Labor-Management Conflict

Sumerian herders of the third millennium BC had annual written contracts with owners to care for cattle, sheep, and goats. The shepherd kept the milk and a fixed amount of the wool and received a food and clothing allowance and sometimes pay for an assistant.

American men began to organize in the late eighteenth century; women early in the nineteenth. Unions became prominent after the Civil War as they tried to establish the right to collective bargaining, sometimes resulting in violent clashes with police and even the army that lasted into the Great Depression.

Once that right was established, unions were able to bargain for wages, but also for benefits, discharge, discipline, safety, and work schedules. By the 1950s, a quarter of the private sector workforce, but virtually none of the public sector workforce, was unionized. At the same time, government increasingly intervened, establishing maximum work weeks, minimum wages, safety regulations, unemployment insurance, workers compensation, and the like that protected all workers, union or not. By the end of 2012, private sector union membership had fallen to 6.9% of the labor force, while public sector unions grew to 4.9% of the labor force.

Twentieth century labor-management relationships reflected Ikle’s (1964) point that bargaining requires both a cooperative and a competitive relationship. Employees and employers must cooperate if the former are to have an income and the latter are to earn a return on investment, but employees want to maximize wages and benefits, while employers want to minimize them. Usually, each understood the situation well enough to keep the bargaining within a reasonably narrow range.

An alternative pattern seen briefly after World War II was “final-first” or Boulwarism. It takes its name from the strategy developed by GE negotiator Lemuel Boulware that began, depending on whom you believe, when he set out to limit and destroy unions or conversely when he tried to restore GE’s traditionally excellent employee relations¹ following a vicious seven-week strike in 1946. He was a critic of the bargaining pattern that had developed after World War II. He thought it absurd for employers to go through the motions of offering less than they expected to pay, and then to concede slowly “under public strike-threat pressure” (Boulware 1969). Worse, he thought it discredited both capitalism and GE, fomented employee resentment, reduced productivity, and allowed unions to take the credit for improvements that the company had planned to offer from the outset. Boulware held that it was essential to “do right by employees,” which he did by applying GE’s consumer research techniques to learn employee wishes. He then developed carefully researched offers that he thought would be attractive to employees while keeping the company competitive with customers—and refused to budge.

Commonly portrayed as take-it-or-leave-it, Boulware maintained that he always was open to "information proving changes would be in the balanced best interests of all." Nevertheless, in 1969 the Second Circuit Court of Appeals upheld a National Labor Relations Board ruling against the practice. The court found GE guilty of surface bargaining and union busting, faulting GE for "sham discussions” and for portraying itself rather than the union as “the true defender” of employee interests—a ruling that supports the view of most labor historians that Boulware was in fact trying to destroy or at least reduce union power.

Walton and McKersey (1965, 1991) developed a behavioral model of labor-management bargaining (Figure 9.1) that “abstract[s] and analyzes four sets of activities which account for almost all behavior in negotiation:

Win-Win or integrative bargaining (Chapter 17) is applicable in the rare cases when the parties view the issues as shared problems. It is a joint rather than an adversarial decision-making process. Integrative potential exists when the nature of a problem permits solutions that benefit both parties. It is rare because it requires considerable trust to discuss concerns honestly, completely, and openly. Win-Lose or Distributive bargaining (Chapter 17) occurs when one side can achieve its objectives only at the expense of the other. It has been the dominant form of negotiation for millennia. It would not have lasted so long if it were as counterproductive as so often portrayed in the current literature. The differences between the two in both process and results seem exaggerated. Distributive bargaining tactics such as linkage have integrative potential, while integrative bargainers eventually must decide who gets what, which gives it a distributive element.

In the late twentieth and early twenty-first centuries, labor-management relations appear to be in a new phase. In the private sector, many vertically integrated companies are transforming into networks of companies manufacturing a product with components from around the world. Revenues are going down; profits are going up. Companies are smaller, more productive, and less stable. Businesses that used to hire accountants, cafeteria workers, janitors, maintenance workers, secretaries, and so on increasingly are contracting work out, which some see as management strategy to reduce the size and strength of private sector unions. This helps explain how US manufacturing has held steady from 1980 to 2010 at about 25% of the world total despite a massive decline in manufacturing jobs. The same trend is discernible in other industries as well. Universities are hiring fewer tenure-track professors and more part-time and adjunct faculty—that is, independent contractors. This in turn is shifting the balance of power from faculty to proliferating administrators, many with responsibilities having little to do with education. Two decades of educational costs rising faster than GDP and advances in educational technology are provoking new conflicts in pedagogy and educational organization (Vedder 2004).

Union membership in the US has declined to about 12% of all workers. The power of public sector unions is generating a backlash as cities, counties, and states face labor and pension costs that exceed their revenues, driving some into bankruptcy. Some states are trying to roll back public sector bargaining rights. Some suggest periodic recertification elections by all unions, as those who voted for a union retire and are replaced by individuals who may or may not want a union. Successful (but not unsuccessful) union certifications may be the only one-time only elections we have—reminiscent of the old joke about communist countries having had one election once. Public sector unions are fighting back, most strongly so far in the courts, in the failed 2012 effort to recall Wisconsin Governor Walker, against proliferating right-to-work laws, and by supporting the election campaigns of sympathetic legislators and governors