Union organization (1)

Union Union OrganizationOrganization

Picking a targetPicking a target1.1. Union return on investment Union return on investment

depends on cost of organizingdepends on cost of 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 Expected bargaining strength in the sectorthe sector


Picking a targetPicking a target1.1. Union return on investment depends on Union return on investment depends on

cost of organizingcost of organizing2.2. 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


Picking a targetPicking a target3.3. Expected probability of winExpected probability of win

– Wages and benefits in the firm relative Wages and benefits in the firm relative to local reference, industry normsto local reference, industry norms

– Worker sense of inequity or injusticeWorker sense of inequity or injustice Campaigns based on workplace dignity: Campaigns based on workplace dignity:

56% win56% win Traditional wages, hours, job security: 27% Traditional wages, hours, job security: 27%

winwin

– Probability of firm resistanceProbability of firm resistance– Phone sampling, researchPhone sampling, research


Picking a targetPicking a target4. Expected bargaining strength in the 4. Expected bargaining strength in the

sectorsector 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


Labor demand: N: number of workers; W: Labor demand: N: number of workers; W: WageWage

Demand

N

W

W1

W0

N1 N0

Wage Bill = W*N; Change in wage bill = W1N1 – W0N0


Labor demand: N: number of workers; W: Labor demand: N: number of workers; W: WageWage

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

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

EED D = 1: unitary elastic demand= 1: unitary elastic demand

EED D > 1: elastic demand> 1: elastic demand

Wage increase with inelastic demand will Wage increase with inelastic demand will raise the wage billraise the wage bill

Wage increase with elastic demand will Wage increase with elastic demand will lower the wage billlower the wage bill

Union OrganizationUnion OrganizationEEDD = Elasticity of demand = 0.3 < 1, = Elasticity of demand = 0.3 < 1,

inelasticinelastic

% change in employment = 3%% change in employment = 3%

% change in wage = 10%% change in wage = 10%

WW1 1 = 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 So wage bill rises when wage rises when the elasticity of demand is

below 1.below 1.


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 elastic Product 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-Nonunion options paid comparable wages (Davis-

Bacon)Bacon)


Laws of derived demandLaws of derived demand Union labor demand is less elastic Union labor demand is less elastic

when …when … ““Importance of being unimportant”—Importance of being unimportant”—

labor costs are a small fraction of total labor costs are a small fraction of total costscosts Heavily capitalized sectorsHeavily capitalized sectors Crafts vs. industrial unionsCrafts vs. industrial unions Only holds when elasticity of demand for Only holds when elasticity of demand for

product is bigger than the elasticity of product is bigger than the elasticity of substitution (holds most of the time)substitution (holds most of the time)

Steps for union recognition Steps for union recognition by NLRB electionby NLRB election

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 Solicits assistance and trains employees

sympathetic to the unionsympathetic to the union Nonemployees do not have access to the premises as Nonemployees do not have access to the premises as

long as there is an alternative way to contact workerslong as there is 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 If the union is successful, it will need an infrastructure

of employees to serve as stewards, local leadersof employees to serve as stewards, local leaders


3.3. SolicitationSolicitation• Work time vs personal time at work vs Work time vs personal time at work vs

nonwork time nonwork time • NLRB reserves work time for work—limits NLRB reserves work time for work—limits

interference in firm business practiceinterference in firm business practice• Personal time at work (lunch, breaks) are Personal time at work (lunch, breaks) are

open for oral solicitation by employeesopen for oral solicitation by employees• Pro union posters, bulletins, clothing, Pro union posters, bulletins, clothing,

buttons ok if they do not disrupt businessbuttons ok if they do not disrupt business• Off-premises solicitation is okOff-premises solicitation is ok


4.4. Authorization cardsAuthorization cardsMinimum of 30% needed to authorize Minimum of 30% needed to authorize

electionelection(unions will not press for election unless (unions will not press for election unless they have majority. AFL-CIO they have majority. AFL-CIO recommends 75%)recommends 75%)

5. Representation Petition5. Representation PetitionUnion submits RC petition. NLRB Union submits RC petition. NLRB verifies minimum 30% interest.verifies minimum 30% interest.

