what factors influence the willingness of union members to participate in local union activities?
Chapter fifteen. Bug in Labor Markets: Unions, Discrimination, Immigration
15.1 Unions
Learning Objectives
By the end of this section, you volition be able to:
- Explain the concept of labor unions, including membership levels and wages
- Evaluate arguments for and confronting labor unions
- Analyze reasons for the decline in U.S. 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 balance 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 field of study of labor unions can be controversial. Supporters of labor unions view them every bit the workers' primary line of defense confronting efforts by profit-seeking firms to hold downward wages and benefits. Critics of labor unions view them as having a trend to catch as much equally they can in the short term, fifty-fifty if it means injuring workers in the long run past driving firms into bankruptcy or by blocking the new technologies and production methods that lead to economic growth. We will beginning with some facts about union membership in the Us.
Facts about Matrimony Membership and Pay
According to the U.South. Bureau of Labor and Statistics, well-nigh 11.1% of all U.Southward. workers belong to unions. Following are some of the facts provided by the bureau for 2014:
- 12.0% of U.South. male workers belong to unions; ten.v% of female workers exercise
- 11.1% of white workers, thirteen.4 % of black workers, and nine.8 % of Hispanic workers belong to unions
- 12.5% of full-time workers and six.0% of function-time workers are spousal relationship members
- 4.2% of workers ages sixteen–24 vest to unions, as do 14% of workers ages 45-54
- Occupations in which relatively high percentages of workers belong to unions are the federal government (26.9% belong to a union), state regime (31.3%), local government (41.vii%); transportation and utilities (xx.6%); natural resources, structure, and maintenance (16.3%); and production, transportation, and fabric moving (14.7%)
- Occupations that have relatively low percentages of unionized workers are agricultural workers (1.4%), financial services (1.1%), professional and business services (two.iv%), leisure and hospitality (ii.7%), and wholesale and retail merchandise (4.7%)
In summary, the percentage of workers belonging to a union is higher for men than women; college for blacks than for whites or Hispanics; higher for the 45–64 historic period range; and higher amid workers in government and manufacturing than workers in agriculture or service-oriented jobs. Table two lists the largest U.Southward. labor unions and their membership.
| Union | Membership |
|---|---|
| National Educational activity Clan (NEA) | 3.ii million |
| Service Employees International Union (SEIU) | ii.i million |
| American Federation of Teachers (AFT) | 1.5 1000000 |
| International Alliance of Teamsters (IBT) | ane.4 million |
| The American Federation of Land, Canton, and Municipal Workers (AFSCME) | 1.3 million |
| United Food and Commercial Workers International Union | 1.3 million |
| United Steelworkers | one.2 million |
| International Union, United Car, 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 2. The Largest American Unions in 2013. (Source: U.S. Department of Labor, Bureau of Labor Statistics) | |
In terms of pay, benefits, and hiring, U.S. unions offer a good news/bad news story. The good news for unions and their members is that their members earn nearly 20% more than than nonunion workers, even after adjusting for factors such as years of work feel and education 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, equally shown in Figure ane. About ane-quarter of all U.Southward. workers belonged to a spousal relationship in the mid-1950s, but simply xi.1% of U.S. workers are union members today. If you lot go out out workers employed by the government (which includes teachers in public schools), only 6.six% of the workers employed by private firms now work for a spousal relationship.
The following section analyzes the higher pay wedlock workers receive compared the pay rates for nonunion workers. The following section analyzes declining marriage membership levels. An overview of these ii bug will allow us to discuss many aspects of how unions work.
College Wages for Union Workers
Why might wedlock workers receive higher pay? What are the limits on how much college pay they can receive? To analyze these questions, let's consider a situation where all firms in an industry must negotiate with a single union, and no firm is allowed to hire nonunion labor. If no labor wedlock existed in this market, then equilibrium (East) in the labor market place would occur at the intersection of the demand for labor (D) and the supply of labor (S) in Effigy 2. The marriage can, however, threaten that, unless firms concur to the wages they demand, the workers will strike. As a outcome, the labor union manages to achieve, through negotiations with the firms, a union wage of Wu for its members, above what the equilibrium wage would otherwise have been.
This labor market situation resembles what a monopoly firm does in selling a product, but in this case a union is a monopoly selling labor to firms. At the higher spousal relationship wage Wu, the firms in this industry will hire less labor than they would have hired in equilibrium. Moreover, an backlog supply of workers want matrimony jobs, simply firms will not be hiring for such jobs.
