Definitions Collective bargaining: a method of determining terms and conditions of employment through negotiation between a union and a firm

Definitions

• Collective bargaining: A method of determining terms and conditions of employment through negotiation between a union and a firm.

• Union- Any organization that represents a collective of employees with regard to compensation, hours, and working conditions.

Theory of labor movements: European Roots

• Classical economists

• Equilibrium analysis
• Wages determined by long-run factors
• Competition maximizes social welfare

• Unions: short-run, disequilibrium, reduce competition, potentially harmful

• Unions did not fit into the competitive theory that early market economists believed represented the ideal.

• McNulty Origins and Developments of Labor Economists

Adam Smith 18th century

• “It is but equity that they who feed, clothe, and lodge the whole body of the people should have such a share of the produce of their own labor as to be themselves tolerably well fed, clothed, and lodged.”

• Government regulation “in favor of the workmen is always just and equitable…

• [Unions] act with the folly and extravagance of desperate men who must either starve or frighten their masters into an immediate compliance with their demands.”

Karl Marx, early 19th century

• Class struggle between labor and capitalists

• Union is a means of helping form class consciousness, short-run usefulness

• Long-run: classless society without unions

• Unions mainly political, pragmatic concentration on wages and benefits is dangerous

• First International : Advocated elimination of wage labor (From each according to his ability….)

Lujo Brentano, latter 19th century

• Unions grow out of the gild system—a means by which craftsmen can maintain capitalist status and fight back industrialization

• Unions are mainly a means of controlling quantity and quality of work.

• Why did they persist?

Sydney and Beatrice Webb, latter 19th century Industrial Democracy, 1897

• Industrialization moves workers progressively further from ownership, power.

• Unions provide a means of countervailing power

• Worker class and capitalist class will cooperate in production decisions: socialist state

• Unions are primarily pragmatic—means to economic gain for workers.

U.S. Theorists: Institutional School influenced by the Webbs began in early 20th century

• Institutional Economics: Effort to infuse theory with more reference to legal, historical and political contexts. Dominant school for industrial relations and collective bargaining textbooks.

• Neo-classical labor economics: theoretical study of labor based on microeconomic principles.

Robert Hoxie, early 20th century

• Characterization of unions by function

• Business unionism: emphasis on economic improvement
• Uplift unionism: emphasis on improving the cultural level of workers (Webb)
• Revolutionary unionism: emphasis on long-run rather than short-run goals (Marx)
• Predatory unionism: Union leadership concentrates on extracting resources from the rank-and-file
• Dependent unionism: firm controls the union as a means of controlling workers

John Commons, early 20th century Father of Industrial Relations

• Union development depends upon a country’s political, social and economic environment. Slow development on the U.S. is due to

• Free land
• Universal male suffrage
• Rapid expansion of markets
• Complex federal government
• Immigration
• Business cycles

• Is this just the supply and demand for union services?—synthesis of neoclassical and institutional schools

Themes from 200 years of union theorists

• Suspicion of unions as potentially lowering social welfare (classical economists)

• Unions as means to balance power of monopoly capitalists

• Unions as a way to improve the lot of the individual worker

• Role of institutions: laws/politics/economy

• Unions of skilled vs. unions of unskilled

• Unions in Europe and the U.S. come from different roots

A Tale of Two Movements

• Europe

• Socialist

• National labor party

• Bargaining across unions

• High density

• Gain ends through increased political power

Stylized facts regarding Union Importance in Europe vs. the United States

• Higher density in Europe

• Europe: Coverage>>Membership

• Decline in density is worldwide

• Decline in strikes is worldwide

• Labor share comparable

• Rising importance of public sector unionism worldwide