Outline

I. Social Stratification and Bureaucratic Organizations: Unions

II. From “Invisible Hand” to “Visible Hand”

I. Wages, Hours and Conditions

II. Collective Bargaining

III. Tyson Chicken

A. Income: who gets what and why?

Next weeks readings: Week 15 and Immigration and Race

Winners and Losers

Institutional Changes: Unions are Weak and Workers Are No Longer Sharing In Economy’s Productivity Gains

Translation: 1975 Joe produced 200 widgets a day and was paid $200 2003 Joe produced 400 widgets a day and was paid $205

The New Inequality: Stakeholders and Compensation

So what’s up with these things called “Unions”

Adam Smith envisions a society as a web of atomized self interested individuals engaged in market exchanges… All pursue self interest, Invisible Hand generates stability & prosperity

Weber noticed the emergence of Bureaucracies a type of organization marked by clear hierarchy of authority and the

existence of of written rules or procedure and staffed by full time officials. (D)

Bureaucratic organizations form in the economy that will assert interests of stakeholders …Let’s explore…

Stakeholders All the parties that have an interest, financial or otherwise, in a

company, including shareholders, creditors, bondholders, employees, customers, management, the community and government.(Economist.com)

Invisible Hand or Visible Hand in the Labor Market?

Chaplin’s situation as typical…now that my labor has been commodified…now that I’m forced to sell it in order to survive…

What will my Working Conditions be like? How many hours will you have to work? What will your wages be?

These are sources of CONFLICT in the labor market Different stakeholders have different interests.

Invisible Hand or Visible Hand in the Labor Market?

Chaplin’s situation as typical…now that my labor has been commodified …now that I’m forced to sell it in order to survive…

What will my Working Conditions be like

How fast will the assembly line go?

Will there be fire exits in the factory?

How many patients per nurse? Note next slide on California

The Terminator vs. The Nurses … Perhaps someone

should have warned Arnold Schwarzenegger that nurses are no pushovers. For weeks, California's famously tough Governor has been locked in a furious feud with the state's R.N.s over his decision to suspend new state rules that would limit the number of patients a nurse must care for.

Invisible Hand or Visible Hand? How many hours of labor will a person have to sell to

survive

In Carnegie’s Steel mills, men worked 7 days a week, 12 hours a day…Earned the nickname the “twin pillars of barbarism”

Will there be coffee breaks? Weekends off ? Paid Vacations? Paid sick days? Maternity Leave? Paid maternity leave?

Will there be mandatory overtime…big issue for nurses

Will Chaplin have to clock out to go to the bathroom? Will he be allowed to go…(NOTE next slide)

Labor Markets Create Conflict

Boss orders female staff to wear red bracelets when they are on their periods By Ian Sparks Last updated at 5:36 PM on 30th November 2010

A boss in Norway has ordered all female staff to wear red bracelets during their periods - to explain why they are using the toilet more often.

The astonishing demand was revealed in report by a workers' union into 'tyrannical' toilet rules in Norwegian companies.  

'Women quite justifiably feel humiliated by being tagged in this way, so that all their colleagues are aware of this intimate detail of their private life.' 

The report, which did not name the firm imposing red bracelets on female staff, has now been passed on to Norway's chief comsuner ombudsman Bjorn Erik Thon.

He said: 'These are extreme cases of workplace monitoring, but they are real.

'Toilet Codes relating to mentrual cycles are clear violations of privacy and is very insulting to the people concerned.  

'I hope and believe that this is not representative of the Norwegian working life in general.

Invisible Hand or Visible Hand?

Wages… if labor power must

be sold for survival…obvious questions emerge…

How much will be people be paid for selling their labor power?

How will the economic pie be divided between various stakeholders?

How should the economic pie be divided?

