Friday, April 6, 2018

Confronting the Myth that Workers Know What They are Signing Up For

Sinclair Broadcasting Group has recently been forcing news anchors at its stations across the country to broadcast statements that echo President Trump’s attacks on the news media as propagating “fake news.” These anchors have then been criticized for following along rather than quitting. But they signed employment contracts in which they can be assessed sizable monetary penalties for quitting, and they also signed non-compete agreements preventing them from working at another TV or radio station for six months. Coincidentally, last week, Professor Evan Starr visited my department to present his research on non-compete agreements in the U.S. labor force. Among many important findings are these: the use of non-competes and their effects on outcomes are unrelated to the extent to which non-compete agreements are legally enforceable in each worker’s state. Moreover, a third of non-compete agreements are forced on workers after they have already accepted the job, and less than 20 percent consulting family, friends, or a lawyer before signing it. What emerges from this, among other things, is a picture of workers who don’t really understand the legal parameters under which they are agreeing to work.

The economists in the audience had a hard time accepting this picture. Economists are trained to think that rational agents make informed choices based on good information. But there is a lot of evidence that workers don’t have great information about their own employment conditions. Two years after the Family and Medical Leave Act (FMLA) was enacted, not even 50% of nonunion hourly workers had heard of it and barely one-third thought they were eligible (Budd and Brey, “Unions and Family Leave: Early Experience under the Family and Medical Leave Act,” Labor Studies Journal, 2003). In Britain, I’ve found that it’s common for two-thirds of workers to not know that some types of employer-provided family-friendly policies are available to them (Budd and Mumford, “Family-Friendly Work Practices in Britain: Availability and Perceived Accessibility,” Human Resource Management, 2006). In a survey of U.S. companies emphasizing “shared capitalism,” 20-25% of employees’ responses to questions about whether they were covered by profit-sharing, gainsharing, or individual incentive plans didn’t match what their employer reported (Budd, “Does Employee Ignorance Undermine Shared Capitalism?” in Shared Capitalism at Work: Employee Ownership, Profit and Gain Sharing, and Broad-Based Stock Options, 2010).

You can try out your own knowledge. Consider the following scenario: 

An employee (in the United States) is accused of dishonesty. The supervisor knows that this employee is not dishonest but fires him anyway because she dislikes the employee personally. The employee’s job performance has been satisfactory.

Is this termination legal or illegal? Did you say "illegal"? If you did, you're not alone, but you're WRONG. Except for a minority of workers (those covered by a union contract with unjust dismissal protections or similar civil service protections, or those working in Montana where this is an unjust dismissal law), this termination would be legal because of employment-at-will. But Pauline Kim found that over 90% people think this is illegal (“Bargaining with Imperfect Information: A Study of Worker Perceptions of Legal Protection in an At-Will World,” Cornell Law Review, 1997). Other research also finds high rates of employee ignorance about workplace law violations and how to remedy them (e.g., Alexander and Prasad, “Bottom-Up Workplace Law Enforcement: An Empirical Analysis,” Indiana Law Journal, 2014).

Why is this lack of understanding such a problem? Because our laissez-faire labor market is premised on fully informed workers making wise choices such that the employment relationship is an equal one among consenting parties. When workers lack a true understanding of what they are signing up for, then the employment relationship looks more like an unequal one in which workers are disadvantaged, if not exploited. Steve Befort and I have therefore argued that U.S. employers should be required to provide a written statement to all employees disclosing all terms and conditions of employment, including being subject to employment-at-will (Befort and Budd, Invisible Hands, Invisible Objectives: Bringing Workplace Law and Public Policy Into Focus, 2009). By itself, this might not change the actual terms and conditions of employment, but it would at least paint a truer picture of what workers are signing up for. 

It must also be said that another pictures emerges from the Sinclair Broadcasting mandate and from research on non-compete agreements--namely, workers lacking options which would allow them to refuse to sign these contracts. Fighting the myth that workers know what they are signing up for and creating ways to facilitate a better understanding of the true nature of the employment relationship probably won’t solve this imbalance, but it’s a good place to start.

Wednesday, March 21, 2018

How Many Things are Inevitable if Workers Unionize? Just One.