Cross-petition from other unions requires Cross-petition from other unions requires additional 10% interestadditional 10% interest


Strict Rules Governing Firm Behavior Strict Rules Governing Firm Behavior During Union CampaignDuring Union Campaign

Steps for union recognition by Steps for union recognition by NLRB electionNLRB election

6.6. Secret Ballot electionSecret Ballot electionWithin 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 Economic strikers within 12 months of strikestrike

Replacement workersReplacement workers

Part-time workers with continuing interestPart-time workers with continuing interestSAG: anyone who worked at least two days in SAG: anyone who worked at least two days in last 12 monthslast 12 months

Steps for union recognition by Steps for union recognition by NLRB electionNLRB election

7.7. Rules on election dayRules on election day1.1. No mass meetings 24 hours before No mass meetings 24 hours before

electionelection

2.2. Firm cannot offer benefits or reprisalsFirm cannot offer benefits or reprisalsNo special pay from firm to compensate for voting No special pay from firm to compensate for voting

expensesexpenses

Special pay from union for voting expenses is ok, Special pay from union for voting expenses is ok, other compensation is illegalother compensation is illegal


8.8. Certification of ElectionCertification of ElectionIf NLRB certifies union win, union is immediately If NLRB certifies union win, union is immediately

certified. Has one year to get a contractcertified. Has one year to get a contract

Contract bar—no other elections allowed for one year, Contract bar—no other elections allowed for one year, regardless of who winsregardless of who wins

If firm is guilty of ULP, NLRB may call for another vote; If firm is guilty of ULP, NLRB may call for another vote; or or

Gissel doctrine NLRB may certify union if firm behavior Gissel doctrine NLRB may certify union if firm behavior is considered so bad as to make a fair election is considered so bad as to make a fair election impossible and there is evidence that union has a impossible and there is evidence that union has a majority; ormajority; or

J.P. Stevens ordered to bargain, even though union did J.P. Stevens ordered to bargain, even though union did not demonstrate majority through authorization cardsnot demonstrate majority through authorization cards

Voluntary RecognitionVoluntary Recognition If firm volunteers to recognize union, If firm volunteers to recognize union,

NLRB will certify union.NLRB will certify union. Recognition picketing (limit of 30 days, Recognition picketing (limit of 30 days,

after which firm can ask for expedited after which firm can ask for expedited election)election)

Economic pressure (boycotts, political Economic pressure (boycotts, political pressure)pressure)

Prior agreements between firm and Prior agreements between firm and worker to accept recognition cards in worker to accept recognition cards in lieu of NLRB electionlieu of NLRB election

Absent election, union at risk of Absent election, union at risk of decertification election, decertification election,

Eaton and Kriesky on Neutrality Eaton and Kriesky on Neutrality and Card Check Agreements ILRR and Card Check Agreements ILRR

(October 2001)(October 2001)

Unions may wish to forge agreements that Unions may wish to forge agreements that lower the cost of organizing or the lower the cost of organizing or the standard for successstandard for success Agreements with firms that have multiple sitesAgreements with firms that have multiple sites

Centralized agreements Centralized agreements Generalized agreement based on a few local Generalized agreement based on a few local

relationshipsrelationships Agreement with entirely new firmsAgreement with entirely new firms

Agreements with Associations of EmployersAgreements with Associations of Employers Most common: Steel, autos, communications, Most common: Steel, autos, communications,

hospitality, gaminghospitality, gaming (66%) restrict agreement to specific (66%) restrict agreement to specific

occupations, job classifications, or facilitiesoccupations, job classifications, or facilities

Types of agreementsTypes of agreements

Neutrality Agreements: Neutrality Agreements: ““Neither helping nor hindering” union Neither helping nor hindering” union organization efforts, facts allowed (UAW, organization efforts, facts allowed (UAW, CWA)CWA)““Employer will not communicate opposition; Employer will not communicate opposition; employer will not attack or demean the union employer will not attack or demean the union or its representatives (HERE)or its representatives (HERE)Firm will not provide support to anti-union Firm will not provide support to anti-union groups (USWA)groups (USWA)Weaker statements: strive for climate free of Weaker statements: strive for climate free of hostility; only positive, pro-company hostility; only positive, pro-company statements will be issuedstatements will be issued


Card Check Agreements: Card Check Agreements: (73%) Third party neutral will (73%) Third party neutral will validate membership cards signed by validate membership cards signed by union members. Firm will recognize union members. Firm will recognize union if a minimum level is reached union if a minimum level is reached (say 65%)(say 65%)Similar to above, but if percentage of Similar to above, but if percentage of cards is above 50% but below cards is above 50% but below threshold, a nonNLRB election is held. threshold, a nonNLRB election is held. If percentage is between 30% and If percentage is between 30% and 50%, NLRB election held.50%, NLRB election held.


