Wage Determination in Perfect and Imperfect Markets

In most cases, bargaining agreements governs wages, benefits, and the working conditions for the union coalition employees. The agreements also set common goals and ground rules for the employee 's and management. When management and labor employees have a difficulty coming into agreements, the bargaining process breaks down. To bring difficult negotiations to an end, unions may possibly decide to strike.

Collective bargaining, as its name implies, is achieved when two or more parties come together to make a decision about something. Specifically, it is achieved when employers and a group of employees work together to decide important terms and conditions regarding employment. These terms and conditions include compensation as well as rights and responsibilities of employees, employers, and unions. They can also include guidelines for resolving problems such as grievances and disputes (Budd, 2010, p. 13).

“By increasing the cost of labor, they reduce the demand for it.” (Zwolinski 6) Businesses could suffer from the wage increase because the expectations of skill from their employees will be much higher. Most people who are unemployed are concerned that the jobs they could once apply for will no longer be an option for work because they are underprivileged. “When jobs are scarce, then immigrants, workers with few skills or little education, and those with limited Englsih proficiency are going to have a harder time convincing employers that their labor is worth $15 an hour then their better-skilled, native, English-speaking competitors.” (Zwolinksi 5) The underprivileged make up a large part of the current employment in businesses.

According to the National Employment Law Project (NELP), one benefit an increased wage would bring would be an improvement in overall productivity resulting in a reduced turnover rate for the company (NELP, n.d.). It makes an employee want to come to work and perform at an optimal level if they are being paid well. Basically, the more we are paid, the better we want to perform and the more we will show up for work. Job satisfaction plays a huge role in an employee’s willingness to commit to a company. If we are satisfied with our employer and the pay, chances are we are going to remain with that employer. That is why this would ultimately reduce the employee turnover rates of companies. Good pay is an extremely important factor in job satisfaction. Some

Increasing the wage for all employees will cost a lot of money for employers. Business will be faced with two decisions, either “raise their prices”, or “simply cut employees or reduce benefits” (Williams). If they choose to raise up prices, then there will be no benefit for the increase of wage. Employees will get an increase in wage, but so is prices of almost everything. And if businesses choose to cut employees and benefits, then the number of unemployment could possibly arise, and the benefits such as paid vacations and PTO, can be easily get demolished.

Unions will justify that if the company is doing well they can afford to compensate employees by sharing the profits since it was obtained by the greater productivity achieved because of their efforts. However, management will prefer to invest the profits within the company as capital. If the company is going through a hardship the union can still demand higher wages and the company can freeze wages.

The conflict to make sure your business continues to grow and provide positive revenue while providing a fair wage to your employees begins with the desire to become wealthy. Retaining the majority of the profits while providing minimal wages to your employees typically results in high employment turnover and unhappy employees. On the other hand, if you were to pay your employees more than your revenue allows remaining profitable the business will likely

Trade unions can be very powerful organisations, however their power does not inevitably lead to increases in wage rates, but not always.

Being part of a union gives members the benefit of negotiating with their employer collectively, as part of a group; giving them more power than if they were to negotiate as individuals (Silverman, n.d.). Overall, unions demand fairness which can lead to the unions influencing and changing ‘managerial decision-making at the workplace level’ for decisions in which employees are affected (Verma 2005). Unions are also beneficial to have present in the workplace because their bargaining of better condition will often benefit non-members as the conditions negotiated with management are implemented across the organization with no regard to membership status. Management is also able to avoid union disagreement by benchmarking conditions to that of an already unionized workplace.

The role of management and unions in society today is to protect the employee. The management team needs to make sure she/he is treating the employee fairly, needs to provide a good work environment. If management fails to do a good job and the employee feels discriminated, treated unfairly, feels discontent for different reason, management does not want the union to get involved, they feel respect for unions and will do whatever it takes to make their team happy. This is why so many companies have employee parties, employee recognitions, etc.

Simply put resting at a conclusion after a negotiation may not necessarily be the ideal outcome unless cooperative is achieved by both parties. Bargaining in general could involve parents, friends, teachers, spouses, employers, and so on (Anderson, 2013). Likewise companies also negotiation contracts with one another or individuals involved within the companies.

Though, unions are declining, the role of union have evolved over time. Now, it is more common to view unions’ primary role as collective bargaining, which is the product of the economic decision and making process with unionism of the private sector. A long time ago, Union was seen as the shield that protects American workers against some of the abusive employers. Many public sector employees have unionized. However, the National Labor Relations Act was designed for the private sector. Despite that, union has become a model for most public sector collective bargaining right. Regardless of the success that Unions have with collective bargaining in the private sector, there are still a few who are opposed collective bargaining in the public sector. Of course, there are some differences between the public and private sectors.

This would not only be advantageous for the employer but also the employee since it would result in higher wages. Due to this, the worker’s level of motivation and drive to do better would escalate leading to overall productivity of the organization (Salimath and Jones, 2011, p.88).

Collective bargaining is the process by which conditions of employment are negotiated between management, and the labor organization representing employees in the bargaining unit. However, “collective bargaining refers to a situation in which union members and officials meet with an intent to resolve any issues or conflicts, in an attempt to maintain relationships” (Holley, Jennings, & Wolters, 2012, p. 243). The collective bargaining process relies on four aspects: recognition of the meeting, meeting with appropriate parties, bargaining in good faith, and incorporating the reached agreement (Adam, 1997). Nevertheless, collective bargaining activities are governed by the National Labor Relations Act (NLRA). The NLRA requires bargaining

In this topic we talk about many different forms of leadership and how it can affect relations between the corporate leadership entities and union leadership. Most often we see or read about in the news the break down between negotiations between the corporate leaders and the union leaders causing production to come to a halt while items are being negotiated.