Recent GM Contract:  Workers wanted a 3%

increase in pay for 3 consecutive years

Translated into a cost of $2.26 billion for GM

For stockholders, an estimated loss of $1.10 to $1.15 in dividends per share

Money can’t go to both places…Where will it go? Wall St or Main St…

Wages, Hours, and Working Conditions are open questions…

Your family has just been forced off of the land in Ireland. You head to Dublin, hoping to find a place to sell your labor. Nobody wants to buy it. You get on a boat and go to America, and upon arriving learn of a Mr. Eimer who is buying labor for his blanket factory. You apply, and he hires you. You work 12 hours a day, 7 days a week. You receive no vacations, and are paid $1 a day, which is barely enough to feed your family. Eimer makes 2,000 times as much as you. Working for Mr. Eimer sucks. It is dark, dirty and dangerous. He has his managers look in the toilet to make sure you’ve actually made a turd. You tell Eimer you are not satisfied with your wages, hours and working conditions, but he tells you to beat it. “Don’t let the door hit you in the back of the head.” This is troubling,& you worry about your family. You wonder if this is what life is supposed to be about

How might Adam Smith suggest that self interest and the “invisible hand” could improve the conditions in this workplace? Use class concepts: self interest, competition, exit, etc.

Invisible Hand Self Regulates

Adam Smith Says: Quit or Exit

Individual choice drives system Factory sucks, individual worker should quit If Eimer’s workers keep leaving Eimer will either have to change or go out of

business Invisible hand will correct situation Firms with bad working conditions will ultimately

disappear No need for outside intervention

In the long run, the invisible hand will regulate things

Some respond… “In the long run, we’re all dead…”

Invisible hand will take too long sort situation out…if it even can…

In the real world, how realistic is it to expect that all workers will quit all the bad jobs and make them disappear?

What kind of things make it hard for people to quit bad jobs?

One Reason People Keep Lousy Jobs

Wages, Hours, and Working Conditions are open questions…

Your family has just been forced off of the land in Ireland. You head to Dublin, hoping to find a place to sell your labor. Nobody wants to buy it. You get on a boat and go to America, and upon arriving learn of a Mr. Eimer who is buying labor for his blanket factory. You apply, and he hires you. You work 12 hours a day, 7 days a week. You receive no vacations, and are paid $1 a day, which is barely enough to feed your family. Eimer makes 2,000 times as much as you. Working for Mr. Eimer sucks. It is dark, dirty and dangerous. He has his managers look in the toilet to make sure you’ve actually made a turd. You tell Eimer you are not satisfied with your wages, hours and working conditions, but he tells you to beat it. “Don’t let the door hit you in the back of the head.” This is troubling,& you worry about your family. You wonder if this is what life is supposed to be about

How you use the concepts of collective action, voice and some of other concepts to tell you how to address your situation?

Visible Hand Regulates… Job sucks…exercise VOICE instead of quitting.

Join with other workers to build a bureaucratic organization that can exercise “collective voice” to demand better hours, wages and working conditions

Let’s all agree that nobody will work for less than $X…

Provide us with $X, or we’ll strike (none of us are going to come to work…none of us will sell you our labor power) Use the Threat of collective exit will increase voice

Try to reduce competition between workers and increase cooperation

Modernity generates new bureaucratic organizations called Unions

As modernity unfolds workers form unions and when the New Deal emerges, unions grow significantly

Unions encourage Voice instead of Exit…

We call these new bureaucratic organizations that provide workers with voice in the workplace UNIONS…

an organization representing workers that collectively bargains with management over wages, hours and working conditions. (D)

What do I mean by Collective Bargaining?

Adam Smith thought market competition between individuals should regulate wages…individuals cutting bargains with employers… 5,3,2,1…

How are wages set in a collective bargaining setting?

Unions encourage Voice instead of Exit…

UNIONS… an organization representing workers that

collectively bargains with management over wages, hours and working conditions. (D)

Collective Bargaining a method for determining the terms and

conditions of employment via negotiation between an employer and a union (D)

Wages are not set solely by market forces…but through negotiations

Temple nurses set March 31 strike deadline (Phil Inq Mar. 20, 2010)

Invisible hand: if an individual doesn’t like what Temple offers they should quit

Visible hand: individuals collectively bargain and if they don’t like offer, they refuse to sell their labor…they strike.

