In the late 1950s, the U.S. Senate held hearings investigating and exposing union corruption that ultimately resulted in the 1959 Landrum-Griffin Act. Designed to protect workers from their unions, Landrum-Griffin, also an amendment to the NLRA, provided for the employee “bill of rights,” union filing of annual financial statements with the Department of Labor, and the requirement that unions hold national and local officer elections every five years and three years, respectively. The main purpose of Landrum-Griffin was to allow for the monitoring of the internal activity of unions. Union officials were now accountable for union spending, union elections, and other activities.
The Railway Labor Act of 1926
The Railway Labor Act was jointly crafted by both labor and management in the railroad industry. Airline workers became covered in 1935. The focus of the law is upon avoiding prolonged strikes whenever possible. In recent years, negotiations in the airline industry have been quite protracted, spanning over several years. On the other hand, strikes have been averted for the most part. The President does have the right to intervene to preclude a strike.
The Civil Service Reform Act (CSRA) of 1978
While similar to the NLRA in its provisions but applicable only to federal employees, the CSRA prohibits wage negotiations (they’re set by Congress) and strikes. The CSRA also established the Federal Labor Relations Authority (FLRA) as an independent agency within the executive branch of the government. The FLRA has authority similar to the NLRB. (See www.flra.gov.) The FLRA regulates the conduct of collection bargaining related to the federal government.
HOW DO WORKERS FORM UNIONS?
The process of organizing workers can be lengthy although the proposed EFCA could expedite this process. Typically, and following the NLRA, the steps are as follows:
1. Either Union Membership is solicited by the employees who contact a union or a union might conduct an organizing drive.
2. At least 30 percent of employees must sign authorization cards that stipulate that a particular union should be their representative in negotiating with the employer (see Figure 13-4 for an example).
3. The NLRB is petitioned to conduct an election.
. Assuming the authorization cards are in order, the NLRB sets a date for the election.
5. A secret ballot representative certification (RC) election is held, which requires that a majority of eligible voting workers accept the union.
The process of gathering authorizing cards and the eligibility of those who sign them can be challenged (and often is). For example, the NLRB made a controversial ruling in Oakwood Healthcare that “charge” nurses are “supervisors” based on their interpretation that employers can label workers as supervisors if these workers assign another employee to another location to work at a certain time or to perform a significant task. These supervisors are thus not eligible to be represented by a union of registered nurses under NLRA. The ruling will probably be challenged all the way to the Supreme Court.
The goal of the NLRB is to maintain an environment in which workers can make an uncoerced decision regarding the certification election. Figure 13-5 presents an example of an NLRB election notice.
Many unions now use the Internet to conduct the authorization step (for an example, try walmartworkerslv.com/authorization) although an NLRB ruling allows an employer to bar employees from using company e-mail for organizing efforts. In general, an employer may lawfully maintain a rule banning all nonwork-related solicitations—including messages about unionization—from its computer system as long as it does not enforce the rule in a discriminatory manner.
Many employers do not get very involved in union prevention activities until step 2 because they are often not aware of the union organizing efforts until this step has been reached. Regardless, managers should have a thorough understanding as to what behaviors are lawful and unlawful under the NLRA.
If a majority vote is received for the union, the NLRB certifies the union and the union is then recognized as the exclusive bargaining unit for the workers. The union then enters negotiations with the employer. If a majority do not accept the union, another certification election cannot be held for 12 months. Even after a union is certified negotiations often break down. A high percentage of certified unions never obtain a contract.
Employers also get involved after a union vote and may work toward a representation decertification (RD), which also is conducted by the NLRB at least 12 months after a certification vote. While the petition for an RD must be made by the rank-and-file workers, management also is allowed, in the rare case of union misconduct, to initiate a decertification drive. Usually, decertification elections are specifically barred when a labor contract is in effect. The number of NLRB elections declined in 2007 to 1,502 and lower than the rate in 2006. Unions won over 60 percent of the votes in 2007. There were 329 decertification elections in 2007. Unions prevailed in 37 percent of them.
