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Chapter Ten

Nonwage Issues in Bargaining

Wage and nonwage issues are not completely separable. Both have economic consequences for the employer. For example, provisions relating to hours of work frequently specify when overtime premiums begin. This chapter considers issues associated with hours and terms and conditions of employment and then examines the effects of unions on nonwage outcomes for employees and employers.

Nonwage issues are important to both union members and employers. For employers, the length of the contract, the design of work, and the scope of management rights clauses are important. For union members, job security provisions (particularly those related to promotions and layoffs), grievance procedures, and work schedules are important. To secure its representation rights, the union would like employees to be required to join the union. How promotions and layoffs are handled influences outcomes that are important to each party.

As you study this chapter, consider the following questions:

1. What effects do federal regulations and contract provisions have on management decision making as it relates to scheduling work?

2. How do discipline and discharge procedures operate, and what procedures are available for employees to redress improper discipline by management?

3. How do job classification and job design affect the employment relationship?

4. What effect do seniority clauses have on employee behavior?

5. What impact does collective bargaining appear to have on the job satisfaction of represented employees?

Page 295NONWAGE PROVISIONS OF CURRENT CONTRACTS

Certain types of nonwage contract clauses appear in a relatively large proportion of collective bargaining agreements. Table 10.1 displays nonwage subjects that are often included in collective bargaining agreements.

TABLE 10.1 Basic Nonwage Clauses in Contracts, 1995

Source: Compiled from Collective Bargaining Negotiation and Contracts (Washington, DC: Bureau of National Affairs, 1995).

Page 296

UNION AND MANAGEMENT GOALS FOR NONWAGE ISSUES

Chapter 9 suggested that unions are concerned with equity, ability to pay, and standards of living in formulating wage demands and have simultaneous economic and job security goals. Employers are expected to resist demands that create uncertainty about their likely future costs or that interfere with their ability to be flexible or to respond to changes in their operating environment through the introduction of new production technologies.

Unions want to maintain the representational role they won during organizing. This means that they will want newly created jobs placed within the union’s jurisdiction. They also want to emphasize job security and the use of seniority as the primary criterion for determining entitlements to promotions and avoiding layoffs.

DESIGN OF WORK

Work design involves determining what tasks, duties, and responsibilities (TDRs) are bundled together and assigned to a particular employee. Usually, several employees will have virtually similar TDRs assigned to Page 297them—in other words, they are assigned to positions in the same job. Jobs can be characterized as narrow or broad. Narrow jobs have a relatively small number of duties assigned to them, broad jobs a relatively large number. Jobs can also be defined in terms of their depth. Relatively deep jobs require sophisticated skills, while the skills for shallow jobs are relatively simple to acquire and use. The design of work is very important to both employers and unions and has evolved substantially over time.

Work Design History

Prior to the industrial revolution, virtually all products were produced by a single individual. This meant that production was highly labor-intensive and that any complex product required very high skills. The industrial revolution introduced machinery into the production process. Products could be produced at a lower price, and as a result, demand increased. As the amount of goods sold increased, job specialization was implemented and skill requirements dropped quickly.

Taylorism

Near the beginning of the 20th century, interest in efficiency increased. Industrial engineering was in its infancy. Frederick Taylor introduced “scientific management” to design work in the most efficient way possible given the capital equipment in use. Efficiency was promoted by narrowing jobs and concentrating on how to make repetitive operations more automatic and less fatiguing. Little or no attention was paid to psychological reactions to work design, and except for training on how to be more efficient in the current job, little was included on how to develop employees for higher-level jobs. The work design also included a hierarchical organizational and supervisory structure in which rank-and-file workers had no say in the workplace.

Fordism

Henry Ford’s work design transformed the automobile industry in the early decades of the 20th century. His production technology enabled the mass production of complex products. Major innovations included the development of close manufacturing tolerances, which allowed interchangeable parts, and the introduction of the assembly line, which required that employees perform relatively few steps in the production process. The latter innovation substantially deskilled jobs in automobile (and other) manufacturing. As a result, Ford, and others who imitated this technology, could focus primarily on hiring for motivation rather than ability, since few skills were required to perform the work.

Ford introduced a darker aspect to the Tayloristic assembly-line approach—an internal security force to monitor employee effort and to quickly identify pockets of malcontents in the workforce. As the decades Page 298went by, this security force increased in size and used particularly brutal tactics to deter unionization.1

The Drive System

The drive system developed concurrently with Taylorism and Fordism. Under the drive system, the production floor was controlled by foremen (supervisors). Foremen had unlimited authority to govern the workplace. They decided who was hired, who was fired, how employees were to be paid, and how the work was to be done. Employees had no voice and depended on their relationship with their foreman for their continued livelihood.

The work design aspects of Taylorism, combined with the internal security force of Fordism and the monarchic influence of the foreman under the drive system, ultimately intensified the interests of unskilled workers in unionization.

