Employment Relations in the United States

Law, Policy, and Practice

Raymond L. (Louis) Hogler

• Publisher: SAGE Publications, Inc
• Year: 2003
• ISBN:
  9781544340265
• Edition: 1
• Topic: Business
• Subtopic: Management
• Index: Business

Employment is closely connected to wealth, status, and security and is therefore a subject of interest across a range of academic disciplines. Employment Relations in the United States incorporates a wealth of research material from these different specialties to provide a historical perspective on the American workplace and the evolution of legal policies affecting employment. The analysis follows both a chronological and thematic arrangement, beginning with the importance of management practices, the growth of labor organizations and the impact of collective bargaining on employment institutions, and the subsequent rise of individual employment rights enforced through administrative and judicial means. Through its evolutionary approach, the book explains the fragmented, overlapping, and conceptually confusing regulatory environment governing workplace relations. It offers an integrated approach to such important contemporary policy issues as health care coverage, pensions, and effective dispute procedures. The book provides an analytical framework for an understanding of the unique nature of our labor markets and the role of government, employers, and unions. Key Features

• Provides students with the historical background they need to understand how the U.S. system developed and how it differs from systems in other industrialized nations
• Discusses individual employment rights, including protection from discrimination
• Covers current policy issues in employment, including raising the minimum wage, the growth of a contingent workforce, and privatizing retirement
• Offers a unique historical and evolutionary explanation of the nature of employment relations

As a general overview of contemporary employment relations, Employment Relations in the United States is a perfect supplement to college courses in employment law, human resource management, and collective bargaining. Human resource managers, mediators, and professionals involved in labor relations will also find this an essential reference.

CHAPTER 1

Contemporary Employment Relations in Historical Perspective

The U.S. employment system has its origins in the arrival of European settlers to the new continent. The early colonists brought with them English traditions of labor, upon which they imposed variations suited to different conditions. One of those variations involved a form of contractual or indentured servitude by which an emigrant agreed to labor for a period of years in exchange for passage to the New World. Another variation was the “peculiar institution” of slavery, which enabled a buyer to purchase human labor power as a form of property. The practice of indentured servitude gradually fell into disfavor as population growth furnished a source of labor. Slavery, and its attendant regime of ownership rights, endured until the passage of the Thirteenth Amendment in 1865. It stamped U.S. society with characteristics that still resonate today; among them are the laws prohibiting race discrimination in employment that make up an important part of contemporary labor market regulation.¹

With the rise of industrialization in the latter nineteenth century, U.S. workers began to organize national labor unions as a response to managerial control over employment. That effort met with limited success until the early twentieth century. As the country experienced world war and depression, unions became a more attractive means of conducting labor market transactions, and such leaders as John L. Lewis, Walter and Victor Reuther, and Jimmy Hoffa emerged as the new men of power in our political economy. For three decades after World War II, unions played a central role in setting terms of employment. Union membership and influence declined sharply in the 1980s, and a burgeoning scheme of governmental regulation emerged to protect the rights of individual employees. The scope and complexity of employment law now rival more traditional fields of legal study.

This book describes the historical context of employment relations in this country and offers an interpretation of the factors shaping its evolution. The system arose in part as a consequence of external forces, but it also followed a trajectory dictated by its internal dynamic. To illustrate with one notable example, the idea of participatory democracy makes up the cornerstone of our national culture. The grandest experiment in workplace democracy began in 1915, when John D. Rockefeller Jr. visited the state of Colorado and declared that capitalists, workers, and shareholders were all partners in the great economic venture of the Colorado Fuel & Iron Corporation and labor was therefore entitled to a voice in the affairs of the enterprise.² Rockefeller devised his industrial plan as a reaction to pressure from President Woodrow Wilson and vociferous public criticism after the labor conflict at Ludlow a year earlier. Eventually, Rockefeller’s ideas led to the widespread use of company unions in the 1930s and prompted Senator Robert Wagner in 1935 to make them illegal under the federal collective bargaining law. Leading policy-makers and academics now question whether Wagner’s views continue to be relevant to today’s circumstances.³ Without a proper historical appreciation of the topic, however, the debate over workplace democracy has little contemporary substance. The remainder of this chapter sketches the major themes and ideas developed over the course of the book.

