document resume ed 374 224 ce 067 120 title fact ...document resume ed 374 224 ce 067 120 title fact...
TRANSCRIPT
DOCUMENT RESUME
ED 374 224 CE 067 120
TITLE Fact Finding Report. Commission on the Future ofWorker-Management Relations.
INSTITUTION Department of Commerce, Washington, D.C.; Departmentof Labor, Washington, D.C.
PUB DATE May 94NOTE 174p.
PUB TYPE Reports Research/Technical (143)
EDRS PRICE MFOI/PC07 Plus Postage.DESCRIPTORS Adult Education; *Collective Bargaining; *Employer
Employee Relationship; Labor Conditions; LaborEconomics; *Labor Legislation; *Labor Relations;Personnel; *Personnel Management
IDENTIFIERS National Labor Relations Act
ABSTRACTThis report presents findings of a commission that
held hearings and examined quantitative and qualitative evidence onthe current state of worker-management relations in the UnitedStates. Chapter I identifies those facts about the changing economicand social envirommnt that bear directly on the mission statement ofthe commission (to ensure that workers and managers work togethermore effectively) and highlight the challenges these facts pose forexisting workplace practices, worker-management relations, and laborregulations. Chapter II reviews the facts with respect to employeeparticipation and labor-management cooperation. Sections report onthe following: views of workers, managers, and labor leaders; theextent of employee involvement; the issues addressed in theseprocesses; the evidence on their effects on economic outcomes; theirprospects for diffusion; and the legal issues they raise. Part A ofChapter III focuses on how effectively the National Labor RelationsAct (NLRA) works in providing workers the free choice whether or notto bargain collectively with their employers. Part B considersworkers not covered by the NLRA, including contingent workers, theconstruction sector, and workers in the railroad and airlineindustries covered by the Railway Labor Act. Chapter IV examinesemployment regulation, litigation, and dispute resolution. Appendixesinclude historical perspectives on the work of the commission and itsnational and regional meetings. (YLB)
**********************************************************************
Reproductions supplied by EDRS are the best that can be madefrom the original document. *
***********************************************************************
O
FACT FINDINGREPORT
COMMISSION ON THE FUTURE OFWORKER-MANAGEMENT RELATIONS
U.S. DEPARTMENT OF LABOR
MAY 1994
U.S DEPARTMENT OF EDUCATIONOn,te of Ea JCI1,.. Resc.rcr. ane
EDUCATIONAL RESOURCES INFORMATIONCENTER (ERIC)
This document has been reproduced asreceived from the person or organizationoriginating itMinor changes have been made toimprove reproduction quality
Points of view or optnons stated in thisdocument do not necessarily representofficial OERI position or policy
U.S. DEPARTMENT OF COMMERCEosort OP
f -N.
BEST COPY AVAILABLE \...2
TABLE OF CONTENTS
Page
Members
LettersSubmitting the Report to:Secretary of Labor Robert B. Reich viiSecretary of Commerce Ronald H. Brown ix
Preface xi
Chapter I: The Changing Environment for Worker-Management Relations
I. Introduction 1
2. The Changing Economy 2
3. The Changing Workforce 10
4. Changing Labor Market Outcomes 14
5. Labor Relations Outcomes 23
6. Summary 25
Chapter Employee Participation and Labor - Management Cooperationin American Workplaces
1. Introduction 29
2. Views Toward Workplace Participation andCooperation 30
3. Extent of Employee Participation and Committees 34
4. Key Features of Workplace Participation Processes . . . 37
5. The Effects of Employee Participationon Economic Outcomes 45
6. Will Contemporary Efforts at Employee Participationand Cooperation be Sustained and DiffuseAcross the Economy? 47
7. Legal Issues Regarding WorkplaceEmployee Participation 53
8. Summary and Questions for Further Discussion 55
Chapter B1: Wolter Representation and Collective Bargaining
Introduction 63
Part A. Experience Under the National Labor Relations Act
1. NLRB Certification Elections 66
2. Unfair Labor Practice Sanctions 71
3. The Trend in First Contracts 73
4. Cost of The NLRB Election Process 74
5. The Human Face of the Confrontational RepresentationProcess 76
6. Debate on Labor Law and Union OrganizingCampaigns 76
7. Summary 79
Part B. Experience with 'Contingent" Workers and Other Sectors
1. "Contingent ''Worker-Management Relations 93
2. Construction Sector 95
3. The Railway Labor Act 98
Chapter IV: Employment Regulation, Litigation and Dispute Resolution
1. Introduction 105
2. Evolution and Present State of EmploymentRegulation 106
fi
3. Nature of Employment Regulation 109
4. Trends in Employment Litigation 111
5. Private Dispute Resolution Alternatives 113
6. Integrated Employment Regulation 123
7. General Observations 125
8. Summary and Questions for Further Discussion 127
Chapter V: General Observations 139
LIST OF APPENDICES
Appendix A Historical Perspectives on the Work of the Commission
Appendix B National Meetings and Regional Hearings of the Commission
iii
Commission on the Future of Worker-Management Relations
APPOINTED BY:Secretary of Labor Robert B. ReichSecretary of Commerce Ronald H. Brown
Paul A. AllaireChairman and CEOXerox Corporation
John T. Dunlop, ChairmanFormer Secretary of Labor (1075-1976)Lamont University Professor EmeritusHarvard University
Douglas A. FraserFormer President, United Auto WorkersProfessor of Labor StudiesWayne State University
Richard B. FreemanHerbert Ascherman Professor of EconomicsHarvard UniversityProgram Director for Labor StudiesNational Bureau of Economic Research.
William B. Gould, IV*Professor of LawStanford University
F. Ray MarshallFormer Secretary of Labor (1976-1981)Audre and Bernard Rapoport Centennial Chairin Economics and Public AffairsL.B.J. School of Public AffairsUniversity of Texas at Austin
Thomas A. KochanGeorge M. Bunker Professor of Manage-ment and a Leaders for ManufacturingProfessorMassachusetts Institute of Technology
Juanita M. KrepsFormer Secretary of Commerce (1977-1979)James B. Duke Professor of Economicsand Vice President EmeritusDuke University
Kathryn C. TurnerChairperson and CEOStandard Technology, Inc.
William J. UseryFormer Secretary of Labor (1976-1977)PresidentBill Usery Associates, Inc.
Paula B. VoosProfessor of Economics and IndustrialRelationsUniversity of Wisconsin
Paul C. WeilerHenry J. Friendly Professor of LawHarvard University(Counsel to the Commission)
June M. RobinsonDesignated Federal Officialfor the CommissionU.S. Department of Labor
*Ceased to be active upon his nomination to be a member and Chairman of the National LaborRelations Board and resigned on March 12, 1993.**Appointed to the Commission on November 1, 1993.
U.S. DEPARTMENT OF LABOR
OFFICE O THE SECRETARYWASHINGTON. D.C.
20210
May 1994
The Honorable Robert B. ReichSecretary of LaborWashington, D.C. 20210
Dear Secretary Reich:
The Commission on the Future of Worker-Management Relations that you
appointed on behalf of the President presents its Fact Finding Report. This
report is designed to facilitate the policy discourse to follow and to encourage
some degree of consensus on the issues raised by your Mission Statement that
defined our task.
Sincerely,
n T. Dunlop, Chairommission on the Future of
Worker-Management Relations
U.S. DEPARTMENT OF LABOR
OFFICE OF THE SECRETARYWASHINGTON, D.C.
20210
May 1994
The Honorable Ronald H. BrownSecretary of CommerceWashington, D.C. 20230
Dear Secretary Brown:
The Commission on the Future of Worker-Management Relations that you
appointed on behalf of the President presents its Fact Finding Report. This
report is designed to facilitate the policy discourse to follow and to encourage
some degree of consensus on the issues raised by your Mission Statement that
defined our task.
Sincerely,
do6-4-hn T. Dunlop, Chairmmission on the Future of
Worker-Management Relations
ix
PREFACE
The Commission on the Future ofWorker-Management Relations was an-nounced by Secretary of Labor Robert B.Reich and Secretary of Commerce RonaldH. Brown on March 24, 1993.
The Mission Statement of the Commis-sion states as follows:
"The future living standards of ournation's people, as well as the competitive-ness of the United States, depend largely onthe one national resource uniquely rootedwithin our borders: our people theireducation and skills, and their capabilitiesto work together productively."
The President's economic plan lays anew foundation for the education and train-ing of the nation's work force. But even awork force that is well prepared for the jobsof the future will fail to adequately improvethe nation's productivity and living stand-ards unless workers and managers worktogether more effectively. Both partiesmust take on new responsibilities.
To this end, the President has asked theSecretary of Labor and the Secretary ofCommerce to form a Commission on theFuture of Worker-Management Relations.The Commission will investigate the currentstate of worker-management relations in theUnited States and report back to the Secre-taries in response to the following questions:
"1. What (if any) new methods or insti-tutions should be encouraged, or required,to enhance work-place productivity throughlabor-management cooperation and em-ployee participation?
2. .that (if any) changes should bemade in the present legal framework andpractices of collective bargaining to enhancecooperative behavior, improve productivity,and reduce conflict and delay?
3. What (if anything) should be done toincrease the extent to which work-placeproblems are directly resolved by the partiesthemselves, rather than through recourse tostate and federal courts and governmentregulatory bodies?"
The Federaaegister of May 7, 1993, carried notice of the establishment of the Commission as well as notice ofthe first meeting on May 24, 1993. The Commiss.on is to serve solely as an advisory body in accordance withthe Federal Advisory Committee Act.
xi
9
This Fact Finding Report is submittedjointly to the Secretaries of Labor andCommerce. After release of this Report, theCommission plans a series of hearings andconferences with representatives of businessorganizations, labor organizations, other or-ganizations that have presented testimonyor statements, and the interested public toreceive comments, reactions and sugges-tions as to the statement of facts and itsimplications for private and public policiesand for the recommendations of the Com-mission. Within a period of six months ofthe presentation of this Report, the Com-mission plans to present a final report withrecommendations to the two Secretaries.(Department of Labor Press Release, Febru-ary 10, 1994).
The Commission has held 11 nationalhearings in Washington, D.C., and workingparties of three to five Commission membershave held regional hearings in six commu-nities Louisville, East Lansing, Boston,Atlanta, San Jose and Houston. (Theagenda of each of these sessions is includedin Appendix B with the subjects underdiscussion and the invited participants.)
In each of the regional hearings severalhours or more were set aside to hearindividuals or representatives of organiza-tions who requested an opportunity to ap-pear and to testify on any subject within thescope of the Commission's Mission State-ment. If time was inadequate to hear allwho requested to testify, in a few cases,written statements were received and dis-tributed to all Commission members, andthese statements are a part of the publicrecord of the Commission. The Commissionappreciates the assistance of various organi-zations that helped to organize and facili-tated these regional hearings.
A total of 134 persons testified beforethe Commission in its 11 hearings in Wash-ington, D.C., and 220 persons testified in
the six regional hearings, for a total of 354witnesses.
The transcripts of the 11 national Com-mission hearings run to 2,125 pages, andthe transcripts of the six regional hearingsrun to 1,733 pages, for a total of 3,858 pages.
The Commission has also receivedscores of exhibits, letters, papers, articlesand studies that have been made a part ofits public record.
The Commission examined a wide vari-ety of quantitative and qualitative evidence,some of which was presented to it intestimony or offered to it by interestedparties, and some of which is part of pub-lished data and the scholarly literature. Insome instances, the evidence is more or lessdefinitive, based upon statistically validsurveys whose results have been replicatedin many studies, or administrative records.In other cases, the evidence is weaker, basedon short reports by participants relatingtheir own experiences, or on limited surveysthat can at best scratch the surface ofcomplex issues. On the general presump-tion that it is better to have some, occasion-ally weak, evidence than no evidence, theCommission has sought to make use of allof this information, albeit weighing thedifferent forms of evidence.
The Commission has encouraged fourgroups of studies by other organizations thatconstitute new data relevant to one or moreof the assignments of its Mission Statement.
(1) The Chairman and Ranking Minor-ity Member of the House Committee onEducation and Labor and the Chairman andRanking Minority Member of the Subcom-mittee on Labor-Management Relations to-gether on August 4, 1993 requested theComptroller General of the United States tomake a study of the complex web of work-place regulations it those adminis-tered by the Labor Department. The studywas to seek the variability in definitions interms common to such regulations and the
xii 10
perceptions as to these regulations held byemployers, and unions in workplaces gov-erned by collective bargaining agreements,in a diverse group of workplaces. The studywas also to seek views as to the regulatoryand administrative processes respectingthese regulations. The Commission hadreleased on July 28, 1993 a listing of themajor statutes and regulations affecting theworkplace administered by the Labor De-partment.
(2) A number of employer associationsAerospace Industries Association, Elec-
tronic Industries Association, Labor PolicyAssociation, National Association of Manu-facturers, and Organization ResourcesCounselors have undertaken a surveyamong a number of businesses of the extentand characteristics of employee involvementplans.
(3) With the aid of private foundationfunding, Professors Richard Freeman andJoel Rogers secured the services of a profes-sional survey firm to do a study of theattitudes of representative workers and su-pervisors toward worker representation andparticipation. The study was undertakenby Princeton Survey Research Associates,Princeton, New Jersey.
(4) With the aid of private foundationfunding, Professor Ray Marshall organizeda conference in Washington, D.C. under theauspices of the Work and Technology Insti-tute on March 14-15, 1994 with labor,management, government and academic ex-perts on labor-management and employ-ment issues from Western Europeancountries, Japan, Canada, and Australia.The Commission hearing on March 16, 1994
included a summary of the conference andheard testimony from a number of theoverseas participants. A report of theMarch 14-15 conference has been preparedfor publication.
This Report of the Commission containsno separate chapter on the experience of
worker-management relations in othercountries. But the separate chapters eachincorporate references to this experience, byway of comparisons or contrasts. The useof international comparisons is based on thebelief that while it is not possible to importany given practice or institution found inanother country to the United States neitheris it advisable to ignore practices that workwell in other settings. Just as Americanbus'_aess has recognized the need to bench-mark practices on a global scale, the Com-mission believes it is both possible andessential to be open to learning from expe-riences abroad.
The Counsel to the Commission, Profes-sor Paul Weiler, organized three groups - ofabout eight in each - of lawyers which havemet separately on several occasions to dis-cuss issues before the Commission groupsof business lawyers including those withincompanies and in outside law firms, laborlawyers including those within unions andin outside law firms, and law school profes-sors. Lawyers drawn from each of thesegroups have testified before the Commissionon legal issues affecting the Commission'sassignments.
A working party of the Commission hasmet on several occasions with a designatedcommittee of the Small Business Council ofthe U.S. Chamber of Commerce to receiveviews and perspectives. A working party ofthe Commission heard reports from variouslocal chapters of the Industrial RelationsResearch Association at its national meetingon January 4, 1994.
The Commission has encouraged a num-ber of studies which are still in process, andwhen they have been completed they will bemade available for comments.
The Commission gratefully acknow-ledges statistical data and information pre-pared for its use by the Bureau of LaborStatistics, the Office of the Solicitor, theWomen's Bureau, the Department of Com-
1 1
merce, the General Counsel of the NationalLabor Relations Board, the Federal Media-tion and Conciliation Service, and the SmallBusiness Administration.
Mr. Roland Droitsch, Office of the As-sistant Secretary for Policy, coordinated thiswork in the Department of Labor and Mr.Everett Ehrlich, Office of the Secretary,provided assistance in the Department ofCommerce. Staff of the Department ofLabor's Office of Small Business and Minor-ity Affairs greatly assisted the Commissionin its hearings and related activities. Thework of Ms. Artrella Mack and Ms. BettyCoe)er were invaluable in the technicalpreparation of this Report. Ms. JoyReynolds, Office of the American Workplace,prepared summary of minutes for the De-partment. Secretaries to members of theCommission, beyond their regular duties,greatly facilitated the work of the Commis-sion. The Commission is most grateful.
The Commission has received some tes-timony, and many letters regarding specificre,, ulations, interpretations, rulings and de-cisions issued under employment statutesand labor-management relations laws.These cases have been helpful in under-standing wider issues and regulatory proc-esses, and this Report roes mention some
of these questions in the course of thediscussion. But the Commission was notdesigned to respond to or to resolve suchspecific cases.
This Report raises a number of ques-tions at various points in the discussion forthe purpose of eliciting more data andinformation and more reflection on difficultissues. It should not be inferred, however,that the Commission intends to provideresponses to all these questions in a finalreport.
A Historical Perspective on the work ofthe Commission is provided in Appendix A.
The Commission welcomes from all par-ties comments and suggestions regardingthis Fact Finding Report. Please addresscomments to: The Commission on the Fu-ture of Worker-Management Relations, c/oMrs. June M. Robinson, Designated FederalOfficial, U.S. Department of Labor, RoomC2318, 200 Constitution Avenue, NW,Washington, DC 20210.
x iv
12
Chapter
The Changing Environment forWorker-Management Relations
1. Introduction
The American economy, the work forceand jobs, the technology at workplaces, thecompetitive context of enterprises, and theregulations of employment have changedgreatly in recent decades. The environmentfor firms and workers differs markedly fromwhat it was when the basic structure oflegislation governing labor-management re-lations in the United States was estab-lished.' The changing economic and socialenvironment poses challenges to some as-
pects of established worker-managementrelations and has created problems in em-ployment, earnings, and other job marketoutcomes for many Americans. This chap-ter identifies those facts about the changingeconomic and social environment that beardirectly on the Mission Statement of theCommission and highlight the challengesthese facts pose for existing workplace prac-tices, worker-management relations, andlabor regulations.
The principal laws governing workplace organization are the Railway Labor Act (1926), the Wagner Act (1935)and the Taft-Hartley Act (1947), and their subsequent amendments. Other key laws dating from this period includethe Social Security Act (1935) and the federal-state system of unemployment insurance, and the Fair LaborStandards Act (1938). The wartime labor relations policies of World War II and the Korean War left their imprintfor many years.
13 1
2. The ChangingEconomy
Among the myriad of economic develop-ments that have affected the United Statesin the past several decades, the followinghave been significant for many Americanworkers and enterprises:
1. A long-term decline in the rate ofgrowth of productivity, measured in GrossDomestic Product (GDP) per employee orper employee-hour.
From 1950 to 1973 GDP per employeein the U.S. grew by 2.6 percent peryear. From 1973 (roughly followingthe first oil shock) to 1992 GDP peremployee grew by 0.5 percent per year.Non-farm business output per hourincreased at the annual rate of 2.5percent per year in the period 1948 to1973, but only at the rate of 0.6 percentper year from 1973 to 1979 and at therate of 1.0 percent per year in the years1979 to 1992.
Manufacturing has had a differentproductivity experience. The rate ofgrowth of productivity fell in the 1970sbut recovered in the late 1980s and1990s to its historic level of approxi-mately 2.5 percent per year. Whilethere are problems in measuring pro-ductivity in the service sector, whichraise some doubts about the magni-tude of the economy-wide productivityslowdown, no analyst has seriouslyquestioned that GDP per employee isgrowing at a pace below its historicrate.
Productivity growth in most otheradvanced economies and in severaldeveloping countries exceeded that inthe U.S. in the last several decades.All advanced countries experienced a
reduction in the rate of productivitygrowth starting with the first oil shockof 1973. Although the decline in therate of productivity growth was greaterin many countries than in the U.S.,these countries still enjoyed higherproductivity growth than the U.S.
Low productivity growth does not,however, mean low productivity. TheU.S. has on average the highest pro-ductivity per worker and per houramong major economies, althoughWestern Europe and Japan are not farbehind. In some sectors, their produc-tivity exceeds ours.
The slowdown in productivity growthoccurred despite sizeable American re-search and development expenditures.Total R&D in the U.S. exceeds thoseof our four closest industrial competi-tors - Japan, West Germany, theUnited Kingdom and France. ButJapan and Germany outpace the U.S.in R&D as a percentage of grossnational product; this is especially thecase for non-defense research and de-velopment. In 1990 the U.S. spent 1.9percent of GDP on non-defense R&Dcompared to 3.0 percent in Japan and2.7 percent in West Germany.
Slow productivity growth makes it dif-ficult for Americans to enjoy rising stand-ards of living and bounds the feasibleincreases in wages and benefits that firmscan pay and their international competitive-ness at any given exchange rate of thedollar.
2. An increased globalization of eco-nomic life, reflected in trade and capitalflows, and immigration.
In 1960 the most commonly usedmeasure of the magnitude of trade onthe economy, the ratio of exports andimports to GDP, was 0.094. In 1991,it was over twice as large, 0.214.2 The
14
2
ratio of exports and imports to GDP inother countries also rose over thisperiod, as world trade expandedgreatly.
A growing proportion of manufactur-ing imports comes from relatively lowwage developing countries, such asChina.3 Reductions in trade barriers,the success of export-oriented develop-ing countries on world markets, thehuge trade surpluses run by Japan,and reduction in America's productiv-ity edge over Europe create a morecompetitive market for American firmssubject to international competition.
Throughout the 1980s and into theearly 1990s, the U.S. ran a substantialtrade deficit in its national accounts.This deficit was financed by foreignpurchases of U.S. financial assets,such as bonds and stocks, of realassets, such as property and busi-nesses, and by direct foreign invest-ments in the U.S. The U.S. movedduring the 1980s from being theworld's greatest creditor nation to theworld's greatest debtor nation.
Trade balances in high technologygoods between 1980 and 1988 showedthat the Japanese tripled their tradesurplus, while the U.S. and the majorEuropean countries reduced their posi-tive balances. At the same time, theproportion of patents issued by theU.S. Patent and Trademark Office offoreign origin have increased over thepast decade or so.4 In 1978 out of
66,097 patents, 24,847 or 37.6 percent,were of foreign origin. In 1991 out of96,047 patents, 45,152 or 47.0 percent,were of foreign origin.
As a result of the flow of capital to theU.S, an increasing proportion ofAmericans have been employed byforeign-owned firms. In 1989 4.4 mil-lion Americans worked for U.S. affili-ates of foreign companies -- 3.8 percentof all workers compared to 1.2 percentof all workers in 1974. At the sametime, U.S. owned companies employmany foreigners in their overseas op-eration. Major multinational compa-nies, regardless of national origin, con-sider locating facilities throughout theworld.
In a global economy, firms face com-petitors whose workforces receive differentlevels of pay and work under different rulesthan those in the U.S., requiring the nationto consider its labor relations from a broaderperspective than in a closed economy.
3. The declining value of the dollar andgreater reductions in unit labor costs in theU.S. than overseas increased the competi-tiveness of U.S. firms in the internationalmarketplace in the late 1980s, in contrastto the difficulties created by the high valueof the dollar in the earlier part of the decade.
Global integration has heightened in-terest in the ability of U.S. firms tocompete with foreign firms. One de-terminant of competitiveness is theexchange rate of the dollar. Using
2 Economic Report of the President, February 1994, Table 131.
3 In 1992 mainland China was the fifth largest importer to the U.S. (Japan, Canada, Mexico, and Germany were the
top four). China and Taiwan together are the third largest importer. The U.S. trade deficit with China is second
to that with Japan.4 The U.S. Patent Office determines the nationality of a patent on the basis of the residency of the applicant. Patents
given to subsidiaries of American firms overseas for inventions there are counted as foreign patents. while patent
given to U.S.-based subsidiaries of foreign firms are counted as U.S. patents.
3
15
1979 as an index of 100, the real(inflation adjusted) value of the dollarcompared to foreign currency of ourtrading partners rose to 159 in 1985,then fell back to 100 in 1992. Theresult was that U.S. firms faced amajor cost disadvantage in the mid-1980s, but have recovered since. Ourshare of world manufacturing exportsdropped in the mid-1980s, but hasreturned to its earlier level.5
The decline in the exchange rate of thedollar and slow growth of wages in theU.S. made the country a lower-wagecompetitor relative to several otheradvanced countries, as the tabulationof hourly compensation in dollars inmanufacturing in Exhibit I-1 shows.
The growth of productivity relative tothe growth of wages determines unit
labor costs, which also greatly affectscompetitiveness. In the U.S. outputper hour increased 2.4 percent a yearin manufacturing from 1979 to 1992,while nominal wages increased mod-estly more rapidly. In most of ourtrading partners, nominal wages in-creased considerably more rapidlythan productivity. The result was areduction in the relative unit labor costof U.S. products compared to productsin other countries.
Exhibit 1-2 shows movements in threemeasures of international competitive-ness. The real effective exchange rate;relative unit labor costs; and the rela-tive unit value or price of manufac-tured exports. All three show thesame trend, but the greatest increasein competitiveness is in unit laborcosts.
EXHIBIT I-1
Hourly Compensation Costs in Some Major Trading PartnersRelative to the United States: 1975 and 1992 (U.S. labor costs are scaled at 100)
1975 1992United States 100 100Belgium 101 136Denmark 99 124France 71 104Germany 100 160Italy 73 120Sweden 113 150United Kingdom 53 91Canada 94 106Japan 47 100Korea 5 31Taiwan 6 32
5 In 1991 the U.S. share of wo, Id exports of manufactures was 17.2 percent, which exceeded the level of 16.8 percentin 1980. U.S. Bureau of Census, statistical Abstract , 1993, Table 1264.
4
16
Inde
x, 1
985
= 1
00
120
110
100 90 80 70
EX
HIB
IT 1
-2
Mea
sure
s of
U.S
. Com
petit
iven
ess
..4.
4...
..
.**
. f I
Dec
linin
g re
lativ
eco
sts
and
Incr
easi
ng60
com
petit
iven
ess.
50
4.
%0.
'
S
1980
1981
1982
1983
1984
1985
1986
1987
1989
1990
1991
1992
1993
Rea
l Effe
ctiv
eR
elat
ive
Uni
t Lab
orR
elat
ive
Uni
t Val
ue o
fE
xcha
nge
Rat
eC
osts
In M
anuf
actu
ring
Man
ufac
ture
d E
xpor
ts
Sou
rce:
Inte
rnat
iona
l Mon
etar
y F
und.
17
18
4. Technology has changed the workperformed at many workplaces and willcontinue to do so into the future.
The most visible symbol of the newworld of work is the computer, whichis virtually ubiquitous in offices, facto-ries, and stores. In 1989 38 percentof workers used a computer on the job.Sixty percent of college graduates useda computer compared to just over eightpercent of persons who were not highschool graduates.6
Some technological changes requiremore skilled workers. Others down-grade existing skills. The current con-sensus is that the former predomi-nates, so chat technology has raisedthe demand for skills, responsibility,and knowledge. In manufacturingthere has been a marked increase inthe proportion of employees in moreskilled white collar jobs. Between1978 and 1993, for instance, the num-ber of professionals and managers indurable manufacturing increased by9.6 percent while the number of pro-duction workers fell by 33 percent.
Some technological changes haveblurred the line between employeesand supervisors and in the arrange-ment of work responsibilities. Thenew information technology has madetime-based competition a new mode ofbusiness and in some cases flattenedmanagement pyramids.
In an economic world where knowledgeis critical, firms that effectively develop anduse the brainpower of employees have anadvantage over competitors; workers who
lack the requisite skills and knowledge aredisadvantaged in the job market.
5. The structure of employment by in-dustry has shifted to service-producing sec-tors from goods-producing sectors, such asfrom manufacturing and agriculture.
In 1990 77 percent of non-agriculturalemployees worked in service producingactivities. This compares to 59 per-cent in 1950.7 Indicative of the changein structure, the number of Americansworking for colleges and universitiesin 1993 was virtually the same as thenumber working in the motor vehicleand equipment, blast furnace, andbasic steel product industries com-bined.
Manufacturing constituted 17 percentof all non-agricultural employment in1993 compared to 34 percent in 1950.Durable goods manufacturing employ-
merit has grown relative to non-dura-ble goods manufacturing employ-ment.
In agriculture, employment declinedfrom 7.2 million in 1950 to 3.2 millionin 1990, due in large part to a fall inself-employed workers and unpaidfamily workers.
The government share of non-agricul-tural employment has risen modestlysince 1960. In 1960 15.4 percent ofemployees on non-agricultural payrollswere employed by state, local, and thefederal governments. In 1993 17.1percent of employees on non-agricul-tural payrolls were government em-ployees.8 The federal share of em-
6 Statistical Abstract of the United States, 1992, Table 648.7 These are from the household data reported in Employment and Earnings, January 1994, Tables 23 and 24, and
include self-employed unpaid family workers. Establishment data that are limited to wage and salary workersgive slightly different figures.
19 6
ployment has fallen while the stateand local government share of employ-ment has risen.
as computer and data processing anddoctors' offices, grew over the period.
EXHIBIT 1-3Percent Change in Employment, Level of Employmentand Projected Change in Employment, by Occupation
1979 to 2005
Percent NumberChange, inActual Millions
1979-1992 in 1992
PercentChange,
Projected1992-2005
All Occupations 19.0 . . . . 121.1 . . . 21.8
Executive, Administrative & Managerial 50.4 . . . . 12.1 . . . 25.9Professional Specialty 43.0 . . . . 16.6 . . . 37.4Technicians and Related Support 57.6 . . . . 4.3. . . . 32.2Marketing and Sales 30.7 . . . . 13.0 ,. . . 20.6Service Occupations 24.6 . . . . 19.4 . . . 33.4Administrative Support, Clerical 15.0 . . . . 22.3 . . . 13.7Precision Production, Craft, Repair 4.3 . . . . 13.6 . . . 13.3Operators, Fabricators, Laborers 10.3 . . . . 16.3 . . . 9.5Agriculture, Forestry, Fishing 5.2.... 3.5. . . . 3.4
Non-agricultural employment grew es-pecially rapidly in industries with lowproductivity growth and in those withlow wages. The big gainers in employ-ment were wholesale trade; retailtrade; finance, insurance and real es-tate; and service industries, includinghealth care. Industries with rapidgrowth of labor productivity experi-enced falls in relative employment inthe economy as a whole and withinmanufacturing. Still, there are excep-tions to this pattern: employment insome industries with high pay, such
9
The new industrial composition of em-ployment demands workers with differentskills and with different responsibilities atthe job than in the past and has contributedto the relative decline in the ',umber of highpaying jobs for manual workers.
6. The occupational structure of theworkplace has shifted toward white collarjobs that require considerable education.9
The tabulation in Exhibit 1-3 showsthe percentage change in employmentby occupation in the period 1979 to1992 and that projected by the BLS
These figures are from establishment data which provide a longer and arguably more accurate measure ofgovernment employment than household survey data.The U.S. government changed its occupational classification in 1983 so that the figures are notstrictly comparable
for the period 1979-92.
2 07
for the period 1992 to 2005. The rap-idly growing managerial and adminis-trative, professional, technician andrelated service jobs are largely exemptpositions under the wage and hour lawand most are outside the definition of
as operators and laborers increased inthe past 13 years less rapidly than theaverage of all employment, and isprojected to increase less rapidly thanthe average in the period 1992 to 2005.Americans with high school degrees or
EXHIBIT 1-4
Number of Establishments and Firms and Number of Employees
Size Class
in Establishments and Firms, by Size Class 1992
Establishments (in 000s) Firms (in 000s)
Establishments Employees Firms Employees
0 to 4 3,245 5,675 2,764 4,8595 to 9 1,164 7,682 924 6,07110 to 19 727 9,786 550 7,38720 to 49 486 14,722 345 10,39450 to 99 167 11,477 113 7,749100 to 249 95 14,182 63 9,429250 to 499 24 8,133 18 6,259500 to 999 9 6,260 8 5,6561,000+ 5 11,353 8 31,465
'TOTAL 5,923 89,269 4,794 89,269
employees under the National LaborRelations Act. Compensation for theseemployees is relatively high and in-creased over the past 10 to 15 yearsmore rapidly than for other employees.These occupations also typically re-quire higher education.
The science and engineering workforcein private industry continued a longgrowth trend at an annual rate ofalmost four percent. The proportionof science and engineering jobs inmanufacturing increased from 5.0 per-cent in 1983 to 5.5 percent in 1989.
Employment of administrative sup-port and clerical positions, precisionproduction and craft employees as well
less education have historically filledthese jobs.
The growing high skill work force hasworkplace needs that arguably differ insome important ways from those of theworkers who were envisaged in traditionallabor laws.
7. The American workplace includesmillions of establishments and firms ofdifferent sizes, whose workplace practicesand outcomes differ depending in part onthe number of employees.
Exhibit 1-4 shows the number of estab-lishments and employees in thousandsby the size class of the establishment
21
or "legal entity" (firm) in the privatesector in 1992.10
At the extremes 5.7 million workersare employed in establishments withfewer than five employees and 13.4million in establishments with lessthan ten employees; whereas over 11.3million are employed in estab-lishments with over 1,000 employees.Thus 15 pr.rcent of American workersare in qtfice small establishments (lessthan ten employees) and nearly 13percent in the largest establishments.
Since large firms often have manyestablishments, the distribution byfirm size shows a greater concentra-tion among firms with over 1000 em-ployees than among establishments inthat size class. Firms with more than1000 employees employ 35.2 percent ofthe work force whereas firms with lessthan ten employees employ 12.2 per-cent of the work force.
In manufacturing, there is little sup-port for the claim that most employ-ment growth is generated by smallfirms. While small plants and firms doaccount for most newly-created jobs,they also contribute disproportionatelyto the number of jobs that disappear.Survival rates for new and existingmanufacturing jobs increase sharplywith employer size. Smaller manufac-turing firms and plants exhibit sharplyhigher gross rates of job creation butnot higher net rates because of theirhigher gross job destruction rates.11
Smaller enterprises pay lower wagesthan larger enterprises in the sameindustry, and are less likely to offerhealth and retirement benefits.Spending on insurance And retirementbenefits per worker inr ceases with thesize of enterprise. In the size catego-ries 1-99, 100-499 and 500 or more,health insurance and pensions costsper hour in March 1993 were respec-tively $1.09, $1.31 and $2.32.12 Mostfirms in the 1-24 size category do notprovide such benefits.
While smaller firms and estab-lishments do not offer the same wagesand benefits as larger firms, manyworkers have traditionally used themas first jobs that lead to better employ-ment outcomes. The lack of formalstructure also makes many smallworkplaces attractive to employees.
Health benefits for retirees, financedin part by former employers apart fromMedicare were provicted in 1990 by 15percent of establishments with fewerthan 100 workers and by 45 percentof establishments with 100 or moreworkers.13
Most enterprises in the United Statesdetermine compensation and workingconditions on their own, without thecoordination of employer associations.This contrasts with the situation inWestern Europe or Japan, where em-ployer associations are a decisive fac-tor in determining wages and hours.In Europe agreements between asso-
10 These data are for workplaces covered by state unemployment insurance laws and thus exclude some firms,self-employed workers, railroad employees, agricultural workers, and some others.
11 Steven J. Davis, John Haltiwanger, Scott Schuh, Small Business and Job Creation: Disawingtkjiy1,41121adieassessing the Facts, October 1993.
12 (USDL: 93-220)13 CWC, August 1993, p. 1 .
9
22
ciations and unions usually extend toestablishments of all sizes.
The disparity between smaller andlarger firms creates different environmentsfor worker-management relations in theUnited States, with firms and workers hav-ing different options and needs dependingon firm size.//
8. During the past 10 to 20 years manyproduct and financial markets in the U.S.have faced turbulent conditions throughderegulation of rates and prices and theremoval of barriers of entry; or throughgovernment cutbacks in defense or otherprograms.
The product markets for raiiroad.3,airlines, trucking, natural gas, tele-phone and cable television are themajor fields of de-regulation, althoughsome public services have also beenprivatized. De-regulation has affectedemployment and wages and labormanagement relations in these sectors.
Changes in financial markets have ledto considerable mergers and restruc-turing of firms and battles for controlof corporations that can affect theemployment k id well-being of employ-ees. In some cases employees benefitin the long run from changes in own-ership, as new managers lead the firmin more productive directions. In othercases, the consequences are adverse foremployees, with new owners downsiz-ing the firm and demanding wage andbenefit concessions from workers.
Defense-industry cutbacks have cre-ated major economic problems formany enterprises, communities andfor selected occupations. Occupationswith a significant reliance on militaryprograms include engineers, particu-larly aeronautical and astronauticalengineers, and aircraft assemblers,and numerical tool controllers.
Turbulence in product and financialmarkets tends to create insecurity at work-places and can upset labor-managementrelations in ways that raise the costs ofstructural change.
3. The ChangingWorkforce
The number of workers, the demo-graphic and ethnic composition of theAmerican workforce and their educationallevels have changed over the past severaldecades. In 1950 firms hired workers froma civilian labor force of 62.2 million persons.In 1993 the American workforce of 129.5million persons was more diverse and bettereducated.
9. A higher proportion of Americanswork or seek work than ever before, due inlarge part to the movement of women intothe workforce.
In 1950 59.2 percent of the populationwas in the civilian labor force; in 1993the percentage had risen to 66.2. Theprincipal reason is the movement ofwomen into the workforce. In 195033.9 percent of females of working agewere in the labor force; in 1993, 57.9percent were in the labor force. Thepercentage is projected to increasefurther to 63.0 percent in 2005. In1993 58 percent of married womenwith children under six years of ageworked.
By contrast, in the same period theproportion of males in the civilianwork force dropped from 86.4 percentto 75.4 percent, due in large part todeclines in the age of retirement. Thelabor participation rate for menprojected to continue to decline.
910
The Increasing Responsibility of Women Workersfor Family Financial Needs
Percent of All Families with Children in Each Family Type
SOURCE: Institute for Women's Policy Research calculations based on Hayghe,1990; U.S. Bureau of Labor Statistics, 1993.
2 4 11
Exhibit 1-5 shows that the compositionof families by earnings has beengreatly altered. Many more familieshave two earners than in the past.Many more families have single fer, aleearners than in the past. The propor-tion of families fitting the traditional"Ozzie and Harriet" pattern of themale working in the labor market andthe female working exclusively inhousehold activities fell from a major-ity to a minority of families.
The Bureau of Labor Statistics pro-jects, in its moderate scenario, a lowerrate of growth in the civilian workforcein the period 1992 to 2005 comparedto 1979 to 1992. Annual growth ratesare projected to be 1.3 percent a yearfor the period 1992 to 2005 instead of1.5 percent a year in the years 1979to 1992, or a net increase in the civilianlabor force of 23.5 million in the 1992to 2005 period compared to 22.0 mil-lion in the 1979 to 1992 period.
The increased role of women as bothbreadwinners and homemakers challengestraditional work arrangements and raisesdemands for flexible working hours, job-sharing arrangements, child care benefits,and parental leave.
10. The ethnic composition of the workforce has changed.
In 1954 approximately 10 percent ofthe workforce was non-White; in early1994, 15.2 percent of the workforcewas non-White. The Hispanic shareof the work-force reached 9.0 percentin early 1994, in part because ofsizeable immigration from Mexico andLatin America. The proportion of thepopulation who were Asian or Pacific
Islanders nearly doubled from 1980 to1994, though from a small base.14
In the 1992 to 2005 period the racialcomposition of the labor force is ex-pected to continue to change, as thefollowing annual growth rates for thelabor force show:
1979-199215 1992-2005
White 1 3 1.1Black 2 0 1.7Asian 5.2 4.7Hispanic 4 3 3.9
Almost two-thirds of entrants to thecivilian labor force in 1992 to 2005 areprojected to be women and racial mi-norities and only one-third are pro-jected to be White males.
The changing composition of the work-force challenges employers and labor organi-zations to develop training and employmentpractices that take account of the diversebackgrounds of employees and that guaran-tee equal employment opportunity for all.
11. The years of schooling attained bythe workforce have increased greatly.
In 1970 25.9 percent of the labor forceaged 25-64 years had more than 12years of schooling; 38 percent had ahigh school degree; and 36 percent hadless than high school education. In1992 52 percent of those aged 25-64had more than 12 years of schooling:25.7 percent had some college work;26.7 percent were college graduates.
14 See Employment and Earnings, February 1994.15 The figures for Hispanics are from 1980 to 1902. They are for any race.
12
25
Despite the huge increase in educa-tional attainment more than 20 per-cent of students drop out of high school
50 percent in many inner cityschools. In October 1991 in the agegroup 16-24, only 64.3 percent of Incawith less than a high school diplomawere employed compared to 80.7 per-cent of men who had completed highschool.
Many high school dropouts go on toget a general education developmentcertificate (GED), but GEDs are animperfect substitute for a high schooldiploma in the job market. In addi-tion, much training in workplaces goesto white collar and more educatedworkers, so that the less educated donot easily make up for their skilldeficiencies through employer-basedtraining, although some employershave exemplary programs.
The military has historically trainedmany male high school graduates anduntil recently, many high school drop-out men as well. The decline in thesize of the military has made this formof education and route into the jobmarket less common among the young.
In 1989 about one-quarter of all stu-dents enrolled in U.S. graduate scienceand engineering departments werenon-U.S. citizens. In engineering,mathematics and the computer sci-ences, the majority of Ph.D. recipients(over 55 percent) were non-UnitedStates citizens.
Traditional employee-management rela-tions and regulations may not fit well thenew highly educated workforce. The cur-rent training system does not meet theneeds of less educated workers.
12. The age structure of the workforcehas changed and will change greatly in the
next decade as the "baby boom" generationages.
The median age of the labor force was40.5 in 1962. With the post-WorldWar H baby boom, the median agedeclined to 34.6 in 1980. It increasedto 36.6 in 1990 and is projected to riseto 40.5 in 2005.
The annual actual and projectedgrowth rates for 16-24, 25-54, and 55and over persons in the labor forcefrom 1979 to 1992 and from 1992 to2005 are shown below:
Age 1970-1992 1992-200516-24 -1.7 L325-54 2.7 1.155 and over . . . 0.2 2.5
The most striking change is the accel-eration in the growth rate of olderworkers compared to the decelerationin the growth of "prime age" workers.
In the period 1992 to 2005 the Bureauof Labor Statistics projects that 51.2million persons will enter the civilianlabor force and 27.7 million personswill leave due to retirements, deathsand withdrawals. Almost twice asmany people will enter the labor forceas leave in this period for a net growthof 23.5 million.
The increase in the workforce aged 55and older (combined with enhanced longev-ity) raises questions about the adequacy ofpensions and health benefits, particularly insmall enterprises, and the feasibility offinancing the trend toward early retirement.
13. There has been an increased flow ofimmigrants, many from developing coun-tries, into the United States.
Large numbers have come legally, butmany also have come illegally. As aresult, the proportion of the population
2613
who are foreign born has risen from4.7 percent in 1960 to 8.4 percent in1990 according to Census of Popula-tion data. Since the Census fails tocount perhaps a third of illegal immi-grants,16 and since immigrants havehigher labor participation rates thanthe native-born, the actual proportionof workers who are foreign born maybe as high as nine percent.
Following the Immigration Act of1964, immigrants from developingcountries have made up the bulk ofAmerican immigrants. In the 1950s,only a third of immigrants came fromdeveloping countries; the largest coun-tries for legal immigration were Ger-many, Canada, Mexico, the UnitedKingdom and Italy. In the 1980... S4percent of immigrants were from de-veloping countries; the largest sourcecountries were Mexico, the Philip-pines, China, Korea, and Vietnam.The increased proportion of immi-grants from poorer countries has re-duced the education and skill distribu-tion of immigrants compared to native-boi-n Americans. Many immigrantscome with advanced training and de-grees (such as Indian doctors, Filipinonurses et al) but many come with littleschooling, largely from Mexico andother Latin American and Caribbeancountries.
The influx of less skilled immigrantswas such that about one in five Ameri-can workers with less than high schooleducation were foreign born in the1980s. The geographic concentrationof immigrants in gateway cities andstates places substantial burdens on
those areas in providing social servicesto a growing low-income population.
Immigrants are disproportionately em-ployed in low wage import-competingindustries. Illegal immigrants makeup a significant share of employmentin several sectors: apparel manufactur-ing; leather and footwear; privatehousehold jobs. In addition, manyimmigrants, particularly those who en-ter the country illegally, work in poorconditions outside the normal rules ofthe labor market.
Immigration links American wages andworking conditions to those in source coun-tries. Immigrants often take difficult andlow-paying jobs, which increases the outputof the country. But by competing with lessskilled native-born Americans, they alsocontribute to the falling real earnings andweak job opportunities for some native-bornworkers.
4. Changing LaborMarket Outcomes
The changes in the economy, technology,workforce, and competitive conditions sum-marized above have interacted within theU.S. labor relations system to produce em-ployment and wage outcomes that differgreatly from those in the past and fall shortof meeting the needs of many Americans.
14. The United States has been moresuccessful in creating jobs for those whoseek work than most other developed coun-tries, but unemployment remains high for
16 While our statistical data undercount "undocumented aliens", both the Census of Population and CurrentPopulation Survey rind sizeable numbers. The current Immigration and Naturalization Service estimate is that in
1992 there were 3.2 million undocumented workers.
14
2 7
the less skilled; many American workers areinsecure about their jobs.
