1. Theories1 ECONOMIC VIEW OF COLLECTIVE BARGAINING Unions a Disruption to Competitive Markets Cause a Misallocation of Resources

2. Wn Wu EuEn UNIONIZED SECTOR NONUNION SECTOR Sn Su Wn Wu Wn

3. Theories3 Management Perspective Dominant in U.S. Flows from Economic Perspective Firm (management) has knowledge and legal authority/responsibility to allocate resources (capital and labor) efficiently in best interests of stakeholders and customers of firm

4. Perlman (1928) Strength of institution of private property Capacity of business to convince society that only they know how to run things –If business is prevented from doing what it is best for business, wealth and jobs will decline Acceptance by body politic of this Theories4

5. Implications for Unions and Collective Bargaining Legitimizes opposition to collective bargaining and unions –Unions seen as preventing management from doing what it must do Forces unions into a lower, unequal status Default is nonunion Theories5

6. Two Concepts Firms are price takers in all markets (labor and product) –Employment an economic transaction Both parties are equal and price takers Raising wages or compensation through collective bargaining is an inefficient use of market power Management of firms must have full discretion over resources to make decisions in best interest of – efficiency (economic view) –Shareholders/owners (private property view) Theories6

7. 7 Relax Price-Taker Assumption for Labor Market Inequality –Status –Bargaining Power Bilateral Perspective Balance Required Economic transaction concept becomes less appropriate than under the price taker assumption –Need other ways to structure employment relationship

8. Concept of Countervailing Power Large institutions will offset the counter the influence of other large institutions –Assume all institutions pursue their self-interest –Unions will counter firm power –“checks and balance” type system Theories8

9. 9 GOVERNANCE VIEW Focuses on how decisions are made –no CB - unilaterally –CB – jointly or negotiated Permits workers to participate in decisions affecting them Transference of notions of democracy to the workplace –property rights only provide authority over property –does not necessarily provide authority over people

10. Theories10 INDUSTRIAL DEMOCRACY VIEW Workplace is analogous to society Cannot have democracy in society without democracy in the workplace

11. Theories11 Law and Values View Values in United States –Individualism rights of individuals superior to other rights property rights a derivative of individual rights individuals free to order economic transactions so long as no laws are broken - freedom of contract –Corporations are Legal Individuals –Purchase and sale of labor an exchange transaction –Unions attempt to collective an individual transaction

12. Theories12 Law and Values View (CONT.) Values in U.S. and Law –Unequal status of employers and unions conflicts between ind\property rights and collective rights usually resolved in favor of ind rights “reserved rights” theory of management Impact on IR System –Unions –Employers\Corporations –Product Market

13. Theories13 ACTIONS ASSOCIATED WITH EMPLOYEE DISSATISFACTION Economic View - Exit Governance View - Voice

14. Theories14 INDUSTRIAL RELATIONS SYSTEMS OUTCOMES ARE RULES – PROCEDURAL RULES – SUBSTANTIVE RULES HOW ARE RULES ESTABLISHED? – MANAGEMENT – GOVERNMENT –WORKERS HIERARCHY – MANAGEMENT-WORKERS – MANAGEMENT-WORKERS-GOVT

15. Theories15 INDUSTRIAL RELATIONS SYSTEMS (CONT.) ACTORS – MGMT, GOVT, WORKERS/ORGS CONTEXTS – TECHNOLOGICAL TYPE OF PRODUCT OR SERVICE – AIR TRAVEL GEOG DISPERSION VARIABLE HOURS, ETC. –MANUFACTURING (PAPER) GEOG CONCENTRATION, LONGER SHIFTS (ETC.)

16. Theories16 INDUSTRIAL RELATIONS SYSTEMS (CONT.) CONTEXTS (CONT.) – MARKET/BUDGETARY SHELTERED COMPETITIVE LOCUS OF POWER IN SOCIETY – OUTSIDE IR SYSTEM POLITICAL INFLUENCE OF UNIONS – CANADA - PARLIAMENTARY SYSTEM & NDP – U.S. - LINK TO DEMOCRATIC PARTY EMPLOYER LINK TO REPUBLICAN PARTY

17. Theories17 INDUSTRIAL RELATIONS SYSTEMS (CONT.) WHAT ARE THE RULES – SUBSTANTIVE COMPENSATION IN ALL FORMS DUTIES AND PERFORMANCE OF WORKERS RIGHTS OF WORKERS –PROCEDURAL FOR RESOLVING DISPUTES CHANGING THE RULES

18. Theories18 INDUSTRIAL RELATIONS SYSTEMS (CONT.) IDEOLOGY –A SET OF COMMON BELIEFS THAT HOLDS SYSTEM TOGETHER –ACTORS’ IDEOLOGIES MUST BE COMPATIBLE –EXAMPLES EUROPE – CLASS LINES – COLLECTIVE WORKER ACTIVITY A NATURAL COROLLARY TO CLASS

19. Theories19 INDUSTRIAL RELATIONS SYSTEMS (CONT.) –EXAMPLES (CONT.) UNITED STATES – INDIVIDUALISTIC – LESS COMFORTABLE WITH COLLECTIVISM AND UNIONISM, ESPECIALLY IF IMPOSED ON UNWILLING INDIVIDUALS (FREEDOM OF ASSOC.) – A NECESSARY EVIL – COMPOSITIONAL ISSUES WHAT IS GOOD FOR EVERYONE IS NOT NECESSARILY GOOD FOR EVERY ONE –SCOPE OF INCLUSION EXTENSION TO ALL EMPLOYERS IN EUROPE UNIT BY UNIT CHOICE IN U.S.