Nurses at Temple University Hospital have set a March 31 strike deadline if progress is not made in their contract talks with the hospital.

The nurses and other health-care professionals at the hospital, who are represented by the Pennsylvania Association of Staff Nurses and Allied Professionals (PASNAP), have been working without a contract since September.

They are at odds over wages, benefits, staffing ratios, and a provision the hospital is demanding that would limit what the union and its members could say publicly about management and hospital staff.

Collective Bargaining and Wages

MEDIAN WEEKLY EARNINGS OF FULL-TIMEWAGE AND SALARY WORKERS, 2000

Sectoral Breakdown of Union Advantage, 1995

Employee Group Union Advantage By %All Wage & Salary Workers 16.7

Private Sector 9.1

Public Sector 2.7

Construction 30

Mining 16.6

Manufacturing 16.4

Transportation, Communication, Utilities

20.5

Wholesale & Retail 5

Finance, Real Estate, Insurance 4.3

Public Administration 6.4

Services 3.9

Collective Bargaining and Benefits (Pct. Of Workers, March 2003) http://stats.bls.gov/news.release/ebs2.t01.htm

All Plans:

Retirement

Benefit

Ret: Defined Benefit

Retire:

Defined

Contribution

Medical

Care

Dental

Care

Vision

Care

All Workers

49% 20% 40% 45% 32% 19%

Union Workers

83% 72% 39% 60% 51% 37%

Non-

Union Workers

18% 15% 40% 44% 30% 17%

Unions in America

So unions impact wages, hours and working conditions…

That’s why many workers like them, and many employers don’t…

What has happened to union density (percentage of workers in unions) in America over the last several decades?

Unions in Contemporary America For many workers a move from Collective

Bargaining back to Individual Bargaining…

Though this general trend varies by economic sector…note next slide

A Changing Labor Movement…

Private Sector- GM autoworkers, Walmart workers, Taco Bell Workers, Citibank, etc,

Public Sector- City Cops, Teachers, Nurses, Secretaries at Public Universities, Forest Rangers, Firefighters, etc.

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

1950 1970 1990

Percent Unionized

Private

Public

A Changing Labor Movement…

Unions decline in private sector, but grow in public Sector A smaller percentage of

private sector workers are in unions: autoworkers, steelworkers, machinists cashiers, etc.

A much larger percentage of public sector workers are in unions: Teachers, Cops, Firemen, Nurses, University Staff, DMV workers, prison guards, etc.

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

1950 1970 1990

Percent Unionized

Private

Public

Who Gets What and Why? Winners, Losers and Power

Power- the ability of individuals or the members of a group to achieve their aims or further their interests, despite opposition from others (D)

Video Clip on the Tyson Corporation and the United Food and Commercial Workers

As you watch, jot down notes about the way different people in the video think pay rates should be set in society

Interests Collide…

Stakeholders All the parties that have an interest, financial or

otherwise, in a company, including shareholders, creditors, bondholders, employees, customers, management, the community and government. (D) (Economist.com)

Tyson wants to reduce starting and top pay

New entry level: $18,720 a year… New top pay($11) lower than old starting pay ($11.10)

Poverty Threshold for a family of 4 in 2003: $18,810 Less than that and the government considers you

poor

Bureaucratic Organizations Representing Different Stakeholders Collide 1. What is the position of the United Food and

Commercial Workers union with regard to the ideas that Tyson should pay a living wage? What reasons are given to justify their position?

Bureaucratic Organizations Representing Different Stakeholders Collide 2. What is Tyson’s position with regard

to the idea that it should pay a living wage? What reasons are given to justify their position?

Bureaucratic Organizations Representing Different Stakeholders Collide 4. With regard to chickens and

immigration: In theory, if the wage offered can’t attract workers, what is a company expected to do? What did Tyson do at their chicken plant? How does this impact the workers in Jefferson?