The Corporatist Environment

Following World War II, a 30-year corporatist environment developed. For most large organizations, this meant that the design of work was collectively bargained. Specific jobs were established, and promotion structures were defined. Most large firms employed work designs that required firm-specific skills. These skills led to enhanced production quality and/or efficiency. Jobs were relatively narrow, but employee experience enhanced productivity. Employees could look forward to jobs with lower physical requirements, as they were able to bid into them with increasing seniority. Wage rates were associated with specific jobs so that if a person was temporarily transferred to a job with higher levels of responsibilities, the wage rate would change for as long as the person was in that job. Supervisory control was substantially checked by the union compared to the drive system, but rank-and-file employees had little or no responsibility for workplace decision making. This design worked quite well during a period of relative price stability and little global competition.

Workplace Transformation

In the late 1970s and early 1980s, a transformation in American workplaces began that continues to the present.2 Changes included removing several layers of management, thereby increasing the importance of production worker decision-making skills, increasing attention to quality, reducing the amount of material and in-process inventory to free up working Page 299capital, creating teams of broadly skilled workers that would be able to adapt quickly to changing product volume and mix, and reducing staffing levels to enhance efficiency.

With this transformation, unions faced demands for radical work design and work rule changes. Unions generally resisted these changes without increases in job security guarantees. Successful changes often required reorienting the labor-management relationship toward a more cooperative approach (detailed in Chapter 13) and incorporating productivity-based gainsharing programs (as described in Chapter 9).

Manufacturing employers have been particularly interested in reducing the number of distinct job classifications in both production and maintenance to gain flexibility in staffing and avoid idle time during maintenance operations due to narrow job jurisdictions. Broader capability requirements in broader job classifications reduce the need for supervision. Managers believe unions’ resistance to change will be higher where technological change requires negotiation.3 Unions, however, will generally accept technological change as long as bread-and-butter issues are protected.4 Auto industry evidence indicates a reduction in job classifications is associated with a reduction in the supervision required, small improvements in the quality of output, and a small increase in total labor hours required for an equivalent level of output.5

Taken together, these changes in organizational and work design are components of so-called high-performance work organizations (HPWO). Firms that implement HPWOs have higher productivity and financial performance and higher wage levels.6 Companies that had introduced HPWOs by 1992 had more layoffs by 1997 than those without HPWOs. Unions reduced the incidence of layoffs; however, a variety of innovations such as teams, quality circles, and total quality management were all associated with increased layoffs. The layoffs that occurred tended to be selective because total employment continued to grow. Fewer contingent workers were used, and flatter organizational structures had been implemented.7 Where teamwork has been implemented, the role of supervisors Page 300changes to training and facilitation while workers gain substantial discretion and control over their work. Their satisfaction increases and their jobs become more secure, while supervisors experience the opposite.8

In return for job security guarantees, employers negotiated team-oriented production designs, where workers are responsible for several tasks and can be assigned to a variety of jobs. “Cell-manufacturing” techniques require substantially more knowledge and skill in tracking inventories, measuring quality, and determining how production activities will be undertaken. This approach requires that employees have higher skill levels, thereby potentially decreasing their interest in unionization as the lines between professional and production employees are blurred.9 At the same time, unionized blue-collar employees have an increased likelihood of receiving off-the-job training.10

When new technology is introduced, union-represented jobs are more likely to be deskilled if management is successful in designating the jobs that are to be outside the bargaining unit. Contractual seniority requirements may entitle jobs to employees who are not the most able to fully operate new equipment. Management is particularly unwilling to include jobs requiring programming within the bargaining unit when new technology is installed.11 In telecommunications, the reclassification of positions from bargaining unit to either professional or managerial categories has reduced the proportion of the workforce that is unionizable from about 75 percent to 40 percent. Slightly less than 30 percent of the workforce is currently organized.12

Some work rule changes try to increase efficiency by using equipment more fully than it had been (as in the case of Teamster drivers previously hauling less-than-full loads).13 Other work rule changes increase flexibility through greater skills and management’s ability to assign employees to an increasingly wide variety of tasks. However, unionized employers are generally less able to use flexible staffing arrangements (part-time and temporary workers), but their ability to subcontract is generally not affected. In turn, the ability to subcontract has a generally positive effect on core bargaining-unit workers’ wages. Job flexibility contributes to job security Page 301and enables the employer to specialize in markets for new products.14 Labor flexibility is greater in companies without unions, but flexibility in the use of other inputs is higher in unionized firms.15

Exhibit 10.1

JOB TARGETING IN THE CONSTRUCTION INDUSTRY

Some [building trades] unions have used a controversial tactic known as job targeting. Under this approach, the union gives a contractor a rebate covering part or all of the difference between union and open-shop rates so the contractor can land a particular project that otherwise would have gone to the open shop. This approach has proven popular in some locals because all members pay into the fund, thereby spreading the cost of the concession beyond those working at a particular job site.

