37:575:100 Chap.7 What Unions Do and How Collective Bargaining Works
What Unions Do and How Collective Bargaining Works
Three questions for Week 11
The week asks what unions do, how collective bargaining works, and whether unions are good or bad for the economy. The answers draw on the whole course so far: the internal labor markets of Chapter 2, the at-will rule of Chapter 3 and the New Deal history of Chapter 6.
What a union contract delivers
By bargaining as a group, workers can win what individuals rarely can.
The 2022 Bloomberg explainer reports that union members earned about $200 a week more than non-members in 2021, $1,169 against $975, with better retirement and health benefits, and that unions raise non-union pay by setting a higher prevailing wage.
Contracts also bring rules: just cause for dismissal, which every union contract requires according to Maltby, plus seniority and grievance procedures that let workers speak up without fear.
How bargaining works
Bargaining is preparation as much as argument.
Each side studies the expiring contract and members' concerns, prices its proposals, sets an opening position and a limit, and predicts the other side's response. The threat of a strike sits in the background, because private-sector workers have the legal right to strike and a stoppage costs both sides.
Students who choose the course's live bargaining exercise meet with their team to build a strategic plan, submit it after the first meeting, bargain, and then hand in a summary of the agreement and ratings of teammates.
The economic debate
Critics call unions a relic of the factory age whose higher pay costs jobs.
Supporters answer that unionized firms have slightly higher productivity, that unions spread gains to non-members, and, in Metzgar's purchasing-power argument, that workers' pay is spent in local economies.
The debate matters for Unit I, because union decline is one of the reasons the readings give for wages lagging profits.
A union premium in one career
The Washington Post article on Google's cafeteria workers makes the premium concrete.
Unionized cafeterias paid an average of $24 an hour with little or no health premium and a pension, while Google cafeterias run by a contractor whose workers had not yet unionized paid $15, with health premiums in the hundreds of dollars. One Seattle worker went from $11 in a previous job to $20 at Google and $27 after unionizing, and said buying a home was possible only because of the union.
What this chapter covers
- 01
Wages, benefits and the union premium
- 02
Just cause, seniority and voice
- 03
Preparing and costing a bargaining plan
- 04
Strike leverage
- 05
The course bargaining exercise
- 06
Are unions good or bad for the economy?
Worked example · free
Price a percentage raise
- 1Payroll: 250 × 2,080 × $18 = $9,360,000 a year.
- 1Raise cost: 3% of $9,360,000 = $280,800 a year.
- 1Per porter: 3% of $18 = $0.54 an hour, or $1,123.20 a year at 2,080 hours.
- 1Interpretation: compare the total with the employer's ability to pay and with the cost of a stoppage.
Key terms
- Union Wage Premium
- The difference between the pay of union members and comparable non-union workers, about $200 a week in 2021 in the course readings.
- Grievance Procedure
- The contract process through which a worker or union challenges a management decision, above the level of the immediate supervisor.
- Free-Rider Problem
- The difficulty that arises when workers can enjoy the gains of a union contract without paying toward the union's costs.
What Unions Do and How Collective Bargaining Works FAQ
How much more do union members earn?
The 2022 Bloomberg explainer cites Bureau of Labor Statistics figures of $1,169 a week for union members against $975 for non-members in 2021, about $200 more, along with better retirement and health benefits.
How is the bargaining exercise graded?
The syllabus says preparation counts, including how ready you are to answer questions about the scenario. The Canvas pages list 10 points for the team's plan after the first meeting and 10 points for rating teammates after the negotiation.
Are unions bad for the economy?
The readings present both sides: critics argue union pay costs jobs, while supporters point to slightly higher productivity in unionized firms, higher pay for non-members through the prevailing wage, and the spending power of better-paid workers.
Do I need to read the bargaining scenario before the first team meeting?
Yes. The syllabus says students in the exercise must read the materials before meeting their team, and part of the grade reflects how prepared each person is to answer questions about the scenario.
Exam move
Practise costing: for any group of workers, compute payroll, the cost of a raise and the per-worker gain. Learn the $1,169 and $975 figures and the just-cause point, and write a balanced paragraph on the economic effects of unions that states the critics' case before answering it.
