Unfair labor practices

The Wagner Act prohibited a series of unfair labor practices by employers. The 

Taft-Hartley Act added a series of unfair labor practices that unions were prohibited from engaging in. The intent of Congress in passing the Wagner Act was to protect the right of workers to organize. However with the Taft-Hartley Act Congress moved to protect the right of workers not to organize. Unions were prohibited from coercing or discriminating against employees who chose not to be represented by a union. Unions were also placed under the same duty to bargain in good faith just like employers were with the Wagner Act. Unions were also prohibited from engaging in a third unfair labor practice called a secondary boycott. In a secondary boycott a union that has a dispute with one firm (the primary employer) involves neutral, secondary employers in the dispute either by striking them or causing their workers to refuse to handle the goods of the primary firm.

The Taft-Hartley Act

When the Taft-Hartley Act was passed in 1947, collective bargaining in the United States bore little resemblance to the situation that prevailed when the NLRA was enacted in 1935. Union membership in 1935 was 3.5 million concentrated heavily in a few industries such as construction, mining, railroads and needle trades. Thirteen years later union membership stood at 14 million and the mass production industries of autos, steel, rubber and electrical equipment that had once been nearly devoid of unionism were solidly organized.

The success of organized labor set off a reaction among the American public. The public felt that the pendulum had swung too far. Where labor was once the underdog now it was too big and powerful. This sense of unease was heightened by a strike wave that hit the economy in 1946. In comparison presently the economy is not good. However, labor has not fared well with the assault on collective bargaining which is unprecedented by the state governments of Ohio, Wisconsin and New Jersey. Then in 1947 Congress enacted the Taft-Hartley Act alternatively described by its proponents as a way to restore the balance of power between management and labor and by its critics as a ‘slave labor’ law.

The Taft-Hartley Act did not repeal the Wagner Act, but it did amend the Wagner Act in some important ways. Maybe now is the right time to come with a new act to enhance the labor and collective bargaining.

The National Labor Relations Board

To administer and enforce the Wagner Act a five member National Labor Relations Board NLRB was established. The NLRB is an independent agency of the federal government. Its members serve for 5 year terms and are nominated by the president and confirmed by the Senate. The NLRB’s basic responsibility is to investigate and rule on charges of unfair labor practices that are brought before it and to conduct representation elections. Much of the actual casework is handled by staff persons of the NLRB at 51 regional, subregional and resident offices. The law gives the NLRB the power to impose financial penalties and to issue cease and desist orders to end unfair labor practices. The caseload of the board grew tremendously between 1970 and 1980 as the annual number of unfair labor practice charges filed more than doubled. Since we are faced with an economy that is on a downward spiral maybe the NLRB will have a tremendous caseload now. However the caseload has declined since then with the sharp drop in union membership and organizing activity.

NLRB’s narrow constructed mandate should be expanded to include religious workplace issues that are on the rise when employers do not have a good valid job related reason for religious discrimination. Equal Employment Opportunity Commission EEOC has lagged, one wonders why.

Unfair labor practices

In order to protect the right of workers to join and participate in unions the Wagner Act prohibited certain unfair labor practices by the employer. An employer would commit an unfair labor practice should he or she attempt to interfere with, coerce, dominate or discriminate against employees in the exercise of their right to organize and bargain. Examples of unfair labor practices are threatening discharge, demotion or loss of job if an employee persists in union activity - interrogating prospective or present employees about their union sympathies or affiliations and discriminating against an employee because of the filing of a grievance or unfair labor practice charge. A firm also commits an unfair labor practice if it refuses to bargain in ‘good faith’ with the union in an attempt to reach a collective bargaining agreement - sound familiar?

A very fine line often separates what is and what is not an unfair labor practice by the employer. The law does not require that an employer remain neutral in a union-organizing campaign. It is legal for an employer to explain and defend its labor policies and to present the advantages and disadvantages of unions in speeches and written communications to its workers as long as it does not threaten reprisals or loss of benefits. Thus an employer may legally publicize the fact that it is operating at a loss - you have heard this one from MTA  and that other unionized companies in its industry have recently gone out of business. It cannot state that if it is unionized it will close its doors and the workers will lose their jobs.

