Labor’s inequality of bargaining power: Changes over time and implications for public policy

A major justification for enacting the Wagner Act and encouraging collective bargaining was that in the wage-determination process individual workers suffer from an inequality of bargaining power vis-á-vis employers. This critical review of this justification examines the analytical meaning of the concept of an inequality of bargaining power, the factors responsible for this inequality, the change that has taken place in labor’s disadvantage since the 1930s, and the implications for national labor policy. It is concluded that some employers continue to have significant market power over wages but that the extent and degree of labor’s disadvantage in bargaining has diminished substantially since World War II. The implication is that the Wagner Act’s protection of the right to organize remains in the social interest but that the bargaining power of labor unions should be further circumscribed to preserve a balance of power in wage determination. The author thanks Paul Swiercz for helpful comments.     

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’s inequality of bargaining power: myth or reality?

This article responds to Morgan O. Reynolds’ paper which questions the inequality of labor’s bargaining power by addressing four issues: (1) the economic case for collective bargaining, (2) the concept of an inequality of bargaining power, (3) the extent of employer market power, and (4) the role of public policy. The author thanks Jack Blicksilver for helpful comments.     

Partial strikes under the railway labor act: The need for a doctrine of unprotected concerted activity

In light of use by airline unions of partial-strike tactics, such as concerted refusals to bid for overtime work and so-called ” CHAOS” tactics involving unannounced refusals to fly after passengers have been ticketed and are ready to board, the authors examine whether the Railway Labor Act (RLA) should be interpreted to permit employers to discipline employees for engaging in such tactics, or whether these are a protected form of economic pressure. Although in many respects bargaining duties and economic weapons under the RLA are read consonant with precedents under the National Labor Relations Act (NLRA) (which governs all industries other than rail and air transport), there are a few decisions suggesting that during the period when self-help may be resorted to, employees can engage in partial strike activities as long as they violate no court order but are subject to permanent replacement in limited circumstances. These decisions, the authors submit, fail to take account of Supreme Court decsions since the 1930s that some economic pressures by unions, such as slowdowns and sitins, may not violate the labor laws but nor are they protected by those laws so as to immunize partial strikers from employer discipline. These decisions are not based on unique features of the NLRA. Rather, they give recognition to the background assumptions of Congress that employers may act to protect their property interests as long as they do not run afoul of NLRA or RLA protections and that employees who engage in partial-strike activities are subject to employer discipline even where not strictly necessary to maintain operations. Moreover, these tactics skew the bargaining process by giving employees an essentially risk-free gambit to pressure their economic position through planned disruption of carrier operations. Professor Estreicher is also labor and employment counsel to O’Melveny & Myers, LLP. The views expressed herein are the authors’ and should not be attributed to any organization. Hannah Breshin and Tom Jerman of O’Melveny & Myers, assisted the authors with this article. We also thank Professor Herbert Northrup for his helpful comments.     

Does “fighting back” make a difference? The case of the Canadian auto workers union

Union revitalization requires mutually reinforcing efforts in organizing, political action, and collective bargaining. We examine the experience of the Canadian Auto Workers (CAW). In addition to membership growth, three bargaining outcomes are analyzed: (1) wage gains; (2) the ability to resist a trend towards longer duration collective agreements; and, (3) success in negotiating same-sex spousal recognition. In each of these areas the CAW has articulated a policy and then made gains in both absolute and relative terms. The CAW’s renewal strategy links these bargaining goals with social activism and membership growth through mergers and new organizing.     

Union membership,economic rents,and migration behavior

This study represents an extension of the human capital paradigm as it relates to an individual’s decision to migrate. It differs from previous studies by incorporating union membership, a labor market variable, into the model. In effect, the National Labor Relations Act of 1935 granted a monopoly bargaining position to unions. The theoretical implication of a union’s monopoly bargaining position is that union wage levels will increase relative to nonunion wages. The increase of relative wages results in union membership granting a property right that possesses positive net present value and hence reduces an employed union member’s probability of migrating. Additionally, the supra-competitive remuneration of union members results in a surplus of labor supplied to union firms. Employers respond by using quality screening to hire workers from the larger labor pool. As a result, unemployed union members will on average possess higher levels of human capital, which will increase their probability of migrating above that of their unemployed nonunion cohorts.     