From the union bespeak of view, workers who receive higher wages are ameliorate off. Withal, notice that the quantity of workers (Qd) hired at the spousal relationship wage Wu is smaller than the quantity Qe that would have been hired at the original equilibrium wage. A sensible union must recognize that when it pushes upwardly the wage, information technology also reduces the incentive of firms to hire. This situation does not necessarily mean that union workers are fired. Instead, it may be that when wedlock workers motion on to other jobs or retire, they are non always replaced. Or perchance when a house expands production, it expands employment somewhat less with a higher union wage than it 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 mayhap the business firm moves or opens a new facility in a state or state where unions are less powerful.
From the firm'due south bespeak of view, the primal question is whether the higher wage of wedlock workers is matched by higher productivity. If then, so the business firm 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 as the equilibrium employment level shifts to the right and the difference betwixt the equilibrium and the wedlock wages will accept been reduced. If worker unionization does not increase productivity, then the higher matrimony wage will cause lower profits or losses for the firm.
Union workers might have higher productivity than nonunion workers for a number of reasons. First, higher wages may arm-twist higher productivity. Second, union workers tend to stay longer at a given task, a trend that reduces the employer'southward costs for training and hiring and results in workers with more years of experience. Many unions as well offer task preparation and apprenticeship programs.
In addition, firms that are confronted with union demands for college wages may choose production methods that involve more physical uppercase and less labor, resulting in increased labor productivity. Table iii provides an instance. Assume that a firm can produce a abode practise cycle with three unlike combinations of labor and manufacturing equipment. Say that labor is paid $16 an hour (including benefits) and the machines for manufacturing price $200 each. Under these circumstances, the full toll of producing a domicile practise bike volition be everyman if the firm adopts the plan of 50 hours of labor and one auto, equally the table shows. At present, suppose that a union negotiates a wage of $twenty an hour including benefits. In this example, information technology makes no departure to the house whether it uses more than hours of labor and fewer machines or less labor and more than machines, though information technology might prefer to use more machines and to hire fewer matrimony workers. (Later all, machines never threaten to strike—simply they exercise not purchase the final product or service either.) In the final column of the table, the wage has risen to $24 an 60 minutes. In this case, the firm clearly has an incentive for using the plan that involves paying for fewer hours of labor and using iii machines. If management responds to union demands for college wages by investing more than in machinery, and so matrimony workers can be more productive because they are working with more or better physical capital equipment than the typical nonunion worker. However, the business firm will need to rent fewer workers.
| Hours of Labor | Number of Machines | Cost of Labor + Price of Motorcar $16/hr | Cost of Labor + Cost of Motorcar $20/hour | Cost of Labor + Price of Automobile $24/60 minutes |
|---|---|---|---|---|
| 30 | iii | $480 + $600 = $1,080 | $600 + $600 = $1,200 | $720 + $600 = $1,320 |
| twoscore | 2 | $640 + $400 = $1,040 | $800 + $400 = $1,200 | $960 + $400 = $1,360 |
| 50 | one | $800 + $200 = $1,000 | $1,000 + $200 = $1,200 | $1,200 + $200 = $1,400 |
| Table three. Iii Production Choices to Manufacture a Domicile Exercise Bicycle | ||||
In some cases, unions have discouraged the use of labor-saving concrete capital equipment—out of the reasonable fright that new machinery volition 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 down the ports on the western coast of the Us. Two fundamental issues in the dispute were the desire of the shipping companies and port operators to apply handheld scanners for record-keeping and computer-operated cabs for loading and unloading ships—changes which the wedlock opposed, along with overtime pay. President Obama threatened to use the Labor Management Relations Act of 1947—ordinarily known as the Taft-Hartley Human activity—where a court can impose an 80-twenty-four hours "cooling-off menstruum" in social club to allow time for negotiations to proceed without the threat of a piece of work stoppage. Federal mediators were called in, and the two sides agreed to a deal in February 2015. The ultimate agreement allowed the new technologies, but also kept wages, wellness, and pension benefits high for workers. In the by, presidential use of the Taft-Hartley Human activity sometimes has made labor negotiations more bitter and argumentative only, in this instance, it seems to have smoothed the road to an understanding.
In other instances, unions have proved quite willing to prefer new technologies. In i prominent example, during the 1950s and 1960s, the United Mineworkers marriage 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, just the union leaders also knew that the mine owners would have to pay college wages if the workers became more productive, and mechanization was a necessary step toward greater productivity.
In fact, in some cases wedlock workers may be more willing to accept new applied science than nonunion workers, considering the matrimony workers believe that the union will negotiate to protect their jobs and wages, whereas nonunion workers may exist more than concerned that the new applied science volition supersede their jobs. In add-on, union workers, who typically have higher task market feel and training, are likely to suffer less and do good more not-union workers from the introduction of new technology. Overall, information technology is difficult to brand a definitive instance that spousal relationship workers every bit a group are always either more or less welcoming to new technology than are nonunion workers.
