Union Organization
Picking a target
1.
2.
3.
4.
Union return on investment depends on cost
of organizing
Expected cost of servicing workers
Expected probability of win
Expected bargaining strength in the sector
Union Organization
Picking a target
1.
2.
Union return on investment depends on cost of
organizing
Expected cost of servicing workers
–
–
–
–
–
–
Heterogeneity of workers, interests
Worker turnover
Part-time vs. full-time vs. transitory workers
Worker ability to pay dues
Size of unit (returns to scale)
Monopoly or oligopoly
Union Organization
Picking a target
3. Expected probability of win
–
–
Wages and benefits in the firm relative to local
reference, industry norms
Worker sense of inequity or injustice


–
–
Campaigns based on workplace dignity: 56% win
Traditional wages, hours, job security: 27% win
Probability of firm resistance
Phone sampling, research
Union Organization
Picking a target
4. Expected bargaining strength in the sector

Depends on the elasticity of labor demand


Laws of derived demand
Depends on the growth of labor demand




Growing firm profits
Growing firm revenues
Growing employment
Growing labor productivity

Can also help with sense of fairness
Union Organization
Labor demand: N: number of workers; W: Wage
W
W1
W0
Demand
N1
N0
N
Wage Bill = W*N; Change in wage bill = W1N1 – W0N0
Union Organization
Labor demand: N: number of workers; W: Wage
W
Relatively Inelastic
Demand
W1
W0
Relatively
Elastic Demand
N1 N2 N0
N
Change in wage bill = W1N2 – W0N0 is smaller than with
elastic demand
Union Organization
ED = Elasticity of demand =
% change in employment
% change in wage
0 < ED < 1: inelastic demand
ED = 1: unitary elastic demand
ED > 1: elastic demand
Wage increase with inelastic demand will raise the wage bill
Wage increase with elastic demand will lower the wage bill
Union Organization
ED = Elasticity of demand = 0.3 < 1, inelastic
% change in employment = 3%
% change in wage = 10%
W1 = W0 (1.10)
N1 = N0 (0.97)
Change in wage bill = W1N1 – W0N0
= W0 (1.10)* N0 (0.97) - W0N0
= 0.067*W0N0
So wage bill rises when wage rises when the elasticity of demand is below 1.
Union Organization
Laws of derived demand

Union labor demand is less elastic when …

Product demand is less elastic





Few substitutes for the product
Monopoly/oligopoly
Weak import penetration
Examples?
There are few substitutes for union labor



No ready supply of replacement workers
High union density in the industry
Nonunion options paid comparable wages (Davis-Bacon)
Union Organization
Laws of derived demand
 Union labor demand is less elastic when …

“Importance of being unimportant”—labor costs are a
small fraction of total costs



Heavily capitalized sectors
Crafts vs. industrial unions
Only holds when elasticity of demand for product is bigger
than the elasticity of substitution (holds most of the time)
Steps for union recognition by
NLRB election
1.
Initial contact


2.
Workers contact union
Union targets workers
Union typically assigns an organizer


Determines campaign focus
Solicits assistance and trains employees sympathetic to the
union



Nonemployees do not have access to the premises as long as there
is an alternative way to contact workers
Employees are known by fellow workers
If the union is successful, it will need an infrastructure of
employees to serve as stewards, local leaders
Steps for union recognition by
NLRB election
Solicitation
3.
•
•
•
•
•
Work time vs personal time at work vs nonwork
time
NLRB reserves work time for work—limits
interference in firm business practice
Personal time at work (lunch, breaks) are open for
oral solicitation by employees
Pro union posters, bulletins, clothing, buttons ok if
they do not disrupt business
Off-premises solicitation is ok
Steps for union recognition by
NLRB election
4.
Authorization cards
Minimum of 30% needed to authorize election
(unions will not press for election unless they have
majority. AFL-CIO recommends 75%)
5. Representation Petition
Union submits RC petition. NLRB verifies
minimum 30% interest.

