Labor Unions in the USA - Essay Example

Labor Unions in the USA Today It is universally conceded that labor unions have served the needs of the‘working man’ but the extent to which they positively affect the overall welfare of the nation’s economic structure is called into question by some, especially business leaders who claim that the presence of unions drive up costs. Higher wages cause businesses to increase prices, which is passed along to consumers, or for production to slow because businesses cannot afford a sufficient number of workers. Critics also point to the power unions wield which hampers efficient business operations. This discussion first defines unions, explains why they were created then addresses the major complaints against them as well as the response. It will also address questions regarding the relevance of unions today. A union is a group of workers who form a formal association with the intention to protect the interests of that group with respect to safe and equitable working conditions and fair compensation. The union also represents their members’ interests by intervening in employee grievances with the company. Unions originated in response to unscrupulous actions from employers such as substandard pay practices and by allowing hazardous working conditions. Unions provide a place for employees to receive better pay and health benefits as well as guaranteed safety regulations (Noe, Hollenbeck, Gerhart & Wright, 2004). The voice of the unions extends well beyond a particular business. Through steadily declining in number over the past 30 years, union members continue to exert substantial political influence, particularly within the Democratic Party. Unions represent the concerns of all workers. Politicians understand that gaining the endorsement of a union is essential. It is a signal to all workers, unionized or not, that the person running for office is sympathetic to their circumstances. Of course, this is an enormous voting block therefore the unions remain as politically powerful as they were at the height of membership. One of the most important responsibilities of union management is contract negotiations which involves decisions regarding pay structures, employment security, workplace regulations, safety and numerous other concerns. If the union and company representatives cannot reach an agreement, the membership may resort to a work stoppage, going ‘on strike,’ and begin gathering in front of their place of employment with their grievances spelled out on signs, ‘picketing.’ However, it is in neither the union members’ nor the corporate management’s best interest to stop production because both sides lose money. Therefore, each side generally makes attempts to settle an issue before it reaches this point. Strikes are the only recourse of a union but this tactic is rarely utilized today though there are significant exceptions. For example in 2005 the New York City transit unions, which represents more than 33,000 members, threatened to strike the bus subway lines (“NYC”, 2005). Those opposed to the unionization of workplaces maintain that while they were once relevant, they are now an ineffective relic of the past. Since unions were first formed to force employers to provide fair pay and safe working conditions, they reason that laws today enforce safe working conditions and a minimum wage requirement which negates the usefulness of unions. Though they admit unions have improved safety and pay for workers worldwide in the past, they state that today’s competitive marketplace will not allow unions to regain the size or power they once enjoyed. The presence of unions, it is feared, could cause a slow growth in employment and smaller corporate profits because of inflated labor costs. “The existing literature suggests that union wage premiums are large and that unions have significant effects on profitability” (Ruback & Zimmerman, 1984). Another and maybe the most prominent reason employers oppose unions is that they must relinquish the total control over the workplace to an outside group (Clark, 2003). It is ultimately more advantageous for businesses to pay salaries that are above the prevailing amount for labor providing this move produces an adequately larger gain in overall productivity. The more that employees are paid in the short-term, to a point, the more they produce which pays dividends in the long-term. Production in unionized businesses is often higher thus the argument that the presence of unions raises prices is not credible. Higher wages does not automatically result in higher production costs and higher consumer prices. Higher wages stimulate the economy because those who work for a living generally must spend all of their income whereas the wealthy are more likely to invest or save added income. The money that workers spend is inserted directly into the economy which begins a cycle of prosperity for more people. In spite of employer fears, proponents of unions argue that businesses are not more susceptible to failure and point out that there is little evidence to indicate anything other than modest wage increases related with newly unionized workplaces. Furthermore, raising the standard of living ultimately stimulates the economy which serves to pump money back into businesses (Freeman & Kleiner, 1990). In addition, a union provides a kind of checks and balance system restraining somewhat the total authority of big business, a function that is proving increasingly important following the recent revelations of abuses of power by many large firms such as WorldCom and Enron (Clark, 2003). The issue of employee productivity has also been greatly debated by both sides of unionization. “On one hand union employees have workload limits that they abide by as well as unionized strikes which can completely shut down organizations. On the other hand unions can reduce turnover by allowing the employee-employer relationship to grow by being an outlet for both sides” (Noe, Hollenbeck, Gerhart & Wright, 2004). Unions have largely influenced the mindset of organizations. Employee concerns are an important focal point along with the bottom line. Employers that wish to avoid unionization are ensuring that safe working conditions and fair pay are offered. Through direct or indirect means, unions have secured enhanced working environments in businesses all over the U.S. Still today, unions play a vital role in the economy and in society as a whole. Their impact has continued to extend well past those dues paying members. This has occurred because non-union employers have been passively forced to improve pay and benefits, job security and working conditions to levels close to union members in a similar industry. The ‘union threat effect’ is the name economists have tagged such an occurrence. Though less than 15 percent of Americans are union members, the mere presence of unions impacts the pay and conditions of nonunion employees. Many receive health insurance, sick leave, paid vacations and pensions not because of their employers’ generosity but because unions successfully negotiated these things for its members. If unions did not exist today, no other employer would likely offer benefits or compensation at present levels as there would be no need to remain competitive with a unionized competitor. The labor movement remains an important facet of society but not simply to ensure equity and fairness in all workplaces, union or not. Today, when revelations of corporate crime are a seemingly a part of everyday life and the Bush administration seems to be enabling rather than regulating white collar crime on the grandest of scales, the role of the union movement as an overseer makes its current relevance undeniable. Works Cited Clark, Paul F. “Look for the Union Influence.” Post Gazette. Pittsburgh, PN, (August 31, 2003). October 12, 2007 Freeman, Richard B. & Kleiner, Morris M. “Do Unions Make Enterprises Insolvent?” Industrial and Labor Relations Review. Vol. 52, No. 4, (July 1999), pp. 507- 524. “NYC Official Transit Workers Rejected Final Offer.” MSNBC. (2005). October 12, 2007 Noe R, Hollenbeck J, Gerhart B, & Wright P. Fundamentals of Human Resource Management. New York: McGrawHill, (2004). Ruback, Richard & Zimmerman, Martin. “Unionization and Profitability: Evidence from the Capital Market.” Journal of Political Economy. Vol. 92, (1984), pp. 1134-1157. Read More