Unions and Efficiency

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Unions and Efficiency
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1. Contrast the structural-change and managerial-opposition hypothesis as they relate to the decline in unionism. Which view do you think is more convincing?

Solution:

The unionized sector is a minority component of the labor force It is now clear that declining union density characterizes most industrialized countries and many developing countries. Unionism is on the decline in the US also.

The structural-change hypothesis is the labor force and economy has changed in ways that are unfavorable to unions. Since unionization rates vary by industry, geographical location, and personal characteristics, changing employment and demographic patterns may alter aggregate union density. Countries that share similar changes in employment structure should share similar trends in union representation.
Employment growth has been greater in traditionally nonunion sectors such white-collar jobs, services, women, small firms, part-time, and Southern states. Due to this structural change, unionized firms switched to nonunion methods of production where possible.
?Nonunion firms expanded output and employment due to their lower costs. So far criticisms of this structural change hypothesis are concerned, we can conclude that other countries have had similar structural changes and their unionism has not decreased like US. Unions have been able to unionize traditionally nonunion workers in the past.

Managerial opposition to unions is often asserted to be the primary factor explaining the decline in the union density in the United States. The managerial-opposition hypothesis argues that the increased union wage advantage in the 1970s caused firms to fight unions more aggressively. Firms may hire permanent strikebreakers, illegally fire pro union workers, hire consultants, etc. Given the role accorded increasing management opposition prior to 1984 by Freeman and Medoff, one must ask whether management opposition continued to increase as unionization continued to decline over the subsequent 20 years. The absence of a clear measure of management opposition hampers a clear answer to this question in any period. When we look for measures of management opposition or union militancy, we find instead measures of labor-management conflict, such as strikes and unfair labor practice charges that reflect choices or actions by both parties. Moreover, a corollary proposition is that a difference in the degree of managerial opposition to unions between employers in the United States and employers in Canada is responsible for the divergence of union density trends between the two countries.

An analysis of the very similar U.S. and Canadian union membership changes between 1984 and 1998 likewise found that structural change explained only a small fraction of the U.S. decline and none of the almost identical Canadian decline. Thus, while the exact contribution of changing employment patterns to falling union density varies somewhat from country to country, it ...