Source: S. G. Allen, “Developments in Collective Bargaining in Construction in the 1980s and 1990s,” in P. B. Voos, ed., Contemporary Collective Bargaining in the Private Sector (Madison, WI: Industrial Relations Research Association, 1994), p. 438.

Work rules reserving certain responsibilities to certain jobs reduce efficiency, but they may preserve employment levels. One study of the construction industry found that restrictive work rules increase labor costs by about 5 percent. However, building trade unions appear willing to give up 5 percent in wages to increase staffing levels by 3 percent.16 In construction it’s important to note that the union supplies labor in the unionized sector since employees are referred from the union hiring hall. Thus, it’s to the median voter’s interest to concede wages to get more employment since most work is for a relatively short period with a single contractor, followed by a return to the union for the next referral. Exhibit 10.1 covers some of these issues.

(FOSSUM 300-301)

HOURS OF WORK

Setting hours of work is a mandatory bargaining issue and is regulated by federal and state wage and hour laws. Union campaigns for shorter work hours have been a priority since the early 1800s, with the National Labor Union proposing an eight-hour day after the Civil War. The federal Page 302government regulated work hours for civil servants during President Van Buren’s administration and imposed overtime penalties for private-sector employers beginning in the 1930s.

Federal Wage and Hour Laws

In 1937, the Fair Labor Standards Act (FLSA) was enacted to regulate wages, hours, and working conditions of private sector employers involved in interstate commerce. Briefly, the legislation requires that employees who are not in supervisory roles, outside sales positions, or jobs requiring independent discretion using complex knowledge must be paid a 50 percent premium over their regular pay rates for more than 40 hours per week. This premium requirement covers all employees whose work is of a routine nature or requires close supervision and direction. Employees who are entitled to an overtime premium are often referred to as nonexempt employees, while those who are not entitled are called exempt employees. The legislation also established a minimum wage and prohibits persons under age 16 or 18 from working in specific occupations or industries.

Congress had previously enacted the Davis-Bacon and Walsh-Healy acts, which required overtime premiums after 40 hours per week for employees in the same types of jobs as are covered by the FLSA and payment of wages equal to those paid in the local area or industry for the jobs to which they were assigned if employees were doing government contract construction work or producing manufactured goods for the federal government. These laws, enacted during the Depression, were intended to stimulate expanded employment and take wages out of competition for federal government work. Employers would save by hiring more employees rather than by having existing employees work overtime.

In 2004, the Department of Labor issued new administrative rules increasing the amounts that employees must earn to be exempt from overtime, regardless of job characteristics, and relaxed the regulations regarding what types of training and job activities would lead to an employee being classified as exempt. No jobs requiring supervision or primarily manual work changed classifications, but some nursing jobs requiring that position holders supervise teams did become exempt. As before, any job that was paid on an hourly basis, regardless of job duties, continued to qualify for overtime (be classified as nonexempt).

Collective Bargaining and Work Schedules

Unions have continually favored reducing the workweek and workday. A 40-hour week is typical in most contracts, and employers strongly resist further reductions. Unionized workers work fewer hours than nonunion workers in more heavily unionized sectors of the economy, but full-time schedules are more likely in unionized sectors,17 although Page 303mandatory overtime in some unionized sectors, particularly in the auto and telecommunications industries, has been the subject of intense negotiations and strikes. Exhibit 10.2 is an example of the Communications Workers’ position in the 2000 Verizon strike in which it won restrictions on mandatory overtime.

Exhibit 10.2

WHY WE MAY GO ON STRIKE AGAINST BELL ATLANTIC (VERIZON) BECAUSE STRESS AND OVERTIME ARE MAKING US SICK

There are not enough employees to meet the exploding demand for Bell Atlantic’s new services. For you, that means long waits for installations, changes, repairs, or questions about your bill.

For workers, it means forced overtime, even when we have kids to pick up from day care or other obligations. It means work speed-ups, unfair discipline, and lousy training. It means we can’t give you the good service we’d like to because we’re pressured to move too quickly from one customer to the next. And as Bell Atlantic turns up the stress and pressure, the chance for errors goes up as well.

Source: Communications Workers of America Web site content available during August 2000.

Entitlements to and Restrictions on Overtime

Contracts usually specify rules for assigning overtime. Overtime is often rotated among workers based on seniority, balancing hours in the work group before returning to the senior worker to begin a new cycle. Some contracts allow employees to refuse more than a specified number of overtime hours per week. Employees who have not met this threshold would be subject to discipline for refusing to work scheduled overtime.

