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Union organization (1)

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  • 1. Union OrganizationUnion Organization Picking a targetPicking a target 1.1. Union return on investment depends on costUnion return on investment depends on cost of organizingof organizing 2.2. Expected cost of servicing workersExpected cost of servicing workers 3.3. Expected probability of winExpected probability of win 4.4. Expected bargaining strength in the sectorExpected bargaining strength in the sector
  • 2. Union OrganizationUnion Organization Picking a targetPicking a target 1.1. Union return on investment depends on cost ofUnion return on investment depends on cost of organizingorganizing 2.2. Expected cost of servicing workersExpected cost of servicing workers – Heterogeneity of workers, interestsHeterogeneity of workers, interests – Worker turnoverWorker turnover – Part-time vs. full-time vs. transitory workersPart-time vs. full-time vs. transitory workers – Worker ability to pay duesWorker ability to pay dues – Size of unit (returns to scale)Size of unit (returns to scale) – Monopoly or oligopolyMonopoly or oligopoly
  • 3. Union OrganizationUnion Organization Picking a targetPicking a target 3.3. Expected probability of winExpected probability of win – Wages and benefits in the firm relative to localWages and benefits in the firm relative to local reference, industry normsreference, industry norms – Worker sense of inequity or injusticeWorker sense of inequity or injustice  Campaigns based on workplace dignity: 56% winCampaigns based on workplace dignity: 56% win  Traditional wages, hours, job security: 27% winTraditional wages, hours, job security: 27% win – Probability of firm resistanceProbability of firm resistance – Phone sampling, researchPhone sampling, research
  • 4. Union OrganizationUnion Organization Picking a targetPicking a target 4. Expected bargaining strength in the sector4. Expected bargaining strength in the sector  Depends on the elasticity of labor demandDepends on the elasticity of labor demand  Laws of derived demandLaws of derived demand  Depends on the growth of labor demandDepends on the growth of labor demand  Growing firm profitsGrowing firm profits  Growing firm revenuesGrowing firm revenues  Growing employmentGrowing employment  Growing labor productivityGrowing labor productivity  Can also help with sense of fairnessCan also help with sense of fairness
  • 5. Union OrganizationUnion Organization Labor demand: N: number of workers; W: WageLabor demand: N: number of workers; W: Wage Demand N W W1 W0 N1 N0 Wage Bill = W*N; Change in wage bill = W1N1 – W0N0
  • 6. Union OrganizationUnion Organization Labor demand: N: number of workers; W: WageLabor demand: N: number of workers; W: Wage Relatively Inelastic Demand N W W1 W0 N1 N0 Change in wage bill = W1N2 – W0N0 is smaller than with elastic demand Relatively Elastic Demand N2
  • 7. Union OrganizationUnion Organization EEDD = Elasticity of demand == Elasticity of demand = % change in employment% change in employment % change in wage% change in wage 0 < E0 < EDD < 1: inelastic demand< 1: inelastic demand EEDD = 1: unitary elastic demand= 1: unitary elastic demand EEDD > 1: elastic demand> 1: elastic demand Wage increase with inelastic demand will raise the wage billWage increase with inelastic demand will raise the wage bill Wage increase with elastic demand will lower the wage billWage increase with elastic demand will lower the wage bill
  • 8. Union OrganizationUnion Organization EEDD = Elasticity of demand = 0.3 < 1, inelastic= Elasticity of demand = 0.3 < 1, inelastic % change in employment = 3%% change in employment = 3% % change in wage = 10%% change in wage = 10% WW11 = W= W00 (1.10)(1.10) NN1 =1 = NN00 (0.97)(0.97) Change in wage bill = WChange in wage bill = W11NN11 – W– W00NN00 == WW00 (1.10)* N(1.10)* N00 (0.97) - W(0.97) - W00NN00 = 0.067*W= 0.067*W00NN00 So wage bill rises when wage rises when the elasticity of demand is below 1.So wage bill rises when wage rises when the elasticity of demand is below 1.
