AOL News, March 20, 2011

AOL News

March 20, 2011

AOL News

What's All the Fuss About? Labor Relations Terminology Explained

National and local headlines have been dominated recently by stories about labor disputes and controversial education reforms. But what exactly is at stake in those battles is somewhat murky. News reports are bogged down with eye-glazing terminology such as "collective bargaining" and "binding arbitration" -- not necessarily phrases that would incite most people to join 85,000 protesters camped out around the Wisconsin state house.

In an effort to clarify the debates gripping the nation this year, we have written a pocket-sized primer on some of those ugly terms. Print it out, carry it in your wallet, show it to your friends.



Justin Sullivan, Getty Images
Farmers march outside the Capitol in Madison, Wis., on March 12. Tens of thousands of protesters staged a massive demonstration outside the Capitol one day after Gov. Scott Walker signed his controversial budget repair bill into law.Collective Bargaining
Collective bargaining is the lightning rod that sparked the uproar in Wisconsin last month. Gov. Scott Walker's "budget repair bill" stripped most public-sector employees (police and firefighters excepted) of their right to collective bargaining.

Teachers, who filled the State House in Madison for several weeks of protest, said they would swallow pay cuts and increases to their benefit contributions, but they would not let go of their collective bargaining rights without a fight.

So just what is collective bargaining?

The Bureau of Labor Statistics defines it as the:

Method whereby representatives of employees (unions) and employers negotiate the conditions of employment, normally resulting in a written contract setting forth the wages, hours, and other conditions to be observed for a stipulated period (e.g., 3 years). The term also applies to union-management dealings during the term of the agreement.

Collective bargaining agreements are the contracts between a union and an employer. Employees have much more power when it comes to negotiating their employment if they can do so together. And unions are where this togetherness takes place.

"Collective bargaining creates a certain level of due process and equal protection for employees," said Ellen Dannin, a professor at Penn State's Dickinson School of Law and a former trial attorney with the National Labor Relations Board.

The fanfare surrounding collective bargaining has its roots in the National Labor Relations Act, which was passed in 1935 after Congress looked at the Great Depression and decided that the "inequality of bargaining power" between nonorganized employees and their employers was keeping wages down and generally depressing business. (Read more about the National Labor Relations Act here.)

Today, destroying collective bargaining rights is a means of taking power from unions.

Walker has said his bill is necessary to balance Wisconsin's budget by giving local governments the ability to single-handedly make changes to public-sector pay and benefits. Opponents say it's a political attack on Democrats, who are generally supported by unions.

"[The bill] has greatly weakened a major financial supporter of the Democratic Party," said Ronald G. Ehrenberg, a professor at Cornell University's Industrial and Labor Relations School. "This is clearly just a political action."

Evidence pointing to this is the fact that the bill does not apply to police and firefighters, who tend to support Republicans.

Binding Arbitration
A key ingredient in union-employer relationships is binding arbitration. When the two sides cannot agree on certain aspects of a discussion, they will often be required to present their cases to an arbitrator (or panel of arbitrators), who then decides on a course of action.

"A common understanding by the parties in all cases, however, is that they will be
bound by the opinion of the decision maker rather than simply be obligated to
'consider' an opinion or recommendation," according to the Office of Personnel Management.

Without this mechanism in place, the employer in the situation may only be held accountable to itself and could decide unilaterally to approve its own offer.

In Ohio, a bill that would eliminate binding arbitration for police and firefighters is being considered in the state House of Representatives after it was passed in the Senate. Police and firefighters are already banned from striking there, leaving them with little bargaining power.

However, "there is no evidence that arbitration has led to higher wages than would otherwise be the case," Ehrenberg said.

'Last in, First Out'
"LIFO," as it's known by its acronym, is the policy of firing the most recently hired first, also known as seniority. Most union contracts require seniority rules for layoffs. LIFO generally refers to teacher contracts.

Battles over LIFO are ongoing in several states nationwide. In New York, New York City Mayor Michael Bloomberg is pushing Gov. Andrew Cuomo for a reprieve from LIFO. And Florida, Idaho and Utah all passed bills eliminating LIFO this month.

Opponents of the policy say it gives undue priority to those who have been around longest, potentially requiring the firing of better teachers.

Joel Klein and Michelle Rhee, former chancellors of the New York City and Washington, D.C., public schools systems, respectively, explained their opposition in an editorial in the New York Daily News in January:

The policy has three major negative impacts: first, it removes many high-performing tenured and non-tenured teachers from the classroom, while retaining those that are less effective but have more years in the system; second, it causes a higher number of layoffs, since junior teachers are paid the least; and finally, it disproportionately impacts the lowest performing schools, which have the largest number of new teachers.
But proponents of LIFO, including teachers unions, say seniority is necessary to encourage teachers to enter and remain in the profession.

"From an economic point of view, there is some sense to it because if you are a senior person and you have job protection, you are likely to share with your younger colleagues everything you know," Ehrenberg said. "The cost arises if the old workers are not performing at satisfactory levels relative to what we'd like them to be performing at."

But even if that does occur, there are methods for removing unsatisfactory teachers through our old friend arbitration.

"Historically, people have gone into teaching because, though pay was lower, there was job stability," Ehrenberg explained. "And now we're talking about -- at least in some states -- taking it all away."

Merit-Based Pay
Several proponents of education reform are big fans of merit pay, by which an employer determines an employee's salary based on performance, not seniority, as is the case with many union contracts requiring step increases based on time in the job.

"In public education, the concern arises because our students just aren't doing as well as they used to do and we're just desperately trying to find a way to improve our system," Ehrenberg said. One of those ways is to encourage high performance by linking it to better pay.

But there are downsides to a seemingly simple idea. Employers can use merit pay to squeeze out individuals who would otherwise be hard to fire by reducing their salaries, for instance. And for teachers, a switch to merit pay would destroy yet another incentive to sticking around in a low-paying, difficult profession if sticking around longer didn't necessarily ensure a higher paycheck each year.

Value-Added Assessment
Another issue with merit pay is the question of how to assess an employee in the first place. How can you be sure than an objective evaluation is "stable"? Ehrenberg asks. Similarly, how can you be sure a subjective evaluation isn't biased?

And if your employee is a teacher, the question is even harder to answer.


Sponsored LinksIn the education debate, a new process is being touted as a method of evaluating teachers. Value-added assessments look at the progress of each individual student over time to determine how much he or she has learned in one year.

Each student takes a standardized test at the end of the year and the scores are compared to the year before. The progress the student has or has not made can then be attributed to the teacher.

The trouble with this model, say opponents, is that it encourages teachers to teach to tests and ignores mitigating factors that are external to the teacher's control -- factors such as economic status, familial involvement and just plan bad luck.