G202 Topic 10

Wagner Act

Established National Labor Relations Board and rights of workers to organize and required employers to bargain in good faith

Taft-Hartley Act (1947)

Prohibited unions from coercing workers to join and allowed states to pass right-to-work laws.

Landrum-Griffin Act (1959)

Strengthened worker democracy within unions and required fairness, transparency, and no corruption in union governance

Health Care Amendments to Wagner Act (1974)

Extended right of workers to unionize to nonprofit healthcare facilities, which is now the most unionized sector in the economy.

How does a monopsonist employer decide how many workers to hire?

A monopsonist hires workers where marginal revenue product of labor (MRP) = marginal labor cost (MLC), which is higher than the wage paid.

How does a competitive employer decide how many workers to hire?

A competitive employer hires workers where MRP = wage, because they can hire as many workers at the market wage as they want.

What is the marginal revenue product of labor (MRP)?

MRP=P×MPL​, where P = output price, MP_L = marginal product of labor.

How do you calculate the monopsonist’s wage and quantity hired using a table?

1. Calculate MRP for each level of labor.

2. Calculate MLC (marginal cost of labor) for monopsonist; in competitive market, MLC = wage.

3. Hire workers where MRP = MLC (monopsony) or MRP = wage (competitive).

4. Wage paid = wage on labor supply curve corresponding to the quantity hired (monopsony) or market wage (competitive).

How to find MCL

MCL = Change in Total Labor Cost/Change in labor

What is the “game of chicken” in labor relations?

Theory predicts that one party initiates negotiation before a business stoppage occurs. Both parties have an incentive to signal unflexible resilience, but one will ultimately flinch.

What are the 2 Nash equilibria in a game of “chicken” between unions and firms?

1. [Firm Negotiates, Union Strikes]

2. [Firm Locks Out, Union Negotiates]
   

What market conditions suggest Starbucks was a monopsonist employer?

• Dominant market size and influence

• Ability to Withhold Benefits Based on Union Status

• Perceived Superiority in Compensation and Benefits

• Historical Characteristics of the Food and Beverage Industry (high turnover, only required entry-level experience)

What factors fueled unionization among Starbucks employees?

• Mainly: Staffing and training issues

• Erosion of progressive image yet having a progressive workforce

• Workers sought better working conditions, fair wages, and more consistent scheduling

• More equity and justice in the workplace with regard to LGBTQIA+, gender, and race issues