ECONOMIC VIEW OF

COLLECTIVE BARGAINING
• Unions a Disruption to Competitive
Markets
• Cause a Misallocation of Resources

Theories 1
 UNIONIZED NONUNION
SECTOR SECTOR

Sn

Wu
Su

Wn Wn

Wu

Eu En Wn Wu

Theories
 INDUSTRIAL RELATIONS
SYSTEMS
• OUTCOMES ARE RULES
– PROCEDURAL RULES
– SUBSTANTIVE RULES
• HOW ARE RULES ESTABLISHED?
– MANAGEMENT
– GOVERNMENT
– WORKERS HIERARCHY
– MANAGEMENT-WORKERS
– MANAGEMENT-WORKERS-GOVT

Theories 3
 INDUSTRIAL RELATIONS
SYSTEMS (CONT.)
• ACTORS
– MGMT, GOVT, WORKERS/ORGS
• CONTEXTS
– TECHNOLOGICAL
• TYPE OF PRODUCT OR SERVICE
– AIR TRAVEL
• GEOG DISPERSION
• VARIABLE HOURS, ETC.
– MANUFACTURING (PAPER)
• GEOG CONCENTRATION,
• LONGER SHIFTS (ETC.)

Theories 4
 INDUSTRIAL RELATIONS
SYSTEMS (CONT.)
• CONTEXTS (CONT.)
– MARKET/BUDGETARY
• SHELTERED
• COMPETITIVE
• LOCUS OF POWER IN SOCIETY
– OUTSIDE IR SYSTEM
• POLITICAL INFLUENCE OF UNIONS
– CANADA - PARLIAMENTARY SYSTEM & NDP
– U.S. - LINK TO DEMOCRATIC PARTY
• EMPLOYER LINK TO REPUBLICAN PARTY

Theories 5
 INDUSTRIAL RELATIONS
SYSTEMS (CONT.)
• WHAT ARE THE RULES
– SUBSTANTIVE
• COMPENSATION IN ALL FORMS
• DUTIES AND PERFORMANCE OF WORKERS
• RIGHTS OF WORKERS
– PROCEDURAL
• FOR RESOLVING DISPUTES
• CHANGING THE RULES

Theories 6
 INDUSTRIAL RELATIONS
SYSTEMS (CONT.)
• IDEOLOGY
– A SET OF COMMON BELIEFS THAT HOLDS
SYSTEM TOGETHER
– ACTORS’ IDEOLOGIES MUST BE
COMPATIBLE
– EXAMPLES
• EUROPE
– CLASS LINES
– COLLECTIVE WORKER ACTIVITY A NATURAL
COROLLARY TO CLASS

Theories 7
INDUSTRIAL RELATIONS
SYSTEMS (CONT.)
– EXAMPLES (CONT.)
• UNITED STATES
– INDIVIDUALISTIC
– LESS COMFORTABLE WITH COLLECTIVISM AND UNIONISM,
ESPECIALLY IF IMPOSED ON UNWILLING INDIVIDUALS
(FREEDOM OF ASSOC.)
– A NECESSARY EVIL
– COMPOSITIONAL ISSUES
• WHAT IS GOOD FOR EVERYONE IS NOT NECESSARILY
GOOD FOR EVERY ONE
– SCOPE OF INCLUSION
• EXTENSION TO ALL EMPLOYERS IN EUROPE
• UNIT BY UNIT CHOICE IN U.S.

Theories 8
 GOVERNANCE VIEW
• Focuses on how decisions are made
– no CB - unilaterally
– CB - jointly
• Permits workers to participate in decisions
affecting them
• Transference of notions of democracy to the
workplace
– property rights only provide authority over property
– does not necessarily provide authority over people

Theories 9
 ACTIONS ASSOCIATED
WITH EMPLOYEE
DISSATISFACTION
• Economic View - Exit
• Governance View - Voice

Theories 10
 INDUSTRIAL DEMOCRACY
VIEW

• Workplace is analogous to society

• Cannot have democracy in society without
democracy in the workplace

Theories 11
 Law and Values View
• Values in United States
– Individualism
• rights of individuals superior to other rights
• property rights a derivative of individual rights
• individuals free to order economic transactions so long as no
laws are broken - freedom of contract
– Corporations are Legal Individuals
– Purchase and sale of labor an exchange transaction
– Unions attempt to collective an individual transaction

Theories 12
 Law and Values View (CONT.)
• Values in U.S. and Law
– Unequal status of employers and unions
• conflicts between ind\property rights and collective rights
usually resolved in favor of ind rights
• “reserved rights” theory of management
• Impact on IR System
– Unions
– Employers\Corporations
– Product Market

Theories 13