reasons for founding of labor unions and what they wanted to get for their members
Affiliate fifteen. Issues in Labor Markets: Unions, Discrimination, Immigration
xv.1 Unions
Learning Objectives
Past the cease of this section, you will be able to:
- Explain the concept of labor unions, including membership levels and wages
- Evaluate arguments for and against labor unions
- Analyze reasons for the decline in U.Southward. union membership
A labor union is an organization of workers that negotiates with employers over wages and working weather condition. A labor union seeks to change the remainder of ability between employers and workers by requiring employers to deal with workers collectively, rather than as individuals. Thus, negotiations between unions and firms are sometimes chosen collective bargaining.
The subject of labor unions can be controversial. Supporters of labor unions view them as the workers' primary line of defense against efforts past profit-seeking firms to concord down wages and benefits. Critics of labor unions view them equally having a tendency to grab as much as they can in the short term, even if it means injuring workers in the long run by driving firms into bankruptcy or by blocking the new technologies and production methods that pb to economic growth. Nosotros will start with some facts about union membership in the U.s..
Facts almost Matrimony Membership and Pay
Co-ordinate to the U.Southward. Bureau of Labor and Statistics, about 11.1% of all U.S. workers belong to unions. Post-obit are some of the facts provided by the agency for 2014:
- 12.0% of U.Due south. male workers vest to unions; 10.5% of female person workers do
- 11.1% of white workers, 13.4 % of blackness workers, and ix.8 % of Hispanic workers belong to unions
- 12.5% of total-time workers and 6.0% of role-time workers are union members
- four.2% of workers ages xvi–24 belong to unions, every bit do fourteen% of workers ages 45-54
- Occupations in which relatively high percentages of workers belong to unions are the federal regime (26.9% belong to a union), state government (31.3%), local government (41.7%); transportation and utilities (xx.6%); natural resources, construction, and maintenance (xvi.three%); and product, transportation, and material moving (fourteen.7%)
- Occupations that have relatively low percentages of unionized workers are agricultural workers (1.4%), fiscal services (1.1%), professional person and concern services (ii.4%), leisure and hospitality (2.7%), and wholesale and retail trade (4.7%)
In summary, the percentage of workers belonging to a marriage is higher for men than women; higher for blacks than for whites or Hispanics; higher for the 45–64 age range; and higher among workers in government and manufacturing than workers in agronomics or service-oriented jobs. Tabular array two lists the largest U.S. labor unions and their membership.
| Spousal relationship | Membership |
|---|---|
| National Pedagogy Clan (NEA) | 3.2 million |
| Service Employees International Union (SEIU) | ii.ane 1000000 |
| American Federation of Teachers (AFT) | 1.5 million |
| International Brotherhood of Teamsters (IBT) | one.4 one thousand thousand |
| The American Federation of State, County, and Municipal Workers (AFSCME) | 1.3 million |
| United Nutrient and Commercial Workers International Union | 1.3 one thousand thousand |
| United Steelworkers | 1.2 million |
| International Marriage, United Machine, Aerospace and Agricultural Implement Workers of America (UAW) | 990,000 |
| International Association of Machinists and Aerospace Workers | 720,000 |
| International Brotherhood of Electrical Workers (IBEW) | 675,000 |
| Table two. The Largest American Unions in 2013. (Source: U.Due south. Department of Labor, Bureau of Labor Statistics) | |
In terms of pay, benefits, and hiring, U.Southward. unions offer a good news/bad news story. The expert news for unions and their members is that their members earn nigh twenty% more than than nonunion workers, even subsequently adjusting for factors such as years of work experience and educational activity level. The bad news for unions is that the share of U.S. workers who belong to a labor union has been steadily declining for 50 years, as shown in Figure 1. Virtually one-quarter of all U.Southward. workers belonged to a union in the mid-1950s, but only 11.1% of U.South. workers are matrimony members today. If you lot leave out workers employed by the authorities (which includes teachers in public schools), only 6.6% of the workers employed by private firms now piece of work for a marriage.
The post-obit department analyzes the college pay wedlock workers receive compared the pay rates for nonunion workers. The following department analyzes declining union membership levels. An overview of these two issues will allow us to discuss many aspects of how unions work.
