The Power Of Labor And Management

1639 WordsFeb 23, 20177 Pages
The bargaining power that labor and management hold is impacted by both total and relative power. In particular, the total power of labor and management is influenced by the competitiveness of the banking market and the state of the economy. The First National Bank (FNB) is the oldest and largest commercial bank in the Lake city community. In addition, it assets’ amount to twice the size of the 6 next largest commercial banks and in the last ten years, through mergers and acquisitions of smaller banks in the nearby community, it now has 17 offices. In a nutshell, as the largest financial institution in the area, FNB faces fewer competitors and therefore exerts market power. With the greater profits that the bank earns, there are more…show more content…
In order to determine this, I would need to know the state of the economy and in particular the level of unemployment. As mentioned above, Lake city’s economic climate is largely dependent on the auto plant. Therefore, the level of production at the auto plant and whether or not it can hire new workers or if it is laying off workers determines if workers are willing to risk their jobs. The economic climate would also impact the ability of family members and spouses to support striking employees. Furthermore, the bargaining power of labor could be diminished because worker’s demands for health care and an improved pension and profit-sharing plans will increase the labor costs for the bank even if wages remain the same. Therefore, the union’s bargaining power is subjective to the ratio of labor costs to total costs. If labor constitutes a large percentage of the bank’s overall costs, then a rise in benefits could result in decreased employment because of wage employment trade off. Increased benefits and job security at the auto plant increases competition in the labor market of Lake city. By providing benefits comparable to FNB, the auto plant positions its self as a substitute place of employment for the labor force in Lake City. While it might not be a perfect substitute because the two firms might require different skills, some workers who can make the move might be incentivized to switch employers. There have already been instances where younger
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