Collective Bargaining

Abstract

For centuries, guilds and unions have fought for worker rights and benefits while managers have fought back to protect the company from going out of business. These parties have worked to find common ground via the collective bargaining process, wherein both sides meet to establish an agreement on how the work will be conducted. This paper will look at collective bargaining, reviewing the process and how it has evolved over the last several centuries. The essay will also review some of the issues that commonly present themselves during such negotiations. The reader will glean a better understanding of this major component of business in the twenty-first-century global economy.

Overview

In 1969, the Western film Death of a Gunfighter opened in theaters across the country. Starring Richard Widmark and Lena Horne, the film was well received by critics, including one of the most well-known, Roger Ebert. Ebert hailed the film and its director, Alan Smithee, of whom he said "a name I'm not familiar with." Smithee would direct more than a dozen other films from that point forward, and would appear in the credits for a number of television shows and even music videos.

Ebert's comment on Smithee's seeming anonymity was telling—no one had previously seen Alan Smithee's work, because in fact, Alan Smithee was not real. According to many accounts, Widmark strongly disagreed with the direction of Robert Totten, having him replaced with director Don Siegel. Siegel felt that Totten did most of the work, and did not wish to have his name on the film. The Directors Guild of America, which set the rules for film directors and worked to protect them within the industry, allowed Siegel to change his name in the film's credits. Over the following decades, the use of Alan Smithee's name by directors would be known as an act of defiance against interfering studio management.

For centuries, workers and business managers have often coexisted in an adversarial relationship. Guilds and unions have fought for worker rights and benefits while managers have fought back to protect the company from going out of business. These parties have worked to find common ground via the collective bargaining process, wherein both sides meet to establish an agreement on how the work will be conducted.

This paper will look at collective bargaining, reviewing the process and how it has evolved over the last several centuries. The essay will also review some of the issues that commonly present themselves during such negotiations. The reader will glean a better understanding of this major component of business in the twenty-first-century global economy.

A Brief History of Unions & Bargaining. As far back as the first century AD, those who work within certain trades have come together to establish rules and advance their interests within larger regional economies. The plight of labor and labor unions has its origins in business, but there is much more to this area. In fact, this issue is not just one of business and economics — labor issues also have political, historical and sociological relevance.

The labor movement began during the Industrial Revolution in the eighteenth century. As industrialized nations began to further their evolution, building a wide range of industries, the workforce expanded with them. Increased demand meant harder work and longer hours, often under dangerous and/or unsanitary conditions. Many workers were on factory assembly lines for twelve- and fourteen-hour shifts in unventilated, poorly lit factories. In Great Britain, after such conditions became well-publicized, Parliament enacted a set of "Factory Acts" in the early nineteenth century (Montagna, 2009). While the implementation of these measures in England did call attention to the issue, such conditions continued in other environments. Workers began to see the value in joining together in solidarity to change those conditions, since government did not seem interested in comprehensive reforms, believing that heavy regulation would stymie industrial growth.

The United States would also undergo this growth, both in terms of populations in urban centers and in the industrial workforce. The first US unions jelled in New York and Philadelphia in the latter 18th century. Over the following century, labor organizations grew in size and quantity, diversifying concurrently with industrial diversification. Their success rate was minimal, however, in light of the political and economic power industrial leaders held at the time (Teasley, 2009). Their plight was worsened by the Great Depression, with only the craft unions surviving that economic period.

However, the Great Depression would also help labor find a resurgence. The fact that more than a third of Americans were put out of work helped give the working individual a sympathetic ear by the government. The federal government, led by new President Franklin Delano Roosevelt, enacted a number of laws designed to place greater restrictions on anti-union policies. The first of these acts was the 1932 Norris-La Guardia Act, which rendered unenforceable so-called "yellow-dog contracts." These were agreements in which the employee agreed to not join a union in order to keep his or her job. That law also limited the ability of courts to intervene in strikes and other labor protests ("The Great Depression and Labor," 2009). In 1935, the National Labor Relations Act, also known as the "Wagner Act" gave workers the right to form unions. This law also gave unions the ability to enter into negotiations with their employers. These negotiations would become known as "collective bargaining."