  • 9. Union OrganizationUnion Organization Laws of derived demandLaws of derived demand  Union labor demand is less elastic when …Union labor demand is less elastic when …  Product demand is less elasticProduct demand is less elastic  Few substitutes for the productFew substitutes for the product  Monopoly/oligopolyMonopoly/oligopoly  Weak import penetrationWeak import penetration  Examples?Examples?  There are few substitutes for union laborThere are few substitutes for union labor  No ready supply of replacement workersNo ready supply of replacement workers  High union density in the industryHigh union density in the industry  Nonunion options paid comparable wages (Davis-Bacon)Nonunion options paid comparable wages (Davis-Bacon)
  • 10. Union OrganizationUnion Organization Laws of derived demandLaws of derived demand  Union labor demand is less elastic when …Union labor demand is less elastic when …  ““Importance of being unimportant”—labor costs are aImportance of being unimportant”—labor costs are a small fraction of total costssmall fraction of total costs  Heavily capitalized sectorsHeavily capitalized sectors  Crafts vs. industrial unionsCrafts vs. industrial unions  Only holds when elasticity of demand for product is biggerOnly holds when elasticity of demand for product is bigger than the elasticity of substitution (holds most of the time)than the elasticity of substitution (holds most of the time)
  • 11. Steps for union recognition by NLRBSteps for union recognition by NLRB electionelection 1.1. Initial contactInitial contact  Workers contact unionWorkers contact union  Union targets workersUnion targets workers 2.2. Union typically assigns an organizerUnion typically assigns an organizer  Determines campaign focusDetermines campaign focus  Solicits assistance and trains employees sympathetic to theSolicits assistance and trains employees sympathetic to the unionunion  Nonemployees do not have access to the premises as long as thereNonemployees do not have access to the premises as long as there is an alternative way to contact workersis an alternative way to contact workers  Employees are known by fellow workersEmployees are known by fellow workers  If the union is successful, it will need an infrastructure of employeesIf the union is successful, it will need an infrastructure of employees to serve as stewards, local leadersto serve as stewards, local leaders
  • 12. Steps for union recognition by NLRBSteps for union recognition by NLRB electionelection 3.3. SolicitationSolicitation • Work time vs personal time at work vs nonworkWork time vs personal time at work vs nonwork timetime • NLRB reserves work time for work—limitsNLRB reserves work time for work—limits interference in firm business practiceinterference in firm business practice • Personal time at work (lunch, breaks) are open forPersonal time at work (lunch, breaks) are open for oral solicitation by employeesoral solicitation by employees • Pro union posters, bulletins, clothing, buttons ok ifPro union posters, bulletins, clothing, buttons ok if they do not disrupt businessthey do not disrupt business • Off-premises solicitation is okOff-premises solicitation is ok
  • 13. Steps for union recognition by NLRBSteps for union recognition by NLRB electionelection 4.4. Authorization cardsAuthorization cards Minimum of 30% needed to authorize electionMinimum of 30% needed to authorize election (unions will not press for election unless they have(unions will not press for election unless they have majority. AFL-CIO recommends 75%)majority. AFL-CIO recommends 75%) 5. Representation Petition5. Representation Petition Union submits RC petition. NLRB verifiesUnion submits RC petition. NLRB verifies minimum 30% interest.minimum 30% interest.  Cross-petition from other unions requires additionalCross-petition from other unions requires additional 10% interest10% interest
  • 14. Steps for union recognition by NLRBSteps for union recognition by NLRB electionelection Strict Rules Governing Firm Behavior During UnionStrict Rules Governing Firm Behavior During Union CampaignCampaign
  • 15. Steps for union recognition by NLRB electionSteps for union recognition by NLRB election 6.6. Secret Ballot electionSecret Ballot election Within 30 days of verification of need for electionWithin 30 days of verification of need for election 50% required to win50% required to win Run-off among top two options if no majorityRun-off among top two options if no majority Voters include everyone in bargaining unitVoters include everyone in bargaining unit Employed at least 30 days in the year priorEmployed at least 30 days in the year prior Avoidance of fraudulent employeesAvoidance of fraudulent employees Economic strikers within 12 months of strikeEconomic strikers within 12 months of strike Replacement workersReplacement workers Part-time workers with continuing interestPart-time workers with continuing interest SAG: anyone who worked at least two days inSAG: anyone who worked at least two days in last 12 monthslast 12 months
