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U.S. Department of Labor Futurework
  Trends and Challenges for Work in the 21st Century
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Changing employment relationships and the shape of labor market institutions to come…

Reframing Institutions of Representation

bullet New Institutions: A Mix of Challenge and Opportunity
bullet What Employees Want: Greater Voice and Responsibility
bullet The Shifting Social Contract: Promises and Limitations
bullet Where Do We Go From Here? Observations and New Directions

Many agree that the system of labor market institutions set in motion by the New Deal has eroded along at least three dimensions: the disappearance of well-defined career paths; the persistent inequality in wages and the shift in how firms set wages; and the dwindling or dismantling of mechanisms for employee voice. “What will replace the traditional system of employee representation?” asks Paul Osterman of MIT’s Institute for Work and Employment Research (IWER). The answers, he believes, can be gained by looking at nascent local-level institutions that are already responding to economic changes. “Once we fully understand the array of innovative labor market institutions emerging, then government, industry, labor, community representatives, and other constituencies can take more proactive steps to actually shape what emerges,” he said.

“At the moment, what the ultimate institutional structure of the labor market as a whole will be is unclear,” says Osterman. “The important point is that, to some extent, we do have choices in shaping what the American labor market will look like in the future.” To begin such a discussion, the Task Force joined with the U.S. Department of Labor (DOL) and its Workplace/Workforce of the Future project to host the “Symposium on Changing Employment Relations and New Institutions of Representation” in May of 1999.

The Symposium was designed to foster an open discussion of some very controversial issues among leaders from business, labor, community, and academic groups. The goal was to explore ways of reframing longstanding debates over the legal rights of workers to organize; the forms of representation that should be allowed and encouraged; the strategies unions and other groups use to recruit, organize, and represent workers; and the roles employers play in these processes. Rather than obscure differences among the constituencies represented—or search for superficial compromise and consensus on minor issues—the Task Force sought to foster a frank and honest exchange of views in an open discussion of alternatives that do not reflect the positions that parties in prior debates have endorsed.

For the DOL, the effort served to complement Secretary of Labor Alexis Herman’s efforts to both understand the changes taking place in the workforce and determine how policy might respond to those changes—perhaps ahead of the curve. “We understand that we can’t predict the future,” said Richard McGahey, Assistant Secretary for Pension and Welfare Benefits at the DOL. “But it is necessary to examine broadly from a variety of perspectives where these trends might be leading us. Our hope is primarily to promote dialogue by focusing on broader policy issues, rather than on specific pieces of legislation.”

New Institutions: A Mix of Challenge and Opportunity

Informing the development of new institutions of employee representation requires a coordinated and comprehensive focus on the changing role of the corporation, the changing social contract at work, as well as innovations emerging in union strategies, community organizations, and other groups that are outside of the labor movement. It also necessitates an acknowledgment that, in a transforming economy, not all of the previous forms and functions of institutions will continue to be appropriate. “There are reasons why the old structure is crumbling,” explains Osterman. “The changing structure of competition, on the one hand, and changing technology and ideas about how to organize institutions and firms, on the other, have become real forces influencing the functioning of the labor market.”

Reframing Institutions of Representation

According to Osterman, these forces have raised two issues—whether perceived as challenges or opportunities—that new labor market structures must confront. First, a higher rate of mobility among workers and increased turnover in certain industries have led to a reduction in employment security, requiring the establishment of a new set of institutions to support this mobility by, among other things, providing information on job opportunities, access to life-long learning and skill enhancement, and portable pensions, health care, and other benefits. These trends have also launched discussions of how the social contract at work—defined in previous Task Force meetings as the broad expectations and obligations members of society hold for work and employment relationships—has changed (Blueprint, April, 1999, Vol. 2, No. 1). Second, an adverse shift in the balance of power with respect to workers—in particular, the erosion of union membership—requires new or transformed mechanisms of representation.

What Employees Want: Greater Voice and Responsibility

From the perspective of the employee, what shapes might these new forms of representation take? On many issues, current employee preferences are relatively unchanged from those of the 1970s. For example, surveys as far back as the 1976 Quality of Employment Survey conducted for the Department of Labor up through comparable national surveys in recent years consistently report that:

  • Between 30 to 45 percent of nonunion workers indicate that they would join a union if afforded the opportunity;
  • Roughly 90 percent of union members would vote to keep their unions;
  • Between 70 and 90 percent report that they want to have a say in how their work is performed and organized; and
  • A majority of workers want greater influence on decisions around benefits, wages, and training.

In more recent surveys, two additional issues have surfaced. First, concern for achieving a better balance between work and family responsibilities now rates as a high priority for workers, reflecting the increased number of hours working parents are supplying to the paid labor force. Unfortunately, data that can track this trend historically are not available, since similar questions were not frequently asked in prior decades.