Higher Wages for Union Workers
Why might spousal relationship workers receive higher pay? What are the limits on how much college pay they can receive? To analyze these questions, let's consider a state of affairs where all firms in an manufacture must negotiate with a single matrimony, and no firm is allowed to hire nonunion labor. If no labor union existed in this market, and then equilibrium (Eastward) in the labor market would occur at the intersection of the demand for labor (D) and the supply of labor (S) in Effigy ii. The matrimony can, however, threaten that, unless firms agree to the wages they demand, the workers will strike. As a result, the labor wedlock manages to achieve, through negotiations with the firms, a union wage of Wu for its members, to a higher place what the equilibrium wage would otherwise accept been.
This labor market situation resembles what a monopoly firm does in selling a production, simply in this case a spousal relationship is a monopoly selling labor to firms. At the higher spousal relationship wage Wu, the firms in this manufacture will hire less labor than they would have hired in equilibrium. Moreover, an excess supply of workers want wedlock jobs, just firms will not exist hiring for such jobs.
From the union point of view, workers who receive higher wages are improve off. However, find that the quantity of workers (Qd) hired at the wedlock wage Wu is smaller than the quantity Qe that would have been hired at the original equilibrium wage. A sensible marriage must recognize that when it pushes up the wage, information technology also reduces the incentive of firms to hire. This state of affairs does non necessarily mean that union workers are fired. Instead, it may be that when spousal relationship workers move on to other jobs or retire, they are not always replaced. Or perhaps when a firm expands production, it expands employment somewhat less with a higher marriage wage than information technology would have done with the lower equilibrium wage. Or perhaps a firm decides to purchase inputs from nonunion producers, rather than producing them with its own highly paid unionized workers. Or peradventure the firm moves or opens a new facility in a state or country where unions are less powerful.
From the business firm'south point of view, the key question is whether the college wage of union workers is matched by college productivity. If so, so the house can afford to pay the higher union wages and, indeed, the demand curve for "unionized" labor could actually shift to the correct. This could reduce the job losses equally the equilibrium employment level shifts to the right and the difference between the equilibrium and the matrimony wages will accept been reduced. If worker unionization does not increase productivity, then the higher marriage wage will cause lower profits or losses for the firm.
Marriage workers might take higher productivity than nonunion workers for a number of reasons. Kickoff, higher wages may elicit higher productivity. Second, union workers tend to stay longer at a given chore, a trend that reduces the employer's costs for training and hiring and results in workers with more years of feel. Many unions also offer job preparation and apprenticeship programs.
In addition, firms that are confronted with union demands for higher wages may choose production methods that involve more than concrete capital and less labor, resulting in increased labor productivity. Table 3 provides an case. Assume that a firm can produce a home exercise cycle with iii different combinations of labor and manufacturing equipment. Say that labor is paid $16 an 60 minutes (including benefits) and the machines for manufacturing toll $200 each. Under these circumstances, the total cost of producing a home exercise bicycle volition be lowest if the firm adopts the plan of 50 hours of labor and one machine, as the table shows. At present, suppose that a union negotiates a wage of $twenty an hr including benefits. In this case, it makes no difference to the firm whether it uses more hours of labor and fewer machines or less labor and more than machines, though information technology might adopt to utilize more machines and to rent fewer union workers. (After all, machines never threaten to strike—but they do non buy the final product or service either.) In the concluding column of the table, the wage has risen to $24 an hr. In this example, the firm clearly has an incentive for using the plan that involves paying for fewer hours of labor and using three machines. If direction responds to marriage demands for higher wages by investing more than in machinery, and then wedlock workers can be more productive because they are working with more or better physical capital equipment than the typical nonunion worker. Still, the firm will need to hire fewer workers.