  • 16. Steps for union recognition by NLRB electionSteps for union recognition by NLRB election 7.7. Rules on election dayRules on election day 1.1. No mass meetings 24 hours before electionNo mass meetings 24 hours before election 2.2. Firm cannot offer benefits or reprisalsFirm cannot offer benefits or reprisals No special pay from firm to compensate for voting expensesNo special pay from firm to compensate for voting expenses Special pay from union for voting expenses is ok, otherSpecial pay from union for voting expenses is ok, other compensation is illegalcompensation is illegal
  • 17. Steps for union recognition by NLRBSteps for union recognition by NLRB electionelection 8.8. Certification of ElectionCertification of Election If NLRB certifies union win, union is immediately certified. Has oneIf NLRB certifies union win, union is immediately certified. Has one year to get a contractyear to get a contract Contract bar—no other elections allowed for one year, regardless ofContract bar—no other elections allowed for one year, regardless of who winswho wins If firm is guilty of ULP, NLRB may call for another vote; orIf firm is guilty of ULP, NLRB may call for another vote; or Gissel doctrine NLRB may certify union if firm behavior is consideredGissel doctrine NLRB may certify union if firm behavior is considered so bad as to make a fair election impossible and there is evidenceso bad as to make a fair election impossible and there is evidence that union has a majority; orthat union has a majority; or J.P. Stevens ordered to bargain, even though union did not demonstrateJ.P. Stevens ordered to bargain, even though union did not demonstrate majority through authorization cardsmajority through authorization cards
  • 18. Voluntary RecognitionVoluntary Recognition  If firm volunteers to recognize union, NLRBIf firm volunteers to recognize union, NLRB will certify union.will certify union.  Recognition picketing (limit of 30 days, after whichRecognition picketing (limit of 30 days, after which firm can ask for expedited election)firm can ask for expedited election)  Economic pressure (boycotts, political pressure)Economic pressure (boycotts, political pressure)  Prior agreements between firm and worker to acceptPrior agreements between firm and worker to accept recognition cards in lieu of NLRB electionrecognition cards in lieu of NLRB election  Absent election, union at risk of decertificationAbsent election, union at risk of decertification election,election,
  • 19. Eaton and Kriesky on Neutrality and CardEaton and Kriesky on Neutrality and Card Check Agreements ILRR (October 2001)Check Agreements ILRR (October 2001)  Unions may wish to forge agreements that lower theUnions may wish to forge agreements that lower the cost of organizing or the standard for successcost of organizing or the standard for success  Agreements with firms that have multiple sitesAgreements with firms that have multiple sites  Centralized agreementsCentralized agreements  Generalized agreement based on a few local relationshipsGeneralized agreement based on a few local relationships  Agreement with entirely new firmsAgreement with entirely new firms  Agreements with Associations of EmployersAgreements with Associations of Employers  Most common: Steel, autos, communications, hospitality,Most common: Steel, autos, communications, hospitality, gaminggaming  (66%) restrict agreement to specific occupations, job(66%) restrict agreement to specific occupations, job classifications, or facilitiesclassifications, or facilities
  • 20. Types of agreementsTypes of agreements Neutrality Agreements:Neutrality Agreements: ““Neither helping nor hindering” union organizationNeither helping nor hindering” union organization efforts, facts allowed (UAW, CWA)efforts, facts allowed (UAW, CWA) ““Employer will not communicate opposition; employerEmployer will not communicate opposition; employer will not attack or demean the union or its representativeswill not attack or demean the union or its representatives (HERE)(HERE) Firm will not provide support to anti-union groupsFirm will not provide support to anti-union groups (USWA)(USWA) Weaker statements: strive for climate free of hostility; onlyWeaker statements: strive for climate free of hostility; only positive, pro-company statements will be issuedpositive, pro-company statements will be issued
  • 21. Types of agreementsTypes of agreements Card Check Agreements:Card Check Agreements:  (73%) Third party neutral will validate(73%) Third party neutral will validate membership cards signed by union members. Firmmembership cards signed by union members. Firm will recognize union if a minimum level is reachedwill recognize union if a minimum level is reached (say 65%)(say 65%) Similar to above, but if percentage of cards isSimilar to above, but if percentage of cards is above 50% but below threshold, a nonNLRBabove 50% but below threshold, a nonNLRB election is held. If percentage is between 30% andelection is held. If percentage is between 30% and 50%, NLRB election held.50%, NLRB election held.