The Decline in U.S. Union 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 force of globalization and increased contest from strange producers
- A reduced desire for unions because of the workplace protection laws now in place
- U.S. legal environment that makes it relatively more difficult for unions to organize workers and expand their membership
Allow's talk over each of these iv explanations in more detail.
A kickoff possible explanation for the decline in the share of U.Southward. workers belonging to unions involves the patterns of chore growth in the manufacturing and service sectors of the economy shown in Figure 3. The U.Due south. economy had about fifteen one thousand thousand manufacturing jobs in 1960. This full rose to nineteen million by the belatedly 1970s then declined to 17 million in 2013. Meanwhile, the number of jobs in service industries and in government combined rose from 35 million in 1960 to over 118 million past 2013, according to the Agency 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 note that several of the biggest unions in the country are made upward of government workers, including the American Federation of State, County and Municipal Employees (AFSCME); the Service Employees International Union; and the National Pedagogy Association. The membership of each of these unions is listed in Tabular array 2. Outside of government employees, yet, unions have non had swell success in organizing the service sector.
A 2nd explanation for the decline in the share of unionized workers looks at import competition. Starting in the 1960s, U.S. 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.S. auto manufacturing fell. This industry is heavily unionized. Not surprisingly, membership in the United Machine Workers, which was 975,000 in 1985, had fallen to roughly 390,000 by 2015. Import competition not only decreases the employment in sectors where unions were in one case strong, but also decreases the bargaining power of unions in those sectors. However, as we have seen, unions that organize public-sector workers, who are not threatened past import competition, have continued to encounter growth.
A third possible reason for the turn down in the number of marriage workers is that citizens frequently phone call on their elected representatives to laissez passer laws apropos piece of work conditions, overtime, parental leave, regulation of pensions, and other bug. Unions offered strong political support for these laws aimed at protecting workers but, in an ironic twist, the passage of those laws then fabricated many workers feel less need for unions.
These first three possible reasons for the reject of unions are all somewhat plausible, merely they take a common problem. Most other adult economies have experienced like economic and political trends, such equally the shift from manufacturing to services, globalization, and increasing authorities social benefits and regulation of the workplace. Clearly there are cultural differences between countries equally to their acceptance 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 loftier-income economies who belong to unions. The U.s. is near the bottom, along with France and Espana. The concluding column shows union coverage, defined as including those workers whose wages are determined by a union negotiation even if the workers do not officially belong to the wedlock. In the Us, matrimony membership is almost identical to union coverage. However, in many countries, the wages of many workers who practise not officially belong to a union are nonetheless adamant by collective bargaining betwixt unions and firms.
| Country | Union Density: Percentage of Workers Belonging to a Wedlock | Union Coverage: Percent of Workers Whose Wages Are Adamant past Matrimony Bargaining |
|---|---|---|
| Austria | 37% | 99% |
| France | 9% | 95% |
| Germany | 26% | 63% |
| Japan | 22% | 23% |
| Netherlands | 25% | 82% |
| Kingdom of spain | eleven.3% | 81% |
| Sweden | 82% | 92% |
| United Kingdom | 29% | 35% |
| United states | 11.1% | 12.5% |
| Table 4. International Comparisons of Union Membership and Coverage in 2012. (Source, CIA World Factbook, retrieved from www.cia.gov) | ||
These international differences in union membership advise a fourth reason for the decline of union membership in the The states: perhaps U.S. laws are less friendly to the formation of unions than such laws in other countries. The shut connection between wedlock membership and a friendly legal surround is apparent in the history of U.S. unions. The keen rising in union membership in the 1930s followed the passage of the National Labor-Management Relations Act of 1935, which specified that workers had a right to organize unions and that management had to requite them a fair chance to do so. The U.S. government strongly encouraged the formation of unions during the early 1940s in the belief that unions would assist to coordinate the all-out production efforts needed during Earth State of war 2. Nonetheless, later on World War II came the passage of the Taft-Hartley Act of 1947, which gave states the power to allow workers to opt out of the union in their workplace if they and so desired. This law fabricated the legal climate less encouraging to those seeking to form unions, and union membership levels soon started failing.
The procedures for forming a union differ essentially from land to state. For example, the procedures in the United States and those in Canada are strikingly different. When a grouping of workers wish to course a wedlock in the The states, they denote this fact and an ballot appointment is set when the employees at a firm will vote in a secret ballot on whether to form a union. Supporters of the union vestibule for a "yes" vote, and the management of the firm lobbies for a "no" vote—often fifty-fifty hiring exterior consultants for assist in swaying workers to vote "no." In Canada, by contrast, a spousal relationship is formed when a sufficient proportion of workers (usually about 60%) sign an official card saying that they want a spousal relationship. There is no separate "election engagement." The direction of Canadian firms is limited by law in its power to lobby against the union. In add-on, though it is illegal to discriminate and fire workers based on their wedlock activity in the U.s., the penalties are slight, making this a not so costly way of deterring union activity. In short, forming unions is easier in Canada—and in many other countries—than in the United States.