The unemployment rate of the civilianlabor force was 5.3 percent in 1950 and5.5 percent in 1990. The figure for1993 was 6.7 percent of the entirelabor force (6.8 percent of the civilianlabor force). The averages of unem-ployment rates for the decades are asfollows: 1950s 4.5; 1960s 4.8; 1970s
6.2; 1980s - 7.3. By contrast, averageunemployment in Western Europe inthe 1980s was 9.1 percent.
Unemployment in the U.S. affectsmany workers. In 1990, 14.7 percentof the workforce experienced somejoblessness. Spells of unemploymentwere shorter than in other advancedcountries American workers unem-ployed in 1990 had a median spell of12.0 weeks. But since statistics onlength of unemployment relate solelyto those currently unemployed, by thetime these workers find a job, they willhave been jobless longer than 12weeks. The amount of time they arelikely to be jobless when they concludetheir spell of unemployment will beroughly double the reported 12 weeks-- or nearly half a year.
A 1991 Family and Workplace Insti-tute survey found that 42 percent ofworkers reported that during the pastyear their places of employment expe-rienced downsizing or permanent cut-backs of the workforce; 28 percentreported cutbacks in the number ofmanagers. Many workers feared fortheir job security; 18 percent felt itvery likely or likely they would be laidoff temporarily next year and 17 per-
cent reported that likely or very likelythey would lose their job perma-nently.17
Unemployment rates vary inverselywith years of schooling. In 1992, theunemployment rate for those with lessthan a high school education was 11.4percent; for those with only a highschool education, 6.8 percent; for thosewith a bachelor degree, 3.5 percent;while for those with a professionaldegree, 1.4 percent. Unemploymentrates have also been lower for whitecollar workers than for blue collarworkers, but in recent years the gapin rates between these two groups hasdiminished.
Unemployment rates for minorities areconsiderably higher than for Whites.18In 1993 12.9 percent of Blacks wereunemployed compared to 6.0 percentof Whites. For young Blacks, rates ofunemployment are high, and many donot participate in the workforce at all.In 1993 just 50.8 percent of 16-24 yearold Blacks not enrolled in school wereemployed compared to 72.8 percent of16-24 year old Whites not enrolled inschool. For those in the labor force,the rate of unemployment was 26.8percent for 16-24 year old not enrolledBlacks compared to 11.0 percent forsimilarly aged not enrolled Whites,and 15.9 percent for Hispanics aged16-24 not enrolled in school.
In the four previous recessions priorto 1990 44 percent of the increase injob osers were on temporary layoff --expecting recall to their previous em-ployer. The remaining 56 percent ofadditional recession-induced job losers
17 Family and Workplace Institute, The Changing Workforce. Highlights of a National Study, 1993, Table 3.18 The data for unemployment in this section comes largely from Employment and Earnings, January 1994,
household data annual averages, Tables 3 and 6.
15
23
were permanent job losers, personswho did not expect recall. But fromJuly 1990 to June 1992, when unem-ployment peaked, only 14 percent ofthe increase in job losers expected tobe recalled, whereas 86 percent werepermanent job losers.
some two percent per year. For theperiod 1973 to 1992, estimates of com-pensation per year from establishmentand household surveys deflated by theCPI show a very different pattern --stagnation or decline in real earnings.The compound annual averagechanges in earnings from the different
EXHIBIT 1-6The Stagnation of Real Earnings Growth in Establishment.
and H usehold Surveys 1973-1993
Compound GrowthRate Per Year
Establishment Survey DataAverage hourly earnings, private nonagriculture,Production and Nonsupervisory Workers, 1973-1993 -0.7%Hourly Compensation, Business Section, 1973-1992 0.4%Total Compensation, Empoyment Cost Index, 1979-1993 0.1%Compensation of Full-time Equivalent Workers, 1975-1991 0.2%
Household Survey DataMedian Weekly Earnings of Full-time Workers, 1979-1993
All -0.3Male. 25 and over -1.0Female, 25 and over -0.4
Median Annual Income, Full-time Workers, 1973-1992Male -0.5Female 0.7
The unemployment insurance system,which was intended for workers temporarilylaid off, is not well-suited to help thosesuffering from structural unemploymentproblems due to permanent job loss oreducational deficiencies.
15. The real hourly compensation ofAmerican workers stagnated in the past twodecades and actually fell for male workers-- developments unprecedented in the past75 years in this country.
From 1929 to 1973 earnings of Ameri-can workers increased in real terms by
series are given in Exhibit 1-6.
Compensation series differ in variousways -- the sample covered; whetheror not they include employee benefitsor social insurance; time coverage (forsome of the series we report figuresgoing back to 1973, others begin inlater years, in others we report figuresfrom 1979) -- but they tell the samestory: that real hourly pay did notincrease in the 1980s to early 1990s atanything like the historic pattern oftwo percent a year.19 The figures thatrelate to wages and salaries show
29
16
smaller growth of real pay than thosethat include benefits; those for produc-tion workers and those for male work-ers show the biggest drops.
The slow growth of U.S. wages hasreduced the gap between the real payof American workers and workers inother advanced countries. Deflatingwages by OECD purchasing powerparity price indices (which measurehow much different currencies buy inthe consumer market) shows thatworkers in several European countriessuch as Germany, Belgium and Nor-way have attained roughly comparable
Less than High School4 Years High
School1-3 Years of College
4 or More Years College
Ratio 4 or m,,re Collegeto 4 years of High School
hourly real earnings to Americanworkers.20
For the non-farm business sector as awhole, output per hour increased atotal of 13.8 percent from 1979 to 1992while hourly compensation deflated bythe consumer price index increased byjust 3.6 percent. One reason for thisis the greater increase in the consumer
price index than in the deflator foroutput. This implies an increased gapbetween the cost of labor relative tothe producer prices (which affects em-ployment decisions by firms) and thepurchasing power of wages relative tothe consumer prices (which affectsliving standards).
16. The gap in earnings between higherpaid and more educated or skilled workersand lower paid and less educated workershas increased greatly in the U.S.
The median annual income, in 1991dollars, of men and women according
Men Women1972 1920 1972 199026,462 20,306 15,117 14,338
33,961 27,629 18,911 19,09338,117 32,892 21,530 23,16148,299 44,310 28,971 31,668
1.42 1.53 1.60 1.66
to educational attainment in 1972 and1990 are reported in tabular form:21
These data show that real earnings fellmore for male workers with less than 4 ormore years of college than for college gradu-ates and have fallen for women with lessthan high school education.
19 We have used the CPI deflator in these calculations. Similar results are obtained if we use the const.mption deflatorfrom the national income accounts, or variant CPI series.
20 Measured by exchange rates, workers in these countries are higher paid than Americans, but the exchange ratesdo not reflect the higher cost of living in other countries. All purchasing power parity measures show that pricesin most other OECD countries are higher than in the U.S. at 1993 exchange reates.
21 These data were presented to the Commission by the Bureau of Labor Statistics on May 24, 1993 as part of theBLS' presentation of facts.
17
30
A group that has fared particularlypoorly in terms of earnings growth hasbeen younger men, particularly thosewith less than college education. Inaddition to facing falling real earnings,these men are less likely to havepensions V- similarly aged menyears ago. 22 Their ability to formfamilies and buy homes has beencompromised by their labor marketplight.
The usual weekly earnings, in 1991dollars, of workers in managerial and
Managerial and ProfessionalService
Ratio
professional occupations and in serviceoccupations in 1983 and 1991 arereported above:
These data show a pattern much likethat in education: falling real earnings formen, particularly those with low wages, anda rising ratio of earnings for the high paidrelative to the low paid.
Several factors have been proposed ascontributing to the widening earningsinequality. Some analysts stress theimportance of trade, particularly withless developed countries; others stresstechnological developments; otherspoint out that the influx of less skilledimmigrants added to the supply of lessskilled workers in the job market;
others have noted that the growth ofthe college workforce decelerated dur-ing the 1980s. In addition to thesefactors, the decline of unions, whohistorically reduce earnings differen-tials within establishments and bringthe earnings of production workerscloser to that of supervisory workers,has contributed to the rise in inequal-ity. For workers with very low earn-ings, the fall in the value of theminimum wage relative to the pricelevel has also played a role. Even afterthe 1990 and 1991 increases in the
Men Women1983 1991 1983 1991
706 753 489 527349 330 237 244
2.02 2.28 2.06 2.16
minimum, it was at an historically lowlevel relative to average earnings.
17. The number of low wage fullyemployed workers in the U.S. has growngreatly, with the result that a sizeableproportion of U.S. workers are paid mark-edly less than comparable workers in otheradvanced countries; by contrast, high paidU.S. workers earn more than high paidworkers in other advanced countries.
About 18 percent of the nation's year-round full-time workers earned lessthan $13,091 in 1992 -- a 50 percentincrease over the 12 percent who hadlow earnings in 1979. These workersconsist disproportionately of women,
22 Coverage of full-time male employeees in pension plans decreased from 54 percent in 1972 to 51 percent in 1988.
Because many plans often require workers to make voluntary contributions, low wage younger workers have a
lower tendency to join such plans when they are available, than other workers.
18
31
young workers, Blacks, Hispanics, andthe less educated.
Measures of the gap between the earn-ings of workers in the highest decileof earnings and thoso, in the lowestdecile show that the U.S. earningsdistribution among workers has wid-ened greatly and is the most unequalamong developed countries. OECDdata shows that male workers in thebottom decile earn 38 percent of me-dian earnings in the United Stateswhereas the bottom decile of workersearn 68 percent of the median earningsin Western Europe. In the upperrungs of the earnings distribution,male workers in the top decile in theU.S. earn 2.14 times median earningswhereas male workers in the top decilein most European countries earn 1.4to 1.7 times the median.23 The ratioof earnings in the top decile to thelowest decile in the U.S. is 5.63 -- byfar the widest among OECD countries.
As a result of stagnant or decliningreal earnings in the U.S. and a wideand increasingly unequal earnings dis-tribution, lower paid workers in theU.S. earn markedly less than compa-rable workers in Western Europe. Thebottom third of American workers earnless in terms of the purchasing powerof their pay than the bottom third ofworkers in such European countries asGermany, France, Belgium. Tenthdecile male workers in the U.S. arepaid barely half what tenth decile maleworkers make in Europe. In addition,many low-paid U.S. workers lackhealth insurance and other fringe
benefits that are provided fcr all work-ers in other countries.
The stagnation of real earnings andincreased inequality of earnings is bifurcat-ing the U.S. labor market, with an uppertier of high wage skilled workers and anincreasing "underclass" of low paid labor.
18. Americans put in more hours ofwork than workers in other advanced coun-tries except for Japan.
After having led the world in reducinghours worked, U.S. workers workabout 200 hours more during a yearthan workers in Europe. For instance,in 1991 the OECD reports that Ameri-cans worked 1,737 hours over the yearcompared to 1,557 hours for Germans,1,540 hours for the French, and 1,423hours by the Dutch.24
A major reason for the difference inworking time is the greater length ofvacations in Europe. Americans withsufficient seniority typically get twoweeks of vacation, though some getmore and others less. By contrast,Europeans typically obtain 4-5 weekvacations, often legally mandated,from the first year hired.
The greater work time of Americans isa relatively new phenomenon. Thelength of vacation and holiday time inthe U.S. for fully employed workersdeclined modestly in the past 20 years.Vacation and holiday time has in-creased in such European countries asGermany.
23 The United Kingdom and France are exceptions to the OECD pattern, with high decile earners earning about twicewhat median earners make.
24 OECD Employment Outlook July 1993, Table B. Our figures arc for dependent employment. The data showsthat the Spanish work more hours than Americans, but Spain is a much lower income society.
32 19
Many American workers work non-normal hours in different locations. In1991 6.2 percent of workers were mul-tiple job-holders, reporting more thanone job; 15.5 percent were on flexibleschedules, compared to 12.3 percent in1985; and 17.8 percent reported thatthey were on shift schedules. In ad-dition, 18.3 percent of workers re-ported that they did job-related workat home. While many of these wereself-employed, 15 million wage andsalary workers also reported workingat home.
With a higher fraction of the workingage population employed and thoseworking averaging more hours thanworkers in Europe, Americans spendmore time at work than people in otheradvanced countries. Surveys of pref-erences for work show that Americansalso want to work more hours andreport working harder than Europeanworkers.
The fact that Americans work so manyhours makes conditions at work a majorfactor in the economic well-being of citizens.
19. The gap in earnings between menand women has declined in recent years,though women continue to earn less. Thegap in earnings by race has fallen amongwomen, but the earnings of black men were
Year White Men White Women
The following tabulations give medianweekly earnings by race and gender for fulltime wage and salary workers (in 1993dollars).
The earnings of women, which havehistorically been lower paid than men,rose relative to those for men in the19S9s, but were still just 81 percent ofmale earnings for Whites in 1993.Some of the difference in pay by genderis attributable to differences in workexperience or to differences in industryor occupation, but there still remainsan unexplained residual gap in anygiven labor market category.
The gap between the earnings of Blackwomen and those of White women wasrelatively narrow. In 1970 Blackwomen earned 85 percent of Whitewomen. In 1993 they earned 87 per-cent as much as White women. Withineducational groups Black womenearned approximately as much asWhite women, so that the remainingdifference is attributable to differencesin educational attainment.
The earnings of Black men, which hadrisen rapidly relative to those of Whitemen in the late 1960s to early 1970sfollowing passage of the Civil RightsAct of 1964, stagnated relative to thoseof White men since 1970. In 1970
Black Men Black Women
1970* 584 353 417 3021980 563 356 431 323
1993 531 403 392 349
*The 1970 Figures for Blacks refer to "Blacks and others."
no better relative to that of Whites in 1993than they were in 1970.
Black men earned 71 percent of whatwhite men earned; in 1980 they earned77 percent; in 1993, they earned 72percent.
3320
While the U.S. reduced earnings differ-entials based on gender and race, consider-able differences remain.
20. The economy, the labor market andthe legal system produce many jobs thatdiverge from full-time continuing positionswith a single employer.
There is no standard definition or datato encompass worker-managementrelations commonly grouped under thelabel "contingent workers.' This termcovers part-time workers, some ofwhom are voluntarily part-time, someof whom are multiple job holders. Italso includes employees of temporaryhelp agencies (who may be full-timeworkers), and some of the self-em-ployed, including "owner-operators" orindependent contractors with only asingle contract or employer. Ratherthan grouping these disparate groupsunder one rubric, we consider eachseparately.
Part-time workers have been a rela-tively constant share of the Americanworkers at about 18 percent of theworkforce in the 1980s to early 1990s.Many part-time workers choose part-time work voluntarily, but the propor-tion who would prefer full-time workhas trended upward. In 1992 6.5million workers were categorized asinvoluntary part-timers out of a totalof 20.6 million part timers.
Whether voluntary or involuntary,part-time workers are lower paid perhour than full-time workers; havehigher turnover rates; are dispropor-tionately young and female; and aremore likely to work for employers whodo not offer pensions or health insur-
ance, Perhaps seven million part-tim-ers work fewer than 1000 hours peryear and are exempt from EmployeeRetirement Income Security Act andFamily and Medical Leave Act(FMLA) benefits. Unemployment In-surance (UI) state earnings and re-quirements to be available for full-timework exclude most part-timers from UIbenefits.The Department of Labor estimatesthat in 1992 there were 2.5 milliontemporary employees, approximatelyhalf hired through temporary agenciesand half hired directly by employers.The number of workers in the tempo-rary help services or help supply serv-ices industries more than tripled from1979 to 1992. These workers aredisproportionately young, female, andBlack and tend to be in relatively lowwage occupations.
Self-employed workers differ greatlyfrom part-time and temporary workersand include some of the nation's mosthighly educated and high paid work-ers. Independent contractors are in-cluded in the self-employed; some ofthem work for a single employer, pos-sibly as a means for avoiding virtuallyall of the nation's labor laws.
European countries and Japan drawsomewhat different lines between con-tingent and other workers.25 Euro-pean countries distinguish betweenworkers with permanent contracts,who are difficult to dismiss or lay off,and those with temporary employmentcontracts. The proportion of workerson temporary contracts ranges widely,from 5.3 percent in the United King-dom to 32.2 percent in Spain. Theproportion of the labor force that isinvoluntary part-time is higher in the
25 The data in this paragraph are largely from OECD Employment Outlook, July 1993.
21
3 4
United States than in other countries,but the proportion who are part-timeis higher in many European countriesthan in the U.S., in part because ofwork-sharing or child-care arrange-ments.
The increase in "contingent work" inthe U.S. is largely the result of theway in which employers cffer jobs toincrease flexibility with uncertainproduct demand and to reduce laborcosts by retaining a smaller core ofyear round full-time workers who re-ceive full benefits which are not givento contingent workers; and of legal andtax arrangements that facilitate theformation of "owner-operator" arrange-ments rather than employer-employeearrangements.
The growing number of "contingent" andother non-standard workers poses the prob-lem of how to balance employers' needs forflexibility with workers' needs for adequateincome protections, job security and theapplication of public laws that these ar-rangements often preclude, including laborprotection and labor-relations statutes.
21. A rising number of America's work-ing-age population is involved in illegalactivity, for which they have come undersupervision of the criminal justice system,which has greatly expanded its employment.
In 1991 789 thousand persons werefederal and state prisoners and 426thousand were in jails, for a total ofover 1.2 million. Relative to the popu-lation the number of prisoners hasmore than tripled since 1970.
Nearly 95 percent of state prisonersare men of working age and 91 percent
of jail inmates are men. These figuresimply that approximately 1.7 percentof the potential male work force in1991 was incarcerated. Rates of re-cidivism are high, so that relativelyfew of these men are likely to berehabiliated into productive membersof the workforce. In 1990, an addi-tional 3.2 million persons were onprobation or paroled. The total num-ber under supervision of the criminaljustice system is thus equivalent to 6.4percent of the 1991 male civilianworkforce of 68.4 million persons.
Of those in state prisons, in 1991 41.2percent had less than 12 years ofschooling;26 47.3 percent were Black;and 31 percent were not employedprior to their arrest. The rates ofincarceration for young less educatedmen, particularly Blacks, are extraor-dinarily high. Many inner city youthsreport that they can earn more fromcrime than from legitimate employ-ment and report substantial opportu-nities for illegal earnings.
In 1990 1.7 million workers were em-ployed in the criminal justice systemproviding police protection, legal serv-ices, correctional work, and the like.In the private sector guards andwatchmen are one of the fastest grow-ing occupations.
The large number of young Americanmen involved in crime is a major drag onthe economy, costing the U.S. considerablehuman and other resources far beyond thoseof any other advanced country.
22. The measured incidence rates ofoccupational injury and illness per full-timeworker shows little improvement over the
26 The 1986 data show 61.6 percent with less than 12 years of schooling. A change in the survey question produced
a sizeable reduction in the proportion in that group.
22
35
past decade. Fatal accidents declined butthe number of workdays lost per full-timeemployee due to occupational injury andillness has risen; and workers' compensationcosts have risen sharply.
Occupational injury rates per 100 full-time workers were unchanged in therange of 7.6 to 8.7 in the 19808.27 Lostworkday cases per 100 full-time work-ers were in the 3.4 to 4.0 range. Butthe number of lost workdays per 100full-time workers rose from around 55days in the 1970s to over 80 days inthe early 1990s, implying that thosewho are sick or injured are out longerthan in the past.
Fatal accidents fell. Among the highestfatal accident workplaces are those intransportation, construction, services,agriculture and manufacturing in thatorder. About one-third of the 6,083fatalities due to work injuries in 1992resulted from highway accidents orhomicides, each of which accounted for1,000 deaths apiece.
The number of workers covered byworkers' compensation insurance grewfrom 36.9 million in 1950 to 95.1million in 1990. Workers' compensa-tion costs rose from 1.11 percent ofpayrolls in 1970 to 2.27 percent ofpayrolls in 1989. Medical and hospi-talization benefits reached $16.8 bil-lion in 1990. The rise in medical andhospitalization costs has been particu-larly sharp in the past decade.
In the first half of 1993 17 statelegislatures introduced initiatives tochange workers' compensation. Tenstates, by 1993, mandated joint labor-management health and safety com-
mittees in enterprises of a specifiedsize (often 11 or more ,inployees) orwith above average health and safetyproblems as reflected in workers' com-pensation records.
While comparisons of the level of U.S.and Canadian rates of workplace in-jury and sickness are subject to manyproblems, the trend rate in Canada isstrikingly different from that in theU.S. Work-related accident rates de-clined in Canada from the early 1970'sthrough 1992 and fell most rapidly inOntario, which made a major effort toreduce accidents through joint healthand safety committees and govern-ment-sponsored health and safety edu-cation.
America's occupational health andsafety record has not improved to the extentthat seems possible, with the result thatwork injuries are producing rising costs forfirms, workers, and the economy.
5. Labor RelationsOutcomes
Collective bargaining governs a declin-ing fraction of workplaces and the work-force. Government regulations governmany more subjects and have become morepervasive, with increased reliance on admin-istrative and court procedures to resolveissues of disagreement between employeesand firms in the new economic environment.
23. The prevalence of collective bar-gaining has declined, as collective bargain-
27 Some of the lack of improvement in occupational health and safety injury rates may be due to changes in reporting,
as the nation recognizes new forms of occupation-related health and safety problems.
23
36
ing agreements have not been negotiated formany new worksites and sectors.
In 1993 the proportion of private sectornonagricultural workers who were un-ion members was 11.2 percent, whichis less than one-third the 35 percentor so covered in the 1950s. By con-trast, over a third of public sectorworkers were union members in 1993,compared with 10 to 11 percent in the1950s.
24. Overt conflict in the form of strikesor lockouts declined appreciably in the 1980sover levels of the earlier post-World War IIyears.
The number of work stoppages involv-ing 1,000 or more workers and thenumber of workers involved in thesedisputes per year has dropped sharplyin the past two decades, as the follow-ing tabulation shows:
The decline in collective bargaining inthe private sector has created an arena foremployee-management relations in whichmost employees have no independent or-ganization to discuss issues with manage-ment.
Stoppages Workers1950s 352 1,588,0001960a 283 1,234,0001970s 289 1,488,0001980s 83 507,000
In 1950 0.26 percent of working timewas lost due to strikes. In 1990 the daysidle constituted 0.02 percent of estimatedworking time.
In 1990 to 1992 the number of stop-pages involving 1,000 workers or moreand the number of workers involvedin these stoppages continued to de-cline. In 1992 there were 35 suchstoppages involving 182 thousandworkers.
25. Government regulations of theworkplace have increased greatly.
The number of statutes affecting theworkplace, and the related regulations,have increased significantly over thepast 25 years under the administra-tions of both political parties (seeChapter IV of this report). The enact-ment of ERISA, OSHA, the Immigra-tion Reform and Control Act, Familyand Medical Leave, and Americanswith Disabilities Acts are illustrativeof major regulatory developments.
At the same time the appropriationsfor organization and staff to secureenforcement have not kept pace withthe enlarged responsibilities of federalagencies. A significant developmenthas been the enactment of the Admin-istrative Procedures Act of 1990 whichauthorizes negotiated rule-making.But these procedures have been usedinfrequently.
The administration of regulation hasseldom resorted to alternative disputeresolution methods. An important de-velopment has been the experience inthe Philadelphia area.28
In contrast to the relatively cents alizedU.S. regulatory system, most Euro-pean countries rely on elected groupsof employees in "works councils" tomeet with managers to determineworkplace conditions and monitor corn-
28 See, A Cost Analysis of the Department of Labor's Philadelphia ADR Pilot Project, August 26, 1993.
3724
pliance with national labor regula-tions.
The growth of federal regulations of theworkplace leaves less room for local partiesto determine the workplace rules that bestmeet the needs of their situations.
The Commission's findings with respectto the economy and labor market for Ameri-can workers are set forth at the end of thisSection. There is, of course, nothing sacro-sanct about the 25 points around which wehave organized our discussion. Some read-ers may prefer a more concise or a moreelaborate listing of facts. Some may prefergreater emphasis on some facts rather thanothers. This said, the overall picture of thechanging environment for worker-manage-ment relations given here is an arrestingone.
The evidence shows that the economyand workforce have changed greatly inrecent years. This is not the first period ofmassive change in the labor market: themovement of labor from agriculture to in-dustry in the early part of the century, thegrowth of the mass production industries,the Great Depression, the boom of WorldWar II. Whether the current restructuringis greater or smaller than earlier transfor-mations need not be decided.29 In terms ofthe Commission's charge, the key finding isthat the changes affect the working lives ofnearly all Americans and firms, and pose amajor challenge to worker-management re-lations.
As noted, some the changes describedin this chapter pose major long term prob-lems for our society. The low rate of growthof productivity makes it difficult for firmsand workers to produce the continuallyrising living standards that have markedthe economic history of our nation. Theglobalization of economic activity placesfirms and workers in greater competitionwith advanced countries that have evolveddifferent rules of work and with less devel-oped countries where pay is much lowerthan in the U.S. It makes competitivenessdepend on fluctuations in exchange rates,almost regardless of what employers andworkers do.
The increased demand for educatedworkers due to changes in the mix ofindustries and occupations and to techno-logical changes and the growth of the edu-cated workforce makes it critical thatAmericans obtain adequate schooling andjob training. They also pose a problem forthe country in finding ways to employ lesseducated workers at wages that enable themto support families at reasonable livingstandards.
The changing composition of the work-force more educated; more female, oftenpart of a two-earner family; more likely tobe members of a minority group; and gettingolder as the baby boomers age poseschallenges to traditional modes of compen-sation and organization of work schedulesand makes the provision of equal opportu-nity for all increasingly critical to our eco-nomic success.
The growth of contingent work andother forms of employment that break themold of more permanent employment witha single employer raise questions about the
29 The 1994 Lconomic Report of the President noted that changes in the structure of industry, measuredby one-half
the sum of the absolute value of shifts in the proportion of the work force in different industries,shows no trend
since 1949. See Chart 111-15.
25
33
ability of our traditional labor relationssystem to provide employee benefits, legalprotection, and representation for those whowant it.
While our labor market and employee-management system has done well in ad-justing to these changes in some areas,notably job growth, it has done sufficientlypoorly in others to raise serious concernabout whether extant institutions and em-ployee-management relations and regula-tions fit with the rapidly changing economicand social environment.
Among the signs of a failure to adjustto the changing environment in ways con-sistent with our past economic history ofprogress for virtually all our citizens are:falling real earnings for less educated andless skilled workers; stagnant growth- ofearnings for others; continued high levels ofoccupational injuries; lack of health insur-ance and other fringe benefits for manyworkers; an increased proportion of ouryoung male workers incarcerated; high ratesof joblessness for the less skilled. Ourunemployment insurance system, whichwas intended for workers temporarily laidoff, is not well-suited to help those sufferingfrom structural unemployment problemsdue to permanent job loss or educationaldeficiencies.
A healthy society cannot long continuealong the path the U.S. is moving, withrising bifurcation of the labor market.
The decline of collective bargaining inthe private sector and increased reliance ongovernmental regulations and court suits toprotect workers gives most employees noindependent mechanism for dealing withtheir management as a group and movesemployee-management policies from the lo-cal parties. The disparity between smallerand larger firms creates different environ-ments for worker-management relations inthe United States, with firms and workershaving different options and needs depend-
ing on firm size. Diversity in size and incharacteristics of workers argues for more,not for less, determination of working con-ditions and rules at worksites.
These are just some of the areas, towhich others will be added in later chaptersof this report, in which our factual reviewsuggests that American labor and firmsneed a better future.
Twenty-Five CriticalFactors in the AmericanLabor Market
1. A long-term decline in the rate ofgrowth of productivity.
2. An increased globalization of eco-nomic life, reflected in trade and capitalflows, and immigration.
3. Increased competitiveness of U.S.firms in the international marketplace inthe late 1980s and early 1990s, due tochanges in unit labor costs and exchangerates.
4. Changes in the work performed dueto changing technology.
5. A shift in employment to service-pro-ducing sectors from goods-producing sectors.
6. A shift in the occupational structureof the workplace toward white collar jobsthat require considerable education.
7. Millions of establishments and firmsof different sizes, whose workplace practicesand outcomes differ depending in part onthe number of employees.
8. Turbulence in many product andfinancial markets due to deregulation and
3326
changes in government cutbacks in defenseor other programs.
9. A higher proportion of Americansworking than ever before, due in large partto the movement of women into the workforce.
10. An increased minority share of theworkforce.
11 Increased years of schooling by theworkforce.
12. A changed aged structure of thework force as the "baby boom" generationages.
13. An increased flow of immigrantsfrom developing countries into the UnitedStates.
14. Substantial creation of jobs but highunemployment for the less skilled and con-siderable insecurity about jobs.
15. Stagnant real hourly compensation,with falling real compensation for maleworkers.
16. A rising gap in earnings betweenhigher paid and more educated or skilledworkers and lower paid and less educatedworkers.
17. A vowing number of low wage fullyemployed workers whose living standardsfall below those of low wage workers in otheradvanced countries.
18. Annual hours of work that exceedthose in other advanced countries except forJapan.
19. A declining gap in the earnings ofmen and women, but stagnation in the gapbetween nun-White and White workers.
20. A growing number of jobs thatdiverge from full-time continuing positionswith a single employer.
21. A large growing population for whomillegal activity is more attractive than legiti-mate work.
22. Stagnant rates of occupational injuryand illness and increased workdays lost perfull-time worker, with increased workers'compensation costs.
23. A decline in the prevalence of collec-tive bargaining.
24. Fewer strikes or lockouts.
25. Increased government regulations ofthe workplace.
4027
CHAPTER 11
Employee Participation and LaborManagement Cooperation in
American Workplaces
1. Introduction
Considerable change is underway inmany of America's workplaces, driven inpart by international and domestic compe-tition, technology, and workforce develop-ments described in Chapter I. Theseexternal forces are interacting with a grow-ing recognition that achieving a high pro-ductivity/high wage economy requireschanging traditional methods of labor-man-agement relations and the organization ofwork in ways that more fully develop andutilize the skills, knowledge, and motivationof the workforce and that share the gainsproduced.
Changes are particularly visible inmany large workplaces that have under-
taken restructuring in response to economicpressures, in new worksites, industries, inorganizations that have utilized these or-ganizational principles from their start, andin work settings where managers, employ-ees, and union representatives have adoptedthese ideas and built them into the overallfabric of their relationships.
Thus, since the 1980s, there has been asubstantial expansion in the number andvariety of employee participation efforts andworkplace committees in both estab-lishments governed by collective bargainingagreements and those without union rep:.e-sentation. These arrangements take a widevariety of forms such as: quality circles,employee participation teams, total qualitymanagement teams, team-based work struc-tures with a variety of responsibilities,safety and health committees, gain sharing
41
29
plans, joint labor-management training pro-grams, information sharing forums. jointtask forces for a variety of problems, em-ployee ownership programs, and workerrepresentation on corporate boards of direc-tors.
Employee involvement is also beingpracticed in many small workplaces whereemployees and managers work together andcommunicate on a more informal and per-sonal basis.
Yet these workplace innovations areonly partially diffused across the economyand many remain rather fragile. Some areof limited duration. Others are subject toa variety of risks and obstacles that maylimit their sustainability and diffusion andthe benefits they can potentially deliver tothe nation's economic performance andstandard of living.
The first item in the Commission's Mis-sion Statement recognizes both the potentialvalue and the partial diffusion of employeeparticipation and labor-management coop-eration. The Commission, therefore, isasked to assess:
"What (if any) new methods orinstitutions should be encour-aged, or required, to enhanceworkplace productivity throughlabor-management cooperationand employee participation?"
This chapter reviews the facts withrespect to employee participation and labormanagement cooperation. The sections thatfollow report on (1) the views of workers,managers and labor leaders, (2) the extentof employee involvement, (3) the issuesaddressed in these processes, (4) the evi-dence on their effects on economic outcomes,
(5) their prospects for diffusion, and (6) thelegal issues they raise.
2. Views Toward WorkplaceParticipation andCooperation
A variety of employees, managers, andlocal and national labor leaders testified andsubmitted statements in support of the goalof enhancing employee participation andworker-management cooperation.
Workers' Views and Expectations
Both survey data and direct testimonypresented to the Commission documentedthat a majority of American workers wantto have opportunities to participate in deci-sions affecting their job, the organization oftheir work and their economic future. A1985 national survey reported that 84 per-cent of employees working for organizationswithout an employee involvement or partici-pation program would like to participate inone if given the opportunity and 90 percentof those in organizations with a plan re-sponded that their company's program wasa "good idea."!1
Other surveys of blue and white collargroups conducted in the early 1980s foundsimilar results. One study found over 80percent indicated a desire for a say aboutissues affecting how they did their work,and about the quality of their work, and amajority indicated an interest in having asay about the handling of grievances orcomplaints, the pace of work, and howtechnology is used on their jobs.
1 13usiness Week and Sirota and Alper Associates, The 1985 National Survey of Employee AttitudelNew York, Sirota and Alper, September, 1985.
30
42
White collar workers2 in this sample ex-pressed higher levels of interest in partici-pation on all these issues than blue collarworkers.
Data from recent focus groups inter-views carried out by the Princeton SurveyResearch Center report that hourly workers,professional and technical employees, andsupervisors consistently stated that amongthe things they value most in a job arevariety, freedom to decide how to do theirwork without close supervision, informationand communication regarding things thataffect their work and their firm, and evi-dence that their employers seek, value andact on their suggestions for improvement attheir workplace.'
Most workers respond favorably whenprovided opportunities to participate attheir workplace. Ms. Deborah Wirtz, anemployee at Texas Instruments who testi-fied at the Commission's Houston hearing,described her response to the introductionof self-managed teams in her plant.
"What I really feel, my honestfeelings about teaming, is thatmy self-esteem has improved asa person. Before teaming, youfelt like you were maybe a num-ber that was there to produce thedaily quota that was expected ofyou, and you left and went home.Now we feel like we have thecapability of making decisionsand being heard."
The changing workforce characteristicsreviewed in Chapter I imply that the desire
for a voice at the workplace has beengrowing gradually over time and will con-tinue to increase in the future, since interestin participation tends to rise with education.Rosabeth Kanter summarized these longterm trends:
"A more educated work force -- asours has become -- is simultane-ously a more critical, questioning,and demanding work force, and apotentially more frustrated one ifexpectations are not met."4
Some employees remain highly skepticaland fearful of cooperative programs devel-oped by managers in the absence of anindependent union to represent workers'interests. The following statement of LaborNotes, a publication of rank and file unionactivists, expresses these sentiments:
"We have deep skepticism towardthe notion that workers andmanagement have much in com-mon in dealing with workplaceproblems. They compete witheach other to divide the economicpie, much as companies competefor market share. The idea thatthey share interests has histori-cally been used to defeat orpreempt unions...
Unions remain the only genuineindependent employee organiza-tions capable of fighting for theinterests of workers on the job."5
2 Thomas A. Kochan, Harry C. Katz, and Robert B. McKersie, The Transformation of American Industrial
Relations, New York, Basic Books, 1986, p. 212.
3 "Worker Representation and Participation Survey Focus Group Report," Princeton Survey Research
Associates, Princeton, New Jersey, April 1994.4 Rosabeth Moss Kanter, "Work in America," Daedalus, Vol. 107 (1918), p. 54.
5 Labor Notes, "The Independence of Labor," A paper submitted to the Commission, October I, 1993.
31
43
Managers and Labor Leaders
A number of managers testified thatemployee participation and worker-manage-ment partnerships are not only desired byworkers but essential to being competitivein their markets and industries. BruceCarswell, Senior Vice President of GTE andChairman of the Labor Policy Associationstated:
"The message that we would liketo leave with you today is thatour nation can no longer afford toview the employment relation-ship as American workers andmanagement competing with oneanother in a zero-sum game. In-stead, we need to create a part-nership among empoweredemployees, government, industry,and unions such that everyone isplaying on the same team inpursuit of mutually beneficial ob-j ectives.
We hope that the Commissionhas been given a sense of the seachange that has occurred in hu-man resource practice during thepast fifteen years and what theimplications of that changeshould be for policy makers...Overthe long term the new high per-formance American workplacewill be better able to provide jobsecurity for American employeesand a more satisfying work envi-ronment...The Commission couldmake an extremely useful contri-bution to the development of em-ployment policy if the final reportwere to communicate to theAmerican public the depth of the
change in the workplace environ-ment."
At the Houston hearing, Mr. CharlesNielson, Vice President for Human Re-sources at Texas Instruments, put it thisway:
"...teaming, effective participationof people in the business process,is an integral part of our survival.I somehow worry that as personslike myself talk, what you hear isa nice-to-do program. Somethingthat's intellectually interesting.Something that probably is ap-pealing to people and makes themfeel good. But I'm afraid some-how we're not communicatingthat it really is the one hope forus to survive in the [competitive]environment I've just described."
The AFL-CIO issued a report, The NewAnaesicauKorkplaceLLabarEgrapectiyQ,that outlines its support for labor-manage-ment partnerships for designing new mod-els of work organization:
"It is incumbent on unions to takethe initiative in stimulating, sus-taining, and institutionalizing anew system of work organizationbased upon full and equal labor-management partnerships. Sucha system presupposes, of course,partners prepared to deal witheach other as equals in an atmos-phere of mutual recognition andrespect."6
Labor leaders appearing before theCommission pointed out that unions provideemployees an independent source of powerin employee participation. Union-manage-
6 The New American Workplace: A Labor Perspective, A Report by the AFL -CIO Committee on theEvolution of Work, Washington, DC: AFL-CIO, February 1994.
32
44
ment partnerships are more likely to ad-dress a wide range of issues of interest toboth employees and managers and lead toa sharing of decision-making at all levels ofthe enterprise. The labor movement be-lieves that the long run objectives of em-ployee participation should be to enhanceboth economic performance and industrialdemocracy by providing employees a voiceat all levels of decision-making. The AFL-CIO report stated:
"It is unlikely in the extremethat...management-led programsof employee involvement or "em-powerment" can sustain them-selves over the long term. It iscertain that such systems cannotmeet the full range of needs ofworking men and women."
The Collective Bargaining Forum, agroup of corporate chief executive officersand international union presidents, has is-
sued two reports in recent years presentinitsvision of the type of labor-managementpartnership needed to pursue the twin goalsof competitiveness and a rising standard ofliving. (See Exhibit II-1.)
Ms. Theresa Roche, Vice President ofHuman Resources for Grass Valley Group,a medium sized (900 employees) high tech-nology company that designs and producesvideo equipment, testified at the San Josehearings that decentralization of traditionalmanagerial responsibilities and the need totrain and empower workers to make deci-sions are especially critical to success inrapidly changing technology driven indus-tries. Ms. Roche, along with several of hercolleagues from other high technology or-ganizations, questioned the relevance oftraditional labels of "worker" and "manager"or "exempt" and "nonexempt" employees totheir industries and organizations:
EXHIBIT II-1
Promoting Joint Approaches to Competitiveness the Collective Bargaining Forum Vie
To address the competitive challenge...will require a long run outlook and asustained commitment to joint work among management, labor, and govern-ment representatives. Such a commitment also implies:
Adoption of business strategies that can support a high productivity/highwage employment relatinship...In turn, it implies a responsibility on the partof labor to accept the need for continual improvement in productivity, and tocommit its energies to the quality of the good and services produced.
(To achieve these goals requires] expansion of and sustained commitment tojoint labor-mangement activities, such as training, quality improvement, workredesign, appropriate kinds of cost containment, and related activities that aretailored to the specific needs and competitive conditions of individual enter-prises. This implies...an ongoing process of adjustment to changing technologyand new work design concepts.
SOURCE: Collective Bargaining Forum, New Directions for Labor andManagement, U.S. Department of Labor, 1988.
33
45
"Organizations' continued successrequire both managers and em-ployees to play profoundly differ-ent roles. Employees must nowassume many of the responsibili-ties that once belonged only tomanagers. They must be betterable to direct themselves, be flexi-ible, help make sound decisonsand take more accountability fortheir work and its results."
A large number of employees, managersand union representatives believe that em-ployee participation, work redesign, andworker-management cooperation are essen-tial to being competitive in their industriesand markets and to producing the resultsworkers expect from their jobs.
Some employees, however, are skepticalof participation processes in which workersdo not have an independent voice or meansto represent their interests.
Labor leaders believe the long run ob-jectives of employee participation should beto enhance both enterprise competitivenessand employee voice at all levels of decision-making. They believe these goals are un-likely to be achieved unless employees haveindependent representation.
3. Extent of EmployeeParticipation andCommittees
Surveys of Adoption Rates
There is no entirely reliable census ofworkplace employee involvement proc-esses, although several recent surveys pro-vide estimates of the current level ofactivity.
Surveys in 1987 and 1990 of the Fortune1000 firms by the General Accounting Office(GAO) and the University of Southern Cali-fornian report that 86 percent of these largefirms in the manufacturing and servicesectors report some experience with em-ployee involvement in their firms. This isan increase from 70 percent in 1987.
Twenty percent of the firms reportedemployee participation processes that covera majority of employees in the firm.
The results of a 1991 survey conductedby Paul Osterman of 691 establishmentswith 50 or more employees8 are summa-rized in Exhibit 11-2. (See page 35.) Itfound that 64 percent of these estab-lishments have one or more employee in-volvement activities covering 50 percent ormore of their "core" employees. (Core em-ployees were defined as non-managerialblue or white collar workers directly in-volved in the production and/or delivery ofthe establishment's products and services.)
This survey showed that these practicesare often combined in various ways, thusOsterman defined significant involvement
7 Edward E. Lawler, III, Susan A. Mohrman, and Gerald E. Ledford, Employee Involvement and TQM:Practice and Results in Font ]e 1000 Companies, San Francisco: Jossey Bass, 1992.
8 Paul Osterman, "How Common is Workplace Transformation and Who Adopts It. ?" Industrial andLabor Relations Review, Vol. 47, January 1994, pp. 173-88.
34
46
Exhibit 11-2Work Practices in Establishments with
50 or More Employees
(50 Percent or Greater Penetration)Blue Collar
Total Sample(in percent)
Manufacturing(in percent)
One Practice Only 27.1 24.1Teams Only 14.4 5.5Job Rotation Only 7.0 11.7Quality Circles Only 2.6 4.5
Two or Three Practices Combined 31.8 36.9All Four Practices Combined 4.8 5.0None of these Practices 33.0 33.3
Source: Paul Osterman, "How Common is Workplace Transformation andWho Adopts it?" Industrial and Labor Relations Review, Vol. 47, January1994, p. 177.
as having a majority of core employeescovered by two or more forms of workplaceinnovation. Just over one-third of theseestablishments met this criterion. Thissurvey documented a wide variety of differ-ent involvement plans in existence today.
The survey found no significant differ-ences in the frequency of these practicesbetween union and nonunion estab-lishments.
In a 1993 survey of 51 large firms,Organization Resources Counselors re-ported that between 80 and 91 percent ofthese firms had committees dealing with
either safety and health, productivity, orquality.9 These companies reported thatapproximately 25 percent of their employeesparticipated in teams of one form or another.
A survey of predominantly large manu-facturing firms conducted by the LaborPolicy Association in cooperation with sev-eral other industry groups, estimated that31 percent of the employees in these firmswere involved in programs classified asdecision-making. Higher percentages werereported to be covered by employee involve-ment programs that involved collaboration,soliciting ideas, and information sharing(49, 69, and 71 percent, respectively).10
9 "ORC Employee Involvement Survey," Chicago: Organization Resources Counselors, 1993.
10 Preliminary tabulations from an employee involvement survey conducted by the Aerospace Industries
Association, Electronic industries Association, Labor Policy Association, National Association ofManufacturers, and Organization Resources Counselors, 1994.
35
4 7
A 1985 survey of a nationally repre-sentative sample of the workforce conductedby Sirota and Alper Associates and BusinessAssociates and Business Week found that36 percent of the respondents worked inorganizations that have some type of em-ployee involvement program and 23 percentof the workforce had been personally in-volved in some form of employee participa-tion.11
There is no agreed-upon standard forjudging which, or what combination, of thesedifferent workplace practices produce re-sults that would warrant the popular labelof a "high performance" workplace. Mostexperts do agree, consistent with the avail-able empirical evidence, that the value ofthese practices is realized best when com-bined into a total organizational system thatrests on a foundation of trust and combinesemployee participation, information shar-ing, and work organization flexibility withreinforcing human resource practices suchas a commitment to training and develop-ment, gain sharing, employment security,and where a union is present, a full part-nership between union leaders and manage-ment.
When judged by this systemic standard,estimates of the extent of diffusion of "highperformance" employment systems are con-siderably lower. The Commission on theSkills of the American Workforce andJerome Rosow, President of the Work inAmerica Institute, each estimate that per-
haps less than five percent of Americanworkplaces presently fit this description.
A substantial majority of largerAmerican employers report using someforms of employee participation in theirorganizations. Many small firms have moreinformal processes for employee participa-tion. The best available estimates suggestthat between one-fifth and one-third of theworkforce is covered by some form of em-ployee participation.
A small fraction of these efforts repre-sent the systemic forms of participationconsistent with the label of a "high perform-ance workplace."