  • 22. Types of agreementsTypes of agreements Access:Access: (66%) Union will be allowed on the firm premises.(66%) Union will be allowed on the firm premises. (36%) Union given lists of employees in the bargaining(36%) Union given lists of employees in the bargaining unitunit First contractFirst contract Accretion of new sites into existing bargaining units (50%Accretion of new sites into existing bargaining units (50% of multi-site agreements)of multi-site agreements) Arbitration if first contract not reached (USWA)Arbitration if first contract not reached (USWA) Negotiations begin immediately upon recognitionNegotiations begin immediately upon recognition
  • 23. DataData  57 International unions with 10,000+ members57 International unions with 10,000+ members  36 respond36 respond  23 had at least one agreement23 had at least one agreement  132 agreements total (113 at least partially132 agreements total (113 at least partially useable)useable)  Data analyzed only relate to these 113 contractsData analyzed only relate to these 113 contracts
  • 24. Union SuccessUnion Success  RecognitionRecognition  NLRB elections: 46% 1983-1998NLRB elections: 46% 1983-1998  Neutrality only: 46%Neutrality only: 46%  Card Check: 74% (understated viz. NLRB)Card Check: 74% (understated viz. NLRB)  Card check, U.S. public sector: 85%Card check, U.S. public sector: 85%  Card check, Quebec: 83%Card check, Quebec: 83%  Card check, Ontario: 78%Card check, Ontario: 78%  First contractFirst contract  NLRB elections: 66-80%NLRB elections: 66-80%  Neutrality only: 100%Neutrality only: 100%  Card check: 96%Card check: 96%  Does this mean that universal mandatory application ofDoes this mean that universal mandatory application of card check or neutrality will raise union density?card check or neutrality will raise union density?
  • 25. Thieblot. “The Fall and Future of Unionism inThieblot. “The Fall and Future of Unionism in Construction.”Construction.” Journal of Labor ResearchJournal of Labor Research Spring 2001.Spring 2001.  1959 Landrum Griffin Act allows closed shops1959 Landrum Griffin Act allows closed shops in building trades (pre-hire agreements)in building trades (pre-hire agreements)  Davis Bacon Act (1931); Little Davis BaconDavis Bacon Act (1931); Little Davis Bacon Acts 2/3 of states); Project Labor AgreementsActs 2/3 of states); Project Labor Agreements (eg Des Moines Iowa Events Center)(eg Des Moines Iowa Events Center)  Construction has lost density more than mostConstruction has lost density more than most industriesindustries
  • 26. Why has Union Density fallen inWhy has Union Density fallen in Construction?Construction?  Demographics: women, educated?Demographics: women, educated?  Insignificant in construction tradesInsignificant in construction trades  10 states repealed little Davis Bacon Acts since10 states repealed little Davis Bacon Acts since 19791979  Most of the decline predates thisMost of the decline predates this  Decline occurs does not slow after Landrum GriffinDecline occurs does not slow after Landrum Griffin  Union/Nonunion Cost StructureUnion/Nonunion Cost Structure
  • 27. Union / Nonunion Cost DifferentialUnion / Nonunion Cost Differential  Pay differential 50% plusPay differential 50% plus  Pay differential largest for the least skilledPay differential largest for the least skilled  How can unionized firm compete?How can unionized firm compete?
