Transcript Labor Unions - Widener University

Labor Unions
Supply & Demand for Union Services
Demand Side: Other things equal, the higher the
price of union services (as measured by monthly dues,
initiation fees, & the value of time expected to devote
to union activities), the lower the proportion of
workers that will want to join a union.
(We will discuss union services or benefits shortly.)
Supply Side: It is costly to provide union services.
The higher the price of union services the more
willing the unions are to provide the services.
Supply & Demand for Union Services
Price of Union
Membership
% of Work Force
Unionized
Supply & Demand for Union Services
Price of Union
Membership
Demand
% of Work Force
Unionized
Supply & Demand for Union Services
Price of Union
Membership
Supply
% of Work Force
Unionized
Supply & Demand for Union Services
Price of Union
Membership
Supply
Demand
% of Work Force
Unionized
Supply & Demand for Union Services
Price of Union
Membership
Supply
equilibrium
Demand
% of Work Force
Unionized
Supply & Demand for Union Services
Price of Union
Membership
Supply
equilibrium
P*
Demand
% of Work Force
Unionized
Supply & Demand for Union Services
Price of Union
Membership
Supply
equilibrium
P*
Demand
Q*
% of Work Force
Unionized
Union Membership
In 2011, 11.8 percent of employed wage and
salary workers were union members.
Union membership varies with many factors.
2008 Union Membership (% of employed workers)
by Gender, Race, & Hispanic Ethnicity
Group
% Union
Members
White Men
13.2
White Women
11.1
Black Men
15.9
Black Women
13.3
Hispanic Men
11.0
Union membership
is higher among men
than among women.
Blacks are more
likely than Whites to
be union members,
& Hispanics are less
likely than nonHispanics to be
union members.
10.0
(From the Statistical Abstract of
the United States, 2010.)
Hispanic Women
2008 Union Membership (% of employed workers)
by Age
Group
% Union
Members
16 to 24 yrs old
5.0
25 to 34 yrs old
10.7
35 to 44 yrs old
13.4
45 to 54 yrs old
16.0
55 to 64 yrs old
16.6
65 yrs & older
9.0
Union membership
was higher among
middle-aged
workers & lower
among younger &
older workers.
(From the Statistical Abstract
of the United States, 2010.)
2008 Union Membership (% of employed workers)
by Sector
Sector
% Union
Members
Public Sector
36.8
Private Sector
7.6
Union membership
is much higher
among the public
sector (government
employees) than
among the private
sector.
(From the Statistical Abstract
of the United States, 2010.)
2008 Union Membership (% of employed workers)
by Industry
Industry
% Union
Members
Transportation
& Utilities
22.2
Construction
15.6
Information
12.7
Manufacturing
11.4
Mining
6.9
Wholesale & Retail Trade
5.2
Financial Activities
1.8
Union membership
varies with industry.
Membership is
considerably greater
in transportation,
construction, &
manufacturing than
in other industries.
(From the Statistical Abstract of
the United States, 2010.)
2008 Union Membership (% of employed workers)
by Selected States
State
% Union
Members
New York
24.9
North Carolina
3.5
Pennsylvania
15.4
New Jersey
18.3
Delaware
13.4
Maryland
12.6
Union membership
ranged from a low
of 3.5% for North
Carolina to a high
of 24.9% for New
York.
(From the Statistical Abstract
of the United States, 2010.)
Union Shop
An employer is a union shop if a worker must join
the union within a specified time period in order to
remain with the employer.
The argument in favor of the union shop concerns
the “free-rider” problem. The workers get the
benefits gained by the union and should therefore
contribute to the union and not “ride free.”
The argument against the union shop is the
individual worker rights argument. A worker
should be able to decide if he/she wants to be a
member of the union.
“Right-to-Work” Law
Many states, especially many southern states,
have “Right-to-Work” laws.
These laws outlaw union shops & make it
hard to unionize.
Strike
an attempt to deny the firm the labor services
of all union members.
Whether a strike is successful in enabling a
union to win concessions from management
depends on
• the monopoly power of the firm in the product market;
• the ability of the firm to stockpile product in
anticipation of a strike;
• the firm’s financial resources to withstand a strike; &
• the union members’ financial resources to withstand a
strike.
Monopoly power of the firm in the
product market
Note: To say that a firm has some monopoly power
does not mean that the firm is necessarily a
monopoly. Rather, it means that the seller has
some control over the price of its product.