Shift Assignments and Differentials

In firms where continuous-flow operations are most efficient (such as chemical manufacturers and refiners) or where product demand levels and heavy plant investment justify multishift operations, contracts specify work schedule assignment rules. Seniority generally governs entitlement to shift preference among employees with similar types of skills. Shifts may also rotate. For example, an intact shift might work from midnight to 8 a.m. for four weeks, rotate to the 8 a.m. to 4 p.m. shift for four weeks, and then rotate to the 4 p.m. to midnight shift for four weeks.

Alternative Work Schedules

A variety of alternative work schedules have been designed to meet employee’s desires and employer requirements. Most have been implemented Page 304in nonunion organizations, and most have expanded daily work hours and shortened the number of days in the workweek.18

Unions often oppose long-workday schedules because they have stressed fatigue, safety, and long-term health impacts in arguing for shorter days. But worker satisfaction improves and fatigue does not appear to be a problem even in strenuous occupations.19 Where employees want to work fewer days and off-job demands in a given day are not great, compressed workweeks may benefit both employers and employees. The union must be aware of member preferences. In one case, a union opposing compressed work schedules was threatened with decertification if it did not go along with the schedule change.20

Paid Time Off

Paid time off includes holidays, vacations, and defined leave periods. Paid time off is relatively straightforward, although management may restrict entitlements or use. For example, employees must normally work the days before and after a holiday to receive holiday pay. Employers may also restrict vacation schedules. If operations are highly integrated and insufficient numbers of employees are available to continue in the absence of vacationing workers, management usually sets aside a period for vacations and shuts down. Other organizations may require that vacations be taken during slack periods. Flextime is becoming more important to many employees and can be expected to increase in importance in future negotiations.

LENGTH OF CONTRACTS

Most contracts exceed one year in length, with most being three or four years. Some provide for wage reopeners during the agreement, especially when COLAs are not included. Employers try to avoid one-year contracts because they believe short contracts lead to more strikes and contract administration problems, lower employee morale, and higher and more unpredictable labor costs.21 Longer-term contracts are more difficult to negotiate, especially if economic environments are changing. Renegotiating long-term contracts was found to be harder when global competition is great; where capacity utilization, the firm’s product prices, and the Page 305number of vacant positions substantially vary during the contract period; where buyer or seller concentration in the industry is high among larger employers; and during periods of high inflation.22 Contract durations have increased independently of many of these factors to provide greater certainty for both labor and management.23 Most contracts have automatic renewal provisions if not renegotiated. Recall that contracts covered by the Railway Labor Act do not have expiration dates but rather have dates at which they are amendable. Negotiations begin at that point rather than needing to be concluded by that date.

UNION AND MANAGEMENT RIGHTS

Contracts specify the union’s representation rights. Most relate to the number of union stewards or representatives permitted within the bargaining unit, their rights to access employees in various plant areas, the amount of time off available for union representation activities and who is responsible for compensating this time, office space, access to bulletin boards, and access of nonemployee union officials to the workplace.

In most contracts management reserves the right to act in areas not constrained by the agreement. Typical reserved rights include the right to subcontract work that could be performed by the bargaining unit,24 to assign bargaining-unit work to supervisors in emergencies or to train new employees, to introduce technological changes to improve efficiency, and to determine criteria for plant shutdowns or relocations.25 When management does not reserve these rights, the union is entitled to bargain during the course of the contract if changes involving job security occur. For example, if a plant closure would result in layoffs, the absence of a clause leaving this determination to management requires bargaining on its effects if the union requests it.

Page 306Outsourcing some part of an operation to another employer increasingly concerns unions since it threatens job security and leads to pressure for concessions, particularly if the new source is a lower-wage nonunion operation. Unions are also concerned with an employer’s selling or spinning off part of its operations to another company or establishing a new firm. In these instances, the new owner or firm is often more able to reduce wages and/or employment.

Management rights clauses specify rights to direct the workforce, establish production levels, and frame appropriate company rules and policies. Establishing rules and procedures and directing the workforce form a base for clauses relating to discipline and discharge.

DISCIPLINE AND DISCHARGE

Most contracts specify that employees can be discharged or disciplined for just cause. Some reasons are spelled out in the contract, and others relate to violations of rules the employer may promulgate under power retained in a management rights clause.

Specific grounds in discipline and discharge clauses most often cover intoxication, dishonesty or theft, incompetence or failure to meet work standards, insubordination, unauthorized absence, misconduct, failure to obey safety rules, violations of leave provisions, or general violations of company rules.26 Committing a violation does not necessarily mean an offender will be automatically discharged but rather means that he or she will be subject to discipline. However, an employer must be consistent in the way discipline is imposed to successfully defend its disciplinary actions against grievances.

Discipline and discharge clauses also spell out the due process procedures necessary before discipline can be imposed. Renegotiation of a long-term contract frequently requires that disciplinary action records from before a certain point be removed from employees’ files.