In summary, matrimony membership in the United states is lower than in many other high-income countries, a divergence that may be due to different legal environments and cultural attitudes toward unions.
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Key Concepts and Summary
A labor union is an system of workers that negotiates as a group with employers over compensation and work conditions. Marriage workers in the U.s.a. are paid more than on average than other workers with comparable teaching and experience. Thus, either union workers must be more productive to match this college pay or the higher pay will lead employers to find ways of hiring fewer wedlock 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 market place for driving metropolis buses in the town of Unionville, where all the jitney drivers belong to a union.
Wage Per Hour Quantity of Workers Demanded Quantity of Workers Supplied $14 12,000 6,000 $sixteen ten,000 7,000 $18 viii,000 8,000 $20 half dozen,000 ix,000 $22 4,000 10,000 $24 2,000 11,000 Tabular array 5. - What would the equilibrium wage and quantity be in this market if no wedlock existed?
- Presume that the wedlock has enough negotiating ability to raise the wage to $4 per hour higher than it would otherwise be. Is there now excess demand or backlog supply of labor?
- Practice unions typically oppose new technology out of a fear that information technology volition reduce the number of spousal relationship jobs? Why or why not?
- Compared with the share of workers in about other high-income countries, is the share of U.S. workers whose wages are determined by matrimony bargaining higher or lower? Why or why non?
- Are firms with a high percentage of marriage employees more than likely to become broke because of the college wages that they pay? Why or why non?
- Practise countries with a higher per centum of unionized workers normally have less growth in productivity considering of strikes and other disruptions caused past the unions? Why or why not?
Review Questions
- What is a labor matrimony?
- Why practice employers accept a natural advantage in bargaining with employees?
- What are some of the most of import laws that protect employee rights?
- How does the presence of a labor matrimony modify negotiations betwixt employers and workers?
- What is the long-term trend in American marriage membership?
- Would you look the presence of labor unions to lead to college or lower pay for worker-members? Would yous expect a higher or lower quantity of workers hired by those employers? Explain briefly.
- What are the main causes for the contempo trends in wedlock membership rates in the U.s.a.? 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 non?
- Will union membership continue to decline? Why or why not?
References
AFL-CIO. "Training and Apprenticeships." http://www.aflcio.org/Learn-Almost-Unions/Training-and-Apprenticeships.
Primal Intelligence Agency. "The World Factbook." https://world wide web.cia.gov/library/publications/the-world-factbook/index.html.
Clark, John Bates. Essentials of Economic Theory: As Applied to Modern Bug of Industry and Public Policy. New York: A. Thousand. Kelley, 1907, 501.
United Motorcar Workers (UAW). "About: Who We Are." http://world wide web.uaw.org/page/who-we-are.
Usa Department of Labor: Bureau of Labor Statistics. "Economic News Release: Spousal relationship Members Summary." Last modified January 23, 2013. http://world wide web.bls.gov/news.release/union2.nr0.htm.
United States Department of Labor, Bureau of Labor Statistics. 2015. "Economic News; Union Members Summary." Accessed April 13, 2015. http://www.bls.gov/news.release/union2.nr0.htm.
Glossary
- collective bargaining
- negotiations between unions and a firm or firms
- labor marriage
- an organization of workers that negotiates with employers over wages and working conditions
Solutions
Answers to Cocky-Cheque Questions
-
- With no union, the equilibrium wage rate would be $18 per hour and there would be eight,000 bus drivers.
- If the union has enough negotiating ability to enhance the wage to $iv per 60 minutes higher than under the original equilibrium, the new wage would be $22 per hour. At this wage, four,000 workers would exist demanded while 10,000 would be supplied, leading to an excess supply of 6,000 workers.
- Unions have sometimes opposed new technology out of a fear of losing jobs, only in other cases unions have helped to facilitate the introduction of new applied science because unionized workers felt that the union was looking later on their interests or that their college skills meant that their jobs were essentially protected. And the new technologies meant increased productivity.
- In a few other countries (such every bit French republic and Espana), the percentage of workers belonging to a wedlock is similar to that in the United States. Union membership rates, however, are generally lower in the United States. When the share of workers whose wages are determined by matrimony negotiations is considered, the Usa ranks past far the lowest (because in countries like France and Spain, union negotiations often decide pay even for nonunion employees).
- No. While some unions may crusade firms to go broke, other unions help firms to get more competitive. No overall design exists.
- From a social signal of view, the benefits of unions and the costs seem to counterbalance. At that place is no evidence that in countries with a higher percentage of unionized workers, the economies grow more or less slowly.
Source: https://opentextbc.ca/principlesofeconomics/chapter/15-1-unions/
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