In addition to strict restrictions on the intervention of external elements into labor disputes, the National Labor Relations Act (NLRA) stated "to bargain collectively is the performance of the mutual obligation of the employer and the representative of the employees to meet at reasonable times and confer in good faith with respect to" such matters of pay and benefits, hours and other aspects of employment (National Labor Relations Act, 1935, Sec. 8 (d)). Collective bargaining, therefore, would entail the periodic negotiations between employers and employees (as represented by a union and/or union representatives). These negotiations would result in a legally binding contract, which could not be terminated unless both sides agreed to do so.

In modern times, unions and collective bargaining are found worldwide, although they tend to be more active in areas where industrialization and subsequent economic growth are increasing. While unions have suffered membership declines in recent years, the passions that have long been part of their unifying philosophies have remained. In fact, there are those who believe that unionization and collective bargaining are fundamental privileges not dissimilar from human rights—these advocates assert that if the sentiments of the International Labor Organization (the intergovernmental organization charged with advocating for both human and labor rights) were adopted in specific countries, the laws protecting collective bargaining would provide greater protections (Adams, 2005).

Further Insights

Understanding Collective Bargaining. At its most basic, collective bargaining entails the negotiation of terms and conditions of employment between management and workers. Under ideal conditions, the key to this concept involves the two sides meeting to establish common ground under set rules and equitable conditions. In the same vein as individual bargaining in employment, the assumption is that both sides are expected to make compromises in order to reach a mutually beneficial agreement.

Collective bargaining owes its roots to a perceived unpredictability in how industry earnings may be split between employers and employees. In 1867, British statistician Jacob Waley argued that the distribution of business returns would be in a constantly fluctuating environment and as such, no clear standards could be established. Therefore, he suggested, "the precise place at which the line is drawn will to a very considerable extent be determined by circumstances which may fairly be called fortuitous, and may be greatly influenced by a bargain between the employer and the employed" (cited in Hutt, 1954, p. 82-3).

Then again, collective bargaining does not entail two individuals. Rather, the negotiations occur between representatives of the respective parties. The employer is represented by human resource managers, legal counsel and managers of the areas in which the work will be performed. On the other side, the workers are represented by the unions, which are member-supported labor organizations whose purpose is to operate to the benefit of the workers. Unions place the collective good of the entire workforce over the individual; an important distinction of collective bargaining in comparison to individual employment negotiations.

Since the resurgence of labor and unions after the Great Depression, collective bargaining in the United States has generated considerable controversy, as few legislative or regulatory attempts to reform or modify collective bargaining have avoided intense lobbying and political polarization. Advocates for collective bargaining assert that the process gives a voice to those who might otherwise have no input into employment conditions. While collective bargaining negotiations may last a long period of time (sometimes weeks and even months), advocates stress that such lengthy periods are well worth the time and expense if it means the betterment of the workers' lives. The arduous process, proponents say, may in fact be wrought with inefficiencies, but such issues are again negated by the fact that the best interests of the workers are being met as a result of the negotiations (Block & Berg, 2003).

There are employers who seek to limit or modify collective bargaining. They assert that collective bargaining is an imperfect process, inflexible to the needs of an ever-changing economy and business environment. To some critics of collective bargaining, a conflict of interest exists: unions rely on the monetary dues of members—the more workers earn, the more they are able to pay to the unions. As such, unions will seek the maximum revenues possible from higher wages negotiated by the unions. Regarding this issue, one expert says that the "union is thought of as a profit-maximizing entity rather than a wage-fixing agency for labor" (McConnell, 1955, p. 14).

In light of the oft-adversarial relationship between employers and employees (or, more specifically, between employers and unions), governments have stood as intermediaries in formulating the manners by which collective bargaining units may proceed with their negotiations. In the United States, The NLRA remains the fundamental basis for governing collective bargaining; although states have implemented their own laws on unions and collective bargaining, the Constitution states that any federal laws pertaining thereto, such as NLRA, supersede those state laws ("Collective Bargaining," 2009).

