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.     

Unions in the 2000 election: A strategic-choice perspective

In the 2000 elections, organized labor mounted a“massive“ political effort. The AFL-CIO spearheaded a program that emphasized both grassroots and“checkbook” politics. Labor 2000, however, represented much more than an attempt to influence elections. Political action, dedicated to a“Working Families Agenda“ became a strategy of choice to elect candidates, influence lawmakers, mobilize union members, and recruit workers into the labor movement. In this paper, I examine Labor 2000 from a strategic-choice perspective. Specifically, I look at the scope and variety of labor's political effort; how labor allocated its political resources; the degree of competition it faced; and the election outcomes. In addition, I examine the effort in terms of its potential for transforming unions. Data from a variety of sources, some of which have not been previously used, are examined to put Labor 2000 into perspective as a strategy. The results indicate that labor did have some success in mobilizing union members politically. However, labor's impact proved insufficient to achieve immediate national election goals. Questions remain about the wisdom of political action as a strategy of choice, especially in terms of its viability as an instrument for institutional revival.     

Disunity within the house of labor: Change to win or to stay the course?

In September 2005, six unions representing 5.4 million workers held their founding convention as a new federation independent of the AFL-CIO. Infelicitously named “Change to Win Federation” (CTWF), the new alliance has called for a rededication of union resources and energies towards organizing the unorganized. Although CTWF has occasioned considerable interest and speculation among labor supporters and observers, it is difficult to determine why the break occurred, other than, perhaps, the personal agenda of some of its leaders. An unstated, significant reason may be a desire on the rebels’ part to operate relatively free of “noraiding” strictures of the AFL-CIO, even though the group disclaims any interest in challenging existing bargaining relationships and has penned “solidarity pacts” with some of its principal AFL-CIO competitors and with state and local units of the federation. Competitive forces are missing in the market for workplace representation services. The new group may reignite the rival unionism that spurred organized labor’s marked growth from 1935–1954, but early returns suggest an emphasis on militant posturing and on trendy, implausible themes such as “global unionism” and “subcontracting out strikes.”     

Union decertification election outcomes: Bargaining unit characteristics and union resources

Previous analysis using aggregate data has concluded that union decertification activity is “exclusively a product of market conditions.” We employ data disaggregated by local (county) labor market which permits a preliminary investigation of the importance of potential nonmarket influences that are not measurable using aggregate data, namely, the type of bargaining unit, the type of union, the type of employer, and proxies for union resources. It also allows a more precise specification of the labor market characteristics previously found to influence decertification. Our results confirm the importance of market conditions in decertification activity and outcomes, but they also suggest that the likelihood of decertification is much greater in independent unions and in industry-county combinations in which the typical employee works part-time and has limited alternative income opportunities. Institutional characteristics of the union and employer, individual characteristics of bargaining unit members, and local economic conditions are important determinants of decertification.     

To reward and punish: A classification of union political strategies

The complexity of union involvement in American politics has frequently been underestimated in the existing academic literature. For this reason, it is helpful to develop a comprehensive classification of the bargaining strategies adopted by unions as they interact with elected officeholders. This classification allows a more systematic analysis of the preconditions and associated advantages and disadvantages of various union strategies in both party nominating processes and general elections. It also shows that the decision to enter electoral politics is best seen as the beginning of a complex, ongoing, and multidimensional process rather than as the end-point of a “single-play” game. Lastly, the classification demonstrates that a wider range of political choice is available to organized labor than is commonly recognized, notwithstanding the real and continuing constraints on labor power.     

Private sector unions: The myth of decline

Conventional wisdom holds that private sector labor unions are in “crisis” due to the loss of millions of members over the past two decades which has resulted in a dramatic decline in their economic viability and political power. Financial data for selected years between 1960 and 1987 are analyzed to show that, contrary to prevailing opinion, private sector unions are financially prosperous despite membership erosion. Evidence is also presented which indicates that union political efforts and influence have increased rather than declined in recent years. Resources have been allocated to political advocacy to obtain a more favorable public policy environment for labor organizations and to achieve gains that have eluded unions in collective bargaining. The author gratefully acknowledges the assistance of Ms. Sybil Jones at the National Institute for Labor Relations Research.     

