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Chapter 15 The Future of U.S. Labor Policy and Industrial Relations McGraw-Hill/Irwin An Introduction to Collective Bargaining & Industrial Relations, 4e Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserv 15 -3 1 - 3 The History of Government-Promoted Labor-Management Dialogue • National-Level Committees - There have been very few successful efforts at national level dialogue over labor policies in the U.S. - A number of national labor-management committees have tried to change industrial relations practices • Industrial relations commissions issued reports in 1880, 1902, and 1915 • The 1915 commission cited the absence of industrial democracy and inadequate working conditions as two of the most serious social problems of the time - This was used as background for New Deal legislation • Presidents Wilson and Franklin Roosevelt created war labor boards in WWI and WWII respectively - The record shows little effect of national forums on collective bargaining, due in part to the decentralized structure and deep-seated ideological differences 15 -4 1 - 4 Local and Regional Government Dialogue Efforts • There have been a number of efforts to promote labormanagement dialogue at the local and regional levels - These committees usually include labor and management as well as key community politicians - Area committees have tended to grow out of economic crisis • Such as plant closings - The committees mobilized resources to attract new business and encourage educational institutions to better respond to industrial needs 15 -5 1 - 5 The Common Failure of National and Area Labor-Management Committees • Our participation in a variety of national and area labormanagement committees has left us with an uneasy feeling • None of the efforts has produced sufficient reforms to stem job losses or slow declines in union membership • None have changed the attitudes of employers ideologically opposed to unionization • None have produced a new coherent strategy to foster employee participation • None have produced a consensus over changes in national labor policy 15 -6 1 - 6 Labor Policy Reform Efforts • American labor law does not change often or easily • The NLRA was only passed as one of the last major reforms of the New Deal - It took the deep economic and social crisis of the Great Depression and fear that capitalism might be at risk to build support for passage of the legislation • In response to a wave of strikes, the Taft Hartley amendments to the NLRA were passed in 1947 to rebalance power - Taft Hartley limited secondary boycotts, closed shop clauses, and other union actions deemed unfair • Union corruption produced the Landrum Griffen Act in 1959 - Little change since then to U.S. labor laws 15 -7 1 - 7 The Limits and Contributions of LaborManagement Dialogue • Participation in a variety of national and area labormanagement committees has led to ambivalent feelings about the contributions • None of the efforts stopped the job losses or slowed declines in union membership • None have changed the attitudes of employers ideologically opposed to unions or produced a strategy to foster employee participation • There is still no consensus about changes to the national labor policy • The decline of these network-building forums is another worrisome development 15 -8 1 - 8 The Dunlop Commission • An attempt was made to resolve the longstanding impasse over labor policy when the Clinton Administration took office in 1993 • A national-level Commission on the future of Worker Management Relations (known as the Dunlop Commission) was established - Purpose was to recommend ways to update national labor policies to embrace competitiveness and improve workers’ standard of living • The Commission issued two reports, but the recommendations gained no support from business, labor, or government officials 15 -9 1 - 9 Alternative Directions for Future National Labor Policy • There are three possible strategic directions for future national labor policy • One approach is to continue the policies of the last 20 years - With an emphasis on deregulation • Another policy would be modest reform of the collective bargaining system • A third approach would seek more fundamental changes in national policies - Changes beyond those currently used 1 - 10 15 -10 Strategy 1: Reliance on Deregulation and the Labor Market • One strategy for national labor policy would involve extension of the deregulation wave of the late 1970s - Primary objective is to increase product market competition - From 1960 to 1975, the number of employment regulations administered by the federal government grew three fold - Except for the Family and Medical Leave Act and plant closing acts, there has been no major regulation since 1975 • The benefit levels in social welfare and employment programs were frozen, reduced, or conservatively enforced • Welfare benefits were dramatically reduced 1 - 11 15 -11 The Case for Further Deregulation - Market forces are very efficient in allocating labor - If market pressures are blocked, inefficient practices can persist and society bears the costs - Some argue that the U.S. steel industry illustrates the inertia when an industry is protected from market forces - Even if one does not like market forces, the alternatives are not clear • This supports the concept of limited regulation of product and labor markets 1 - 12 15 -12 Criticisms of a Market and Deregulation Policy Approach • Reliance on market forces and deregulation presumes that the market will lead to outcomes society finds acceptable, which may not be the case - Limited health care and the "Wal-Martization" of the U.S. are some criticisms • In the early part of the 20th century, the Institutionalists of the Wisconsin School articulated normative arguments against reliance on the market alone • They argued that labor was more than a commodity and that labor/management conflicts of interests are inherent and enduring • Competitive labor markets may leave too many workers in a weak bargaining position with employers and give workers too little job security - Workers should accumulate “property rights” in their jobs and should be able to influence management in a democracy 1 - 13 15 -13 The Potential Consequences of Further Declines in Union Membership • If union representation continues to decline, management abuse of its power might eventually produce a more adversarial form of collective bargaining and conflict - Unions could lose their capacity to innovate as their security declines - Concerns over declining real wages, longer hours, and wage inequality are growing - Declining unionization diminishes an important voice in political discourse 1 - 14 15 -14 Costs to Workers of Adjusting to Economic Changes - Any future labor policy must address the fact that union membership is heavily concentrated in the oldest and most mature sectors of the economy • These sectors are the most exposed to international competition - Jobs will be eliminated due to technology, new products, and new business strategies - Older workers may not be well-trained to fill the new jobs being created - Transition could be painful, and many displaced workers may be forced to take lower wage jobs 1 - 15 15 -15 What Will Be the U.S. Comparative Advantage in World Trade: Low Wages or High Skills? - The events that followed deregulation in the airline and telecommunications industries suggest that deregulation may reduce workers’ power to resist management's efforts to minimize