Access:Access:(66%) Union will be allowed on the firm (66%) Union will be allowed on the firm premises.premises.(36%) Union given lists of employees in the (36%) Union given lists of employees in the bargaining unitbargaining unit

First contractFirst contractAccretion of new sites into existing Accretion of new sites into existing bargaining units (50% of multi-site bargaining units (50% of multi-site agreements)agreements)Arbitration if first contract not reached Arbitration if first contract not reached (USWA)(USWA)Negotiations begin immediately upon Negotiations begin immediately upon recognitionrecognition

DataData

57 International unions with 57 International unions with 10,000+ members10,000+ members

36 respond36 respond 23 had at least one agreement23 had at least one agreement 132 agreements total (113 at least 132 agreements total (113 at least

partially useable)partially useable) Data analyzed only relate to these Data analyzed only relate to these

113 contracts113 contracts

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 Does this mean that universal mandatory application of card check or neutrality will application of card check or neutrality will raise union density?raise union density?

Thieblot. “The Fall and Future of Thieblot. “The Fall and Future of Unionism in Construction.” Unionism in Construction.”

Journal of Labor Research Spring Journal of Labor Research Spring 2001.2001. 1959 Landrum Griffin Act allows 1959 Landrum Griffin Act allows

closed shops in building trades (pre-closed shops in building trades (pre-hire agreements)hire agreements)

Davis Bacon Act (1931); Little Davis Davis Bacon Act (1931); Little Davis Bacon Acts 2/3 of states); Project Bacon Acts 2/3 of states); Project Labor Agreements (eg Des Moines Labor Agreements (eg Des Moines Iowa Events Center)Iowa Events Center)

Construction has lost density more Construction has lost density more than most industriesthan most industries

Why has Union Density fallen in Why 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 10 states repealed little Davis Bacon Acts since 1979Acts since 1979 Most of the decline predates thisMost of the decline predates this Decline occurs does not slow after Decline occurs does not slow after

Landrum GriffinLandrum Griffin Union/Nonunion Cost StructureUnion/Nonunion Cost Structure

Union / Nonunion Cost DifferentialUnion / Nonunion Cost Differential

Pay differential 50% plusPay differential 50% plus Pay differential largest for the least Pay differential largest for the least

skilledskilled

How can unionized firm compete?How can unionized firm compete?


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 must be at least 50% higher for union firm to be be at least 50% higher for union firm to be competitivecompetitive


Evidence on relative productivityEvidence on relative productivity

Cost per Sq foot = aCost per Sq foot = a00 + a + a11*INPUTS + *INPUTS + aa22*(UNION) *(UNION)

aa22 > 0 implies union effect on wages > 0 implies union effect on wages dominates union effect on productivitydominates union effect on productivity

aa2 2 < 0 implies union effect on productivity < 0 implies union effect on productivity dominates union effect on wagedominates union effect on wage

Evidence suggests aEvidence suggests a22 > 0; responsible for at > 0; responsible for at least part of the declineleast part of the decline


Other sources of higher union costOther sources of higher union costWork rulesWork rules

Price of helpersPrice of helpersStaffing: journeymen vs less skilledStaffing: journeymen vs less skilledTrade staffing restrictionsTrade staffing restrictions

Slow adjustment to new technologies, Slow adjustment to new technologies, tradestrades

Consequence: union market share has fallen Consequence: union market share has fallen from 75% in 1950 to 25% todayfrom 75% in 1950 to 25% today


Competitive option when unit costs are Competitive option when unit costs are higher in union sectorhigher in union sector 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, Government projects are 20% of the market, largely unionlargely union

Private sector projects are about 80% of the Private sector projects are about 80% of the market, largely nonunionmarket, largely nonunion

Other Strategies for unionized Other Strategies for unionized firms, unionsfirms, 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 Union pools money on high priced, prevailing

wage jobs to subsidize wages on competitive bidswage jobs to subsidize wages on competitive bids Salting: try to lower APSalting: try to lower APNN or raise W in or raise W in

nonunion sectornonunion sector More laterMore later

Unionized firmsUnionized firms Double breasting: union and nonunion crewsDouble breasting: union and nonunion crews

Fine. “Union Salting: Reactions and Rulings Fine. “Union Salting: Reactions and Rulings since since Town and CountryTown and Country JournalJournal of Labor of Labor

ResearchResearch Summer 2002. Summer 2002.