Second, in a survey administered by Joel Rogers and Richard Freeman in 1994, employees expressed a new concern over voice and representation. “As Freeman and Rogers have found, employees are saying that they want more voice,” explained Thomas Kochan of IWER. “They have a strong preference for labor-management committees and joint activities and are looking for ways to resolve disputes with their employer through forms of representation that give them more control and more say. Workers express that they want more decentralized and varied options for workplace representation/organization and they expect their employers to cooperate with these processes.”

In fact, worker responses point to a demand for both a mix of new forms of organization and an extension of current labor representation. “Not only are preferences varied,” said Kochan, “workers do not see the variation as substitutes or mutually exclusive alternatives. They want to see complementary institutions—unions and collective bargaining complemented with direct participation at the workplace and with other forms of representation.”

The Shifting Social Contract: Promises and Limitations

Employees clearly know what they want—but what are they, in fact, getting? What do employers require from their workforces in order to compete in today’s market? To address these questions, participants revisited a discussion initiated at earlier meetings on the various ways in which companies, unions, and workers have attempted to rebuild a social contract at work that is responsive to the expectations and needs each party brings to the employment relationship. What became most evident was the significant variation in the terms of these social contracts.

Firms such as Saturn, with its formal co-management arrangements, United Airlines with employee ownership and representation on the company’s board, and Xerox, with the management-UNITE partnership and employee involvement, sit at one end of the spectrum. At the other are employers with implicit contracts, such as Eastman Kodak, a company with a long history of “paternalistic” commitment to its workers and the Rochester, NY, community that was forced to resort to downsizings and layoffs in recent years. Kodak’s current pledge to its employees is to provide them with open and honest information on their future job prospects, access to learning and training opportunities to keep their skills current, and labor market adjustment assistance if reductions are needed in the future.

Somewhere in the middle is Lucent Technologies, which is building on AT&T’s legacy but recreating its own approach to human resources to fit a highly competitive and rapidly shifting technology industry. Lucent stresses the establishment of a culture of innovation and the recruitment of knowledge workers, while simultaneously negotiating a new relationship with its 48,000 unionized manufacturing employees who face constant outsourcing threats.

From the perspective of the employer, the definition of a new social contract cannot ignore the realities of the market. As Ralph Craviso of Lucent explained, “There are two forces redefining the social contract. One is the changing business model, which is a response to technology and competition. The other is a response to the marketplace for labor.” According to Craviso, where corporations are defining their compensation and benefits packages, it is in order to adjust to the labor market—particularly to the competition for highly skilled professionals who want 401k or other types of mobile pension plans and stock options that allow them to share immediately in the gains they help produce. In this context, the labor-management environment requires both parties to recognize that the expectations of this segment of the labor force have changed. New company start-ups have an advantage here because they can tailor staffing and compensation policies to fit these demands without grappling with the equity issues that such changes raise among incumbent workers. Clearly, the rules of competition in both product and labor markets have changed, and business must respond accordingly.

Yet, from the perspective of labor, the constancy of change does not invalidate the role of worker voice in responding to it. “Workers are entitled to some reciprocity, some kind of contract, some kind of mutual understanding,” said Lynn Williams, formerly of the United Steelworkers. “We require new governance structures in a new social contract that is consistent with the changing times.” According to Nancy Mills of the AFL-CIO, the change in the role of workers and their representatives within firms and the increasing value of human capital in contributing to a firm’s success constitute a legitimate claim to such reciprocity. “There is change in both directions,” she explained. “Unions and workers are no longer simply reacting to management decisions, but are directly or indirectly contributing to business strategy and performance through online teams and shared decision-making processes, and various offline participation and problem-solving groups. If employers want workers to make a major contribution, then they need to think about social contracts that establish some kind of obligation to those workers.”

The variation inherent in the contracts themselves and in the outcomes for workers and firms reinforces the notion that there is no “best practice” or “single bullet” to guide the formation of new social contracts that serve both employee and employer interests. A range of settings and conditions in an equally varied number of industries requires a range of options. There are, however, common themes emerging from these cases that do inform the establishment of new social agreements:

bullet Firm-level institutions need to engage the parties where the real power lies—at strategic levels of decision-making. The “old” social contract was enforced by a notion of corporate citizenship that evolved out of the countervailing power exercised through collective bargaining. To rebuild a viable social contract within specific firms today requires engaging more directly in discussions of strategic decisions made at the highest levels of the firm. As Lynn Williams put it: “The problem is we don’t have enough of these types of arrangements. It’s not so much that the ones we have aren’t working, it’s that not enough people and companies have them.”

bullet Yet, firm-level arrangements aren’t enough. The most important theme is the recognition that, given the uncertainty in today’s markets, the rebuilding of social contracts must go beyond the boundaries of any single firm or employment relationship. As Richard Locke from IWER noted, “The enterprise as an entity is fundamentally unstable.” Labor market intermediaries, unions, community groups, and government agencies that support mobility and help coordinate the efforts of single employers will be increasingly important players in this process in the future.

