Employment Relation System And Working Environments Commerce Essay


The current U.S. employment system is significantly influenced by former rules and impacts of the country history for instance the slavery where work was a kind of property and it was easy to buy without any bodily effort for the buyer. The current U.S. president Obama partly headlined his election campaign with the slogan, that everybody should receive a health insurance policy. His success and the requirements of the entire U.S. population show very obvious the necessity of future employment developments and changes. Currently major topics are the arrangement of health insurances, pension paying and especially employment stability. The business environment situation in the U.S in the first quarter of 2010 shows a pretty worse situation. Nevertheless the employment cost index increases by 0.6 % 1which can be observed as a recreation of several businesses and the necessity of well skilled people to lead companies back to the successful way with discovering new market shares. Moreover the productivity of U.S. companies increases by 3.6 %2 in the first quarter of 2010 which serves as a clear indicator of business recreation .In addition to this the role of trade unions entails various discussions and bargaining activities between the involved parties. The U.S. unemployment rate in April 2010 accounts for 9.9 %3 (for comparison: German rate equals 4.9 % in April 2010) which shows pretty obvious the challenges for readjusting the employment system. Giving a general overview employment relations in the U.S. are divided into two sections. The private sector and the entire circumstances regarding labor law based on the National Labor Relations Act4. Furthermore the employment relation in the public sector based on another regulation, the Civil Service Reform Act from 19785. The evolution of the current situation in the U.S. mainly began in late 2005. At this time more than 50 % of all American employers work in small and medium-sized enterprises (SME) which employed mostly not more than 500 employees in total (due to the definition indicators of SME's). Therefore these companies created most of the annually new jobs which saves the growth of the U.S. import and export business. An equal characteristic which is not only a phenomenon in the U.S. is the lower wages paying in SME's. Therefore employees who want to be promoted and receive a higher wage must primarily take their focus on bigger companies.

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1,2,3 http://www.eiro.eurofund.eu.int, EIROnline, called on 09. Apr 2010

4,5 Budd, J. , Labour Relations, 3rd ed., Boston, 2010

This is important for employment relations because if this will proceed there will be an inequality and a gap in the U.S. population regarding the intermediate layer which will obviously fade away. More employers will become dissatisfied and will enter trade unions. They will be supported by many goal-oriented and well educated members. This powerful situation of unions serves as one major core characteristic of U.S. employment system.

In summary the U.S. employment relation system generally consists of several basic employment rights which are heavily protected by law. The right of free speech, handing in petitions to the government and the possibility of indemnity of damages in case of nuisance are protected privileges due to labor laws. The underlying acts are the Wagner Act (defining fairness criteria for labor relations for instance avoiding discrimination in order to protect employees), Landrum-Griffin Act and the Taft Hartley Act6. Anymore a controlling organ exist named National Labour Relation Board (NLRB) which controls e.g. the protected right for conventions. Apart from that union independence is still an important issue. Unions have the right to bargain build on right to work law in several U.S. states7. This hinders non-unions members to receive a separately agreement and therefore weakens the non-unions members position. Finally the unions have the right to bargain. Denying this by management harms the contemporary law. After finding an agreement between workers and management it is unusual to extract special deals to other industries or companies in the same way. In case of conflict governmental organizations normally set up a mediator for a third party objective solution finding. The U.S. employment system offers this solution as well but opposed to other countries it is not mandatory for the participants. Unions are often certified and the leaders were elected by an official voting controlled by NLRB delegates. Concerning strike regulations a further hallmark of the U.S. employment relation systems is a rule which hinders the employees to strike (''no strike rule''). In return to these behavior managers often supports some wishes of the unions. But a major pitfall could be possible because unions sometimes had to pay for financial damages which happened due to the long duration of strikes.


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6 Hogler, R. (2004). Employment relations in the United States: Law, Policies and Practices, p.30

7 Hogler, R. (2004). Employment relations in the United States: Law, Policies and Practices, p.40 ff.

Surely employers have the right in contradiction to many other European countries to replace worker which are consequently strikes for e.g. higher wages without any permission of the NLRB. This seems pretty unfair for the worker but for this case the Unfair Labour Practices (ULP) exists in the U.S law. Examples for these kind of ULP's are vengeance for any kinds of worker misbehavior or discrimination for attitude towards union topics which where not in line with the union majority.