Traditionally, unions organize workers through campaigns. Bottom-up campaigns begin when workers become dissatisfied with some aspect of their work and contact a union to request organization. Top-down campaigns are initiated by the union as part of a strategy to increase their representation in the area or industry. In order to gain worker support unions employ a variety of tactics, including worker-to-worker campaigns, increasing internal pressure tactics, and community involvement. Their goal is to help build a sense of injustice and a belief that the union can effectively remedy the wrong. As a part of their organizing strategy, union organizers often use “salting” where union sympathizers gain employment in nonunion firms for the purpose of organizing. While employers have argued that “salts” obtained employment under false pretenses, the Supreme Court held in Town & Country Electric v. NLRB that as long as the “salts” did the work for which they were hired, employers violated the NLRA if they took actiond against them.
Management typically counters the union campaigns with a campaign of their own. They can communicate with the workers citing the harmful effects of unions and hold “captive audience meeting” where workers must listen to management discuss their reasons for not wanting a union. In regulating the campaign process, the goal of the NLRB is to promote an environment in which workers feel free to vote their conscience whether or not it is for or against unions. By law, workers should not be subject to threats or intimidation from either the union or management. Management violations include promising wages or firing workers for union activity. In recent years, management has often employed consultants who specialize in refuting the claims of union organizers as well as more aggressive management tactics. Often the result is management violating the NLRA and engaging in such tactics as illegally firing workers for union activity. Despite the illegality of these actions, there is evidence that many companies engage in these activities as the penalties for these actions are weak.
While the NLRB-supervised route is still the typical method of organizing, it is not the only way. Many unions feel that they do not have a level “playing field” in union organizing drives and the regulation of election conduct. Thus, they will avoid elections where possible and may have already succeeded in passing the EFCA that would preclude elections. Some unions had been successful at obtaining what are known as neutrality agreements from management. These agreements often contain provisions in which management agrees to recognize the union if a majority of the workers sign authorization cards and they waive their rights to wage a countercampaign. Management will typically agree to a neutrality clause when the union and management have a preexisting relationship such as a collective bargaining agreement at another location.
An alternative and growing trend in the U.S. is non-NLRB organizing or a “corporate” or “pressure” campaign. By rejecting the typical election model, unions have more freedom to take advantage of particular issues related to the targeted company. Particularly effective at non-NLRB organizing is the 1.5 million member Service Employees International Union (SEIU) in recently organizing janitors, health care and hotel workers, and immigrant workers. While the goal is the same as an NLRB-supervised effort, that is, to secure a collective bargaining agreement but without the election, the strategies vary from civil disobedience to boycotts to news coverage of employer indiscretions. Some recent examples involve farm workers where adverse publicity has been directed at Taco Bell, McDonald’s, and Burger King to pressure growers to increase the pay of tomato pickers. Some unions have established new programs for developing and implementing strike-alternative, pressure-campaign strategies and tactics.
A 2008 study found that the non-NLRB election approach to organizing was more successful for the union than the traditional approach. From 1990 to 2001, unions were more likely to win a non-NLRB organizing drive than an NLRB-supervised election and despite a 9:1 ratio of NLRB to non-NLRB organizing, the difference in the number of workers actually organized each approach was small.
THE EFFECTS OF UNIONS
Workers join unions to improve their wages, working conditions, and job security. This section presents opinions regarding whether or not unions actually do provide these improvements and what these effects mean for firm performance. Estimates of union and nonunion wage differentials range from 3 percent (utilities) to 52 percent (construction). On average, the differential in pay was between 15 and 20 percent in 2008 while the “fringe benefit” (e.g., health care, pensions) differential is higher. Unions also have a positive fringe benefit effect. In general, those who are usually paid the least tend to benefit the most from unionization. Studies show that younger workers, nonwhites, people living in the South and the West, and blue-collar workers seem to gain the most from unionization. Interestingly, little apparent difference exists between the wage gains from unionization for males and females. Research on public-sector unions shows a 24 percent pay differential for public-sector employees represented by unions versus public-sector employees not represented. In 2007, full-time wage and salary union workers had median weekly earnings of $863, compared with a median of $663 for workers not represented by unions.
