Time path of strikes United States Number of strikes declines sharply in mid 1970s Hits post WWII low in 1985, levels out at less than 50 per year. Europe

Time path of strikes

•United States•Number of strikes declines sharply in mid 1970s•Hits post WWII low in 1985, levels out at less than 50 per year.

Europe•Incidence of strikes also declined starting in the 1980s

Theories of strikes

•Joint cost model•Low union and firm costs of a strike will lead to a greater incidence of strikes

–Explains why strikes more common in durable manufacturing, concentrated industries where lost sales, production can be made up

•If costs are unequally divided, the party that bears the largest costs will make the biggest concessions

Theories of strikes

Joint cost model•Firm preparation before strikes

–Build up Inventory, Production•Possible with durables (autos, steel, electronics)•Not possible with nondurables (bakery, dairy, UPS next-day service)

–Prepare strike plan (decide between using exempt or replacement workers or shutting down, security, legal)

•During strike–Raise prices—moderate consumer demand to shorter supply–Replacement labor used in a small proportion of strikes

•After strike–Deferred sales, stepped up production

Theories of strikes

Joint cost model•Union preparation before strikes

–Strike fund—built up from dues–Organize workers to man picket lines, train on legal and illegal behavior

•During strike–Disburse strike funds (fraction of previous earnings, receipt may be tied to participation in the picket line or other union activities) –Part-time jobs–Public assistance

•UI, Food stamps, Welfare, Local

•After strike–Union must be able to contact workers

•Vote on contract•Take up open jobs

Theories of strikes

Example of strike preparation in the automobile industry: Gunderson and Melino, Journal of Labor Economics 5 (January 1987)

Firms prepare a strike plan in case negotiations break down (as do Unions)

In 70% of strikes, firm suffers no production loss

Theories of strikes

•Information dissemination model: imperfect or asymmetric information leads to strikes

–Consistent with evidence that strikes are more common in firms with highly variable stock prices

•Note —both of these views of strikes fit within the Hick’s model—they explain why resistance and concession curves have differing shapes

LeRoy “The PATCO Strike: Myths and Realities.” and “Lengthening Duration of Permanent Replacement Strikes: Public Policy Implications.” IRRA 49th Annual Proceedings

•Time path of strikes in the U.S.—sharp decline in the 1980s

•1981: Reagan fired all striking air traffic controllers for violating federal law prohibiting strikes. Replaces them permanently with workers who did not honor the strike

•Is PATCO responsible for decline in strikes?


•Is PATCO responsible for decline in strikes?–Increase in use of replacement workers since 1970

•Between 1935-1970, frequency of permanent replacement strikes varies between 0.4% and 2.3%•After 1970, frequency varies from 1.2% to 5%•Irony: Reagan halted BLS reporting of strike data in 1981 at time of PATCO strike•In 15-30% of strikes, replacement workers are used, so most replacement workers are temporary

–Increase in length of strikes using permanent replacements since 1970

• Not obviously a change due to PATCO strike

–Replacement strikes are still relatively rare


•Is PATCO responsible for decline in union density?

–Distinction between public and private sector unionization

•Density rising in the public sector, despite PATCO•Not clear why enforcement of anti-strike rules in public sector should affect legal strike activity in the private sector

Hutchens, Lipsky and Stern, “Unemployment Insurance and Strikes.” Journal of Labor Research 13 (Fall 1992)

•Test of the joint cost model: Strikes are more common when the combined firm and union costs of the strike are lower

•If costs are unequally divided, the party that bears the largest costs will make the biggest concessions


•Unemployment Insurance benefits provided

–to strikers in New York and Rhode Island after 8 weeks and 7 weeks respectively–Stoppage of work: 24 states allow benefits if the firm does not cut production as a result of the strike–Innocent bystander: If you lose your job as a result of the strike but are not a direct participant


•Why would unemployment benefits for strikers affect incidence of strike?

–Lowers cost for workers–If incomplete experience rating, implicit subsidy of strike–If UI benefits untaxed (have been taxed since 1979) implicit subsidy of strike–Innocent bystander rule has unknown effect–Magnitude of effect may depend on amount of UI benefit


•Results–Work stoppage rule has no significant impact–New York and Rhode Island have no significant impact–Innocent bystander rule lowers frequency of strikes–Magnitude of benefits raises incidence of strikes


•ConclusionLowering cost of strikes to workers (more UI benefits) increases incidence of strikes

•What lowers costs to the firm?