Existing systems of collective bargaining and their development since the 1980s

It is first important to point out which purpose collective bargaining commonly has. The main purpose and aim is evolving new ideas and thoughts for both involved parties8. Furthermore the U.S. collective bargaining systems basically based on the bargaining power of the trade unions and their form can be well explained by the different size of companies. In small enterprises (less than 500 employees) the bargained contracts were made on an individual base between employer and employees. The decision ways were shorter than in huge companies and therefore a quicker result can be achieved by both parties. Another important characteristic is the duration of bargaining outcomes which mostly extract one year due to the fact that some additional contract clauses exist. Therefore a disruption of such clauses is nearly impossible for both parties. As mentioned before the position of trade unions includes the application of bargaining action with employers. For problem solving in these interdependency often arbitrators or mediators where used. The overall limitations for trade unions are limited to the negotiation process and the observation of bargaining fulfilling. The collective bargaining evolution in the U.S. started in the late 1980s with an emphasis on power. In this time an inequality exists between labour unions and management. Not every industrial sector has the same contracts concerning their bargaining activities outcomes. They exist in several business sectors for instance in the trucking division or in janitorial services.


8 Bean, R. (1994). Comparative Industrial Relations, 2nd ed., p. 1 f.

Currently no or only partly major contracts exist in the largest U.S. business sector the hotel and tourism business where unions recently spent their main efforts only on big companies with a special amount of employees. In 1993 the average wage spent by an employer equals $ 21.85 for a union member in comparison to $ 15.76 for a non union member9. This pretty obvious leads the employer to guide their employees to deny when union wants them to sign in regarding saving costs and gain more revenues.

Source: US Department of Labor, Bureau of Labor Statistics, 2000-2006


9 Kyokai, N.R. (2002), Migration and the labour market in Asia:recent trends and policies, Japan Institute of Labour, Tokyo, p.25 ff.

In this time the management had greater power and was superior due to employers. This was often mentioned by HR specialists a starting point of the readjustment of the U.S. labour law. But in this time a major characteristic is still the superior position of management when getting in touch with union negotiations. The U.S. union density in this times lies between 13-18 % which is quiet low in comparison to e.g. Sweden (90 %). The bargaining coverage equals roughly 20 % which is quite low in comparison and contradictory to the claimed U.S. position in worldwide business evolution. The late 1990s and the early 2000s were characterised by a significant decrease of collective agreements. The wages and additional benefits decreased significantly of roughly 20 %. Other important topics were taken into consideration by unions like long-term job security and increasing necessary team work aspects. This occurs certainly to unions and employees dissatisfaction concerning financial security and promotion possibilities in this field. For preventing collective problems like strike employers evolved new paying systems to strengthen their position towards the unions. Additionally they created union conglomerates while they bargained for high efficient outcomes which count for as much employees as possible. This had an outstanding appearance cause; unions wanted to show their bargaining power with huge amount of members. Here it is important to distinguish between manufacturing and non-manufacturing industries. At this times Manufacturing industries where the business sector where not entire but single union units bargained solely for better contract conditions. This stood in contradiction to the non-manufacturing business. But the state policy and law regulations had a major influence in this time. It prevented the single union members to get organised in strong units. It is important to emphasize the important role of the U.S. collective bargaining system for the evolution and the perpetuity of other national labour systems. With a labour force of 142 million10 it is obvious which such big influence the ups and downs of the U.S. system could have on other systems which are dependent of U.S. product and manpower output


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10 Bamber,G., Russell, D., International & comparative employment relations, p.67

Furthermore the roof of the U.S. collective bargaining system lies in the compositions of Frederick W. Taylor founded around 190011. These scientific management (''Taylorism'') set pretty clear work characteristics and circumstances and conducted the goodness of fit between work and people. Later these compositions became an important influence on European models. When NAFTA (North Atlantic Free Trade Association) reject trade barriers with embargos the U.S. unions were also weaken due to the low payments in e.g. Guatemala and Mexico. But this was supported by the former president Clinton and so unions receive several problems due to too many workers on the market. Since this point and very dominant in the late 1990 the unions were weakened due to the position of capitalism oriented employers which were seen as superior in the entire business community. Reengineering processes and job losses made people unsure about their future. They were not as strong as required when they are organized in small chapters over the whole U.S. Therefore they decided to centralize their power for boosting up their collective bargaining position towards the capitalists. This decentralization was recently one of their main problems for their low density. In regard to reactions of employer's behavior in collective bargaining processes they evolved in this late 90's one main weapon to fight against repression, the strike when quitting their work effort.

The last point to mention and quite the most important one is the relationship between unions and politics concerning collective bargaining activities. Originally they had a few activities in these field, they appeared in comparison to normal clubs with punishing and rewarding activities concerning misbehavior or efforts of their members. But with the time they recognized the enormous possibilities of organizations like the American Federation of Labor-Congress of Industrial Organization's (AFL-CIO) or Committee on Political Education (COPE) which had with their donations an influence on political topics and finally fits rather good with union's targets11. Up to now it can be observed that unions became bigger concerning their active members and their influence on politics. Accompanied with several union mergers since the 1980s the position became such more influential and contemporary U.S. election campaigns in these times could not be successful without union support.