Employees are expected to follow the directions of their supervisors and to carry out their job duties. There may be situations in which employees believe that an assignment is not within the duties of their jobs or that an assignment is unsafe. An employee runs a risk of being disciplined for insubordination for failing to carry out a job direction. Employers, however, must be careful to avoid disciplining a group of employees who protest a supervisory direction because this would likely be determined to be “protected concerted activity.” Discipline might constitute an unfair labor practice.

GRIEVANCE AND ARBITRATION

Grievance procedures are a high-priority bargaining issue for unions because they allow employees to object to unilateral management action during the term of the agreement. For example, assume an employee believes a supervisor unjustly suspended him or her for a work rule violation. Without a grievance procedure, no review of the supervisor’s action would be possible. Grievance procedures are also useful to management because the aggrieved employee is expected to use this forum when an alleged violation occurs, rather than refusing a work assignment or walking off the job.

Grievance procedures usually specify who receives a grievance, the right of employees to representation at various steps in the process, the path a grievance follows if it cannot be resolved by the parties when it is filed, and the time limits at each step before some action is required. Chapter 14 will discuss grievance procedures in considerable detail.

Most contracts specify that when parties cannot agree on the disposition of a grievance, a neutral third party will arbitrate the dispute and render a decision binding on both parties. The contract specifies how an arbitrator is selected, how arbitrators are paid, the powers of the arbitrator, and the length of time an arbitrator has to render a decision. Arbitration of contract interpretation disputes will be covered in Chapter 15.

High grievance rates are associated with decreased productivity. While low morale might be a hypothesized cause, productivity decreases also occur because employees and supervisors are involved in grievance processing rather than production.27 Where production rates and methods change, grievance rates might be influenced. For example, in a long-term study of an aircraft manufacturer, the level of planned production and an increase in the variety of production methods to be used, which would cause frequent job classification changes, were both associated with higher grievance rates.28 Thus, grievance rates may reduce productivity and follow from higher productivity requirements.

STRIKES AND LOCKOUTS

Pledges by unions and managements to avoid strikes and lockouts while the agreement is in force appear in most contracts. Managements frequently demand a no-strike agreement in return for arbitrating unresolved grievances. Unions usually do not give up the right to strike during the Page 308contract if management refuses to comply with an arbitration award. Some work stoppages are permitted by contracts, including refusing to cross picket lines of other unions striking the same employer and performing struck work. Some contracts reserve the right to strike over work rule changes during the contract’s duration.

Many contracts require that if unauthorized work stoppages (wildcat strikes) occur, the union will disavow the strike and urge employees to return to work. If employees continue a wildcat strike, many contracts specifically permit these employees to be discharged.

UNION SECURITY

Because the union is the exclusive representative of employees in the bargaining unit, the union would like employees to be required to join and pay dues for the representational services the union renders on their behalf. Different levels of union security may be negotiated. Except in states with right-to-work laws, contracts may contain agency or union-shop clauses. The following are definitions of various forms of union security:

1. Closed shop requires that employers hire only union members. Although this requirement is illegal, a contract clause can require that the employer offer the union an opportunity to fill vacant assignments. These arrangements occur most frequently in the construction, entertainment, and maritime industries, where many employers are relatively small and have relatively short-term demands for certain occupations.

2. Union shop requires that any bargaining-unit employee employed with the firm for a specific time (not less than 30 days, or 7 days in construction) must become a union member (to the extent of paying dues) as a condition of continued employment.

3. Modified union shop requires that any bargaining-unit employee who was hired after a date specified in the agreement must become a union member within a specific time as a condition of continued employment.

4. Agency shop requires that any bargaining-unit employee who is not a union member must pay a service fee to the union for its representation activities.

5. Maintenance of membership requires that any bargaining-unit employee who becomes a union member must remain one as a condition of continued employment as long as the contract remains in effect (but members can legally resign and retain employment).29

Page 309Contracts often include a dues checkoff in which employers deduct union dues from members’ pay and forward the amount directly to the union. The process generally benefits all parties. First, it avoids workplace disruptions involved in collection. Second, it insulates employees from union disciplinary action for nonpayment of dues. Third, it ensures a smooth cash flow for the local union’s financial operations.

Unions usually bargain for the highest form of union security attainable, but some might argue that a union or agency shop is not in the individual member’s best interest. If union membership were not compulsory, those who joined or remained members would make sure that the union accomplished important ends efficiently. State right-to-work laws enable a preliminary test of whether union membership is influenced by the efficiency of the local union, because individuals can choose whether to join. One study found that the costs of a local’s operation were lower in right-to-work states but that no differences in dues levels, provision of benefits or services, compensation of union officers, or profitability of investments existed.30 Right-to-work laws increase free riding (union representation without paying dues) by about 8 percent. Of the employees who freeride, about 30 percent appear to do so because union membership cannot be required, while the other 70 percent would not work in an establishment where union membership was compulsory.31 Right-to-work laws have a significantly negative effect on union density in the private sector.32 Some evidence shows that the proportion of union members in the bargaining unit influences the union’s bargaining power because wage levels increase with higher membership.33