Collective bargaining II

Before the Wagner Act the law did not forbid collective bargaining but the employer was under no legal compulsion to accept it. Without legal or administrative means with which to secure recognition and bargaining rights, unions had to strike to force the employer to accede to bargaining. Because the issue of union recognition and collective bargaining was often seen by both labor and management as a matter of principle and not subject to compromise there occurred a number of bitter and drawn out ‘recognition’ strikes throughout the late 1800s and the beginning decades of the twentieth century that resulted in considerable violence and a general radicalization of emotions on the issue of unionism.

Three key provisions of the Wagner Act fundamentally altered the practice of collective bargaining and the balance of power between workers and employers. The first was the prohibition of various antiunion unfair labor practices by employers, the second was the establishment of the union representation election, and the third was the establishment of the quasi judicial National Labor Relations Board to administer and enforce the law. The act covered all workers except those with supervisory or managerial roles or persons employed in the government (local, state and federal), agriculture, domestic service and industries (railroads and airlines) that were covered under the Railway Labor Act.

Collective bargaining

The organizational structure of TWU Local 100 is one important determinant of its effectiveness in pursuing five functions of organizing, negotiation, striking, contract administration and political action. A second important determinant is the legal framework that governs collective bargaining. This framework is composed of statute law, common law, court rulings and rulings of regulatory agencies that together define the rules of the game by which both MTA and TWU Local 100 have to play. These rules are of paramount importance in collective bargaining because they define the rights and responsibilities of both sides and the amount of power that each brings to the bargaining table.

Without a doubt the single most important piece of legislation with respect to collective bargaining is the National Labor Relations Act (NLRA) also known as the Wagner Act. Prior to its enactment in 1935 public policy towards unionism and collective bargaining had been generally repressive and obstructive. The Wagner Act represented a fundamental shift in public policy because for the first time the power of the federal government was explicitly committed to the protection of the right to organize and the promotion of the process of collective bargaining.

The importance of the Wagner Act can be better judged by comparing it with the legal environment that existed prior to its adoption. The Wagner act did not legalize either union or the process of collective bargaining which have been established in the nineteenth century by various court decisions. The Wagner Act protected the worker from discrimination or harassment for the exercise of that right. Prior to its passage employers were free to fire, demote, or refuse to hire union members or persons suspected of union sympathies. To prevent unionism, employers frequently hired agents and spies to infiltrate a union organization to disrupt its activities and discover its leaders. Once discovered the union activists faced the risk of being fired and ‘blacklisted’ among the other employers in the area making it impossible for these workers to find employment.

Bargainers learning function III

Not all labor negotiations exhibit the pattern of mutual concession and convergence to a settlement. Currently MTA will be doing the bidding of the New York State Governor Andrew Cuomo, since he has set a precedent that other labor organizations must follow in tow. We do not agree with Civil Service Employees Association CSEA President Danny Donohue - with friends like him we do not need enemies - who agreed to a five year agreement that had no wage raise for the first three years. In addition that agreement was laced with givebacks and endless concessions.

However we in the TWU Local 100 are opposed to the 21st century Boulwarism - we are not going to accept MTA firm and final offer that we have either to accept or reject. MTA offer can be billed in any manner they prefer, and they can claim it as a fair and equitable settlement. However, General Electric learned in 1969 that Boulwarism did not work.

If Boulwarism worked with CSEA it will not work with TWU Local 100 - we are definitely not going to follow the Donohue principle of givebacks and endless concessions.

Bargainers learning function II

Aspiration level theory provides several important insights into both the resistance and concession curves and the actual practice of collective bargaining. The first has to do with the process of concession as well as the convergence of the reaction functions. We pointed earlier that often TWU Local 100 and MTA enter the negotiations with overly optimistic expectations of what they will be able to win - TWU Local 100 (or at least hopes) that the MTA will concede faster than it actually does while the MTA hopes for moderate or ‘responsible (net-zero wage increases)’ demands from TWU Local 100. The result in this case is that neither side gives in as much as the other expects and as the aspiration theory predicts the two sides mutually lower their estimates of what is attainable resulting in concessions and a movement along the resistance and concession curves toward the point of agreement.

A second insight provided by the aspiration level theory concerns the best use of bluffing in labor negotiations (does not happen in diplomacy or finance). Now lets look at the usual purpose of bluffing which is to give the negotiator some room to make concessions or to shift the opponents estimates in a way favorable to the bargainer.