External legitimacy of unions: Trends in New Zealand

Just 5 years ago, at the pinnacle of their success, New Zealand unions negotiated collective agreements covering over 720,000 employees and were successful in persuading some 603,000 of these employees to join. In May 1991, the Employment Contracts Act, which withdrew totally any state-endorsement or sponsorship of union activity, radically altered their position. Union membership fell by around 40 percent in the four years since the enactment of the Act — from 603,000 to 376,000 members in December 1994; the overall number of unions remaining has declined to around 80; a number of unions have become insolvent and have filed for liquidation; staff retrenchments within unions has been widely reported and, in some cases, this has led to a reduction in services and capacity. Data for 1993 suggest that union decline may have “bottomed out” with unions losing fewer than 20,000 members in that year. However, decline is again apparent in the 1994 data. The removal of external legitimacy has had a significant impact on unionization rates. We review the conditions under which the restoration of legitimacy would bring about a reversal of union decline.     

The power and pay of international union officials

Secondary data are used to examine the relationship between the power of international union presidents and their pay. The analysis supported the hypotheses that (1) power and pay were positively related and (2) the relationship is more pronounced in unions that are larger and are less effective in bargaining as well as during periods characterized by conflict over the president’s role. While highlighting the political dimensions of union organizations, the data also support previous studies that found international union officers’ salaries to have a “rational” basis in the union’s bargaining effectiveness. I am indebted to Gabriella Belli for help with a number of statistical issues.     

Exclusive representation and american industrial democracy: An historical reappraisal

Exclusive representation in the public sector has been defended on the basis of private sector experience, which purportedly demonstrates that stable, orderly, peaceful collective bargaining is otherwise impossible or impracticable. Nevertheless, nonexclusive collective bargaining was the norm in most industrial nations when the Wagner Act was passed in the 1930s, and it still is the rule outside the U.S. Historical evidence is presented for the thesis that exclusivity was adopted in the private sector primarily in order to pave the way for a corporative state. Peaceful, orderly collective bargaining by “responsible” unions in a competitive economy was a minor, secondary consideration. Editor’s Note: This Symposium was jointly sponsored by theJournal of Labor Research and the National Institute for Labor Relations Research and was held February 10, 1984 at the Westpark Hotel, Rosslyn, Virginia.     

Labor laws: Then and now

Our thesis is that the statutes governing labor market behavior were passed in a vastly different economic and institutional environment from that which prevails today. The underlying assumptions used to justify those laws are for the most part unrealistic in today’s altered economic climate. The problems of the 1930s or the 1960s are not the problems of the 1990s, and the solutions have changed as well. We show this by exploring four areas of labor law: collective bargaining, wages and hours, income security, and civil rights. The authors gratefully acknowledge research support provided by the John M. Olin Institute for Employment Practice and Policy.     

Pensions and the uses of ignorance by unions and firms

Pensions are contingent claims contracts that are often fashioned by collective bargaining under conditions of asymmetric information and market power. Pensions are not an employer’s or a union’s optimal contract; they represent compromise. Employers use pensions to minimize labor costs and to adjust to market changes. Pensions help unions improve and protect their members’ work lives and help unions to survive as institutions. When workers’ estimations of their pensions differ from their employers’ estimations a moral hazard can exist. Less mobile workers and those with less influence subsidize the pension benefits of other workers or reduce an employer’s costs. Econometric results based on data from the President’s Commission on Pension Policy show that certain workers, namely women, overvalue their plans, which provides an opportunity to lower labor costs and redistribute benefits. Unions have a contradictory effect on information. The author thanks participants in the Cornell University Collective Bargaining workshop and the Harvard Labor Economics workshop. I especially thank James Medoff for his comments.     

The market’s reaction to two supreme court rulings on American labor law

The Supreme Court has gradually narrowed the number of persons who are protected by the National Labor Relations Act should they seek to form or join a union, in part by ruling that professionals who also serve as supervisors of less skilled employees are not covered by the Act. The market’s reaction to the two latest rulings, Health Care & Retirement Corp. and Kentucky River is researched herein. Shareholder wealth rose for health care firms in response to each ruling. The market response was greater for the latter decision, signaling investor beliefs regarding the benefit to employers and the likely future direction of court decisions.     