labor costs • Deregulated industries have experienced widespread wage and work rules changes • Once competition increased, management often found it easier to cut labor costs with non-union workers or outsourcing - However, labor cost minimization may be self-defeating as American firms competing on labor costs may not fare well in world trade • Yet market forces alone may not move employers toward a high-skills strategy, and should be supplemented by labor policy 1 - 16 15 -16 Strategy 2: Modest Reforms within the Current Collective Bargaining System - A second alternative for future labor policy is to actively support the types of modest reforms of traditional collective bargaining and labor law suggest by the Dunlop Commission, leading to: • Making it more difficult for employers to oppose union-organizing efforts • Making it easier for a union to achieve a first contract • Easing restrictions on employee participation in nonunion settings • Providing alternative dispute resolution procedures to reduce the backlog and provide speedy decisions - However, there is no reason to assume that this policy approach will be any more acceptable than it was in 1995 when the Dunlop Commission issued its recommendations 1 - 17 15 -17 Strategy 3: A New Industrial Relations System It may be time to open up labor law and related employment policies to a period of active experimentation and learning - Over time, this can create an innovative industrial relations system - A new system could provide valuable improvements in productivity and living standards, while providing equitable due process - Elements in a new industrial relations system: • Strategic Level: Information sharing, worker participation and representation, cross-functional consultations, and integration of industrial relations with business and technology strategies • Functional Level: Contingent compensation, employment security, and strong commitment to training and development • Workplace Level: Employee participation and flexibility 1 - 18 15 -18 Beyond Labor Law: The Need to Integrate Labor, Economic, and Social Policies • Implementing a new industrial relations system will require active support of federal and state policy makers - As well as significant shifts of management and labor • Government Strategies - Major reform of the NLRA • Current policy encourages the parties to begin in an adversarial proceeding • Legal restraints on participation of employees, supervisors, and middle mangers in decision making should be removed, since they conflict with contemporary decentralization of managerial decision making • Currently, the precarious status of supervisors gives them incentive to block workplace innovation 1 - 19 15 -19 Changes in Other Government Policies - The diffusion of the new industrial relations system should be accompanied by changes in other federal economic and social policies - An extensive employment and training policy is needed for transitioning across employers or occupations - Unemployment compensation should be modified to encourage the acquisition of new skills • Management Values and Strategies - Management should accept a broad role for unions and workers in strategic decision making • Otherwise, poor relations and distrust will diminish productivity • A hostile climate will favor traditional adversarial relationships 1 - 20 15 -20 State and Local Government Policies • The impasse in labor policy at the national level has led to increased calls for action at the local and state government levels • This is consistent with the history of innovation in social and labor policy at the state and local level in the U.S., such as: - The enactment of “living wage” ordinances in over 50 communities - California enacted the first paid family leave act • These initiatives should serve as laboratories for experimentation and learning that can inform national policy debates in the future 1 - 21 15 -21 The Role of Business Strategies • Business competition based on low labor costs undermines worker trust, flexibility, and adaptability - Yet, many firms now are tempted to pursue a lowwage strategy - The low-wage strategy can divert management's attention from developing other comparative advantages - Moving work to lower cost locations limits trust - Mergers and takeovers that have only short-term objectives have dysfunctional consequences on industrial relations 1 - 22 15 -22 Technological Strategies • Technological strategies that maintain managerial control and maximize labor savings lead to deskilled and unmotivated workers • More consistent with new industrial relations practices are “socio-technical” approaches that use technology to decentralize decision making and upgrade skills - This happens with the broadening of job tasks and blurring traditional blue- and white-collar distinctions • Economic pressures, and pressures from government and unions, may eventually induce management to make major changes 1 - 23 15 -23 Broader Corporate Reforms • Confidence in American corporations and their top executives fell to historic lows in the wake of scandals in recent years • Restoring confidence is a high priority for the economy • This may require providing employees with more opportunities to monitor corporate governance • To gain value from the employee’s knowledge requires rebuilding employee trust - Employees must understand the risks they are taking in joining or staying with a particular firm 1 - 24 15 -24 Union Strategies • Labor leaders face a similar strategic choice regarding whether to support the diffusion of a new system of industrial relations • Labor leaders generally support worker participation and partnerships but they have not developed a clear strategy for promoting these initiatives • The reluctance of labor leaders to strongly support participation in decision making stems from leaders’ fears of co-option - They will need to reassess their views and become more visible champions of innovations • Passive acceptance will not motivate workers or policy-makers • A further decline in unionization would result • Union leaders will have to be capable of influencing decisions made at the strategic and workplace levels as well as collective bargaining 1 - 25 15 -25 Broader Experiments: New Models of Employee Representation? • The inability of unions to reverse membership declines even in the face of increasing resources devoted to organizing and a troubled employment environment are posing problems for the industrial mode of U.S. unions • To support labor mobility, unions will need to develop new capabilities and structures - These are needed to satisfy workers’ needs for life long learning and skill retraining - This would require unions to recruit members and maintain their membership over the full course of their careers • Modifications of union structure would allow movement across union jurisdictions over the workers’ careers 1 - 26 15 -26 Summary • The book began by presenting a normative perspective on work and employment relations • It presented a broad framework for analyzing industrial relations • The text explored how the strategic choices of the parties interact with environmental conditions to shape industrial relations • This chapter poses the strategic choices now faced by labor, management, and governmental decision makers regarding the future of industrial relations • The field of industrial relations has a connection between research, teaching, public policy, and private practice - Fostering this tradition will help address the future