Although collective bargaining has evolved considerably and has generated significant controversy during that development, the practice of this employer-employee negotiation remains common.

The Art of Negotiation. At the genesis of collective bargaining is the formation of the union. Permissible under the NLRA in the United States, unions may be formed in a private, for-profit business, non-profit organization or a public (government) agency. Unions are typically formed when a majority of workers within a business vote by secret ballot to be represented by such organizations. Once this vote has been conducted, the National Labor Relations Board (NLRB), the federal agency charged with union oversight, certifies the vote and validates the union. Meanwhile, management of the business must also accept the vote and recognize the union as the agent representing employees at the collective bargaining unit.

The goal of the collective bargaining unit is a contract under which the required work will be performed. Many such negotiations focus on single worksites and single employee organizations. However, many larger employers may have multiple sites in other regions. They may conduct single contract negotiations with the unions on behalf of the entire breadth of the organization's operations or negotiate contracts that are site-specific.

Traditional Bargaining. There are two general styles of negotiating employed during collective bargaining units. The first of these is the more traditional form, in which both sides act solely on behalf of their respective interests. Employers will proceed from the perspective of the business, the union from the perspective of the workers. It is an adversarial and occasionally extremely bitter form of bargaining, often involving sacrifices from both parties, resulting in a contract in which a sizable percentage of the provisions therein are considered negative by each party. Despite the confrontational nature of this approach, the traditional view of collective bargaining remains a long-standing preference among negotiators.

Partnership Approach. The partnership style is a more congenial and conciliatory approach. Employers are given an ability to see and appreciate the interests of the employees and vice versa. From this mutually beneficial perspective, it is believed that an agreement would be more quickly completed. Because both sides understand the needs and concerns of their counterparts, it is believed that this approach is less controversial and more efficient than the traditional approach, resulting in a contract with which both parties can find accord (Lee, 2009).

Strikes. Of course, given the inherently adversarial relationship that exists between employers and unions, there are occasions in which collective bargaining reaches an impasse. As negotiations extend longer than expected or break off altogether, both sides may employ a range of tactics designed to hamper the other. Unions may call for a strike, taking workers out of their jobs until employers return to the table or agree to their demands. In the event of such an incident, employers may retaliate by hiring non-union employees to replace the striking workers. When collective bargaining reaches this point, it may be further intensified by charged rhetoric, public battles on the media and intervening political figures.

Arbitration. In the event that such an impasse occurs, both parties may agree to seek arbitration. As an alternative to litigation, arbitration offers a solution to an extended and increasingly combative standoff. A neutral third-party arbitrator is called in by both parties to review the unresolved issues and render a decision that is legally binding. The decision may not be fully agreeable to either party, but arbitration offers an end to lengthy disputes.

Issues

Unions & Legislation. Unionization and collective bargaining have long been the subjects of controversy in political circles as well as business operations. Proposed changes to state and national laws pertaining to these issues have been introduced in great quantities for decades. Most recently, for example, a significant push in the United States has been initiated by unions to increase membership by eliminating the secret ballot vote and replacing it with more open "card check" process, whereby employees vote for or against unionization simply by signing their names to the process. Part of a larger bill known as the "Employee Free Choice Act," the measure is seen by proponents as a way to expedite unionization and minimize employer interference, while opponents see it as a vehicle by which unionization will be imposed upon workers who might not otherwise vote for it.

In Canada, relevant legislation has been introduced on a number of fronts. In the late 1990s, bills were introduced in Ottawa that were designed to lessen the impact of contentious collective bargaining negotiations by restricting strike declarations and regulating when non-union workers could be used while employees were on strike (Gramton, Gunderson & Tracy, 1999). The consistently integrating European Union is exploring ways by which collective bargaining in transnational and multinational business may be made uniform, a concept opposed by employers and advocated by unions (Gennard, 2008).

