Labor UnionsSupply & Demand for Union ServicesSlide 3Slide 4Slide 5Slide 6Slide 7Slide 8Slide 9Union Membership2008 Union Membership (% of employed workers) by Gender, Race, & Hispanic Ethnicity2008 Union Membership (% of employed workers) by Age2008 Union Membership (% of employed workers) by Sector2008 Union Membership (% of employed workers) by Industry2008 Union Membership (% of employed workers) by Selected StatesUnion Shop“Right-to-Work” LawStrikeWhether a strike is successful in enabling a union to win concessions from management depends onMonopoly power of the firm in the product marketAbility of the firm to stockpile product in anticipation of a strikeFirm’s financial resources to withstand a strikeUnion members’ financial resources to withstand a strikeFirm’s Concession CurveUnion’s Resistance CurveThere is an expected strike duration at which the employer & the union will accept the same wage. This point is the Settlement Point, where the employer & the union come to an agreement.Settlement PointSlide 28Slide 29Slide 30Slide 31Slide 32Slide 33ArbitrationSplitting-the-difference arbitrationFinal-Offer arbitrationUnion Membership Around the WorldUnion Membership As a % of Total Paid EmployeesSlide 39Slide 40Slide 41Slide 42Slide 43Slide 44Slide 45Slide 46Slide 47Slide 48Slide 49Slide 50Slide 51Slide 52Slide 53Slide 54Slide 55Slide 56What does the future hold concerning unions?The union movement was originally founded on white, older men.What might unions do in the future?Labor UnionsSupply & Demand for Union ServicesDemand Side: Other things equal, the higher the price of union services (as measured by monthly dues, initiation fees, & the value of time expected to devote to union activities), the lower the proportion of workers that will want to join a union. (We will discuss union services or benefits shortly.)Supply Side: It is costly to provide union services. The higher the price of union services the more willing the unions are to provide the services.Supply & Demand for Union Services% of Work Force UnionizedPrice of Union MembershipSupply & Demand for Union ServicesDemand% of Work Force UnionizedPrice of Union MembershipSupply & Demand for Union ServicesSupply% of Work Force UnionizedPrice of Union MembershipSupply & Demand for Union ServicesSupplyDemand% of Work Force UnionizedPrice of Union MembershipSupply & Demand for Union ServicesSupplyDemand% of Work Force UnionizedPrice of Union MembershipequilibriumSupply & Demand for Union ServicesSupplyDemand% of Work Force UnionizedPrice of Union MembershipP*equilibriumSupply & Demand for Union ServicesSupplyDemand% of Work Force UnionizedPrice of Union MembershipP*Q*equilibriumUnion MembershipIn 2008, 12.4 percent of employed wage and salary workers were union members.Union membership varies with many factors.2008 Union Membership (% of employed workers)by Gender, Race, & Hispanic EthnicityGroup% Union MembersWhite Men 13.2White Women 11.1Black Men 15.9Black Women 13.3Hispanic Men 11.0Hispanic Women 10.0Union membership is higher among men than among women. Blacks are more likely than Whites to be union members, & Hispanics are less likely than non-Hispanics to be union members.(From the Statistical Abstract of the United States, 2010.)2008 Union Membership (% of employed workers)by AgeGroup% Union Members16 to 24 yrs old 5.025 to 34 yrs old 10.735 to 44 yrs old 13.445 to 54 yrs old 16.055 to 64 yrs old 16.665 yrs & older 9.0Union membership was higher among middle-aged workers & lower among younger & older workers.(From the Statistical Abstract of the United States, 2010.)2008 Union Membership (% of employed workers)by SectorSector% Union MembersPublic Sector 36.8Private Sector 7.6Union membership is much higher among the public sector (government employees) than among the private sector.(From the Statistical Abstract of the United States, 2010.)2008 Union Membership (% of employed workers)by IndustryIndustry% Union MembersTransportation & Utilities 22.2Construction 15.6Information 12.7Manufacturing 11.4Mining 6.9Wholesale & Retail Trade 5.2Financial Activities 1.8Union membership varies with industry. Membership is considerably greater in transportation, construction, & manufacturing than in other industries.(From the Statistical Abstract of the United States, 2010.)2008 Union Membership (% of employed workers)by Selected StatesState% Union MembersNew York 24.9North Carolina 3.5Pennsylvania 15.4New Jersey 18.3Delaware 13.4Maryland 12.6Union membership ranged from a low of 3.5% for North Carolina to a high of 24.9% for New York.(From the Statistical Abstract of the United States, 2010.)Union ShopAn employer is a union shop if a worker must join the union within a specified time period in order to remain with the employer.The argument in favor of the union shop concerns the “free-rider” problem. The workers get the benefits gained by the union and should therefore contribute to the union and not “ride free.”The argument against the union shop is the individual worker rights argument. A worker should be able to decide if he/she wants to be a member of the union.“Right-to-Work” LawMany states, especially many southern states, have “Right-to-Work” laws.These laws outlaw union shops & make it hard to unionize.Strikean attempt to deny the firm the labor services of all union members.Whether a strike is successful in enabling a union to win concessions from management depends on•the monopoly power of the firm in the product market;•the ability of the firm to stockpile product in anticipation of a strike;•the firm’s financial resources to withstand a strike; &•the union members’ financial resources to withstand a strike.Monopoly power of the firm in the product marketNote: To say that a firm has some monopoly power does not mean that the firm is necessarily a monopoly. Rather, it means that the seller has some control over the price of its product. So, if a firm has some monopoly power, it can raise its price without losing all its business.Consequently, it can pass some of the cost of higher wages along to its customers in the form of higher prices.Thus, a union will be better able to win concessions from a firm with monopoly power.Ability of the firm to stockpile product in anticipation of a strikeA firm that can stockpile its product is able to accumulate inventory. Durable goods, such as cars, can be stockpiled; perishable goods, such as fresh fruit, can not be