Salting: union members or organizers Salting: union members or organizers accept employment at a nonunion firm accept employment at a nonunion firm with the intent of filing unfair labor with the intent of filing unfair labor practice charges and organizing the practice charges and organizing the work placework place Aim is to pressure firm to recognize the Aim is to pressure firm to recognize the

union without a certification election; orunion without a certification election; or To disrupt nonunion firm production To disrupt nonunion firm production

activities and lower its cost advantage activities and lower its cost advantage over union firmsover union firms



NLRB v. Town and Country Electric (1995)NLRB v. Town and Country Electric (1995) IBEW locals 292 and 343 asked their unemployed IBEW locals 292 and 343 asked their unemployed

members to apply for jobs at Town and Country Electricmembers to apply for jobs 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 How to monitor employer actions for possible ULP

chargescharges IBEW paid the salts the difference between nonunion and IBEW paid the salts the difference between nonunion and

union scale.union scale. IBEW alleged one salt wrongfully discharged; 10 IBEW alleged one salt wrongfully discharged; 10

others wrongfully refused employmentothers wrongfully refused employment NLRB upholds charge; consistently has held that NLRB upholds charge; consistently has held that

salts are entitled to the same rights as other salts are entitled to the same rights as other employeesemployees



ULP charges rise 36% in nonunion ULP charges rise 36% in nonunion firms after salting firms after salting NLRB Cases involving saltsNLRB Cases involving salts

1995:1995: 4 4 1996:1996: 9 (of 262 salt cases filed in 9 (of 262 salt cases filed in

1996)1996) 1997: 101997: 10 1998: 81998: 8 1999: 81999: 8 2000: 162000: 16



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, Penalties include back pay, reinstatementsreinstatements



Employer responsesEmployer responses Salting insurance paid by the Associated Salting insurance paid by the Associated

Builders and ContractorsBuilders and Contractors Architectural Glass and Metal Co. Inc. Architectural Glass and Metal Co. Inc.

(1997) (1997) can dismiss salts if there is an anti-can dismiss salts if there is an anti-moonlighting clause in contractmoonlighting clause in contract

Industrial Company Southeast, Inc. Industrial Company Southeast, Inc. (1997)(1997) Can require applications on Can require applications on original forms (union had submitted original forms (union had submitted applications on xeroxed application forms.applications on xeroxed application forms.

DecertificationDecertification

RD petition must be filed by employeesRD petition must be filed by employees At least 30% of employees must sign a At least 30% of employees must sign a

decertification petitiondecertification petition Employer cannot encourage this process, Employer cannot encourage this process,

must remain neutralmust remain neutral Filed within 60-90 days of expiration of a Filed within 60-90 days of expiration of a

contract; or contract; or if there has been no contract filed within 1 if there has been no contract filed within 1

year of certification; oryear of certification; or After a contract has expiredAfter a contract has expired

DecertificationDecertification

RM petition can be filed by the RM petition can be filed by the employeremployer Timing similar to RDTiming similar to RD Evidence supporting RM petition can Evidence supporting RM petition can

include:include: Unsolicited communications from Unsolicited communications from

employees requesting decertification;employees requesting decertification; Failure of union to represent workers, fulfill Failure of union to represent workers, fulfill

responsibilities; responsibilities; Changes in the size of the workforceChanges in the size of the workforce

DecertificationDecertification Unions lose 75% of decertification electionsUnions lose 75% of decertification elections Unions win 45-50% of certification elections Unions win 45-50% of certification elections

RD petitions are gaining over time, RC and RD petitions are gaining over time, RC and RM petitions have decreased in relative RM petitions have decreased in relative importance.importance.

Combined RD + RM mean that Combined RD + RM mean that decertification elections are rising in decertification elections are rising in importanceimportance

Scott, Hester and Arnold. “Employer-Initiated Elections, Scott, Hester and Arnold. “Employer-Initiated Elections, 1968-1992.” 1968-1992.” Journal of Labor ResearchJournal of Labor Research Spring 1997. Spring 1997.

Career

Union organization (1)