Collective bargaining continues to adapt to a constantly evolving business environment. Although it remains largely adversarial, collective bargaining in a general sense is likely to continue to be the primary vehicle for employer-employee labor negotiations.

Example: PATCO. In 1981, over 12,000 members of the Professional Air Traffic Controllers (PATCO), who were mired in a bitter collective bargaining unit with the Federal Aviation Administration (FAA), walked off the job over a lack of amenable pay raises. Although the law allowed for replacement workers to be hired to replace striking workers, few employers had until then acted on that ability to hire them. President Ronald Reagan issued a simple but harsh warning to PATCO: return to work within forty-eight hours or their jobs would be terminated. PATCO called Reagan's bluff, but he did not flinch. Reagan terminated all of the employees' jobs, replacing them with non-union personnel. Reagan's heavy-handed approach had two results. In the short term, he effectively ended an arduous collective bargaining unit with one bold, swift move. In the long term, he set a fearful precedent for would-be strikers: in the decades before the PATCO incident, there were about three hundred major strikes per year—since then, there have only been an average of thirty per year in the United States. (Schalch, 2006).

The example of PATCO underscores the typically adversarial and often contentious relationship between labor and employers during collective bargaining. In a general sense, the nature of both parties' respective perspectives has not changed since the Industrial Revolution, nor have the issues (such as hours, wages, safety and job requirements) that widen the gulf between employer and employee during negotiations. As this paper has shown, collective bargaining continues to evolve as the business environment itself changes. Despite the oft-bitter and at times politically-charged conflicts that arise through collective bargaining, it remains an important tool in helping employers and employees seek and establish common ground.

Terms & Concepts

Arbitration: The practice of calling in a neutral third-party arbitrator to review unresolved collective bargaining issues and render a decision that is legally binding.

Collective Bargaining Unit: A series of negotiating sessions between employers and union representatives over a labor contract.

International Labor Organization: The UN agency charged with advocating for both human and labor rights.

National Labor Relations Act (NLRA): A 1935 US law allowing workers to unionize and representatives to enter into collective bargaining units on behalf of workers.

National Labor Relations Board (NLRB): The US federal agency charged with overseeing regulations and guidelines for collective bargaining and unionization.

Partnership Approach: A collective bargaining tactic in which each party shares its respective needs and from there negotiates to meet those needs.

Bibliography

Adams, R. (2005, March 24). Collective bargaining as a human rights and labour relations issue in Canada [Transcript]. Retrieved October 25, 2009 from National Union of Public and General Employees http://www.nupge.ca/news%5f2005/n30ma05a.htm.

Alan Smithee. (2009). Retrieved October 24, 2009 from Internet Movie Database, http://www.imdb.com/name/nm0000647/bio

Block, R. & Berg, P. (2003). Collective bargaining in context: Comparing the United States and Europe. In Block, R., Ed. Bargaining for competitiveness: Law, research and case studies. Kalamazoo, MI: W.E. Upjohn Institute for Employment Research. Retrieved October 26, 2009 from http://www.upjohninst.org/publications/ch1/barg.pdf.

Caverly, N., Cunningham, B. & Mitchell, L. (2006). Reflections on public sector-based integrative collective bargaining. Employee Relations, 28, 62–75

Chamberlain, N. (1944). The nature and scope of collective bargaining. Quarterly Journal of Economics, 58, 359–387. Retrieved October 28, 2009 from EBSCO Online Database Business Source Premier. http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=7716012&site=ehost-live&scope=site

Collective bargaining. (2009). Wex — LLI's collaboratively built law dictionary and encyclopedia. Retrieved October 27, 2009 from Cornell University Law School Legal Information Institute. http://topics.law.cornell.edu/wex/Collective%5fbargaining.

Cloutier, J., Denis, P. L., & Bilodeau, H. (2012). Collective bargaining and perceived fairness: Validating the conceptual structure. Relations Industrielles / Industrial Relations, 67, 398–425. Retrieved November 24, 2013, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=82084976&site=ehost-live

Cramton, P., Gunderson, M. & Tracy, J. (1999). The effect of collective bargaining legislation on strikes and wages. Review of Economics and Statistics, 81, 475–487. Retrieved October 28, 2009 from EBSCO online database, Business Source Complete http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=2245054&site=ehost-live

Gennard, J. (2008). Negotiations at multinational company level? Employee Relations, 30, 100–103.