| Hours of Labor | Number of Machines | Cost of Labor + Price of Machine $16/hour | Cost of Labor + Cost of Car $twenty/hour | Price of Labor + Cost of Machine $24/hr |
|---|---|---|---|---|
| 30 | 3 | $480 + $600 = $1,080 | $600 + $600 = $1,200 | $720 + $600 = $1,320 |
| twoscore | ii | $640 + $400 = $i,040 | $800 + $400 = $1,200 | $960 + $400 = $ane,360 |
| 50 | 1 | $800 + $200 = $one,000 | $1,000 + $200 = $1,200 | $1,200 + $200 = $ane,400 |
| Table 3. Iii Production Choices to Manufacture a Home Practise Cycle | ||||
In some cases, unions have discouraged the utilise of labor-saving physical upper-case letter equipment—out of the reasonable fear that new mechanism will reduce the number of union jobs. For case, in 2002, the union representing longshoremen who unload ships and the firms that operate shipping companies and port facilities staged a work stoppage that close downwardly the ports on the western declension of the United States. Ii key issues in the dispute were the desire of the shipping companies and port operators to use handheld scanners for record-keeping and computer-operated cabs for loading and unloading ships—changes which the marriage opposed, forth with overtime pay. President Obama threatened to use the Labor Management Relations Act of 1947—usually known as the Taft-Hartley Act—where a courtroom can impose an 80-solar day "cooling-off period" in social club to allow time for negotiations to keep without the threat of a work stoppage. Federal mediators were called in, and the two sides agreed to a deal in February 2015. The ultimate agreement immune the new technologies, merely as well kept wages, health, and pension benefits high for workers. In the by, presidential use of the Taft-Hartley Act sometimes has made labor negotiations more bitter and argumentative but, in this case, it seems to take smoothed the route to an agreement.
In other instances, unions have proved quite willing to adopt new technologies. In one prominent case, during the 1950s and 1960s, the United Mineworkers union demanded that mining companies install labor-saving machinery in the mines. The mineworkers' union realized that over time, the new machines would reduce the number of jobs in the mines, but the union leaders besides knew that the mine owners would have to pay college wages if the workers became more productive, and mechanization was a necessary footstep toward greater productivity.
In fact, in some cases union workers may be more willing to accept new engineering science than nonunion workers, because the marriage workers believe that the matrimony will negotiate to protect their jobs and wages, whereas nonunion workers may be more concerned that the new technology will replace their jobs. In addition, wedlock workers, who typically accept higher chore marketplace feel and grooming, are likely to suffer less and do good more than non-union workers from the introduction of new engineering science. Overall, information technology is difficult to brand a definitive instance that union workers as a group are always either more or less welcoming to new technology than are nonunion workers.
The Reject in U.S. Spousal relationship Membership
The proportion of U.S. workers belonging to unions has declined dramatically since the early 1950s. Economists have offered a number of possible explanations:
- The shift from manufacturing to service industries
- The forcefulness of globalization and increased competition from foreign producers
- A reduced want for unions because of the workplace protection laws at present in identify
- U.Southward. legal environment that makes it relatively more hard for unions to organize workers and expand their membership
Let's discuss each of these four explanations in more detail.
A kickoff possible caption for the reject in the share of U.Due south. workers belonging to unions involves the patterns of job growth in the manufacturing and service sectors of the economy shown in Figure iii. The U.S. economy had almost 15 million manufacturing jobs in 1960. This full rose to xix one thousand thousand by the belatedly 1970s and then declined to 17 million in 2013. Meanwhile, the number of jobs in service industries and in authorities combined rose from 35 million in 1960 to over 118 million by 2013, co-ordinate to the Bureau of Labor Statistics. Considering over fourth dimension unions were stronger in manufacturing than in service industries, the growth in jobs was not happening where the unions were. It is interesting to notation that several of the biggest unions in the country are made up of government workers, including the American Federation of State, County and Municipal Employees (AFSCME); the Service Employees International Matrimony; and the National Education Association. The membership of each of these unions is listed in Table two. Exterior of regime employees, however, unions accept non had nifty success in organizing the service sector.
A second explanation for the decline in the share of unionized workers looks at import contest. Starting in the 1960s, U.Southward. carmakers and steelmakers faced increasing competition from Japanese and European manufacturers. As sales of imported cars and steel rose, the number of jobs in U.Due south. car manufacturing barbarous. This manufacture is heavily unionized. Non surprisingly, membership in the United Car Workers, which was 975,000 in 1985, had fallen to roughly 390,000 by 2015. Import contest not merely decreases the employment in sectors where unions were one time strong, but besides decreases the bargaining ability of unions in those sectors. Nevertheless, as we have seen, unions that organize public-sector workers, who are not threatened by import competition, have continued to see growth.
