The hiring of permanent replacement workers during a labor dispute has been at the center of confrontations between labor unions and business owners. While labor unions argue that the National Labor Relations Act (NLRA) needs to abolish hiring of permanent replacement workers, business owners are of the view that the status quo should be maintained. As such, the argument for or against permanent replacement workers depends on what side one is.
One of the main advantages of hiring a permanent replacement is that it acts as a check to labor unions. If there was no right to hire permanent replacements, unions would have disproportionate power as they would tie employers to stop operations for the duration of the negotiations (Thsing & Balders, 2010). That would be a disadvantage to the employers because there is no law that sets a time limit within which a strike should take place. It may, therefore, lead to massive losses for the employers were if a dispute rages on for an extended period. As reiterated by the Supreme Court in the Mackay decision of 1938, employers have a legal leeway to ensure their operations are not disrupted for prolonged periods.
It also acts as a safeguard for fair labor practices since there have been instances in which an economic strike has been converted into one of unfair labor practices, which would legally prohibit the employer from hiring permanent replacements until the dispute has been resolved. Turning an economic strike into that of unfair labor practices would force the dispute to move to the National Labor Relations Board for resolution, a process that could take years (Thsing & Balders, 2010).
Hiring permanent replaces allows the employer to lower costs since these replacements often demand lower wages as compared to their unionized counterparts. Furthermore, it is more economically viable to hire permanent replacements as opposed to temporary replacements because of the training requirements, which are a cost to the employer, are higher for temporary replacements than those of permanent replacements. The NLRA also states that despite the right to engage in a strike, they cannot do so regardless of competition in the market within which the tire plant operates, thus giving the firm the legal basis to hire permanent replacements.
The disadvantage is that it gives employers undue bargaining power, as the unions will tend to give into the employers' demands to avoid the replacements. Failure to do so by the unions would lead to demoralization of the members who would view it as unfair to lose their jobs when exercising their right to strike. As a result, the employees may choose to leave the union leading to its death hence creating an environment in which the employer has the upper hand concerning workers' issues. If the union does not yield to the employers' threat of hiring permanent replacements, it may lead to prolonged strikes since the striking employees cannot be terminated and this may harm industrial relations contrary to the labor policy.
Breaking up the union would have several advantages to both the employer and the non-unionized workers. The merit for promotions and rewarding of hard work for unionized workers is often the period in which one has served. However, it is easier for the employer to reward non-unionized workers based on productivity irrespective of the period served. It also reduces the bureaucracy that employers face in hiring and firing staff, which can be quite prolonged for unionized staffs where the employer often has to show just cause for termination, but there is always the fear that the unions might retaliate even when the reason is justified. The same is not the case for non-unionized workers.
Despite the advantages that may be brought about by breaking up local 974 of the United Tire workers of America, there is a potential downside to it. Unions offer some form of job security to employees for the employer has to show just cause for terminating them. The job security allows them to express themselves freely, which might be advantageous to the employer as it may lead to new ideas. The unions' primary goal is to advocate for increased wages; in their absence, employers would not be under pressure to raise the wages of the non-unionized employees, which would not augur well for overall economic growth that is dependent on wage growth. The stagnant wages would also lower the morale of the employees hence their productivity leading to not just a decline in the overall economic growth but also in the firms' performance.
The absence of a union would increase the probability of the employees missing benefits such as health and retirement benefits. In 2010, 93% unionized workers received such benefits as opposed to a mere 69% of the non-unionized employees (U.S Bureau of Labor Statistics, 2010).
A geographic-based standard of setting the wage rate is the most accommodative to both the employer and employee. While there should be a pre-determined average level of wages, the particular rate should vary depending on the geographic position of the business though it should not deviate a lot from the average (Atchison, Belcher & Thomsen, 2013). Other determinants of wage rate include demand and supply of labor and the cost of living in a particular area. All these should be considered when setting the wage rate. These determinants tend to vary from one place to another, and it would, therefore, be irrational to derive the wage rate of one area based on that of another area regardless of the different firms being in the same industry.
It should also be noted that an increase in the wage rate may not necessarily lead to an increase in the average output of labor and such considerations have to be taken into account by the unions while negotiating their collective bargaining agreements.
References
Atchison, T., Belcher, D., & Thomsen, D. (2013). The Wage Level and Its Determinants. Retrieved 18 February 2016, from http://dlc.erieri.com/onlinetextbook/index.cfm?fuseaction=textbook.chpt07
Thsing, G, & Balders, S. (2010). Permanent replacement of economic strikers in the United States of America and the Federal Republic of Germany: Two sides of the same coin. Temple International and Comparative Law Journal, 14 (11), pp.12-15.
U.S Bureau of Labor Statistics. (2010). Employee benefits in the United States 2010. Retrieved 18 February, 2016 from http://www.bls.gov/ncs/ebs/benefits/2010/
