Collective bargaining outcomes are affected by factors.
How unions affect wages.
The government employed strike against Caterpillar, Inc. in November 1991 was launched by the United Auto Workers Union.
The union wanted the manufacturer to change market outcomes.
The chapter focuses on how power can be used to increase pay, benefi ts, and job security.
After 17 months, it relented.
In the process of answering these questions, we look at a decline in the power of labor unions.
To gauge the impact of labor market power, we must first observe how a competitive labor changes the market price of a good or service.
On the supply side, we have people who are willing to work at various wage rates.
Market labor demand amounts of time at alternative curve are reflected in the willingness of producers to hire labor.
The curve is constructed by counting the number of workers each firm has available to hire at a given wage rate.
In addition, f irms are able to acquire all the labor ties of labor employers will they be willing and able to hire at that wage.
This is an oversimplification.
If you were looking for a job in New York City, you wouldn't have much interest in employment prospects or power configurations.
Within a particular geographical area, interest is usually focused on particular labor demands.
If you were looking for work as a dancer, you wouldn't care about the employment situation for carpenters or dentists.
You would want to know how many vacancies there were in nightclubs and dance troupes.
There is a more meaningful basis for analyzing labor market power from the different geographical, occupational, and industrial labor markets.
The national labor market has over 150 million workers and anyone can't take control of it.
Wal-mart employs less than 0.8 percent of the labor force.
The top 500 industrial corporations employ less than 20% of all workers.
The labor demand curve shows how many workers employers are willing to hire.
There is a similar situation on the supply side.
The largest labor union in the country represents less than 1 percent of workers.
All unions are only a small part of the labor force.
This doesn't mean that unions don't have an influence on economic welfare.
Labor unions want to change the equilibrium wage and employment conditions in specific labor markets.
Unions must be able to control the market supply curve.
Workers organize themselves by industry or occupational craft lines.
The purpose of both types of labor unions is to coordinate the actions of thousands of individual workers.
Most monopolies try to increase their incomes by using their market power.
Raising the wages of union members is a primary objective of unions.
Money was the only issue in the 2005 dispute between pro hockey team owners and players.
The players were resisting a salary cap that would restrain their wages.
The team owners wanted to limit total player salaries.
It's unusual to have an exclusive focus on wages.
The UAW Association and the National Football League have bargained about the use of artificial activity, visit the organization's Web turf, early retirement, player fines, television revenues, game rules, and the use of team site at www.uaw.org doctors.
The United Auto Workers worry about job security a lot.
Work rules may eliminate jobs and unemployment benefits for laid off workers.
We focus on wage rates because they are the only objective that is as broad as the concerns of union members.
Most non wage issues can be translated into their impact on wage rates.
In 2003 the UAW and GM agreed to nearly two dozen different job provisions, ranging from job security to child care.
It was possible to figure out the cost of these provisions.
Wage costs can be expressed in terms of the compensation package's bottom line.
We want to know if unions can raise effective wage rates in a specific labor market by changing the competitive equilibrium depicted in Figure 311.
Each worker makes a labor supply decision based on his or her own perception of the relative values of labor and leisure in a competitive labor market.
The market wage won't be affected by the decision.
In a market of thousands, one worker isn't significant.
The conditions no longer hold after a market is unionized.
The wage rate paid to its members must be concerned with the effects of increased employment.
New hires must be on a four-year contract in October.
attrition replacements were included in the contract.
It went from $4,200 to $4,600 per year.
In 2005 and 2006 Benefi t increased by 2% and 3%.
In November 2005, it increased from Election Day.
Increased from $23,500 to $30,000.
30 cents per hour was increased.
Coverage was extended to LASIK.
There are a variety of employment conditions that labor unions bargain with management over.
In terms of wage costs, most issues can be expressed.
A larger quantity of labor can only be sold at lower wage rates.
The labor demand schedule depicted in Figure 31.2 could be confronted by the workers in a particular labor market.
Five workers per hour are demanded at a wage of $1 per hour at lower rates.
An individual worker who was offered a wage of $1 an hour would have to decide if it was worth the sacrifice of an hour's leisure.
The offer would be evaluated differently by a union.
The wages of all the workers will be affected by the hiring of one more worker.
The wage received by individual workers is what the market wage is.
Total wages paid amount of labor employed Marginal change in total wages paid amount of labor employed
The downward slope of the labor demand curve leads to the distinction between marginal wages and market wages.
We made a distinction between marginal revenue and price for monopolists in product markets.
As wages fall, the number of workers hired increases.
Figure 31.2 shows the impact of increased employment on marginal wages.
The wage rate paid to the first worker will be reduced from $5 to $4 in order to partially offset the increased wages of the second worker.
When the wage loss to workers already on the job begins to exceed the wage of a new hired worker, the marginal wage becomes negative.
A union doesn't want to accept a negative marginal wage.
It would be better for union members to pay someone to stay home.
What level of marginal wage should the union accept?
The labor supply curve can be used to answer this question.