11 Ruysseveldt, J.v., Harzing, A.W. (2004), International Human Resource Management, California, p.136 ff.

12 Bamber,G., Russell, D., International & comparative employment relations, p.71

Recent trends in the U.S. employment system and lately issues in the U.S. national human resource system

Occasionally the U.S. system were widely criticized for his ''hire and fire'' mentality which in one characteristic phenomenon in the U.S. employment system. People can be replaced very quickly when they do not fulfil their jobs in a sufficient way. This could and happens regularly very easy in jobs where no high-skilled workers were required. But in recent times it happens as well on the top management level where it is more difficult to find a suitable candidate as a successor. This leads potential candidates for this kind of jobs to an avoiding behaviour with high content of distrust in new employers. Reinforced by the financial crisis there is a current inequality between jobs which requires high-skilled workers and the wages. But candidates must receive job offers with low wages due to their entire family needs where mostly only one person fosters the entire family with their wage. But on the other hand there is and will prospective be an oversupply of low pay jobs for low-skilled people. Currently companies reduce their fresh engagements until a recreation of the worldwide business environment will take place. Therefore most low-skilled people remain unemployed and will become a welfare case. This shows the contemporary situation of political parties which must be very diligent and familiar with their political actions in this important field.

This importance of job protection is one major recent trend and should illustrate the current major focus of U.S. political parties on topics like entire health insurance or boosting up the whole industry with governmental support.

Nevertheless other recent trends play a major role in the future of U.S. employment relation system as well. The amount of workers originally born and grown up in the U.S. equals 88 % in 200213. This shows pretty obvious the independence of the system due to non domestic employers. Furthermore the amount of female workers climbed up constantly for thirty years up to now. These women were well educated and would work hard if the receive a chance to show their ability to perform in their jobs.


13 Kyokai, N.R., Migration and the labour market in Asia:recent trends and policies, p.20

The average age of typical U.S. employers is another aspect to consider. Recently the average U.S. worker decreased up to 37 years since the 1960s where it was 40 years14. But another phenomenon shows more overt the evolution since 2008. The workforce was formerly essentially one ethnic group, the whites with a power of 115 million. The second group were the blacks with 16 million registered employees. These circumstances changed dramatically in the recent three years. Up to now there were several other ethnical groups which are working official and nonofficial in the different business sectors. Especially the Hispanics were more present du toe a lack of adequate work in their home countries. Their number increased in 2009 from 14 million to 20 million15. This brought the U.S. employment system into massive problems concerning the dissatisfaction of the white inhabitants. This conflict between blacks and whites, the ethnic riots, based on conflicts due to the establishment of the U.S in 1776 when they became independent from Great Britain. The overall outcomes were strikes and a huge union inflow which fought for the rights of the white inhabitants. The dissatisfaction of many of these lobby groups mixed with insecurity about future developments is one major problem in the U.S. employment system. On the other side employers could possibly apply for working permission for workers which must not have them. They receive spurious support from the government for this committed fraud. Finally this could seem to be an offense for white workers which have the correct permission to work in such companies but not required due to companies behaviour. Certainly not only a U.S. problem but recently appearing very often during the Obama political regency was the problem of inequality between growing industries without having highly skilled workers. These persons must be provided by international negotiators which were very costly and increased the problems with the domestic lobby groups which denied this kind of action. On the other side shortage of work in several business sectors is a problem too. More employees must fulfil the same or more amount of work within a give time. If they fail, the companies stuck into problems and will probably quit their business for the last consequences. This leads us to one major issue to be deeper discussed in this essay. Should the government install a law that contents a minimum wage covering all different business sectors? This is a contemporary problem for many employment relation systems worldwide but especially for the U.S. formerly one of the biggest economies in the entire world.


14, 15 Kyokai, N.R., Migration and the labour market in Asia:recent trends and policies,p.20

Therefore different opinions about this topic exist and should be distinguished and observed very carefully. What is more important for the U.S. employment system perpetuity, the social security given when minimum wages would possibly be introduced or a higher amount of different jobs which also protects the growth and therefore the competitive ability due to worldwide trade? Surveys and investigators questioned this as well and could not come to a common solution16. On the one hand the advantage of minimum wages consists of more satisfaction between employees and make jobs more comparable. The workers can be sure that they are equally paid apart from their current job also when they changed their workplace. It also has company internal advantages. Bullying could be avoided therefore the work environment will be harmonized. Additionally normal worker feel well treated and encourages their work power. Inequalities between non high-skilled workers would be avoided because the wages for special jobs were equal. Everybody with comparable education would be on the same social level and nobody have causes to complain. This obviously could work against the perceived mentality of hiring and firing in many U.S. companies which finally leads to insecurity and desperateness among the employees. Confederations of employers often argue for the minimum wages because a worker must have the chance to satisfy his own needs for instance protect their families. Obviously Confederations of companies deny to minimum wages with the argumentation of short-term survive of established jobs. Anymore prior surveys and investigations pointed out that in several European countries the minimum wages did not have a negative influence on such causes which were mentioned before. It is important to distinguish here between low qualified workers and high qualified workers. This gap often mentioned against the minimum wages due to the lower work opportunities of low qualified workers. Nevertheless the investigations showed no connection between the degrees of qualification because the unemployment rate decreased since four years and in times of the financial crisis significantly. At this point the behavior of low-skilled workers and their attitude to work opportunities must be stated. Most of them often accept their situation with low financial support and would not like to work. Therefore the minimum wages would not play a major role. Another positive effect of minimum wages is the restriction of price fight. Companies and their competitors were instructed to pay a fair wage otherwise would change their workplace.