Bluffing can also work to a bargainers disadvantage however since at some point the bluff (if it is truly a bluff) will have to be given away as a concession and the larger the concession is the more the other side is motivated to toughen its demands.

Aspiration level theory also explains the incremental way TWU Local 100 negotiators move toward a settlement. One might imagine an exasperated MTA negotiator saying to his or her TWU Local 100 counterpart ‘Let’s quit kidding around. You and I both know were going to settle for a raise of 25¢ so lets get it over with. That’s my offer!’ Unfortunately for the MTA negotiator ‘coming clean’ like that usually does not result in a settlement but in an escalation of TWU Local 100 demand. The MTA immediate offer of 25¢ (even though there is a huge gap to $1.50 which the membership desires) wont cease until the TWU Local 100 negotiator acquiesces. This example points out what is perhaps one of the most difficult tasks facing a TWU Local 100 negotiator - how to make concessions without the other side reading it as a sign of weakness.

Bargainers learning function I

To predict the actual time path of wage demands it is necessary to specify in the mathematical representation of the reaction functions the exact of the bargainers uses in modifying their position. This decision rule is the bargainer’s learning function. The learning function of each bargainer states how its wage demand will change given a particular change in the opponent’s demand. The learning function captures the crucial process of strategic interaction in the bargaining.

Can we develop a mathematical equation for this learning phase? Maybe, however it is not easy to develop one due to the nature of the back and forth between the bargainers. Principally because the analysis becomes too complicated. The basic idea that underlies the learning function can be easily explained however to capture the dynamic interaction between TWU Local 100 and MTA bargainers one approach can be based on the learning function on what is called aspiration level theory. According to this theory people have goals or aspirations that they seek to obtain. Studies in psychology have shown that a person’s aspirations behave in a predictable way rising with greater than expected success and failing with less than expected success. In calculating the most favorable wage demands both TWU Local 100 and MTA negotiators implicitly estimate what the other side’s demand will be and how fast the opponent will concede during the negotiations. Lets assume for example that TWU Local 100 negotiator based on his or her subjective estimate of the MTA negotiator’s initial offer will be zero (0) an hour and that this offer will then be increased to 15¢ in the second round. What happens to TWU Local 100 wage demand if the MTA offers only 15¢ an hour?

The failure of the MTA wage offer to meet TWU Local 100 negotiators expectations should cause a reevaluation of TWU Local 100 demand. TWU Local 100 negotiator might conclude that he or she had overestimated the MTA vulnerability to strike costs or underestimated that the MTA bargainer had attached to the stated objective of holding down labor costs. If TWU Local 100 becomes convinced that the MTA position is not a bluff but is in fact the MTA firm actual bargaining position then the aspirations level theory predicts that the TWU Local 100 negotiator would respond by lowering the TWU Local 100 demand from its initial position. Had the MTA initial wage offer been more than TWU Local 100 anticipated the opposite result would be predicted TWU Local 100 bargainer would raise his or her expectations of what was attainable and would concede less than originally planned.

Contract Demand Meeting

The contract demand meeting at the Sheraton hotel was a success. The turnout was great. John E. Samuelsen president of TWU Local 100 speech was a traditional one. In addition what was said was what the management should hear. What was said from the management side was in a conciliatory tone which was a great move from the new MTA chairman Joseph Lhota. 

Raise of wage

To increase the MTA estimate of the strike costs that New York City will bear we demand that John E Samuelsen president of TWU Local 100 adopt a belligerent attitude in the bargaining process. We also recommend that he should take a strike vote among the membership. If in the event that he speaks to the press we prefer the following statement, ‘if we don’t get our demands, there’ll be a strike!’.

He should tell the MTA that the subjective estimates of the costs that TWU Local 100 would incur from a strike would be minuscule. Specifically by publicizing how large our strike fund or the amount of savings the membership has built up. We are aware that they may try to manipulate our estimate, however we know we are due for a raise.