WORKING CONDITIONS AND SAFETY

Working conditions and safety clauses deal with the provision of safety equipment, the right to refuse hazardous work, and the creation of management-union safety committees. Many health and safety collective bargaining concerns have been superseded by the Occupational Safety and Health Act (OSHA). Unions may negotiate higher standards than what the act requires.34 Unions have an additional effect beyond OSHA, Page 310however. In construction, unionized worksites are visited by OSHA inspectors more often, maintain a higher level of safety, and have higher penalties for violations.35 A British study found that safety committees appointed by the union rather than management were more effective in reducing accidents.36

In one health and safety study, petrochemical workers perceived greater risk from, and worried more about exposure to, dangerous carcinogens if they were union members or contract workers and had low job control. Regarding concerns about explosions, risk perceptions were related to job demands and being a contract worker, but not a union worker. Contract workers felt their union had less influence on workplace safety than core employees did for their union.37

Employers have also taken initiatives in the health and safety area with programs aimed at detecting and reducing substance abuse. Many employers have adopted prehire drug screening programs, over which unions have no control because applicants do not have representation rights. Unions and employers may potentially clash about bargaining over and administration of periodic or random drug tests, with unions arguing the tests constitute an invasion of privacy and may not be supported by just cause, while employers argue they are entitled to control the operation of the workplace and need to operate as safely as possible.38

SENIORITY AND JOB SECURITY

Seniority issues cut across several of the economic and noneconomic bargaining issues. Seniority may entitle employees to higher pay levels or to overtime, preferences on vacation periods, lengths of vacations, eligibility for promotions and transfers, and insulation against layoffs. Seniority provisions have been shown to positively influence the pay level of blue-collar workers represented by unions.39

A distinction must be made between benefit-and competitive-status seniorities. Benefit-status seniority is related to entitlement to organizationwide or bargaining-unit-wide benefits established in the contract. Page 311For example, if the contract specifies that vacation length depends on seniority, then the date of hire (as adjusted by any layoffs or leaves) establishes a benefit status. Most contracts base benefit entitlements on an employee’s total length of employment since being hired.

Competitive-status seniority relates to entitlement to bid on promotions and transfers and to avoid layoffs. Benefit-and competitive-status seniorities occasionally overlap, but competitive-status seniority is usually accumulated within a job or department. Assume that an employee with five years’ total service who currently works in an assembly job bids on an inspection job. Competitive-status seniority among the inspectors would begin as of the date of the job change. If a subsequent layoff occurred in which employees with four or fewer years of service on the job were furloughed, this inspector would be laid off. The inspector’s benefit-status seniority would be five years, but his or her competitive-status seniority would begin only from the date that he or she obtained the inspector job. Competitive-status seniority is more likely to be companywide than departmentwide when the employer is small and capital-intensive, there is a single-employer bargaining unit, and the production technology requires that the employer provide substantial training.40

Layoff Procedures

Layoffs are usually in inverse order of seniority, protecting the most senior worker for the longest period. Many contracts specify layoffs on the basis of departmental seniority; some permit bumping, whereby a senior employee is entitled to displace a junior employee in another department or job as long as the senior employee is qualified for it. In almost 60 percent of the contracts surveyed in a recent sample, seniority was the sole provision for determining layoff or job retention rights during cutbacks.41 In another 30 percent of the contracts, seniority was the determining factor if the individual was qualified for the remaining jobs.

Promotions and Transfers

The Collective Bargaining and Negotiating Contracts survey found that seniority is less frequently a criterion for promotions and transfers than for layoffs. In about half of contracts, seniority is the sole or determining factor for promotions if qualifications are essentially equal. For transfers, seniority is also a sole or determining factor in half of the contracts.42

Depending on the contract, seniority for someone promoted out of the bargaining unit (e.g., to first-line supervision) may continue to be accumulated, frozen, or lost after time. Employers usually desire clausesPage 312protecting accumulated seniority for supervisors because rank-and-file employees may be more willing to vie for promotions where risks of job loss are less if they fail or if employment is later reduced.

Time Away from Work

Contracts usually provide for holidays, vacations, rest periods, and leaves. Each year the average unionized employee enjoys one more paid holiday than the national average.

Contracts also include provisions related to paid breaks, lunches, changing and cleanup, and other periods in which no production work occurs but employees are compensated.

Most vacation clauses link entitlement to length of service, with some contracts allowing five weeks or more, usually after 20 or more years of service. Employers experience higher vacation costs for senior employees because of both the greater time away from work and the higher pay that senior employees are likely to be earning.

A variety of situations in which paid or unpaid leave will be granted are also included. Paid leaves often include time for funerals of close relatives, sick leave, and jury duty. Unpaid leaves are available for civic responsibilities (such as elected office), union work (such as local president), and family leave (over and above that required by law).