So, if a firm has some monopoly power, it can raise
its price without losing all its business.
Consequently, it can pass some of the cost of higher
wages along to its customers in the form of higher
prices.
Thus, a union will be better able to win concessions
from a firm with monopoly power.
Ability of the firm to stockpile
product in anticipation of a strike
A firm that can stockpile its product is able to
accumulate inventory.
Durable goods, such as cars, can be stockpiled;
perishable goods, such as fresh fruit, can not be
stockpiled.
If a firm can stockpile its product, then it will still have
product to sell in the event of a strike.
Thus, the firm will be in better condition and able to
hold out longer without giving in to union demands.
Thus, a union will be less able to win concessions from a
firm that has a stockpile of product.
Firm’s financial resources to
withstand a strike
A firm will greater financial resources can hold
out longer during a strike without going
bankrupt.
Thus, a union will be less able to win concessions
from a firm that has considerable financial
resources.
Union members’ financial resources
to withstand a strike
If a union’s members have substantial financial
resources, they will be able to hold out longer
during a strike and still be able to pay bills
and eat.
Thus the union will be better able to win
concessions from the firm.
Firm’s Concession Curve
Because a strike imposes costs on a firm (loss
of production, sales, & profit), the employer
will pay more to avoid a strike of a particular
length.
The longer the expected duration of strike, the
greater the wage increase they are willing to
concede.
Union’s Resistance Curve
Because a strike imposes costs on employees
(loss of income), they will accept less to avoid
a strike of a particular length.
The longer the expected duration of strike, the
smaller the wage increase they are willing to
accept.
There is an expected strike duration at
which the employer & the union will
accept the same wage.
This point is the Settlement Point, where
the employer & the union come to an
agreement.
Settlement Point
% wage
increase
Expected duration
of strike
Settlement Point
% wage
increase
Firm concession curve
Expected duration
of strike
Settlement Point
% wage
increase
Union resistance curve
Expected duration
of strike
Settlement Point
% wage
increase
Firm concession curve
Union resistance curve
Expected duration
of strike
Settlement Point
% wage
increase
Firm concession curve
settlement pt.
Union resistance curve
Expected duration
of strike
Settlement Point
Firm concession curve
% wage
increase
settlement pt.
Union resistance curve
S*
Expected duration
of strike
Settlement Point
Firm concession curve
% wage
increase
settlement pt.
W*
Union resistance curve
S*
Expected duration
of strike
Arbitration
when a third party is brought in to settle a
dispute between labor & management
Types of arbitration include:
Splitting-the-difference arbitration
Final offer arbitration
Splitting-the-difference arbitration
The arbiter selects a solution halfway between the
union’s offer & the employer’s offer.
Example:
union offer: $20
Employer offer: $10
Arbiter’s decision is halfway between 10 & 20
which is $15.
Final-Offer arbitration
The arbiter asks each of the two parties for their
final offer and selects the offer that he/she thinks is
most reasonable.
Example:
union offer: $18
Employer offer: $6
If the arbiter thinks the appropriate wage is $15,
he/she would pick the offer closest to that value, in
this case, $18.
Union Membership Around the World
Internationally, union membership rates vary
considerably. Membership in the United
States is much lower than in many other
countries.
Union Membership As a % of Total Paid Employees
Country
China
Iceland
Norway
Brazil
France
Canada
United Kingdom
Australia
India
Germany
Japan
Singapore
U.S.A.
Year Membership (%)
2000
90.3
2000
89.4
2000
70.6
1992
44.0
1994
31.0
1999
30.1
1999
29.5
1998
28.1
1997
26.2
1998
26.1
2000
21.5
1999
18.0
2002
13.3
Gender Differences in Union Preferences
Women have traditionally had lower union
representation than men.
There is no evidence that women have less of a
preference for unions than men.
In fact, survey evidence indicates that women
tend to be more supportive of collective action
to achieve goals than men and are more likely
to vote for a union.
Reasons for Gender Differences
in Union Membership
Women tend to be concentrated in industries and
occupations where unionization is below average.
Traditionally, unionization has been highest among
blue-collar workers in manufacturing, whereas women
have been concentrated in clerical and service
occupations, which have lower rates of unionization.
Within the manufacturing sector, women are
concentrated in more competitive industries, while
unionization is greater in monopolistic industries.
75% of the difference in unionization
between men and women is explained
by the underrepresentation of women in
highly organized occupations and
sectors.