16 Kyokai, N.R., Migration and the labour market in Asia:recent trends and policies, p.22

This is a phenomenon which can be observed currently in the U.S. employment system. Due to the recent election politicians argued for fair wages within fair jobs and additional benefits like health insurance for everybody17. The current situation is rather bad due to a lack of medical support for handicapped worker. But in 2009 and 2010 the first U.S. business sectors changed their mind and support the minimum wages like in the building and construction industry or the hospitality industry with their temporary workers. They stated that consumer services are strongly connected with people and these services cannot be removed to low wages country like the Ukraine or Mexico. An additional value provided by paying minimum wages in the U.S. is the increasing buying power of each employee. According to this the market demand increases as well and this finally leads companies to create new working places. Many observers argued that appears very easily in the theoretical approach but has many pitfalls in the practical implementation.

In contradiction to this several advantages of paying minimum wages different disadvantages appears as well. Paying these kinds of wages significantly increases the additional costs of jobs when they were created. According to this creating new workplaces lead to harm existing jobs. This appears very obvious in the U.S. because many former big business players like the bank Freddie Mac or Funny May had not survived if the would not been rescued by the government. They grew too much and with this strategy their way went directly into insolvency concerning their not sufficiently calculated costs e.g. for HR support. Moreover the U.S. employment relations have a huge problem concerning clandestine employment. U.S. firms have to move their current workplaces to lower wages paying countries where HR costs are not so high. They need the money to invest. But due to the migration from South America this problem exists currently. In this argumentation it is necessary to protect the employment relations from this minimum wages paying otherwise the migration problem will be enforced. Finally minimum wages advocates a huge amount of bureaucracy on companies and government sides. For this additional work, ensuring high standards and controlling them many support by employees must be given and surely adequately paid. This is a major U.S. problem. Normally contracts were made between employers and employees.


17 Cutcher-Gershenfeld, J. Kochan, T. Ferguson, J.P., Barrett, B. , Collective bargaining in the 21st century: A negotiations institution at risk, in Negotiation Journal, July 2007, pp.249-265

Due to this regulations set by the government the companies were restricted concerning their strategy. Therefore they will wait with the process of hiring new employees. This decreased satisfaction among workers and changes their work attitude and lately the government must pay for these people.

Before talking about minimum wages it is important to mention the strict migration policy of the U.S. government. Mostly only time limited working permission were given and additionally high-skilled people must apply for a green card (several types of green cards exist) for a permanent stay and working permission18. This obstacle often avoids specialists to immigrate into the U.S. and support the employment system. Especially the U.S. computer industry with worldwide players like Microsoft or Apple required regularly inflow of high skilled workers. Many foreign U.S. experts immigrated in the 1990s as students from Japan and China and helped the system to increase their productivity and strongness 19. Therefore the only chance for recreation of the U.S. employment system is an earlier focusing on education of different experts coming from the entire world. Limiting migration of low-skilled workers must be a target as well otherwise this strategy will automatically more fail.

Summarizing all mentioned aspects of the U.S. employment system it is obvious that it is more weak compared to the 1990s. Politicians must foster a step by step recreation of the employment system with covering and protecting all levels of workers e.g. with health support and additional benefits. This requires a massive cut in other political fields but this will finally support the recreation of the whole system. Minimum wages should be taken into consideration as an aim in roughly five years after protecting current workplaces. Everybody must contribute his part to the entire system and the government must release the law restrictions in the field of company's own ideas and strategies but also strengthen the current confusing migration process. This will help the U.S system to boost up their economic power and become one of the world's biggest economies once again.


18 Cutcher-Gershenfeld, J. Kochan, T. Ferguson, J.P., Barrett, B. , Collective bargaining in the 21st century: A negotiations institution at risk, in Negotiation Journal, July 2007, pp.249-265

19 Kyokai, N., Migration and the labour market in Asia:recent trends and policies, p.25 f.