Term Paper on "Labor and Collective Bargaining"

Term Paper 10 pages (4253 words) Sources: 1+

[EXCERPT] . . . .

Labor and Collective Bargaining

Federal Government Resistance to Collective Bargaining - Supporters of the Public Safety Employer-Employee Cooperation Act or HR 980 assumed that this legislation would enhance and increase cooperation between the government and its workers (Sherk 2007). Most of these employees belonged to unions and experience already demonstrated that collective bargaining would, in fact, not enhance cooperation. Rather, it would create greater and undue burden on the States. These public employees included policemen, firefighters and emergency medical personnel. Collective bargaining has viewed as intrinsically adversarial. Putting employees and the employer before the bargaining table may be aimed at cooperation. But it would create as much conflict as the cooperation it was aimed at effecting. If the outcome was not favorable to either side and the employees staged a strike, the action would jeopardize vital public services. Examples were the Detroit public school teachers who went on strike in September 2006 and would not return to work despite a court order. In December 2005, transit workers staged an illegal strike, which paralyzed New York City in that busy shopping time of the year (Sherk).

And even when employees would not stage a strike, collective bargaining tended to create strife among workers (Sherk 2007). The National Air Traffic Controllers Association, for example, went up against the federal government for the increase of their salaries to $200,000 a year. HR 980 would afflict State and local governments with a huge but unfunded mandate (Sherk 2007). A union's monopoly over bargaining would prevent their employer from hiring other employees to do the same job at less than the wages fixed by the union. This meant that the government would have to pay more for the same work done. Being unfunded, the Act would force the government to reduce services or increase taxes (Sherk).

Unions Put Companies at a Competitive Disadvantage - Unionized workers earn roughly 15% more than non-unionized workers at the average (Hassett 2001). This situation puts unionized businesses at a disadvantage. These businesses said that they were generally unable to overcome this disadvantage. Statistics say that companies where unions held vast power have been steadily declining in number. Union power has correspondingly declined with them. Reports say that less 10% of private workforces is currently unionized, which went down from approximately 27% in the early 50s. Federal Reserve economist Bruce C. Fallick said that these businesses could offset the disadvantage of higher wages. But he was also quick to say that strategies were not really effective (Hassett).

It was thought that a unionized company could acquire and use more machines and become automated in order to lower production costs (Hassett 2001). But few companies opt for this choice when they are unionized. Profit increases would simply be offset by wage demands. Quite often, they merge with other unionized companies in apprehension that the union would only spread if a non-unionized firm was acquired. The non-unionized asset would then decline in value (Hassett).

It has been observed that firms would generally invest approximately 30% less in new machines when a union existed (Hassett 2001). This showed that unionized businesses did not favor the automation option or strategy. This trend clearly suggested that American workers in the last few years have become more and more convinced that forming or joining unions was not profitable or worthwhile (Hassett).

NLRB Criteria on Employee Mutuality of Interest - Mutuality of interest is described as a "direct or material indirect business relationship" with a "direct financial interest or material indirect financial interest (U.S. Securities and Exchange Commission 2005)" between two parties. A union may intervene in a representation hearing if it presents the required showing of interest (National Labor Relations Agreement 2006). This union must show that prove it has at least 10% of the showing of interest among the employees. It may also meet this requirement if it is the certified or presently recognized bargaining agent of the employees. Otherwise, the union should be party to a present or recently expired collective bargaining involving the employees it represents. The union should make the showing of interest within 48 hours of the request to intervene. If it is too late, the representative may still participate if the showing of interest is made before a Consent Election Agreement. He may still do so if the union to which he belongs did not receive a pre-consent or pre-hearing notice and that the showing of interest was made before the consent agreement was approved. He can no longer participate after the approval of the consent or the hearing has ended. But the showing of interest of the employees he represents can be added in the ballot in a consent election if they approve of it (National Labor Relations Agreement).

Section 9a (National Labor Relations Agreement 2006) requires that a representative be chosen by a "majority of employees in a unit in order to engage in collective bargaining exclusively for them. The Board does not have to determine the appropriateness of the unit but only needs to state the unit as "appropriate." As a result, if a union seeks out a unit, which the Board considers appropriate, the employers' alternative will not be considered. The Board will constitute that unit according to the "community-of-interests" test. This evaluates whether the employees coming to the hearing share and enjoy a "substantial mutuality of interest in wages, hours and working conditions." The Board bases the evaluation and decision on whether an appropriate unit exists on a number of factors. These factors include similarity of duties, skills, wages, fringe benefits, hours, interest and working conditions; volume of communication among the employees; the employer's organizational structure; integration of work flow and interrelationship of the production process; bargaining history in the said unit and industry; extent of organization; and the desires of the petitioner (National Labor Relations Agreement).

Mandatory, Permissive and Illegal Subjects of Bargaining. - Collective bargaining is a lawfully binding agreement between the union and the employer to negotiate with each other (Twarog 2005). Negotiations covered wages, hours and other terms and conditions of employment through the grievance and arbitration procedure. The assumption is that the employer and the union, through its representative, come to the bargaining in good faith. They do not have to reach an agreement. They only have to engage in the process itself. But three basic issues can and do come up during the process (Twarog).

Mandatory issues deal with wages, hours or working conditions, which have vital effects on employees (Twarog 2005). These subjects require that the negotiation be undertaken in good faith. Negotiation is undertaken when one party requests the other. But they need not reach an agreement. They only need to engage in the process (Twarog).

Permissive issues are non-mandatory and the parties can still bargain over the issues (Twarog 2005). One side may put the subject on the bargaining table, but the other side need not bargain on it. If one side refuses to discuss it, the issue dies. Neither can compel the other to pursue the issue. Holding a strike over a permissive issue would not be protected or legal. Examples are retiree benefits, internal union matters, supervisors' conditions of employment and interest arbitration (Twarog).

Illegal bargaining subjects cannot be legally bargained over by either party (Twarog 2005). They violate a law and thus cannot be entered into even if both sides agree to do so. Examples are discrimination, hot cargo clauses, and closed shop clauses (Twarog).

The issues, type and categories of collective bargaining must be clearly understood (Twarog 2005). Clearly understanding the type of issue will help the union come up with the appropriate bargaining strategy and tactics for the process (Twarog).

Profit-Sharing and Lump Sum Increase, COLAs and Wage Re-openers Decrease

Profit-sharing has been on an upward climb globally, especially in developed economies (Ellis and Smith 2007). A study revealed that the trend was actually moving up since the mid-80s rather than presenting as a recent phenomenon. Although there are no consistent explanations to the surge, the consensus was that ongoing technological progress had raised the rate of old capital goods. This, in turn, induced a greater increase in both capital and jobs. Such placed the firms in a stronger bargaining position to share profits with the labor force, which, for its part, has been experiencing frequent job losses. The firms were able to realize a bigger fraction of the economic surplus from market frictions. Profit share increased, as a consequence. The effect has been observed to be stronger where labor market institutions were more rigid. There was also positive impact between the size of the profit share and the extent of product market regulation (Ellis and Smith).

A study compared the annualized returns from dollar-cost average strategies and lump-sum investing from 1926-1991 (Williams and Bacon 2004). It found that lump-sum investing produced greater returns than dollar-cost averaging. The cash involved appeared to have come from lump-sum retirement distribution, court settlements or inheritance. This was indicative of the increase in lump-sum incentive… READ MORE

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