Effects of Union Policies
on Women’s Union Membership
Male craft unions did not begin to admit women until
the late 1800s and were not hospitable to women (and
blacks) long after they no longer formally excluded them.
Unions have been criticized for having
made little effort to organize women
workers and for not supporting women’s
own efforts to unionize.
Only recently has emphasis been placed
on the provision of benefits such as
parental leave and day care, which are
important to women.
Union membership has declined from over
25% in the mid-1950s.
Women’s unionization has declined more
slowly than men’s. The change in the
relative unionization of men and women
is partly attributable to the decline in the
size of the heavily unionized and
predominately male manufacturing
sector.
Also contributing is an increase in
unionization in sectors in which women
are heavily represented, such as the
public sector, and among white collar and
service workers, including clerical and
health care workers.
What are the benefits of unions?
They increase the wages of their
members. Overall, the relative wage
advantage of union members is about
17-18 percent.
Research indicates that unions raise
women’s wages at least as much as they
raise men’s.
As women become more attached to the
labor force and gain seniority, the
economic advantages of unionization to
them may increase because unions tend
to provide greater benefits to workers
with more seniority.
Other Benefits of Unions
Unions increase the fringe benefits of
their members relative to nonmembers.
They provide members with nonpecuniary benefits by
giving them greater opportunity to shape their work
environment by communicating their preferences
to employers through the collective bargaining
process, and by providing for grievance
procedures.
Unions have the potential to reduce tension between
work and family by negotiating for family leave,
on-site day care, and flexible schedules.
A Social Benefit of Unions
On balance, unions reduce wage inequality
among all workers by providing relatively high
paying job opportunities for many less skilled
workers.
This means that deunionization has contributed
to rising wage inequality.
As long as women remain underrepresented in
unions (compared to their representation in the labor
force), the impact of unions is to widen the malefemale pay gap, since men benefit from the union
wage premium to a greater extent than women.
The decrease in unionism has
contributed to a reduction in
the male-female wage gap
because it has been associated
with a decrease in the male
advantage in unionization.
We have seen that unions offer many advantages
to workers, such as higher wages and fringe
benefits.
However, since the quantity of labor demanded is
negatively related to wages, these higher wages
are associated with lower employment.
Hence, the gains of the employed workers are at
the expense of those who are not hired due to
unionization.
The Glass Ceiling in Union Leadership
As in corporate America, women appear to face a
glass ceiling, when it comes to union leadership
positions.
In 2012, only 15 percent of AFL-CIO executive
council members were women.
Women have been more successful in
attaining middle-level positions at the local
level and some have even reached some
top-level positions.
However, among the 4 major elected posts
(president, vice-president, treasurer, and
secretary), women tend to be most heavily
represented in the secretary position, which
is the lowest rung.
Why do unions lack women
in key leadership positions?
1. Employed women usually have to juggle
home and job responsibilities, leaving little
time available for union activities.
2. Election to leadership positions often takes
years of working with the rank and file
members to reach the top posts. This work
usually starts when union members are in
their 20s, which coincides with most women’s
childbearing years.
3. Women often underestimate their abilities
and are less likely to place themselves on
the leadership track.
4. The underrepresentation of women in union
leadership positions makes other women’s
advancement more difficult, because it
reduces the opportunities for women to
receive informal mentoring and to find role
models.
5. Women also often must contend with
sexual harassment and the perception that
women are not tough enough to negotiate
contracts and participate in bargaining.
6. In addition, women frequently lack the
education and experience required for
leadership positions, such as union
negotiating skills and institutional
knowledge about union offices.
Prospects for women in unions are improving.
Efforts are being made to
• include women in executive
positions,
• take greater account of
women worker’s needs, and
• train women to develop their
leadership skills.
What does the future hold concerning unions?
Trends suggest that unions are likely to
continue to lose members in the future.
However, even if unions are unable to meet
their membership goals, they are likely to
remain a significant political & economic
force.
The union movement was originally
founded on white, older men.
Given the changing composition of the labor
force, unions must reach out to different
workers, including women & white-collar
workers.
Unions have been making efforts to appeal to
more diverse groups of workers.
What might unions do in the future?
Unions can evolve into a different type of organization.
They can shift away from being organizations
concerned with employment & wage gains &
towards being organizations that offer a variety of
services & benefits to their members.
In so doing, they may have more success in providing
value & a perceived need to their membership.
Edward Potter of the Employment Policy Foundation
referred to this type of union as “the working
person’s AARP.”