Hutt, W.H. (1954). The theory of collective bargaining. Glencoe, IL: The Free Press. Retrieved October 27, 2009 from Ludwig von Mises Institute http://mises.org/books/bargaining.pdf.

Javits, J. M. (2017). Better process, better results: Integrating mediation and arbitration to resolve collective bargaining disputes. ABA Journal of Labor & Employment Law, 32(2), 167–187. Retrieved January 4, 2018 from EBSCO Online Database Business Source Ultimate. http://search.ebscohost.com/login.aspx?direct=true&db=bsu&AN=124024329&site=ehost-live&scope=site

McConnell, C. (1955). Trouble spots in collective bargaining theory. American Journal of Economics and Sociology, 15, 13–30. Retrieved October 26, 2009 from EBSCO Online Database Business Source Premier. http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=15391339&site=ehost-live.

Montagna, J. (1981). The Industrial Revolution. An Interdisciplinary Approach to British Studies, Vol. II. Retrieved October 24, 2009 from Yale-New Haven Teachers Institute. http://www.yale.edu/ynhti/curriculum/units/1981/2/81.02.06.x.html.

National Labor Relations Act. (1935). Retrieved October 25, 2009 from National Labor Relations Board. http://www.nlrb.gov/about%5fus/overview/national%5flabor%5frelations%5fact.aspx.

Sachs, B. I. (2013). The unbundled union: Politics without collective bargaining. Yale Law Journal, 123, 148–207. Retrieved November 24, 2013, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=91544715&site=ehost-live

Schalch, K. (2006, August 3). 1981 strike leaves legacy for American workers [Transcript]. Morning Edition, NPR. Retrieved October 28, 2009 from National Public Radio. http://www.npr.org/templates/story/story.php?storyId=5604656.

Teasley, C. (2009). The rise of labor unions during the Industrial Revolution. Retrieved October 24, 2009 from Helium.com. http://www.helium.com/items/1121656-rise-of-labor-unions-industrial-revolution.

The Great Depression and labor. (2009). Adapted from Conte, C. & Karr, A., Outline of the U.S. Economy. Washington: U.S. Department of State. Retrieved October 25, 2009 from http://economics.about.com/od/laborinamerica/a/greatdepression.htm.

Suggested Reading

Hassel, A. & Schulten, T. (1998). Globalization and the future of central collective bargaining: the example of the German metal industry. Economy and Society, 27. Retrieved October 28, 2009 from EBSCO Online Database Business Source Premier. http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=6602454&site=ehost-live.

Jensen, V. (1963). The process of collective bargaining and the question of its obsolescence. Industrial & Labor Relations Review, 16, 546–556. Retrieved October 28, 2009 from EBSCO Online Database Business Source Premier. http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=6448750&site=ehost-live.

Kochan, T. & Wheeler, H. (1975). Municipal collective bargaining: A model and analysis of bargaining outcomes. Industrial & Labor Relations Review, 29, 46–66. Retrieved October 28, 2009 from EBSCO Online Database Business Source Premier. http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=4461433&site=ehost-live.

Lewin, D., Keefe, J. H., & Kochan, T. A. (2012). The new great debate about unionism and collective bargaining in u.s. state and local governments. Industrial & Labor Relations Review, 65, 749–778. Retrieved November 24, 2013, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=83756624&site=ehost-live

Murray III, H. F. (2017). Federal appeals court sanctions National Labor Relations Board in ongoing battle over management rights provisions in collective bargaining agreements. Employee Relations Law Journal, 42(4), 64–67. Retrieved January 4, 2018 from EBSCO Online Database Business Source Ultimate. http://search.ebscohost.com/login.aspx?direct=true&db=bsu&AN=120984364&site=ehost-live&scope=site