The Start of a New Millennium

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Beginning in the early 1990s, the U.S. economy embarked on an era of expansion and prosperity that lasted through the end of the decade. Stock prices climbed to a historic peak, reaching 11,722 on the Dow Jones Industrial Average in January 2000. The unemployment rate dropped from 7.8 percent in 1991 to 3.9 percent in September 2000. Inflation rates remained low, and productivity grew at an annual rate of 2.5 percent between 1995 and 2000. Workers in low and middle income levels experienced real wage gains for the first time since the early 1970s, and income differentials began to moderate. Recipients of public welfare entered the workforce, gaining a foothold in the labor market. In March 2001, the number of households below the poverty line fell to 11.3 percent, its lowest level since 1973. As employment grew, even unskilled workers found jobs that offered training and prospects of advancement. But the run of prosperity came to an end at the turn of the century.⁴

The destruction of the World Trade Center towers in September 2001 and the ensuing war against terrorism aggravated existing weaknesses in the economy and precipitated a recession persisting into the next year. The stock market reported a record numerical decline in late September. Following a brief period of recovery, disclosures of accounting irregularities in major firms such as Enron and WorldCom led to further market declines, and the Dow Jones index fell to 7,286 in October 2002.⁵ The national unemployment rate rose to a four-year high of 6 percent in November 2002. As a response to threats of financial instability, the Federal Reserve continued to lower key interest rates until they reached levels of 1961.⁶ Following significant Republican victories in the 2002 congressional elections, officials in the administration of President George W. Bush debated policy moves to stimulate the economy, including tax cuts for businesses and upper income families and investment incentives based on elimination of taxation of corporate dividends. Democratic members of Congress put forward their own proposals, one of which featured a payroll-tax holiday to provide financial relief to low income workers.⁷ Those measures were designed to encourage business investment and consumer spending to avert a downward spiral that threatened the global economy.⁸

The outbreak of war against Iraq in early 2003 prompted a surge in stock prices and the index gained nearly 1,000 points in eight sessions, only to drop by one-third shortly thereafter.⁹ As the costs of the conflict and reconstruction became more defined, domestic policies gave way to the international agenda. Congress appropriated $70 billion to the military effort, despite mounting concern over the effect of deficits on such domestic programs as Medicare, health care for uninsured individuals, schools, and aid to financially distressed state governments.¹⁰ The airline industry, particularly affected by the conflict, requested substantial amounts of federal aid.¹¹ After the war officially ended in Iraq, unemployment remained at relatively high levels and reached a nine-year high of 6.4 percent in June 2003. Many discouraged workers stopped seeking work, raising the total number of unemployed to 3.82 million.¹² President Bush insisted that his tax cuts would act as a stimulus to create jobs. Democrats, meanwhile, continued to press for more federal aid for states and extended unemployment benefits.¹³ Analysts vigorously debated the effects of the administration’s economic policies on future budget deficits, interest rates, and growth.¹⁴

The idea that our federal government should play an active role in managing labor markets to promote social policy gained widespread acceptance in the New Deal era of the 1930s, when many of the programs originated that make up the foundations of modern workplace relations. Those changes were prompted by the crisis of the Great Depression. At the time of Franklin Delano Roosevelt’s election in November 1932, more than one-quarter of the workforce was unemployed, capital investment had largely ceased, and the economy had steadily contracted since 1929. In response, Roosevelt and the New Deal Congress enacted legislation that profoundly altered the industrial environment, and the effects of those changes persist today. The major legislative components of the New Deal program included laws encouraging unions and collective bargaining, a system of retirement security, minimum wage and hour regulation, and unemployment insurance. Such innovations marked a radical break with existing law, which, with some rare exceptions, consisted of judicial common law doctrines formulated over the course of nearly two centuries. But government activism was then, and is now, politically controversial.¹⁵

In contrast to other industrialized nations, the U.S. pattern of employment regulation evolved sporadically and unsystematically. One important reason was the absence of a strong working-class political movement to promote aggressive state intervention in labor markets.¹⁶ European countries adopted integrated approaches to regulation, driven in large part by powerful trade unions representing class interests, and, as a result, legal rules helped to stabilize compensation, working conditions, and living standards.¹⁷ Today, labor market concerns remain embedded in discussions of political issues, such as the aims and objectives of the European Union as it expands its membership.¹⁸ To understand the U.S. system, it is useful to examine some background about the United States’ unique approach to employment and its relevance to public policy.¹⁹

Analyzing “Exceptionalism”: Is the United States Different and Why?