No Discrimination

Virtually all contracts have a no-discrimination pledge. This enables employees who allege discrimination to have their complaints heard quickly under the terms of the grievance clause without giving up rights to later pursue claims under civil rights law provisions.

EFFECTS OF UNIONS ON NONWAGE OUTCOMES

Unions influence nonwage outcomes for both employers and employees, predominantly in hiring, promotions, transfers, turnover, and retirement. Employee satisfaction is also related to union membership. This section explores research on the effects of unions on these types of nonwage outcomes.

Union Influences on Hiring

Lower-skilled workers prefer union jobs; thus for lower-skilled jobs, a unionized employer will have a larger pool from which to select. Applicants who do not obtain union employment when they are young see union jobs as less attractive as time passes because promotion opportunities are at least partially related to seniority.43 Among the unemployed, Page 313those with higher pay requirements, women, minorities, and former union members are more likely to wait for a union job opening, but this tendency is inversely related to unemployment levels and the duration of individual unemployment.44 Unionized employers use fewer recruiting sources and methods, probably because of the availability of more applicants from chosen sources. However, this increases the number of selection hurdles, primarily because the likelihood of an employee quitting is lower and the ability to discharge unsatisfactory workers is decreased. Figure 10.1 shows a model suggesting why these differences occur.45

FIGURE 10.1 Union Effects on Hiring Practices

Source: M. J. Koch and G. Hundley, “The Effects of Unionism on Recruitment and Selection Methods,” Industrial Relations, 36 (1997), p. 352. Reprinted with permission from Blackwell Publishing.

Minorities are a higher proportion of new hires in unionized as compared to nonunion organizations.46

Employers that actively avoid unionization may attempt to screen out prounion applicants. This practice, while rare, violates the Taft-Hartley Act. Unfair labor practice charges are most likely to be upheld when the employer is involved in an organizing campaign or is openly hostile to the union or when the applicant is applying for a skilled position.47

Promotions, Transfers, and Turnover

Most contracts specify the methods for filling vacant positions requiring promotions or transfers. In nonunion organizations, unless policy or custom dictates otherwise, the employer may use any legal criterion for filling jobs.

Turnover in nonunion organizations is greater than that in unionized employers with equivalent jobs. Chapter 6 suggested that a relatively stable workforce is necessary for a successful organizing campaign. A plausible explanation for lower turnover following unionization would be the stable base preceding it. But employers with represented workforces are no more likely than other employers to hire innately stable applicants.48 Lower turnover is probably related to union wage premiums of about 3 to 8 percent for taking a unionized job, while losses from leaving one are about 7 to 11 percent.49

Contract provisions requiring that promotion and transfer decisions be based on seniority may explain union-nonunion differences in quit rates. The greater the weight given to seniority in job assignments, the lower the turnover rates.50 Collective bargaining also provides employees with a voice in how the organization is managed. Grievance procedures and contract negotiations provide a vehicle for changing the work environment. Without collective bargaining, employees must quit to escape unsatisfactory conditions.51

When nonunion employees have grievances, unless their employers have established grievance procedures, the employee must accept the employer’s unilateral action or quit (assuming the action was not unlawful). In unionized employers, employees are entitled to due process, and grievances might be allowed. Lags in the grievance process will extend tenure until a grievance is finally decided against the employee. Other inducements to stay in a unionized firm relate to expected progress in the next round of negotiations and perceptions about the likelihood of vacancies for which the individual can qualify through seniority.52

Page 315Unionization does not change layoff and discharge likelihoods, but laid-off unionized employees are much more likely to return when recalled than nonunion employees.53 Compared to nonunion employees, unionized employees are more likely to be recalled from layoffs but are less likely to find a new job if permanently separated.54 Unionized employees are 23 percent more likely to receive unemployment insurance benefits when laid off as compared to similar nonunion workers.55 In the absence of supplemental unemployment benefit packages, unionized employers should have a cost advantage—recall that costs are lower because of fewer vacancies and new employees need less training. Management can “store” labor for future demand at relatively minimal costs.56

Seniority provisions may also result from management attention toward the interests of senior bargaining-unit members (they are much more likely to be represented on negotiating committees than are junior members) and away from the impact of the external labor market on the establishment of employment policy. Thus, where cost differences are not significant and the experience of senior employees is related to productivity, negotiated seniority clauses may benefit both the employer and longer-tenure employees. Bargaining-unit members are probably more willing to ratify contracts with significant benefits for seniority because many of them are likely to have more seniority if turnover in union situations is less. Unionized employees may also anticipate achieving these benefits in later years.