Studies of Survival Rates
Despite the widespread interest in em-ployee participation and cooperative ar-rangements, the record shows that someemployee participation efforts do not survivelong enough to have significant positiveeconomic effects. The Osterman surveyshowed, for example, that only about one-third of these establishments reported theiremployee involvement efforts have been inplace for five years or more. Edward Lawlerand Susan Mohrman report over half of thequality circles begun in the early 1980sfailed to survive.1 Robert Drago found asimilar result for quality circles.13 Hisresults showed a higher survival rate forquality circles in union than nonunion es-tablishments, a finding replicated in a morerecent study of labor-management commit-tees in machine shops. 14
11 Business We and Sirota and Alper, p. 87.12 Edward E. Lawler III and Susan Mohrman, "Quality Circles after the Honeymoon," Organizational
Dynamics, Vol. 15 (Spring, 1987), pp. 42-59.13 Robert Drago, "Quality Circle Survival: An Explanatory Analysis," Industrial Relations Vol. 27, 1988,
p. 336-51.14 Maryellen Kelley, Presentation to the Sloan Foundation Human Resources Network Meeting, MIT,
Cambridae, July 1993. Data are available from Maryellen Kelley, Graduate School of IndustrialAdministration, Carnegie Mellon University, Pittsburgh, PA.
3648
A number of studies have shown thatemployee involvement is more likely tosurvive over time if the effort expandsbeyond the narrow confines of a singleprogram or process and if human resourcepractices such as compensation, training,employment security, and managerial re-wards systems are modified to support theseefforts. Where a union is present survivalis increased significantly if the process isgoverned by a joint partnership between theunion and management.15
Some employee participation efforts areshort lived. Others have been sustainedover a long enough time to demonstratetheir value.
Those most likely to be sustained overtime are ones in which the parties broadenthe scope of issues addressed, and integratethem with the human resource policies ofthe organization. Those in unionized set-tings in which the union is involved as ajoint partner with management are particu-larly likely to survive.
4. Key Features ofWorkplace ParticipationProcesses
Surveys cannot tell us what these par-ticipatory processes actually do, the mix ofemployees and managers involved in theseefforts, how participants are selected, orwhether they speak only for themselves orimplicitly represent others in the organiza-tion. These issues are of special relevance
to the Commission since they relate to thelegal status of employee participation.
The Commission received considerabletestimony on these issues in its national andregional hearings. Some of this is presentedto illustrate the range of variation in con-temporary practice with respect to theseissues.
The examples presented below beginwith efforts originally designed to focus onproductivity and quality improvement is-sues, and then move on to examples ofself-managing work teams and broader workmanagement committees, partnerships andemployee ownership arrangements. Anyeffort to categorize these arrangements israther artificial, however, since as the ex-amples will illustrate, they tend to evolveand change over time in ways that are notwell captured by their popular labels.
The examples are presented in thissequence, however, since labor law attemptsto draw a distinction between processes thatdeal with production or quality issues, andthose that involve wages, hours, or otherterms and conditions of employment, andbetween processes in which employees com-municate information to management ver-sus those that involve consultation, shareddecision-making, ancVor representation.
Production and Quality CenteredInitiatives
Many participation efforts focus on qual-ity or productivity improvement. For exam-ple, a team from Federal Express composedof both management and non-management,employees described how it changed the way
15 For reviews of these studies see Eileen Appelbaum and Rose Batt, The New American Workplace,
Ithaca, New York: ILR Press, 1994; Gary C. McMahan and Edward E. Lawler, Ill, "Effects of Union
Status on Employee Involvement: Diffusion and Effectiveness," a paper prepared for the Employment
Policy Foundation, Washington, D.C., 1994; and Thomas A. Kochan and Paul Osterman, The Mutual
Claim Elli_e_m_s, Boston: Harvard Business School Press, forthcoming, 1994.
37
49
packages are sorted in its Memphis distri-bution center and thereby improved thecompany's on-time delivery performance,reduced staffing required for this operationfrom 150 to 80 employees and achievedannual savings of approximately $702,000.
At the New United Motors Manufactur-ing (NUMMI) operations in California, teammembers are trained to use a six-stepproblem-solving process. This process re-quires team members to explore potentialroot causes associated with, among otherthings, the way work is organized, howindividuals perform their work, the staffingand scheduling of activities, and other per-sonnel and employment practices. Toyota'smanufacturing facilities in Kentucky followsimilar training, problem-solving, andkaizen (continuous improvement) processes.
The type of root cause analysis describedat NUMMI and Toyota is central to mostTotal Quality Management (TQM) processesthat have become increasingly popular inU.S. industry.
In Atlanta, Bell South and repre-sentatives from the Communication Work-ers of America described how their qualityof working life program that carried overfrom the early 1980s later embraced TQMpractices, and has evolved to the pointwhere employees and workers meet withkey customers to demonstrate their commit-ment to total customer satisfaction. Theirprogram, like nearly all the others describedto the Commission. entails a strong commit-ment to training in problem-solving, statis-tical methods, and related quality practices.
In Louisville, the Commission heardabout quality improvement teams at AlliantHealth Care Systems. Alliant relies heavilyon use of temporary task force teams tosolve specific problems that cut across tra-ditional functional and/or hierarchicalgroups. In response to a question Mr. Rod-ney Wolford, former CEO of Alliant, de-
scribed the changing membership andstructure of these task forces:
"When it comes to specific pro-jects or specific improvement ef-forts, those are typicallycross-functional teams made upof front-line workers, with someinvolvement by management, andcertainly a responsibility of man-agement to monitor the processand to be involved to some degree,but not necessarily to run theprocess.
Often-time those teams may evenbe chaired by front-line workerswho have undergone specifictraining to be able to manage theteam process. In terms of whogoes on those teams, it's simplywhat makes sense repre-sentatives of all the various func-tions that may be involved orhave some ownership account-ability to any aspect of the proc-ess."
In San Jose, the Commission heardtestimony from small and large high tech-nology firms working to embed participatoryprinciples into their organizational culturesthrough a wide variety of practices. Again,a common practice in these firms is to ustemporary task forces or teams made up ofa diverse cross section or a "vertical slice"of employees and managers. Ms. DeborahBarber, Vice President of Human Resourcesat Quantum Corporation, described the fluidnature of assignments in her corporation:
"High performance groups are as-sembled to address specific needs,whether the need is in design ormanufacturing or sales and mar-keting or distribution, and sincemany of these high performancework groups are associated withthe management of a particularprocess or product, they need to
5038
Exhibit 11-3
Self-Managed Teams at D.D. Williamson and Company
We have eliminated all supervisory positions and we have gone to self-managedwork teams. Our Louisville plant runs 24 hours a day, five days per week.Shift leaders and teams were chosen by the associated themselves in somethingsimilar to a baseball draft. And team leaders rotate on a semi-annual basis.Along with the increase in responsibility, there's an extensive training. Forthe most, associates can now do several tasks ...The work teams are alsoresponsible for their own hiring and firing. We have some base education andpersonality screens that we use but after that the team does the interviewingand the team does the hiring.
T'cvo years ago....we began a program to see that all associates visit ourcustomers. And many times it required an overnight stay.
be constantly reconfigured andreassembled as the products andprocesses change."
While the survey evidence suggests thatformal participation arrangements are moreprevalent in large than small estab-lishments, the Commission heard testimonyfrom small employers about the diverse andinformal ways these principles are appliedin their organizations. For example, Ms.Cheryl Womack, Chief Executive Officer ofVCW, Inc., a 75-person insurance companyin Kansas City, described a wide range ofinformal communications, rewards, quar-terly meetings, and advisory committees inher firm. She stressed particularly, theimportance of the communications that flowout of breakfast meetings company officershold each month with the winner of their"employee of the month" program.
Both temporary and ongoing productionand/or quality focused efforts often expandover time to address issues that fall withinthe category of terms and conditions ofemployment.
The principles underlying TQM encour-age team members to explore root causesof problems and alternative solutions thatinvolve human resource practices and poli-cies.
Quality improvement teams often mixtogether individuals from different hierar-chical levels and functional groups in waysdesigned to overcome traditional status dis-tinctions and job definitions.
Over time it becomes increasingly diffi-cult if not impossible to draw a line betweenproduction issues and employment prac-tices, and among "employees," "supervisors,"and "managers" in the most successful pro-ductivity and quality improvement efforts.
Self-Managed Work Teams
As illustrated above, some employeeparticipation processes that begin as produc-tion or quality focused problem-solvinggroups evolve over time to take on issuesand responsibilities that in the past wouldhave been handled by a supervisor or man-ager. In self-managed work teams a num-ber of duties traditionally reserved to
51.39
managers are explicitly delegated to teammembers. At the Louisville hearing, forexample, Mr. Ted Nixon, CEO of D.D.Williamson and Company in Louisville, afood processing manufacturer of caramelcolored product:; with 105 employees, de-scribed the responsibilities of the self-man-aged work teams in his company. (SeeExhibit 11-3.)
Self-managed work teams take on re-sponsibilities traditionally performed by su-pervisors and managers and may deal witha variety of issues that affect wages, hours,and other terms and conditions of employ-ment.
Workplace Committees and Partnerships
A variety of firms and labor organiza-tions described their efforts as full-fledgedpartnerships and committee structures.Some of these focus on specific issues suchas safety and health while others address awide range of issues and span multiplelevels of the organization.
Safety and Health Committees
Among the most longstanding and wide-spread types of issue specific committeesfound in American workplaces are thosethat focus on monitoring and improvingworkplace health and safety. According tothe 1993 survey of the National SafetyCouncil, workplace safety and health com-mittees are found in 75 percent of estab-lishments with 50 or more employees andin 31 percent of establishments with lessthan 50 employees. This study also re-ported that safety and health committeesexist in 89 percent of unionized estab-lishments and 56 percent of nonunion es-tablishments.16 Under collective
bargaining, union safety and health commit-tees often have access to union-providedprofessional experts to assist in these mat-ters. The role of committees or other ap-proaches to employee participation in safetyand health will be discussed in more detailin Chapter IV.
Multi-Employer and Union Committees
A distinctive feature of collective bar-gaining in some industries or regions hasbeen the creation of multi-employer-laborunion committees. These committees ad-dress a variety of workplace problems thatcan be more effectively handled on a multi-employer level than within an individualenterprise. Such committees have existedsince the earliest days of collective bargain-ing and have been concerned with issuessuch as training, health and safety, griev-ance handling, and productivity. Exampleshave occurred in industries such as anthra-cite mining, electrical contracting, men'sand women's clothing, retail food stores, andlongshoring.
Broad-ranging Committees
In a number of union and nonunionfirms, employee participation and labor-management cooperation processes take ona variety of issues and are overseen by oneor more committees.
Ford Motor and the UAW have had anemployee involvement and labor-manage-ment cooperation program in place since1979. (See Exhibit 11-4 page 58) Theysummarize the key lessons learned over thisperiod as follows:
The Ford-UAW experience hasdemonstrated two especially sig-
16 Thomas W. Planek and Kenneth P. Kolosh, "Survey of Employee Participation in Safety and I lealth,"Itasca, IL: National Safety Council, October 1993. A similar estimate of the frequency of safetycommittees is reported in the Labor Policy Association survey.
5 240
nificant lessons about joint pro-grams. The first is that leader-ship, trust and funding arecritical ingredients not struc-ture. The second is that an evo-lutionary approach, progressingfrom fairly simple applications tothose that are more comprehen-sive and integrated, is importantto create and to sustain large-scale transformation.
Peter Pesti llo added another point:
"If management wants unions tohelp make companies more com-petitive and to be an ally in thestruggle with foreign competitors,management must accept the va-lidity of employee chosen unionsas a legitimate institution in oursociety. Management must ac-cept this union role, must honorit, must value it, must work withit. A strong alliance requires twostrong members. There shouldbe no quibbling about that."
The National Steel Company and theUnited Steelworkers described the evolutionof their partnership as one that now goesfrom the shop floor to the corporate boardroom. Steelworkers' former president LynnWilliams commented on how his unionextended the approach used at NationalSteel to other major steel companies in their1993 negotiations:
"We have in our minds closed thecircle by including board member-ship. We're not taking over thehoards of these companies...butwe are going to have one person(In qach of these boards there torepresent the general interest ofthe workc 1. constituency. [W]e'llbe functioning at every level ofthe company."
AT&T and the CWA described a similarintegrated partnership they call the "Work-place of the Future" that is built on exten-sive employee involvement and teamsystems at the workplace, consultation atthe business unit level where long termcompetitive issues are discussed, and acorporate-wide human resource council thatincludes labor, management, and outsideexperts in discussion of long range plans.
William Ketchum, Vice President ofAT&T, described Workplace of the Futureas a "framework for change which includesunions as joint partners in planning andimplementing change based on mutual re-spect and mutual gain." Morton Bahr, thepresident of the Communication Workers ofAmerica, testified that "the critical elementof success" is that for workers to effectivelyparticipate in workplace decision-making,front-line workers must first have their ownorganizations, educated leadership and sig-nificant resources in order to have theconfidence and preparation to participate asequals and without fear.
At the Commission's Michigan hearing,Miller Brewing Company and repre-sentatives of the UAW described how theyjointly planned and designed a team-basedhighly participative work system in a newplant. The management system of thisplant includes union representatives at alllevels of the organization. (See page 58 forExhibit 11-4.)
Several nonunion firms described enter-prise-wide councils or committees in theirorganizations. In Michigan, a team fromDonnelly Corporation described their long-standing (established in the 1950s) ScanlonPlan that has since expanded to include anemployee council that not only rev;ewsemployee suggestions but consults on thefull range of human resource policies. Don-nelly's system is described in Exhibit 11-5.Another Scanlon Plan that has been in placefor over thirty years at Herman Miller
5341
Corporation is also described in Exhibit 11-5.(See page 59)
At the Boston hearing, the Commissionheard accounts of the events that led to thetermination of a longstanding and broadranging employee committee at the PolaroidCorporation.
Mr. MacAllister Booth, the Chief Execu-tive Officer of Polaroid Corporation, de-scribed his frustration with his decision todisband an elected employee committee thathad been in place since 1949 after anemployee filed charges with the Departmentof Labor over the legality of the company'sprocedures for electing the committee's offi-cers. The elected representatives of thiscommittee discussed the full range of per-sonnel practices and policies at Polaroid.Subsequently, a charge also was filed withand a complaint issued by the NationalLabor Relations Board finding the commit-tee violated Section 8(a)(2) of the NationalLabor Relations Act banning company domi-nated organizations.
Following the Labor Departmentcharge, and in anticipation of the 8(a)(2)charge, the company disbanded the commit-tee and in its place Polaroid established anEmployee Ownership Influence Councilwhich serves as a "focus group" for commu-nications between employees and managers.This new entity has considerably less powerto review and consult on employment poli-cies and practices than the disbanded em-ployee committee. This case raises theissues of what companies can do within thelaw to establish committees of workers toresolve problems. 'Ile mutual frustrationsof Mr. Booth and Ms. Charla Scivally, theemployee who filed the complaint, are sum-marized in Exhibit 11-6. (See page 60)
Consultation in Japan
Labor-management consultation forumsexist in over 70 percent of Japanese firmsand establishments. In contrast to European
works councils, these operate in the absenceof any formal statutory obligation. Instead,they have been promoted by the JapanProductivity Center as Fi means for, amongother things, discussing the relevance ofmacro economic trends and performance tothe wage and other policies of specificenterprises. Professor Haruo Shimado fromKeio University in Japan indicated thatconsultation now covers a wide variety ofissues ranging from safety and health tonew technology and investment plans andis viewed by both employer and workerrepresentatives as an essential componentof Japan's industrial relations system.
Australian Strategies for WorkplaceReform
In the mid-1980s the Australian Con-feration of Trade Unions (ACTU) conductedan international study that produced a newstrategy promoting union mergers and con-solidations, work restructuring, commit-ment to training and development,decentralization of wage setting and collec-tive bargaining, and labor-management con-sultation.
Between 1987 and 1991 Australia's In-dustrial Relations Commission issued deci-sions calling for enterprise level bargainingover work restructuring and pay systemsthat reward skill attainment and produc-tivity improvement and labor-managementconsultation. In 1991 the federal govern-ment initiated a "Best Practices" programthat provides grants and awards to firmsand unions to promote workplace reforms.In 1993 the requirement for consultationwas enacted into federal law.
The Australian approach involves legalrequirements for safety and health commit-tees, incentives and recommendations forworkplace reforms, enterprise wage agree-ments, and labor-management consultationin return for greater flexibility and decen-tralization in wage determination, and a"Best Practices" recognition and grant pro-
5442
gram. These reforms have produced thefollowing results to date:
Approximately 40 percent of Austra-lian workplaces, covering 65 percent ofthe workforce are covered by safetyand health committees;
Quality management techniques thatrely on employee involvement arefound in 26 percent of the workplaces;
The greatest amount of workplace re-form has occurred in workplaces withan active union presence; and
Managers report consultation has re-sulted in improvements in manage-ment-employee relations in 90 percentof the workplaces, improvement in theprocess of introducing change in 81percent, and improvements in produc-tivity in 70 percent.
Works Councils in Europe
Works councils are elected bodies ofemployees who meet regularly with man-agement to discuss establishment levelproblems. Works councils are widespreadin Europe because most countries requirethem by law, if employees indicate aninterest in creating such a body. In Ger-many, for example, if employees want one,an establishment with five or more employ-ees is required to have a council that iselected to represent the entire workforce inthe establishment. This does not mean thatall workplaces have them, for in manysmaller enterprises, employees and manag-ers choose less formal modes of communica-tion and consultation. The prime differencebetween the U.S. and Germany in thisrespect is that workers can "trigger" theformation of councils.
Exhibit 11-7 summarizes some of the keyfeatures of works councils presented to theCommission at its meeting on internationalexperiences. (See page 61)
Some workplace committees and labor-management partnerships address a widerange of employment and managerial issueswhile others are focused on specific topicssuch as workplace health and safety.
In some cases these structures coverindividual establishments. Others are en-terprise-wide and few cover an entire sectorin a community or nationally.
Establishment or enterprise-wide com-mittees that cover the full spectrum ofwork-place issues are more prevalent inunionized companies. However, examplesof such structures are found in some non-union firms as well.
Committees in nonunion firms operatewith some uncertainty over their legalstatus.
Establishment or enterprise-wide con-sultative arrangements are less widely dif-fused in the U.S. than in firms in Japan,Australia, or in European countries withworks council legislation.
Employee Ownership
Employee stock ownership plans(ESOPS) have increased in recent years tothe point where they now are estimated tocover as much as 11 percent of the laborforce. While all ESOPS provide employeeswith a direct financial stake in the economicperformance of their enterprise, the vastmajority are mainly contingent compensa-tion plans and do not provide any role foremployees in firm governance (beyond thevoting rights associated with share owner-ship). Some of these have been establishedto achieve the favorable tax treatment avail-able to such plans or to help ward off thethreat of a hostile takeover.
Other ESOPS, such as those at LincolnElectric or the Bureau of National Affairs,have been in existence for many years,include extensive employee participation
55
43
and a formal role for employees in thegovernance of the firm. ESOPS that providefor employee participation and repre-sentation in firm governance perform betterthan those that do not. The empiricalevidence on the effects of ESOPS on firmperformance can be summarized as fol-lows.1
1. No studies show that ESOP plansreduce productivity or profitability.
2. Some studies show that ESOPS areassociated with higher performance com-pared to non-ESOP firms or compared tothe same firi:'s prior to the introduction ofthe ESOP. Some of these estimated effects,however, are not significant and are sensi-tive to changes in the statistical modes andtests used.
3. ESOPS are more likely to be associ-ated with higher performance when com-bined with participation of employees at theworkplace than when there is only repre-sentation of employees on the board ofdirectors.
ESOPS have grown in recent years.While some include a role for employees inorganizational governance and/or workplaceparticipation, many do not. Those that in-clude employee participation appear to per-form better than those that do not.
General Patterns
These are only some of the examplesdescribed in Commission hearings and inthe materials submitted to the Commission.Thii; evidence suggests the following generalconclusions regarding what these commit-tees and employee participation processesdo and who is involved in them.
1. There is no single dominant form ofemployee participation today. While manyefforts began with a focus on productivityand or quality improvement, most of thosethat endure.over time go on to address otherworkplace issues as well. Some address avariety of terms and conditions of employ-ment such as training, safety and health,communications and information sharing,employee selection, performance evaluation,work assignments/rotation, job descriptionsand procedures, staffing levels, work hoursand scheduling, overtime, pay system designand administration, discipline, and griev-ance resolution. Some deal with issuestraditionally reserved to management andsupervision such as customer service, newplant design, design and implementation ofnew technologies, equipment, or products,and long-range human resource planning.
2. Some workplace participation effortsare ongoing while others are temporary taskforces established to solve specific problemsand then disbanded or reconstituted forother purposes. In some cases, employeesparticipate in these processes while continu-ing working in their regular jobs or partici-pation becomes a normal part of the jobitself. In other cases employees may beasked temporarily to serve as facilitators orteam leaders in a fashion traditionally re-served for managers or supervisors. Insome cases their primary co-workers arepeers doing similar work while at othertimes they work in cross-functional taskforces that mix together hourly employeeswith technicians, professionals, and manag-ers. Sometimes the work may be on-siteduring regular work hours but in caseswhere customer service or external bench-marking are involved, it may require traveland irregular hours.
17 Michael A. Conte and Jan Svejnar with Comments by Joseph R. Blasi, "The Performance Effects ofEmployee Ownership Plans," in Alan S. Blinder (ed.) Paying for Productivity. Washington, D.C.: TheBrookings Institution, 1990, pp. 143-82.
5644
3. Few of these efforts remain constantover time. Those that endure over timeoften expand or modify the issues includedand the personnel involved. Indeed, thelines separating production, employment,and managerial issues are often impossibleto draw or to enforce in the most successfulprograms.
4. Participants are chosen for theseprocesses in various ways. In some casesindividuals volunteer to participate in prob-lem-solving teams. In other cases manage-ment selects team or committee members,however, there are also some cases whereemployees elect representatives. In union-management committees it is customary forthe union leaders to arrange for the selec-tion or for unions to elect their repre-sentatives.
5. The line between communication andshared decision-making is difficult to drawin these processes. In some cases decision-making authority is delegated to the teams;in others committees make suggestions thatare advisory to management, and in othercases, committees consisting of employeesand managers make decisions and allocateresources. Regardless of their formalauthority, workers and managers tend toremain committed to these arrangementsonly if they believe they are exerting aconstructive influence on the issues in-volved.
6. These features all make it difficultto draw a clear distinction between "exempt"and "nonexempt" employees as defined invarious labor and employment laws andregulations.
I8
19
5. The Effects ofEmployee Participationon Economic Outcomes
The Commission received considerabletestimony on the effects of employee partici-pation efforts and reviewed the case studiesand quantitative research on these efforts.The evidence to date suggests that manyprograms improve the quality of work lifeand in some cases raise productivity andproduct quality. More specifically:
1. One by-product of employee partici-pation is to increase investment in educa-tion and training of the workforce. Thispoint was made in almost every case de-scribed to the Commission. This is alsoconsistent with the evidence in the Lawler,et. al., Osterman, ORC, and other studies.
2. While most of those testifying abouttheir efforts reported their programs re-sulted in improved productivity, quality, orsome other indicators of economic perform-ance, the empirical studies on this issuecompleted to date show mixed results.
Some of these efforts fail to survive longenough to produce significant economicgains. Studies that have attempted toisolate the individual effects of single pro-grams such as quality circles or teams tendto find small or insignificant effects onperformance.18 One study found that un-ion companies with joint committees usesignificantly less production time per unitof output than nonunion companies withsuch committees.19 Other studies have sug-gested that employee involvement or gain
I Larry Katz, Thomas A. Kochan and Jeffrey 11. Keefe, "Industrial Relations and Productivity in the U.S.Automobile Industry," The Brookings Papers on Economic Activity, Vol. 3, 1987, pp. 685-728.Ivlaryellen Kelley and Bennet Harrison, "Unions, Technology, and Labor-Management Cooperation," in
57 .45
sharing under collective bargaining hasgreater effects when the union supports theeffort and jointly administers the pro-gram.20
The largest positive effects on economicperformance have been found in studies thatmeasure the combined effects of workplacereforms (i.e., where participation is com-bined with changes in employment prac-tices, manufacturing policies andmanagement structures and decision-mak-ing procedures).
Studies examining these systemicforms of workplace change at Xerox, in aninternational sample of auto assemblyplans, and in a sample of plans in the steelindustry all conclude that the more systemicthe involvement efforts, the greater theeconomic benefits.21
Another exhaustive review of all thestudies of employee participation and workredesign that were carried out since the1970s reached a similar conclusion withrespect to the effects of participation onvarious economic and psychological resolts.
A study of the effects of human resourcemanagement innoyation on profits and re-
turns to shareholders found similar results,namely, the more comprehensive the humanresource innovations, the greater their eco-nomic effects.22
Thus, broad based workplace innova-tions that remain in place over an extendedperiod of time and are integrated into asystem's approach to workplace innovationand change produce the most improvementsin economic performance.
3. The effect of these efforts on employ-ment security is limited, at best. Many ofthe organizations that have initiated theseefforts did so in response to an economiccrisis so it is difficult to determine whatwould have happened to job growth or lossin the absence of these efforts. But clearly,employee participation or workplace com-mittees alone do not necessarily producenew jobs. However, we did receive testi-mony from a number of people indicatingthat market share improvements resultedthat created or maintained jobs, and fromothers that new investment was authorizedbecause of the improved relationships andeconomic effects of these programs. PhillipMorris, Saturn Corporation, Ceiba Gigy,Miller Brewing Company, and others wereall cited as cases where new jobs were
Lawrence Mishel and Paula Voos (eds.), Washington, D.C.: Economic Policy Institute, 1992.20 Roger T.Kaufman, "Effects of Improshare on Productivity," Industrial and Labor Relations Review, Vol.
45, No. 2 (January 1992), pp. 311-322; William Cooke, "Product Quality Improvement ThroughEmployee Participation: The Effects of Unionization and Joint Union-Management Administration,"Industrial and Labor Relations Review, Vol. 46, No. 1 (October 1992), pp. 119-134.
21 Joel Cutcher Gershenfeld, "The Impact on Economic Performance of a Transformation in WorkplacePractices," Industrial and Labor Relations Review, Vol. 44 (January 1991), pp. 241-60; John PaulMacDuffie and John F. Krafcik, "Integrating Technology and Human Resources for High-PerformanceManufacturing: Evidence from the International Motor Vehicle Research Program," in Thomas A.Kochan and Michael Useem (eds.) Transforming Organizations. New York: Oxford University Press,1992, pp. 209-26; Casey Ichinoiski, Kathryn Shaw, and Giovanna Prennushi, "The Effects of HumanResource Management Practices on Productivity, unpublished paper, Carnegie Mellon University,March 1994.
22 Mark Huse lid, "Human Resource Management Practices and Firm Performance," unpublished paper,Institute of Management and Labor Relations, Rutgers University, June 1993.
46
58
created as a direct result of cooperativeefforts.
6. Will ContemporaryEfforts at EmployeeParticipation andCooperation be Sustainedand Diffuse Across theEconomy?
"If these efforts work so well, whyaren't they adopted more widely?Do they constitute a real changein work relations or another man-agement fad?"
These are big questions facing thisCommission and others concerned with theAmerican Workplace. A bit of history willhelp explain these concerns.
Earlier Examples of Committees
The period since the 1980s is not thefirst time American industry experienced anincrease in the use of worker-managementcommittees. Indeed, worker-managementcooperation has ebbed and flowed at variouspoints in history both under collective bar-gaining and in nonunion workpla, es.
In earlier years these arrangementswere often called "employee representationplans," "works councils," or "shop commit-tees." Among the earliest of these workscouncils, outside of collective bargaining,was one established at the Filene's store inBoston in 1898. Employee committees were
elected and a board of arbitration heard anymatter brought by an employee. The em-ployees' association owned a large block ofcompany stock and nominated yersons tothe Company board of directors.`3
Historically, employee representationand participation plans, outside of unions,have involved in varying degrees threethemes: more efficient production andhigher quality; workplace democratic valuesand participation; and discouragement of"outside" labor organizations.
During World War 1 the National WarLabor Board required the establishment ofshop committees where unions did not exist.The American Federation of Labor (AFL)initially viewed these committees as a pos-sible step in the evolution of unions. In thepost-war period of conflict, however, theAFL stated at its 1919 convention:
"We heartily condemn all suchcompany unions and advise ourmembership to have nothing todo with them; we demand theright to bargain collectivelythrough the only kind of organi-zation fitted for this purpose, thetrade unions."
Employee representation plans andshop committees, outside of collective bar-gaining, grew during the 1920s. By 1924virtually all the plans started by the gov-ernment in World War I were abandoned orsuperseded by plans drawn up by employersthemselves. By 1928 there were 869 plansin 399 companies with 1.5 million employ-ees. The depression after 1929 eliminatedmany of these plans except in the largestcompanies. In 1933 and 1934 employeerepresentation plans expanded.
23 Lescohier, Don D., ''Employee Representation or Company Unions," in John R. Commons (ed.) Historyof Labor in the United States. 1896-1932. Vol..3. Working Conditions. New York: MacMillan, 1935,p. 337.
53 47
As will be described in more detail later,employer dominated committees or "com-pany unions" were outlawed by the NationalLabor Relations Act in 1935 and by the 1934amendments to the Railway Labor Act.
Labor-management committees devotedto workplace problems under collective bar-gaining also have a long history. Instancesof labor-management cooperation in the1920s and 1930s were most noteworthy inthe men's and women's garment industrieson various railroads such as the Chesapeakeand Ohio and Baltimore and Ohio, and inthe Naumkeag Steam Cotton Company.24Beyond these cooperative programs address-ing costs and competitive conditions, manycollective bargaining relationships histori-cally included provisions for cooperativeactivities on a wide range of workplace andindustry issues such as safety, quality, andtraining.
Most of these examples from earlierperiods took the form of indirect participa-tion or representation (i.e., they involvedworkers selected by management or electedby employees to represent them in consult-ations or negotiations with managementover a variety of enterprise issues). Fewwere as focused on direct employee partici-pation and work redesign as are contempo-rary initiatives.
This history adds considerable contro-versy and concern to current debates overemployee participation and labor-manage-ment cooperation.2° Some critics believethat today's participation efforts are in someways an effort by employers to return to the
past whereby weak forms of managementcontrolled participation and representationare substituted for independent forms ofworker voice. Some skeptics also believethat the changes occurring at the workplacetoday are merely another in a long historyof temporary fads that will ebb and flow asdid past episodes of labor-management co-operation.
History tells us that labor-managementcooperation in the U.S. tends to periodicallyebb and flow. It is hard to sustain in theAmerican environment and institutionalsetting, and often fails to diffuse widelyacross the economy.
Obstacles to Diffusion of ContemporaryPractices
If American history indicates that sus-taining and diffusing cooperation is difficult,and the current data suggest that partici-pation is now partially diffused, the logicalquestion becomes:
"What will influence the stayingpower and diffusion of contempo-rary forms of employee participa-tion and worker-managementcooperation?"
A number of managers testified thatmarket pressures will force firms to adoptthese practices.
Employee participation is more wide-spread in industries exposed to interna-tional and domestic competition than inindustries with less competition.26 How-
24 Sumner Slitcher, Union Policies and Industrial Management. Washington, D.C.: The BrookingsInstitution, 1941.
25 David Brody, "Section 8(a)(2) and the Origins of the Wagner Act," paper presented to the Commission,January 6, 1994.
26 Kochan and Osterman, The Mutual Gains Enterprise; McMahan and Lawler, "The Effects of Union Statuson Employee Involvement."
48
00
ever, within all industries, a considerablenumber of firms and employees do not haveany significant amount of empioyee partici-pation or workplace committees. Once theeffects of product and labor market compe-tition are controlled, the evidence suggeststhat size of firm, managerial values, thetype of competitive strategies adopted by thefirm, the relative influence of human re-source considerations in top managementdecision-making, and in unionized settings,the extent to which the union is involved asa joint partner, all influence whether em-ployee participation will be adopted andsustained over time. 27 Thus, managers,and in collective bargaining relationships,managers and union leaders, have consider-able discretion over whether or not to initi-ate and sustain these workplaceinnovations.
While there is no clear consensus onwhat keeps workplace innovations fromspreading more widely, some of the mostfrequently mentioned factors are summa-rized below in order to stimulate furtherdiscussion on this vital question.
Lack of Trust
Workers must trust management to usethe fruits of worker participation to benefitemployees as well as shareholders.
Data obtained in a series of recent focusgroup interviews conducted by the PrincetonSurvey Research Center provides insightsinto the sources of employee skepticism.Consistent with the evidence on workersviews summarized earlier, most of the em-ployees in these focus groups respondedpositively to the idea of employee participa-tion around quality and general organiza-tional improvement. Moreover, manyexamples of successful quality improvement
programs were cited and evaluated favor-ably by the focus group participants. Butmany also noted that too often in theirexperience top management fails to followthrough and stay committed to these efforts.Suggestions are not taken seriously or im-plemented, or the initial commitment toTQM fades as customer pressures to imple-ment these programs fade. Those withsuch experiences expressed considerabledistrust of their managers. These inter-views suggest that some employees viewthese initiatives with a rather skeptical eyebased on their past and current experiences.
For workers the biggest fear is thatemployee participation and productivity im-provement will result in the loss of theirjobs. At the San Jose hearings, Mr. RomieManan, an employee of National Semicon-ductor, told of how he and his fellow em-ployees were bitter about being laid off aftercontributing ideas to improve productivityof his operations. The company was nowplanning to transfer this work to a newplant in another state:
"The company claims that theseteams give us a voice in runningthe plant and a place where wecan talk about our problems. Inreality, however, in these groups,all the company ever wants totalk about are ways to makeNational more productive, moreefficient, and more profitable.
Over the past seven or eightyears, our company has shiftedproduction from our plant tolower wage plants in Arlington,Texas and Portland, Maine.Thousands of my fellow workerson the fab lines have lost their
27 See McMahan and Lawler. "Effects of Union Status on Employee Involvement," and Kochan andOsterman, the Mutual Gains Enterprise.
61 49
jobs in this process. I will losemine too, next week after workingmany years in that factory."
Some middle level managers, first-linesupervisors, and workers also are skepticalof management's motives or fear that theseinitiatives are just another passing mana-gerial fad. One survey of middle levelmanagers reported that 72 percent of thesemanagers felt employee involvement wasgood for their company, 60 percent felt itwas good for rank and file employees, butonly 31 percent felt it was good for them.28
Some union leaders distrust managers'motives because they see employee partici-pation initiatives as union avoidance tech-
niques. This distrust has deep historicalroots. As noted earlier, union avoidance hashistorically been one of several factors mo-tivating management to implement work-place committees. Union avoidance has alsobeen documented as one, but not the sole,motivation for some of the workplace inno-vations introduced by nonunion employersin the current period as well.29
Union leaders are sometimes asked tosupport and participate in cooperative ef-forts in one facility at the same time anemployer with multiple facilities opposesunion representation in others, often newerworksites. This has been a major factorchilling the diffusion of employee participa-tion in unionized facilities and holding back
Exhibit 11-8
AFL-CIO Principles for Labor-Management Partnerships
First, we seek partnerships based on mutual recognition and respect...Apartnership requires management to accept and respect the union's right torepresent the workers in units already organized and equally to accept andrespect the right of workers in unorganized units to join a union.
Second, the partnerships we seek must be based on the collective bargainingrelationship. Changes in work organizations must be mutually agreed toand not unilaterally imposed and must be structured so as to assure theunion's ability to bargain collectively on behalf of the workers it represents onan ongoing basis.
Third, the partnerships must be founded on the principle of equality. Inconcrete terms, this means that unions and management must have an equalrole in the development and implementation of new work systems.
Fourth, the partnership must be dedicated to advancing certain agreed-upongoals reflecting the parties' mutual interests.
28 Janice Klein, "Why Supervisors Resist Employee Involvement, Harvard Business Review, Vol. 62(September-October, 1984), pp. 87-95.
29 Fred Foulkes, Personnel Policies kilarge Nonunion Firms (Englewood Cliffs, NJ: Prentice Hall, 1980;David W. Ewing, Justice on the Job, Boston: Harvard Business School Press, 1989.
50
62
labor leaders from becoming more active andvisible champions of employee participation.It is not coincidental, for example, that theunion leaders who appeared before theCommission in support of worker participa-tion with individual companies such asAT&T, Phillip Morris, National Steel, ScottPaper, and Miller Brewing were all caseswhere the issue of union representation innew facilities had been worked out to theparties' mutual satisfaction.
Some managers likewise distrust or areskeptical of union leaders' ability to supportcooperation and employee participation, be-lieve unions will hold cooperation hostageto achieve other objectives, or are unwillingto share information and power with unionleaders in the belief that the company willbe "contractually" bound to continue jointdecision-making in the future.
A number of individual unions, includ-ing the Steelworkers, CWA, the Amalga-mated Clothing and Textile Workers, andthe Grain Millers, have recently publiclyendorsed employee participation and labor-management partnerships as an explicitpolicy and objective. As noted earlier, theAFL-CIO recently did so as well. Theprinciples it believes should guide thesepartnerships are summarized in Exhibit11-8. Whether these principles will be ac-cepted by employers and provide a basis forovercoming the mutual skepticism and mis-trust between some labor and managementleaders are questions worthy of furtherdiscussion.
Economic Factors. Building a trustingrelationship between workers and employ-ers so that workers are highly motivatedand contribute their ideas to the firm con-stitutes a long term investment. Thus, it isno surprise that management surveys re-port layoffs and downsizing are the single
biggest threat to the continuity of employeeparticipation in industry today.30
Employee participation and relatedworkplace changes entail high start-up costsfor training, consulting services, and man-agement and employee time away from"normal" activities. Yet the benefits are notlikely to be realized until some time in thefuture and often are difficult to predict orto measure. This often produces conflictswithin management between advocates forthese changes and those who want to meas-ure their costs and benefits of these effortsbefore the benefits are realized. Indeed, theLabor Policy Association reported that othermanagers were a more significant source ofresistance to employee involvement effortsthan were employees or unions. Specifi-cally, among those reporting their effortshad been less successful than expected, 42percent cited management resistance, 39cited employee resistance, and 28 percentcited union resistance as a problem.
Some executives report that the invest-ment community has little knowledge orunderstanding of workplace innovations.Others go a step further and argue thatpressures for short term results from thefinancial community coupled with the lackof information on the benefits of workplaceinnovations and the high up-front costs ofthese efforts produce a systematic under-in-vestment in these initiatives.
In businesses where employee turnoveris routinely high, where the education ofworkers is low, or where the technology ofjobs is such that employee participation isunlikely to add much to economic perform-ance, participation may not spread no mat-ter how much it succeeds in other areas.
Employee Options to Initiate Participtign. The vast majority of employee partici-
30 Lawler. Mohrman, and Ledford, Employee Involvement and TQM.
6351
pation efforts have been initiated by seniormanagers. Lawler et. al., for example,reported that the stimulus for employeeinvolvement came from employees in only18 percent of the cases.31 In nonunionsettings, management traditionally retainscontrol over whether to initiate, change, orabandon employee participation. Outside ofunion settings, employees have little inde-pendent means for initiating these efforts.
Surveys consistently find that over 80percent of American workers want a say indecisions affecting their jobs and how theirwork is performed. A recent survey by theGallup Organization and the EmployeeBenefit Research Institute found that 83percent agreed or strongly agreed that mostcompanies do not give workers enough sayin decisions that affect them.3" Combiningthese percentages with the number of work-ers not now covered by some form of par-ticipation process, this implies that theremay be as many as 40 to 50 million workerswho want to participate in decisions on theirjob but lack the opportunities to do so.33
The focus group interviews again pro-vide some insight on the difficulty employ-ees have in acting on their preferences forgreater involvement. Most participants feltthat their managers would feel threatenedby efforts of employees to propose formationof groups or teams to solve problems. Somefeared retaliation. Others believed theiremployers would view this as an effort toorganize a union and this would put at riskthe jobs or careers of leaders of this type of
effort. Others simply expressed a sense offutility about their ability to initiate changesthat did not have the active support of theirsupervisors or top management. Taking theinitiative to propose changes in ways thatwent beyond individual efforts and involvedany group or collective process was seen bymost participants as risky or futile.
Government Policy and Legal Issues
The international evidence presented tothe Commission documented that govern-ments can and do promote diffusion ofworkplace reforms in a variety of ways.Australia and several Canadian provincesrequire safety and health committees.European countries require work councils ifemployees express a desire for them at theirworkplaces. The Japanese Productivity
Center encourages and supports labor-man-agement consultation through its data
gathering, information dissemination, andrelated activities. The Australian "BestPractices" program, along with its nationalarbitration awards, encourage consultationand workplace reforms.
The U.S. Government has no programof a magnitude, visibility, or impact thatcomes close to any of these internationalapproaches.
Labor law casts a cloud that somebelieve limits the scope of participation.Seventy-six percent of the managers whoresponded to the Labor Policy Associationsurvey indicated their organization saw sig-
31 Lawler, Mohrman, and Ledford, Employee Involvement and TQM.
32 Daily Labor Reports, February 25,1994, A-3.33 This estimate was calculated as follows: 111 million wage and salary workers - 19 million government
employees = 92 million private sector wage and salary workers. 92 million (.88).(67)(.80) = 43.4 million.
.88 = percentage of private sector non union work force; .90= percent expressing a desire to participate
on issues normally covered in employee participation processes. This calculation assumes all union
members have access to participation through their collective bargaining representatives. Relaxing thisassumption and including both the union and nonunion labor force in the calculation increases the
estimate to 49.3 million private sector workers. (92)(.67)(.80) =49.3 million.
52
64
nificant problems with the government'sviews of employee involvement programs.Sixty-eight percent indicated that the gov-ernment's views either are of concern tothem (45 percent) or are making them morecautious about broadening existing or im-plementing new programs (23 percent).Those most vulnerable to legal challenge areprecisely those that take a broader, moresystemic approach to participation that theevidence suggests have the greatest longterm positive effects on economic perform-ance.
7. Legal Issues RegardingWorkplace EmployeeParticipation
Section 8(a)(2) of the National LaborRelations Act makes it an unfair laborpractice for an employer to "dominate orinterfere with the formation or administra-tion of any labor organization or to contrib-ute financial or other support to it." In turn,Section 2(s) of the Act defined "labor organi-zation" as "any organization of any kind, orany agency or employee representation com-mittee or plan, in which employees partici-pate and which exists for the purpose, inwhole or in part, of dealing with employersconcerning grievances, labor disputes,wages, rates of pay, hours of employment,or conditions of work." The underlinedphrases indicate how broad and how impor-tant Congress intended this legal prohibi-tion to be.
The stated aim of the NLRA is toencourage collective bargaining through rep-resentatives of the employees' own choosing.Unions whose activities are limited to em-ployees at a single firm are perfectly com-patible with this policy as long as they arenot created or controlled by management.The law says employees may not be exposedto employer-dominated structures that"deal" with "conditions of work." Congress'assumption, based on the experience withthe employee representation plans of the1920s reviewed earlier, was that the pres-ence of such company-dominated unionswould unduly influence employees in theirjudgment about whether they needed andwanted to be represented by an independentunion.
Only during representation electioncampaigns is it illegal under the NLRA foremployers to unilaterally grant benefits toemployees."4 Management-created repre-sentation plans are illegal at any time.°5
By the end of World War II, Section8(a)(2) was generally conceded to have elimi-nated as a significant phenomenon the formof "company unionism" that had developedprior to the enactment of the NLRA.Though Congress chose not to relax thisprov.sion in the 1947 Taft-Hartley amend-ments to the NLRA, the principal use ofSection 8(a)(2) from the mid-1940s to themid-1970s was to bar employers from rec-ognizing minority unions, to require com-pany neutrality between two unions seekingto represent its employees.
In the late 1970s and early 1980s,several legal controversies arose about theoriginal intent and contemporary relevanceof Sections 8(a)(2) and 2(5) of the NLRA. A
34 The Supreme Court so held in Exchange Parts (1964).35 Or so the Supreme Court appeared to rule in its two major decisions interpreting this statutory policy:
in Newpo_rt_News Shipbdaing sgjlaskIck (1938), regarding the Section 8(a)(2) concept of "employerdomination"; and in Cabot Carbon (1957) , regarding the Section 2(5) phrase "dealing with".
65 53
closely-divided National Labor RelationsBoard found that employer participation ingrievance adjudication committees consti-tuted performance of management functionson behalf of their employer, rather thanrepresentation of employees in dealing withthe employer (Mercy-Memorial Hospital(NLRB), 1977)). That same year, a unani-mous Board panel concluded that a jobenrichment program under which produc-tion employees were divided into smallteams, that by consensus divided up theirown work and overtime assignments, didnot constitute illegal "dealing with" theemployer about conditions of work (GeneralFoods (NLRB, 1977)). Meanwhile severalappeals court panels, most conspicuously onthe Si' th Circuit (e.g., in Scott and Fetzer(6th Cir. 1984)), were giving narrower read-ing to the key statutory terms "labor organi-zation" and "employer domination." A
sentiment that ran through several of thesejudicial opinions was that the adversarialconception of the employment relationshipthat had led to the 1935 Wagner Act wasincompatible with the cooperative relationsthat were necessary in the modern economicand human resource environment.