  • 28. Union / Nonunion Cost DifferentialUnion / Nonunion Cost Differential  Unit Labor Cost =Unit Labor Cost = W*N = WW*N = W = W= W QQ (Q/N)(Q/N) (AP(APNN)) W = wageW = wage N = number of workersN = number of workers Q = output or revenueQ = output or revenue If W is 50% higher in union sector, APIf W is 50% higher in union sector, APNN must be at leastmust be at least 50% higher for union firm to be competitive50% higher for union firm to be competitive
  • 29. Union / Nonunion Cost DifferentialUnion / Nonunion Cost Differential Evidence on relative productivityEvidence on relative productivity Cost per Sq foot = aCost per Sq foot = a00 + a+ a11*INPUTS + a*INPUTS + a22*(UNION)*(UNION) aa22 > 0 implies union effect on wages dominates union> 0 implies union effect on wages dominates union effect on productivityeffect on productivity aa22 < 0 implies union effect on productivity dominates< 0 implies union effect on productivity dominates union effect on wageunion effect on wage Evidence suggests aEvidence suggests a22 > 0; responsible for at least part of> 0; responsible for at least part of the declinethe decline
  • 30. Union / Nonunion Cost DifferentialUnion / Nonunion Cost Differential Other sources of higher union costOther sources of higher union cost Work rulesWork rules Price of helpersPrice of helpers Staffing: journeymen vs less skilledStaffing: journeymen vs less skilled Trade staffing restrictionsTrade staffing restrictions Slow adjustment to new technologies, tradesSlow adjustment to new technologies, trades Consequence: union market share has fallen from 75% inConsequence: union market share has fallen from 75% in 1950 to 25% today1950 to 25% today
  • 31. Union / Nonunion Cost DifferentialUnion / Nonunion Cost Differential  Competitive option when unit costs are higher in unionCompetitive option when unit costs are higher in union sectorsector  Raise costs in nonunion sectorRaise costs in nonunion sector  Role of prevailing wage lawsRole of prevailing wage laws  Government projects are 20% of the market, largely unionGovernment projects are 20% of the market, largely union  Private sector projects are about 80% of the market, largelyPrivate sector projects are about 80% of the market, largely nonunionnonunion
  • 32. Other Strategies for unionized firms, unionsOther Strategies for unionized firms, unions  UnionsUnions  Job targeting: Try to lower W in union sectorJob targeting: Try to lower W in union sector  ““list price vs street price”list price vs street price”  Union pools money on high priced, prevailing wage jobsUnion pools money on high priced, prevailing wage jobs to subsidize wages on competitive bidsto subsidize wages on competitive bids  Salting: try to lower APSalting: try to lower APNN or raise W in nonunionor raise W in nonunion sectorsector  More laterMore later  Unionized firmsUnionized firms  Double breasting: union and nonunion crewsDouble breasting: union and nonunion crews
  • 33. Fine. “Union Salting: Reactions and Rulings sinceFine. “Union Salting: Reactions and Rulings since Town andTown and CountryCountry JournalJournal of Labor Researchof Labor Research Summer 2002.Summer 2002.  Salting: union members or organizers acceptSalting: union members or organizers accept employment at a nonunion firm with the intentemployment at a nonunion firm with the intent of filing unfair labor practice charges andof filing unfair labor practice charges and organizing the work placeorganizing the work place  Aim is to pressure firm to recognize the unionAim is to pressure firm to recognize the union without a certification election; orwithout a certification election; or  To disrupt nonunion firm production activities andTo disrupt nonunion firm production activities and lower its cost advantage over union firmslower its cost advantage over union firms
  • 34. Fine. “Union Salting: Reactions and Rulings sinceFine. “Union Salting: Reactions and Rulings since Town andTown and CountryCountry JournalJournal of Labor Researchof Labor Research Summer 2002.Summer 2002.  NLRB v. Town and Country Electric (1995)NLRB v. Town and Country Electric (1995)  IBEW locals 292 and 343 asked their unemployed members to apply forIBEW locals 292 and 343 asked their unemployed members to apply for jobs at Town and Country Electricjobs at Town and Country Electric  Those employed trained on how to organize the siteThose employed trained on how to organize the site  How to monitor employer actions for possible ULP chargesHow to monitor employer actions for possible ULP charges  IBEW paid the salts the difference between nonunion and union scale.IBEW paid the salts the difference between nonunion and union scale.  IBEW alleged one salt wrongfully discharged; 10 othersIBEW alleged one salt wrongfully discharged; 10 others wrongfully refused employmentwrongfully refused employment  NLRB upholds charge; consistently has held that salts areNLRB upholds charge; consistently has held that salts are entitled to the same rights as other employeesentitled to the same rights as other employees