Cross-petition from other unions requires additional
10% interest
Steps for union recognition by
NLRB election
Strict Rules Governing Firm Behavior During Union
Campaign
Steps for union recognition by NLRB election
6.
Secret Ballot election
Within 30 days of verification of need for election
50% required to win
Run-off among top two options if no majority
Voters include everyone in bargaining unit
Employed at least 30 days in the year prior
Avoidance of fraudulent employees
Economic strikers within 12 months of strike
Replacement workers
Part-time workers with continuing interest
SAG: anyone who worked at least two days in
months
last 12
Steps for union recognition by NLRB election
7.
Rules on election day
1.
2.
No mass meetings 24 hours before election
Firm cannot offer benefits or reprisals
No special pay from firm to compensate for voting expenses
Special pay from union for voting expenses is ok, other
compensation is illegal
Steps for union recognition by
NLRB election
8.
Certification of Election
If NLRB certifies union win, union is immediately certified. Has one
year to get a contract
Contract bar—no other elections allowed for one year, regardless of
who wins
If firm is guilty of ULP, NLRB may call for another vote; or
Gissel doctrine NLRB may certify union if firm behavior is considered
so bad as to make a fair election impossible and there is evidence
that union has a majority; or
J.P. Stevens ordered to bargain, even though union did not demonstrate
majority through authorization cards
Voluntary Recognition

If firm volunteers to recognize union, NLRB
will certify union.
Recognition picketing (limit of 30 days, after which
firm can ask for expedited election)
 Economic pressure (boycotts, political pressure)
 Prior agreements between firm and worker to accept
recognition cards in lieu of NLRB election
 Absent election, union at risk of decertification
election,

Eaton and Kriesky on Neutrality and Card
Check Agreements ILRR (October 2001)

Unions may wish to forge agreements that lower the
cost of organizing or the standard for success

Agreements with firms that have multiple sites






Centralized agreements
Generalized agreement based on a few local relationships
Agreement with entirely new firms
Agreements with Associations of Employers
Most common: Steel, autos, communications, hospitality,
gaming
(66%) restrict agreement to specific occupations, job
classifications, or facilities
Types of agreements
Neutrality Agreements:
“Neither
helping nor hindering” union organization
efforts, facts allowed (UAW, CWA)
“Employer will not communicate opposition; employer
will not attack or demean the union or its representatives
(HERE)
Firm will not provide support to anti-union groups
(USWA)
Weaker statements: strive for climate free of hostility; only
positive, pro-company statements will be issued
Types of agreements
Card Check Agreements:
(73%) Third party neutral will validate
membership cards signed by union members. Firm
will recognize union if a minimum level is reached
(say 65%)
Similar to above, but if percentage of cards is
above 50% but below threshold, a nonNLRB
election is held. If percentage is between 30% and
50%, NLRB election held.

Types of agreements
Access:
(66%)
Union will be allowed on the firm premises.
(36%) Union given lists of employees in the bargaining
unit
First
contract
Accretion
of new sites into existing bargaining units (50%
of multi-site agreements)
Arbitration if first contract not reached (USWA)
Negotiations begin immediately upon recognition
Data





57 International unions with 10,000+ members
36 respond
23 had at least one agreement
132 agreements total (113 at least partially
useable)
Data analyzed only relate to these 113 contracts
Union Success

Recognition



NLRB elections: 46% 1983-1998
Neutrality only: 46%
Card Check: 74% (understated viz. NLRB)




First contract




Card check, U.S. public sector: 85%
Card check, Quebec: 83%
Card check, Ontario: 78%
NLRB elections: 66-80%
Neutrality only: 100%
Card check: 96%
Does this mean that universal mandatory application of
card check or neutrality will raise union density?
Thieblot. “The Fall and Future of Unionism
in Construction.” Journal of Labor Research
Spring 2001.



1959 Landrum Griffin Act allows closed shops
in building trades (pre-hire agreements)
Davis Bacon Act (1931); Little Davis Bacon
Acts 2/3 of states); Project Labor Agreements
(eg Des Moines Iowa Events Center)
Construction has lost density more than most
industries
Why has Union Density fallen in
Construction?

Demographics: women, educated?


Insignificant in construction trades
10 states repealed little Davis Bacon Acts since
1979
Most of the decline predates this
 Decline occurs does not slow after Landrum Griffin


Union/Nonunion Cost Structure
Union / Nonunion Cost Differential

Pay differential 50% plus
Pay differential largest for the least skilled

How can unionized firm compete?