The MTA negotiator for example may bring to the table a mass of charts and diagrams to show TWU Local 100 how precarious the MTA financial position is or why TWU Local 100’s large demands will result in layoffs. Part of this is a useful exchange of information so that TWU Local 100 knows the MTA’s true position many times. However it also has large elements of bluffing as the MTA deliberately exaggerates the negative consequences of a particular wage increase in order to win a less expensive settlement. TWU Local 100 must play the same game by trying to persuade management that a wage increase will cost less than it thinks because of better worker morale and increased productivity.

The bargainers’ objective functions IV

A fourth insight is that strike costs narrow the range of disagreement  between the MTA and TWU Local 100 and make an agreement more likely. If strike costs were zero then TWU Local 100’s best wage demand would be the upper limit of the contract zone and the MTA would be the lower limit of the contract zone. However we know the cost of strike is not zero and it will never be that. Further we know the cost will be imposed on the New York City economy. Thus the strike cost has to be increased in value then that will force the bargainers to compromise more in order to reach a pre strike settlement. The larger the prospective strike costs then the narrower will be the distance separating the TWU Local 100 resistance curve and the MTA concession curve.

Finally is the important role of negotiating tactics in the bargaining process. Both the MTA’s and TWU Local 100 most favorable wage demands are based on what they think the benefits and costs of a particular wage demand are. During the bargaining each side uses a variety of tactics designed to change the opponents’s subjective estimates of these benefits and costs so as to obtain a more favorable settlement. 

The bargainers’ objective functions III

A second important feature of the bargaining process helps to explain the gradual convergence that takes place between the TWU Local 100 resistance curve and the MTA’s concession curve. At each round of negotiations the bargainers have to reestimate their objective functions and their best wage demands. It is likely that if a strike is utilized as a bluffing technique then as the deadline approaches the bargainers’ estimate of both the probability of a strike and the amount of strike costs will increase as they face the reality of a shutdown. The wage demands of TWU Local 100 and the MTA will also converge as the strike deadline forces them to concede bargaining of secondary importance in order to resolve the issues that are major stumbling blocks towards an agreement. As the bargaining process continues therefore both the TWU Local 100 and MTA are forced to reevaluate their most favorable bargaining demands as their subjective estimates of the benefits and costs change over the negotiations. Each point on the resistance and concession curves is thus the best wage demand that comes out of this dynamic to make the best of each bargainer’s objective function.

A third insight concerns the fundamental importance of the right to strike in collective bargaining. As many of you are aware the Taylor law has denied us the right to strike - that is the yardstick of a strike in its ability to impose costs on the New York City economy which the mayor of New York City has to answer for. However that indirect cost does not pass on to the MTA. Therefore based on that the MTA is severely restricted and the MTA has little incentive to bargain with TWU Local 100 or compromise to reach an agreement. In addition to those executives in the MTA that do not reside in New York City or utilize public transportation they are out of touch with the average New Yorker’s desires for premier mass transportation. They do not answer directly to the mayor of New York City based on the above. Without the threat of a strike or some other cost imposing sanctions on New York City economy the MTA best wage offer in this case is the lower limit of the contract zone.

The bargainers’ objective functions II

To maximize utility TWU Local 100 negotiators should raise the wage demand as long as the marginal increase is an expected utility from the higher wage and exceeds the marginal decrease in expected utility from strike costs. The best wage demand is $1.50 per hour for TWU Local 100 as an initial demand and would determine the starting point for its concessions curve such to land at 99¢.

The MTA bargainers have made the same sort of calculations. The desire to win as low a wage increase as possible must be balanced against probable strike costs necessary to obtain it. Starting from the upper limit of the contract zone the MTA negotiator would compare the additional benefit from a lower wage against the additional strike costs that would be likely to go with it. As the negotiator considers lower and lower wage offers at some point - say when the wage increase falls below that granted by a private sector - the additional utility from yet a lower wage begins to diminish while expected strike costs become quite large. By equating marginal benefit and marginal cost the MTA bargainer would arrive at a most favorable wage demand as the starting point for the MTA’s resistance curve.