Bureaucratic Organizations Representing Different Stakeholders Collide 3. How does the pay and benefits offered

by Walmart impact workers employed by other retail stores?

Bureaucratic Organizations Representing Different Stakeholders Collide

5. In your opinion, is it okay to pay a wage that is so low that workers qualify for food stamps, Medicaid, and other forms of public assistance that are paid for by taxpayers?

Tyson’s position Taxpayer’s position (note

slide)

Prevalence of such wages requires a more nuanced view of poverty and “welfare” in America…

Large number of the poor are the “working poor” and their kids

Most poor families have someone working…

The Work History of Families in Poverty, 2000

Source: US Census; Poverty in the US, 2000 (2001: Table C) in Kerbo, p.259

Work History 2000

No full time worker 46.1%

1 full time worker 44.5%

2 or more full time workers 9.4%

Bureaucratic Organizations Representing Different Stakeholders Collide 6. In your opinion, should corporations

be required to pay a living wage? If no, why not? If yes, why…and how might such a goal be achieved?

Living Wage Laws

January 30, 2006, University Memorandum,Series 4 - #8

ARAMARK Update

Last spring a group of students and faculty asked that the university consider its responsibility regarding the wages of individuals hired by contract employers such as ARAMARK. Since that time, I personally spoke with ARAMARK hourly employees about their concerns and had several conversations about this issue with my faculty and staff colleagues, members of the Board of Trustees as well as student leaders

Widener Living Wage

I am pleased to announce that ARAMARK and Widener have agreed to set the minimum hourly wage for ARAMARK employees at or above $8.50 per hour beginning in September, 2006. In addition, there will be an annual inflationary increase so that within a year the minimum hourly rate for all ARAMARK employees will be approximately $9.00 an hour. Increases for current ARAMARK employees will be based on the performance reviews of the individuals as set by corporate policy in the future.

Corporate Power vs. Union Power Power- the ability of individuals or the members

of a group to achieve their aims or further their interests. (D)

UFCW & Tyson: How did it end? Predictions?

Could the workers refuse to sell their labor and thus give up their income longer than Tyson could go with reduced production?

Law allowed Tyson to permanently replace the workers in order to maintain pepperoni Ted is on strike…Tyson gives Ted’s job to Bill…Bill gets

to keep job forever

Corporate Power vs. Union Power

UFCW & Tyson…How did it end? Predictions? Could the workers give up their income longer than Tyson

could go with reduced production?

Strike ended in January 2004. Union lost. 8 months is along time to go without pay…

CA Grocery Stores and UFCW. Union lost.

“In the biggest confrontation in years, a 138-day dispute involving 59,000 California supermarket workers, the companies trounced the union, obtaining a two-tier contract that means lower wages and fewer health benefits for new employees. (NYT 3/10/04)

The just-ended California supermarket strike and lockout erased more than $235 million in combined fourth-quarter profit at Kroger Co. and Albertsons Inc., but they said Tuesday that the labor contract they won was worth the price

Unions & Modern Society…

Currently 17.8 million unionized workers in US 13.7% of all workers, down from

35% in 1950s

US labor movement remains an important force in society

Though smaller and weaker than it once was Pay attention to the Employee

Free Choice Act currently in Congress

US labor movement is smaller weaker than in most other advanced industrial capitalist societies

Society as complicated…Interests collide

Which side are you on…maybe it will depend and which hat you wear…

When Walmart or Tyson pay low wages and/or offer few benefits Owners and shareholders get more money

Workers get less money

Taxpayers pay for public assistance

Consumers get cheaper pepperoni, chicken, toasters and groceries

What’s the Best way to address the conflicts that emerge in the labor market?

Should the primary mechanism of adjustment be EXIT Individuals making choices about where they

want to work

Should the primary mechanism of adjustment be VOICE Groups bargaining over wages, hours and

working conditions

Reasonable people have, and continue to, disagree on this…

Next…

We’ll see…