The topic returned to the national legalagenda with the Electromation case of 1992.Management of Electromation, reacting toemployee displeasure about the company'snew pay and attendance policies, estab-lished five committees to address these andother issues such as pay progression, nosmoking, and the communication network.The committees were principally comprisedof employees selected by management fromvolunteers, along with one or two supervi-sors or managers. The committees beganto meet weekly to talk about these subjects.However, after the Teamsters Union sur-faced with a petition to represent the em-ployees, the company campaigned actively
against union representation of the workersand announced that it would not continuewith the committee format until after theNLRB-conducted election. Shortly beforethe election a Section 8(a)(2) charge wasfiled with the NLRB along with a Section8(a)(1) charge alleging unlawful employerinterference with the election.
The Board scheduled the case for specialoral argument at which a variety of em-ployer groups argued that Sections 8(a)(2)and 2(5) do not apply to these forms ofemployee involvement. However, the fourmembers of the Board were unanimous infinding a violation of the Act in the circum-stances of this case. Though they authoredfour different opinions explaining their re-spective views about the relevant legalprinciples, their decision in this case rein-forced the traditional board interpretationof this feature of the NLRA, rather thanaccept a narrower view that would excludemost or all employee involvement programsfound in many workplaces today. Flu rrnation is now on appeal to the SeventhCircuit Court.
Few cases have actually been broughtto the NLRB on these issues. A recentstudy36 found an average of about threesuch NLRB decisions a year over the lastquarter century. This may change in thefuture, however, given the visibility andimportance attached to the Electromationcase. For these reasons, a number of em-ployer representatives suggested the Com-mission recommend major revisions in thisarea of labor law. Most labor leaders be-lieve no change in the law is required.
If changes to 8(a)(2) are to be considered,two related legal questions will need to beaddressed. The first reflects the same arms-length adversarial philosophy of workplace
36 James Rundle, "The Debate Over Modifying the Bar on Employee Dominated Labor Organizations:
What Is the Evidence?" Cornell University, unpublished manuscript, 1993.
54
66
representation embodied in Section 8(a)(2).This issue concerns exclusion of all super-visors and managers for the rights andprotections of national labor law. Thisstatutory exclusion rests on the assumption(see Bell Aerospace, (1974)) that employersneed the undivided loyalty of managementin representing shareholder interests wherethese conflict with the interests of the workforce. If a more cooperative conception ofthe employer-employee relationship is em-bodied in labor law so that representationdoes not necessarily imply the existence ofan adversarial relationship, it may be nec-essary to reconsider whether supervisors ormiddle managers should be denied the rightto union representation or collective bar-gaining.
The second question also involves themanagerial exclusion doctrine in the NLRAand arises out of the Supreme Court's 1980Yeshiva University decision. The Courtfound that university faculty were excludedfrom the NLRA because as a group theyinfluenced their employer's policies aboutcurriculum content, teaching staff, and soon. Up to this time, that brand of legalexclusion has been applied principally touniversity faculty and other professional-level employees. However, as noted earlierin this Chapter, even under current laborlaw more and more employers are choosingto delegate to work teams considerableautonomy to shape the make-up of theirgroup, their mode of operations, materialsand equipment used, and so on. It wouldseem inconsistent with the intent of theNLRA if, in pursuit of more innovative andcooperative work relationships, employeeswere denied the right to independent unionrepresentation.
8. Summary andQuestions for FurtherDiscussion
The Commission's findings with respectto employee participation and labor-man-agement cooperation can be summarized asfollows:
1. Employee participation, in a widevariety of forms, is growing and is partiallydiffused across the economy and the work-force, extending to upwards of one-fifth toone-third of the workforce. Adding the moreinformal styles of communication and in-volvement found in many small estab-lishments would likely increase the numbercovered.
2. The trends in the workforce and theeconomy identified in Chapter I suggestinterest will continue to grow in future yearsas the education of the workforce rises,technology creates more opportunities toshare information and delegate decision-making authority, and the pressures ofcompetition require continuous improve-ment in productivity and quality.
3. Survey data suggest that between40 and 50 million workers would like toparticipate in decisions on their job but lackthe opportunity to do so.37
4. Labor representatives view em-ployee participation as a means to enhanceboth competitiveness and workplace democ-racy. They believe that independent repre-sentation is essential to achieve both ofthese goals. Most management repre-sentatives see employee participation as anintegral part of the work process and believe
37 See footnote 33 for the calculations of these estimates.
6755
effective participation can be achieved inboth union and nonunion settings.
5. The labor and employment legisla-tion enacted in the 1930s has raised ques-tions about a variety of forms ofcontemporary employee participation. Thisis particularly true of (1) employment lawsand regulations that try to draw a distinc-tion between "exempt" and "nonexempt"employees or among "workers," "supervi-sors" and "managers," and (2) labor lawsthat may tend to limit the scope of employeeparticipation in both nonunion and unionsettings.
6. Where employee participation issustained over time and integrated withother organization policies and practices,the evidence suggests it generally improveseconomic performance. If more widely dif-fused and sustained over time, employeeparticipation and labor management coop-eration may contribute to the nation's com-petitiveness and standards of living.
7. Both historical and contemporaryevidence suggests that employee participa-tion and labor-management cooperation arefragile and are difficult to sustain anddiffuse in the American environment.
8. The available evidence does notprovide a clear understanding of the factorsthat limit the diffusion or sustainabilty ofemployee participation and labor-manage-ment cooperation. Four factors that appearto be important include: insufficient trust,the inability of employees to initiate partici-pation, economic pressures on employers,and government policies and legal issues.Further understanding is needed, however,of these and other barriers and potentialstrategies for overcoming them.
These findings suggest a number ofquestions on which the Commission invitesfurther discussion and analysis:
1. How can the level of trust and qualityof the relationships among workers, laborleaders, managers, and other groups insociety and at the workplace be enhanced?
2. Is there a deep unrealized interestin participation in the American workforce?If so, what keeps these employees fromtaking the initiative on these matters?
3. Should employees have some voicein initiating employee participation? If so,how might this be done?
4. Should employees have some voicein determining whether, once started, agiven employee participation processshould be continued, changed, or termi-nated? If so, how might this be done?
5. How serious are the economic obsta-cles such as downsizing pressures for short-term results, high start-up costs, and lackof understanding in the investment commu-nity? What, if anything, can be done toaddress these issues?
6. How should the legal uncertaintiesand limits on employee participation andlabor-management cooperation be addressedwithout discouraging workplace innovationsthat enhance the competitiveness of themodern workplace and without risking areturn to the conditions that motivatedpassage of these protections?
7. What, if any government strategiescan assist the diffusion of employee partici-pation and labor-management cooperation?
The issues raised in this chaptershould not been seen in isolation. Theyare tightly interrelated with the issuesdiscussed with respect to collective bar-gaining in Chapter III and governmentregulations and dispute resolution inChapter IV.
With respect to future legal policy, themajor question is whether, and if so, how,
6856
the National Labor Relations Act should berevised or interpreted to permit nonunionfirms to develop one or more of the array ofemployee participation plans that have beenchallenged under Section 8(a)(2) of the Act:
Self-managed production teams, par-ticularly if the team addresses not onlyefficiency and product quality, bu', alsoworkplace safety, assignments, andother matters of direct concern toemployees.
In-house dispute resolution proceduresin which employees may participateeither as members of the committeehearing the matter or as repre-sentatives of the employee with agrievance.
Joint quality of working life commit-tees in some of which employee-mem-bers are selected by management, andin others by the employees.
With respect to these and other formsof employee participation that havebecome more common in the modernworkplace, very different policy posi-tions are now being advocated fromdifferent quarters:
Section 8(a)(2) should be retained inits present form.
Section 8(a)(2) should no longer limitthe freedom of nonunion employers toestablish procedures by which its em-ployees will "deal with" (as opposed to"collectively bargain" about) condi-tions of employment.
Section 8(a)(2) should be relaxed topermit employers to establish suchemployee participation proceduresdealing with conditions of work, ifthese procedures meet certain stand-ards about employee selection, accessto information, protection against re-prisals, and the like.
Section 8(a)(2) should be altered torequire employers to offer their em-ployees participation procedures meet-ing these minimum quality stand-ards.
In the second stage of its proceedings,the Commission would like to hear frominterested parties about which of these (orother) options are preferable (and what, ifany, revisions might also be made in thescope of the managerial exclusion from theNLRA).
69 57
Exhibit 11-4Two Cases of Partnerships in Union Settings
Ford-UAW
The Ford and UAW joint initiatives are national and local. At both levels, theyaddress matters of common concern in areas such as product quality, educationand development, employee involvement, team structures, work redesign,health and safety, ergonomics, employee assistance, apprenticeship, and labor-management studies.
Job security protection, wide information sharing, and profit sharing are allimportant building blocks for this structure of workplace cooperation.
A negotiated central fund and local training funds, projected to total $75 millionin 1993, support these joint endeavors. Administrative direction is furnishedby the first National Training Center ever negotiated in the United States, plusa network of national and local committees that extends to all 71 Ford-UAWlocations in the U.S.
Each workplace program has a purpose, structure, and focus of its own. Somehave large programs within programs. For example, there are more than 20individual programs in education and development.
Source: 1993 UAW-Ford Joint Programs Key Documents.
H. Joint Approach to New Plant Design at Miller Brewing Company
In October 1990 the decision was made to open Miller Brewing Company'splant located in Trenton, Ohio. Planning at the earliest stages assumed that ourworkforce at the new facility would be unionized. The planning team decidedthat if the workforce chose to be represented, a significant investment wouldbe made in communicating with the union leadership about issues facing theplant, the company, and the industry.
While certain decision-making responsibility would still reside with manage-ment, union involvement in plan operational planning, problem-solving, andgoal setting would be sought at every level and few decisions would be madewithout the union leadership's consent and endorsement. In practice, thismeant that the plant's management team would not only have to include theunion in weekly staff meetings, decisions, and planning, but would also haveto re-think which decisions required staff-level attention and involvement.
7 0
Exhibit 11-5Two Cases of Plans in Nonunion Companies
L Donnelly Corporation[The Scanlon Plan] was introduced in 1952...in the late 1960s Donnelly hadworked with the Scanlon Plan for a fair amount of time but we really introducedwhat we call the "Team Concept" in the late 1960s....We also started at thattime trying to provide an alternate forum for due process...the Equity Structurebegan in the late 1960s as basically an employees' committee....Nqw it'sdeveloped over time to a representative structure to make sure that it satisfiedtwo fundamental purposes. These representatives sit on committees, and wehave sort of a hierarchy of committees. Eventually, the top committee in this
structure is the Donnelly committee, which has 15 voting members, one ofwhom is the president of the company. So again, it is a diagonal slice; thereare representatives from all different section of the company.
This structure has two fundamental purposes.... it provides a safety net on issuesof fairness, the whole issue of due process, grievance processing. We also callit the issue resolution process, so 1 think that's a very interesting commonality
there.
Also, we ask our equity structure to guarantee that people have a voice in thedevelopment ent of policies that affect them and in fact, we ask our Donnellycommittee to unanimously agree on all personnel policies that we put into place
in the company.II. Herman Miller, Inc.
We began to practice participative management in the 1950s with the adoptionof our Scanlon Plan...Every month we hold informational meetings to informall employees of business conditions and our performance to plan. Everyfull-time tenured employee, regular employee, with one yearof tenure, is given
stock in the company throughout profit sharing plan.
[W]ithin our organization we have an internal Appeals Board, which is made
up of management and employees. There is a group of ten people who anemployee an choose [five] from and appeal a decision to them.
We also have what we call caucuses and councils. Caucuses are used forinformation sharing, for seeking charity, for groups, and they elect anindividual who is able to act as an information source for that group ofemployees in the organization.
We have what we call a Suggestion Review Board, which is made up ofrepresentatives from all disciplines in the organization, and it is a diagonalrepresentation of employment.
71 59
Exhibit 11-6The Polaroid Problem
1, The Employee's ComplaintI was elected to the Employee' Committee in 1992...1 ran on a platform ofreform. The word around the company was that the Employees Committeewas a tool of management and did not represent the employees and had beenthat way for a long, long time.
So I filed a complaint with the Office of Labor Management Standards...Theydid an investigation and found out, yes, that...these officials of the union should
be elected by the membership.
There was a special meeting of the Employees' Committee....shortly thereafterwhere Mr. Booth appeared along with other corporate executives, and said hehad decided to do away with the Employees' Committee...
It was widely known in the company that this organization was not incompliance with the law, but nobody filed a complaint about it. But, they[employees] wanted reform. We all wanted reform. They said it didn'trepresent us. I was there trying to do what I felt I had been elected to do. Thatwas to make this body of people represent the employees of this company.That was what they had elected to do. Then, all of a sudden, it was gone.
II. The Company's DilemmaWhat it needed for sure is greater freedom to try new ideas and methods ofparticipation without the fear, that merely discussing vital workplace questionswith employees, means being charged with unfair labor practice violation. Itseems terribly unreasonable for federal policy to urge workplace cooperationand then put out of bounds open discussion on the most vital issues foremployees--pay, policy, and benefits.
As a practical matter, I can't figure out how to engage in any meaningfuldiscussion about any workplace issues without treading on those importantmatters. Employee involvement is about new creative ideas and solutions.That is what our country's history has been all about. So why have barriers totrying out different forms of employee creativity in the workplace to solvemattes are so important to eveyone?
60
Exhibit 11-7
Works Councils in Europe
1. Councils are elected by and cover all employees (up to the most seniorexecutives) in an establishment. Works councils have information sharingrights on issues affecting the enterprise and consultation rights on a wide array
of human resource policy issues. In Germany work councils have jointdecision-making rights on some specific workplace issues.
2. Works councils operate separately from unions though in most countriesunions representatives make up the majority of council members and unionssometimes provide technical advice and other supports to council members.Works councils are reported to be more effective where there is a strong union
presence and support for council activities. They are least effective in Francewhere they lack support from either employers or the ideologically divided
French unions.
3. In some countries unions and/or employers initially oppose works council
legislation. In countries with legislation works councils are now generallyaccepted by both unions and employers with France again serving as theexception to this generalization. British employers generally oppose workscouncil legislation both within their country and through directives of the
European Commission.
4. Works councils encourage employers to consider and consult on humanresource issues when planning major restructuring or modernization decisionsand encourage employees to recognize the need for such plans. Some see this
as a major benefit; it elevates the importance and integrates human resourcepolicies with other strategic decisions. In addition, councils tend to: (a)
improve communications and assist in resolving grievances, (b) delaydecisions but improve their quality; (c) provide flexibility in adaptingregulations to fit the needs of different worksites, and; (d) support diffusion of
work redesign and decentralized decision making.*
5. But these benefits are not costless. Councils slow decision-making. Somesec them as to formal and less flexible than the informal small group problemsolving processes found in American firms, especially when faced with theneed for major restructuring often called for by current competitive conditions.
d
Chapter
Worker Representation andCollective Bargaining
Introduction
Since enactment of the National LaborRelations ("Wagner") Act in 1935, the de-clared policy of the United States has been"to encourage the practice and procedure ofcollective bargaining." Congress assertedthat collective bargaining is an essentialinstrument for securing "equality of bar-gaining power between employers ai d em-ploynes," and promoting economic and
political democracy for American workers.Public opinion surveys have long made itclear that most Americans approve of unionsin general and of the right of employees tojoin the union of their choice.1 In presen-tations to the Commission, representativesof labor and business concurred with thebasic principle of the Act that workersshould have "full freedom of association, selforganization, and designation of repre-sentatives of their own choosing."
1A 1988 Gallup poll found that 69 percent of Americans believe that "labor unions are good for the nation
as a whole." A 1991 Fingerhut/Powers survey reported 60 percent of the general public agreeing (and
23 percent disagreeing) that "unions have basically been good for American working people." A 1992
Harris Poll showed that general approval of unions does not necessarily translate into support of their
stand on particular issues, such as on NAFTA.
7 4 63
The intent of the Wagner Act was toencourage collecti ie bargaining, not to man-date it in any particular workplace. TheWagner Act made it an unfair labor practicefor employers to "interfere with, restrain, orcoerce employees in the exercise of theirright ... to form, join, or assist labor organi-zations." The 1947 Taft-Hartley amend-ments to the NLRA made it an unfair laborpractice for labor unions to coerce employeeswho wanted "to refrain from" union repre-sentation.
By making it illegal for either manage-ment or unions to coerce employees in theirfreedom of association, the Nation's laborlaw seeks to leave the decision whetherto form a union or not in the hands ofworkers.
The second charge to the Commissionprovides:
"What (if any) changes should be madein the present legal framework and practicesof collective bargaining to enhance coopera-tive behavior, improve productivity, andreduce conflict and delay?"
In most workplaces with collective bar-gaining, the system of labor-managementnegotiations works well. Conflict is rela-tively low, and unions and firms havedeveloped diverse forms of new cooperativearrangements, as Chapter II indicated. Therelations among workers, their unions, andmanagement in these workplaces are well-regarded by these parties. In testimonybefore the Commission, the leaders of majorcompanies and unions attested to theirpositive experiences with collective bargain-ing.
Peter J. Pesti llo, Executive Vice-Presi-dent Corporate Relations, Ford Motor Copany testified as follows:
"In this constantly evolving envi-ronment of uncertainty, can col-lective bargaining produce andsustain the type of cooperationthe nation requires? I believe itcan.
Based on the Ford experience, Ibelieve that management, unionsand employees can successfullywork together to improve rela-tionships and improve U.S. com-petitiveness on a firm-by-firmbasis. It's a tall order. But it'sthe only way to proceed if wewant to be here for the long run.
We can't afford a collective bar-gaining meltdown." (July 28,1993).
Moreover, in some cases, parties de-velop their own non-conflictual proceduresfor determining workers' preference for un-ionism. The Commission heard testimonyabout some of these efforts to reduce thedegree of conflict and resources devoted toconfrontational battles over whether newfacilities should be organized. Philip Mor-ris, Miller Brewing, and the General Motors'Saturn Division created joint task forces todiscuss the organization of work and themanagement system in their new facilities.In each case this produced union repre-sentation without prolonged conflict so thatcollective bargaining could start, in the newfacilities on a cooperative basis. Otherfirms, such as AT&T and Scott Paper, havenegotiated rules of conduct to govern unionorganizing in new facilities or businessunits.
For instance, AT&T agreed that it wouldnot campaign against organization and thatit would recognize the union if a majorityof employees signed cards indicating thatthey desire representation. (This agree-
J64
ment excludes that part of AT&T that wasformerly National Cash Register). Accord-ing to testimony before the Commission, thissystem has worked well. The Commissionnotes that in some of these facilities workershave chosen to remain nonunion.
In addition to these cases, other partieshave developed their own procedures forvoluntary representation elections. Manycompanies maintain nonunion facilities andgood relations with workers and unionswithout engaging in a "war" over organizingnew plants or worksites.
Where much conflict and delay doesoccur is in the process of providing workersa democratic choice whether to organize aunion in previously unorganized work-places. The history of union organization isnot one of a "laboratory condition" election(to use the phrase that has guided theNational Labor Relations Board) of employ-ees for or against forming a union to bargaincollectively with their employer. Manyfirms and business organizations in theUnited States have historically been moreresistant to the formation of unions thanmanagements in other advanced economies,and often have sought to discourage unioni-zation. Employees and union organizerswho seek to bargain collectively have coun-tered this resistance with their own varietyof tactics, with varying degrees of successover time.
General agreement exists on broad prin-ciples regarding worker representation andcollective bargaining; however, the effort toimplement those principles in workplaces
encounters a highly conflicted and emotionaldebate. Since the 1926 Railway Labor Actevery major piece of legislation regulatingthe process of organizing a union has beenthe subject of bitter partisan political andunion-management conflict. Most union or-ganizing drives in the United States todayare difficult for both employees and man-agement. Though the number of unionorganizing campaigns is small compared tothe universe of workplaces, the perceptionsgenerated by these conflict-driven situ-ations pervade the broader employee andmanagement relationships.
The first step in moving toward a dis-passionate and reasoned discourse on theexperiences with worker representation andcollective bargaining under U.S. law is toexamine statistical evidence on the opera-tion of the National Labor Relations Act.2Much of the data in this chapter comes fromthe statistics of the National Labor Rela-tions Board (NLRB), and the record wasdeveloped under both Republican andDemocratic administrations over the years.
The Process of Establishing CollectiveBargaining
Before examining statistical trends,however, it is useful to set out the keyfeatures of the National Labor Relations Actthat guide the model for determiningwhether there is to be a collective bargain-ing relationship at any given workplace.
2 From the outset, the National Labor Relations Act contained the provision: "Nothing in this Act shall
he construed to authorize the Board to appoint individuals for the purpose of conciliation or mediation
or for economic analysis." The paucity of analysis and data, other than operating statistics, hampers
efforts to study and appraise the work of the NLRB and the public policies it administers.
7G 65
1. The majority verdict of employees inan appropriate unit determines whether ornot they will be represented by a union forpurposes of collective bargaining -- a deci-sion typically made through a secret ballotelection conducted by the National LaborRelations Board at the employees' worksite.
2. Prior to this election, the employerand the union are entitled to, and usuallydo, engage in a vigorous campaign pointingout the pros and cons of changing thenonunion status quo. However, as notedabove, both sides are prohibited from threat-ening or inflicting retaliation against em-ployees who support the other side -- inparticular, employers through dismissals ofunion supporters or of labor organizationsthrough coercing employees in their decisionrespecting self-organization.
3. If the majority of employees vote forunion representation, the employer mustrecognize the designated union as exclusivebargaining agent for employees in the unit,and must engage in good faith negotiationsabout terms and conditions of employmentthat would be incorporated in a collectiveagreement; but the employer is not requiredto make concessions to particular unionproposals.
4. If agreement cannot be reachedvoluntarily by the two sides, employees havethe legal right to collectively withdraw theirlabor (i.e., to strike) without fear of dismiss-al; although the employer is free to lockoutworkers or to permanently replace strikingemployees in their jobs.
Not all workers are covered by theNational Labor Relations Act. Some, suchas managers, supervisors, agriculturalworkers, and domestic workers, are ex-cluded by the law. Workers in the railroadand airline industries are covered by theRailway Labor Act.
Other workers nominally covered by thelaw are effectively excluded, because theymay be part-time or contingent, as describedin Chapter I, or because they may have anindependent contractor relationship with asole employer. These temporary, "leased,"on-call, or self-employed contractor statusworkers, are often low-paid individuals.
Finally, the situation of employers andworkers in construction differs enough fromthat of other employers and workers tomerit special attention. We examine firstthe experience of employees for whom theprocedure given above applies, and whoseexperience dominates the NLRB statistics.
Part A
Experience Under theNational Labor RelationsAct
1. NLRB Certification Elections
Since passage of the NLRA almost 60years ago, millions of workers and largenumbers of unions and enterprises haveused the procedures establi:thed by theNLRB. The majority of part tipants havecompiled with the established requirementswithout resort to tactics that were chal-lenged by either side and later found illegalby the Board.
Exhibit III-1 (see page 81) shows thenumber of elections held for union certifica-tion under the NLRB and the outcome ofthis stage of the process to form a collectivebargaining relationship. It gives the datain five year annual averages from 1950 to1980 and in single years thereafter.
7?66
The first fact stands out is thatthe number of certification elections andworkers involved has been small comparedto the number of workplaces and employeesin the United States.
In the late 1980s, less than 4,000NLRB elections were held in any givenyear. This contrasts with the largenumber of establishments in the U.S.shown in Chapter I. The number of"eligible voters" in NLRB elections hasranged from roughly 200,000 to250,000 in the 1980s. This contrastswith the approximately 65 million non-union employees potentially coveredby the Act.
The extent of NLRB election activityhas trended downward through muchof the post-World War H period. Inthe early 1950s for example, the Boardconducted nearly 6,000 elections, in-volving over 700,000 workers. By thelate 1970s, the total number of certi-fication elections had risen to over7,500, but in smaller-sized units total-ing 490,000 employees. From 1975 to1990 the number of elections fell by 55percent to 3,628 elections involving230,000 workers.
Fewer workers were involved in theNLRB representation process in 1990than were involved in previous dec-ades, despite the enlarged work force.
One important implication of these sta-tistics is that the NLRB data on organizingcampaigns, and on unfair labor practices by
management and labor in these campaigns,reflects experiences in a small portion of theAmerican labor market. Even at 1960s or1970s levels of NLRB election activity, onlya relatively small number of workers andworkplaces were involved in representationcampaigns that reached the election stage.
A second fact is that the success ofemployees in organizing unions through theNLRB election process has fallen sharply.
The proportion of elections in whichworkers voted to unionize fell from theearly 1950s levels of 1950 to 1954 of72 percent to figures hovering about50 percent in the 1975 to 1990 period.
The number of workers eligible to votein NLRB elections has fallen morethan has the number of elections. Thisreflects the fact that union organizingdrives have increasingly been locatedat smaller workplaces.
The number of employees in newlycertified units shows a greater percent-age decline than does the number ofnewly certified units. This is becauseunions have been less successful inwinning elections in larger workplacesin the 1970s and 1980s than in the1950s and 1960s. In 1990, 79,000workers were in newly certified units.
The number of NLRB elections held, thenumber of workers in elections, and thenumber in units certified for collective bar-gaining has diminished.
3 The estimate of 65 million is based on applying 74 percent to the 88.1 million total private sector wage
and salary workers reported in U.S. Department of Labor Employment and Earnings January 1994, Table
A-23. The estimate of 74 percent is based on data in Table I of Dorothy Sue Cobbie's "MakingPost-industrial Unionism Possible" Rutgers University, January 7, 1994 .
78 67
The number of workers organizedthrough NLRB elections, and the downwardtrend in such, underlies the decline in theproportion of the private sector workforcewhose conditions of employment are shapedby collective bargaining described in Chap-ter 1.
The process of moving from a petitionfor an election to an election involves severalsteps. The union seeking to represent theworkers first goes to the NLRB with awritten authorization petition from at least30 percent of workers in the relevant unit,but which usually includes close to two-thirds of the workers. Once the Board hasdirected an election, it also provides theunion with a list of names and addresses ofemployees in the election unit.
The union can speak to the employeeson its own premises or in the employees'homes, if the employees are willing. Theemployer can speak to the employees at theworkplace, whether through one-on-one con-versations between supervisors and work-ers, or in general meetings which employeesare required to attend and from whichindividual workers who support unioniza-tion may be excluded. Union organizers areexcluded from these meetings and are typi-cally banned from speaking to workers insome places accessible to the general public,such as company parking lots, or cafeterias.Supervisors who refuse to engage in thecompany's campaign may be legally dis-charged. Studies show that consultants areinvolved in approximately 70 percent oforganizing campaigns and that unions areless successful in those campaigns than inothers. There are no accurate statistics onconsultant activity.
How long does an NLRB election cam-paign last? Exhibit 111-2 (see page 82)shows the time between union petitions foran election and the actual election. The
median time from petitioning for an electionto a vote has been roughly fifty days for thelast two decades (down considerably fromthe time taken in the 1940s and 1950s).
The union determines when to file anauthorization petition, and employers caninfluence the election date by raising issuesabout the relevant election unit and insist-ing on a pre-election hearing and decisionabout them. Employers and unions can alsoagree on the definition of the unit or exclu-sion of certain categories of employees fromits scope, producing consent or stipulatedelections that will take place more quickly.
It is difficult to determine the effect ofthe time between a petition and an electionon whether workers vote for or againstunionization. Unions are more likely towin elections held relatively quickly, butthis does not prove that time in fact affectsthe election result. Many things will differbetween elections that take place quicklyand those that take a long time. Manage-ment is more likely to be resistant to theorganizing drive in the latter case. Ap-proximately 20 percent of elections takemore than 60 days.
Compliance with the NLRA
The NLRA makes provision for identi-fying and remedying unfair labor practicesinvolving any participant.
The NLRB statistics provide informa-tion about management and union illegalbehavior under the labor law.
Exhibit 111-3 (see page 83) records thenumber of unfair labor practice chargesagainst employers, the percentage heldmeritorious, the decomposition of thecharges between those under Section 8(a)(3)(which prohibits discriminatory dischargesand other retaliatory actions against union
7 9 68
supporters) and those under Section 8(a)(5)(which prohibits employers from bad faithbargaining in a collective bargaining situ-ation). The last three columns give thenumber of backpay awards, amount ofawards, and the number of employees or-dered reinstated due to employer unfairpractices. The Exhibit gives figures asannual averages in five year intervalsthrough 1980 and for single years thereaf-ter.
Through 1980, there was an upwardtrend in unfair practice chargesagainst employers. In the early 1950s,when the number of certification elec-tions was running at roughly 6,000,approximately 3,000 8(a)(3) chargeswere filed each year against employ-ers, and a little over 1,000 8(a)(5)charges were also filed. By the late1970s, with approximately 7,500NLRB elections per year, Section8(a)(3) charges had risen five-fold, toalmost 16,000 a year, while Section8(a)(5) charges were up to nearly7,500 annually.
From 1980 to 1990, the number ofSection 8(a)(3) charges against em-ployers fell by 50 percent while thenumber of Section 8(a)(5) chargesagainst employers remained stable.The fall in Section 8(a)(3) chargestracks the fall in NLRB elections overthe period.
More than 60 percent of unfair laborpractice charges are either withdrawnby the complainant or judged to bewithout merit by the National LaborRelations Board. This means that thenumber of charges under the law ex-aggerates the extent of violations. In1990, there were about 10,600 chargesof unfair labor practices against man-
agement that were found meritoriousby the NLRB.
The proportion of charges found meri-torious has trended upward over time.In 1990 44 percent of charges againstemployers were held meritorious com-pared to less than 40 percent in the1950 to 1975 period.
The number and amount of backpayawards given to employees and thenumber of employees reinstated underthe Act because of meritorious chargesagainst employers rose from about1960 through the mid 1980s. Thenumber of backpay awards roughlystabilized thereafter, in the 17,000-18,000 range, while the amount ofbackpay awarded continued to grow.The number of employees ordered re-instated dropped from the early 1980sto around 4,000-4,500 in the late 1980sand 1990.
Taken by themselves, the statistics inExhibit 111-3 may overstate the degree ofemployer interference with employee freechoice about union representation. Becausethe legal reach of Sections 8(a)(3) and 8(a)(5)has been considerably expanded by theBoard and the courts over time, manymeritorious complaints do not take placewithin the context of representation cam-paign or attempted negotiation of a firstcontract.
The NLRB does not separately cata-logue meritorious 8(a)(3) complaints thatare precipitated by a representation contest.However, the Commission used a methodol-ogy developed by University of ChicagoProfessors Bernard Meltzer and RobertLalonde4 to calculate the share of reportedNLRB reinstatements that were connectedto union organizing campaigns.
30 69
Exhibit 111-4 (see page 84) presents oneset of estimates of the number of workersoffered reinstatement arising from NLRBcertification elections, the ratio of thoseworkers to workers voting for unions, andthe p rcentage of elections producing rein-statement offers.5
In the early 1950s, approximately 600workers were reinstated each yearbecause of a discriminatory dischargeduring a certification campaign. Bythe late 1980s, this number was near2,000 a year.
Adjusted for the number of certifica-tion elections and union voters, theincidence of illegal firing increasedfrom one in every 20 elections ad-versely affecting one in 700 unionsupporters to one in every four elec-tions victimizing 1 in 50 union sup-porters.
The number of reinstatement offers aris-ing from certification elections, while smalland relatively constant since 1975, has risensignificantly when compared to the totalnumber of workers voting for unions.
As noted earlier, section 8(b)(1)of theNLRA makes it an unfair labor practice fora labor organization to restrain or coerceemployees in the exercise of their rights ofself-organization guaranteed by law.
Exhibit 111-5 (see page 86) shows thenumber of unfair labor practice chargesagainst unions, using a format similar tothat in Exhibit 111-3 for charges againstemployers.6
In 1990, nearly 9,700 unfair laborpractice charges were filed againstunions, constituting 29 percent of thenearly 34,000 unfair labor practicecharges filed with the Board. Theproportion of charges held meritoriouswas just over a quarter, so thatcharges against unions represented 17percent of the charges found meritori-ous, 10 percent of complaints issued,and 11 percent of cases in whichformal decisions were made by theBoard that year.
The trend in unfair labor practicecharges against unions, like that
4 See Robert LaLonde and Bernard Meltzer, "Hard Times for Unions: Another Look at the Significanceof Employer Illegalities," 58 University of Chicago Law Review 953, 1991.
5 The estimates are imperfect as a measure of discriminatory discharges during elections. One problem isthat they only include workers offered reinstatement and exclude those offered backpay. Anotherproblem is that some of the reinstatement offers may occur in situations in which the union petitions foran election but does not proceed to an election. There is no reason to expect these problems to bias thetrends over time shown in the Exhibit. Though not taking issue with the Meltzer-Lalonde methodologyand findings regarding the rate of illegal discharges during organizing campaigns, former NLRBChairman Edward Miller pointed out to the Commission that unions actually file objections to employerconduct in only six percent of elections, and these objections are found meritorious in only two percentof the cases.
6 The NLRB does not have available statistics that show the number of unfair labor practice charges againstunions in certification elections, so Exhibit 111-4 cannot be replicated for unions. However, the NLRBtends to set aside an election, and orders a new election, on a finding that a union has coerced employeesin their free choice.
870
against firms, is upward from 1950through 1980, and falls in the 1980scoincident with the falling number ofNLRB representation elections.
The percentage of unfair labor practicecharges held meritorious against un-ions was below 30 percent in the 198Csand trended downward since roughly1970.
Unfair labor practices against unionsgrew until the 1980s. The proportion ofcharges against unions held meritorious islower than the proportion held meritoriousagainst employers.
Comparing the statistics in ExhibitsIII-3 and III-5 shows that a larger propor-tion of unfair labor charges and of chargesheld meritorious are against employers thanare against unions. In 1990, 71 percent ofunfair labor practice charges (Section 3(a)and 8(b)) were against employers and 81percent of charges held meritorious wereagainst employers.
2. Unfair Labor Practice Sanctions
What penalties does the law impose onemployers or unions who engage in unfairlabor practices?
The philosophy of the NLRA has beento repair the harm done to injured employ-ees by providing employees who were firedfor union activity with backpay and byordering them reinstated in their jobs.
The monetary penalty for an employerfiring a union supporter in violation ofSection 8(a)(3) is the back pay that was lost.3y the employee-victim, minus any sums theemployee did (or should have) earned inanother job while awaiting relief from theNLRB. In 1990, the average back payaward amounted to $2749 per discharge.
The "in kind" relief of reinstating work-ers who were illegally fired often takes along time to effectuate. Before an employeris legally obligated to reinstate a dischargedemployee, the case goes through a four-stageprocedure. The employee's charge mustfirst be judged meritorious by the Board'sregional office, then by an AdministrativeLaw Judge following a full-scale trial, thenby the Board itself, and then by a federalappeals court a process that takes anaverage of three years to complete. Inpractice, however, most such cases are re-solved longibefore they reach the end of thislegal path.' Earlier disposition of a chargerequires voluntary agreement between theparties.
Empirical research shows that mostillegally fired workers do not take advantage
7 As former NLRB Chair Edward Miller pointed out to the Commission, the source of delay is not at theBoard's initial investigative stage. The Regional Offices screen out or settle the bulk of charges and issueformal complaints in meritorious cases within 45 days or so, a track record that just about any other laboror employment agency would be proud to have. The crucial delay occurs at the next stage, theadministrative law judge proceedings, which typically takes a year to complete, and then only with arecommended disposition to the Board itself. Rather than superimpose on this administrative processthe additional avenue of interim injunction sought from judges, Miller would rather movethe trial of all
NLRA unfair labor practice cases into a specialized federal labor court which had full judicial authority
to move as quickly and effectively as the legal circumstances required. (See Edward B. Miller, An
AdThinistrative Appraisal of the NLRB (Rev. ed. 1980).)
82 71
BES1 COPY f"AllARLE
of their right to reinstatement on the job,following an order, and most reinstatees aregone within a year.
Employers who violate Section 8(a)(5)by engaging in surface bargaining typicallyare ordered by the NLRB not to repeat thisconduct in the future. The Board cannotaward any specific contract term that em-ployees may have been denied by reason oftheir employer's bad faith bargaining.Most NLRB orders directing employers tocease bargaining in bad faith do not lead toa first contract, and of those that do, mostdo not see a contract renewal.9
Board remedies against employer unfairlabor practices can he compared to theremedies available to employers against theunfair labor practice of unions, the secon-dary boycott, that was outlawed by the 1947Taft-Hartley amendments to the NLRA.Section 8(b)(4) of the Act makes it an unfairlabor practice for unions to engage in anysuch secondary pressures, either for "topdown" organizing of nonunion employees, orwhere employees on strike in a bargainingdispute with their own employer have askedfellow union members working for otheremployers not to handle goods and servicesproduced by their strike replacements.
Both the secondary and the primaryemployers affected by such union actions
have the right under Section 10(1) of theNLRA to have the Board's regional officeseek immediate injunctive relief (typicallywithin a few days) from a federal districtjudge; as well as the right under Section303 of the Labor Management Relations Actto sue the union in court for all damagessustained as a result of its illegal behavior(including recovery of the employer's legalcosts of suing the union). Those statutorysanctions have greatly reduced the use ofsecondary boycotts.
Congress did not, however, enact thesame enforcement provisions for cases inwhich employers illegally discharge unionsupporters in an organizing campaign orengage in bad faith bargaining with newly-elected union representatives as they do forsecondary boycotts. The Taft-Hartley law(Section 10(j)) empowers the Board itself(not its Regional Office), following issuanceof an unfair labor practice complaint, topetition a federal district court for interiminjunctive relief.10 In practice, this legalavenue is pursued infrequently each year,and is usually too late in discriminatorydischarge cases to undo the damage done.
More recent employment law includingthe Civil Rights Act, the Age Discriminationin Employment Act, the Americans withDisabilities Act, and related antidiscrimina-tion laws that Chapter IV examines, and
8 The first study, by Les Aspin of reinstatement cases in New England in the early 1960s, is summarizedin Hearin on H.R. 11725 before the Special Subcommittee on Labor of the Committee on Educationand Labor, 90th Congress, 1st Sess. 3-12 , 1967. The second study, by Elvis C. Stephens and WarrenChaney of cases in Texas in the early 1970s, is reported in "A Study of the Reinstatement Remedy underthe NLRA," 25 Labor Law Journal 31,1974, and "The Reinstatement Remedy Revisited," 32 Labor LawJournal 357, 1981.
9 Philip Ross, The Labor Law in Action: AnAnalysisoftheAdministative Process Under the Taft-HartleyAct, An Independent Study Supported by the NLRB, Typescript, 1966; Benjamin Wolkinson, "TheRemedial Efficacy of NLRB Remedies in Joy Silk Cases ," Cornell Law Review 1, 1969.
10 The Board may delegate this authority to its Regional Office.
72
83
the tort of wrongful dismissal,11 use a verydifferent enforcement model. Over andabove the back pay lost by the fired em-ployee, the employer is liable for consequen-tial financial and psychological harm to itsvictims, punitive damages for willful mis-conduct, and the attorney fees of victoriousplaintiffs.
The N'LRA mode of dealing with employ-ers or unions who violate the rights ofworkers under the Act is remedial or repara-tive. There are stiffer sanctions availableto employees whose rights are violatedunder most federal and state employmentlaws.
3. The Trend in First Contracts
NLRB certification that employeesvoted to be represented by a union is onestep in establishing collective bargaining inthe workplace. The next step is for employ-ees and their union to secure a writtenagreement from the employer.
Data about the historical trend in suc-cess in negotiating first contracts is less firmthan the data on certification elections. Oneset of estimates is from independent ana-tysts who have used various samples indifferent years to determine the extent to
which workers who elect a union to repre-sent them in collective bargaining obtain acontract. The earliest estimate in the late1950s found that unions failed to secure afirst contract 14 percent of the time,12whereas estimates of the union failure ratein the 1980s are on the order of 20 to 37percent.13
The Commission received new informa-tion on first contracts from the files of theFederal Mediation Conciliation Service(FMCS). Since fiscal year 1986 the FMCS,by informal arrangement with the NLRB,has received notice and copies of all newcertifications. Exhibit 111-6 (see page 87)presents these new data.
Of the 10,783 certification notices theFMCS received between 1986 and1993, initial agreements were reachedin 6,009 or 56 percent of those units.Another 4 percent were found not toneed mediation or to fall outside theFMCS jurisdiction. Thus, on the orderof two-thirds of certification electionslead to a first contract, whereas one-third or so do not.
Because many newly certified units donot produce a first contract, the num-ber of workplaces which obtain a col-
11 See Clyde Summers, "Effective Remedies for Employment Rights: Preliminary Guidelines and
Proposals," 141 University of Pennsylvania Law Review 457, 1992.12 Philip Ross, The Labor Law in Action: An Analysis of the Administrative Process Under the Taft-Hartley
Act 12, An Independent Study Supported by the NLRB, Typescript, 1966. .Also see, Philip Ross, The
Oovernment_as a Source of Power. The Rule of Public Policy in Collective Bargaining. Brown UniversityPress, 1965, Theodore J. St. Antoine, "The Role of Law" in U.S. Industrial Relations 1950-1980: A
Critical Assessment, Industrial Relations Research Association, 1981, pp. 172-77.
I3 An analysis done for the AFL-CIO's Industrial Union Department, Gordon Pavy, "Winning NLRBElections and Establishing Stable Collective Bargaining Relationships With Employers," found that of
NLRB certifications secured by AFL-CIO affiliates in 1987, he union had by 1992 negotiated a first
contract for 65 percent of the units and a second contract in just 47 percent (covering 59 percent of the
employees).
34 73
lective bargaining contract through theNLRB process is lower than indicatedin the election figures in Exhibit III-1.Applying two-thirds to the percentwon figures in that Exhibit indicatesthat just one-third of NLRB electionsresulted in a collective bargaining con-tract in 1990, and that on the order of53,000 workers ended up with a con-tract. 14
FMCS data also show that strikesoccurred in 356 of these first contractnegotiations. First contract strikestended to last longer than contractrenewal strikes handled by FMCSan average of 45 days versus 30 days-- and to produce fewer agreements atthe end of the strike -- 54 percentversus 82 percent.
Studies of representative samples offirst contract situations15 indicate thatroughly a third of employers engage in badfaith "surface" bargaining with the newly-elected union representative, and that thisillegal tactic significantly reduces the oddsthat employees will secure an initial agree-ment from their employer (or if they do, thatthe bargaining relationship will survive thenext round of negotiations).
The Commission is aware that manyfactors can contribute to the failure of theparties to reach agreement including badfaith bargaining.
. Cost of the NLRB Election Process
There do not exist national data on theamount of resources spent by managementand labor in fighting NLRB election cam-paigns, but most participants and observersassess the dollar and human cost as highin relation to the extent of st.ch activity.Firms spend considerable internal resourcesand often hire management consulting firmsto defeat unions in organizing campaigns ata sizable cost. Unions have increased theresources going to organizing and spendconsiderable money in organizing cam-paigns. Employees who want repre-sentation devote considerable time andeffort to this activity.
In testimony before the Commissionboth union and employer spokespersonsstressed the confrontational nature of theelection process. (See Exhibit 111-7, page 88)
Ms. Allison Porter of the AFL-CIO Or-ganizing Institute explained the problemfaced by union organizers who must tellworkers the risk they face from illegalfirings. Mr. Clifford Ehrlich of MarriottInternational explained how employers view"perpetual conflict" in organizing drives.Public opinion polls show that many Ameri-cans recognize the problems involved inorganizing drives as well.
In a 1988 Gallup Poll, 73 percent saidthat "workers' rights and abilities to organ-ize unions have faced a strong challengefrom corporations in the past few years," 69percent stated that "corporations sometimesharass and fire employees who support
14 Because the FMCS data do not give us the number of employees covered in different situations, we applythe distribution of new certificates to the number of workers in elections won.
15 William N. Cooke, "Failure to Negotiate First Contracts," 38 Industrial and Labor Relations Review 163.1985.
85 74
unions," and 44 percent reported that "ifemployees attempted to form a union in myworkplace, serious conflict among employeeswould be inevitable."
In a 1991 Fingerhut-Powers poll, 59percent said it was likely they would losefavor with their employer if they supportedan organizing drive; 79 percent agreed (ver-sus 16 percent who disagreed) that it waseither "very" or "somewhat" likely "thatnonunion workers will get fired if they tryto organize a union."16 Of employed non-union respondents, 41 percent believed (ver-sus 50 percent who did not) that "it is likelythat I will lose my job if I tried to form aunion."
