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.
I’d like to take this idea a step further. Let’s say you take a job and really need it. Perhaps you have a slightly spotty employment record. Good work, but issues nonetheless. You haven’t signed a non compete however you were not fully understanding of the corporate culture. You start working a quickly learn you’ve signed up to work in a toxic environment. There may have been signs pointing to possible disconnects with the culture, but you could not fathom the situation your are now faced with. You’re not wealthy, you need the job. You can’t just quit. Now you have to seek a new job. We know how fun job searching can be. So the employee is now faced with the demands of a new job in an unbearable environment. Did the employee accept a job blindly? Did they really know what they were signing up for?
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