Clearly there are important points about the bargaining process. First at the beginning of bargaining a relatively wide distance separates the wage demands of the two sides. There are several factors that account for this - one is that the threat of a strike still lays in the distance and psychologically the bargainers tend to discount the amount of strike costs they would incur. Therefore this reduces the value in each bargainer’s functions leading the TWU Local 100 to demand a relatively high wage and the MTA to offer a relatively low wage. Second at the beginning of the negotiations one or both sides may have an over confidence of expectations about how much the other side will give into without a strike leading to inflated estimates of the variables in each bargainer’s too large demands. This tendency of inflated demands at the beginning of bargaining reflects in part the knowledge of skilled negotiators that it is easier to come down in one’s demands if they are too high than it is to increase one’s demands from too low an initial position. A third reason for the wide distance separating the reaction functions is that at the beginning of bargaining both sides typically engage in demand exaggeration or bluffing. Bluffing is part of the bargaining tactic used by labor negotiations in which one side attempts to alter the other party’s subjective estimates of the benefits and costs of a particular wage in a way that yields a more favorable settlement.

The bargainers’ objective functions I

To be able to predict the outcome of the bargaining process it is necessary to first specify the goals of the bargainers. One common assumption is that the bargainers desire to obtain the wage rate that maximizes their subjective expected utility. This term emphasizes that the utility to be gained from any given wage demand can never be known with certainty by either TWU Local 100 or the MTA prior to bargaining but must be predicted on the basis of subjective estimates of the benefits and costs that go with it. 

The starting points of the reaction functions show the initial wage demand of TWU Local 100 and the initial wage offer of the MTA. However one has to consider how the negotiators arrived at these particular wage demands? There are many answers one can chose from. Each bargainer demands in the negotiations that the wage maximizes its subjective expected utility. To determine this wage each bargainer must compare the expected benefits with the expected costs for each wage rate in the contract zone. This calculation for the TWU Local 100 bargainer has hypothetical values for the four variables.

The higher the TWU Local 100 wage demand the lower the probability that the MTA will accept it without a strike. TWU Local 100 bargainers utility increases slowly for a wage of 90¢ or less more rapidly by up to $1.20 and at a diminishing rate of up to $1.50 as the presumed upper limit of the contract zone. The rationale for this pattern might be the following. TWU Local 100 negotiators may feel that they have to get at least 90¢ in order to keep the membership’s wage up with the rate of inflation or the industry pattern since a wage increase below that would provide relatively little increase in utility. Utility increases at a faster pace for wage increase between 90¢ and $1.20 as the bargainers demonstrate their ability to win more from the MTA. Beyond a $1.20 increase, utility grows at a diminishing rate as TWU Local 100 bargainer’s success leads to a growing concern over negative employment effects and the threat of layoff from the MTA. However with a low wage offer the probability of striking increases. If the wage demand from TWU Local 100 is a low wage demand then that will send a message that the negative utility from the costs are also low while the TWU Local 100 wage demands escalates. However so does the duration of a strike necessary to obtain it therefore causing strike costs to rise at an increasingly rapid rate.  

The contract zone

Explicit or implicit in nearly every bargaining the concept is of a contract zone. The contract zone defines the range of wage rates within which a settlement is possible. The upper limit of the contract zone is determined by the maximum wage rate that TWU Local 100 would desire to obtain - the lower limit of the contract zone is determined by the minimum wage rate that the MTA would desire to have. Between the upper limit of TWU Local 100 and the lower limit of the MTA is where the bargaining wages will take place and where a settlement will be reached.

The next task of bargaining models is to predict the actual wage rate in the contract zone to which TWU Local 100 and the MTA agree at the end of the negotiations. Unfortunately the nature of the bargaining process is such that it is not easy to construct an estimate that is realistic. The reason is because of the strategic interaction that takes place between the bargainers. Strategic interaction arises from the dependency between the wage demands of TWU Local 100 and the MTA, the size of the MTA’s wage offer that for example influences TWU Local 100 demand which then causes the MTA to modify its offer which causes a further change in the TWU Local 100 position and so on.

Bargaining power

Power is the essence of collective bargaining. The ability of the TWU Local 100 to obtain what it wants and the ability of the MTA to resist TWU Local 100 demands depends on the relative power position of each side. It is fundamental to understand the process of wage determination in collective bargaining power and the source of power available to the TWU Local 100 and the MTA.