A 3rd possible reason for the decline in the number of marriage workers is that citizens ofttimes call on their elected representatives to pass laws apropos work weather, overtime, parental leave, regulation of pensions, and other issues. Unions offered strong political support for these laws aimed at protecting workers simply, in an ironic twist, the passage of those laws and then made many workers experience less demand for unions.
These first three possible reasons for the turn down of unions are all somewhat plausible, but they have a common problem. Most other developed economies have experienced similar economic and political trends, such as the shift from manufacturing to services, globalization, and increasing government social benefits and regulation of the workplace. Clearly there are cultural differences between countries equally to their credence of unions in the workplace. The share of the population belonging to unions in other countries is very high compared with the share in the United States. Table 4 shows the proportion of workers in a number of the world's high-income economies who belong to unions. The United States is well-nigh the bottom, along with France and Spain. The last cavalcade shows union coverage, defined equally including those workers whose wages are adamant by a union negotiation even if the workers do not officially belong to the spousal relationship. In the Usa, union membership is nigh identical to spousal relationship coverage. However, in many countries, the wages of many workers who do not officially belong to a union are yet adamant by commonage bargaining between unions and firms.
| Land | Marriage Density: Percent of Workers Belonging to a Union | Union Coverage: Percentage of Workers Whose Wages Are Adamant past Marriage Bargaining |
|---|---|---|
| Austria | 37% | 99% |
| France | 9% | 95% |
| Germany | 26% | 63% |
| Japan | 22% | 23% |
| Netherlands | 25% | 82% |
| Spain | 11.3% | 81% |
| Sweden | 82% | 92% |
| Great britain | 29% | 35% |
| United States | 11.ane% | 12.5% |
| Table 4. International Comparisons of Union Membership and Coverage in 2012. (Source, CIA Earth Factbook, retrieved from world wide web.cia.gov) | ||
These international differences in marriage membership advise a fourth reason for the decline of union membership in the United States: perhaps U.South. laws are less friendly to the formation of unions than such laws in other countries. The close connection betwixt wedlock membership and a friendly legal surround is apparent in the history of U.S. unions. The great ascension in union membership in the 1930s followed the passage of the National Labor-Direction Relations Human action of 1935, which specified that workers had a right to organize unions and that management had to give them a fair chance to do and so. The U.S. regime strongly encouraged the formation of unions during the early 1940s in the belief that unions would help to coordinate the all-out production efforts needed during World War Two. All the same, afterward Earth State of war II came the passage of the Taft-Hartley Deed of 1947, which gave states the power to permit workers to opt out of the union in their workplace if they and then desired. This law made the legal climate less encouraging to those seeking to form unions, and union membership levels soon started declining.
The procedures for forming a matrimony differ substantially from state to country. For example, the procedures in the United states and those in Canada are strikingly different. When a group of workers wish to form a union in the United States, they announce this fact and an election engagement is prepare when the employees at a firm will vote in a undercover ballot on whether to form a union. Supporters of the union lobby for a "yeah" vote, and the management of the firm lobbies for a "no" vote—oft even hiring outside consultants for assistance in swaying workers to vote "no." In Canada, past contrast, a matrimony is formed when a sufficient proportion of workers (usually about 60%) sign an official menu maxim that they want a spousal relationship. At that place is no separate "election date." The management of Canadian firms is limited past law in its power to lobby against the union. In add-on, though it is illegal to discriminate and burn workers based on their union activity in the United States, the penalties are slight, making this a non then costly way of deterring spousal relationship action. In curt, forming unions is easier in Canada—and in many other countries—than in the United States.
In summary, spousal relationship membership in the Us is lower than in many other loftier-income countries, a divergence that may be due to different legal environments and cultural attitudes toward unions.
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Fundamental Concepts and Summary
A labor marriage is an organization of workers that negotiates as a grouping with employers over bounty and work atmospheric condition. Union workers in the U.s.a. are paid more than on boilerplate than other workers with comparable education and feel. Thus, either union workers must exist more productive to friction match this higher pay or the college pay volition lead employers to find means of hiring fewer union workers than they otherwise would. American union membership has been falling for decades. Some possible reasons include the shift of jobs to service industries; greater competition from globalization; the passage of worker-friendly legislation; and U.S. laws that are less favorable to organizing unions.
Self-Check Questions
- Table 5 shows the quantity demanded and supplied in the labor marketplace for driving city buses in the town of Unionville, where all the bus drivers belong to a union.