The marginal wage curve is the most important factor in the union's assessment of wage offers.
The union members will be paid more than that.
The union can demand $4 an hour if it only has two workers.
The union is choosing a point on the labor demand curve that they think is the optimal combination of wages and employment.
The labor demand curve would be pushed down to $3 per hour if the additional worker were to offer his services.
Union solidarity is the most important force here.
Once unionized, individual workers must agree not to compete with each other by offering their labor at nonunion wage rates.
If wage rates are too low, the workers must agree to supply labor only at the union-set wage.
All workers employed in a particular company or industry must join the union within 30 days after being hired.
The general union solidarity and stiff penalties ensure that only nonunion workers will take the job of a worker on strike.
Substitute labor is subject to potential competition in union shops.
When the UAW struck Caterpillar in 1991, the company set up a toll-free phone line for replacement workers.
The company got a huge response in the midst of a recession.
Workers crippled the UAW strike.
Baseball players faced the same problem in 1995.
The team owners hired new players to replace the regulars when the strike threatened a second season.
The strikers were forced to reconsider because of the huge supply of aspiring ball players.
There are more replacement workers in agriculture.
California's 20,000 strawberry pickers have been trying for decades to be represented by the United Farm Workers.
Thousands of additional workers from Mexico will come to California if they protest wages and working conditions.
The first labor unions in America were formed in the 1780s.
When large-scale manufacturing became common in the 1900s, union power was not a significant force in labor markets.
Large numbers of workers began to see their employment situations from a common perspective.
The period 1916-20 was one of the fastest growing periods for labor unions because of the high demand for labor after World War I.
The membership gains were lost when millions of people were out of work during the Great Depression.
The levels of union membership in 1933 were the same as in 1915.
Government policy and public attitudes changed during the Depression.
Too many people have learned about layoffs, wage cuts, and long-term unemployment.
The National Industrial Recovery Act established the right of employees to bargain with their employers.
The labor provisions of the NIRA were included in the new law after it was declared unconstitutional by the Supreme Court.
Between 1933 and 1937, union membership doubled.
The production needs of World War II increased the demand for labor.
Even though the labor force kept growing, union membership stopped increasing in the 1950s.
The current unionization rate of 12.5 percent of the labor force centage is less than half of the peak rate after World War II.
Sector workers have plunged more than the figure suggests.
The rate of unionization in the private sector has fallen over the last 10 years.
Union membership in the United States is not as high as other industrialized countries.
In the United States, unionization rates are low.
More than 36 percent of workers on government payrolls were union members in 2007.
The old industrial unions are being replaced by unions of service workers.
Industrial unions have pockets of market power despite their decline.
The UAW, the United Mine Workers, the Union of Needletrades and Textile Employees, and the Food Workers all have substantial representation in their respective markets.
The ability to alter market outcomes is determined by their strength in those specific markets.
A brief 9 million workers can be found on the Web site of The AFL-CIO, a representational body of more than 50 national unions.
It doesn't represent or negotiate for any particular group of workers, but instead focuses on issues of general labor interest.
The labor movement and labor's interest in legislative areas are represented by the AFL-CIO.
It is the main vehicle for political action.
Economic assistance may be given to member unions or to groups of workers who wish to organize.
The unions that favored more focus on traditional union interests were upset by the political activity of the AFL-CIO.
The Change to Win Coalition was formed in September 2005, when some of the unions quit the AFL-CIO.
We will argue that graduate students who work do not deprive workers.
The ruling upheld a decision that dents earn is not compensation.
While critics complain that graduate students are exploited as have already been recognized at a growing number of public cheap labor, administrators respond that universities are governed by state labor laws.
The National Labor Relations Board gave a thumbs up to 2000 U.S. News & World Report.
Wage and workload for graduate assistants are set by universities.
Grad assistants may bargain collectively to counterbalance their power.
In a power vacuum, the power of labor unions in various occupations and industries is rare.
The United Auto Workers confront GM, Ford, and Chrysler; the Steelworkers confront U.S. Steel, International Steel Group, and AK Steel.
An imbalance of power can be found on one side of the market or the other.
Labor markets with power on both sides are common.
We have to assess the market power of employers to understand how wage rates and employment are determined in such markets.
Market power on the demand side indicates the ability of a single employer to change the market wage rate.
The classic example of a monopsony is a company town that depends on the decisions of a single employer.
The universities that employ graduate teaching assistants are similar to company towns.
It's difficult to transfer from one university to another once they've started taking graduate classes.
There is only one local labor market for graduate students.
They say they are forced to work long hours at low wages.
The University of California graduate students went on strike in 1998.
More than 10,000 graduate students affiliated with the United Auto Workers gained more power in 1999.
The National Labor Relations Board ruled in 2000 that graduate research and teaching assistants have the right to organize and strike.
Professional sports teams had power before 1976.
Pro players were not allowed to move from one team to another without permission.
Team owners had the power to set wages and working conditions.
When players were allowed to be "free agents" and bargain with more than one team, the power was diminished.