Why Study Labor Relations? While unionized proportion of labor force declining,

understanding of labor relations not less important Unions facing most serious challenge to their power and

influence since passage of Wagner Act 75 years ago 1955: ~35% workers unionized Today: 12% But nearly half of Fortune 500 orgs have some unionized workforces

Labor relations is value-laden topic Professionals in field believe in seeking balance between interests of

mngt, Ees, and society as whole Pro-NLRA position: Ees have protected right to organize and

bargain, Ers have right to resist, actions of both regulated by law

Importance of Employment Relations Investments in advanced technology alone are

not enough Auto industry case suggests that

implementing advanced technology wo/complementary changes in HR strategies did NOT produce significant improvements in quality or productivity Alternative of NUMMI Helps to involve Ees in early stages of design and

implementation

“Toyota Set to Close California Factory” Toyota pulled plug on plant it owned jointly w/ the former

GM; first time Toyota involved in closing a factory in U.S. (Will re-open as Toyota-Tesla joint venture production facility) Plant had mostly been money-loser since Toyota and GM set

up partnership in 1984 GM abandoned its ownership in NUMMI in July 2009, as part of

bankruptcy Plant had 4,700 UAW-represented workers NUMMI last auto plant in CA still in operation

Toyota needs to cut excess production capacity and end losses Co expected to report for second year in a row

Source: Wall Street Journal, 8/31/09; www.wikipedia.com

“New Deal” Employment Relations System NLRA (1935) established collective bargaining as

preferred method of setting wages, hours, working conditions

Today, growing sectors of economy are largely non-union

More socially and politically acceptable for mngt to embrace “union-free” preference than at any point since WWI

NLRA expected to give Ees freedom of choice, mngt expected to confine opposition to legal means Not clear that is case

“New Deal” Employment Relations System Are interests of Ers and Ees opposed or the same? “New Deal” system struck bargain:

Unions would have role in setting wages, hours, working conditions Mngt would retain initiative re: strategic decisions

“Job control unionism” Highly formalized contracts, grievance procedure to resolve disputes,

wage rate attached to job, seniority rules System grew out of “scientific mngt” (note: MNGT 305 vocabulary)

Concern today w/reality of global competition, need for mngt flexibility, Ee desire for job security

Business strategy question: low-cost vs. differentiation? Global compensation costs

Auto Industry Big Three had 59% of light-vehicle market in 2004, down

from 75% in 1980 Projected to decline to 52% by 2008 Foreign-owned nonunion competition increasing in remaining highly

profitable segment – pickups and SUVs (at least, prior to increase in gas prices)

GM (most profitable of Big Three at time) earned $700/vehicle in N.A. in 2002, Toyota $1200/vehicle in N.A. Big part of story is benefits costs – foreign-owned workforces younger,

pay less in pension and health-care benefits GM had 2.5x as many retirees as active workers in 2002

First six months of 2005, GM lost $1227/vehicle produced; Ford lost $139/vehicle

UAW membership half of 1980 level of 1.4m Source: Wall Street Journal, 9/8/03; Detroit Free Press, 8/30/05

Auto Industry Health and retirements costs per vehicle

GM $1,360

Ford $734

Chrysler $631

Toyota $180

Honda $107 Includes active and retired ees For Toyota and Honda, U.S. plants only

Source: Business Week, 9/22/03

Case Study: The Auto IndustryThen… Now…

Journal of Labor Research (Fall 1999)

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THE OBJECTIVES OF THE EMPLOYMENT RELATIONSHIP• Efficiency

• Economic performance-the effective use of scarce resources (competitiveness, productivity, quality, economic prosperity) Efficiency equals Pareto optimality

No one can be made better off without making someone else worse off

• Equity• Fair employment standards--fair outcomes and treatment

(justice)• Voice

• Meaningful input into decisions (discretion, industrial democracy) 

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Labor RelationsLABOR RELATIONS

examines how employee representation, typically through independent labor unions, contributes towards achieving a BALANCE between efficiency, equity, and voice.

EFFICIENCY EQUITY

VOICE

 

U.S. labor law protects union activity to promote efficiency, equity, and voice.

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Thickness of U.S. Union Contracts

First UAW-General Motors Contract

(1937)

Contemporary UAW-General

Motors Contract (circa 2000)

Contemporary UAW-Saturn

Contract (circa 2000)

National Agreement

(2”)

Local Supplement

( 3/8”)

(1/16”)

State of Unions Today Membership

In 2009, 12.3% of employed wage and salary workers were members of unions (up from 12.1% in 2007)

15.3 million workers were members of unions, another 1.6 million were represented by a union but not a member

Distribution by Industry Private sector: 7.2%; public sector: 37.4% Transportation and public utilities: 22.2% Construction: 14.5% Manufacturing: 10.9% Mining: 8.6%

Declining Union Membership

State of Unions Today Distribution by Gender

Males: 13.3%; females: 11.3% Gap was 10 percentage points in 1983 In 1962, 19% of union members were female, in 2009, 45% 2/3 of new union members are female

E.g., UAW represents bargaining unit of curators, educators, librarians at Museum of Modern Art in NYC, faculty at Carroll College (WI)

Distribution by Race White: 12.1%; black: 13.9%; Hispanic: 10.2%

Geographic Distribution 25.2% of workforce unionized in NY, 3.1% in NC IN: 10.6%, IL: 17.5%, KY: 8.6%

Earnings Differential

State of Unions Today

Source: U.S. Department of Labor, Bureau of Labor Statistics, January 2009.

