are not union members, but we found the reverse. Union members weight unemployment relative to inflation less than nonunion members because they weight unemployment less. Given the emphasis that trade union leaders place on reducing unemployment rather than inflation, this suggests a divergence in views between union leaders and the rank and file. The authors are indebted to Jeff Moore and an anonymous referee for helpful comments on earlier versions of this paper. Any remaining errors are our own. Smyth’s research was aided by the LSU Foundation.     

The closed and union shop in Western Europe

Conclusion But in the final analysis the cases cited above in Switzerland, Belgium, or the Netherlands are only modest exceptions or glosses on the general absence of formal union or closed-shop arrangements continental or Western Europe, and this contrasts, of course, with the United States. Whether or not this particular divergence may be reduced in the future remains to be seen. Certainly, in the U.S. with the union movement increasingly aware of its relative (to the labor force) decline in numbers, if anything one could anticipate even greater determination to insist on strong union-security arrangements in the future. (Whether this might be offest by some growth in state right-to-work laws, is problematical). Forecasting the future of the closed or union shop, or other forms of union security in Western Europe is hazardous, although this paper does suggest some grounds for development of a trend in the direction of such developments in several countries. How then in retrospect does the West European experience relate to the broader theme of the conference, the free rider issue? Trade unionism in European history has been at least as much a social and political collective phenomenon, as it has been an economic phenomenon. Economists must be able to understand workers’ relationships to unions in terms of these collective realities, if their explanations of why workers do or do not join unions, or why unions may or may not feel compelled to seek the closed or union shop are to achieve a similar reality. This paper is submitted by the author in his private capacity. It is not intended to represent the position of the Library of Congress, where he is currently serving as a senior specialist, nor the University of Wisconsin. The paper has benefited from the comments of Morris Weisz, University of Wisconsin and Bruce Millen of the U.S. Department of Labor.     

The hard and soft sides of union political money

We reach several conclusions. First, to the extent that soft money per se and issue advertising are the primary targets of campaign-finance reformists, unions contribute little, overall, to the perceived or real problem. Union soft money pales in comparison not only to total interest-group expenditures of this type but also to the hard money that labor dispenses. Moreover, with their relatively limited treasuries, unions are in no position to compete with the corporate sector. It has been estimated that the total assets of labor unions, at the combined local, regional, and national/international levels, barely exceeded $10 billion in 1995 (Masters and Atkin, 1997). Revenues were less than $13 billion.     

The choice between union membership and free-rider status

Free riders are employees who are covered by collective bargaining agreements but are not union members. This article examines the choice between free-rider status and union membership. A discriminant analysis of data from the 1988Current Population Survey identifies employee characteristics that distinguish free riders from union members. Factors influencing the decision to be a free rider, including the knowledge of available options, the preferential treatment of union members, the value of reputation, and union consciousness are discussed. A probit analysis determines the extent to which earnings and proxy measures for the value of reputation and union consciousness affect free-rider status. Suggestions are made for extending the study of the free riders and for the design of internal organizing campaigns. The authors thank an anonymous referee for helpful comments.     

The effects of davis-bacon on labor cost and union wages

Two issues have seriously hampered studies of the impact of the Davis-Bacon Act. The first is that one must make assumptions about what the distribution of wages would be in the absence of the statute. It is shown that cost estimates are quite sensitive to these assumptions. The second is that while Davis-Bacon determinations may increase nonunion wages, they are also likely to increase the bargaining power of unions leading to higher union wages. Simply estimating the impact on nonunion wages therefore underestimates the true effect. Union wages are both determined by and a determinant of Davis-Bacon wages. It is found that Davis-Bacon determinations exert a significant influence on the union’s ability to gain higher wages. I would like to thank Joseph DiMasi and David Alexander for comments and discussion on an earlier version of this paper. Special thanks are due an anonymous referee for his support and suggestions.