While no survey has documented thedisturbance that a "war" for unionizationbrings to the employer nor the effects onproductivity or profitability, the statementby Clifford Ehrlich makes it clear that theconfrontational process brings tension andpain to employers as well as to workers.
The United States is the only majordemocratic country in which the choice ofwhether or not workers are to be repre-sented by a union is subject to such aconfrontational process in most cases. Onereason for this is that the exclusive repre-sentation doctrine in the United Statesmeans that workers who want union repre-sentation must constitute a majority of therelevant work force: unionization is an all-or-nothing choice. Another reason is thatin the United States unionization oftenraises the labor costs at a worksite, whereasin many other countries, collective bargain-ing or administrative decrees establish
wages for all workers in a given sectorregardless of unionization at the local site,while many benefits are nationally man-dated. A third reason is that the legalframework poses the issue of worker repre-sentation as a campaign struggle betweenemployers and unions.
The issue of union representationsparks a highly contested campaign betweenemployers and unions that produces consid-erable tension at the workplace.
Summary
The four major findings that emergefrom the NLRB and related evidence onrepresentation elections, unfair labor prac-tices, and first contracts are:
1. Relatively few new collective bar-gaining agreements have been created inrecent years under the procedures of theNLRB.
2. The rights of most workers whoseek to unionize are respected by employ-ers, but some employers do violate therights of some workers.
3. Employer unfair labor practiceshave risen relative to the declining amountof NLRB representation activity.
4. The NLRA process of representationelections is often highly confrontationalwith conflictual activity for workers, un-ions and firms that thereby colors labor-management relations.
16 The polling data referred to in this section are detailed in Richard Freeman and Joel Rogers, "Who Speaksfor Us? Employee Representation in a Nonunion Labor Market," from Bruce E. Kaufman and MorrisM. Kleiner. eds. Employee Representation: Alternatives and Future Directions 13, 2834, 1993.
8E 75
5. The Human Face of theConfrontational Representation Process
Behind the NLRB and other statisticsare real people -- American employees --rather than spokespersons for organizedlabor or business groups. A number ofemployees testified before working partiesof the Commission about experiences withemployer reprisals in organizing cam-paigns.0 These examples are not necessar-ily representative of organizing campaignsgenerally, and do not reflect on the behaviorof employers at millions of worksites in theU.S. any more than the examples of criminalactivity by some union leaders that sparkedthe Landrum-Griffin Bill of 1959 reflectedon the overwhelming majority of unionmembers and leaders. Still, the testimony"of workers trapped ... in the dark ages oflabor-management antagonism" show thatthere is a negative side to American laborrelations that reflects the highly chargednature of the debate and contrasts sharplywith the efforts of employers and theirworkers to establish cooperative and produc-tive relations documented in Chapter Il ofthis Report. (See Exhibit 111-8, page 89)
As the Commission has neither theinvestigative staff nor subpoena power toexamine these examples in detail, the Com-mission simply reports the testimony beforeit, as in Chapter II.
6. Debate on Labor Law and UnionOrganizing Campaigns
The debate over labor law and unionorganizing goes beyond concerns over illegalconduct.
The Commission heard from labor lead-ers, front-line union organizers, and work-ers, and some scholarly experts that, ascurrently operated, the design and admini-stration of the NLRA are ill-suited to pro-viding workers a free choice about unionrepresentation.
The Commission also heard from manybusiness representatives who believe thecurrent law is working well, at least for thevast bulk of employers and workers, anddoes not need any major revision. Thebusiness representatives agreed that the Actshould be effectively enforced; some acknow-ledged that the misconduct of those firmsthat violate the law needs to be dealt withmore effectively; and others called for a newvision for labor law that breaks out of thecurrent highly adversarial pattern.
The issue dividing labor and manage-ment is not about the illegal actions of someemployers or unions but about how thecurrent operation of the law affects theability of workers to organize. No one beforethe Commission condoned the tactics ofemployers who violate the law.
On the union side, the trend in unionrepresentation shown in Chapter I and thetrend in NLRB election results shown inthis chapter illustrate why union leaders aregravely concer_ied about the operation of thelaw in general.
The Commission received testimonyfrom union leaders that the primary prob-lem facing workers who want to organize isnot the illegal actions of some employers(although those actions harm an organizingcampaign). It is rather, in the words of
17 Professor Richard liurd of Cornell and several union representatives provided additional case studies ofemployee experiences.
76
87
AFL-CIO President Lane Kirkland, "veiledthreats and acts of discrimination whichcannot be proven to be unlawfully moti-vated."
Union witnesses felt that employers hadcertain advantages in NLRB election cam-paigns: access to the workplace and toemployees during working time, and exer-cised their economic power over employeesto override the right to free representation:
The reality of employer opposi-tion and the kind of latitudeemployers have in how they cam-paign under current law has to-tally invaded the way that unionsseleot and run campaigns ... anda clearly defined bargainingunit...organizing a union today isso risky, it's so hard, it's so tech-nical, and so scary for workers,that only the most resourceful,the most fed-up, and the mostheroic workers will even pursueit ." (Allison Porter in testimonybefore the Commission.)
Based on their experiences union rep-resentatives recommend various changes inthe representation system, such as:stronger penalties to deter unlawful em-ployer conduct, expedited procedures to rem-edy such conduct, an equal time provisionto give workers the same access to unionspokepersons as they have to managementspokespersons, an obligation of an employerto recognize a representative designated bya majority of employees through authoriza-tion cards, and interest arbitration to guar-antee a first contract to employees who votefor a union.
The employers do not believe the trendin union representation is due to any flawsin the NLRA and are opposed to thosechanges advanced by labor.
The Commission heard testimony frommanagement representatives that they didnot feel that unfair labor practices contrib-uted to the difficulty of organizing. Employ-ers further contend that a meaningfulcampaign is an indispensable means forenlightening employees about the issuesbefore they cast their secret ballot vote oror against union representation.
Overall, both sides are in apparentagreement that employer resistance to un-ionization reduces the probability of a unionelection win, and thus of the establishmentof a collective bargaining arrangement.
One question that is often raised iswhether any significant number of workerscurrently not covered by collective bargain-ing in fact want such coverage.
Public opinion surveys provide someevidence on this question for the millions ofAmerican workers who are not involved inNLRB election campaigns. These datawhile informative about attitudes, do nottell us how workers would in fact vote in anNLRB representation campaign after man-agement and unions gave their respectivearguments nor how they would vote in suchcampaigns absent unfair labor activities, orin an environment with less stringent em-ployer opposition.
Public opinion surveys on this issue tella fairly consistent story from 1977 through1991: approximately 30 percent of the non-union workforce typically answers "yes" toquestions normally worded as follows: "If aunion representation election were held onyour job, how would you vote?" Non-Whitesare generally twice as likely to expressdesire for unionization as Whites; womenalso often tend to express a greater prefer-ence for unionization than men.
88 77
If the 30 percent figure is applied to thenumber of private sector workers covered bythe NLRA and not in unions, approximately15 million nonrepresented workers mayindeed want representation.18 Many ofthese workers may be at worksites wherethe majority of employees do not wantrepresentation. Some will be at worksiteswhere the majority does want such repre-sentation. While the NLRA protects theconcerted activity of nonunion employees asa group, the doctrine of exclusive repre-sentation makes minority unionism or non-union concerted activity by workers rare inthe United States.
Information was presented to the Com-mission regarding the results of repre-sentation elections in the public sector.Over the past three decades, 36 states haveenacted laws allowing some or all of theirpublic employees to organize and bargaincollectively. Certification win-rates by un-ions in public employment are high. in1991-92 averaging 85 percent nation-wide,reflecting substantial union wins in theelections. Studies show that the union winrate in public sector elections exceeds theirwin rate in private sector representationelections in the same state.19 The reasonsfor the difference in union success in elec-tions in the two sectors is an issue fordebate. Union representatives testified be-fore the Commission that they believed animportant reason was that public employersseldom campaign against union organizingand that employees believe if they vote
union the outcome will be a collective bar-gaining contract.
The Commission has not sought to de-termine the role of particular campaigntactics, legal or illegal, on the outcome ofNLRB elections nor the reasons for thedecline in the proportion of workers coveredby collective bargaining in the UnitedStates.
Many factors are undoubtedly at workbehind these trends, including managementactions, union actions, government regula-tions, and the changing needs of workersand their assessment of how best to meetthose needs. The relative influence of these(and other) factors would be very difficult todetermine, including the significance of un-fair labor practices.
There is disagreement about the rela-tionship between unfair practices and legalemployer and union tactics in NLRB elec-tions and the declining success of unions inrepresentation elections.
There is no disagreement that illegaldischarges and related illegal activity harmthe lives of the individual employees whowere fired, and that the legal and adminis-trative process should afford those employ-ees effective redress and try to reduce illegalactivity.
18 This is a conservative estimate obtained 1)) applying 30 percent to the approximately 58 million privatenon-agricultural wage and salary workers covered by the law who are not union members. We obtainedthe 58 million by adjusting downward the roughly 65 million private non-agricultural wage and salaryworkers who are covered by the law by the 11 percent of workers who are union.
19 Kate 13ronfenbrenner and Tom Jurawich, The CurrentStatesgLarganizing in the Public Sector: Final
Repo-4: Transcript, February 24,1994.
78
89
7. SummaryPart A of Chapter III has focused on
how effectively the NLRA works in provid-ing American workers the free choice tochoose whether or not to bargain collectivelywith their employers, which is the unifyingprinciple on which labor, business, and theAmerican people concur.
Only a small proportion of the U.S.workforce is involved in NLRB repre-sentation elections and only a small numberof employers and unions have been foundguilty of violations of the NLRA. Still, theissues in this Chapter are important to U.S.employee-management relations. They areimportant because NLRB representationelections are the way the nation offersworkers the right to choose union repre-sentation and because conflicts in this arenacan create an atmosphere of conflict andconfrontation in worker-management rela-tions throughout the economy.
Our principle findings are summarizedin the following points:
1. American society -- management,labor, and the general public -- support theprinciple that workers have the right tojoin a union and to engage in collectivebargaining if a majority of workers sodesire.
2. The number of NLRB electionsheld, the number of workers in elections,and the number in units certified forcollective bargaining has diminished
3. Representation elections as cur-rently constituted are a highly conflictualactivity for workers, unions, and firms.This means that many new collective bar-gaining relationships start off in an envi-ronment that is highly adversarial.
4. The probability that a worker willbe discharged or otherwise unfairly dis-criminated against for exercising legalrights under the NLRA has increased overtime. Unions as well as firms have en-gaged in unfair labor practices under theNLRA. The bulk of meritorious chargesare for employer unfair practices.
5. The legal relief afforded individualemployees fired for exercising their rightsunder the NLRA was designed to beremedial. The legal relief afforded indi-viduals under more recent employmentlaw is more severe.
6. Relief to employees whose employerhas bargained in bad faith with themrequires the employer to cease and desistsuch tactics.
7. Roughly a third of workplaces thatvote to be represented by a union do notobtain a collective bargaining contractwith their employer.
8. There is a dismal side to Americanlabor relations in which the rights of someindividual workers are violated by someemployers who resist the effort to organize.
The analysis of Part A poses a host ofquestions about possible labor law reforms,to which the Commission will be looking forinformation from interested parties and thegeneral public. Here are some critical ques-tions for further discussion:
How can the level of conflict andamount of resources devoted to unionrecognition campaigns be de-esca-lated?
What, new techniques might producemore effective compliance with prohi-
30 79
bitions against discriminatory dis-charges, bad faith bargaining, andother illegal actions?
Should the labor law seek to provideworkers who want representation butwho are a minority at a workplace agreater option for non-exclusive repre-sentation?
Should unions be given greater accessto employees on the job during organ-izational campaigns, and if so how?
What if anything, should be done toincrease the probability that workerswho vote for representation and theiremployers achieve a first contract andon-going collective bargaining relation-ship?
How might cooperation in mature bar-gaining relationships be increased?
91 80
Year
EXHIBIT III -1Final Outcome of NLRB Union Representation Elections in
TotalNumberElections
TotalNumberElectionsWon
% Won TotalEligibleVoters
Size of NewlyCertified Units(in % ofEmployees)
Cases Closed
% ofEligibleVoters inNewlyCertifiedUnits
1950-54 5,906 4,257 72.1 715.541 554,098 77.4
1955-59 4,731 3,013 63.7 443,770 277,707 62.6
1960-64 6,780 3,944 58.2 495,593 273,026 55.1
1965-69 7,374 4,419 59.9 545,057 302,031 55.4
1970-74 7,911 4,297 54.3 538,108 248,402 46.2
1975-79 7,593 3,746 49.3 488,226 181,352 37.1
1980 7,296 3,498 47.9 478,821 174,983 36.5
1981 6,658 3,019 45.3 403,837 147,353 36.5
1982 4,247 1,857 43.7 258,626 86,439 33.4
1983 3,483 1,663 47.7 171,548 76,659 44.7
1984 3,561 1,655 46.5 211,696 92,231 43.6
1985 3,663 1,745 47.5 217,331 78,073 35.9
1986 3,663 1,740 46.5 223,018 76,272 54.2
1987 3,314 1,608 48.5 204,235 81,396 39.9
1988 3,509 1,736 49.5 211,438 85,525 40.4
1989 3,791 1,878 49.5 247,638 98,709 39.9
1990 3,623 1,795 49.5 231,069 79,814 34.5
9281
EXPIBIT 111-2
NLR
B E
LEC
TIO
NS
(19
75-1
993)
1M
edia
n D
ays
fron
t Fili
ng o
f Pet
ition
to E
lect
ion
1991
%19
92
Cas
es
1992
%19
93
Cas
es
1993
%in
ierv
..k19
75
Cas
es
1975
%19
80
Cas
es
1980
%19
85
Cas
es
1985
%19
90
Cas
es
1990
%19
91
Cas
es
0 to
30
Day
s99
211
.072
99.
038
78.
125
86.
222
46.
026
37.
523
16.
6
31 1
`) 6
U
Day
s
5222
57.9
5004
61.8
3425
71.4
3001
72.1
2740
73.2
2498
71.4
2530
72.3
CI t
o 90
Day
s18
1220
.117
8222
.079
016
.569
316
.660
316
.154
115
.555
215
.8
91 t.
120
Day
s
458
5.1
321
4.0
110
2.3
100
2.4
772.
189
2.5
832.
4
121
to
150
Day
s17
51.
985
1.0
34.7
411.
036
1.0
401.
127
.8
151w
180
Day
s10
01.
145
.613
.319
.511
.315
.420
.6
181
orC
itrat
e'.
Day
s
257
2.9
132
1.6
38.8
521.
250
1.3
531.
555
1.6
TO
TA
LS90
162
8098
4797
4164
3741
3499
3498
4849
4948
49M
edia
n
Day
s
5050
931 This table is based on initial representation election cases processed by NLRB regional
offices during a given- fiscal year (tallied from Regional Monthly Report 4770).
Note: R
cases statistics in the NLRB Annual Report are
based on cases closed during a fiscal year and
include blocked c.nd consolidated cases.
2Reporting of 1975 data is subject to error
since the current casehandling tracking
!;ystme was not in place in 1975.
Accordingly, some information may not correspond to
that
1 nOther reports on the same subject.
94
Exhibit 111-3Unfair Labor Practice Charges Against Employers
Year* Total % of Total Total Backpay EmployeesNumber Charges Number of Number of Awards Offeredof 8(a) Found 8(a)(3) 8(a)(5) (Number/ Reinstate-Charges Meritorious Charges Charges Average Amount) ment
1950-54 4,345 32.9 3,036 1,266 2,940 $ 458 :!,194
1955-59 5,175 21.8 3,993 1,047 1,627 495 9,437
1960-64 9,067 33.9 6,746 2,279 4,349 444 2,876
965-69 11,397 37.4 7,657 3,902 9,156 517 4,180
1970-74 16,428 34.6 10,684 5,306 6,407 846 4,317
1975-79 25,199 37.9 15,912 7,420 8,729 1,607 4,817
1980 31,281 42.6 18,315 9,866 15,433 2,050 10,033
1981 31,273 40.2 17,571 9,815 25,793 1,415 6,463
1982 27,749 40.1 14,732 10,898 N/A N/A 6,332
1983 28,995 42.5 14,866 12,211 17,984 1,713 6,029
1984 24,852 41.1 13,177 10,349 34,863 1,050 5.363
1985 22,545 41.4 11,824 9,186 18,482 2,066 10,905
1986 24,084 42.6 12,714 10,131 17,635 1,937 3,196
1987 22,475 41 4 11,548 9,760 "7,175 2.093 4.307
1988 22,266 44.4 11,196 9,501 17,496 1,928 4,179
1989 22,345 45.0 11,567 9,479 18,956 3,007 4,508
1990 24,075 43.9 11,886 10,024 16,082 2,733 4,026
*Numbers represent annual averages
83
93
EXHIBIT 111-4Discriminatory Discharges During NLRB Electionsi
Five Year Period ReinstatementOffers ArisingFrom Certifica-tion Elections2
Ratio of WorkersOffered Reinstate-ment to WorkersVoting for Unions3
% of Elections % of WorkersProducing Involved inReinstatement Elections WhoseOffers4 Units Voted to
Unionizes
1951-1955 608 1/689 5% 75%
1956-1960 429 1/584 4% 59%
1961-1965 1019 1/272 8% 56%
1966-1970 1346 1/225 8% 54%
1971-1975 1473 1/171 . 8% 43%
1976-1980 2238 1/92 14% 37%
1981-1985 2855 1/38 32% 38%
1986-1990 1967 1/48 25% 38%
The figures in this Table represent annualized averages for each five year period reported.
2 The figures in this column represent the number of all reinstatement offers recorded by the NLRB, reduced
to reflect only those resulting from firings that took place during representation election campaigns. Thefigures do not represent all election-time discriminatory discharges, but only those leading to the particularremedy of reinstatement. In other words, they do not account for 1) illegal firings not reported to the NLRB;
2) those reported to the NLRB but not producing an NLRB charge or complaint; 3) those producing a complaint
but not a favorable resolution; 4) those resulting a favorable resolution not including reinstatement, such as
an award of back pay.
Robert J. LaLonde and Bernard D. Meltzer developed the method for estimating the portion of reinstatementoffers attributable to election-period firings in "Hard Times for Unions: Another Look at the Significance ofEmployer Illegalities," 58 U. Chi. L. Rev., 953 (1991). The figure is derived by 1) multiplying the gross numberof Board-adjudicated or settled reinstatment cases by 0.51, the fraction that arises in the election context,and 2) multiplying that product by 2.2, the estimated number of persons offered reinstatement in each case.
Lalonde and Meltzer looked at a period beginning with 1964, the first year the NLRB reported the number of
reinstatement cases (in addition to its long reported figure for the number of individuals offered reinstatement).We employed a method suggested by Professor Lalonde in order to extend this figure back before 1964.We multiplied the number of individuals offered reinstatement by 0.30, which represents the ratio between
individuals offered reinstatement as a result of election-period firings and all individuals offered reinstatement
for the period 1964-1969. Sources: 16-55 NLRB Annual Reports Table 4 (1953-1990), Table 3 (1951-1952).
3 This s column shows how many workers voted to unionize for every one worker offered reinstatement as
a result of an illegal firing during election campaigns. The figures are derived by dividing all workers voting
to unionize in NLRB elections by the number of election-time reinstatement offers (column one). The figures
may be turned into percentages simply by dividing the numerator by the denominator. Thus, .14% of workersvoting to unionize were fired and offered reinstatement in the early 1950s, whereas 2% were in the late 1980s.
The source for the number of pro-union voters is 16-55 NLRB Annual Report Table 14 (1951-1990).
The column analogous to this one in Lalonde and Meltzer's table contains two errors which taken together,
understate the steepness of the rise in the percentage of union supporters illegally fired from the early 1960s
84
9G
to 1980s. For the period 1964-1969, the appropriate figure is 1/219, not 1/209. For 1980-1984, the correctfigure is 1/48 not 1/57. These corrections indicate that illegal terminations were somewhat less of a problemin the early 1960s and more a problem in the early 1980s than their table suggests. Their mistake for1964-1969 appears to be a simple arithmetical one. As for 1980-1984, they arrived at the wrong figure byforgetting to eliminate the number of pro-union voters in 1982 from the equation. The other side of theequation for 1982, the number of "discriminatory discharges" (reinstatement offers), was already eliminatedbecause the NLRB did not publish the relevant figures for that year.
4The figures in this column are derived by dividing the number of reinstatement offers arising in the electioncontext (column one) by the number of collective bargaining elections. The source for the annual number ofelections is 16-55 NLRB Annual Report Table 13 ("RC" and "RM" elections only) (1951-1990).
5This column represents what one might call organized labor's effective yield in NLRB elections. It revealsthe percentage of workers in such elections whose group ended up unionizing. The percentages are derivedby dividing the number of workers in units that voted to unionize by the total number of workers eligible tovote in NLRB elections. The source for both halves of the equation is 16-55 NLRB Annual Report Table 13(1953-1990), Table 10 (1952), Table 12 (1951).
97 85
EXHIBIT III-5Unfair Labor Practice Charges Against Unions
Year* TotalNumberof 8(b)Charges
% ofChargesFoundMeritorious
Total TotalNumber of Number of8(b)(2) 8(b)(3)Charges Charges
Backpay Awards(Number/Average Amount)
1950-54 1,247 29.2 736 141 742 $ 194
1955-59 2,300 28.9 1,482 157 256 360
1960-64 4,231 30.5 1,827 284 201 494
1965-69 5,585 31.8 1,587 453 125 1,002
1970-74 8,657 31.8 1,743 653 324 763
1975-79 11,503 27.3 1,760 858 373 1,999
1980 12,563 29.7 1,690 913 285 1,740
1981 11,882 28.3 1,513 945 460 1,619
1982 10,230 26.0 1,514 778 N/A N/A
1983 11,526 27.8 1,749 1,158 437 1,055
1984 10,580 26.5 1,660 991 329 4,567
1985 10,065 28.7 1,420 825 158 5,940
1986 10,259 27.9 1,324 735 509 1,823
1987 9,495 27.7 1,298 716 171 20,549
1988 9,111 27.2 1,171 638 142 6,366
1989 9,928 26.5 1,250 616 210 2,758
1990 9,684 25.4 1,269 649 344 1,434
*Numbers represent annual averages.
SOURCE; Statistics provided by the NLRB to the Commission. Section (8)(b)(1) charges againstunions are for re-training or coercing employees in exercise of their statutory rights...; in (8)(b)(2) casesunions are charged with discriminating against employees; in (8)(b)(3) cases unions are charged with badfaith bargaining.
86
93
EXHIBIT 111-6Estimates of the Outcome of Certification Cases
Number of Cases
Fiscal Year 1986 toFiscal Year 1993Percent of Cases
Number of Certifications 10,783 100.0
Reason for Closing the CaseAgreement Reached 6,009 55.7
Diverse Factors for Closing 488 4.5Question of Representation 580 5.4Referred to NLRB 563 5.2Plant Closed 341 3.2Other 2,802 26.0
Strikes of Certification Cases 356 100.0
Agreement Reached 191 53.7
Diverse Factors for Closing 3 0.8Question of Representation 18 5.1Referred to NLRB 27 7.6Plant Closed 8 2.2
Other 109 30.6
Service.
SOURCE: Tabulated for the Commission by the Federal Mediation and Conciliation
99 87
EXHIBIT 111-7
Allison Porter, Director of Recruitment and TrainingAFL-CIO Organizing Institute
"I believe regular people with ordinary concerns about their jobs . .
should be able to choose union representation and have an accessiblemechanism for achieving it. Sadly, that is not the case in Americatoday .. . When [workers] hear what the process actually is -- signingup a majority, requesting the federal government to conduct anelection, then waiting several weeks or months for an election tooccur -- the first question you hear is, can I be fired? New organizersare usually daunted by this question. "If I'm honest, I'll scare themaway. If I'm not, and something happens, how will I live withmyself?". . . It's every organizer's job to develop the ability toconfrom and work through worker's fears. In my experience, fear isthe number one obstacle to workers supporting a union in an organ-izing drive. It starts out as fear of retaliation, then becomes fear oflosing what they have, fear of the union as it is described by manage-ment, fear of strikes and plant closings, until finally it just becomesfear of change."
Clifford Erhlich, Senior Vice President of Human ResourcesMarriott International
". . . most American companies would prefer operating without aunion present at the worksite . . . [The reason is that] in the swirlingseas of change sweeping over the workplace there remains all toooften one island of constancy -- organized labor's view of theemployment relationship. That view, unfortunately, has kept manylabor leaders in a mindset that sees employee needs and companyinterests in perpetual conflict. I would refer the Commission to aquote from a recent article in Labor Research Review by Joe Crump,Secretary-Treasurer of the United Food and Commercial WorkersLocal 951, who testified before a panel of the Commission.
"Organizing is. war. The objective is to convince employersto do something that they do not want to do. That means afight. If you don't have a war mentality, your chances ofsuccess are limited."
If Mr. Crump's quote represents how a union approaches an unorganizedworksite, I have a difficult time understanding why anyone should be surprisedthat most companies respond in kind.
88
100
EXHIBIT III-8
The Human Face of the Confrontational Representation Process
"The federal Commission on the Future of Worker-ManagementRelations heard two stories about those relations in Louisville yes-terday. One story told of cutting-edge programs for cooperation andtraining. The other told of workers trapped in ... the dark ages oflabor-management antagonism." (Joe Ward, The Courier-Journal,Sept 23, 1993).
Testimony given by Judy Ray at the Regional Hearing in Boston, Massachu-setts on January 5, 1994 recounted:
"I was a ten year employee of Jordan Marsh, in Peabody, up until thisday after Thanksgiving, on which I was fired. I was fired, I trulybelieve, solely because I was a union organizer within the store. I
was a dedicated employee, for ten years, for that company ...
I cannot impress upon you what an organizer, what an employee whois just fighting for their rights in a campaign, goes through this dayand age. I wouldn't have believed it, myself. I have been followed,on my day off, to restaurants, by security guards with walkie-talkies.I had an employee, a management person, assigned to work with meeight hours a day, five days a week, who was told he was there solelyto work on me, to change my ideas about unions.
I was timed going to the bathroom. I could go nowhere in myworkplace without being followed. It's a disgrace. It's harassmentbeyond what I could ever tell you. Unless you have lived through it,you couldn't know what it feels like. ..." I
At its Regional Hearing in Atlanta on January 11, 1994, the workingparty heard testimony from Mrs. Florence Hill of High Point, NorthCarolina, whose firm, Highland Yarn Mills, decided to undertake a
1 The NLRB iss led a formal complaint against Jordan Marsh, alleging that the storedischarged her because of her union activities. On April 11,1994., Ms. Ray filed a suitin Essex County Superior Court for violating her civil rights through intimidation andcoercion, falsely imprisoning her for two hours before firing her, defaming hercharacter, injuring her career and causing her emotional stress.. Sc e Meg Vaillancourt,"Clerk Wins NLRB Decisions, Sues to Get Former Job Back," the Boston Globe,Tuesday, April 12, 1994.
89
101
drive to decertify an existing union. Mrs. Hill is the wife of the localunion president:
I was not allowed off of my little section that I worked in. When I'dgo to the bathroom, the supervisor would follow me. Anywheres Iwent, I was being followed. I'd go take my break; they'd cut medown to two 10-minute breaks and a 15-minute break. I was checked.I'd go through the mill. I'd always been a happy-go person, I couldspeak and I -- you know, be friendly with people. But I got, as time-- I'd have to hold my head down when I walked, because I didn'tknow what I was going to see, I didn't know what these people weregoing to do to me....
And then, the stress got so had that I did have a heart attack. Butwhen I came back, they didn't let up on me. They continued evenworse than what they were doing in the beginning. And my super-visor made the remark that he didn't know how I had been takingwhat I was taking without walking out the door or dropping overdead. That was what they was waiting for, is for me to drop overdead ...
And it was all because that we stood up for what we believed in, forwhat we thought was right, and for what we thought the other peoplewanted. The people wanted the union there; we've had it there allthese years. And, yet, they did this campaign against us, and it wasterrible."
In Louisville, the Commission working group heard testimony from CarolHolman and Steve Lazar on September 22, 1993, about the blacklisting ofnurses for seeking to exercise their legal rights. Here is Ms. Holman'stestimony:
"In June of 1988 I was employed by Humana Audubon on Four East.Because of my concern for understaffing and other conditions affect-ing patient care, I became active in the NPO (Nurses ProfessionalOrganization). I openly spoke for the union.... On August 1st, 1989,I and my friend, who was also active in NPO, were so frustrated andupset with the conditions of understaffing on our nursing unit that weresigned our positions at Humana Audubon. ...
It was a time of the nursing shortage w:ien all hospitals were desperateto recruit nurses. Jewish Hospital at that time was anxious to recruitnurses and offered a hundred dollars to each -- to all nurses whoagreed to come for an interview. My friend and I both went to Jewishand were paid a hundred dollars to do interviews. Jewish Hospitalhired us for the Transitional Care Unit. The critical care supervisor
102
90
called us and had arranged for us to attend the critical care classes.We had our physicals. TB skin tests, chest X-rays, and other lab test;;.We were told to report to work on TCU at Jewish on September the25th..
On September 20th we each received by UPS Next Day Air at our homes thefollowing letter from Jewish Hospital: Quote. "We regret to inform you thatwe have no position of employment for you.". The letter was signed by theVice President of Human Resources at Jewish. My friend and I went toJewish Hospital and asked to speak with him. He was there, but would notsee us. ... On September 26, Jewish Hospital ran a nurse recruitment ad inthe Courier-Journal listing TCU as a unit where positions were available.
I had a very good evaluation at Humana-Audubon, a 3.6. A 3.0 is asatisfactory-plus. A 4.0 is excellent ... In all, I received on my evaluation atotal of 22 fours and fives. Despite this very good evaluation, Audubonmarked me as ineligible for rehire on the personnel form. ...
We knew we had been blacklisted ... It was very scary when my friend andI received the letters from Jewish Hospital denying us our TCU jobs for whichwe had just been hired. We knew deep in our hearts that there was no reasonfor this. Someone had to be out to get us. It was very devastating...
Mr Lazar, former manager in the employee relations department at Humana,Incorporated, testified:
"I was present in the office of the human resource director ofAudubon Hospital when he received a call from the human resourcedirector of Jewish Hospital about Carol and her friend. The conver-sation I overheard was directed at the fact that both nurses wereconsidered to be union red hots, very active in the Audubon cam-paign, extremely pro-union individuals. The Audubon human re-sources director went to so far as to say, "You probably don't wantthem working for you."...
"I fully expect that by testifying as I have today every effort will bemade by Humana to discredit me. But my testimony is not rumor, itis not innuendo, and it is certainly not falsehood. Rather, I have toldyou what I have seen, what I have heard, and what I have personallydone to combat unionizing efforts."
In its East Lansing Hearings on October 13, 1993, the Commission workingparty heard the testimony of an employee in a unit that had voted for a unionbut which had not been able at that time to negotiate a first contract:
103
91
"I am on the bargaining committee for a union certified to representemployees of a food processor in Eastern Mich:gan ... Because weare still in bargaining, I'm not going to give my name or the em-ployer's name, because I don't know what he'd do if he knew I waseven here right now. He might fire me, he might not, I don't knowand I don't want to take the chance.
"... I make $6.80 an hour ... About over two-thirds make less than$6.00 an hour ... We have no benefits, no health insurance, nomeaningful pension, nothing. nothing to go on. ... So low wages andbenefits were an obvious reason why we went for the union.
"And the other reason is, we have no voice in this work place. Hedon't listen to anything we have to tell him. Example ... five peoplecome down with some kind of rash that they got off of the sauce orsomething they were allergic to. Their skin started cracking, it startedbleeding. He wouldn't even give them gloves to wear ... he told themif they wanted to go to the doctor they got to go on their own and payfor it out of their own pocket. He wouldn't acknowledge that it comefrom that shop.
"... we started organizing in April of '92 ... we won by a three to onevote, and he filed objections to it ... it took a year for certification ...after the certification he wouldn't bargain with us. ... he offered us araise if we would sign a petition saying that we did not want a unionthere.
"Then he withheld our annual wage increase, and we haven't gottennothing since. So when we filed these charges they were settled andthat's when he come to the table and started bargaining with us ...We've been to seven meetings that we've had with him; nothing'sbeen done ... He has not agreed to anything ...
"... me and my fellow workers, we need our jobs. We don't want tostrike, we don't want to walk out ... If we can't even get a firstcontract, we're in big trouble,
These stories are representative of testimony presented to the Commission by individualcitizens.
92
104
Part B
Experience with"Contingent" Workersand Other Sectors1. "Contingent" Worker-Management
Relations
As noted in Chapter 1.20, one of thesignificant developments in the Americaneconomy in the past decade or two has beenthe growth in the number and proportion ofworkers with relationships to those thatprovide job opportunities that diverge fromfull-time continuing positions with a singleemployer. This cluster of types of worker-management relations, or self-managementarrangements, has been expanding, butthere are few reliable statistics beyond thosesummarized in Chapter 1.20.
These marginal job relations to a singleemployer have always existed in Americanlabor markets. Hiring halls and variousother arrangements have been developed tomatch worker qualifications and availabili-ties with the fluctuating and specializeddemands of employers in such industries asmaritime, construction, home nursing,printing and hotel banquets. But thesecontingent work relations now encompassmany more workers and take ever more
forms.1 The term "contingent workers"often includes part-time workers, some ofwhom are voluntarily part-time, some ofwhom would like full-time work, and someof whom are multiple job holders. It alsoincludes employees of temporary help agen-cies - who may be full-time workers - andsome of the self-employed including "owner-operators" or independent contractors withonly a single contract of employment.
The Commission encountered many re-ports of these diverse worker-managementarrangements in its hearings and in vrittensubmissions:
In the cleaning of office buildings, insome cities, owners have sub-contracted thecleaning to businesses who may perform thework with their employees or even franchiseparts of the work to groups of workers.2
Many public and private employershave sub-contracted activities to enterprisesusing the same workers part-time perform-ing identical tasks at lower benefits andwage rates.
In trucking, agriculture and construc-tion the device of owner-operator has ex-panded rapidly.
Temporary work agencies have grownin white collar and specialized occupations.
Homework and sub-contracting has ex-panded in a number of sewing industries.3
See, Francoise J. Carre, Virginia duRivage, and Chris Tilly, "Piecing Together the FragmentedWorkplace", Unions and Public Policy on Flexible Employment, Lawrence G. Flood, ed. (forthcoming),and Dorothy Sue Cobble, "Making Postindustrial Unionism Possible", Rutgers, October 1993.
2 The Commission was told of a large Seattle cleaning contractor which, after its low bid won the contractfor a number of commercial buildings, sold the franchise to clean indivithal floors to a largely immigrantworkforce.
1tj5 93
These developments reflect market pres-sures on labor costs and the need forflexibility. They also at times result in theavoidance of social security taxes, workers'compensation, unemployment insuranceand benefits such as health insurance andpensions. These arrangements often attractnew immigrants, minorities and women inthe labor force. As Chapter 1.20 noted, theproblem is how to balance employers' needsfor flexibility with socially deteroined jobprotections and labor-relations statutes.
Introduction of these contingent rela-tionships just to reduce the amount ofcompensation (whether wages or benefits)paid by the firm for the same amount andvalue of work raises serious social questions.To the extent that free collective bargainingis considered a valuable instrument forprotecting the economic and personal situ-ation of both contingent and regular work-ers, the predominant industrial model ofunionism is somewhat ill-suited for thistask, based as it is on the actions andrepresentation of a group of employees whowork together for a single employer. TheNLRA framework for collective bargainingwas, however, primarily designed for thiskind of employment relationship and unionrepresentation.
Mr. John Sweeney, President of theSEIU, devoted a considerable part of histestimony to the human and economic situ-ation of the contingent worker. He andother witnesses have placed the followingimportant legal and policy issues before theCommission for its deliberations.
What is the proper interpretation ofthe "community of interests betweenregular full-time and temporary orpart-time workers for purposes of de-fining the "appropriate unit" withinwhich representation decisions aremade and collective bargaining carriedon?
Should the definition of "employee" beexpanded (or supplemented) to bringunder the NLRA workers who arelabeled "contractors," but who functionnot as entrepreneurs but as individu-als in a dependent relationship withthe firm(s) for whom they work?
Should the definition of "employer" beretailored to include the enterprisethat owns the structure or finances theproject on which work is being done,but utilizes a contractor to hire andmanage the people who perform thiswork?
Are the standard legal picture andrestraints on representation, negotia-tion, and economic pressure suited foran employment world in which em-ployee interests are focused muchmore on the sector within which they(hope to) work regularly, rather thanon the specific firm for whom theyhappen to be working at any one time?
While the contingent worker issue wasidentified by labor representatives, the Com-mission realizes that it poses a number ofimportant and complex questions about theapplication and enforcement of employmentlaws, such as the Fair Labor Standards Act,
3 "Labor Relations and the Contingent Work Force: Lessons from the Women's Garment Industry,"a statement submitted by Jay Mazur, President, International Ladies' Garment Workers' Union, April29, 1994.
94
106
and labor-management statutes. The Com-mission intends to devote more attention tothis subject.
2. Construction Sector
Some forms of "contingent" employmentrelationships have characterized the con-struction industry for more than a century.
The construction industry is large anddiversified, widely spread throughout thecountry with specialized contractors and askilled and relatively mobile workforce.
In June 1992 the industry was com-posed of 622,975 establishments withthe employment of 4.6 million. Theindustry contained 10.5 percent of allestablishments and 5.2 percent of allemployment in the economy.
In June 1992 the industry contained524,741 firms (legal entities), 11 per-cent of all firms.
Construction is an industry of smallbusiness. In June 1992 425,000 firmshad less than 10 employees (for a totalof 1.15 million employees) while 120firms had more than 1,000 employees(for a total of 290,000 employees).
The number of single proprietorshipsor independent c mtractors with noemployees has expanded greatly in thepast several decades. One governmentestimate places the increase from687,000 in 1970 to 1.46 million in 1990.
Many branches of the construction in-dustry reflect significant cyclical and sea-sonal fluctuations in employment.
The major proportion of employees workon shifting construction sites which oftencontain variations in employees and craftsduring the course of a single project or worksite. These variations relate to the branchof the industry, the size of the project, andthe diverse practices of contractors undercollective agreements and those operatingnonunion.
The Commission heard sharply differenttestimony and points of view from repre-sentatives of the collective bargaining andthe nonunion segments of the constructionindustry.4 'The Commission would welcomefurther information and analysis of some ofthe factual information in contention:
The extent to which construction ac-tivity and employment is transitory byfirm -- and how this varies by sectorand occupation and trade.5
4 The Building and Construction Trades Department, AFL-CIO tes`Tied on December 15, 1993 and the
Associated Builders and Contractors, Inc. on Jsauary 5,1994. ttlso see the Supplemental Statement of
the Building and Construction Trades Department, AFL-CIO, of March 29, 1994 and the comments ofthe Associated Builders and Contractors, Inc. and the comments of the Associated General Contractors
of America, both dated April 29,1994. There are numerous other contractor associations in the industry
that have presented no views.5 Data were furnished to the Commission from jointly-trusted benefit funds that give some indication of
the variability of employment, at least in the unionized sector; I) The Massachusetts Laborers Benefit
fund , for instance, reports for 1993 that of 8967 employees, 5208 worked for a single contractor averaging
1033 hours. But 1780 employees worked for 2 contractors, 871 worked for 3 contractors, 482 workedfor 4 contractors, 252 worked for 5 contractors, 144 for 6 contractors, and so on, with 1 person having
1u7 95
The union-nonunion differences, ifany, in occupational safety and healthenforcement and industry and fatalityrates, again identifying constructionsector characteristics and job classifi-cations.
The union-nonunion differential, ifany, in the expenditures made byconstruction workers and firms in theacquisition and retention of skillsthrough apprenticeship and othertraining programs.
Clearly, these and other questions arecrucial to the Commission's appraisal of thehuman and social consequences of worker-management transformations in the con-struction work place.
Also vital is evaluation of the difference,if any, that labor law has made in the sharpdrop in collective bargaining in the construc-tion industry. The Associated Buildersand Contractors, Inc. believes that the trueexplanation for the decline in building tradeunionism is that construction workers nowprefer this group's "merit shops" to tradi-tional union representation. The BuildingTrades believes that it is employers, notemployees, who have effectively made thedecision to deunionize this industry, a deci-sion they have neen able to implementbecause of the apparent misfit between the
general design of the NLRA and the specialfeatures of construction employment.
Though the original Wagner Act of 1935
made no exception for construction, theNLRB quickly decided not to exercise juris-diction over this industry (Brown and Root,1943). The Board adopted that "hands-off'policy because it believed that the legalframework for certification and bargainingdecisions by stable units of employees couldnot sensibly be applied to a constructionindustry workforce that regularly movedfrom job to job and employer to employer.Formation and termination of labor-man-agement relationships were left to voluntaryactions by the parties themselves, withconstruction unions having the instrumentof picketing and boycotts through which tosecure their position in the industry.
In 1947, however, the Taft-Hartleyamendments to the NLRA clearly broughtconstruction under the orbit of the statuteby subjecting building trade unions to sec-tion 8(b)(4)'s new ban on secondary boycottsand jurisdictional disputes. The signifi-cance of this new legal status became clearwith the Supreme Court's 1951 DenverBuilding Trades decision, which restrictedpicketing at a construction site by a unionrepresenting one building trades craft thatwas also being worked by other contractorsand employees from other trades. (As notedearlier, Section 8(b)(4) was and is an unfair
reported working for 18 different contractors in a single year, 2) The National Electrical Benefit Fundreports a similar pattern of variability on a national basis. In 1992, while 63 percent of employees workedfor a single contractor, 18 percent worked for two, 9 percent worked for three, 5 percent for four, 2 percentfor five , and on up to those who worked for ten or more contractors in the year. 3) The Bricklayers &Trowel Trades International Pension Fund reports the following pattern of variability on a national basis.In 1992, while 58 percent of employees worked for a single contractor 23 percent worked for two, 9percent for three, 5 percent for four, 2 percent for five, and on up to those who worked for ten or morecontractors in the year.
96
108
labor practice provision with effective en-forcement teeth).
When Congress returned to the NLRAin 1959, its Landrum-Griffin amendmentsacknowledged in two ways the special fea-tures of the construction employment rela-tionship.6 One was an exception to the newban on "hot cargo" agreements, and theother was permission given to building tradeunions and contractors to enter into "pre-hire" agreements, with NLRB-conductedvotes reserved for after the fact, if theemployees so desired. Subsequent decisionsby the NLRB have, however, restricted thescope and effectiveness of both of theseexceptions, at least as compared to what thebuilding trade unions believed they hadsecured from the Congress in 1959.
Even more important, in the early 1970sconstruction firms developed and the NLRBendorsed a device called "double-breasting"(see Peter Kiewit Sons, 1977). What thislabel refers to is the ability of a singleconstruction enterprise to operate one cor-porate entity for purposes of securing acontract on a project whose terms of employ-ment are set by union agreements, andanother corporate entity to work on nonun-ion projects at lower wages and benefits.
In the view of the Building and Con-struction Trades Department, the majorissues in the legal framework of worker-management relations in the constructionindustry requiring change include:
On the expiration of a pre-hire agree-ment, a contractor is free currently torepudiate the agreement without theobligation to bargain. (Johnpeklewaand Sons, 282 NLRB 1375, 1987).
A contractor signatory to a collectivebargaining agreement is free to estab-lish a construction entity under itscontrol that is not bound by the agree-ment and can bid and perform workthrough this entity on a non-unionbasis. Peter Kiewit Sons' Company,206 NLRB 562). The term "doublebreasting" or "dual shop" is used tocharacterize such activity.
A general contractor and its sub-con-tractors or separate prime contractorsworking on the same job site areseparate entiiies for purposes of thesecondary boycott prohibition. (NLRBv. Denver Building and ConstructionTrades Council, 341 U.S. 675, 1951).
The Associated Builders and Contrac-tors, Inc. opposes changes in the law advo-cated by the Building and ConstructionTrades Department. In particular, it op-poses the "anti-dual shop" bills, the proposedchange in "pre-hire" agreements, advocatingthat contractors be free to call for an electionand escape at any time, under Section 8(f),and it opposes the changes urged in Section8(e).
The Associated Builders and Contrac-tors, Inc. provide a further list of mattersthat include the following to achieve "true
6 The garment industry has also long been characterized by contingent work relationships with its heavilyimmigrant and female labor force and with highly competitive manufacturing and sub-contractingarrangements. Congress expressly modified the NLRA in 1959 to give garment industry unionsprotection from "hot cargo" and secondary boycott provisions in cases involving "an integrated processof production in the apparel and clothing industry".