The “Helper” controversy in the construction industry

Helpers, whose role is to assist craftsmen, have been a subject of controversy in the construction industry for nearly a century. The AFL-CIO construction unions have attempted in various ways to control the work of helpers so that helpers cannot “pick up” the trade and then compete with craftsmen for jobs. With the help of the U.S. Department of Labor’s administration of the Davis-Bacon Act, these unions succeeded in almost eliminating the use of helpers on government-financed construction and most union jobs. This has meant that much unskilled and semiskilled work has been done by journeymen at skilled labor wages. The result has hurt union members and unionized contractors by aiding open-shop contractors, who use helpers extensively, to underbid their competitors and win increasing market share. This article examines the ramifications of the helper issue and related training problems from the turn of the century to the present, discusses various union policies, court decisions, and legislation affecting the issues, and concludes that the economies of utilizing helpers are sufficient to cast doubt on the efficacy or future success of current union attempts to limit narrowly the training and use of helpers. Professor Emeritus of Management; formerly, Director, Industrial Research Unit, and Chairman, Labor Relations Counsel.     

Codetermination: Union style

Many European countries have instigated a form of “industrial democracy” by legislating codetermination schemes. However, codetermination may also be accomplished without legislation. We show that unionizing an industry’s labor supply will also achieve much the same results as mandatory codetermination as long as unions are exempt from antitrust legislation. The value of “union codetermination” will yield returns beyond what economists have previously predicted.     

Union activity and the decline in American trade union membership

This paper extends recent research on the determinants of the decline in union membership in the United States. Using biennial state-level data for a set of years between 1958 and 1982, my model tests “union organizing,” “structural,” “management opposition,” and “public policy” hypotheses concerning union membership and suggests improved specifications of each of these hypotheses. The paper also examines the relative importance of each factor in explaining the decline in unionization. The results support each of the hypotheses and confirm previous findings that changes in the structure of the labor force are most important in explaining union membership decline.     

A model of monopoly and “efficient” unions with endogenous union coverage: Positive and normative implications

We present a model of a rent-maximizing union that organizes to increase its coverage of an industry and analyze monopoly and “efficient” unions in this setting. Our model is unique in that we allow for a competitive industry with free entry and find union and nonunion firms coexisting with product market equilibrium. This is achieved by incorporating the insight that firms are heterogeneous in productive characteristics. An important implication of our model is that an “efficient” union that covers a nontrivial share of the market is not efficient and may in fact be less efficient than a monopoly union.     

Unions,politics, and protectionism

Conventional models of labor relations emphasize “business unionism,” that is, collective bargaining activities and outcomes. We argue that a more realistic model of behavior incorporates the union’s role as an agent of redistribution that seeks to benefit some members and union leaders primarily at the expense of other members, nonunion employees, and consumers. Union power to redistribute wealth is obtained from the special privileges that labor organizations obtain from government. This paper demonstrates how, as political entities, unions and their employers attempt to secure government-sanctioned wealth transfers through protectionism. The authors gratefully acknowledge research support provided by the Sarah Scaife Foundation and the Earhart Foundation.     

The quantity and quality of new immigrants to the US

Since immigration to the US began to accelerate in the 1970s, economic and social policy issues surrounding immigration frequently raise concern and generate debate. These policy debates often aim to mitigate the costs of immigration and augment the benefits. Key to this is understanding the characteristics of immigrants, especially those related to economic success and integration. A commonly accepted finding in the economic literature regards the declining economic “quality” of successive immigrant cohorts as measured by differences in entry wages across cohorts. In this paper, I refine our understanding of immigrant cohort quality. I show that increasing competition in the labor market among immigrants can explain a significant portion of declining “quality”. This result suggests that labor market interactions are as important to immigrant economic integration as their inherent “quality”.     