Variations in union wage effects across industries partially occur due to the union’s ability to take “wages out of competition.” Wages can be taken out of competition in several ways. First, labor demand may be relatively insensitive to wage changes (inelastic). That is, consumers will absorb the increased labor costs without offsetting employment effects. The extent of union organization in a particular market also can affect union power. More unionized markets have greater union/nonunion wage differentials because of less nonunion wage competition. The extent of bargaining coverage further augments this effect. This coverage can take several forms. For example, one union may bargain for the entire market—so that all union firms in the industry have virtually identical contracts. In the auto industry, the UAW bargains with one of the big automakers and then uses this contract as a pattern for remaining settlements. This strategy has become less effective as nonunionized automakers have gained market share. A union negotiating simultaneously with numerous employers, such as in steel and coal, provides another example of extensive industry coverage. A union that bargains at the plant level has much less power than those that negotiate on a broader basis.
Union advocates maintain that the “collective voice” of unions reduces worker quit rates, thereby leading to retention of experienced workers, lowering a firm’s training costs, and raising its productivity. Another side benefit is that management is forced to become more efficient when faced with the necessity of providing higher wages to unionized employees.
This suggests that unions may actually have positive effects on management. If so, why does management strenuously resist unions? Are they behaving rationally? Or do they resist unions only because unions threaten their decision-making autonomy? Two theories exist regarding the unions’ effects upon firms’ productivity. On one hand, productivity is predicted to decrease in unionized firms because unions create resource misallocation and demand restrictive work rules. In contrast, the collective voice view predicts that productivity gains may occur because the union wage effect causes firms to manage better, employ better-quality labor, substitute capital for labor, and reduce voluntary turnover, leading to the development of a more experienced and better-trained labor force.
The evidence is mixed regarding the effects of unions on organizational productivity. Unions tend to have a negative effect on productivity when there is relatively greater conflict between the union and management. Florida State professor Jack Fiorito summed up the confusing evidence on unions and productivity this way: “There is indeed considerable variation by industry; overall union productivity effects are probably in the zero to mildly negative range.”17 Positive productivity effects generally tend to be found in competitive industries with higher union wage effects (i.e., where firm survival apparently depends upon offsetting the higher wage costs with increased productivity). Research indicates that when unions and management are working for a “bigger pie” as well as fighting over their relative share, the result is higher productivity. Under conditions of poor labor–management relations, where the focus is on taking a bigger share of the same size pie, the result is usually lower productivity.
What of the argument that unions raise wages to noncompetitive levels and have thus seriously affected the ability of some U.S. industries to compete? One surprising study of 134 industries concluded that “heavily unionized industries are not found to have lost any more to imports nor gained any more in exports than comparable U.S. industries . . . industrial concentration appears to be a significant disadvantage.”19 This means that U.S. industries facing a more globally competitive environment after less domestic competition tended to have more difficulty competing regardless of union status.
Studies show that unionization negatively affects accounting profits and shareholder wealth. For example, shareholder wealth decreases during union organizing campaigns and strikes and increases during concession bargaining. Unions do not seem to change the overall firm value, but they do redistribute the firm’s economic profits from the stockholders to the workers. Research on “high-performance work systems” establishes a relationship between the absence of labor unions and corporate financial performance.
Unions can also influence firms through unilateral management responses (in anticipation of union pressure) and can influence nonunion firms through spillover and threat effects (i.e., adoption of “unionlike” practices through imitation or to prevent unionization). The recent improvements in the compensation and benefits of Wal-Mart employees are probably one example of these “spillover” effects. However, such effects could erode in the future due to competitive pressures and declining unionization.