10997
labor law reform": federal laws to prohibitlabor violence; enforcement of the Beckdecision; amendment or repeal of the Davis-Bacon Act; make it unlawful for a public orprivate employer to require a sub-contractorto adopt a labor agreement as a conditionof performing work, etc.
With the preceding brief background,the Commission poses the following ques-tions for further presentations and delibera-tions:
Is the source of the decline in collectivebargaining in the industry the unat-tractiveness of union representation tothe present-day construction worker,or resistance to unionization on thepart of construction employers, or theinappropriateness of the general legalframework for representation to thespecial features of construction em-ployment and what importance shouldbe attached to each?
Which, if any, of the provisions of theNRLA (or interpretations) should bealtered?
To the extent that changes are war-ranted in the legal treatment of constructionemployment under the NLRA, can some orall of these be accomplished by the NLRB(perhaps via the Board's rule-making proce-dure), or should these issues by reserved forCongressional action?
3. The Railway Labor Act
The special legal treatment sought forthe construction industry would not beunprecedented. Indeed, the Railway LaborAct (RLA) of 1926 was this country's firstnational labor-management relations law,one that was extended in 1936 to embracethe fledgling airline industry. The Commis-
sion held a session on October 20, 1993 atwhich 'management and labor repre-sentatives from both these industries offe,..edtheir views about the present-day operationof the RLA. They also submitted sub-sequent statements and comments.
The factual evidence presented to theCommission reflects changes in the econ-omy, the development of labor laws enactedafter RLA, and changes in the Administra-tion of the RLA. While representatives ofrails and airline labor and managementrecognize that "there is much that could bechanged for the better" under the RLA, theywere virtually unanimous in contendingthat the primary purpose of the Act has beensatisfied. That is, disputes between theparties have been settled through the Act'sprovisions for negotiation and mediationwithout resort to strikes or major disruptionof the national transportation system.These representatives were united in thecommon and repeated refrain with respectto the RLA: "if it isn't broke, don't fix it."Nonetheless, the evidence reflects that thereis room for improvement.
A brief overview of the history of theAct, and highlights of the significant differ-ences between the RLA and the NationalLabor Relations Act follow. These elementsare critical to understanding the impact ofthe economic changes that have occurredsince the RLA's adoption.
A. Historical Overview
Enactment of the RLA in 1926 was theproduct of a consensus reached by railwaymanagement and railway unions, in starkcontrast to the intense labor-managementand partisan political conflicts that tookplace over enactment of the NLRA and alllater amendment efforts. The original in-tent of the RLA was to provide mechanismsthat would guarantee the continuity of
11098
interstate transportation service in theevent of labor conflict. The unique provi-sions of the RLA were deemed necessarydue to the crucial role of rail transportationin the free flow of interstate commerce.
The RLA created different mechanismsto achieve this goal, based on whether thedispute was a "major" dispute or a "minor"dispute. (These disputes are roughly analo-gous to disputes over collective agreements(major) and grievances (minor)). If theparties are unable to resolve a "major"dispute through direct negotiation, the dis-pute is subject to mandatory mediationthrough the National Mediation Board. Ifmediation efforts do not succeed, the partieshave the option of proceeding to arbitration.If either party rejects the offer of arbitration,there is a 30 day status quo period, duringwhich time the President may appoint anEmergency Board. Emergency Boards havebeen invoked 224 times in the last 67 years,7191 times in the railroad industry and 33times in the airline industry. Congress hasbeen called upon 17 times to extend thestatus quo, to impose a settlement, or toprovide for final and binding arbitration inthe railroad industry.
In exchange for labor giving up the rightto strike over "minor" disputes, these dis-putes are subject to mandatory arbitration.The government bears the expense of rail-road arbitrations. The budget for grievancearbitration averaged $2.5 million a year forthe period 1983 to 1.992, or an average costof $264 per grievance closed. Arbitrators inthe airline industry are appointed to SystemBoards of Adjustment: each party shares
the costs of the neutral arbitrator on theSystem Board.
The RLA was amended in 1981 toestablish a special procedure for publiclyfunded and operated rail commuter service,including Amtrak. The procedures providenot only for a emergency board to report thefacts (including recommendations), butshould that report not settle the dispute,another emergency board may be createdrequiring each side to submit final andbinding offers for settlement. This emer-gency board shall select "the most reason-able offer" and prescribed penalties are toapply to the party refusing to accept theaward.
B. Differences Between the RLA and theNLRA
The railroad and airline industries un-der the RLA differ in a number of respectsfrom other private sectors governed by theNLRA.
Enactment and amendment of theRLA, and appointment of members tothe National Mediation Board, hasregularly been the product of consult-ation and consensus. Enactment andrevisions of the NLRA and appoint-ments to the National Labor RelationsBoard have been characterized by ac-rimony and conflict.
Coverage under the RLA is limited totwo major industries, railroads andairlines. The NLRA covers all otherprivate industries, with specified ex-ceptions.
7 In addition, a presidential commission was appointed under Executive Order 10891 to consider a series
of work rules and manning issues. Report dine Presidential Railroad Commission, Washington, DC.,
February, 1962.
99
BEST COPY AVAILABLE
Representation under the RLA isbased on the majority vote of allemployees eligible to vote through amail-in ballot. Representation underthe NLIIA is based on the majorityvote of those who do vote, almostalways in elections conducted at thework place.
Employees under the RLA are repre-sented for purposes Gf collective bar-gaining in nation-wide 'class or craft"units for a single employer. Employ-ees under the NLRA are placed inbargaining units that rest on theNLRB's judgment of their "communityof interests," typically on a site by sitebasis.
Employees in the two industries cov-ered by the RLA are almost entirelyrepresented by labor unions and gov-erned by collective bargaining agree-ments. (Total employment in rail-roads in 1992 was 275,000, down from1.2 million in 1950; in airlines, employ-ment has risen from 76,000 to540,000.)
Arbitration over minor disputes ismandatory under the RLA. Arbitra-tion is a negotiable and occasionallycontentious issue under the NLRA.
Secondary picketing during a labordispute is permissible under the RLA;it is prohibited in industries coveredby the NLRA.
Under the NLRA, collective bargainingagreements typically have specific ter-mination dates. Contracts do not ex-pire, as such, under the RLA. Thecontractual terms continue until Sec-tion 6 notices are filed and negotia-
tions take place to amend, in whole,or in part, existing contracts.Under the RLA, the parties cannotseek self-help, i.e., strike or lock-out,until they are specifically released bythe NMB, which in most instancesdoes not occur for many months oryears. Under the NLRA, parties canengage in self help, if they follow thenotice requirements provided in theNLRA and in the collective bargainingagreement.
C. The Changing Economy
The changing environment depicted inChapter I has had a distinctive impact onthe railroad and airline industries.
From the RLA's inception until the endof the 1970s, the two industries subjectto the Act were highly regulated. De-regulation (of airlines in 1978 andrailroads in 1980) had two major ef-fects on the RLA industries. First,deregulation exposed the two indus-tries to increased price competition,which resulted in downsizing or elimi-nation of a number of employers. Sec-ond, those firms that survived foundthemselves competing against otherfirms covered by the RLA as well assome covered by the NLRA.
In the 1930s, a railroad strike hadgreat potential to shut down the entirecountry. A national or regional rail-road strike rapidly affected many otherindustries that depended upon therailroads for essential transportationservices. A strike could soon becomea serious threat to the nation's econ-omy and welfare. Today, the impactof a railroad or airline strike is ques-tionable. On the one hand, adoptionof "just in time" inventory manage-ment systems, such as those used by
1/2100
the major auto companies, risks shut-down of manufacturing operationswithin 24 to 72 hours of a rail strike.Moreover, in some parts of rural Amer-ica, just as in the 1930s, there are noother viable freight options besidesrailroads. On the other hand, in mostsettings, the external impact of astrike has been sharply diluted. Dueto the fractionalized nature of bothtrain and air services, there generallyare other transportation methodsavailable. In 1926 railroads carried 80percent of inter-city freight. Today,they carry under 30 percent.
In the 1930s, the role of railroads (ifnot airlines) was unique in that noother industry had such an impact onthe overall economy. Strikes in otherindustries principally affected the com-panies involved, their employees, cus-tomers and suppliers. This statementis no longer true. Other industries,e.g., communication, have as great orgreater impact on the economy as awhole as did the railroads six decadesago.
In the 1930s, coverage under the Actwas clearcut. Firms providing similarservices operated under the samerules. Today, due to the complexitiesof corporate structuring and the com-binations of services provided, the linebetween an RLA covered and non-cov-ered firm has become sometimes am-biguous. (For example, Federal Ex-press is covered by the MA while itscompetitor, United Parcel Service, iscovered by the NLRA. The growth ofinter-model transportation furthercomplicates the separation.) As inother industries, the line between em-ployer and employee is no longer clear-cut. Not only has changing organiza-
tion of work created new roles andblurred distinctions between managersand employees, but employee owner-ship and participation on corporateboards has become a regular responseto financially troubled airlines.
Administration of the RLA has becomecharacterized by increased governmen-tal involvement and excessive delay.
Over the last decade, average timetaken to grant or dismiss certification peti-tions has ranged as high as 175 days forairlines and 130 days for railroads. Duringthat same period, the number of RLA arbi-tration cases has reached as high as 14,000in a single year -- an overall growth of tenpercent during a period when employmenthas dropped by 30 percent.
-- In 1992 there were a total of 11,708pending cases in all boards to hear minordisputes. In 1992 there were 7,755 casesdocketed and 6,951 case closed. The Na-tional Mediation Board reports that "virtu-ally all cases submitted to the NationalRailroad Adjustment Board have requiredthe services of neutral arbitrators".
-- There is increasing litigation overwhat constitutes a "major" or a "minor"dispute, producing considerable delay beforethe cases can even make their way into theproper dispute system.
-- Average time spent in mediation of"major" disputes trebled over the last decade-- now taking three years after the partieshad already engaged in direct bargaining.
Out of the 17 times that Congress hashad to intervene in rail disputes, five oc-curred in the last ten years, giving Congressa role it does n relish. As CongressmanSwift, chairman of the subcommittee thathad handled the last two national rail
113 101
shutdowns, noted in his written statementto the Commission:
"Congress is not a body mandatedor temporarily suited to interferewith complex labor-managementdisputes, some of which requirethe experts in the field to negoti-ate for 4 years and still they donot reach agreement. Yet, itcomes to this body and we aresomehow supposed to...resolvewhat the experts cannot resolvein years."
D. The Parties' Recommendations
As noted at the outset, representativesof both labor and management in the majorrailroad and airline firms concurred in theirjudgment that, by any measure, "RLA laborrelations are in better working order thanlabor relations in the NLRA sector, theFederal Labor Relations Act sector, or anyof the state or local public or private laborrelations law sectors." For this reason,these constituencies stated emphatically tothe Commission that they wanted theirlabor relations to be governed by the RLA,not placed under the NLRA. They furtheragree that "there is no compelling need toseek changes in the RLA and to risk theunforeseeable consequences that might re-sult. Any defects in the system are attrib-utable to its administration, not itsstatutory design."
In contrast, the group of smaller Re-gional Railroads of America, a coalition of117 class II and Class III carriers with anaggregate of 10,000 employees, as well assome of the transit systems that have railoperations under the RLA, expressed a need
for change. The problems unique to smallrailroads are highlighted by the class andcraft distinctions which prevent the partiesfrom cross-utilizing employees and can re-sult in separate units comprised of just twoor three people. The regional railroadsclaim that the resulting cumbersome nego-tiating process prevents their smaller linesfrom reaching effectively to today's competi-tive marketplace, and that a collective bar-gaining process more like that available inthe traditional industry contracts governedby the NLRA could be more effective.
While recommendations for change weresparse, the following suggestions weremade. Some parties called for the use ofmandatory arbitration of major disputes toeliminate the need for emergency boards.Others called for a prohibition against per-manent striker replacement to achieve thesame results. Some advocated use of theNLRA model that counts only votes that areactually cast, rather than counting absten-tions as a "no" vote. Some recommenda-tions were made to revise RLA definitionsso as to reduce the amount of litigation overwho is covered and/or what constitutes a"major" or "minor" dispute.8
Summary
This initial factual inquiry has raised anumber of important questions about theoperation of the RLA. For ,xample:
Does interstate transportation still re-quire all of the distinctive provisionsof the RLA? Would the parties' inter-ests be better served by utilizing (per-haps modified) provisions that nowexist under the NLRA?
3 See National Research Council, Transportation Research Board, c_ompensating Injured RailroadWorkers Under the Federal Employer Liability Act, 1994.
102
114
If the special provisions of the RLA arestill needed, are the right industriescovered? Specifically, are there otherindustries that should today bebrought within its coverage, and arethere segments of the railroad and/orairline industry that need to be exemptfrom the RLA? How is the experiencewith commuter railroads to be evalu-ated? Even if the right industries arecovered, have changes in the country'seconomic structure made the RLA'scoverage tests obsolete?
Has the administration of the RLAbecome so burdensome that it is coun-terproductive?
Should the Federal Government con-tinue to pay for grievance arbitrationhandling pursuant to Railroad Adjust-ment Boards and/or Public LawBoards under the RLA?
The Commission is mindful of the laborand management representatives who testi-fied that the RLA was just fine: "If it isn'tbroke, don't fix it!" There was also, though,testimony to the contrary conclusion includ-ing the concerns voiced by members ofCongress. While the Commission is respect-ful of some key parties' evident wish to beleft alone, its stated mission requires thatit at least consider these questions. TheCommission is aware that some of theproblem areas can be corrected under thecurrent RLA regime (for example, by theNational Mediation Board changing its pro -'edures for resolving disputes more expedi-tiously and by more aggressive and effectivemediation).
Before the Commission makes any rec-ommendations, it will explore these ques-tions and explore whether the problems canand will be addressed by the parties andthe NMB in the context of the existingstatutory framework.
115103
Chapter IV
Employment Regulation, Litigationand Dispute Resolution
1. Introduction
The National Labor Relations Act (andthe earlier Railway Labor Act) were thepioneering forms of federal legal regulationof labor manageme.ut relations at the work-place. By the 1990s, though, a very differ-ent model of legal intervention, employmentlaw, has come to play a much more promi-nent role both on the job and in the courts.
American employees have now beenpromised a wide variety of legal rights andprotections by both federal and state law-makers. These include minimum wagesand maximum hours, a safe and healthyworkplace, secure and accessible pensionand health benefits once provided, adequatenotice of plant closings and mass layoffs,unpaid family and medical leave, and banson wrongful dismissal: these and all other
employment terms and opportunities are tobe enjoyed without discrimination on ac-count of race, gender, religion, age, ordisability. Implementation and enforce-ment of these legal rights against noncom-plying employers requires litigation in theordinary courts and/or administrative pro-ceedings before specialized agencies. Thedramatic surge in employment law disputesover the last quarter century has raisedquestions about the burden and distributionof these legal costs. At the same time, thecomplicated, lengthy, and expensive proc-esses involved make it difficult for manyordinary employees to pursue a claimthrough these administrative and court pro-ceedings. This is especially true for lowwage workers, and those who lack thesupport of a union or other advocacy groupin pursuing their legal rights.
Concern over these issues gives rise tothe third charge to the Commission:
105
116
"What (if anything) should bedone to increase the extent towhich work-place problems aredirectly resolved by the partiesthemselves rather than throughrecourse to state and federalcourts and government regula-tory bodies?"
Crucial to any such policy judgments areappraisals of both whether workplace litiga-tion imposes unnecessary costs on employ-ers, the immediate target of employmentregulation, and whether the current proce-dures meet the needs of ordinary workerswho are the intended beneficiaries of suchpublic programs.
2. Evolution and PresentState of EmploymentRegulation
The present body of federal and stateemployment law -- statutory, administra-tive, and judicial fills many volumes.Employment laws and regulations have ex-panned at an especially rapid rate since1960. One study found that from 1960 to1974 the number of regulatory programsadministered by the Department of Labortripled, growing from 43 to 134.1 A currentcount would place this number muchhigher.2 Some highlights are noted here.
A. Fair Labor Standards in the 1930s
An important legacy of the New Deal,the Fair Labor Standards Act of 1938
(FLSA), established a minimum hourlywage and required time and one-half payfor overtime hours worked by nonexemptemployees. Administration of the FLSA,which covers both private and public em-ployers, is the responsibility of the Wageand Hour Division of the Department ofLabor.
B. Birth of Antidiscrimination in theMid-1960's
The modern birth of federal employmentlaw was inspired by the civil rights move-ment of the 1960s, which produced threemajor statutory regimes.
The Equal Pay Act of 1963 (formallyan amendment to the FLSA) prohib-ited gender-based differences in wagesand benefits, unless the differentialcould be justified by factors not basedon sex (such as seniority).
The Civil Rights Act of 1964, in par-ticular, its Title VII, prohibited dis-crimination by private firms (with atleast 25 employees), not just in paybut also in hiring, firing, and otheremployment decisions, on grounds ofrace, sex, religion, and national origin.
The Age Discrimination in Employ-ment Act of 1967 (ADEA) extended theantidiscrimination principle to age-based decisions affecting employeesover 40 years old working for firms of20 employees or more.
The ADEA and Title VII are adminis-tered by the Equal Employment Opportu-nity Commission (EEOC), now located in theDepartment of Justice; however, legally
I "The Limits of Legal Compulsion," U.S. Department of Labor Release, November 12, 1975, Labor LawReview, Vol. 27 February 1976, p. 67.
2 See Outline of Statutes and Regulations Affecting the Workplue, prepared by the Office ofthe AssistantSecretary of Policy, U.S. Department of Labor, June 21, 1993.
106
binding verdicts under these statutes must EEOC, as well as the affected em-be rendered through lawsuits filed in court. ployee, to sue employers for violations.
C. Expansion of Antidiscrimination Lawsin the Early 1970s
A number of important expansions inthe breadth and depth of federal antidis-crimination law took place in the early andmid-1970s.
In two major rulings, the U.S. Su-preme Court found that employer useof apparently neutral factors (such ashigh school diplomas or test scores)could be a violation of Title VII if thispractice had a disparate statisticalimpact on members of a particulargroup and the employer could notjustify its practice as a "business ne-cessity" (Griggs v. Duke Power (1971));and that the civil rights legislation ofthe post-Civil War era allowed minori-ties to sue for general and punitivedamages suffered because of inten-tional employer discrimination in anemployment contract Johnson v. Rail-w . y Express Association).
Executive Order 11246, first promul-gated by President Johnson in 1965,amended by Executive Order 11375 in1967, to ensure equal employmentopportunities with firms that had con-tracts with the federal government,was intensified by President Nixon soas to direct all such contractors todevelop and file affirmative actionplans that set numerical goals andtimetables for elimination of under-utilization of women and minorities intheir labor forces.
The Equal Employment OpportunityAmendment Act of 1972 extended TitleVI I's coverage to state and local gov-ernments and to private firms with atleast 25 employees, and allowed the
The Rehabilitation Act of 1973 prohib-ited employers with federal contractsfrom discriminating against employeeswith handicaps.
D. New Regulatory Targets in the 1970s
In the early 1970s the federal govern-ment enacted several statutory programsdirected at serious workplace problems thatpotentially affect all classes of employees.
The Occupational Safety and HealthAct of 1970 (OSHA) imposed on em-ployers the general duty to furnishtheir employees "a place of employ-ment...free from recognizable hazardsthat are causing or are likely to causedeath or serious physical harm," aswell as to comply with a growing arrayof specific safety and health standardsdeveloped by OSHA in the Departmentof Labor.
The Federal Mine r-afety and HealthAct of 1977 (MSHA) established analo-gous statutory and administrative ob-ligations to protect the safety andhealth of the nation's mine workers.
The Employee Retirement Income Se-curity Act of 1974 (ERISA) enacted aprogram for regulating access, vesting,security, and fiduciary responsibilitiesin pensions and health and welfarebenefits provided by employers to theiremployees.
E. Judicial Protection Against WrongfulDismissal
From the mid-1970s through the mid-1980s, there were no major legislativeinno-vations in employment regulation. Duringthat, period, though, the state courts acrossthe country were transforming their tradi-tional hands-off posture towards employ-
118107
ment at will into a measure of legal protec-tion against wrongful dismissals.
One such source of protection is a tortaction for discharges in violation ofpublic policies, such as retaliation foran employee refusing to violate the law(e.g., commit perjury) on behalf of theemployer, or for asserting their ownlegal rights (e.g., claiming workers'compensation benefits).
A second source of protection is con-tractual, based on violation by employ-ers of express or implied repre-sentations of job security (e.g., throughpersonnel handbooks).
A third source of protection is thegeneral doctrine of "good faith and fairdealing," treated by some state courtsas contractual and by others as tort-based (with the label used by judgesmaking a real difference in potentialdamages).
By the early 1990s, 45 states hadadopted one, two or all three of these legaldoctrines, each of which is enforceable byindividual suits filed in state or federalcourts. Then,
In 1987, the state of Montana enacteda broader Wrongful Discharge FromEmploye ient Act (WDFEA) which gaveall nonunion employees !lroad legalprotection against any form of "wrong-ful" dismissal, though with more lim-ited damages in most cases.
In 1991, the National Conference ofCommissioners on Uniform StateLaws agreed upon a Model Employ-ment Termination Act (META) withimportant similarities and differencesfrom the Montana example. METAhas not yet been adopted by any state.
F. Resurgence of Statutory RegulationSince the Late 1980s
Beginning in the later years of PresidentReagan's Administration, and continuing tothe present time, there has been a revivalof Congressional enactments targeted atworkplace problems.
The Immigration Reform and ControlAct of 1986 (IRCA) made it illegal foremployers to hire illegal aliens and foremployers to discriminate against le-gal aliens.
The Employee Polygraph ProtectionAct of 1988 (EPPA) made it generallyillegal for employers to force theiremployees to submit to lie detectortests.
The Worker Adjustment and Retrain-ing Notification Act of 1988 (WARN)required 60 days notice by coveredemployers (those with 100 employeesor more) of pending plant closings andmass layoffs (generally those layoffsaffecting 50 or more workers).
The Americans With Disabilities Actof 1990 (ADA) prohibited discrimina-tion by employers (as of July 1994,those with at least 15 employees)against disabled workers, and requiredreasonable accommodation of theworkplace to the employee's disablingcondition.
The Civil Rights Act of 1991 revisedseveral important Supreme Court rul-ings of the late 1980s (most promi-nently, Wards Cove PackingYAntonio(1989), which had relaxed the Court'searlier "disparate impact" standard ofdiscrimination in Griggs v. DukePower (1971)), and significantly in-creased potential damages for inten-tional violations.
119
108
Most recently, the Family and MedicalLeave Act of 1993 (FMLA) required publicand private employers (with more than 50employees) to grant up to 12 weeks of leavefrom the job (without pay but with continuedhealth benefits) to employees who had givenbirth to or adopted a child, or who them-selves, their spouse, or their children haddeveloped a medical condition needing care.
In its forthcoming study,3 the GAOidentified a general framework of 26 keystatutes and one executive order whosethousands of implementing rules constitutean intricate web of workplace regulation. Adescription of this major framework of fed-eral workplace regulation is summarized inExhibit IV-1. (See page 129.)
The number of laws and regulationsgoverning the workplace have increasedsubstantially since the 1960s creating acomplex and expensive set of requirementsfor employers to administer and for employ-ees in lursuit of their legal rights.
3. Nature of EmploymentRegulation
The body of employment law just re-counted constitutes a very different modelof government intervention in the workplacethan does the national labor relations lawdepicted in Chapter III. The NLRA pro-vides a variety of protections and proceduresfor employees choosing whether or not topool their collective resources to try tonegotiate better compensation and condi-tions of employment. The law, however,basically takes a hands-off attitude to theprocess and results of free collective bar-
gaining between private employers and un-ions.
Employment law, by contrast, focuseson issues that are felt to be sufficiently vitalto the body politic not to leave to privatenegotiations -- whether individual or collec-tive. Some such concerns are directly finan-cial: (e.g., what are the minimum wagesthat should be paid to people at work (underFLSA), and what must be done to insurethe value and security of retirement incomepromised for the future (under ERISA)).But as described above, many employmentlaws tend to focus on value-laden issues likeracial and gender discrimination, occupa-tional hazards, privacy invasions, and thelike. Public policy holds that all employeeshave equal protection against denial of theirrights in these areas, whatever their (ortheir employer's) market power.
The reason these social standards areannounced in mandatory legal form is rec-ognition that some employers (perhaps alsoemployees and their unions) are tempted bythe financial and non-financial gains fromnon-compliance with these public standards.Equally important, law-abiding employersneed protection against the unfair competi-tion from non-complying employers' lowerlabor costs. Enforcement of employmentlaw is pursued either through specializedadministrative agencies (such as OSHA), orregular courts and juries (as under statewrongful dismissal law), or a combinationof the two (the variety of antidiscriminationlaws).
Handling and resolving disputes undersuch law enforcement vehicles requires con-siderable financial expenditures from em-ployers, employees, and the public. Aconservative estimate is that for every dollartransferred in litigation to a deserving
3 United States General Accounting Office. Report to Congressional Requestors. Workplace Regulation.Agejicies Need to Become Service-Oriente& Say Employers and Unions 1994.
120109
claimant, another dollar must be expendedon attorney fees and other costs of handlingboth meritorious and non-meritoriousclaims under the legal program.4 Employ-ers regularly spend much more than thesedirect costs of litigation to develop newpersonnel practices, operational proceduresand equipment, and other measures tocomply with the regulations.
The difficulties encountered in fittingregulations to the diverse and changingemployment relationships found in the mod-ern economy and the many trade-offs amongdifferent policy objectives give rise to acontinuous stream of questions and debatesover the merits of specific employment regu-lations. Consider just a few of the currentcontroversies brought to the Commission'sattention.
Should the fact that salaried et Lploy-ees are given unpaid time off work forpersonal reasons mean that they (andtheir colleagues in the same positions)are entitled under FLSA to be paid theovertime premium for extra hours thatthe employer requires them to work?
Is obesity a disabling condition thatshould trigger protection of the an-tidiscrimination and reasonable ac-commodation requirements of theADA?
Does the transformation in technologyand family life require different legaltreatment of unconventional workschedules, and indeed of work per-formed entirely at home?
Has the host of federal regulations andrecord-keeping promulgated sinceERISA, intended to enhance the finan-
cial viability and acc ssibility of pen-sions and other benefits, in fact servedmore to reduce the willingness of em-ployers to offer these benefits to theirworkforce?
How, if at all, can one address underOSHA the serious hazards posed byguns and cigarettes to people workingat their jobs?
Is a mandate that employers pay for(the bulk of) their employees' healthinsurance the ideal vehicle for securingcomprehensive and affordable healthcare coverage for American workersand their families?
Which employer(s) are or should beheld responsible for enforcing laborstandards (e.g., safety and health) fortemporary or contract workers?
Although concerns such as these areoften raised about specific rules, the forth-coming GAO study referred to earlier foundthat most employers and union leadersaccept the need for workplace regulatior sand support the broad social goals embodiedin the laws governing the workplace. Butthese respondents were critical of the com-plexity and the "command and control"orientation of the agencies that administerand enforce these laws. What they desireis a more service-oriented approach to theadministration of wt kplace laws.
It is not the Commission's task to judgethe substantive merits of any of these lawsor regulations. Instead, the question beforethe Commission is whether more efficientand equitable ways can be developed toadminister, enforce, and resolve disputesinvolving the law of the workplace. Specifi-
4 James N. Dertouzos, Elaine Holland, and Patricia Ebenere, The Legal and Economic Consequences ofWrongful Termination (Rand Institute for Civil Justice: 1988), finds the compensation -legal costs ratioto be significantly worse than fifty-fifty.
1 :2 1110
tally, are there alternative methods forprescribing regulations, administering com-plaints and resolving disputes that ariseunder the variety of legal regimes -- federaland state, legislative and judicial -- summa-rized above? A further question is whetheralternative dispute resolution (ADR) mecha-nisms can render the positive benefits prom-ised by regulation more accessible to andeffective for ordinary workers.
Most employers and union repre-sentatives support the social goals of work-place laws and regulations but see them ashighly complex and unresponsive to theirneeds. They would like to see a moreservice-oriented approach adopted to theadministration and enforcement of work-place laws and regulations.
It is increasingly difficult to write andenforce standard regulations that fit wellwith the diverse employment settings andworkforce and the changing workplace prac-tices found in the contemporary economy.This is particularly true for the growingnumber of temporary or contract workersand the firms that employ them or utilizetheir services.
4. Trends in EmploymentLitigation
Exhibit IV-2 offers a glimpse of thearray of form's, procedures, and remediesavailable under this country's law of theworkplace. (See page 132)6 Some cases theindividual employee alone can bring (e.g.,wrongful dismissal suits); others only theadministrative agency can file (e.g., FLSA).Some cases go directly to court (wrongfuldismissal); some remain within the agency(OSHA); some go to the agency for investi-gation and then to the courts for adjudica-tion (ADA), while some conduct adjudicationwithin the agency but leave enforcement(and review) up to the courts (NLRA). Somelegal rights carry open-ended compensatoryand punitive damages (wrongful dismissal);some provide for general damages under aceiling, but attorney fees are also assessedagainst losing employers (Title VII; ADA);while (as set forth in Chapter III) the NLRAis unique in restricting the damages as-sessed against guilty employers to the netback pay lost by the employee -- along withthe prospect of reinstating the employee ifthe latter is willing to return to the positionfrom which he or she was fired.
Table IV-3 (see page 134), based on suitsin federal court, provides as good a statisti-cal index as is available of how fast and howfar employment. litigation has been rising.?
5 As put by the Republican Statement of members of the House Committee on Education and Labor to theCommission (at page 15, referring specifically to the variety of EEO laws): "...it is important to notethat the Commission should not attempt to change or alter the basic thrust of each law; rather, theCommission should seek to untangle the legal web of regulation that has spawned a cottage-industry forlawyers, conF Itants, and employment policy specialists."
6 For detailed analysis, see Clyde Summers, "Effective Remedies for Employment Rights," 141 Universityof Pennsylvania Law Review 457, 1992.
7 Exhibit 1V-3 was based on data supplied to the Commission by the Business Disputing Group Project ofProfessor Joel Rogers of the University of Wisconsin and Terence Dunworth at the RAND Corporation.The data were generated by their assistant, Matt Zeidenberg, from figures supplied 'o the Project by the
111
122
(There are no systematic records of the rateof state court filings, whether the trendsover time or the breakdown by type of suit).By the early 1970's, many of the keyfeatures of federal statutory protection werein place. During the two decades from 1971to 1991, total civil suits filed in federal courtwere up 110 percent. Interestingly, (non-asbestos) personal injury suits, the usualtargets of litigation critics, were up only 17percent, not appreciably different frompopulation growth. While suits under laborlaws had actually dropped slightly, busi-ness-related suits by Fortune 1,000 firmshad more than doubled. However, the an-nual rate of employee suits against employ-ers was five times the number of twentyyears earlier--and this was before theAmericans With Disabilities Act of 1990, theCivil Rights Act of 1991, and the Familyand Medical Leave Act of 1993 had comeinto effect.
In fact, the true leap in employmentlitigation was even higher than that visiblein federal court figures. Though the precisenumbers and trends are not available, it isclear that wrongful dismissal cases comprisea major share of employment suits filed instate courts. In 1971, there were only ahandful of such discharge suits, because thedoctrinal underpinnings for such claims hadnot yet been fashioned by state supremecourts. By the early 1990s, the best esti-mate we have is that employees are nowfiling 10,000 or so wrongful dismissal suitsannually, with a total of 25,000 such casesnow pending (the bulk in state courts).8Adding these state court numbers to thefederal court figures in Exhibit IV-4 (See
page 135) makes the aggregate rise inemployment litigation even steepe.^.
Lawsuits filed in court are only the tipof the legal iceberg. In contrast to judi-cially-developed wrongful dismissal law, leg-islative programs give primary (under TitleVII) or exclusive (under OSHA) jurisdictionto a specialized administrative agency. Ex-hibit IV-2 shows that in 1993, the EEOCreceived nearly 90,000 employee claims ofdiscrimination by employers, up from 56,000in 1981 (and up tenfold from 1966). Thenumber of such administrative proceedingsis roughly ten times the number of antidis-crimination suits eventually filed in court(only a handful of which are filed by theagency instead of the employee). In 1993,the Wage and Hour Division of the Depart-ment of Labor was receiving 46,000 em-ployee complaints under the FLSA andinitiating more than 2300 suits, whileOSHA was receiving over 10,000 complaintsand conducting nearly 60,000 inspections,leading to 9,000 cases. While a considerableportion of such government action poten-tially affords legal relief to employees withmeritorious claims, every such action im-poses legal costs on the targeted employers,many of whom turn out to be fully incompliance with the law.
Access to legal relief is not uniformlydistributed across the labor force, especiallyunder those laws that require the individualemployee to initiate a lawsuit to secure abinding ruling. For example, only about onein ten suits under civil rights legislation isfiled by an employee still on the job.9 Bycontrast with the early life of Title VII, thevast majority of such suits currently com-
Administrative Office of the U.S. Courts.8 Those rough estimates are developed in a paper by Lewis Maltby, Director of the American Civil
Liberties Union's National Task Force on Civil Liberties in the Workplace, to be published in theNovember 1994 issue of Annals of the American Academy of Political and Social Science.
9 John J. Donohue and Peter Siegelman, "The Changing Nature of Employment Discrimination Litigation,
43 Stanford L;iw Review 983, 1991.
112
123
plain of discriminatory firings, rather thanabout a refusal to hire in the first place.Such ex-employee plaintiffs are dispropor-tionately drawn from the ranks of executivesand professionals. These are the peoplewhose lost earnings and personal charac-teristics make them the best bets for plain-tiff lawyers to make the substantialinvestment needed to challenge in court anemployer with its (usually) much greaterresources.
Verdicts in employment litigation regu-larly reach six and even seven figures. Theprospect of such awards does serve as adeterrent to improper management deci-sions (though sometimes a source of undulydefensive personnel practices). The overallpattern of jury awards does, however, dis-play a rather lottery-like response to theharms inflicted on individual employees.
The administrative procedures andremedies used to enforce workplace lawsvary widely, involve multiple agencies fromdifferent departments of the federal govern-ment, and are administered on a stand-alone basis with little or no regard foroverlap or conflicting requirements.
The number of employment suits infederal courts increased by 430 percentbetween 1971 and 1991. Another 10,000cases charging unlawful discharge are filedannually in state courts.
The EEOC handles approximately90,000 complaints per year, compared to56,000 in 1980.
Access to legal relief through the courtsis limited for the majority of employeeswhose earnings are too low to cope with thehigh costs and contingency fee requirementsof private lawyers.
5. Private DisputeResolution Alternatives
Two broad approaches have been sug-gested for reforming the current mechanismfor implementing employment law: privatealternatives for dispute resolution (ADR),and more coordinated administrative regu-lation, perhaps capped by a single labor andemployment court with jurisdiction over thebroad array of legal rules described earlier.The private alternatives are discussed inthis section and the administrative andjudicial options are taken up in the nextsection.
The option that attracted the most at-tention and debate before the Commissionwas private resolution of public law disputesin the employment relationship. This ap-proach is commonly labeled alternative dis-pute resolution (ADR). ADR can take on avariety of forms including informal problemsolving processes, peer review panels, om-budsman systems, grievance procedures,mini-trial, mediation, and arbitration.
Practitioners of ADR suggest that theseprocedures work best when integrated intoa system that begins with effective organ-izational policies and practices that limitoccurrence of problems before they arise,provides informal processes for individualand group problem-solving of issues or con-flicts that do arise, and includes formalappeal and dispute resolution procedures.10In turn, for these internal procedures to beused to full advantage, they need to havethe necessary due process features. More-over, neutrals who resolve claims withinthese systems need to have sufficient sub-stantive expertise to warrant deference to
10 Douglas S. McDowell, Alternative Dispute Resolution Techniques: Options and Guidelines to MeetYour Company's Needs, Washington, D.C.: The Employment Policy Foundation, 1993.
113
124
their decisions by the public agencies andcourts responsible for the laws involved.Finally, most experts in dispute resolutionstress the importance of involving the par-ties covered by the system in its design andoversight."
A. Mediation
Under "mediation" the parties try tosettle their dispute voluntarily, but with theassistance of a third party who serves as achannel of communication and advice aboutmutually acceptable resolution of the issues.Ultimately, though, each side retains theprerogative to reject a proposec settlementand proceed to litigation. Under "arbitra-tion," by contrast, the parties agree thattheir legal dispute will be authoritativelyresolved by a private person whom theyhave jointly selected, rather than pursuedto the courts for a jury trial. A third option,fact-finding with or without recommenda-tion or non-binding arbitration, is a blendof the two: the parties submit their casesto a third party who gives them a writtendecision, but a decision that each has theoption of rejecting and going off to court(subject perhaps, to certain sanctions if theircase does not fare so well in court).
Mediation, if successful, is advantageousto both sides. They get firm resolution oftheir legal conflict without the expense anddelay of protracted litigation, and on termsthat the parties themselves control, ratherthan being subject to the judgment of anoutside tribunal applying public law. Me-diators often provide real assistance insettlement negotiations by facilitating pri-vate conversations that explore the zone fora "win-win" consensus among the two sides.These potential gains are the reason the
EEOC and the Department of Labor havebeen experimenting with mediation of em-ployment law suits.12
One difficulty with mandating media-tion whether by legal directive or at theoption of either side -- is that if this processdoes not succeed in resolving the dispute,additional time and money will have to beexpended by the parties who still must goto court to get a binding decision. There isgood reason to believe that mediation wouldbe a valuable tool for resolving certaindisputes: it benefits not just the immediateparties, but also the agency burdened witha large and fast-growing caseload, andthence other parties who are at the back ofthe agency's long line. To be cost-effective,mediation of legal disputes should occur ata key point in the litigation process. Theparties should be far enough along that theyhave discovered what they need to know tomake an intelligent judgment about how toresolve the matter voluntarily. They shouldnot have gone so far, though, that almostall of the pre-trial costs have been incurredand the parties are either committed togoing to trial or are ready to settle them-selves, without outside intervention.
Since the most propitious time can varyconsiderably from case to case, anotherpossible option is for the agency to assemblea group of seasoned outsiders who can offerthose parties who want it some expert andreliable advice about where they could rea-sonably compromise from their original po-sitions. If settlement negotiations still fail,the parties could be assured that what themediator has learned from them would notfigure in the agency's decision aboutwhether to file charges or a law suit.
I I See, for example, William L. Ury, Jeanne M. Brett, and Stephen B. Goldberg, Stetting Disputes Resolved,San Francisco: Jossey Bass, 1988, p. 65.
12 Report to the Secretary of Labor on the Philadelphia ADR Pilot Project (October 1992), and MarilynnL. Schyyler, A Cost Analysis of the Department of Labor's Philadelphia ADR Pilot Project, August 1993.
114
125
B. Arbitration
Arbitration, by contrast, produces a finaland binding adjudication of the employ-ment dispute. If the dispute poses compli-cated questions of fact or law, thearbitration proceeding will require a hearingat which both sides are represented by legalcounsel or other experienced advocate. Bycomparison with litigation in court, arbitra-tion can secure considerable savings in boththe time and money that must be expendedfor such authoritative legal resolution.13Arbitration entails much less paperwork,preliminary depositions and motions, andpost-hearing briefs and appeals than doesthe winding path to and from the court-house. Equally important, the arbitrationhearing is scheduled at a time convenientfor the parties and the person they havepicked to decide their case, rather thanplaced at the end of a long line of casesfilling the dockets of the court or agencyresponsible. For a smaller expenditure thangoing to court, the parties entrust their fateto a decision-maker whose previous trackrecord they knew about and whom theydecided to use, rather than a jury for whomthis is usually the first and last legalexperience.
1. Grievance Arbitration in Union Settings
While arbitration has had a long historyin commercial contract disputes, its appear-ance in the workplace in substantial volumepost-dates the National Labor Relations Actof 1935. In almost every industry, unionsand employers have negotiated into theircollective agreements a system of grievancearbitration to resolve disputes about howtheir contract provisions should be inter-preted and applied. (This labor-manage-
ment innovation took place in a legal andindustrial relations environment in whichthe likely alternative to arbitration was astrike or lockout, not a lawsuit.)
Grievance arbitration developed undercollective bargaining meets many of therequirements of effective dispute resolutionsystem design. It is a voluntary systemadopted through negotiation to fit the par-ticular circumstances of the different em-ployment settings and therefore buildsparticipation of the parties into its design,administration, evaluation, and modifica-tion. It rests on a foundation of day-to-dayinteraction among workers, union stewards,and first line supervisors where the vastmajority of problems are resolved informallywithout ever entering the formal procedure.It allows for the parties to reach settlementsat multiple steps in the process up to andsometimes during the arbitration hearings.Arbitrators, chosen by the parties for theirspecialized knowledge and expertise in laborrelations, are limited to interpreting theparties' rights under the contract and there-fore cannot expand or reduce the substan-tive rights of either party.
By 1960, the system of grievance arbi-tration was so widespread in collective bar-gaining and had achieved such a high degreeof confidence that the Supreme Court, inthree casesthat became known as the "Steel-workers' Trilogy," gave strong judicial en-dorsement to the labor arbitrator'sjurisdiction and final say about a laborcontract. The effect of these three decisionswas that the court would defer to arbitra-tors' awards on nearly all substantive ques-tions and only review arbitration decisionsfor procedural or due process irregularities.
13 For illustrations of arbitration of legal disputes outside the employment field, see U.S. GeneralAccounting Office, Securities Arbitration: How Investors Fare, 1992, and U.S. General AccountingOffice, Medical Malpractice: Few Claims Resolved Through Michigan's Voluntary ArbitrationProgram, I 990.
126 115
Grievance arbitration has proven to bea flexible instrument that has, from time totime over its long history, been combinedwith other dispute resolution techniques toenhance its effectiveness and lower its costs.For example, labor and management havesometimes used mediation of grievances toincrease the number of cases resolved priorto arbitration. Between 1980 and 1992, theMediation Re ,arch and Education Projectat Northwestern University Law School, anon-profit organization that conducts griev-ance mediation, reports that of the 2,220cases it handled, 82.6 percent were resolvedthrough mediation. The average cost for themediator in 1990 to 1992 was $393 per case,compared to an average arbitrator's feeduring this time of approximately $1,800.14
2. Grievance Arbitration in NonunionSettings
Some nonunion firms have also adoptedforms of grievance arbitration. A recentstudy15 found that 45 percent of largenonunion firms had some form of employeegrievance procedure, versus 98 percent inall unionized firms. In the nonunion set-ting, senior management usually made thefinal judgment about whether to uphold orreverse the personnel decision being chal-lenged by an employee (whereas in union-ized firms, final authority is lodged in aneutral arbitrator selected by both sides).The study also found that nonunion employ-ees faced significant risks in their futureprospects with the firm if they took issuewith their supervisor's action through sucha review process.
Shortly after th' Steelworker Trilogyrulings came the surge in employment leg-islation and regulation. Unlike the collec-tive agreement, these laws created publicrights that could not be waived or alteredby private agreement, and they entrustedinterpretation and enforcement of the law'sterms to a body selected by and accountableto the broader community, not the partiesto an immediate dispute. Thus, in the early1970s, the Supreme Court ruled (in Alexan-der v. Gardner-Denver (1974)) that a union-ized employee with a racial discriminationclaim was not bound by nor required to havethe claim disposed of by the arbitrator underthe labor agreement; the employee was free,instead, to pursue the case in federal court.That refusal to defer to the collectivelybargained system was applied by the Courtto other civil rights laws (Section 1983 inMcDonald v. City of West Branch, 1984) andto employment legislation generally (to theFLSA in Barrentine v. Arkansas-BeatFreight System, (1981)). Since the substan-tive rights established by public statutescould not be waived or altered by privateagreement, the Court was concerned aboutentrusting administration of legal claims ofindividual employees to a grievance proce-dure negotiated by employers and by unionsand to private arbitrators whose jurisdictionand experience was primarily based on theinterpretation of labor agreements.
3. Arbitration Under IndividualEmployment Agreements
By the early 1990s, sentiment had be-gun to change about the virtues of the ADRalternative to litigation. Thus, in the 1991
14 Data provided to the Commission by Professor Stephen B. Goldberg, the Mediation Research andEducation Project, Northwestern University Law School, 1994. The arbitrator's fee is based on Federal
Mediation and Conciliation Service data See Stephen B. Goldberg and Jeanne M. Brett, "GrievanceMediation and other Alternatives to Arbitration," Workplace Topic5, Vol. 2, July 1992, pp. 102-12.
15 David Lewin, "Grievance Procedures in Nonunion Workplaces: An Empirical Analysis of Usage,Dynamics, and Outcomes," 66 Chicago-Kent Law Review 828, 1990.
116
127
Civil Rights Reform Act, the Congressstated:
"Where appropriate and to theextent authorized by the law, theuse of alternative dispute resolu-tion, including settlement nego-tiations, conciliation, facilitation,mediation, fact finding, mini-tri-als, and arbitration, is encour-aged to resolve disputes arisingunder the Acts and provisions ofFederal Law amended by thislaw."
