Chapter 9
Section 3: Organized
Labor
Labor & Labor Unions
• Wages are determined by the forces of
supply & demand
• Competition among firms keeps a
worker’s wages close to their level of
productivity
• A competitive labor market helps
prevent low pay & dangerous
working conditions because workers
will leave such firms to work
elsewhere
• 1 in 7 workers belongs to a union or
less than 14% of U.S. workers
The Labor Movement
• The union
movement took
shape over the
course of more
than a century.
Key Events in the U.S. Labor
Movement
Year
Event
1869 Knights of Labor founded
1911
Fire in the Triangle Shirtwaist Factory in New York
kills 146, spurring action on workplace safety
1932
Norris-La Guardia Act outlaws “yellow dog”
contracts, gives other protection to unions
1935
1938
Wagner Act gives workers rights to organize
AFL splinter group becomes the independent
Congress of Industrial Organizations (CIO),
headed by John L. Lewis
1955 AFL and CIO merge to create AFL-CIO
1970s Rise in anti-union measures by employers
1990s Increase in public-sector unions, including
teaching assistants at some universities
• Workers in the 1800’s
–Arose in response to the Industrial
Revolution (factory jobs)
–Workers 12-16 hour days, 7 days a
week, for meager wages
–Men, women, & children as young
as 5 operated clattering machines
so dangerous that many people
lost their hearing, sight, & fingers
or limbs
• Injured workers often lost their
jobs
• Unions take hold
–1790’s skilled workers formed unions to
protect their interests
–Tool of unions was the strike
–Courts initially regarded unions as illegal
• Employers simply fired & replaced
workers who caused trouble by trying to
organize
• Man who truly started the US labor
movement was Samuel Gompers
–Focused on higher wages, shorter
hours, & a safer working
environment
–1886- founded the American
Federation of Labor (AFL)
Employer Resistance
• Viewed strikers as threats to free
enterprise & social order
• Identified & fired union organizers
• Forces workers to sign “yellow-dog”
contracts- agreement in which
workers promised not to join a union
–Yellow was slang for coward
• Used court orders called injunctions
to order striking employees back to
work
• Some hired their own militias to
harass union organizers
Congressional Protection
• Expansion of workers rights in the 1930’s
gave rise in union strength
• Membership peaked in the 1940’s at
about 35% of the nation’s nonfarm
workforce
• Union controlled the day to day
operations of businesses from shipyards
to garbage collection to steel production
• Amassed billions of dollars in union
dues to cover the costs of union
activities including organizing,
making political donations, &
providing aid to striking workers
Labor Issue: Unions
20% or +
15-19.9%
10 – 14.9%
5-9.9%
4.9% or -
Source: U.S. Dept. of Labor, BLS
Decline of the Labor Movement
• As they grew, some unions began to abuse
their power
• Some sought to preserve outdated &
inefficient production methods in order to
protect jobs & benefits
–Companies that badly needed to improve
efficiency to stay competitive, found that
unions could be an obstacle
• Reputations of unions suffered
because of their links to organized
crime
• Corrupt crime bosses gained a
foothold in many local unions & used
fund to finance illegal operations
• Several factors have led to declines in union
membership since the 1950s:
–“Right to Work” Laws
• The Taft-Hartley Act (1947) allowed states
to pass right-to-work laws.
• These laws ban mandatory union
membership at the workplace.
• Today, most right to work states are in the
South, which has a lower level of
unionism than other regions
• Loss of traditional strongholds
– One theory for the decline suggests that
structural changes in the US economy have
reduced membership
– Economic Trends
• Unions have traditionally been strongest in
the manufacturing sector, representing bluecollar workers, or workers who have
industrial jobs.
• Blue-collar jobs have been declining in
number as the American economy becomes
more service-oriented.
• Certain manufacturing industries have
traditionally employed large numbers of
union workers
–Have been hurt by foreign competition
recently
–Many individual firms have laid off
union workers or shifted operation to
countries where labor is cheaper
• The rising proportion of women in
the labor force has effected
membership
–Women are less likely to join
• Seeking to reduce their production
costs, some industries have relocated
to the South
Fulfillment of Union Goals
• With the government setting standards
for workplace safety, & with more
benefits being provided by both private &
government sources, some claim that the
union membership has decreased simply
because their goals have been fulfilled by
other organizations.
• Safe workplace, shorter hours,
pensions, unemployment
insurance, Social Security benefits
Labor & Management
• A union gains the right to represent
workers at a company when the majority
of workers in a particular work unit vote
to accept the union
• After that the company is required by law
to bargain with the union in good faith to
negotiate an employment contract
Collective Bargaining
• The process in which union & company
representatives meet to negotiate a new
labor contract.
• Union contracts generally last 2-5 years & can
cover hundreds of issues
• The resulting contract spells out each side’s
rights & responsibilities for the length of the
agreement
• Unions come to the bargaining table with
certain goals that set the agenda
–Wages and Benefits
• The Union negotiates on behalf of all
members for wage rate, overtime rates,
planned raises, and benefits
• If wages go too high, the company may
lay off workers to reduce costs
Working Conditions
• Safety, comfort, worker responsibilities, and
other workplace issues are negotiated and
written into the final contract.
Job Security
• One of the union’s primary goals is to secure
its members’ jobs.
• The contract spells out the conditions under
which a worker may be fired.
• If a union member is discharged for
reasons that the union believes to be in
violation of the contract, the union
might file a grievance (formal complaint)
–Procedure usually involves hearings by
a committee of union & company
representatives
Strikes & Settlements
• A strike is the union’s ultimate weapon
• If no agreement is met between the union
and the company, the union may ask its
members to vote on a strike.
• A strike is an organized work stoppage
intended to force an employer to address
union demands.
• Strikes can be harmful to both the union and
the firm.
• Can cripple a company
• Some firms can continue to function by
using managers to perform key tasks or
by hiring nonunion “strikebreakers”
• If a company can withstand a strike, it is
in a good bargaining position
• A long strike can be devastating to
workers, since they don’t get paid
–Many unions provide some
financial aid to their workers
during long strikes, but less then
their wages
• To avoid the economic losses of a strike, a
third party is sometimes called in to settle a
dispute
–Mediation
• A settlement technique in which a neutral
mediator meets with each side to try and
find an acceptable solution that both
sides will accept.
• Decision reached is nonbinding
Arbitration
• If mediation fails, talks may go into
arbitration, a settlement technique in
which a third party reviews the case &
imposes a decision that is legally binding
for both sides.
• Collective bargaining usually goes
smoothly with few strikes
• In 2004 there were 17 major strikes
involving 171,000 workers