Trade Unions,Gender and Claims under Irish Employment Equality Legislation

This article examines trade union activity in representing claimants at Equality Officer investigations under the Republic of Ireland's Employment Equality Act, 1977 . This is set in the context of traditional trade union support for gender segregation in employment and the observation that trade union decision‐making bodies still tend to be heavily male dominated. Use of the Act by trade unions is shown to have been mainly reactive rather than strategic. Evidence is presented that, while some individual union officials actively supported claims, this was not necessarily typical. It is argued that this represented a lost opportunity by trade unions to push the equality agenda forward and is consistent with continuation of the patriarchal trade union tradition. The article concludes by arguing that significant change to this approach is unlikely, given current gendered patterns of trade union governance.     

Teachers’ collective bargaining outcomes and tradeoffs

This study uses data from Illinois and Iowa public school districts to examine the factors that influence the wage and nonwage bargaining outcomes negotiated by teachers’ unions. Tradeoffs between wage and nonwage outcomes and among nonwage contract provisions are also examined. The results provide some evidence that tradeoffs exist between wage and nonwage outcomes. The findings also reveal differences in outcome and tradeoff patterns across the states for issues unrelated to union security. I am grateful to the Illinois State Board of Education, the Iowa Department of Public Instruction, and the Iowa Public Employment Relations Board for providing the data analyzed in this study. I am also grateful to the Institute of Labor and Industrial Relations at the University of Illinois and the Columbia University Graduate School of Business for research support, and to Jack Fiorito, David Lewin, Susan Schwochau, Donna Sockell, and an anonymous referee for helpful comments on an earlier version of this paper.     

A Review of Kyoto Protocol Adoption in Russia: Joint Implementation in Focus

Russia’s role in ‘animation’ of the Kyoto Protocol was crucial. Its initial vacillation on ratification was predominantly due to political bargaining with the EU. Domestic economic rationales [i.e. impacts of emission trading and Joint Implementation (JI) projects] were important to a much lesser extent and environmental motives did not seem to play any role in the decision. Since the Protocol entered into force, there have been significant delays in complete establishment of policy implementation frameworks, which are necessary for Russia to start benefiting from JI and emission trading. Only recently, in 2007, have GHG inventories and a national registry been established and the responsibilities for implementation of the Protocol and JI among the government departments have been distributed only to a certain extent. Some constraints hindering JI projects, such as vague legislation, an unfavourable economic climate, lack of commitment to JI projects, corruption, xenophobia, state and agency ‘capture’ still remain.      

Fighting in the legal grey area: an analysis of the German Federal Court of Justice decision in case preimplantation genetic diagnosis

According to the German Embryo Protection Act, PGD has been banned in Germany since 1990; one reason is the legislature’s avoiding to insert a revision clause regarding medical advance into the law. The ruling of the German Federal Court of Justice of July 2010 shows the problems resulting out of this approach and declares PGD to be permitted in certain cases. The article discusses the necessity for, as well as the problems of, an interdisciplinary dialogue in the field of reproductive medicine.     

Protective service unions’ political activities and department expenditures

This paper examines how police and firefighter unions’ political activities influence departmental expenditures. Unlike prior research, we measure unions’ political activity independently of union bargaining power. Results indicate that a protective service union’s electoral activities positively affect departmental expenditures, and these effects are attributable to union political power rather than multilateral collective bargaining power. The authors thank Steve Blumenfeld, Wally Hendricks, Asghar Zardkoohi, and an anonymous referee for their excellent comments and suggestions.     

The best interests of the child? The role of the court welfare officer

SUMMARY. The current developments in practice, where children are involved with the courts, will form a fundamental part of work with children under the 1989 Children Act. One of the key actors will be the Court Welfare Officer, part of the Probation Service. This article reviews the role as it has developed in recent years, pointing out the different practices which coexist, even in the same area. Using evidence from a small scale research study in one Service, the article argues for a clearer and more consistent role, which can only really develop under a Family Court Welfare Service     

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.