Union / Nonunion Cost Differential

Unit Labor Cost =
W*N =
W
= W
Q
(Q/N)
(APN)
W = wage
N = number of workers
Q = output or revenue
If W is 50% higher in union sector, APN must be at least
50% higher for union firm to be competitive
Union / Nonunion Cost Differential
Evidence on relative productivity
Cost per Sq foot = a0 + a1*INPUTS + a2*(UNION)
a2 > 0 implies union effect on wages dominates union
effect on productivity
a2 < 0 implies union effect on productivity dominates
union effect on wage
Evidence suggests a2 > 0; responsible for at least part of
the decline
Union / Nonunion Cost Differential
Other sources of higher union cost
Work rules
Price of helpers
Staffing: journeymen vs less skilled
Trade staffing restrictions
Slow adjustment to new technologies, trades
Consequence: union market share has fallen from 75% in
1950 to 25% today
Union / Nonunion Cost Differential

Competitive option when unit costs are higher in union
sector

Raise costs in nonunion sector

Role of prevailing wage laws

Government projects are 20% of the market, largely union
Private sector projects are about 80% of the market, largely
nonunion

Other Strategies for unionized firms, unions

Unions

Job targeting: Try to lower W in union sector
“list price vs street price”
 Union pools money on high priced, prevailing wage jobs
to subsidize wages on competitive bids


Salting: try to lower APN or raise W in nonunion
sector


More later
Unionized firms

Double breasting: union and nonunion crews
Fine. “Union Salting: Reactions and Rulings since Town and
Country Journal of Labor Research Summer 2002.

Salting: union members or organizers accept
employment at a nonunion firm with the intent
of filing unfair labor practice charges and
organizing the work place
Aim is to pressure firm to recognize the union
without a certification election; or
 To disrupt nonunion firm production activities and
lower its cost advantage over union firms

Fine. “Union Salting: Reactions and Rulings since Town and
Country Journal of Labor Research Summer 2002.

NLRB v. Town and Country Electric (1995)






IBEW locals 292 and 343 asked their unemployed members to apply for
jobs at Town and Country Electric
Those employed trained on how to organize the site
How to monitor employer actions for possible ULP charges
IBEW paid the salts the difference between nonunion and union scale.
IBEW alleged one salt wrongfully discharged; 10 others
wrongfully refused employment
NLRB upholds charge; consistently has held that salts are
entitled to the same rights as other employees
Fine. “Union Salting: Reactions and Rulings since Town and
Country Journal of Labor Research Summer 2002.

ULP charges rise 36% in nonunion firms after
salting

NLRB Cases involving salts
1995:
 1996:
 1997:
 1998:
 1999:
 2000:

4
9 (of 262 salt cases filed in 1996)
10
8
8
16
Fine. “Union Salting: Reactions and Rulings since Town and
Country Journal of Labor Research Summer 2002.

Salt “charges” upheld by NLRB
18 “refusal to consider”
 22 “refusal to hire”
 19 “unlawful interrogation”
 19 “unlawful discharge”


Penalties include back pay, reinstatements
Fine. “Union Salting: Reactions and Rulings since Town and
Country Journal of Labor Research Summer 2002.

Employer responses
Salting insurance paid by the Associated Builders
and Contractors
 Architectural Glass and Metal Co. Inc. (1997) can dismiss
salts if there is an anti-moonlighting clause in
contract
 Industrial Company Southeast, Inc. (1997) Can require
applications on original forms (union had submitted
applications on xeroxed application forms.

Decertification

RD petition must be filed by employees
At least 30% of employees must sign a
decertification petition
 Employer cannot encourage this process, must
remain neutral
 Filed within 60-90 days of expiration of a contract;
or
 if there has been no contract filed within 1 year of
certification; or
 After a contract has expired

Decertification

RM petition can be filed by the employer
Timing similar to RD
 Evidence supporting RM petition can include:

Unsolicited communications from employees requesting
decertification;
 Failure of union to represent workers, fulfill
responsibilities;
 Changes in the size of the workforce

Decertification




Unions lose 75% of decertification elections
Unions win 45-50% of certification elections
RD petitions are gaining over time, RC and RM
petitions have decreased in relative importance.
Combined RD + RM mean that decertification
elections are rising in importance
Scott, Hester and Arnold. “Employer-Initiated Elections, 19681992.” Journal of Labor Research Spring 1997.