Labor turmoil and Service Quality

Labor turmoil and Service Quality - Labor turmoil and...

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Labor turmoil and Service Quality Efficiency, Equity, and Voice Kyoung Won (Ken) Park What do Unions do—Efficiency Dimension Estimated Effect of US Unions Job Satisfaction Union workers are less satisfied (but also less likely to quit) Turnover Reduced Turnover Productivity Mixed evidence—controversial effects Profits Reduced Profitability What do Unions do—Equity and Voice Dimension Estimated Effect of US Unions Wage Levels Yes Higher Wages (15% higher, on average) Wage Distribution No Compressed (less unequal) wage Structure A Clause of Just Cause Discipline and Discharge Yes Nearly Universal in union contracts; rare elsewhere Importance of Seniority Yes Increased importance of seniority provisions in personnel changes A Clause of Grievance Procedures Yes Nearly universal presence of formal grievance procedures in union contracts; few nonunion procedures with same level of due process and representation Unions: Good or Bad? ¨“Labor Problem” in the Early 20 th Century o The 20 th century labor problem generated undesirable outcomes that stemmed from an inequitable, contentious, oppressive and exploitative employment relationship. o Important dimensions of the 1900s labor problem included: Long hours. Low pay. Dangerous and unhealthy working conditions. Job insecurity Industrial accidents and disease. ¨Historical discussion of the labor problem is relevant today for three reasons: o It is necessary to understand the beliefs of the different schools of thought on the labor problem. o The U.S. system of labor relations is founded on the belief s of the industrial relations school set within the context of the labor problem.
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o The U.S. in the 21 st century continues to struggle with the modern equivalent of the labor problem. Views on Labor ¨The four possible underlying causes of the labor problems lead to four different views of labor unions. Cause Each School of Thought Market Failures Neoclassical Economics Poor Management Human Resources Management Unequal bargaining b/w employers and individual employees Industrial Relations Control of the capitalist class Critical Industrial Relations In Each School of Thought Labor Unions are… Neoclassical Economics Bad
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