–One option—maintaining production during strike

Singh and Jain. “Striker Replacement in the United States, Canada and Mexico: A Review of the Law and Empirical

Research.” Industrial Relations 40 (January 2001)

•Arguments for or against restrictions on the use of replacement workers

–For•Lessens chance of picket line violence•Shortens strike or lowers likelihood of strike (raises cost of strike for firm)•Replacement workers may be used to decertify the union•Replacement workers allow firm to avoid its duty to bargain collectively•Leads to poor employer-employee relations

Singh and Jain. “Striker Replacement in the United States, Canada and Mexico: A Review of the Law and Empirical

Research.” Industrial Relations 40 (January 2001)

•Arguments for or against restrictions on the use of replacement workers

–Against•Gives too much power to unions•Puts small firms at a disadvantage (less able to absorb strike costs)•Inconsistent with free market, right to property

Use of replacement workers

•United States–Mackay Radio and Telegraph Co. (1937)

•San Francisco radio station struck, brings in workers from other places to keep station functioning

–Although section 13 provides nothing in the Act shall be construed so as to interfere with or impede … the right to strike, it does not follow that an employer, guilty of no action denounced by the statute, has lost the right to protect and continue his business by supplying places left vacant by the strikers. And he is not bound to discharge those hired to fill the places left by strikers, upon the election of the latter to resume their employment, in order to create places for them

Unfair Labor Practices and Economic Strikes

• ULP Strikes are called to press for reversal of violations of the NLRA– Failure to bargain in good faith– Discrimination on the basis of union sentiment– Failure to recognize the union

• Only temporary replacements can be used in ULP strikes

• ULP Striking employees are unconditionally entitled to reinstatement at the end of the strike

• NLRB decides on ULP vs economic strike status

Unfair Labor Practices and Economic Strikes

Economic Strikes are called to press for wages, benefits, or working conditions

• Permanent replacements can be used in the case of economic strikes

• Replacement workers also have rights—cannot be fired after the strike if they were promised a long-term job (Belknap v. Hale (1983)

Economic Strikes

Even though they are not obligated, most employers rehire strikers

–Trained–Known –Avoids friction between union and replacement workers

If do not hire back all strikers….–Must not look like a retaliatory measure based on support of the union, or face a potential ULP charge –Strikers must be considered for open positions and put on waiting list for future openings–Rehired strikers must be paid the same as replacement workers. Can’t be punished for strike in terms of compensation.

Economic Strikes

Employees lose all rights to rehire or preferential position in the hiring pool in an economic strike if

•They have accepted a substantially similar job elsewhere

•They engaged in violent activities during the strike

Illegal Strikes: Workers lose NLRA protection of the right to rehire

• Strikes called during the Warning Period (60 day negotiation period)

• Wildcat strikes: strikes not sanctioned by the union– Union may be liable for damages if contract

has no-strike clause

• Sit-down strike—workers refuse to work and remain on the premises


• Strikes called during the Warning Period (60 day negotiation period)

• Wildcat strikes: strikes not sanctioned by the union– Union may be liable for damages if contract

has no-strike clause

• Sit-down strike—workers refuse to work and remain on the premises


• Secondary strike: In a primary dispute with firm A, the union also strikes firm B that has business dealings with firm A.

• Hypothetical examples– Grocery workers striking Safeway also strike trucking

company delivering produce to Safeway– Steelworkers on strike against rebar manufacturer

convince construction workers at building site to strike to prevent firm from purchasing rebar from the firm


• Sympathy strike: honoring picket lines of other unions (treated as are primary strikers

• Can be permanently replaced if economic strike• Temporarily replaced if ULP strike

– Honoring picket line ok if fear of violence– If only part of job (don’t make delivery at one

firm on route =>prorated punishment)


• Jurisdictional strikes: Striking over which of two or more competing unions should get the work assignment (NLRB is to decide on assignment)

• Example—plumbers refuse to work because they believe they should both do the plumbing and install bathroom tile on a high rise project.

• Recognition strike: Union strikes a firm for the right to represent workers already covered by a recognized union

Singh and Jain. “Striker Replacement in the United States, Canada and Mexico: A Review of the Law and Empirical Research.” Industrial Relations 40 (January 2001)

•United States–Legal to use permanent replacements in economic strikes.–Can only use temporary replacements in ULP strikes–Either permanent or temporary replacements are used in 15-30% of strikes


•Canada–Illegal to use permanent replacement workers in all provinces. Illegal to use temporary replacements in four provinces.–There is some element of guaranteed rehiring of strikers at the conclusion of the strike in all provinces–Replacements used in 12-20% of strikes


•Mexico–Right to strike guaranteed–Prohibition against hiring either permanent or temporary replacement workers in legal strikes

•Legal strikes involve a majority of the workers, and are geared toward pressuring employer to raise wages or comply with CBA.

–Officially, replacements are used in 0% of strikes–Enforcement spotty


•How do bans of replacement workers affect strike incidence or duration?

–Effect of legislation•Evidence from Canada (depends on Quebec vs rest)

–Increased probability of strike

–Increased length of strike

–Effect on wages zero or positive

–Effect of use of replacement workers (U.S. and Canada)•Raises length of strike•Raises union decertification•Raises incidence of picket line violence•Mixed on probability of strike

Documents

Time path of strikes United States Number of strikes declines sharply in mid 1970s Hits post WWII low in 1985, levels out at less than 50 per year. Europe