Where Do We Go From Here? Observations and New Directions

“Fundamentally, the social contracts even at leading firms—those we would otherwise consider to be ‘enlightened employers’—either don’t seem to be working well or aren’t working for all employees,” said Locke. If exemplary employers cannot achieve a social contract that equals employer commitments of the past, the question is: Who can, and how?

Part of the challenge in resolving which terms of the social contract are appropriate for today’s labor market and in creating or updating institutions of representation lies in the need to reframe the debate itself. “It’s going to take a great deal of effort to make progress and overcome some of the historical difficulties in this perennial conversation,” said Kochan. “We are only taking the first steps here in laying out a framework for labor market institutions, policies, and practices that engage the American public, labor leaders, business leaders, community organizers, and government officials.”

One of those first steps is to explore the new models of institutions of representation—both union and nonunion—that have emerged. The features of these models were presented at the Symposium, and overviews of their initiatives are reported on in this issue of Blueprint. In sum, they demonstrate that today’s labor movement is engaged in broad-scale experimentation, having recruited a talented and committed set of new leaders who are working at the community, local union, and national levels. Along with greater reception to new ideas has arisen an openness to forming coalitions with other groups, ranging from researchers to religious leaders to business leaders, all of whom recognize the need for new approaches.

However, considerable controversy remains on many points, such as how to interpret and respond to workplace-based participation processes and how to achieve sufficient power within the workforce for producing substantial change or for overcoming employer opposition in the absence of collective bargaining rights, contracts, or leverage. Although the Symposium was not intended to resolve these debates, it did yield several observations that might point the dialogue in new directions—or perhaps prevent it from traveling down unproductive paths:

1. Ground worker representation in a clear set of values. Institutions for worker representation should serve both instrumental and moral functions. A number of participants emphasized the importance of building institutions that promote democracy, celebrate and enhance the dignity of work and workers, and build community and solidarity across the diversity now present in the labor force. Absent a strong moral foundation and a positive reason to participate, no worker institution is likely to attract a broad following or maintain a sustainable position in society.

2. Join issues around work and family. Any new social contract must be rooted in a commonly shared and deeply held set of values about expectations for the balancing of work and family life. Given the increased number of hours that multiple household members are now working, the potential for work to detrimentally affect family life is an overwhelming concern. “We must think about the core values that we want to achieve in both spheres such as dignity, fairness, and flexibility,” said Kochan, “and build a set of workplace policies and institutions that enable them.” Bringing the concerns of working parents into this discussion may help to reframe the debate and add a new set of powerful and broadly representative voices to the process.

3. The more models, the better. As there is no single model of change in employment relations or arrangements, a variety of new or updated forms of representation will be required to fill the institutional gap. Inside the enterprise, a multitude of innovations around collective bargaining, employee voice and participation, and involvement in strategic decision-making are required. Since the firm’s boundaries are no longer stable, institutions that cut across the employment relationship—particularly those able to provide labor market and life-long educational services as well as portable health care, pensions, and other benefits—are also necessary.

4. Expand the representation vocabulary. “Some of the definitions we use are real barriers to having the type of conversation needed to take us beyond the labor-management impasse,” said Dorothy Sue Cobble of Rutgers University. To avoid the traps of well-worn positions, new words must be found and new definitions must be applied to the terms used regarding worker representation before new relationships and creative solutions can be achieved. A starting point may be to think about how innovations within the labor movement, among community groups, and at the workplace can complement each other, rather than seeing them as competing alternatives or substitutes.

5.Workers should have the right to choose. As Ron Blackwell of the AFL-CIO said, “There should be agreement on one basic principle: should be the ones to decide whether or not and how to be represented. Unless this principle is honored both in law and practice, no form or forms of representation can succeed.”

6. Policy should be designed with variations in mind. Given the range of worker preferences and employment settings, public policies must be flexible enough to cope with this variability, rather than assuming a single type of employment relationship. McGahey expressed the dilemma this context poses for policymaking: “How can we think about a regulatory framework that encompasses both the talented worker who commands high salaries and benefits in tight markets and others with fewer skills and alternatives working at firms that are shedding their obligations to workers whenever possible?”

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