State of Unions Today Evidence of Union Decline

Membership NLRB Elections

Number of elections declining However, some unions adopting other methods for obtaining

Er recognition – ‘card checks’

Political Power Public Image

Some 80% believe Ees should have right to join union, while about one-half of non-union Ees say they would join union if one existed at their workplace (up from 30% in 1984)

State of Unions Today What Workers Want

More say at workplace than they now have Both to improve quality of work life and to make firms more

productive

More participation as individuals and as part of group as well

Some degree of independence in dealing with mngt, but… Cooperative relations w/mngt

Believe workplace organization can only be effective if it has mngt participation and support

Believe mngt resistance is primary reason for lack of desired say Source: Freeman and Rogers (1999)

State of Unions Today Reasons for Decline

Economic Factors Union strength was in decaying industrial sector,

forced to become more competitive

Shift in Mngt Tactics

Characteristics of American Labor Movement Limited Goals

Seeks greater share of wealth for its members Central Role of Collective Bargaining

Union bargaining power comes from ability to strike Power of strike determined in part by extent to which Ees

organized Traditionally opposed gov’t involvement in settling

bargaining disputes Working with Existing Political Parties

Legislative goals supplement bargaining demands (e.g., minimum wage)

Characteristics of American Labor Movement Support for Industry

Unions better able to achieve goals when industry in strong economic position

“The worst crime against working people is a company that fails to operate at a profit” (Samuel L. Gompers, first president of American Federation of Labor)

Limited Role in Plant Mngt Evolving to some extent today

Decentralization Local unions more important in U.S. than elsewhere AFL-CIO has little control over members, doesn’t play

significant role in organizing or bargaining

New Directions?

Ethics in Action: Honda’s Restrictive Hiring Policy in Indiana Why do foreign auto companies focus on

operating union-free in the U.S.? Why do you think Honda implemented its

restrictive hiring policy at its Greensburg plant? Is it discriminatory?

Should Honda’s restrictive policy be illegal? Is it ethical?

Global Snapshot of Labor Relations

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United States

One example of an attempt to balance the rights of labor and capital, and balance efficiency, equity, and voice…but there are alternatives...

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Mexico

Representative of other developing countries: labor relations controlled by the state; growing tension as independent labor movements emerge and international competitive pressures intensify

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European Union27 European countries progressing towards an economicand monetary union, but Integration Requires Standards

The EU’s Solution (regarding labor): The Charter of Fundamental Social Rights of Workers Non-binding declaration of workers’ rights, including

• Freedom of association and collective bargaining • Information, consultation, and participation rights

For specific points to be binding, they must be passed into EU legislation (generally requiring unanimity) or enacted as national laws

Conflicting pressures of standards, integration, competitiveness, and autonomy

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Great Britain

Illustrates drawbacks of a voluntary system?

30

Germany

Generally representative of northern European countries, but is the system flexible enough for the 21st century?

31

Australia

Is decentralization and deregulation the answer to international competitive pressures?

32

Japan

A model for the 21st century? Or the domination of labor?

Labor and Religion AMERICAN BAPTIST

"We reaffirm our position that workers have the right to organize by a free and democratic vote of the workers involved. This right of organization carries the responsibility of union leadership to protect the rights of workers, to guarantee each member an equal voice in the operation of its organization, and to produce just output labors for income received."

American Baptist Churches Resolution, 1981

Labor and Religion CHRISTIAN REFORMED CHURCH OF

AMERICA "Church membership and membership in a labor union

are compatible as long as the union does not warrant or champion sin in its regular activities. Church members should discontinue membership in any unions whose common practices are clearly in conflict with the principles of the Word of God. Christian conscience cannot condone membership in a union if it continues in sinful practices in spite of protests against them."

Labor and Religion EPISCOPAL CHURCH

"We reaffirm the right and desirability of workers in the United States to organize and form unions. ...We decry the growing wage of anti-unionism mounting in the nation today which asks people to forget the struggles that led to this form of negotiation as a just way to settle differences."

Urban Bishops Coalition of the Episcopal Church, 1982

Labor and Religion ISLAM

"When you hire, compensate the workers and treat them fairly."

Prophet Mohammed, The Holy Qur'an

Labor and Religion JUDAISM

"Jewish leaders, along with our Catholic and Protestant counterparts, have always supported the labor movement and the rights of employees to form unions for the purpose of engaging in collective bargaining and attaining fairness in the workplace."

Preamble to Workplace Fairness Resolution, Annual Convention of the Central Conference of American Rabbis, 1993

Labor and Religion ROMAN CATHOLIC

"Among the basic rights of the human person must be counted the right of freely founding labor unions. These unions should be truly able to represent the workers and to contribute to the proper arrangement of economic life. Another such right is that of taking part freely in the activity of these unions without fear of reprisal.”

Pastoral Constitution of the Church in the Modern World, Second Vatican Council, 1965

Labor and Religion SEVENTH-DAY ADVENTIST

"A Seventh-Day Adventist cannot either join or support a labor union because: 1) His allegiance to Christ forbids it. 2) The Scriptures do not permit it. 3) The Law of God rejects it. 4) The Spirit of Prophecy counsels against it. 5) The law of service does not harmonize with it. 6) It is contrary to baptismal vows. 7) The Seventh- Day Adventist Church clearly exhorts otherwise."

Seventh-Day Adventists and Labor Unions by W. Melvin Adams

Labor and Religion SEVENTH-DAY ADVENTIST

Operates largest Protestant nonprofit health care system in U.S., w/ 38 hospitals in 10 states, 23 nursing homes, and 44,000 ees No ees are in U Has argued that NLRB has no jurisdiction because

hospital was religious institution and to force it to recognize or bargain w/ U would violate First Amendment and Religious Freedom Restoration Act NLRB disagreed

Source: New York Times, 10/9/06