UNIONS
Because of Unions, lots of originally US based companies went to
China, Korea, Mexico, South East Asia countries in 80s, 90s and never come back. Believe it
or not it is a real pain when you are not meeting any unionized labor’s
requirements or demands. That was the reason todays private enterises are staying away unions in countries and unions are fading away. I have lots of union friends back then. They are good guys, but there is always something there that we will never find out
Unions: Are they updated?
Employers
and workers seem to approach employment from vastly different perspectives. So
how can the two sides reach an agreement? The answer lies in unions. Unions have played a role in the
worker-employer dialogue for centuries, but in the last few decades, many
aspects of the business environment have changed. With this in mind, it's
important to understand how unions fit into
the current business environment, and what role unions play in the modern
economy.
What
Are Unions?
Unions
are organizations that negotiate with corporations, businesses and other
organizations on behalf of union members. There are trade unions, which
represent workers who do a particular type of job, and industrial unions, which
represent workers in a particular industry. The American Federation of
Labor-Congress of Industrial
Organizations
(AFL-CIO) is a trade union, while the United Auto Workers (UAW) is an
industrial union.
What
Do Unions Do?
Since
the Industrial Revolution, unions have often been credited with
securing improvements in working conditions and wages. Many unions were formed
in manufacturing and resource companies, companies operating in steel mills,
textile factories, and mines. Over time, however, unions have spread into other
industries. Unions are often associated with the "old economy": companies that operate in
heavily regulated environments. Today, a large portion of membership is found
in transportation, utilities, and government
The
number of union members and the depth at which unions penetrate the economy
varies from country to country. Some governments aggressively block or regulate
a union's formation, and others have focused their economies in industries
where unions have not traditionally participated.
Industry
deregulation, increased competition, and labor
mobility have made it more difficult for traditional unions to operate. In
recent decades, unions have experienced limited growth due to a shift from
"old economy" industries, which often involved manufacturing and
large companies, to smaller and medium-sized companies outside of
manufacturing. In the recent past, potential union members have spread into a
larger set of companies. This makes collective bargaining a more complicated task, as union
leaders must work with a larger set of managers and often have a harder time
organizing employees.
The
evolution of the modern worker has also changed the role of unions. The
traditional focus of union leaders has been representing workers when
negotiating with managers, but when developed economies shift away from a reliance on
manufacturing, the line between manager and worker becomes blurred. Also,
automation, computers and increased worker productivity results in fewer
workers being needed to do the same job.
How Do
Unions Affect the Labor Environment?
The
power of labor unions rests in their two main tools of
influence: restricting labor supply and increasing labor demand. Some economists compare them to cartels. Through collective bargaining, unions
negotiate the wages that employers will pay. Unions ask for a higher wage than
the equilibrium wage (found at the intersect of the labor
supply and labor demand curves), but this can lower the hours demanded by
employers. Since a higher wage rate equates to less work per dollar, unions
often face problems when negotiating higher wages and instead will often focus
on increasing the demand for labor. Unions can use several different techniques
to increase the demand for labor, and thus, wages. Unions can, and do, use the
following techniques:
Push
for minimum wage increases. Minimum wage increases the
labor costs for employers using
low-skilled workers. This decreases the gap between the wage rate of low-skilled and high-skilled
workers; high-skilled workers are more likely to be represented by a union
low-skilled workers. This decreases the gap between the wage rate of low-skilled and high-skilled
workers; high-skilled workers are more likely to be represented by a union
Increase
the marginal productivity of its workers. This is often done through training.
Support
restrictions on imported goods through quotas and tariffs. This increases demand for
domestic production and, therefore, domestic labor
domestic production and, therefore, domestic labor
Lobbying for stricter immigration rules. This limits growth in the labor supply, especially of low
skilled workers from abroad. Similar to the effect of increases in the minimum wage, a limitation in
the supply of low-skilled workers pushes up their wages. This makes high-skilled laborers more
attractive.
Unions have a unique legal position, and in some sense, they operate like a monopoly as they are immune to antitrust laws. Because unions control or can exert a good deal of influence on, the labor supply for a particular company or industry, unions can restrict non-union workers from depressing the wage rate. They can do this because legal guidelines provide a certain level of protection to union activities.
What
Can Unions Do During Negotiations?
When
unions want to increase union member wages or request other concessions from employers, they can do so through
collective bargaining. Collective bargaining is a process in which workers
(through a union) and employers meet to discuss the employment environment.
Unions will present their argument for a particular issue, and employers must
decide whether to concede to the workers' demands or to present
counterarguments. The term "bargaining" may be misleading, as it
brings to mind two people haggling at a flea market. In reality, the goal of
the union in collective bargaining is to improve the status of the worker while
still keeping the employer in business. The bargaining relationship is
continuous, rather than just a one-time affair.
If
unions are unable to negotiate or are not satisfied with the outcomes of
collective bargaining, they may initiate a work stoppage or strike. Threatening
a strike can be as advantageous as actually striking, provided that the
possibility of a strike is deemed feasible by employers. The effectiveness of
an actual strike depends on whether the work stoppage can force employers to
concede to demands. This is not always the case, as seen in 1984 when the
National Union of Mineworkers, a trade union based in the United Kingdom,
ordered a strike that, after a year, failed to result in concessions and was
called off.
Do
Unions Work?
Whether
unions positively or negatively affect the labor market depends on whom you ask. Unions say
that they help increase the wage rate, improve working conditions and create
incentives for employees to learn continued job training. Union wages are
generally higher than non-union wages globally. According to a 2013 study, by
the Bureau of Labor Statistics, " Salaries for private industry union
workers averaged $18.36 per hour while those for nonunion private industry
workers averaged $14.81 per hour." As well, the study found that union
workers have more access to employee benefits than nonunion workers.
Critics
counter the unions' claims by pointing to changes in productivity and a
competitive labor market as some of the primary reasons behind wage
adjustments.
If the
labor supply increases faster than labor demand, there will be a glut of
available employees, which can depress wages (according to the law of supply and demand). Unions may be able to prevent
employers from eliminating jobs through the threat of a walkout or strike,
which will shut down production, but this technique does not necessarily work.
Labor, like any other factor of production, is a cost that employers factor in
when producing goods and services. If employers pay higher wages than their
competitors, they will wind up with higher-priced products, which are less
likely to be purchased by consumers.
Increases
in union wages can come at the expense of non-unionized workers, who lack the
same level of representation with management. Once a union is ratified by the
government, it is considered a representative of the workers, regardless of
whether all workers are actually part of the union. Additionally, as a
condition of employment, unions can deduct union dues from employee paychecks
without prior consent.
Whether
unions were a primary cause of a decline in labor demand by "old
economy" industries is up for debate. While unions did force wage rates
upward compared to non-union members, this did not necessarily force those
industries to employ fewer workers. In the United States, "old
economy" industries have declined for a number of years as the economy
shifts away from heavy industries.
The
Bottom Line
Unions
have undoubtedly left their mark on the economy, and continue to be significant
forces that shape the business and political environments. They exist in a wide
variety of industries, from heavy manufacturing to the government, and assist
workers in obtaining better wages and working conditions
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