Environmental/Contextual Issues

1
Environmental/Contextual Issues

• Social, Legal, Economic and Political

2
Social Environment for Collective Bargaining in
the U.S.

• Individualism
• Rights of individuals superior to other rights
• Property rights as a derivative of individual
  rights
• Corporations are legal individuals
• Chartered by state
• Collectivities of shareholders
• Perpetual life
• Limited liability

3
Citizens United v. FEC U.S. Supreme Court,
1/21/2010

• Justice Kennedy, Majority Opinion. The Court has
  recognized that First Amendment protection
  extends to corporations. . . . (23 citations
  omitted) This protection has been extended by
  explicit holdings to the context of political
  speech. . . . (2 citations omitted) Under the
  rationale of these precedents,political speech
  does not lose First Amendment protection simply
  because its source is a corporation (2 citations
  omitted) . . . The Court has thus rejected the
  argument that political speech of corporations or
  other associations should be treated differently
  under the First Amendment simply because such
  associations are not natural persons. (558
  U.S. _____, pp. 25-26 Opinion)

4
Citizens United v. FEC U.S. Supreme Court,
1/21/2010

• Justice Stevens, Dissenting Opinion. In the
  context of election to public office, the
  distinction between corporate and human speakers
  is significant. Although they make enormous
  contributions to our society, corporations are
  not actually members of it. They cannot vote or
  run for office. . . The financial resources,
  legal structure, and instrumental orientation of
  corporations raise legitimate concerns about
  their role in the electoral process. 558 U.S.
  ____, p. 2 Dissent)

5
The Employment Relationship

• An economic exchange transaction
• Between two individuals
• Basically, perceived as no different than
  purchasing a commodity
• No social content

6
Unions and Individualism

• Collectivities
• Collectivizing what we view as natural individual
  economic transaction
• At a disadvantage vis-à-vis those exercising
  rights
• Corporations legal individuals
• Employees actual individuals
• Skeptical About Governmental Protection

7
Other Values

• Europe
• Class based collectivistic values in Europe
• Asia
• Confucianism based principles of obligation and
  harmony

8
Implications of Social Environment for Collective
Bargaining

• Strong management and employers
• Property rights
• Individualism
• Job provider
• Resistance to unionism
• Unionism
• Struggle for legitimacy
• Difficulty in staying organized

9
Legal Environment

• Basic Principles of Legal Environment
• Accessible
• Wide Coverage
• Public
• Mandatory Procedures

10
Economic Environment

• Macro-Level Focus
• Determinants of Union Growth
• Shifts in Structure of Employment
• Business Cycle
• Micro Level Focus
• Labor and Product Markets\Firm
• skilled - hard to replace workers
• inelastic demand for union product
• inelastic supply of substitutes for union labor
• ratio of labor costs to total costs (importance
  of being unimportant)
• Take Wages out of Competition - Organize the
  Product Market

11
Product Market

• Successful organization of product market key to
  union success during period 1945-75
• Autos
• Steel
• Airlines
• Trucking
• Paper
• Construction
• Union Taking Wages (labor costs) Out of
  Competition

12
Product Market

• Implications
• As entry increases, union power declines
• Wages and labor costs
• If employers can remove themselves from unionized
  sector, union power declines
• spatial limitations
• Longshoring
• Public Employment
• Post 1975
• Increasing foreign competition - nonunion
• autos less than 5 market share in late 60s to
  roughly 35 today
• steel increase in worldwide capacity
• Deregulation - airlines and trucking

13
Product Market (cont.)

• Employer Removal - rubber
• Spatial Characteristics - longshoring

14
Microeconomic Principles

• Consumer Welfare
• Efficiency is desirable
• Efficiency is determined by low prices to
  consumers
• Work is for the purpose of generating income so
  that individuals can consume
• Labor supply
• Labor an input to production

15
Implications

• More competitive product markets due to entry of
  unorganized firms reduces union power
• Unionized employer capability of removal from
  union sector reduces union power
• Both happened in period 1975-2005

16
Political Environment

• Political linkages
• Unions Democratic Party
• Employers Republican party
• Republican party rise over last 25 years
• Favorable to Business
• Flexibility
• Reduction of Legal Constraints
• Minimalist government

17
Political Environment (cont.)

• Legislative Gridlock
• Each side can prevent other from meeting its
  labor market regulatory goals
• Freezes status quo
• Defaults to
• NLRB
• Courts of Appeals

18
Linkages to Other Three Environments

• Social
• Reinforces individualism Legal
• Legislation
• Appointments
• Administrative
• Judicial
• Economic
• Fewer constraints on business
• Willingness to let market work