Looking back on the now-defunct (or hibernating) University of Minnesota faculty organizing drive, it’s striking the number of things that were said that implied that certain good or bad outcomes were inevitable. From the vantage point of someone who studies and teaches about labor relations, I only see one thing as inevitable if any group of employees vote in favor of unionization—namely, representatives of the business and of the employees will be obligated to bargain in good faith over terms and conditions of employment. That’s it. Everything else is up to numerous participants in the process—in the University of Minnesota case, this would include faculty, deans, a president, regents, union leaders, and others; in other cases this could include CEOs, other corporate leaders and supervisors, or in the public sector, governors, mayors, school board members, etc.

Let’s consider some things that were said during the University of Minnesota faculty (UMF) organizing drive that implied something was inevitable:

A lengthy process will continue to drag on. Yes, union organizing drives are typically lengthy affairs. The UMF organizing drive started back to 2014, and the union filed for an election in January 2016. The parties disagreed over the definition of the bargaining unit (in particular, should contract faculty be together in the same unit as tenured and tenure-track faculty), and the state Bureau of Mediation Services (BMS) finally issued a ruling in September 2016. The following month, the University appealed this ruling to the Minnesota Court of Appeals, which then took a year to overrule the BMS ruling. Shortly afterwards (October 2017), the union withdrew the petition seeking an election. So after three years, the drive was formally over and an election was never even held.

So yes, organizing drives are often lengthy affairs. But does a drive have to drag on? Is this inevitable? No. The ball is essentially in the employer’s court. In the UMF case, an election could have been scheduled quickly if the university had agreed to the definition proposed by the union. Employers like the university may feel that they have good reasons for challenging and appealing the unit determination process. But then administrators or corporate leaders need to recognize that they are making the choice to lengthen the process. [As a footnote, in the UMF case, we also have the Minnesota state legislature from several decades ago to thank for unnecessarily limiting flexibility and creating additional legal controversy by oddly trying to write the bargaining units into state law.] Bottom line: a lengthy process is likely, but it’s a choice, not an inevitability.

A rigid, one-size-fits-all collective bargaining agreement will be negotiated. It is common to stereotypically associate labor unions with rigid contracts that spell out specific outcomes in great detail. In the UMF case, this translated into a fear that unionization would take autonomy away from colleges or departments and mandate one-size-fits-all compensation structures, evaluation procedures, and the like. This certainly could happen. But it’s not inevitable. Professional athletes and Hollywood movie stars are represented by unions, and have collective bargaining agreements that allow for individual variation in compensation and other terms. Policies rather than outcomes could certainly be negotiated that empowered employees while allowing colleges to tailor practices and outcomes to their unique cultures, market conditions, and priorities. It all depends on who gets involved on both sides of the table and the choices they make. Bottom line: rigid collective bargaining agreements are possible, but not inevitable.

 Everyone will have to pay union dues. In the United States, if a union is voted in, it is true that it must represent everyone, and if negotiated, a collective bargaining agreement must apply to everyone. So individuals can’t opt out of being covered. But can they opt out of paying dues? In right-to-work states, they can. In the UMF case, Minnesota is a fair share state which means that unions are allowed to collect a fair share fee to cover the cost of representation, not to exceed 85 percent of regular dues. It’s likely that the Supreme Court will rule that this is unconstitutional and that no public sector employee can be forced to pay even a fair share fee (Janus v. AFSCME). In the meantime, it is true that public sector employees in Minnesota can be forced to pay at least the fair share fee, and the same is true to private and public sector employees in other non-right-to-work states. But a union does not have to force this issue; rather it’s something that is negotiated into contracts. In reality, unions likely do prioritize this (after all, they have expenses representing all workers). But once again, this is a choice. Bottom line: mandatory dues requirements are highly likely in non-right-to-work states or sectors, but are not inevitable.

Better off employees and colleges will lose out to worse off employees and colleges. Unions commonly try to benefit the worst off. After all, that’s what social justice is about. But whether this comes at the expense at employees and colleges who are currently better off depends on where the resources come from. It typically seems that university budgets are a zero sum game. If that’s accurate and unchangeable, then winning greater gains for the worse off will likely represent a redistribution away from the better off. But if new resources are created (for example, by stronger lobbying at the legislature) or found elsewhere (for example, administrative expenses), then it’s this doesn’t have to be a zero sum gain. Moreover, the extent to which this is a priority in the union, and how it is pursued, depends on who gets involved and how the agenda is shaped. Similar dynamics occur in any heterogeneous bargaining unit (for example, skilled crafts and assembly line workers; RNs and LPNs; etc.). Bottom line: uncertain.