If seniority clauses actually create opportunities for senior employees, over time unionized employees should have more internal job changes than nonunion employees. One study found that quit rates for white union members were substantially below those of nonunion employees and that transfer and promotion rates were significantly higher. Almost all union members who had been with the same employer for more than 10 years had made at least one internal job change. Education was negatively related to a bargaining-unit promotion but positively related to a promotion out of the bargaining unit. Promotions were more likely with more seniority in unionized situations, while they were less likely in nonunion employment. Unlike the nonunion situations in which women were less likely to receive promotions, gender made no differences in situations where employees were represented.57 Interests in Page 316career flexibility within the employer were found to be higher among unionized employees.58

Retirement Programs

Many contracts establish a minimum service requirement for full retirement benefits. For example, the UAW agreement with the automakers provides that an individual can retire after accumulating 30 years of service (25 in foundries), regardless of age. Thus, auto workers might retire as early as age 43 (with 25 years in foundry operations) and receive retirement benefits regardless of whether they are reemployed by a different employer. Early retirees would want health care continued because they would not be eligible for Medicare until age 65. Chapter 9 detailed problems in funding retiree health care programs in mature and/or shrinking industries.

The Age Discrimination in Employment Act prohibits negotiating a mandatory retirement age. However, mandatory retirement may be required in situations where age has been ruled to be a bona fide occupational qualification, as is the case for airline pilots and police officers.

Early retirement decisions appear to be strongly influenced by the retiree’s economic expectations and general health. The better the expectations and the worse the health, the more likely the individual is to retire early.59 Married men plan to retire earlier when they expect larger pensions from both private and public sources, when their pensions have a known benefit level, when they are homeowners, when they have earned relatively higher wages, and when they are in poorer health.60 Union members have greater predictability in benefits because a larger share is covered by defined benefit pension plans.61

As benefit levels increase and as retirement decisions cover a range of time periods rather than a particular date, greater retirement planning by individuals and organizations is probable. Some contracts provide pension benefits that, when combined with social security and tax advantages, impose a cash penalty on an employee who continues to work after becoming eligible for social security.

Job Satisfaction

Union effects on job satisfaction are not clear-cut. Chapter 6 noted dissatisfaction was a significant predictor of pro-union voting in organizing campaigns.62 Receiving the benefits a union might gain is expected to increase job satisfaction, but a large-scale, cross-sectional study found that job satisfaction was lower among union members than nonunion employees when other variables were held constant.63

Job satisfaction increases for union members whose jobs change as the result of a transfer or promotion but not leaving the previous employer. The reverse was found for nonunion employees: Their satisfaction increased with turnover and did not change as the result of internal job movements.64

A cross-sectional study found that job satisfaction among unionized employees was somewhat lower than it was among nonunion employees, but results varied when facets of satisfaction were compared. Union members were more satisfied with their pay, valued it more, and received more pay than nonunion employees. Promotion satisfaction was also greater, largely because union members place lower value on promotions than other outcomes. This result can be partially accounted for by relatively lower pay differences between job levels in unionized work. Union members were less satisfied with supervisors and co-workers, especially with regard to supervisory behavior. They were also less satisfied with their jobs, which generally had less varied tasks than those of nonunion employees.65 Unions influenced the satisfaction of employees toward supervisors and the job by pointing out potential sources of problems the union will help employees solve. However, within bargaining units, one study found no differences between union members and nonmembers on job satisfaction or intentions to quit.66

Unionization in nursing homes influenced perceptions of job quality among employees. Other factors related to positive perceptions included being a skilled-care-provider facility, being owned by a chain, having a Page 318religious or ethnic affiliation, having private pay patients, and having trained administrators.67

Finally, the strength of the union reduces fears that an employer might be able to increase work effort through threats.68 At the same time, the degree of unionization appears positively related to job satisfaction and the willingness to cooperate, be productive, and reduce waste.69

Summary

Nonwage issues in contracts are related primarily to hours of work, lengths of contracts, management rights, union security, and seniority provisions. All of these have economic consequences for the employer and represented employees.

Work-hour issues relate to establishing the length of the workday, entitlements to overtime, shift assignments, and the number of days worked during given periods. Evidence suggests that employers may prefer innovative schedules with fewer days and longer hours in some operations.

Management rights clauses spell out areas in which management exercises decision-making control. Management also establishes rights to make and enforce reasonable rules. Grievance and arbitration clauses provide due process rules for situations in which bargaining-unit members disagree with management’s interpretation and operation of the contract.

Union security clauses provide requirements related to dues payment and union membership. Union shops require that all bargaining-unit members belong to the union, while agency shop agreements require that non-members pay dues.

Seniority can be broken down into competitive-and benefit-status seniority. Competitive-status seniority relates to entitlements to jobs, while benefit-status seniority refers to compensation benefits.

Lower-skilled workers, particularly younger applicants, prefer union jobs since seniority is a factor in promotions in most union settings. Promotions and transfers occur more often in unionized settings, and turnover is lower. Job satisfaction among union members is about equivalent to that among nonunion employees, but there are differences in the levels of satisfaction for different aspects of the employment relationship.