Bargaining power may be defined as one’s ability to induce an opponent to agree on one’s own terms. The origin of bargaining power is twofold. One determinant of bargaining power is the ability of TWU Local 100 to impose costs on the MTA if the MTA does not agree to TWU Local 100’s terms. The second determinant of TWU Local 100 bargaining power is the ability to insulate itself from retaliatory cost-imposing sanctions by MTA. This description of bargaining power suggests that one side’s ability to win its demands depends on how costly it can make disagreement for the other while minimizing its own costs. Much of collective bargaining involves jockeying back and forth between TWU Local 100 and MTA as each seeks ways either to strengthen its own sanctions against the other side or to protect itself from the cost-imposing ability of its opponent.

The single most important source of bargaining power for TWU Local 100 is the threat of a strike while for the MTA it is the ability to resist a strike. A Strike imposes costs on both sides since the MTA management loses its credibility, confidence of New Yorkers as a state agency while we in the TWU lose earnings from work. The relative bargaining power of the MTA in relation to TWU Local 100 hinges on whether the costs of a strike fall more heavily on the MTA management or the TWU Local 100 members.

Questions - 1. How does bargaining power effect the size of the wage increase that TWU Local 100 is able to win from the MTA? What factors increase the TWU Local bargaining power? What factors increase the MTA? 2. What factors influence the size of the TWU Local 100 and MTA initial wage demands in bargaining? How might a skilled negotiator be able to change the other side’s demands to be more in his or her own favor? 

Alternative methods of dispute resolution III

The final form of third-party intervention in labor negotiations is binding arbitration. Under a system of binding arbitration a neutral third party listens to both sides of the dispute and then issues a decision that the parties are committed to accept. Binding arbitration is the most intrusive form of third-party intervention because it allows an outsider to dictate the terms of the settlement.

There are several forms of binding arbitration. Interest arbitration is the use of arbitration to determine the terms and conditions of a new contract, while rights arbitration on the other hand is used to adjudicate grievances or disputes over the interpretation or application of the terms of an existing contract. The use of binding arbitration to settle grievance disputes is quite common and is one of the most distinctive features of collective bargaining. Virtually every collective bargaining agreement provides for a grievance process where workers can seek redress against an owner, company or management decisions or policies that are thought to violate the contract. Most grievance procedures involve a series of hearings culminating in binding arbitration if the dispute cannot be resolved at an earlier stage. The major impetus behind the widespread adoption of rights arbitration is the desire of both the employees and the employers to replace the strike with an alternative form of dispute resolution that is less disruptive to the day-to-day employment relationship and that imposes lower costs on both sides.

In the private sector interest arbitration is much rarer. When it comes to negotiation of a new contract, few unions or companies are willing to give up their right to strike or to place their futures in the hands of an outside arbitrator.

Interest arbitration is much more common in public sector bargaining primarily because many public sector workers do not have the right to strike and an alternative form of dispute resolution is necessary. The positive side of interest arbitration is that it permits bilateralism between the employees and employers in public sector negotiations without the threat of a strike. Interest arbitration also has several negative aspects. It is often alleged that interest arbitration has a chilling effect on the motivation of the employer and the employees to bargain and make concessions. Without the prospective costs of a strike neither side loses as much by being intransigent. Also if both sides anticipate that the arbitrator will split the difference between their respective positions, they have a strong incentive to exaggerate their final positions in order to win a more favorable settlement. Interest arbitration may also lead to what is known as a narcotic effect in bargaining. The narcotic effect refers to the possibility that once the bargainers have used arbitration they may automatically resort to arbitration in subsequent negotiations rather than reach a settlement on their own. The bargainers may for example find it easier to rely on a third party to resolve their dispute rather than undertake the hard work and political risks within their own organizations of fashioning an agreement. A final negative impact at least from the perspective of public officials and taxpayers of interest arbitration is that it seems to result in higher wages and benefits for workers relative to negotiated settlements.

These negative side effects of interest arbitration have led to the development of final offer arbitration. Under final offer arbitration the arbitrator chooses the final offer of one side or the other as the settlement. The hope is that the ‘all or nothing’ nature of the award will provide a strong incentive to both sides to moderate their positions and reach a settlement on their own - it also leaves a stronger residue of bad feelings between the employees and the management because it produces a clear winner and loser.