The best faculty (workers) will leave and it will be harder to recruit new faculty (workers). There isn’t any direct evidence on this. If the faculty unionize and the relationship becomes adversarial, and rigid, one-size-fits-all policies and high levels of redistribution are negotiated, then yes, the university could become less attractive to certain faculty (and more attractive to those who have less power otherwise). If the relationship is productive and things are negotiated that further support and empower faculty in flexible ways, then unionization might be attractive to some people and a non-issue for others. There are many things that determine whether a job is attractive. Bottom line: Possible, but certainly not inevitable.

In conclusion, there is no doubt that there is much at stake in any organizing drive. Unionization could possibly transform important policies, procedures, and relationships. It’s certainly reasonable to debate whether these changes would be for the good, or not. But it’s better to debate them in the context of what might happen and by recognizing that this depends on the choices that many people will make. Not much is inevitable.

Monday, February 26, 2018

Business Is Not a War, a Jungle, a Machine, or a Game: Rejecting Narratives that are Unhealthy for Work and Workers


Earlier this month, an Australian colleague (Rae Cooper) tweeted that Tony Dundon’s AIRAANZ keynote presentation made the point that the “war for talent” narrative is macho and narcissistic, and undermines collaborative employment strategies. I agree. In fact, there are many war metaphors used in business: in addition to the “war for talent,” we can see references to competitors as the enemy, strategies as plans of attack, cash as a war chest, competition as a battle (“capture market share”), sometimes even employees as troops (“rally the troops”). All of these portray business as focused on beating the competition rather than producing an excellent product or service and make it legitimate to do this by any means necessary. War metaphors make it seem necessary for business to adopt hierarchical, authoritarian, military-like chains of command. All of these should be rejected. Business should be viewed as focused on  excellent products and services, not winning. Business requires cooperation, shared interests, and agreed-upon rules of conduct, not war.

But it’s not just war metaphors that are problematic. Here are some other popular metaphors used in business, all of which should be rejected and discarded:
  • “It’s a Jungle Out There”: Business is viewed as uncivilized, lacking rules, and dominated by a killer instinct. This survival of the fittest mentality justifies and even promotes selfish behavior. But to the contrary, and as noted above...business requires cooperation, shared interests, and agreed-upon rules of conduct. Inside and outside of organizations, humans need to be members of communities, not atomistic, isolated individuals.
  • Machine Metaphors: Employees as cogs, corporations as machines, knowledge as input, rest periods as downtime. These narratives reduce workers to impersonal machines without needs, rights, and knowledge. These narratives also emphasize static efficiency rather than dynamic effectiveness. But to the contrary...organizations are human communities. Workers deserve more than being reduced to a machine, and effective management requires more than technical optimization and a soulless deployment of labor (oops, back to war metaphors). 
  • Game Metaphors: playing fields, players, coaches, and scorecards. This creates a focus on keeping score (money) and winning. This gives legitimacy to seeking thrills and challenges without regard for the public who are reduced to spectators. But to the contrary...business is an integral part of society, not a sideshow for entertainment. Corporate “playing fields” are not isolated from society and business is not just about winning through profits.

Employment relations scholarship and practice has long sought to embrace a broader conception of business than simply making profits. Many of the major theories in business ethics similarly reveal and advocate for this broader conception. These theories also discount the popular emphasis on competition over cooperation as the driving force in business. Rather, it is emphasized that business is “a fully human activity” that requires a sense of community, extensive cooperation, and a deeper purpose than simply making money (as just one example, see Robert C. Solomon, Ethics and Excellence: Cooperation and Integrity in Business (Oxford University Press), which is also a good reference for the negatives of business metaphors). 

But note that the common metaphors described above (and by Solomon) capture very narrow views of business. The rhetorical power of these metaphors is illustrated by the negative practices that these metaphors support. In studying and practicing employment relations and human resources (and anything thing else related to business, including policy making), it’s important to break through these narrow metaphors.