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The distinction between the labor relations system in the United States and its global competitors is sometimes described by the term American exceptionalism, which emphasizes the fact that U.S. workers do not make up a coherent group united by class sentiment and common goals.²⁰ The lack of a unified political force in this country has resulted in less social legislation to assist wage earners, such as guaranteed health insurance, paid parental leaves, and other kinds of mandated employment benefits. During the early twentieth century, scholars devoted increased attention to emerging trends in the relations between workers and employers. Writing in 1906, the German political economist Werner Sombart analyzed the U.S. trade union movement and pointed out that neither U.S. workers nor their leaders accepted the basic tenets of socialism. Indeed, Sombart said, “emotionally the American worker has a share in capitalism: I believe that he loves it.”²¹ He then went on to suggest a number of reasons why U.S. industrial relations were unique, including the attitudes of workers, the two-party system in U.S. politics, the relatively high material conditions of U.S. workers, and greater opportunities for upward and geographical mobility.

Early studies of U.S. labor were influenced by Sombart’s views. Selig Perlman, in his classic book Theory of the Labor Movement (1928), echoed the notion that Americans were unique in their outlook and approach to labor organization. For Perlman, the crucial feature of labor was a consciousness of scarcity of opportunity. Such consciousness led to collective attempts to control and ration opportunities for work. Business, in contrast, was dominated by a consciousness of unlimited opportunity or abundance. Because U.S. workers historically enjoyed access to land and economic mobility, their social philosophy at first resembled that of the business entrepreneur. Only when the consciousness of abundance had been replaced by a consciousness of job scarcity did workers in this country create a stable labor movement. Even then, peculiarly U.S. conditions produced a relatively weak labor movement.

Perlman identified two main factors in the U.S. environment affecting trade union formation. One was the strength of the institution of private property, and the second was the lack of a class consciousness in U.S. labor. Vigorous trade unionism, Perlman said, was always “a campaign against the absolute rights of private property” because it circumscribed an employer’s prerogatives in the workplace. The absence of class consciousness in the United States could be attributed to a fluid economic system that offered social advancement, a political system giving most workers a right to vote, and ethnic and cultural diversity. As a result, Perlman believed, the U.S. labor movement was dominated by a job consciousness that had only a narrow objective of controlling wages and working conditions, rather than broad political reform.²² The basic attitudes and beliefs that Sombart and Perlman identified are still used as explanatory factors in studies analyzing the low rates of union membership in the United States. According to a recent analysis, “American workers are less class conscious than their counterparts in almost all other developed countries.” Thus, Americans have less inclination toward group action, such as unions, because we favor values of individualism and merit over collective action and social protections.²³

Employers, likewise, demonstrate considerable hostility to unions in their work-places. Indeed, the opposition of U.S. employers to unions “has always been more extreme than that of employers in other nations” and is an important factor in union decline.²⁴ When union membership fell by over 30 percent in the 1980s, influential scholars attributed the decline to increases in employer unfair labor practices and their effects on workers.²⁵ Such research prompted a debate about the role of unions in our economy and the effectiveness of U.S. labor laws; that controversy remains unsettled.²⁶ Subsequent chapters of this book examine the contributions of the union movement to creating stable employment conditions and the rise of a system of fringe benefits.

Negative views about unions are also prevalent in our judicial system, and adverse common law decisions in the nineteenth century forced labor leaders to focus on job-related matters and discouraged labor radicalism through outright legal repression.²⁷ One important rule was the principle of employment at will, which permitted employers to fire employees at any time for any reason. The rule has been qualified by various statutes and judicial exceptions, discussed later in the book, which created a patchwork of rights and duties that often results in litigation to resolve disputes. During the late nineteenth century, the U.S. Supreme Court rendered important decisions striking down both state and federal legislation attempting to limit employers’ power in the workplace. The Court did not change its constitutional view of federal power over employment until 1937, when it upheld the constitutionality of the National Labor Relations (Wagner) Act. Since that time, the federal government has exercised its authority over most dimensions of employment, ranging from an employer’s selec...

Table of contents

• Cover Page
• Title
• Copyright
• Contents
• Preface
• 1. Contemporary Employment Relations in Historical Perspective
• PART I: THE ERA OF MANAGEMENT, 1880–1935
• PART II: THE EVOLUTION OF COLLECTIVE BARGAINING
• PART III: INDIVIDUAL EMPLOYMENT RIGHTS, 1960s-2000s
• PART IV: REBUILDING THE EMPLOYMENT CONTRACT: PRACTICES, POLICIES, AND POLITICS
• Index
• About the Author