Social attitudes, labor law, and union organizing: Toward a new economics of union density

Abstract

Much has been written about union wage bargaining. Much less has been written about union density, which has been viewed as simply the employment outcome under the wage bargain. This paper presents a new dynamic model of union density that exhibits multiple equilibria and path-dependency. The model builds upon Freeman (1998) who identified the importance of union spending on organizing and business spending on opposing unions. It emphasizes the demand for union representation which depends on wage bargaining outcomes, the state of labor law, and socio-economic factors impacting public attitudes to unions. The model is used to provide a narrative account of the historical evolution of union density in the U.S. and to identify factors important for its future evolution. I IntroductionMuch has been written about the theory of union wage bargaining, but relatively less research has been devoted to the density of union membership. Union density has tended to be viewed as simply the product of the employment outcome under the wage bargain. Whereas such an approach makes sense in times when the underlying state of union density is given, it makes much less sense when it comes to explaining the massive fluctuations that have occurred in the historical evolution of union density within the U.S. economy over the last hundred years.Our approach seeks to remedy this weakness in the literature on the economics of unions. It presents a dynamic model of union density that exhibits the possibility of multiple equilibria.The model builds upon Freeman (1998) who identified the importance of union spending on organizing and business spending on union busting. However, it extends the analysis to include wage bargaining effects, as well as socio-economic factors such as the state of labor law and public attitudes about unions. The model is used to provide a narrative account of the historical evolution of union density in the U.S. economy. The paper closes by identifying a new microeconomic research agenda that grows out of an explicit focus on union density. II Shifting the focus: from union bargaining to union densityEconomists have long had an interest in the economic effects of unions. However, a distinct feature of this interest has been a tendency to focus on firm-level impacts. This is typified by the monopoly union model in which the union is taken as an institutional given, and the union acts as a monopoly supplier of labor to the firm. Given this, wages and employment are determined by the union's preferences over wages and employment given the firm's labor demand curve.There are many variants of this firm level approach to unions. Nash bargaining models (McDonald and Solow, 1981) have the firm and union jointly solving a program that maximizes the product of their respective objective functions subject to each realizing a minimum acceptable outcome. This co-operative bargaining model results in a Pareto efficient outcome (which is sensible from a classical maximization perspective), but enforcement of the bargain...

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