Alternative methods of dispute resolution II

The next higher level of third-party intervention in bargaining is fact-finding. Fact-finding is most frequently used in the public sector and often begins when mediation has failed to bring about a settlement in negotiations. Under fact finding procedures, a neutral third party enters the negotiations and prepares a report that outlines the conditions surrounding the dispute and the positions of the parties. Fact-finding often goes beyond mere determination of the facts, because in many instances the fact finder is also empowered to prepare a set of recommendations as a suggested basis for a settlement of the dispute.

Proponents of fact-finding argue that it facilitates a settlement of collective bargaining disputes in three ways. First, fact-finding can resolve important disagreements between TWU Local 100 and MTA over the truthfulness of the information with which each side buttresses its demands. Second, the fact-finder’s recommendations can serve as a focal point around which a settlement can be reached. Finally and perhaps most importantly, it argued that fact-finding subjects the bargainer’s demands to public scrutiny therefore inducing both sides to adopt more moderate positions than they would if the negotiations remained behind closed doors. Despite these claims in its favor, evidence suggests that at least in the public sector fact-finding has declined in its effectiveness as a means of dispute resolution. The major reason seems to be that fact-finding does not, contrary to its proponents’ claims, arouse enough public pressure to move the parties to a settlement.

Alternative methods of dispute resolution I

Mediation is the most common form of third-party intervention in collective bargaining and also the least intrusive. Mediation is a procedure in which a neutral party joins the negotiation to assist the TWU Local 100 and MTA in reaching an agreement. The mediator has no power to impose a settlement on the parties. Rather the mediator facilitates the bargaining process by serving as a go-between in the negotiations.

The central purpose of the mediator is to help the parties reach agreement since the mediator cannot impose sanctions or costs on the negotiators. The major influence the mediator can have on the speed with which an agreement is reached is by improving the flow of communication between the bargainers and suggesting possible areas of compromise. Mediation will usually be more effective in some types of disputes than others. For example in a labor negotiation where one party has boxed itself into a ‘must strike’ position through inexperienced or clumsy bargaining a skillful mediator can suggest a compromise that allows an effective face saving retreat. Another important service the mediation can perform is facilitating concession. As noted earlier each negotiator must be careful not to convey weakness to the other side by ‘coming clean’ too soon. A mediator can therefore suggest x as a point of settlement when neither parties would have dared to put it on the table themselves.

In other disputes/situations mediation may be relatively ineffective in bringing about settlement. This is particularly true when matters of principle are involved or when the costs of disagreement are too low to induce the parties to compromise. 

Bargaining process

Unfortunately the nature of the bargaining process is such that it is quite difficult to construct models that are realistic or analytical, the reason is because of the strategic interaction that takes place between the bargainers. Strategy interaction arises from the interdependency between the wage demands of TWU Local 100 and the MTA. 

One issue rises here which is the MTA’s wage offer, can we assume that it would not influence our demand? Which then causes the MTA to modify its offer, which may cause a further change in our position and so on. However we know what we had previously which can be used as a bench mark.

Lets take a single approach of the TWU Local 100 - MTA bargaining in order to see what reaction functions for the MTA and the TWU Local 100. This reaction functions are a pair of mathematical equations that predicts the wage demand of each bargainers over the x rounds of the negotiations.

Lets assume the equation contains two major parts - an objective function which states what it is that the bargainers are trying to maximize and a learning function which states how the bargainers alter their wage demands given what they have learned from their opponent’s most recent bargaining move. In many fields whether in automobile, real estate or even some kind of service always one bargains to what he or she feels comfortable with. If you are an automobile purchaser you would prefer to purchase that automobile as cheaply as possible while the dealer wants to maximize his profits. These equations are solved to yield the predicted time path of the bargaining demands of the TWU Local 100 and the MTA and the wage rate that the two sides will eventually agree on.

Questions - 1. Occupations A and B are identical except occupation B requires people to work at night. Assume that some people prefer night jobs, but that others do not. Will the wage in occupation B be higher, lower, or equal to that in A? 2. Consider the following statement: ‘As long as even one person dies from an assault incident there is not enough safety at the workplace.’ Evaluate this statement from an economic point of view. Critics charge that human life cannot be assigned a dollar value and benefits of additional safety cannot and should not be balanced against costs as advocated by economists. What do you think about this argument? 3. Only 2 percent of airline pilots are women and only 2 percent of dental hygienists are men. What reason can you give to account for this pattern?