C a geographic shift of industrial location away from

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c.A geographic shift of industrial location away from the northeast and Midwest(traditional union country) to the south and southwest.d.Union success in gaining higher wages for their workers may have given employers anincentive to substitute away from the expensive union labor in a number of ways.i.Substituting machinery for workers,ii.Subcontracting more work to nonunion suppliers,iii. Opening nonunion plants in less industrialized areas, andiv. Shifting production of components to low-wage nations.E.Relatively high-priced union produced goods would encourage consumers to seek lower-costgoods produced by non-union workers.II.Collective BargainingA.The goal of collective bargaining is to establish a “work agreement” between the firm and theunion.B.Union status and managerial prerogatives.1.In a closed shop, a worker must be (or become) a member of the union before being hired.This is illegal except in transportation and construction.2.In a union shop, an employer may hire nonunion workers, but they must join in a specifiedperiod of time.3.An agency shop requires nonunion workers to pay dues or donate a similar amount tocharity.4.In an open shop, the employer may hire union or nonunion workers.Workers are notrequired to join the union or contribute; but the “work agreement” applies to all workers –union and nonunion.5.Most work agreements contain clauses outlining the decisions reserved solely formanagement; these are called managerial prerogatives.C.The focal point of any bargaining agreement is wages and hours.1.The arguments most frequently used include for wage increases are:a.“What others are getting”;b.Employer’s ability to pay based on profitability;c.Increases in the cost of living; andd.Increases in labor productivity.2.In some cases, unions win automatic cost-of-living adjustments (COLAs).3.Hours of work, voluntary and mandatory overtime, holiday and vacation provisions, profitsharing, health plans, and pension benefits are other contract issues.D.Unions stress seniority as the basis for worker promotion and for layoff and recall andsometimes seek means to limit a firm’s ability to subcontract work or to relocate productionfacilities overseas.E.Union contracts contain grievance procedures to resolve disputes.211
Wage DeterminationF.The bargaining process.1.Collective bargaining on a new contract usually begins about 60 days before the existingcontract expires.2.Hanging over negotiations is the “deadline” which occurs at the expiration of the oldcontract, at which time a strike (union work stoppage) or a lockout (management forbidsworkers to return) can occur.3.Bargaining, strikes and lockouts occur within a framework of Federal labor law,specifically the National Labor Relations Act (NLRA).III.Economic Effects of UnionsA.The union wage advantage is verified by studies that suggest that unions do raise the wages oftheir members relative to comparable nonunion workers; on average, this pay differential overthe years is estimated to have been about 15 percent.

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