Ellen Swallow Richards: “Humanistic Oekologist,” “Applied Sociologist,” and the founding of sociology

Best known as the first woman graduate from MIT, and the founder of Home Economics, Ellen Swallow Richards was a Progressive Era reformer who applied social science research techniques to problems of concern to early sociologists. As a mentor to many women who joined the “Cultural” and “Pragmatic” feminists of Hull House, her secular theories of “Oekology” and “Euthenics” challenged many of the models of social change prevalent in the Cambridge and Chicago academic communities. Her most radical contribution as a feminist was her assertion that women’s unpaid labor in the home played a vital economic role in maintaining capitalism and was the ultimate source of their second-class citizenship. She shared a belief in democracy and education as a feminist “Pragmatist,” and laid the groundwork for the contemporary “Ecofeminist” movement. Although she was a biochemist by training, she engaged several genera-tions of women in the application of scientific methods to the solution of contemporary social problems. As a political organizer, much of her legacy is reflected in the accomplishments of the reform organizations she was instrumental in founding.     

The returns to seniority in academic labor markets

Although earnings and seniority are believed positively related in most labor markets, the earnings of academics were thought to be an exception to this rule. Using the National Survey of Postsecondary Faculty, from 1993, we find that earnings and seniority are positively related once adequate controls for past labor market mobility are included among the regressors. In particular, we find that individuals who are currently tenured at their initial job have the steepest seniority profile of any group we examined. We also find a handsome premium paid to individuals who are hired-with-tenure. These results suggest a market characterized by competitive “raiding” of top faculty.     

Activism and Willingness to Help in Union Organizing: Who Are the Activists?

Research on union renewal often cites a critical role for lay activism. This study examines determinants of activism and activism intentions among a broadly representative sample of U.S. union members. Hypotheses are developed from theory and previous research on union commitment and participation. Results for current activism are generally consistent with prior work. Extending the model to future intentions to help with organizing, an interesting contrast is that pro-union attitude influences appear much more important than do union instrumentality perceptions. This suggests that “covenant” rather than “exchange” concerns are more salient for this form of activism. Findings for ideological orientation support this interpretation.     

Mandatory agency shop laws as an explanation of Canada-U.S. union density divergence

X. Conclusion During a period of strength the Canadian labor movement was able to secure enduring legislation providing for their institutional protection. In the 1940s Justice Rand justified his decision by invoking the spirit underlying the operationalization of a collective bargaining regime. In the 1990s the Canadian Supreme Court continued this tradition by refusing to hollow out unions’ rights to a secure financial base and autonomy in decision making. Between the 1940s and the 1990s, the unions' voice was heard in legislatures throughout the country through the NDP. Canadian unions now benefit from, among other things, first-contract arbitration, job protection for striking workers, and a card process of union certification. Thus, although current Canadian attitudes towards unions show considerable detachment, the embeddedness of legal protections helps hold such challenges as RTW in Alberta at bay. During the same years, American labor was unable to translate its strength of numbers into gains in public policy: in fact, as union density peaked, legislation such as the Taft-Hartley Act and Landrum-Griffin Act eroded union institutional protections. An earlier version of this article appears as “Union Security in Canada,” in The Internal Governance and Organizational Effectiveness of Labor Unions, edited by S. Estreicher, H. C. Katz, and B. E. Kaufman, Kluwer Press. We are grateful for their permission to reproduce portions of the chapter. Comments from Dennis Nolan (University of South Carolina) and John Godard (University of Manitoba) are greatly appre-ciated. The article benefited from their excellent suggestions. Research assistance from Fred Jacques is acknowledged. We follow the Canadian spelling of “labour” for accuracy when it is used in citations, quotes, and titles.     

Labor arbitrators’ performance: Views from union and management perspectives

Analyses were carried out relating performance evaluations of labor arbitrators by union representatives to similar evaluations of the same arbitrators by management representatives. It was found that these evaluations are either unrelated or, in some cases, negatively related. An important consideration in the evaluations is whether an arbitrator’s awards tend to favor union or management. These results are dicussed in terms of the disparate values and “good arbitrator” views of arbitrator performance. Both views find some support.     

Exclusive representation in public employment: A public choice perspective

Public sector unionization has grown rapidly in recent years, and research has suggested that among the reasons for such growth is legislation granting special privileges to public employee unions. This paper examines one form of legislative privilege, exclusive representation, from a public choice perspective. It is shown that exclusivity reduces employees’ freedom of choice, increases the welfare of union leaders at the expense of union members, limits employment opportunities to “outsiders,” entrenches the monopoly provision of public services, and generates conflict and instability in labor relations.