How Do Environmental Or
Contextual Factors Influence
(The locus and distribution of power in the larger society)
IR System Concept:
A Causal Model Representation
IR System Concept
Markets (output and input)
Community (Locus …)
Bargaining Power and Strike
• UBP=(M’s Cost of Disagreeing)/
(M’s Cost of Agreeing)
• MBP=(U’s Cost of Disagreeing)/
(U’s Cost of Agreeing)
• Strike Leverage: Union’s ability to
successfully conduct a strike, or
management’s ability to take one
• Numerous factors influence strike leverage
and bargaining power -- some examples?
Markets: Micro and Macro Influences
• Micro: Marshallian Conditions
– Elastic and inelastic demand, and why it matters
– What factors give rise to an inelastic demand for labor?
• Inelastic demand for product or service
• Low labor-cost-to-total-cost (LC/TC) ratio (“the importance of
• Limited technical possibilities to substitute for labor
• Inelastic supply of “cooperant” factors of production
• Macro: Inflation, Unemployment, Etc.
– Inflation stimulates use of “COLA” clauses
– Unemployment rate affects strike leverage?
– Interest rates and construction?
Technology Influences on LIR
• Some general (abstract?) questions (samples):
– Is the workplace fixed or variable? Does it move?
– Is the work steady, or episodic?
– Is the worker’s attention directed at:
• Objects (Tools, equipment, materials, machines, etc.)?
• Some specific questions (samples):
– Does automation make it possible to continue
operations during strikes?
– Does perishability or seasonality have an influence?
Bargaining Subject Types: A
(Law Partly Represents the Locus and Distribution of Power
• Three types of issues • Is it mandatory?
– Mandatory or – Direct and immediate
required (wages, hours, impact on members’
and terms and jobs
conditions of – Strongly influenced by
employment) labor cost factors
– Permissive or • Mandatory issues may
be argued to impasse
– Prohibited or illegal • Problem: Difficult to
• Who bargains with whom? Who is affected?
• The ABU (Appropriate Bargaining Unit) is not
necessarily the actual bargaining unit
• Four distinct levels of bargaining structure
– Informal work groups (no legal status, but …)
– ABU as determined by NLRB
• Important for election purposes, as noted previously
• A legal minimum; Neither party can insist on subdivision or
amalgamation into a larger unit
– Formal bargaining unit: Who is actually represented at the table?
Often an amalgamation of ABUs
– Unit of direct impact: Recognize that others may be affected
rather directly, even if not formally (e.g., “pattern bargaining”)
• Bargaining may occur at multiple levels
• Market factors • Bargaining power (e.g.,
– Unions seek to “take wages consider vertically and
out of competition” horizontally integrated
– Obvious way to do this: companies)
Include competitors within the
bargaining unit • Union democracy
• Technology • Industrial democracy
– Similarity of work, production • Responsiveness to local
technology, etc. allows for conditions
• Ability to adapt to
– Information technology affects
ability to coordinate
• Community • Opportunities for conflict
– Laws re ABUs • Scope of conflict
– Laws re multi-employer bgng.
Bargaining Structure Arrangements
• Highly varied. Beyond a few legal restrictions, the parties
are free to arrange things as they please (voluntarism)
• Common configurations
– Multi-employer arrangements, typically where ERs are small and
competitive (e.g., trucking, coal, construction)
– Single employer multi-site (many large ERs in manufacturing,
trade, postal service, elsewhere)
– Single employer single site (smaller ERs)
– Multi-union in some instances, often via “coordinated bargaining”
– Pattern bargaining (autos probably the best example)
– Multiple levels of agreements (local and national)
• Deceptive decentralization? Who really calls the shots?
Bargaining Structure Trends
• An old general rule: One wants competitors included in
the formal (or de facto, e.g., via pattern bargaining)
bargaining unit lest they gain an advantage via lower
– Assumed risk aversion, management in a reactive mode
– Many ERs have since 1970s sought decentralized structures,
to break away from previous more centralized structures
• Changing product mix, technology
• New competitors (e.g., foreign, nonunion)
• Local labor market conditions (especially after “greenfield siting”)
• Opportunism, especially during “Great Recession”
• Case in point: Steel industry formerly had virtual
industry-wide bargaining. Now at company level
Contextual or Environmental
Influences: Final Thoughts
• How do they matter? “Let me count the
ways …” (apologies to Browning?)
• Dunlop said contextual factors can have a
• Decisive is not deterministic. There is lots
of room for managerial discretion and
strategic interaction between the parties via