Labor Unions: Achieving Efficiency, Equity, and Voice in the Employment Relationship

1. CHAPTER TWO • LABOR UNIONS: GOOD OR BAD? • The objectives of the employment relationship are efficiency, equity and voice. • Employee representation through labor unions and collective bargaining is one way to achieve a balance of these objectives. • Whether unions are thought to be “good” or “bad” depends on how one thinks labor markets and the employment relationship works.

2. Workplace Governance Options

3. THE LABOR PROBLEM • Neoclassical economics view • Free markets and competition promote optimal (efficient) outcomes • “Labor problem” stems from market failures or is perhaps “labor’s situation” (unions interfere w/ markets) • HRM view • HR policies can align interests of Ers and Ees • “Labor problem” would be poor mngt (unions unnecessary/conflictual) • Industrial relations view • Inherent conflict of interests, unequal bargaining power • “Labor problem” stems from unequal power and lack of unions a/o gov’t leveling of playing field (unions necessary) • Critical view • “Labor problem” stems from capital’s control of social institutions (unions important mechanism, may be co-opted)

4. THE LABOR PROBLEM • U.S. political and legal thought during the 1800s and 1900s dominated by laissez faire views consistent with neoclassical school of economics. • Great Depression (1930s) called into question wisdom of laissez faire legal and economic philosophies. • FDR’s “New Deal” policy embraced Industrial Relations school of thought, assumed that labor unions and collective bargaining counter corporate bargaining power and provide Industrial Democracy.

5. FUNDAMENTAL ASSUMPTIONS OF HUMAN RESOURCES AND INDUSTRIAL RELATONS • Different possible underlying causes of labor problems of early 20th century lead to different views of labor unions. • Underlying these views are four fundamental assumptions of how markets work and nature of employment (see Box 2.10): • Is labor a commodity? • Are employers and employees equals in self-regulating, competitive labor markets?  • Is there an inherent conflict of interest between employers and employees? • Is employee voice important?

6. THEORIES OF THE LABOR MOVEMENT • The several views of labor unions give rise to several categories of theories (or views) of the labor movement, based on social roles of labor unions: • Harmful Labor Market Cartel (monopoly) • Institution for Economic Protection • Agent for Extending Industrial Democracy • Agent of Revolution • Special Interest Group in a Pluralist Society • Instrument for Achieving Psychological Needs • Agent for Moral and Spiritual Reform

7. WHAT DO LABOR UNIONS DO? • Are unions good or bad? • Ultimately, no single answer to question. • One way to address issue is through influential model of unionism developed by economists Freeman and Medoff. • Model states that labor unions have two faces, a monopoly face and a collective/institutional response face. • With two faces, unions can have both positive and negative effects on diverse list of workplace and societal dimensions

8. WHAT DO UNIONS DO? (efficiency)

9. WHAT DO UNIONS DO?(equity)

10. WHAT DO UNIONS DO?(voice)

11. THE LABOR PROBLEM IN THE 21ST CENTURY • Chapter Two lays out schools of thought, discusses historical “labor problem” • Relevant as well for contemporary labor relations • Economic and social debates such as globalization • Are modern sweatshops a problem? If so, what should be done? • See “Workers in Bondage” • See www.aflcio.org • See www.ilr.cornell.edu/trianglefire