Chapter 9

Section 3: Organized Labor

Labor & Labor Unions

• Wages are determined by the forces of supply & demand• Competition among firms keeps a

worker’s wages close to their level of productivity

• A competitive labor market helps prevent low pay & dangerous working conditions because workers will leave such firms to work elsewhere• 1 in 7 workers belongs to a union or

less than 14% of U.S. workers

Key Events in the U.S. Labor Movement

Year Event1869 Knights of Labor founded

1911Fire in the Triangle Shirtwaist Factory in New York kills 146, spurring action on workplace safety

1932 Norris-La Guardia Act outlaws “yellow dog” contracts, gives other protection to unions

1938 AFL splinter group becomes the independent Congress of Industrial Organizations (CIO), headed by John L. Lewis

1935 Wagner Act gives workers rights to organize

1955 AFL and CIO merge to create AFL-CIO1970s Rise in anti-union measures by employers

1990s Increase in public-sector unions, including teaching assistants at some universities

The Labor Movement• The union

movement took shape over the course of more than a century.

• Workers in the 1800’s–Arose in response to the Industrial

Revolution (factory jobs)–Workers 12-16 hour days, 7 days a

week, for meager wages

–Men, women, & children as young as 5 operated clattering machines so dangerous that many people lost their hearing, sight, & fingers or limbs• Injured workers often lost their jobs

• Unions take hold–1790’s skilled workers formed unions to

protect their interests–Tool of unions was the strike–Courts initially regarded unions as illegal• Employers simply fired & replaced

workers who caused trouble by trying to organize

• Man who truly started the US labor movement was Samuel Gompers–Focused on higher wages, shorter

hours, & a safer working environment–1886- founded the American

Federation of Labor (AFL)

Employer Resistance

• Viewed strikers as threats to free enterprise & social order• Identified & fired union organizers • Forces workers to sign “yellow-dog”

contracts- agreement in which workers promised not to join a union –Yellow was slang for coward

• Used court orders called injunctions to order striking employees back to work• Some hired their own militias to

harass union organizers

Congressional Protection

• Expansion of workers rights in the 1930’s gave rise in union strength• Membership peaked in the 1940’s at

about 35% of the nation’s nonfarm workforce• Union controlled the day to day

operations of businesses from shipyards to garbage collection to steel production

• Amassed billions of dollars in union dues to cover the costs of union activities including organizing, making political donations, & providing aid to striking workers

20% or +15-19.9%10 – 14.9%5-9.9%4.9% or -

Source: U.S. Dept. of Labor, BLS

Labor Issue: Unions

Decline of the Labor Movement

• As they grew, some unions began to abuse their power

• Some sought to preserve outdated & inefficient production methods in order to protect jobs & benefits –Companies that badly needed to improve

efficiency to stay competitive, found that unions could be an obstacle

• Reputations of unions suffered because of their links to organized crime• Corrupt crime bosses gained a

foothold in many local unions & used fund to finance illegal operations

• Several factors have led to declines in union membership since the 1950s:–“Right to Work” Laws• The Taft-Hartley Act (1947) allowed states

to pass right-to-work laws. • These laws ban mandatory union

membership at the workplace.• Today, most right to work states are in the

South, which has a lower level of unionism than other regions

• Loss of traditional strongholds–One theory for the decline suggests that

structural changes in the US economy have reduced membership–Economic Trends• Unions have traditionally been strongest in the

manufacturing sector, representing blue-collar workers, or workers who have industrial jobs. • Blue-collar jobs have been declining in number

as the American economy becomes more service-oriented.

• Certain manufacturing industries have traditionally employed large numbers of union workers–Have been hurt by foreign competition

recently–Many individual firms have laid off

union workers or shifted operation to countries where labor is cheaper

• The rising proportion of women in the labor force has effected membership–Women are less likely to join

• Seeking to reduce their production costs, some industries have relocated to the South

Fulfillment of Union Goals• With the government setting standards

for workplace safety, & with more benefits being provided by both private & government sources, some claim that the union membership has decreased simply because their goals have been fulfilled by other organizations.

• Safe workplace, shorter hours, pensions, unemployment insurance, Social Security benefits

Labor & Management

• A union gains the right to represent workers at a company when the majority of workers in a particular work unit vote to accept the union

• After that the company is required by law to bargain with the union in good faith to negotiate an employment contract

Collective Bargaining

• The process in which union & company representatives meet to negotiate a new labor contract.

• Union contracts generally last 2-5 years & can cover hundreds of issues

• The resulting contract spells out each side’s rights & responsibilities for the length of the agreement

• Unions come to the bargaining table with certain goals that set the agenda–Wages and Benefits• The Union negotiates on behalf of all

members for wage rate, overtime rates, planned raises, and benefits• If wages go too high, the company may

lay off workers to reduce costs

Working Conditions• Safety, comfort, worker responsibilities, and

other workplace issues are negotiated and written into the final contract.

Job Security• One of the union’s primary goals is to secure

its members’ jobs. • The contract spells out the conditions under

which a worker may be fired.

• If a union member is discharged for reasons that the union believes to be in violation of the contract, the union might file a grievance (formal complaint)–Procedure usually involves hearings by

a committee of union & company representatives

Strikes & Settlements

• A strike is the union’s ultimate weapon • If no agreement is met between the union and

the company, the union may ask its members to vote on a strike. • A strike is an organized work stoppage intended

to force an employer to address union demands. • Strikes can be harmful to both the union and

the firm.

• Can cripple a company• Some firms can continue to function by

using managers to perform key tasks or by hiring nonunion “strikebreakers”• If a company can withstand a strike, it is

in a good bargaining position

• A long strike can be devastating to workers, since they don’t get paid–Many unions provide some

financial aid to their workers during long strikes, but less then their wages

• To avoid the economic losses of a strike, a third party is sometimes called in to settle a dispute–Mediation•A settlement technique in which a neutral

mediator meets with each side to try and find an acceptable solution that both sides will accept.•Decision reached is nonbinding

Arbitration• If mediation fails, talks may go into

arbitration, a settlement technique in which a third party reviews the case & imposes a decision that is legally binding for both sides.

• Collective bargaining usually goes smoothly with few strikes• In 2004 there were 17 major strikes

involving 171,000 workers