TradeUnions2011A

TradeUnions2011A - Econ145.TradeUnions2011A John Pencavel...

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Econ145.TradeUnions2011A John Pencavel TRADE UNIONS A trade (or labor) union is an organization of employees designed to raise the welfare of these employees. Distinguish four classes of union activities, the first two usually described as “rent seeking”: 1. Bargaining collectively with the owners (or the representatives of the owners) of the firm or group of firms in which the employees work. In the U.S., subjects for collective bargaining usually include (a) wages & fringe benefits, (b) work hours & work days, (c) grievance procedures, (d) regulations on hiring, training, firing, & laying off employees. 2. Acting as a pressure group on national and local government. Do not assume these pressure group activities are opposed to the pressure group activities of employers. 3. Acting as a mutual aid society. In 19 th century, unions often functioned as “friendly societies” or self-help societies using member dues and entrance fees to support members in times of difficulties. E.g., unemployment insurance, sickness benefits, strike & lockout benefits, accident insurance, retirement benefits. Today some unions offer some of these benefits as well as legal advice & adult learning opportunities for their members. 4. Serving as a vehicle for employee participation at the workplace. The union may function as the collective “voice” of workers. The union mitigates the hierarchical structure of most enterprises and introduces a dimension of “economic democracy”.
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2 1 Nevertheless, antitrust suits are sometimes filed against unions and occasionally they win. For example, the Supreme Court ruled in 1965 that the United Mine Workers conspired with some employers to impose a wage scale on other (small and high-cost) employers with the intent of putting these competitors out of business. Why do some call labor unions monopolies? 1. In collective bargaining with employers, a union is not a price(wage)-taker and, in this technical sense, the union is a monopolist. The union negotiates the price at which all workers in the bargaining unit sell their labor and (at least during the lifetime of a contract) any worker is not permitted to undercut the negotiated wage. 2. The Sherman Act (1890) made it illegal to “monopolize trade” and prohibited “combination or conspiracy in restraint of trade”. In the 20 or so years after its passage, the courts interpreted the Act as applying to labor unions as well as to product market monopolies. After all, the stated intent of unions was to “take wages out of competition”. However, the Clayton Act (1914) explicitly exempted labor unions from antitrust laws. 1 3. Once certified by the National Labor Relations Board, by law, a union represents all workers in a specified bargaining unit and competition by other unions for representation of these workers is prohibited, i.e., the union becomes the exclusive bargaining agent.
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3 Movements in the Extent of Unionism in the U.S. over Time Union Density: Union Membership as a Percent of Employment, 1897-2010 1897-1984 Union membership as a percent of non-agricultural employment. Leo Troy & Neil Sheflin, Union
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TradeUnions2011A - Econ145.TradeUnions2011A John Pencavel...

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