  • 35. Fine. “Union Salting: Reactions and Rulings sinceFine. “Union Salting: Reactions and Rulings since Town andTown and CountryCountry JournalJournal of Labor Researchof Labor Research Summer 2002.Summer 2002.  ULP charges rise 36% in nonunion firms afterULP charges rise 36% in nonunion firms after saltingsalting  NLRB Cases involving saltsNLRB Cases involving salts  1995:1995: 44  1996:1996: 9 (of 262 salt cases filed in 1996)9 (of 262 salt cases filed in 1996)  1997: 101997: 10  1998: 81998: 8  1999: 81999: 8  2000: 162000: 16
  • 36. Fine. “Union Salting: Reactions and Rulings sinceFine. “Union Salting: Reactions and Rulings since Town andTown and CountryCountry JournalJournal of Labor Researchof Labor Research Summer 2002.Summer 2002.  Salt “charges” upheld by NLRBSalt “charges” upheld by NLRB  18 “refusal to consider”18 “refusal to consider”  22 “refusal to hire”22 “refusal to hire”  19 “unlawful interrogation”19 “unlawful interrogation”  19 “unlawful discharge”19 “unlawful discharge”  Penalties include back pay, reinstatementsPenalties include back pay, reinstatements
  • 37. Fine. “Union Salting: Reactions and Rulings sinceFine. “Union Salting: Reactions and Rulings since Town andTown and CountryCountry JournalJournal of Labor Researchof Labor Research Summer 2002.Summer 2002.  Employer responsesEmployer responses  Salting insurance paid by the Associated BuildersSalting insurance paid by the Associated Builders and Contractorsand Contractors  Architectural Glass and Metal Co. Inc. (1997)Architectural Glass and Metal Co. Inc. (1997) can dismisscan dismiss salts if there is an anti-moonlighting clause insalts if there is an anti-moonlighting clause in contractcontract  Industrial Company Southeast, Inc. (1997)Industrial Company Southeast, Inc. (1997) Can requireCan require applications on original forms (union had submittedapplications on original forms (union had submitted applications on xeroxed application forms.applications on xeroxed application forms.
  • 38. DecertificationDecertification  RD petition must be filed by employeesRD petition must be filed by employees  At least 30% of employees must sign a decertificationAt least 30% of employees must sign a decertification petitionpetition  Employer cannot encourage this process, mustEmployer cannot encourage this process, must remain neutralremain neutral  Filed within 60-90 days of expiration of a contract; orFiled within 60-90 days of expiration of a contract; or  if there has been no contract filed within 1 year ofif there has been no contract filed within 1 year of certification; orcertification; or  After a contract has expiredAfter a contract has expired
  • 39. DecertificationDecertification  RM petition can be filed by the employerRM petition can be filed by the employer  Timing similar to RDTiming similar to RD  Evidence supporting RM petition can include:Evidence supporting RM petition can include:  Unsolicited communications from employees requestingUnsolicited communications from employees requesting decertification;decertification;  Failure of union to represent workers, fulfillFailure of union to represent workers, fulfill responsibilities;responsibilities;  Changes in the size of the workforceChanges in the size of the workforce
  • 40. DecertificationDecertification  Unions lose 75% of decertification electionsUnions lose 75% of decertification elections  Unions win 45-50% of certification electionsUnions win 45-50% of certification elections  RD petitions are gaining over time, RC and RMRD petitions are gaining over time, RC and RM petitions have decreased in relative importance.petitions have decreased in relative importance.  Combined RD + RM mean that decertificationCombined RD + RM mean that decertification elections are rising in importanceelections are rising in importance Scott, Hester and Arnold. “Employer-Initiated Elections, 1968-Scott, Hester and Arnold. “Employer-Initiated Elections, 1968- 1992.”1992.” Journal of Labor ResearchJournal of Labor Research Spring 1997.Spring 1997.

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