What Companies Must Know When a Union Tries to Organize

¶ … Senior Management MEMO to Senior Management: What are the differences in operating a union-free workplace vs. A unionized workplace? Here is some background on the issue. A view that many observers express is that unions tend to raise "non-union wages" (Waschik, et al., 2010). The way the argument goes is that when there is a union shop, wages go up. Hence, non-union companies raise their salaries as well to complete with union shops (Waschik, 263).

Also, the scenario includes this suggestion: if "production-line workers" get raises thanks to the union, the company will then be obliged to raise the wages of "non-union management" in order to continue their wage differential between the workers and management (Waschik, 263). There is a rebuttal to those suggestions: market forces have not been taken into account, Waschik explains.

When unions raise wages, it causes companies to lay some workers off, and those workers that have been laid off will now search for jobs in non-union houses, which in turn will drive down wages in non-union shops (Waschik, 263). The supply and demand dynamic is supposedly at work here. Meanwhile, when there is a threat of a union coming in, some companies will raise their wages to discourage their employees from organizing for a union to come in (Waschik, 263).

So if this company is very adverse to a union coming in, raising wages and improving working conditions may be the best way to ward off the threat of a union.

If the employees are happy and are pair fair wages, why would they want or need a union? Unions can lower profits for companies Meanwhile, in the book Microeconomics: Private and Public Choice, the authors point out that "unions do lower firm profits"; and the reason is that higher costs for a company (through higher wages and benefits paid) tend to reduce the profits (Gwartney, et al., 2014). Waschik explains in his narrative that if higher wages result in more productivity, the company will not lose profits.

But Gwartney and colleagues explain that in the short run, workers enjoy higher wages; but in the long run because unions tend to bring down profits, that low profitability will result in potential investments on "…fixed structures, research, and development will flow into the non-union sector and away from unionized firms" (Gwartney, 422). Gwartney provides the experience of the United Auto Workers (UAW) at the "big three" auto makers in the recent past. Higher wages and lucrative benefits (including retirement and health benefits) were negotiated in collective bargaining situations.

But foreign car makers (notably Japan) began building plants in the southern United States (and there were no unions in these facilities), began selling cars at reduced prices, and soon because of the competition, the profits of the "big three" (Chrysler, GM and Ford) sank so low these companies had to be bailed out by the federal government (Gwartney, 422).

There is another side to this discussion and on page 423 Gwartney explains that the "real source of high wages is the increase of productivity per hour," and so this has to be taken into account as well. What behaviors can management legally do and not do doing during union organizing? The National Labor Relations Act is a document that should be on the desks of every executive manager in the company.

It spells out what a company is prohibited from doing when there is a union organizing effort ongoing within the company.

The company may not: a) prohibit union organizers from soliciting "during non-work time" or in "non-work areas" (parking lot, break room, etc.); b) interfere with the organizing efforts in any way; c) fire, demote or "reduce" the hours of employees who are leading the campaign; d) promise promotions or pay raises if the union is turned down; e) prohibit employees from wearing union t-shirts, hats, buttons, or pins in the workplace; f) "spy on or videotape peaceful union activities"; and g) threaten to close the company if the union comes in (NLRA).

Laws that Relate to Unions The United States Department of Labor explains that there are laws that relate to unions and to union organizing activities. These should be known to all senior and executive staff in your company -- and to your board of directors. The Labor-Management Reporting and Disclosure Act (LMRDA) spells out the rights (a "Bill of Rights") that apply to union members and to unions in the private sector.

Unions must disclose key information about their "structure and financial condition," and the union must report the guidelines that it goes by when conducting elections for officers (DOL). The LMRDA is enforced by the Office of Labor-Management Standards (OLMS).

In that "Bill of Rights" the members of unions have the right to vote in elections, attend union meetings and are "guaranteed freedom of speech and assembly, and the right to meet and assemble freely with other members, to express views, arguments or opinions," including in favor or against candidates in union elections (DOL).

Conclusion Why have unions been in decline since about 1960? Kris Warner writes in the peer-reviewed Labor Studies Journal that union membership rose sharply after the National Labor Relations Act was passed in 1935, and again during World War II (because of the "industrial boom" the war created) (Warner, 2013). There are.