That same year, the Supreme Court wasconfronted (in Gilmer v. Interstate/JohnsonLane Corp. (1991)) with the questionwhether to require arbitration of a nonunionemployee's claim of age discrimination inviolation of the ADEA. The Court majoritydecided to enforce the employee's agreementto arbitrate even such public law disputes,distinguishing Gardner-Denver and otherprecedents from the union context on thebasis that nonunion workers had sole con-trol over their claims and the arbitrator was
empowered to address the non-contractualissues.
There is disagreement about the legalscope as well as the policy merits of theGilmer ruling.16 What is still up in the airpost-Gilmer, is whether the Supreme Courtwill treat Congress' decision in 1925 toexclude from the FAA all contracts of em-ployees then engaged in interstate com-merce as excluding the contracts of allemployees who are now potentially subjectto Congressional regulation under the pre-sent reading of the constitutional commerceclause. Whatever the Court's eventual ver-dict, a sound judgment about whether it isworthwhile public policy in the 1990s tofacilitate arbitration of employment rightscases should not turn on what Congressintended in the 1920s to be an endorsementof arbitration of commercial contract dis-putes.
The pros and cons of this form of ADRfor statutory claims of employees are hotlycontested at present.17 Proponents of ar-bitration believe that this procedure actu-ally strengthens enforceability of the
16 What was distinctive about the case was that the employee worked for a financial services firm and thearbitration clause was contained in his registration agreement with the New York Stock Exchange(NYSE) as a securities representative. Arguably, then, the case did not involve an employment contract.The significance of that fact is that the legal premise for the Supreme Court's ruling was the 1925 FederalArbitration Act which specifically excludes "contracts of employment of seamen, railroad employees,or any other class of workers engaged in foreign or interstate commerce." In the 1920s, the judicialinterpretation of the Constitution basically limited Congress' jurisdiction under the commerce clause tobusinesses (and employees) engaged in transportation of goods and services. Now interstate commerceunder the Constitution has been read to encompass just about any firm engaged in production anddistribution of goods and services.
17 Besides Professors Clyde Summers, Theodore St. Antoine, and Katherine Stone who testified on thistopic, there is a published debate by two other legal scholars who testified beforc. the Commission onother issues: Samuel Estreicher, "Arbitration of Employment Disputes Without Uni 3ns," 66Chicago-Kent Law Review 753 (1990), and Matthew W. Finkin, "Commentary," kl. 799. Thtevidence we have is that arbitrators tend to uphold claims more often than they reject them (see, forexample, U.S. General Accounting Office, Employment Discrimination: How RegisteredRepresentatives Fare in Discrimination Disputes (March, 1994), and, at least in the medical malpracticecontext, to favor the plaintiff's case considerably more often than do juries: see Thomas B. Metzlofl,"Alternative Dispute Resolution Strategies in Medical Malpractice," 9 Alaska Law Review 429, 19c/2.
128
BEST COPY AVAILABLE
117
substantive rights guaranteed by the law,by expanding access for those people whosecases would otherwise not be heard (particu-larly lower-paid workers with less obvious,but still meritorious, legal claims).
Some experts have expressed misgivingsabout the type of arbitration system en-dorsed in the Gilmer case as a model forresolving employment disputes involvingpublic law. Few are concerned about anagreement to use arbitration arrived at byboth parties after a dispute has arisen. Inthis setting the plaintiff (usually a formeremployee) is advised by a lawyer, and canfreely decide that private arbitration is trulypreferable to pursuing this particular casein court. The reason arbitration is rarelyagreed to at this stage is that the employerand the employee each prefer to take quitedifferent kinds of cases to court.18 Bycontrast, the type of pre-dispute arbitrationarrangement seen in Gilmer is devised byemployers or their associations and pre-sented to newly-hired employees on a "takeit or leave it" basis. While the labor marketdoes permit some negotiation and variationin salaries and benefits, it is hardly likelyto let employees insist on litigating, ratherthan arbitrating, future legal disputes withtheir prospective employers.
The fact that employment arbitration isnot a particularly voluntary procedure asfar as individual employees are concernedis not a sufficient reason for rejecting thisoption. The alternative of litigation in courtor before an administrative tribunal ishardly voluntary either. The employee-
plaintiff has no other option but to expendthe time and money needed for legal reso-lution of a claim of a claim.
A crucial fact, of course, is that it is theemployer that unilaterally develops the ar-bitration procedures that (nonunion) em-ployees are contractually bound to use.That means that important quality stand-ards should be met by such a privateprocedure before it may be enforced againsta plaintiff with a public law claim. As theSupreme Court acknowledged in Gilmer, ifCongress or the courts have decided that itis in the public interest to guarantee em-ployees certain fundamental rights, thispolicy judgement must not be evaded ordiluted through private procedures thatcannot fairly and effectively address em-ployee claims that their rights have beenviolated.
Employer representatives who ad-dressed the Commission on this topic ac-cepted this fundamental principle.1 Thedifficult practical issue concerns the keysafeguards that must be built in to anyemployment ADR model. Some of the ques-tions regarding these safeguards are listedbelow.
Bilateral Arbitration
Should the employer also have to com-mit itself to arbitration of all employmentdisputes it might have with (former) em-ployees covered by this procedure (e.g.,
18 That is why under Montana's wrongful dismissal statute, even though there are substantial financialincentives to the two sides to agree to arbitration, the vast majority of such cases still go to court: seeLeonard Bierman, Karen Vinton, and Stuart A. Youngblood, "Montana's Wrongful discharge fromEmployment Act: The Views of the Montana Bar," 54 Montana Law Review 367, 1993.
19 The views of one such witness are elaborated in a recent book, Douglas S. McDowell, Alternative DisputeResolution Techniques: Options and Guidelines to Meet Your Company's Needs (Employment PolicyFoundation: 1993). The written submission by another witness, Charles Bakaly, was essentially to thesame effect.
118
1._' 9
claims of violation of trade secret or non-compete covenants)?
Selection of Arbitrator
Should a neutral arbitrator for each casehave to be agreed-to by the individualemployee with the claim, or should theemployer be entitled to name a roster ofarbitrators (or even a permanent umpire)for all claims by its entire workforce?Should some kind of certification of arbitra-tors handling public law disputes be re-quired from either arbitration associationsor the agency responsible for enforcing thelegislation in question (e.g., the EEOC foranti-discrimination claims)?
Arbitration Costs
Should the fees and expenses of thearbitrator be borne entirely by the employer,or be divided equally between the two sides,or divided between the parties but with acap on the employees' share? Should theemployer (and possibly the employee) berequired to pay the entire cost of arbitrationif the other party wins the case?
Arbitration Procedure
Should each side have a right to discov-ery of relevant documents and to depositionof representatives of the other side, and ifso, with any limits to use of such pre-hearingprocedures? Should the arbitrator have theauthority to issue subpoenas to secure thepresence of reluctant witnesses?
Arbitration Decision
Should the arbitrator have the samebroad remedial authority as would be avail-able to a court or to an administrativeagency hearing this type of employment lawdispute? Should the arbitrator be requiredto issue a written decision containing bothdetailed findings of fact and explicit analysisof all the relevant legal issues?
Arbitration Rulings
Should arbitration rulings in employ-ment disputes be a matter of public recordor kept confidential? Should arbitrationrulings be subject to the same right ofappeal or judicial review as is normal withtrial court or administrative enforcement ofthe statute in question, or be subject onlyto the extremely narrow scope of review ofgrievance arbitration (after the Steelwork-ers Trilogy)? Should an arbitration verdictunfavorable to an individual employee affectthe prerogatives of the public enforcementagency to file and pursue a claim in courtabout the same dispute?
Participation in Design and Oversight
Should employees have a voice in thedesign and oversight of the arbitration sys-tem? If so, how can this be achieved?
The current debate about the use ofprivate arbitration relates not simply toemployer-designed procedures (post-Gil-mer), it also requires rethinking employeeuse of union-negotiated procedures (post-Gardner-Denver). For example:
Should unions and employers in-clude in their grievance arbitra-tion systems a right of individualemployees to secure resolution oflegal claims and a directive to thearbitrator to consider them? Ifthis is done by the parties, shouldunion-represented employees berequired to use this procedure todispose of federal law claims?Should they be entitled to use thisprocedure for state law claims?
C. Internal Workplace Dispute ResolutionProcedures
Grievance arbitration procedures undercollective bargaining or in most nonunion
130 119
settings are limited to the scope of issuescovered in the bargaining agreement or inthe written personnel policies of the com-pany. Yet increasingly, the problems thatarise at the workplace involve issues andsometimes involve employees or managersnot covered by a bargaining agreement.The increased diversity in the workforce andin workplace issues has led to the adoptionof a variety of procedures for handlingcomplaints of any type in organizations.Many of these procedures include a desig-nated professional, often with the (Swedish)title, Ombudsperson, who is responsible forhandling and seeking resolution of employeecomplaints as they arise. As MIT Ombud-sperson Mary Rowe pointed out to theCommission:
"We've been hearing about savingthe courts from traditional prob-lems and overload of traditionalchannels. There are, in addition,peer problems, problems betweenmanagers, for example, or be-tween workers, or disputes frommanagers about harassment bysubordinates, as well as the typi-cal labor-management problemsyou're all used to"
In establishments with union repre-sentation, these professionals must work tosupplement but not substitute for the estab-lished grievance procedures or other infor-mal problem-solving processes betweenunion and employer representatives. Inboth union and nonunion situations, the roleof these professionals is to help apply or tosupplement, not to modify or substitute for,existing personnel policies. There are noreliable national estimates of the extensive-
ness of these procedures, nor are there anysystematic studies of their effectiveness.Several analyses have documented, though,that properly functioning internal disputesystems can be cost effective for an organi-zation.20 Exhibit IV-5 (See page 136) listssome of the features professionals believeneed to be built into effective workplacedispute resolution systems.
These internal dispute resolution sys-tems tend to embody multiple options forhandling complaints: ranging from informalcounseling of the individual on how to dealwith the problem or with a fellow employee,to mediation and fact-finding, and in somecases, culminating in binding arbitration.
The existence of multiple options forresolving issues is viewed as especiallyimportant for the handling of interpersonalissues such as sexual harassment. Theprocesses used to deal with these issues varydepending on the nature of the complaint,the wishes or willingness of the complainantto pursue the issue through a formal orpublic process, and the subjective nature ofthe evidence that is often involved.
The limited amount of published infor-mation on these systems makes it hard toevaluate their effectiveness at this point intime or the extent to which those in placeembody these design features. While mostof these systems appear to provide multipleoptions, they are pakl for, staffed, andmanaged by the employer. Thus, standingalone, they do not serve as a completesubstitute for enforcement of worker rightsthrough recourse to a public agency or thecourts. 21 The question, however, is how tobuild on the features and experiences of
20 See A.J. Perneski, G. Hall, M. Rowe, J. Ziehgenfuss, and M. Lux, "Perspectives on the Costs and CostEffectiveness of Ombudsman Programs in Four Fields: Academia, Health Care, Private Companies, andState Government," 15 Journal of Health and Human Resources Administration, Winter, 1993.
2 I Indeed, to the extent that such nonunion grievance procedures involve participation by regular employees,they pose significant questions about their compatibility with the NLRA's ban on employer-established
131120
these internal dispute resolution systems inways that integrate the private proceduresat the workplace with public agencies andthe courts.
D. Joint Safety and Health and OtherWorkplace Committees
Well designed grievance procedures andarbitration models may prove a valuablealternative for resolving the kinds of em-ployment problems that would otherwise bechanneled into a lawsuit. These proceduresare not, however, well-suited for addressingongoing problems facing the workplace as awhole: whether it be occupational hazards(under OSHA); the financial viability of thecompany's pension plan (under ERISA);devising alternatives (including retraining)to mass lay-offs (under WARN); eliminatingsexually hostile environments (under TitleVII); devising reasonable accommodation tothe special needs of disabled workers on thejob (under ADA). Implementation of publicpolicies and protections in these spheres hasprimarily relied on specialized administra-tive agencies.
Vice President (lore's 1993 Report, Cre-ating a Government That Works Better andCosts Less, underlines the limitations andfailings of use of a single centralized agencyto monitor and secure compliance withquality standards ordained by public policyfor millions of workplaces across the na-tion.22 Speaking specifically about OSHA,the Report stated (at p.62):
"Today 2400 inspectors fromOSHA and approved state pro-
grams try to insure the safety andhealth of 93 million worke -s at6.2 million worksites. The sys-tem doesn't work well enough.There are only enough inspectorsto visit even the most hazardousworkplaces once every severalyears and OSHA has the person-nel to follow up on only threepercent of its inspections."
The Vice President proposed, instead, todraw upon the efforts and insights of thoseactually on site to figure out ways to makeour workplaces safer, fairer and more se-cure.
Employees, the intended beneficiaries ofthese public policies, can play a valuablerole in enforcing the laws. Properly trained,equipped and organized, employees on thejob are in a good position to monitor whethertheir employers are complying with thegovernment's standards. Working together,employees and managers can also figure outways of achieving more of these goals atlower costs to their firms and the economy.
That is why joint safety and healthcommittees (JSHCs) are the most commonform of employee participation programaimed at employee concerns about condi-tions of work (as opposed to employer con-cerns about productivity and quality). A1993 National Safety Council Report foundthat JSHCs exist in 75 percent of estab-lishments with 50 or more employees, andin 31 percent with less than 50 employees.23Indeed, ten or so states now require by lawsuch a committee (or other forms of em-
employee representation plans (discussed in Chapter II). Professor Charles Morris, in his presentationto the Commission titled "Deja Vu and 8(a)(2) -- What's Really Being Chilled by Electromation ?" April1994, pointed out that a case now pending before the NLRB, Keeler Brass Automative Group, mayproduce a Board ruling on precisely this legal issue.
22 Also see U.S. General Accounting Office, Dislocated Workers: Worker Adjustment and RetrainingNotification Act Not Meeting Its Goals, February 1993, documents the particularly egregious failings ofWARN, whose notii& requirements are complied with by employers less than 30 percent of the time.
132121
ployee involvement in this area). In manyof these states the joint committees werelegislated with trade-offs involving otherprovisions of workers' compensation anddisability provisions.
What JSHCs do in practice varies sig-nificantly from one work site to another.The more effective programs offer technicaltraining to committee members, have regu-larly scheduled meetings and well-definedinternal procedures and responsibilities,conduct periodic on-site inspections to moni-tor compliance with safety regulations, andrecommend (and usually secure) improve-ments in employer practices and equipmentto avoid identifiable hazards. The best suchcommittees are integrated with other em-ployee participation and quality programs.These high-quality JSHCs tend to be foundin unionized settings or in larger nonunionfirms with a commitment to the advancedhuman resource techniques described inChapter II. Union committees, even insmall firms, have access to outside technicalassistance.
The Commission heard favorable testi-mony from both business and labor abouttheir experience under the Oregon statute,in particular. (A recent Wall Street Journalarticle also quoted positive comments froma number of small employers about theirexperience in Oregon and other states withsuch laws.) The reasons cited include fewerOSHA inspections and fines, more effectiveefforts at reducing workplace hazards, andlower workers' compensation costs. (Work-ers' compensation premiums in Oregon de-clined by approximately ten percent a yearduring the first three years, 1991 to 1993,
in which its law requiring employee safetyand health participation was in effect.) Arecent study documents how effective Ore-gon's new brand of on-the-job safety regula-tion and administration has proven (innon-union as well as unionized firms).24
The Commission was also provided withevidence of the considerably longer experi-ence with such "internal responsibility" pro-cedures in Ontario, which shows that higherquality committees lead to lower injuryrates for employees.25
Private arbitration has served as aneffective and flexible process for resolvingworkplace issues covered under collectivebargaining agreements.
The Supreme Court, through the Gilmerdecision, has introduced the possibility of anexpanded role for arbitration of a widerarray of employment law issues. A varietyof questions regarding the design of suchsystems will need to be addressed if arbi-tration is used to resolve a broader array ofemployment disputes and is to apply to abroader range of employees.
A wide variety of alternative disputeresolution procedures have arisen in a num-ber of workplaces to deal with issues orindividuals not covered by a collective bar-gaining agreement. These procedures ex-pand the options available for resolvingworkplace issues.
Safety and health committees lire widelyused in the U.S. and other countries. Al-though their effectiveness varies consider-ably, well designed committees that aresupported with adequate training and re-
23 Thomas W. Planck and Kenneth P. Kolosh, Survey of employee Participation in Safety and Health,National Safety Council, October 1993.
24 David Weil, "The Impact of Safety and Health Requirements on OSHA Enforcement" (April, 1994).25 See the submission by te labor and management co-chairs of Ontario's Workplace Health and Safety
Agency: Paul K. Forder and Robert D. McMurdo, "Working Together on Health and Safety: The Impactof Joint Health and Safety Committees on Health and Safety Trends in Ontario" (March 1994).
122
133
sources and integrated with other organiza-tional policies and practices have dem-onstrated their effectiveness in improvingworkplace safety.
6. Integrated EmploymentRegulation
Shifting disputes from courts (and ju-ries) to private mediation, arbitration, orin-house dispute resolution is just one com-ponent of possible institutional reform. An-other would be to create a specializedtribunal a single employment court tohandle the entire array of employment (andlabor) law disputes.
As the Preface noted, while it is notpossible to import an institution found inother countries into the United States it isimportant to learn from experiences abroad.The task of consolidating the mix of agenciesdetailed in Exhibit IV-2 would be enor-mously difficult and take considerable timein view of the diversity of statutes, admin-istrative agencies, rules, and remedial ar-rangements.
Labor Courts
Most other countries have tribunals thatspecialize in workplace disputes (see ExhibitIV-6, page 137).26 Typically, the tribunal iscomposed riot just of professional neutral
lawyers, but also of lay representatives ofbusiness and labor. The procedures areconsiderably more informal and relaxedthan standard judicial proceedings, and ex-tensive use is made of mediation sessionswith the parties. Either the labor court canitself issue immediate injunctive relief whennecessary, or it can petition the regularcourt for such orders that are routinelygranted. There has been little systematicstudy of the impact of the labor court modelon comparative costs and effectiveness inenforcing of employment law in these othercountries.
The Commission recognizes an impor-tant objection that can be raised to the ideaof a single employment tribunal. Are notthe differences between, for example, civilrights law and occupational safety andhealth law, or between pension law andcollective bargaining law, so deep and com-plex that it would be a mistake to assumethat a single group of judges could developthe necessary experience and sophisticationin all these fields? (People who take thatposition cannot, of course, easily defend thecurrent breadth of federal and state courtjurisdiction in this country, not only overemployment, but all other fields of law.)
Unified Agency Administration
The Commission does want to highlightfor further discussion the question whetherthere should be more integrated administra-tion of our numerous federal employmentstatutes, even granting the difficult odds
26 Good descriptions of the tribunals and procedures for enforcement of labor and employme ,t in othercountries can be found in Benjamin Aaron, "Settlement of Disputes Over Rights," in Comparative LabourLaw and Industrial Relations (Roger Blanpain, ed., 1990); Manfred Weiss, Simitis and Rydzy, "TheSettlement c: Labor Disputes in the Federal Republic of German," in industrial Conflict Resolution inMarket Economies (Tadashi Hanami and Roger Blanpain, eds., 1989); Michel Despax and Jacques Rojot,"Labor Law and Industrial Relations in France," in International Encyclopedia for Labor Law aridIndustrial Relations (Roger Blanpain, ed., 1987); and Bob Hepple, "Labor Law and Industrial Relationsi, Great Britain, in international Encyclopedia fQr Labor Law and Industrial Relations (Roger Blanpain,ed., 1992).
123
134
against creation of a single Article III laborcourt for final adjudication of all such cases.It is important to try to improve resolutionof immediate disputes in the employmentrelationship. However, such disputesshould not simply be viewed as isolatedevents affecting only the immediate claim-ants. This country needs to develop insti-tutional arrangements that will do a betterjob of integrating the host of legally distinctprograms all trying to influence and reshapedifferent parts of the same employmentbody.
The following are just a few of thequestions that one might address from thatperspective.
If the Wage and Hour Division of theDepartment of Labor discovers that anemployer is regularly violating FairLabor Standards requirements, is thata reason for alerting OSHA about theneed to do a sudden and thoroughwork site inspection to see whether thesame management is also endangeringthe lives and limbs of its workers?27
Since state-appointed tribunals underthe federal Unemployment Insurancelaw now must decide whether an em-ployee was discharged for good reasonsand thereby disentitled to UI benefits,could such tribunals also function asthe body that awards employees dam-ages against those employers who firethem without good reasons?
Should the Department of Labor es-tablish a single investigative staff tocoordinate enforcement of its extensivebody of regulations, and a single adju-dicative tribunal for interpretations
and enforcement rulings under allthese laws?
Should various agencies that enforcespecific employment regulations thatare located in different federal depart-ments outside the Department of L^-hor be included in a single integratedagency responsible for enforcing allemployment regulations and resolvingemployment law disputes?
Should the judgment about whether toadd or delete a new employment regu-lation or doctrine under one statute beassessed and instituted only as part ofa broader process that considers thenew rule's interplay with and cumula-tive impact on other existing (or pro-posed) employment mandates?
Negotiated Rule Making
Apart from legislative enactment, thepromulgation of regulations offers anotheropportunity to reduce the extent to whichworkplace problems are resolved withoutthe current level of recourse to regulatoryagencies and the courts. Under the Admin-istrative Procedures Act, regulators draftrules, publish them in the Federal Register,hold hearings and receive comments, andthen issue the final regulations. The com-ments often present extreme views of themost interested parties and their versionsof the facts. The scene is set for extendedlitigation on the legislation and what theregulations mean in their finest detail.
Beginning in 1975, the Labor Depart-ment began to experiment with negotiatedrule-making, under which interested partieswere invited to meet with agency officials
27 A study in California (released on April 14, 1994), based on random inspections of 69 garmentmanufacturers and contractors, found that all but two were breaking some federal and state employmentlaws -- including locked or blocked fire exits and having 13-year-old children working nine hours a day.A Labor Department official was quoted as stating that "this is an industry that ignores the law."
135 124
to present and to discuss various views ofthe facts and issues.'8 Studies could beagreed upon by mutually respected sourcesand, with the assistance of a mediationprocess, a degree of consensus on manyfacets of the prospective regulations couldbe reached. Such discourse was designedto concentrate on practical achievement oflegislative objectives, rather than on esoterictechnicalities. The agency would then issuea draft regulation in the Federal Registerfor general comment, to be followed by thefinal rules. The mediation process wasdesigned to produce more understandableand acceptable regulations, within the in-tent of the legislation, and thereby to reducesubsequent litigation.
The process has now been fully endorsedand authorized by the Negotiated Rulemak-ing Act of 19909 Despite the encourage-ment of this legislation, negotiated rulemaking has seldom been used in the em-ployment law field (by comparison withenvironmental regulation). Negotiatedrule-making's potential to reduce recourseto state and federal courts and administra-tive agencies for workplace regulation hasyet to be achieved. The Commission needsto understand why so little use has beenmade of these methods since negotiationsappear to be such a natural tool for effectiveregulation at the workplace. The process,however, requires different al titudes andskills from the parties.
Most other countries resolve employ-ment disputes in a dedicated labor courtrather than through the civil court systemas in the U.S. A number of experts t"stifiedabout the merits and limitations of adoptingthis approach in the U.S.
A number of suggestions were presentedto the Commission for integrating some orall of the administrative agencies responsi-ble for different employment laws.
Negotiated rule making has been usedeffectively but infrequently by the federalgovernment to adapt regulations to fit themodern workplace.
7. General Observations
While the various private and publicpi ocedures for resolving disputes were dis-cussed separately in previous sections, ex-perience suggests it is best to view them asinterrelated. Thus in considering new ap-proaches to resolving workplace issues it isuseful to think in terms of at least thefollowing four stages to an overall system:
(1) the practices used to solve work-place problems before they arise or infor-mally before they enter the formal system;
(2) the options available to resolvedisputes privately without involvement ofpublic agencies or the courts;
(3) the administrative processes in-volved in enforcing the law and resolvingdisputes; and
(4) the judicial procedures used toreview or appeal private and public admin-istrative decisions and rulings.
The last three decades have witnessedan explosion in the breadth and depth oflegal regulation of the American workplace.
28 "The Limits of Legal Compulsion", U.S. Department of Labor Release, November 12, 1975, Labor Law
Journal, Febniary 1976, pp. 6- 74.Public Law 101-648, 101st Congress. See also Administrative Conference of the United States,Negotiated Rulemaking Sourcebook, January 1990.
29
136125
Federal and state legislatures, courts, andadministrative agencies have tried to re-spond to the social and economic concernsof employees by establishing a host of legaldirectives telling employers what they mustdo or they may not do.
The virtue of a legal mandate that offersthe employee recourse to a judicial or ad-ministrative tribunal is that this providessome assurance that crucial employee inter-ests in a safe, secure, and fair workingenvironment will not be ignored. As we sawfrom Exhibits IV-1 and IV-2, since the 1970semployees seeking such legal relief haveproduced a sharp increase in the numbersof suits filed in federal courts and com-plaints filed with federal agencies.
The workers best able to take advantageof the law are upper-level employees whoseclaims (usually about their termination) arefinancially worthwhile to sue about, orgroups of employees who have the kind ofrepresentation (usually by a union or someother advocacy group) that gets the atten-tion of a short-staffed administrativeagency.
Even such limited legal protection comesat a considerable cost. Some of the costsare paid from the public purse that supportsthe judicial and administrative systems.Much of it comes from the parties them-selves who must pay the attorney fees andother expenses of legal proceedings. Someof that cost burden is borne by employerswho were guilty of violating the law. Asmuch, if not more, of these legal expendi-tures are made by law-abiding employersdefending themselves against non-meritori-ous claims and going through all the inter-nal procedures and paperwork needed todemonstrate compliance.
In the longer run most of these employerexpenditures are passed on to others -- togovernments in the form of lower corporatetaxes, to consumers in the form of higherproduct prices, and to employees in the form
of fewer jobs or lower wages a. d benefits.That means that there is a broad socialinterest, not just a narrow business interest,in reducing the costs of litigation and regu-lation.
One such path would take us towardsprivately-run mechanisms for either resolv-ing individual disputes under the law (e.g.,discrimination or wrongful dismissal) or forinspecting and monitoring workplace com-pliance with regulations (e.g., of OSHA orERISA).
With respect to arbitration, the keyquestion is whether and how such aprocedure should be designed to en-sure it is a fair, as well as a moreaccessible, alternative to a jury trial.
With respect to joint safety and healthor other such "internal responsibility"programs, should the law require com-mittees or some equivalent from ofemployee participation, and, if so, howcan these programs be designed to fitthe diverse workplaces and employ-ment settings found in the economy?
With respect to either arbitration orself-regulatory committees, the ques-tion is whether employment law cansafely grant these private proceduressome leeway in interpreting and ap-plying public laws to local situations.
For all these questions, the issue is notjust whether there are risks and costs tothese private alternatives. The more impor-tant issue is how these risks and costs ofADR compare with those now being experi-enced in the administration of employmentlaw by courts and agencies. That, in turn,raises the question about the value ofanother path towards reform -- more coor-dinated administration of the array of em-ployment regulations.
137126
8. Summary andQuestions for FurtherDiscussion
1. Federal laws governing the work-place increased dramatically since the1960s. Accompanying this growth in law isa corresponding expansion in the rules andregulations that guide their administrationand enforcement. The Labor Departmentalone is responsible for enforcing a vastnumber of workplace regulations, and otheragencies.
2. At the same time, the Americanworkforce and workplaces have becomemore diverse, making it difficult for the lawsand regulations to fit these changing circum-stances. The increased diversity, in turn,created more demand for protective legisla-tion and more complex rules.
3. Workplace litigation caseloads andcosts rose faster than other areas of law.Employment cases in the federal courtsincreased by over 400 percent between 1971and 1991.
4. Agencies responsible for administer-ing these laws experienced increasing back-logs and delays in processing cases.
5. The private institutions Americanshave traditionally relied upon to resolveissues without resort to government regu-latins or court litigation, namely collectivebargaining grievance arbitration, declinedin coverage and were limited in their finalityby court decisions.
6. Neither the more longstanding formsof private representation and dispute reso-lution, i.e., mediation and arbitration, northe newer more informal employee partici-pation and alternative dispute resolutionsystems, are being utilized to their fullpotential for dealing with issues and resolv-
ing disputes that now are regulated by law.All of these procedures would need to bemodified in various ways if they are to beused as part of a system for adaptingworkplace regulations to fit different set-tings and enforce public laws.
7. The administrative procedures forresolving employment cases are complicatedby (1) the large number of different agencies,enforcement regimes, and remedies avail-able under the different statutes; and (2)the varying scope of judicial review accordedagency decisions.
8. The U.S. relies on the civil courtsystem to litigate employment disputeswhile many other countries use specialized,tripartite employment courts.
9. Experience with dispute resolutionsuggests the value of considering the inter-relationships among different levels orstages in the private and public proceduresused to resolve workplace issues, including:(1) the informal practices and organizationalpolicies designed to solve workplace prob-lems before they arise or to resolve theminformally before they enter the formalsystem; (2) the formal procedures (e.g. a .-bi-tration) used to resolves disputes before theyare brought to a public agency or the court,(3) the administrative processes involved inenforcing the law and resolving disputes,and (4) the judicial procedures used toreview or appeal private and public admin-istrative decisions and rulings.
10. Negotiated rule making has beenshown in some instances to improve theefficiency and acceptability of the regula-tions required to implement and enforce theobjectives of laws governing the workplace.However, it has seldom been used for em-ployment issues.
138127
Questions for Further Discussion
1. What changes in current labor andemployment arbitration procedures areneeded to deal with the broader range ofissues and individuals involved in contem-porary employment disputes?
2. What is the appropriate relationshipbetween private and public dispute resolu-tion procedures?
3. What role, if any, should employeeshave in the design and oversight of work-place dispute resolution systems that in-volve issues of public law?
4. How can worker-management com-mittees or other forms of employee involve-ment be used to internalize responsibilityfor or resolve problems of occupationalsafety and health or other workplace mat-ters regulated by public law?
5. Should the U.S. government inte-grate and combine different agencies re-sponsible for administering and enforcingemployment laws and regulations?
6. Should the U.S. consider establishinga specialized branch of the judicial systemto deal with employment law cases?
128
133
EXHIBIT IV-1
Description of Major Statutes and Executive Order Comprising the Framework ofFederal Workplace Regulation*
PRINCIPALENFORCEMENT
STATUTE DESCRIPTION AGENCY
LABOR STANDARDSFLSA Establishes minimum wage, overtime pay and child Labor -WI-ID
Davis-Bacon Act Provides for payment of prevailing local wages and Labor -WHDfringe benefits to laborers and mechanics employedby contractors and subcontractors on federal con-tracts for construction, alteration, repair, painting
0. : s Il AO .
Service Contract Provides for minimum compensation and safety andhealth standards for employees of contractors andsubcontractors providing services under federalcontracts.
ActLabor -WHD
Walsh-Healy Act Provides for labor standards, including wage and hour,for employees working on federal contracts for themanufacturing or furnishing of materials, suppliesarticles, or ecluinroent.
CWHSSA Establishes standards for hours, overtime compensa-tion, and safety for employees working on federalelle '0' : dos '111 Si : :O. ' OS
Labor-WHD
Labor-WHD
MSPA Protects migrant and seasonal agricultural employers,agricultural associations, and providers of migranthousing.
Labor -WHD
ERISABENEFITS
Establishes uniform standards for employees pensionand welfare benfit plans, including minimum partici-pation, accrual and vesting requirements, fiduciaryres onsibilities, re ortin and disclosure benefits.
Labor-PWBAbPBGC, IRS
COBRA
UnemploymentCompensation
FMLA
Provides for continued health care coverage undergroup health plans for qualified separated workersfor lw to 18 monthsAuthorizes funding forsation administrationswork for the operationanise nrograms.Entitles employees to take up to 12 weeks of unpaid,job-protected leave each for specified family andmedical reasons such as the birth or adoption of achild or an illness in the family.
Labor-PWBA
state unemployment compen- Labor-ETAand provides the general frame-of state unemployment insur-
Labor-WHD
'Title VIICIVIL RIGHTS
Prohibits employment or membership discriminationby employers, employment agencies, and unions onthe basis of race, color, religion, sex, or nationalorigin; prohibits discrimination in employment againstwomen affected by pregnancy, childbirth or relatedmedical condition.
140
EEOC
129
EXHIBIT IV-1 (Continued)
Description of Major Statutes and Executive Order Comprising the Framework ofFederal Workplace Regulation*
STATUTE DESCRIPTIONEqual Pay Act Prohibits discrimination on the basis of sex in the
payment of wages.EO 11246 Prohibits discrimination against an employee or
applicant for employment on the basis of race,color, religion, sex, or national origin by federalcontractors and subcontractors, and requiresfederal contractors and subcontractors to takeaffirmative action to ensure that employees andapplicants for employment are treated withoutregard to race, color, religion, sex or nationalorigin.
PRINCIPALENFORCEMENT
AGENCYEEOC
Labor-OFCCP
ADEA Prohibits employment discrimination on the basis EEOCf age against persons 40 years and older.
ADA Prohibits employment discrimination against EEOCindividuals with disabilities: requires employerto make "reasonable accommodations" for disa-bilities unless doing so would cause undue hard-shin to the employer.
Rehabilitation Prohibits discrimination in employment by federal Labor-OFCCPAct (Section 503) contractors and subcontractors on the basis of dis-
ability and requires them to take affirmative actionto employ, and advance in employment, individualswith disabilities.
Anti-retaliatory Prohibits the discharge or other discriminatory action Labor-OSHAhProtections - against filing a complaint relating to a violation of aSTAA commercial motor ..ehicle safety rule or regulation or
for refusing to operate a vehicle that is in violation ofa federal rule, or because of a fear of se,-;ous injurydue to an unsafe condition.
Occupational Health and SafetyOSHA Requires employers to furnish each employee with OSHA
work and a workplace free from recognized hazardsthat can cause death or serious physical harm.
MSHA Sets health and safety standards and requirements MSHA'to protect miners.
Drug Free Requires recipients of federal grants and contracts OFCCI'Workplace Act to take certain steps to maintain a drug free work-
place.
NLRA
LMRDA
Labor RelationsProtects certain rights of workers including theright to organize and bargain collectively throughrepresentation of their own choice.Requires the reporting and disclosure of certainfinancial and administrative practices of labororganizations and employers; establishes certainrights for members of labor organizations and im-
141
NLRBi
NLRB
130
EXHIBIT IV-1 (Continued)
Description of Major Statutes and Executive Order Comprising the Framework ofFederal Workplace Regulation*
PRINCIPALENFORCEMENT
TATIUTTF, DFSCRTPTION AGENCY
Railway Labor Sets out the rights and responsibilities of manage- NMBkAct gent and workers in the rail and airline industries
where one employer may provide services in numerouslocations simultaneously; provides for negotiation and
mediation procedures to settle labor-managementdisputes.
EmploymentPolygraph Prohibits the use of lie detectors for pre-employment Labor-WHDprojaciialAuacaealugarcuriagijaa_cauxzwamajonexa._
eterans Provides reemployment rights for persons returning Labor-ETAReemployment from active duty, reserve training, or NationalAct Guard duty.IRCA Prohibits the hiring of illegal alliens and imposes Labor-WHD
certain duties on employers; protects employmentrights of legal aliens; authorizes but limits theuse of imported temnorary ap-ricultural workers.
WARN Requires employers to provide 60 days advance Labor-WHDwritten notice of a layoff to individual affectedemployees, local governments, and other parties.
a Wage and Hour Divisionb Pension Welfare Benefit Administration
Pension Benefit Guarantee Corporationd Internal Revenue Servicee Employment and Training Administration
Equal Employment Opportunity Commissiong Office of Federal Contract Compliance Programsh Occupational Safety and Health Administration
Mine Safety and Health AdministrationNational Labor Relations Board
K National Mediation BoardMany statutes are complex and contain a multitude of requirements, rights, and remedies. The
information presented has been simplified for illustrative purposes.
131
142
EX
HIB
IT I
V-2
Proc
edur
e, F
orum
, and
Rem
edy
PRO
GR
AM
AU
TH
OR
ITY
GR
OU
PFO
RU
MIN
TE
RIN
IN-K
IND
SCO
PE O
FPU
NT
IVE
AT
TO
RN
EY
CL
AiM
SR
EL
IEF
RE
ME
DY
CO
MPE
N-
DA
MA
GE
S FE
ES
SAT
ION
Fair
Lab
orD
ept.o
f L
abor
Rep
rese
ntat
ive
Fede
ral
Secr
etar
ySe
cret
ary
of B
ack
Pay
Dou
ble
Prev
ailin
gSt
anda
rds
Act
and
Indi
vidu
alA
ctio
nD
istr
ict J
ury
Petit
ion
Dis
t.D
ist.
Cou
rtB
ack
Pay
Plai
ntif
fsE
mpl
oyee
depe
nds
on.
Cou
rtIn
junc
tion
Cri
min
alcl
aim
sPr
osec
utio
n
Fam
ily a
ndD
ept.
of L
abor
.C
lass
Act
ion
... S
tate
or
Sec.
of L
abor
.B
road
Bac
k Pa
y.N
oPr
evai
ling
Med
ical
Lea
veIf
not
Fede
ral C
ourt
. Pet
ition
Cou
rt. E
quita
ble
Plai
ntif
fsA
ctIn
divi
dual
Jury
Tri
alR
elie
fE
mpl
oyee
Em
ploy
ee .
....
... S
ec.o
f L
abor
Cla
ss A
ctio
nSt
ate
orSe
cret
ary
toB
road
At l
arge
.Pe
nalti
esPr
evai
ling
Poly
grap
han
d In
divi
dual
Fede
ral C
ourt
. Dis
t.Cou
rt.
.. . e
quita
ble
...da
mag
es ..
. ass
esse
d by
....
Part
yPr
otec
tion
Em
plre
lief
Sec.
of
Lab
orA
ctup
to $
10,0
00
Occ
upat
iona
lO
SHA
Div
.Y
es.-
0S11
AL
J to
OSH
A to
Aba
tem
ent
For
Fine
s-N
one
Safe
t. an
dD
ept.
Com
palin
tO
SHR
C to
.D
ist.C
ourt
Ret
alia
tory
.Pa
id to
Hea
lth A
ctof
Lab
orC
irc
Cou
rt.
Act
ions
.... g
over
nmen
t
Frnp
loee
Dep
t of
Lab
or.
..
. Cla
ss A
ctio
n .
..Fe
dera
l Cou
rt. E
mpl
oyee
... .
Def
initi
on &
Liq
uida
ted.
. Cri
min
al F
ines
.Pr
evai
ling
..R
etir
emen
tIn
divi
dual
Rul
e 23
Soni
c St
ate.
.. B
enef
icia
ries
. Pro
visi
on o
fD
amag
es ..
Civ
il Pe
nalti
es..
Plai
ntif
fs:
MIn
com
eE
mpl
oyee
sC
ourt
in C
ourt
Ben
efits
..
.to
Ben
efits
.. So
me
Puni
tives
.So
me
Secu
rity
Act
Som
e Ju
ryPr
evai
ling
Tri
alD
efen
dant
s
143
144
Exh
ibit
IV-2
Pro
cedu
re, F
orum
, and
Rem
edy
Pro
gram
Aut
horit
yG
roup
For
umIn
terim
Cla
ims
Age
Dis
crim
..
Indi
vidu
alR
epre
sent
ativ
eE
mpl
oym
ent
-Unl
ess
EE
OC
.w
ith c
onse
nt.
Act
sues
in ti
me.
Fed
eral
EE
OC
Pet
ition
Dis
tric
t Jur
yD
ist.
Cou
rt.
of g
roup
tria
l
In-
kind
.... S
cope
of
Pun
itive
Atto
rney
Rel
ief
Rem
edy
satio
nC
ompe
n-D
amag
esF
ees
Bro
adB
ack
pay
and
. Dou
ble
Pre
vaili
ngE
quita
ble
-F
ront
pay
.da
mag
es-
Pla
intif
fsR
eins
tate
men
tIf
will
ful
Rar
e
Fai
r la
bor
Dep
t. of
Lab
or.
Rep
rese
ntat
ive
Fed
eral
Sta
ndar
ds A
ctan
d In
divi
dual
.A
ctio
nD
istr
ict J
ury...
Em
ploy
ee
Sec
reta
ryP
etiti
on D
ist.
.
tria
l for
som
ecl
aim
s
Fam
ily a
ndD
ept.
of L
abor
.C
lass
Act
ion
.
Med
ical
Lea
veIf
not
Act
Indi
vidu
alE
mpl
oyee
Sec
reta
ry to
. Bac
k P
ayD
ist.
Cou
rt.
Bac
k P
ay-
.
Cou
rtIn
junc
tion
Sta
te o
rS
ec. o
f Lab
or .
Bro
adB
ack
Pay
Fed
eral
Cou
rtP
etiti
on C
ourt
. Equ
itabl
e R
elie
fP
lain
tiffs
Jury
Tria
l ....
Rel
ief
Dou
ble
Pre
vaili
ngP
lain
tiffs
Crim
inal
Pro
secu
tion
No
Pre
vaili
ng
Fin
plo
eeD
ept.
of L
abor
Cla
ss A
ctio
nS
tate
or
Pol
ygra
ph.
and
Indi
vidu
alF
eder
al C
ourt
.P
rote
ct io
nE
mpl
Act
Sec
reta
ry to
Bro
adA
t lar
geP
enal
tiesP
reva
iling
Dis
t. C
ourt
Equ
itabl
e ..
dam
ages
asse
ssed
by
.P
ary
Rel
ief
Sec
. of L
abor
-up
to $
10,0
00
Occ
upat
iona
lO
SI I
A D
iv. D
ept.
Yes
.-O
SH
Saf
et a
nd..
.of
Lab
orC
ompl
aint
leal
th A
ct
toO
SH
A to
..O
SH
RC
to C
ir. D
ist.
Cou
rtC
ourt
Aba
tem
ent
. For
Ret
alia
tory
Fin
es-
.N
one
Act
ions
Pai
d to
gove
rnm
ent
Em
ploy
eeD
ept.
of L
abor
...
.C
lass
Act
ion
...
Fed
eral
Cou
rt. E
mpl
oyee
....
Ret
irem
ent
Indi
vidu
alR
ule
23S
ome
Sta
te...
Ben
efic
iarie
s.
Inco
me
Em
ploy
ees
Cou
rtin
Cou
rtB
enef
itsS
ecur
ity A
ctS
ome
Jury
in C
ourt
Def
initi
on a
nd L
iqui
date
d.. C
rimin
al F
ines
.P
reva
iling
Pro
visi
on o
f Dam
ages
to...
Civ
il P
enal
ties.
. Pla
intif
fs:
Ben
efits
Ben
efits
Som
e P
uniti
ves
.S
ome
Pre
vaili
ngT
rial
Def
enda
nts
145
146
EXHIBIT IV-3
SELECTED CATEGORIES OF LITIGATIONIN THE FEDERAL DISTRICT COURTS
By Cases Filed
Year Total,Civil
Fortune4000Plaintiff'
PersonalInjury
Labqr EmploymentLaw Law'
1971. . . . 69,465 3,153 20,517.... 2,430, 4,3311972. . . . 72,180 3,396 19,449.... 2,741 4,6351973. . . . 74,563 3,220 18,520.... 2,965 4,8551974. . . 77,347 3,485 18,621 3,311 5,7831975. . . 87,641 4,139 19,192.... 4,316 7,6381976. . . 96,139 4,718 19,161 4,452 10,2691977. . . 96,829 4,836 19,280.... 4,305 10,9541978. . . 103,513 4,495 19,483.... 4,141 10,7091979. . . 117,680 4,874 20,630.... 4,603 11,1031980. . . . 131,533 6,059 22,622.... 4,368 11,4721981. . . 139,193 6,044 24,816.... 4,540 13,1341982. . . . 139,593 7,539 25,801 4,711 15,4361983. . . 147,518 7,744 27,582.... 4,669 17,7011984. . . 152,061 7,855 27,686.... 4,459 19,1661985. . . 160,484 8,257 30,294.... 4,017 18,0611986. . . 163,664 8,329 29,420.... 4,242 20,3201987. . . 159,275 9,709 27,622.... 3,738 19,9501988. . . 161,769 9,029 26,760.... 3,231 20,0411989. . . . 163,865 8,905 26,803 2,920 21,7751990. . . 156,762 6,637 23,868.... 2,709 22,1651991. . . . 146,790 6,954 23,959.... 2,364 22,968Increase1971-1991.. 110% 121% 17% -3% 430%
This category excludes the following subcategories of civil litigation: prisoner petitions (i.e., forwrits of habeas corpus) student loan recovery cases, deportation cases, local cases in U.S. territories,9.nd personal injury or social security cases in which the U.S. is a defendant.