Wage Per 60 minutes Quantity of Workers Demanded Quantity of Workers Supplied $14 12,000 6,000 $16 10,000 7,000 $18 viii,000 8,000 $20 vi,000 nine,000 $22 4,000 10,000 $24 2,000 eleven,000 Table 5. - What would the equilibrium wage and quantity be in this market if no union existed?
- Assume that the union has plenty negotiating ability to raise the wage to $4 per hour higher than it would otherwise be. Is there now excess demand or excess supply of labor?
- Do unions typically oppose new technology out of a fright that it will reduce the number of union jobs? Why or why not?
- Compared with the share of workers in virtually other loftier-income countries, is the share of U.S. workers whose wages are adamant by union bargaining higher or lower? Why or why not?
- Are firms with a loftier per centum of union employees more likely to go bankrupt considering of the higher wages that they pay? Why or why non?
- Do countries with a higher percentage of unionized workers usually accept less growth in productivity because of strikes and other disruptions acquired by the unions? Why or why not?
Review Questions
- What is a labor union?
- Why practise employers have a natural advantage in bargaining with employees?
- What are some of the most important laws that protect employee rights?
- How does the presence of a labor union change negotiations between employers and workers?
- What is the long-term trend in American wedlock membership?
- Would you expect the presence of labor unions to lead to higher or lower pay for worker-members? Would y'all expect a higher or lower quantity of workers hired past those employers? Explain briefly.
- What are the master causes for the contempo trends in union membership rates in the United States? Why are union rates lower in the United States than in many other developed countries?
Critical Thinking Questions
- Are unions and technological improvements complementary? Why or why not?
- Will union membership continue to pass up? Why or why not?
References
AFL-CIO. "Preparation and Apprenticeships." http://www.aflcio.org/Learn-Virtually-Unions/Preparation-and-Apprenticeships.
Central Intelligence Agency. "The World Factbook." https://www.cia.gov/library/publications/the-world-factbook/index.html.
Clark, John Bates. Essentials of Economic Theory: As Applied to Modern Problems of Industry and Public Policy. New York: A. M. Kelley, 1907, 501.
United Motorcar Workers (UAW). "About: Who We Are." http://world wide web.uaw.org/folio/who-we-are.
United states of america Department of Labor: Bureau of Labor Statistics. "Economic News Release: Union Members Summary." Last modified Jan 23, 2013. http://www.bls.gov/news.release/union2.nr0.htm.
Usa Section of Labor, Bureau of Labor Statistics. 2015. "Economical News; Matrimony Members Summary." Accessed Apr thirteen, 2015. http://www.bls.gov/news.release/union2.nr0.htm.
Glossary
- collective bargaining
- negotiations between unions and a firm or firms
- labor union
- an organization of workers that negotiates with employers over wages and working conditions
Solutions
Answers to Self-Check Questions
-
- With no wedlock, the equilibrium wage rate would be $eighteen per hour and at that place would be 8,000 motorbus drivers.
- If the marriage has plenty negotiating ability to raise the wage to $iv per hour college than under the original equilibrium, the new wage would be $22 per hr. At this wage, 4,000 workers would be demanded while ten,000 would be supplied, leading to an excess supply of half-dozen,000 workers.
- Unions accept sometimes opposed new technology out of a fright of losing jobs, merely in other cases unions have helped to facilitate the introduction of new engineering considering unionized workers felt that the union was looking later on their interests or that their higher skills meant that their jobs were essentially protected. And the new technologies meant increased productivity.
- In a few other countries (such every bit France and Spain), the percent of workers belonging to a spousal relationship is similar to that in the United States. Union membership rates, however, are more often than not lower in the United States. When the share of workers whose wages are determined by union negotiations is considered, the United states of america ranks by far the everyman (because in countries like France and Spain, wedlock negotiations often determine pay even for nonunion employees).
- No. While some unions may cause firms to become bankrupt, other unions help firms to get more competitive. No overall design exists.
- From a social point of view, the benefits of unions and the costs seem to counterbalance. At that place is no bear witness that in countries with a higher percentage of unionized workers, the economies abound more or less slowly.
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Source: https://opentextbc.ca/principlesofeconomics/chapter/15-1-unions/
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