This category is presented here as proxy for business litigation in general, for which there are noprecise figures for the period in question. Fortune 1000 stands for the industrial Fortune 500 and§ervice sector Fortune 500 combined.
This category excludes all asbestos cases because the brief but massive surge in asbestos litigation
luring the 1980s distorts underlying long term trends.Labor law covers cases involving the National Labor Relations Act, the Labor Management
Reporting and Disclosure Act, and the Railway Labor Act.
134
EXHIBIT IV-4
TRENDS IN COMPLAINT AND CASE VOLUME: SELECTED EMPLOYMENT STATUTES
Wage & HourComplaints
Wage & HourCases
OSHAComplaints
OSHACases
EEOCComplaints
EEOCCases
1980 45,366 7,949 16,100 11,988 --- --1981 46,020 5,752 13,161 6,744 56,228 444
1982 46,584 7,648 6,741 5,978 54,145 241
1983 44,869 3,958 6,361 5,219 66,461 195
1984 50,037 3,989 7,532 4,789 -- - --
1985 57,314 3,610 8,663 4,736 - --1986 59,988 4,389 9,085 4,808 62,822 526
1987 58,936 3,343 9,764 5,041 62,074 527
1988 62,599 3,357 12,200 5,686 58,853 555
1989 63,965 3,439 11,869 7,702 55,952 598
1990 60,484 3,327 10,850 8,242 62,135 643
1991 54,142 3,041 10,198 8,686 63,898 593
1992 47,879 2,733 10,873 8,646 72,302 446
1993 46,121 2,295 10,539 8,960 87,942 481
Peak Year 1989 1980 1980 1980 1993 1990
% Change1980 -Peak +41% 0% 0% 0% +56% 45%
% Change1980-1993 +2% -71% -35% -25% +56% 8%
I The figures for the EEOC categories are from 1981, sin 1980 figures are unavailable.
SOURCE: Joel Rogers and Terence Dunworth, Business Disparity Group.
143135
Ebchibit IV-5
Key Features for an Integrated Workplace Dispute Resolution System
An Integrated Workplace Resolution System should:
1. Deal with a very wide spectrum of workplace concerns.
2. Be open to al categories of personnel.
3. Handle group issues as well as individual complaints.
4. Have multiple options or mechanisms including encouragingperson-to-person or group-to-group negotiations and problemresolution; informal or formal mediation fact finding, andpeer review, and; arbitration.
5. Allow "looping backward and forward" to the informal andformal procedures at various stages in the resolution process.
6. Provide a variety of helping resources such as training,advising, and representation not only to the complaint butalso to the respondent and the supervisors and coworkersaffected by the dispute.
7. Include people of color, women, and men in the various rolesin the system.
8. Be taught to all participants in the organization.
9. Proscribe reprisal and provide for monitoring and evaluation.
10. Include a wide cross section of employees and managers in thedesign of the system.
Source: Testimony of Professor Mary Rowe, April 6, 1994
136
110
Gen
eral
Str
uctu
re:
Pane
ls:
r. l Jur
isdi
ctio
n:
Proc
edur
e:
Rem
edia
pm
% e
r: 150
EX
HIB
IT I
V-6
GE
RM
AN
Y;F
RA
NC
E
The
labo
r co
urt s
yste
m is
thre
e tie
red:
Lab
or a
nd e
mpl
oym
ent i
ssue
s m
ay b
ela
bor
cour
ts o
f fi
rst i
nsta
nce,
app
ella
te I
dec
ided
in a
num
ber
of c
ourt
s, y
et th
eco
urts
, and
a f
eder
al la
bor
cour
t, w
ith m
ajor
ven
ue f
or th
ese
case
sis
the
revi
ew b
y th
e C
onst
itutio
nal C
onse
il de
s Pr
ud'h
omm
es. T
here
is o
nela
bor
cour
t in
ever
y di
stri
ct w
here
ther
eju
dici
al!c
ourt
.
Com
pose
d of
a p
rofe
ssio
nal j
udge
and
j tw
o w
inge
rs -
lay
judg
es, w
ith a
n eq
ual
I vo
te, o
ne r
epre
sent
ing
labo
r an
d th
eot
her
busi
ness
.
UN
ITE
D K
ING
DO
M
Indu
stri
al tr
ibun
als
cove
r m
ost o
f th
ein
divi
dual
em
ploy
men
t dis
pute
s, a
nd a
nE
mpl
oym
ent A
ppea
ls T
ribu
nal p
resi
des
over
appe
als
from
the
indu
stri
altr
ibun
als
(sub
ject
to ju
dici
al r
evie
w).
is a
reg
ular
fir
st e
chel
on C
ivil
Cou
rt.
The
cou
nsel
lers
are
not
pro
fess
iona
lju
dges
, but
rat
her
repr
esen
tativ
es o
f th
eem
ploy
ees
and
empl
oyer
s,el
ecte
ddi
rect
ly b
y th
eir
peer
s.E
lect
ions
of
repr
esen
tativ
es f
or th
e C
onse
ils a
re lo
cal
in n
atur
e.
Lab
or c
ourt
s ha
ve e
xclu
sive
juri
sdic
tion
over
vir
tual
ly a
ll pr
ivat
e le
gal i
ndus
tria
lco
nflic
ts in
clud
ing
both
col
lect
ive
and
indi
vidu
al d
ispu
tes.
Exc
lude
d fr
om th
eco
urt's
juri
sdic
tion
are
mos
t dis
pute
sov
er c
o-de
term
inat
ion,
and
the
inte
rnal
orga
niza
tion
of u
nion
s an
d em
ploy
ers'
asso
ciat
ions
.
Com
pare
d to
the
regu
lar
Ger
man
cou
rtsy
stem
, pro
cedu
res
are
rela
xed
and
The
indu
stri
al p
anel
is c
ompo
sed
of a
prof
essi
onal
cha
irpe
rson
app
oint
ed b
yth
e Se
cret
ary
of S
tate
and
two
lay-
mem
bers
appo
inte
dth
roug
hco
nsul
tatio
n w
ith la
bor
and
busi
ness
asso
ciat
ions
.
The
Con
seils
hav
e ju
risd
ictio
n on
ly o
ver
indi
vidu
al d
ispu
tes.
On
thes
e m
atte
rsth
ey a
re th
e fi
rst a
nd la
st in
stan
ce, w
ithal
mos
t no
appe
al p
ossi
ble.
The
trib
unal
s ar
e in
cha
rge
of in
divi
dual
empl
oym
ent
disp
utes
.C
olle
ctiv
edi
sput
es a
re r
esol
ved
thro
ugh
volu
ntar
ym
easu
res,
and
unde
rso
me
circ
umst
ance
s in
the
regu
lar
cour
ts.
Cas
es a
lway
s st
art b
efor
e th
e bo
ard
ofco
ncili
atio
n an
d on
ly if
uns
ucce
ssfu
l are
conc
iliat
ory.
The
cha
ir is
aut
hori
zed
to tr
ansf
erre
d to
the
boar
d of
judg
men
t or
sum
mon
all
witn
esse
s, e
xper
ts, a
nd to
cou
nsel
lers
-rec
orde
rs w
ho s
erve
as
docu
men
ts w
hich
he
view
s as
nec
essa
ry f
act-
find
ers
who
late
r pr
esen
t the
cas
etie
r th
e co
mpl
etio
n of
the
tria
l in
one
day.
bef
ore
the
boar
dof
judg
men
t.Ju
dgm
ent
mus
tbe
pron
ounc
ed P
roce
dure
s ar
e ge
nera
lly in
form
al a
ndim
med
iate
ly f
ollo
win
g th
e pr
ocee
ding
s. e
xtre
mel
yfa
st,
with
mos
tca
ses
com
plet
ed w
ithin
the
sam
e da
y an
d w
itha
shor
t wai
ting
peri
od.
Inju
nctio
ns a
re is
sued
by
the
labo
r co
urt T
he c
ourt
has
bro
ad in
junc
tive
and
itsel
f.In
add
ition
, the
cou
rt h
as f
ull r
emed
ial a
utho
rity
.'re
med
ial p
ower
.
Com
plic
ated
ple
adin
g pr
oced
ures
are
avoi
ded,
rul
es o
f ev
iden
ce r
elax
ed, w
ithno
com
puls
ory
lega
lre
pres
enta
tion.
The
Adv
isor
yC
onci
liatio
nan
dA
rbitr
atio
n Se
rvic
es (
AC
AS)
pro
mot
esA
DR
for
reso
lvin
gal
l em
ploy
men
tre
late
d di
sput
es, i
nclu
ding
pro
visi
on o
fco
llect
ive
conc
iliat
ion,
con
cilia
tion
inpr
ocee
ding
s be
fore
the
trib
unal
s, a
ndre
fere
nce
to a
rbitr
atio
n an
d m
edia
tion.
The
trib
unal
s ha
ve li
mite
d re
med
ial
pow
er,
and
cann
otis
sue
inte
rim
inju
nctio
ns,
not e
nfor
ce c
ompl
ianc
ew
ithth
e ow
n _j
udgm
ents
. 151
Chapter V
General Observations
Several common themes emerged in thetestimony and the evidence presented tothe Commission, beyond the three sepa-rate questions raised in the MissionStatement discussed in the previous threechapters. This brief chapter summarizesseveral of these themes which need to berecognized when addressing the issuesconsidered in the individual chapters.
1. Growing Diversity in Worker-Management Relations
Chapter I reported the wide variety ofemployment relations found in firms ofdifferent sizes and in different industries.Earnings have become more unequallydistributed in recent years, separatingthose with and without the education,training, and ability to use modern tech-nologies and to participate effectively inworkplace problem-solving. This raisesthe question of whether the Americanworkforce is adequately prepared to meetthe demands of international and domes-tic competition, changing technologies,
and new patterns of work organizationthat put a premium on education, skill,and problem-solving abilities. The moveaway from the stereotypical model of amale wage earner in a stable long termjob with a wife and family at home posesthe question of whether existing privateand public policies are flexible enough tofit the diverse workforce and circum-stances encountered in the contemporarylabor market.
Diversity characterizes the distribution ofhuman resource policies and practices ofemployers and labor organizations. Chap-ter II, for example, focused on the inno-vative practices found in many firms thatprovide employees a voice in decisions thataffect their jobs and the performance oftheir enterprises. American employershave been world leaders in introducingsome of these workplace innovations.Some American firms have served asbenchmarks for employers around theworld, while others have learned from thepractices of leading firms in other coun-tries. These innovations are helping
152
139
American employers be competitive onworld markets. A number of unions haveinitiated broad ranging partnerships withemployers that extend from the workplaceto the highest levels of decision-making inan effort to enhance both enterprise per-formance and democracy at the workplace.Chapters III and IV showed that thediversity reported in Chapter I has con-tributed to the inability of governmentregulators to enforce the laws governingindividual and collective worker rights.The variation and complexity in adminis-trative and enforcement procedures andpenalties add significant costs to the work-place and divert time and resources tolitigation that could be more effectivelyput to use in preventing problems fromarising, resolving disputes quickly andclose to their source and making thepromised rights accessible to their in-tended beneficiaries. This leads to thequestion of whether alternative disputeresolution techniques, mediation, and ar-bitration can be utilized to provide bettertailored approaches to workplace disputeresolution; the issue also arises whetherthe present methods of determining regu-lations and administering them can beimproved.
2. Interdependence of Issues Presentedto the Comxcission
A diverse workforce requires variation inmethods and procedures for employee par-ticipation, representation, and disputeresolution. Sustained labor-managementcooperation requires acceptance of laborrepresentatives as valued partners in ex-isting worksites under collective bargain-ing and respect for workers' rights tochoose .vhether or not to be representedin new facilities. Cooperation cannot besustained in an environment of bitter,prolonged, and inflammatory debates overthe process of worker representation. Col-lective bargaining relationships that fol-low long battles over union recognition
cannot be easily transformed into coopera-tive and highly participative workplaces.
Alternative dispute resolution proce-dures cannot take on a broader role at theworkplace in enforcing workplace justiceunless the parties affected participate inboth the design and oversight of thesystem.
The issues and the parties to the work-place no longer fit the traditional labelsof "worker" versus "supervisor" or "man-ager," or "exempt" versus "nonexempt."The issues of concern in the modernworkplace transcend those covered by atraditional collective bargaining contract.Thus, participation in the design andoversight of workplace dispute resolutionmust also transcend these traditional la-bels and boundaries between employeegroups.
The success of any formal dispute resolu-tion system requires effective workplacepolicies and institutions that both preventproblems from arising in the first placeand resolve as many as possible informallybefore they escalate into formal com-plaints or lawsuits. The evidence pre-sented in Chapter II suggests thatworkplaces that have been successful indeveloping the trust needed to foster andsustain employee participation and coop-eration are more likely to have these typesof policies and the capability to resolvethose problems that do arise. The ques-tion is whether it is possible to takeadvantage of existing labor-managementrelationships and employee participationprocesses to fulfill some of these workplacejustice roles.
3. Mismatch of Policy and Practice
The evidence presented to the Commissionreflected a degree of mismatch betweensome aspects of the legal framework regu-lating worker-management relations andthe emerging workplace and workplace
153140
practices necessary to be competitive andto meet workers' needs in the moderneconomy.
Chapter II reported how some of the moreadvanced forms of employee participationare put under some uncertainty by inter-pretations of the National Labor RelationsAct. Chapter III documented the obstaclessome employees experience in exercisingtheir right to choose whether or not to berepresented and to bargain collectively iffaced with determined employer opposi-tion. Chapter IV described the growth inregulatory burdens on the workplace andthe exploding levels of litigation related tostatutes and regulations that workers andemployers find hard to use or managebecause of their high costs, long delays,and unresponsiveness to non-standardemployment relationships. The mismatchbetween law and practice may grow in thefuture given the trends of increased inter-national and domestic competition, tech-nological innovation, rising educationlevels and growing labor force diversity.
4. De-escalation of Workplace Conflicts
The agreement of management and laboron the principle that workers should havethe right freely to choose whether or notto oe represented by a union and thecooperative labor-management relationsfound in many settings conflicts with theconfrontational process of union organiz-ing and management campaigning to pre-vent organization that takes place inmany other situations. The latter is whatwas referred to as the "dark side" of laborrelations in Chapter III. Caught in themidst of these conflicts are workers whowant a voice on their job but fear thetensions, risks, and adversarial climatethat sometimes accompany efforts to ex-ercise those rights. All participants --employees, management, and unions --would benefit from reduction in illegalactivity and de-escalation of a conflictualprocess that seems out of place with thedemands of many modern workplaces andthe needs of workers, their unions, andtheir employers.
154 141
APPENDIX A
Historical Perspective on the Work of theCommission
1. The United States enacted in the past75 years four major statutes that governlabor-management relations - the Rail-way Labor Act (1926) now applicable tothe railroad and airline industries; theWagner Act, the National Labor RelationsAct, (1935), the Taft-Hartley amendments,Labor-Management Relations Act, (1947),and the Labor-Management Reportingand Disclosure Act (1959).
The 1926 Railway Labor Act waspassed with full agreement of railwaymanagements and railway unions.
The other three pieces of legislationwere enacted in bitter controversy be-tween business and organized labor, insharply divided partisan political con-flict, and each reflected short termantecedents in conflicts in the periodspreceding the legislation.
2. The labor law reform attempt on thepart of the Carter Administration in 1978and 1979 ended with passage of legislationin the House but a failure to muster the60 votes required to break a filibuster inthe Senate.
3. In this century, there have been twoCongressional Commissions and two ex-tended Congressional Committee hear-ings, that lasted over several years, thathave been influential in developing infor-mation that shaped Congressional views
and legislation on labor-management re-lations:
U.S. Industrial Commission, 1898-1901;U.S. Commission on Industrial Relations1912-1915; the LaFollette Committee,Senate Committee on Education and La-bor, 1936-1940; The McClellan Commit-tee, Select Committee, 1957-1960.
The 1898-1901 Commission was com-prised of five members of Congressfrom each body and nine private citi-zens appointed by the President witha large technical staff. The Commis-sion submitted 19 volumes of materi-als, ten of which related to the prob-lems of labor, and the Commission alsosubmitted recommendations. Thesubstantive content of the volumesrather than the recommendationswere noteworthy.'
The 1912-1915 Commission was com-prised of three representatives of or-ganized labor, three of employers, andthree public members. Frank P.Walsh was named chairman; ProfessorJohn R. Commons of Wisconsin wasalso a public member. The work ofthe Commission was carried on bothby public hearings and by researchreports done by a large and distin-guished staff. The Commission held154 days of hearings in which 740witnesses testified. The final reportconsisted of 11 volumes with 253 pagesof recommendations.2
The extensive hearings conducted bySenator McClellan, 1957-60, detailedthe influence of organized crime insome unions, the abuse of some unionofficers of their members and finances
1 Mark Perlman, Labor Union Theories in America, Background and Development Evanston, IL, Row, Petersonand Company, 1958, pp. 264-79.
2 Mark Perlman, pp. 279 -30I.
143
155
and improper conduct of some manage-ment representatives. The Committeeproduced 46,150 pages of testimony,heard 1,525 witnesses and employed104 staffers at its peak.
4. There have been two occasions in thepast 75 years in which Presidents of theUnited States, after World War I andWorld War II, have assembled labor andmanagement representatives in formalconferences to seek a consensus on vitalissues of post-war abor-management re-lations. Organized labor and the businesscommunity had supported the governmentin wartime, and business and labor hadworked cooperatively with governmentagencies in the wartime for full productionand resolution of disputes.
President Wilson called an industrialconference that convened in October1919 with 50 representatives drawnfrom organized labor, business andpublic members. The main differencearose on a resolution on collectivebargaining in which employers wouldonly endorse collective bargaining un-less at the same time the resolutionendorsed shop councils and similarorganizations, outside of unions. Noagreement was possible between theseviews.
President Truman opened the Labor-Management Conference on November5, 1945. It was designed in part toseek agreement on a reconversion pol-icy - from wartime to peace and fromwage controls to free bargaining andwage setting. Labor and managementwere unable to reach agreement. Inthe view of George Taylor, however"the Labor-Management [conference]of 1945 goes down on the books as thesession where American industry for-
mally accepted collective bargaining inprinciple." The Conference did agreeon a few matters, most notably, arbi-tration as the final step in a grievanceprocedure under a collective bargain-ing agreement.
In commenting on the 1945 Confer-ence, George Taylor who played a rolein organizing the Conference, wrote:"Labor-management conferences, bothnational and regional in scope, can beand should become a standard part ofthe American industrial-relations pattern."3
5. Two Presidents since the end of WorldWar II established ongo:ng labor-manage-ment committees comprised of nationalleaders of organized labor and business.They met regularly for periods of a yearor two.
President Johnson established a Com-mittee jointly chaired by the Secretaryof Labor and Secretary of Commercein the mid-1960s.
President Ford established a Commit-tee chaired by the Secretary of Laborthat met monthly during 1975. ThePresident met with the Committee foran hour each session.
6. The previous experience outlined aboveprovides some perspective on the scale ofthe work of the present Commission. Italso necessarily raises the questionwhether a major Congressional Commis-sion is in order and whether a continuingLabor-Management Committee of toplevel national business and labor repre-sentatives is appropriate.
Previous Commissions have beenmuch more elaborate than the present
3 George \V. Taylor, Government Regulation of Indtbstrial Relations, New York, Prentice-I fall, Inc., 1948, p. 228.
144
156
effort, and Congressional authoriza-tion and involvement historically ap-pear to have been a vital ingredient.
Continuing direct discourse betweentop level national business and laborrepresentatives is essential to chang-ing circumstances and to the long-termadaptation of the public framework forconstructive worker-management and
labor-management relations in thechanging environment described inChapter I.
The problems of the workplace con-fronting workers and their organiza-tions and management are not suscep-tible to simple or once-and-for-all so-lutions.
13.7145
APPENDIX BNATIONAL MEETINGS -- Washington, D.C.
May 24, 1993 -- Initial Meeting
FOCUS: Nature of the AmericanWorkforce and Workplace
COMMISSIONERS
John T. Dunlop, ChairPaul A. AllaireDouglas A. FraserRichard B. FreemanWilliam B Gould IVThomas A. KochanJuanita M. KrepsF. Ray MarshallWilliam J. Usery, Jr.Paula B. Vow
Paul C. Weiler,Counsel to the Commission
June M. Robinson,Designated Federal Official
Introduction of Commissioners
REMARKWPRESENTATIONS
Thomas S. Williamson, Jr.Solicitor (then nominee)Department of Labor
Robert A. ShapiroAssociate SolicitorLegislation & Legal CounselDepartment of Labor
William G. BarronActing CommissionerBureau of Labor Statistics
Robert B. ReichSecretary of Labor
Ronald H. BrownSecretary of Commerce
Chair Dunlop --Commission Plans & Procedures
JUNE 21, 1993
FOCUS: Presentation on AmericanWorkforce and Further Workplace CommitteeReports
PRESENTATIONS
William G. BarronActing CommissionerBureau of Labor Statistics
George L. StellutoAssociate CommissionerOffice of Compensation & Working
ConditionsBureau of Labor Statistics
Edwin R. DeanAssociate CommissionerOffice of Productivity & TechnologyBureau of Labor Statistics
Everett W. EhrlichSpecial Advisor to the SecretaryDepartment of Commerce
David C. CranmerAssociate DirectorNational Institute of Standards &
TechnologyDepartment of Commerce
REPORTS OF COMMISSIONWORKING PARTIES
Paul A. AllaireWorkplace Committees
F. Ray MarshallForeign Experience
Thomas A. Kc,chanRegional Meetings of the Commission
Richard B. FreemanFocus Groups
William B. Gould IVLitigation
Chair Dunlop presided at all meetings of theCommission held in Washington, D.C.
147
153
JULY 28 1993
FOCUS: Employee Participation Programs
PRESENTATIONS
Manufacturing Sector
Peter J. Pesti lloExecutive Vice PresidentCorporate RelationsFord Motor Company
Ernest LoftonVice PresidentUnited Auto WorkersDirector, Ford Department
Health & Safety
Lisa TrussellManager, Human ResourcesNorpac Foods
Iry FletcherPresident, Oregon, AFL-CIO
Jack PompeiAdministrator, Oregon OSHAOregon Occupational Safety & HealthDivision
Harry FeatherstoneCEO & ChairmanThe Will-Burt Company
Services Sector -- Small Enterprise
Cheryl WomackCEOVCW, Inc.
Michael HoweHuman Resources OfficerHealthspan Corporation
Betty BednarczykLocal 113Service Employees International Union
Vickie Cloud (and Others)Personnel Division AdministrationFederal Express Corporation
SEPTEMBER 15, 1993
FOCUS: Workplace Committees &Employment Involvement
PRESENTATIONS
Manufacturing Sector
Ronald DoerrPresident & CEONational Steel
Lynn WilliamsPresident,United Steelworkers of America
Harry LesterDirector, District 29United Steelworkers of America
Barry W. DavisDirector, District 34 (Retired)United Steelworkers of America
Services Sector
Morton BahrPresidentCommunications Workers of America
William K. KetchumVice President, Labor RelationsAT&T
Tunja GardnerSprint Employee NetworkRepresentative/CWA
Juan CastilloSupervisor, Atlanta Mini-ComputerMaintenance & Operations CenterMMOC/AT&T
19
Bill CosensCommunications TechnicianMMOC/CWA
Kathi BondCommunications Technician
John P. NeeVice PresidentScott Paper Company 148
Donald L. LanghamInternational Vice President & Regional
DirectorUnited Paperworkers International Union,
AFL-CIO
Robert J. ReidChief Legal OfficerTOYOTA
PRESENTATION/DISCUSSION OFLESSONS LEARNED
Jerome M. RosowPresidentWork in America Institute
OCTOBER 20, 1993
FOCUS: Issues Under the Railway LaborAct
PRESENTATIONS -
Patrick ClearyMember,National Mediation Board
William GillExecutive Director,National Mediation Board
Panel I
Walter J. SheaPresident,Transportation Trades Department, AFL-CIO
Airline Labor Panel
Captain J. Randolph BabbittPresidentAirline Pilots Association
John F. PeterpaulVice PresidentInternational Association of Machinists
Marvin GriswoldDirector, Airline DivisionInternational Brotherhood of Teamsters
Nancy SegalAttorneyAmerican Flight Attendants
David BorerDirector, Collective Bargaining DepartmentAmerican Flight Attendants
Rail Labor Panel
James M. BrunkenhoeferNational Legislative DirectorUnited Transportation Union
Donald C. BuchananDirector of Railroad DivisionSheet Metal Workers' International
Association
G 0
149
Mark FilipovicRailroad CoordinatorInternational Association of Machinists
Ronald P. McLaughlinPresidentBrotherhood of Locomotive Engineers
Joel ParkerInternational Vice PresidentTransportation-Communications
International Union
Panel II
Charles I. Hopkins, Jr.ChairmanNational Railway Labor Conference
Edwin L. HarperPresident & CEOAssociation of American Railroads
Panel III
Robert J. De LuciaVice PresidentGeneral Counsel P-. TreasurerAirline Industrial Relations Conference
Panel IV
Victoria FrankovichPresidentIndependent Federation of Flight
Attendants
Alice SaylorGeneral Attorney & Director
of Public RelationsTranstar, Inc. (for)Regional Railroads of America
Captain Robert M. MillerPresidentIndependent Pilots Association
NOVEMBER 8, 1993
FOCUS: Issue of Organization andRepresentation for Collective Bargaining
PRESENTATIONS
Lane KirklandPresidentAmerican Federation of Labor Congress
of Industrial Organizations
Jerry JasinowskiPresidentNational Association of Manufacturers
William D.1VlarohnPresident & CEOWhirlpool Corporation
Bruce CarswellSenior Vice PresidentGTE CorporationChairman, Board of DirectorsLabor Policy Association
Howard V. Knicely12;xecutive Vice PresidentTRW andVice Chairman, Board of DirectorsLabor Policy Association
Clifford J. EhrlichSenior Vice President of Human ResourcesMarriott Corporation
Charles F. NielsonVice President of Human ResourcesTexas Instruments
150
DECEMBER 15, 1993
FOCUS: Issues of Organization &Collective Bargaining, continued.
PRESENTATIONS
William StoneChairman & CEOLouisville Plate Glass andChairman, Labor Relations CommitteeU.S. Chamber of Commerce
Diane M. OrlowskiPresidentJFD Tube & Coil Products, Inc.
Wendy LechnerResearch DirectorNational Federation of Independent
Businesses
Karen NussbaumDirector, Women's BureauU.S. Department of Labor
John J. SweeneyPresidentService Employee's International Union,
AFL-CIO
Robert A. GeorginePresidentBuilding & Construction Trades
Department, AFL-CIO
Albert ShankerPresidentAmerican Federation of Teachers andChairman of the BoardDepartment of Professional Employees,
AFL-CIO
John D. OngCEOB.F. Goodrich Company andChairmanThe Business Roundtable
JANUARY 19, 1994
FOCUS: The Legal Framework ofWorkplace Employee Participation Plans
PRESENTATIONS
Views of Management and LaborOrganizations
Daniel V. YagerASsistant General CounselLabor Policy Association
Howard V. KnicelyExecutive Vice President of
Human Resources, Communicationsand Information Sources
TRW
Judith ScottGeneral CounselInternational Brotherhood of Teamsters
Larry CohenOrganizing DirectorCommunications Workers of America
PRESENTATIONS
Perspectives of research & Academic Lawyers
Richard A. BeaumontPresidentOrganization Resources Counselors, Inc.
Eileen ApplebaumAssociate Research DirectorEconomic Policy Institute
David BrodyAssociateInstitute of Industrial Relations and
Professor Emeritus of HistoryUniversity of California at Berkeley
Samuel EstreicherProfessor of LawNew York University School of Law
Joel RogersProfessor of LawUniversity of Wisconsin School of Law
162151
Karl KlareProfessor of LawNortheastern University
FEBRUARY 24, 1994
FOCUS: Procedural and SubstantitiveIssues of Representation
PRESENTATIONS
Views of Management and LaborOrganizations
William J. KilbergGibson, Dunn and Crutcher
Clifford J. EhrlichSenior Vice President of Human ResourcesMarriott Corporation
Allison PorterDirector, Recruitment & TrainingAFL-CIO Organizing Institute
Bruce H. SimonCohen, Weiss and Simon
PRESENTATIONS
Reports of Research by Academics
Matthew FinkinProfessor of Law and Professor in
Industrial and Labor RelationsUniversity of Illinois College of Law
Jack GetmanProfessor of LawUniversity of Texas School of Law
Henry S. FarberProfessor of EconomicsIndustrial Relations SectionPrinceton University
Jack J. LawlerAssociate Professor of Law and Industrial
RelationsInstitute of Labor and Industrial RelationsUniversity of Illinois at Urbana-Champaign
1.63152
MARCH 16, 1994
FOCUS: The Foreign Experience in Labor-Management Relations
Summary of March 14 and 15 Conferenceon Industrial Evidence
F. Ray MarshallCommissioner and Convener of Conference
PRESENTATIONS
Experience of Selected Countries
Germany
Wolfgang StreeckProfessor of SociologyUniversity of Wisconsin and Senior FellowBerlin Institute for Advanced Studies
Japan
Hironari YanoManager, Yokohama WorksToshiba Electric
France
Jacque RojotPI ofessor and Dean of Industrial Relations
and ManagementUniversity of Paris I, the Sorbonne
Australia
Bill KellyGeneral Secretary of Trade UnionsAus `"align Council
Bruce Charles HartnettVice PresidentNational Australia Bank and Formerly with
ICI Australia
Margaret GardnerHead of the School of Industrial RelationsGriffith University, Brisbane
Comments on Presentations fromSelected Countries
United States of America
Charles F. "Chuck" NielsenVice President, Human ResourcesTexas Instruments
Peter StirlingVice President, Human ResourcesTI Europe and formerlyPersonnel Manager, Pfizer Consumer
ProductsPfizer, Inc.
Jack SheinkmanPresidentAmalgamated Clothing and Textile
Workers Union
Thomas F. FlynnConsultant to theNational Association of Manufacturers andOrganization Resources Counselors, Inc.
I 4
153
APRIL 6, 1994
FOCUS: Alternative Dispute ResolutionLitigation and Regulations
PRESENTATIONS
Views of Management and Labor Civil Rightsand Civil Liberty Organizations
Charles G. Bakaly, Jr.AttorneyO'Melvaney and Myers
Douglas S. McDowellPartnerMcGuiness and Williams
Marsha S. BerzonAttorneyAltshuler, Berzon, Berzon, Nussbaum
and Rubin.
Lewis MaltbyDirectorNational Task Force on Civil Liberties
in the WorkplaceAmerican Civil Liberties Union
Mary P. RoweAdjunct Professor of ManagementMassachusetts Institute of TechnologyDesignated Neutral and OmbudspersonCo-founder and former PresidentThe Ombudsman Association
Paul H. TobiasAttorneyFounder, Plaintiff Employment
Lawyers Association
Pay Equity and Related Issues
Susan Bianchi-SandChairCouncil of Presidents
Research Reports by Academics
Clyde SummersJefferson B. FordhamProfessor of Law EmeritusUniversity of Pennsylvania
Katherine StoneProfessor of LawUniversity of Michigan Law School
Comment
Leroy D. ClarkProfessor of LawCatholic University School of Law
165154
REGIONAL HEARINGS --Commission Working Parties
SEPTEMBER 22, 1993
Jack WillExecutive DirectorGreater Louisville Chamber of Commerce
Panel 2: Innovative Practices in LargeLouisville Regional Hearing CompaniesCenters for the Arts
COM USSIONERS
John T.Dunlop, ChairJuanita M. KrepsThomas A. KochanF. Ray Marshall
REMARKWPRESENTATIONS
Stephen A. WilliamsPresident & CEOAlliant Health Systems
Rodney WolfordPresident & CEOCalifornia Health SystemsFormer CEO, Alliant Health Systems
Ron GettlefingerCarol M. Palmore DirectorSecretary of Labor Region 3, United Auto WorkersCommonwealth of Kentucky Ford Motor Company
David ArmstrongJefferson County Judge/Executive
Jerry AbramsonMayorCity of Louisville
Panel 1: Community Infrastructure
Tom RyanRegional Manager of State GovernmentRelationsDenver Region
Terry SmithEmployee Relations ManagerLouisville Assembly Plant
Laramie L. Leatherman Al KirkpatrickGreenebaum Doll & McDonald DirectorVice President Industrial RelationsThe Gheens Foundation, Inc. and Louisville Gas & Electric Company
Chairman ElectGreater Louisville Chamber of Commerce Gary W. Klinglesmith
President/Business ManagerRegina M. J. Kyle Local Union 2100, IBEW
PresidentThe Kyle Group Frank CroweJCPS/Gheens Professional Development Manger, Labor Relations
Academy Philip Morris
Patt ToddJefferson County Public Schools
Steve NealJefferson County Teacher's AssociationKentuckiana Education & WorkforceInstitute
Wayne PUrvisPresident16T, BCTW
Panel 3: Innovative Practices in SmallerCompanies
Robert TaylorKathryn Mershon DeanVice Chair College of BusinessKentuckiana Education & Workforce Institute University of Louisville
it3G
155
George GendronEditor-in-ChiefINC. Magazine
Thomas BladesPlant ManagerBuckhorn, Inc.
OCTOBER 13, 1993
East Lansing Regional HearingMichigan State University
COMMISSIONERS
Douglas S. FraserRandy Pidcock Thomas A. KochanPresident Paula B. VoosUSWA, Local 15523
REMARKS/PRESENTATIONSTed NixonPresident & CEO M. Peter McPhersonD.D. Williamson & Co., Inc. President
Michigan State UniversitySherri SchuenemeyerManager, Human Resources ViceLantech, Inc.
Randall EbertsExecutive DirectorW.E. Upjohn Institute for EmploymentResearch
Industry and Labor Organizations
Frank GarrisonPresidentMichigan AFL-CIO
David ZurvalecVice PresidentIndustrial Relations, MichiganManufacturers
Panel 1: Innovations in Worker-ManagementRelations
Miller Brewing Company and United AutoWorkers, Local 2308
Jim NealPresidentUAW Local 2308
Bill "Red" GreenPlant ChairpersonUAW Local 2308
Dennis PufferPlant Manager
Ron McClaronHuman Resources Manager
167
156
Herman Miller Company
Craig SchrotenboerVice President for People Services
Dave CotterRehabilitation Service Team Leader
Donnelly Corporation
Kay HubbardAdvocate for Human Resource Development
Shelly Appel, Lee Keuvelaar, andTony SpaldingPVC Operations TechniciansJohnson Controls and InternationalAssociation of Machinists Local 66
Paul SivanichPlant Manager
Doug CurlerShop Committee Chair
Panel 2: Non-traditional Methods ofResolving Dispute Problems
David HammarMead Paper Company
Bill BrowerPresidentUnited Paperworkers InternationalUnion, Local 110
Joe MobergPresidentUnited Paperworkers InternationalUnion, Local 209
Rita ShellenbergerManager of DiversityDow Chemical Company
Janet S. DillonAdvisor, Diversity, Management, IBM UnitedStates International Business MachinesCorporation
Rochell HabeckProfessor of Counseling, EducationPsychology, and Special EducationMichigan State University
Michael TaubitzAssistant Director of Occupational Safety,General Motors Corporation
Panel 3: Legal Issues in Labor-ManagementRelations
Tom WoodruffPresidentService Employees International UnionDistrict 1199, Columbus, Ohio
Joe CrumpFood and Commercial Workers, Local 951
Gene HoltVice PresidentGraphic, Communications InternationalUnionLocal 577 M
Rita ErnstInternational Representative, AmalgamatedClothng and Textile Workers UnionMidwest Regional Board
Leonard PageAssociate General CounselInternational Union, UAW
Kent VanaAttorney, Varnum Riddering, Schmidt andHowlett
Theodore St. AntoineUniversity of Michigan, Law School
1 a157
JANUARY 5, 1994
Boston Regional HearingGardner Auditorium, The State House
COMMISSIONERS
John T. Dunlop, ChairRichard B. FreemanF. Ray MarshallThomas A. KochanPaula B. Voos
Paul C. Weiler,Counsel to the Commission
REMARKWPRESENTATIONS
IM (Mac) Booth, President & CEOPolaroid Corporation
Ann G. LeibowitzSenior Corporate AttorneyPolaroid Corporation
Kenneth B. Krohn, PhD.
Char la ScivallyPolaroid Employee
Honorable Edward M. KennedyU.S. SenatorMassachusetts
Anthony ByergoAttorney
James R. GreenProfessor and Director, Labor StudiesUniversity of Massachusetts at Boston
Robert J. HaynesSecretary-TreasurerMassachusetts AFL-CIO
Phil IVIamberPresident, District 2United Electrical, Radio & Machine Workersof America
George PoulinInternational Vice President, Machinists
Ashley AdamsOrganizer, Service Employees internationalUnion,Local 285
Karen O'DonnellState Representative, Massachusetts
El ly LeaeryUAW, Local 2324, New DirectionsNational Organizing Committee
Joe Ivey1993 PresidentAssociated Builders and Contractors, Inc.
Maurice BaskinGeneral CounselAssociated Builders and Contractors, Inc.
Henry FijalkowskiInternational Representative, UAW
Peter B. MorinGeneral CounselMassachusettts Bay TransportationAuthority
George CarlsonGraphics Communications, Local 600M
Ed ClarkVice President, ACTWU
Steve EarlyInternational Representative, CWAfor Jobs with Justice
Sandy FelderPresident and Executive DirectorService Employees International Union. Local509
Father Edward F. Boyle, S.J.
Donene Williams, HUCTW
Kate BronfenbrennerNew York State School of Industrial andLabor RelationsCornell University
IGO158
Mark ErlichBusiness Manager/Financial SecretaryCarpenters Local 40
Nancy LessinSenior StaffMassachusetts Coalition for OccupationalSafety and Health, Safety and HealthEffectiveness Committees
Dave BuckEconomic Democracy CommitteeCitizens for Participation in Political Action(Written submission)
Joseph DartPresidentMassachusetts Building Trades CouncilAFL-CIO (written submission)
Dorothy JohnsonMemberUnited Electrical Radio and MachineWorkers of America (UE), Local 299 atCircuit-Wise of New Have, CT(Written Submission)
1 7
JANUARY 11, 1994
Southeast Regional Hearing-AtlantaGeorgia State University
COMMISSIONERS
William J. Usery, Jr., PresidingRichard B. FreemanThomas A. KochanF. Ray Marshall
PRESENTERS
Bruce Kaufman/Philip A. LaPorteSite Committee Co-Chairs
Carl PattonPresident Georgia State University
Honorable William CampbellMayor of Atlanta
Randy CardozaCommissionerGeorgia Department of Industry, Trade &Tourism
David Poythr3ssGeogia Department of Labor
Donald RatacjzakDirectorEconomic Forecasting CenterGeorgia State University
Amanda HyattChair, Council for Competitive Georgia
Michael McCallDeputy Executive Director, South CarolinaState Board for Technical Education
Kathy DelanceyRegional ManagerThe Alliance for Emplyee Growth andDevelopment
David Reynolds, Sr.Vice President for HumanResources, Georgia-Pacific Corporation
159
Dorothy YanceyGeorgia Institute of Technology
Jerry BarnesAssistant Vice President for Labor RelationsBellSouth Telecommunication, Inc.
Gene RussoVice President for District 3Communications Workers of America
Maurice Worth, Sr.Vice President for PersonnelDelta Airlines
Charles WilsonIndustrial Relations ManagerReynolds Metals Company
Bill MetchnikDistrict Business RepresentativeInternational Association of Machinists
Carolyn JacksonDirector of Human ResourcesCoca-Cola, USA
Ralph JohnsonDirectorCenter for Labor Education and ResearchUniversity of Alabama-Birmingham
Harold McIverRegional DirectorIndustrial Union Department, AFL-CIO
Bruce RaynorExecutive Vice PresidentSouthern Regional Director, ACTWU
Hoyt WheelerProfessor of ManagementCollege of Business AdministrationUniversity of South Carolina
Casey SharpeOrganizing CoordinatorInternational Brotherhood of Teamsters
Homer L. Eadkins, Jr.Management AttorneyOgletree, Deakins, Nash, Smoak & Stewart
Frak SheehanVice President of Industrial RelationsThe Bibb Company
160
JANUARY 27, 1994
San Jose, CASan Jose McEnery Center
COMMISSIONERS
William J. Usery, Jr., PresidingDouglas A. FraserThomas A. Kochan.
FOCUS:
The Changing Nature of Work in SiliconValley
Employee Challenges in the CurrentEmployer Context
Changes in the Law
REMARKS/PRESENTATIONS
Doug HentonDeputy City Manager of San Jose, CA
Pat HIll HubbardSenior Vice PresidentAmerican Electroncs Association
Any DeanBusiness ManagerSouth Bay AFL-CIO Labor Council
Lenny SiegelDirectorPacific Studies Center
Linda Kimball
Mary Ruth GrossInstitute of Industrial RelationsUniversity of California at Berkeley.
Val AfanasievPresidentCommunicatiaons Workers ofAmerica, Local
9409
Romie MananMemberUnited Electrical Workers Electronics
Bill BrillCo-Chair, Labor Management CommitteePacific Gas and Electric Co.
Lloyd WilliamsBusiness ManagerUnited Association Local 393, Plumbers,Steam Fitters and Refrigeration MechanicsUnion
Ed ChieraConsultantInternational Association of Machinists
Mr. MananNational Semi-conductor
Dennis CuneoNew United Motives
Bruce LeeRegional Director, UAW, California
Kirby DyessCorporate Vice President, Intel Corporation
Jamie Van De VenOperations Manager
Phuli SiddiqiArea Coordinator
GlennToneyVice PresidentGlobal Human Resources for AppliedMaterials
Bess StephensManager of Corporate K thr-.ugh 12 RelationsHewlett Packard
Theresa RocheVice PresidentHuman Resources for GrassValley Group
Kaye CaldwellPolicy Director, Software Industry Coalitionand President, Computer Software IndustryAssociation, Software Entrepreneur's Forum
Lloyd Ulman
161
1 72
Mike GarciaPresidentService Employees' International Union 1877
Karen HossfeldProfessor of Sociol,
James McEnteeDirector of Santa Clara CountryOffice of Human Relations
Esther ThompsonMember, SEIU Local 1877
Eugenio Ramirex GamboaMember, SEIU Local 715
Debra EngelVice President, Corporate Services3Com Corporation
Deborah BarberVice President,Human ResourcesQuantum Corporation
Cheryl Fields-TylerDirector, Work Force Activities, AmericanElectronics AssociationWork Force Skills Project
Lindbergh PorterShareholder, Littler,Mendleson,Fastiff, Tichy& Mathiason,General Counsesl and LegalAdvisor
Chuck MackSecretary/TreasurerTeamsters Local 70
Curt WeinrichDirectorRegional Transportation Commission,Southern Nevada
Vince Carrajal
John Neece
Sharlene, BonnemaisonBusiness Representative, IBEW
Dale Stansbury
Fred HirschMember, Plumbers Local 939
Joseph DoniachAirline Pilots Association
Jock SavageRetired Airline Pilot
Steve StammSecretary/TreasurerUFCW, Union Local 428
Darcy Brister
Barbara BeatleSEIU, Local 250
Jill FurilloDirector, Organizing for Local 250, SEI
Al Traugott
Ken PavlsenBusiness ManagerHotel/Restaurant Union, Local 19David Beaver, Manager
173 162
FEBRUARY 11, 1994
Houston Regional Hearing Omni Hotel
COMMISSIONERS
John T. Dunlop, ChairThomas A. KochanF. Ray Marshall
REMARKWPRESENTATIONS
George McLaughlinJohn Gray Institute
William E. HaynesLynodell-Citgo Refining Company Ltd.
Robert WagesOCAW International
W. Michael CoxFederal Reserve Bank of Dallas
Bernard L. "Bud" WeinsteinUniversity of North Texas
John Calhoun WellsFederal Mediation and Conciliation Service
Recommendations from Management
John YoarsLyondell-Citgo Refining Company, Ltd.
Michael J. KernTexaco Chemical Company
Foley ProvenzanoUnion Carbide Company
Recommendations from Organized Labor
Robert WagesOCAW International
Joe GunnTexas AFL-CIO
Gale Van HoyTexas Building & Construction Trades
Quality Process and Employee Involvement
Patricia PateJohn Gray Institute
Victor ZaloomLamar University-Beaumont
Don ShellenbergerDrago Supply Company
Chuck NielsonTexas InstrumentsScott Moffitt, Texas Instruments
Deborah WirtzTexas Instruments
Lolita DickinsonCiba-Geigy Corporation
Recommendations
Charles J. MorrisProfessor Emeritus, SMU School of Law
Wade RathkeService Employees International Union
Mark ShermanUniversity of Houston-Clear Lake
* MS GOVERNMENT PRINTING OFFICE: 1994 - 301-225 - R14/14422 1 74
163