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Labor Relations & Collective Bargaining in a Global

Economy

ASSIGNEMENT-01

FedEx

SUBMITTED BY –NAZMUL SAJON

-ID-0520056

SUBMITTED TO-
DR.SHOIB AHMED

(SCHOOL OF BUSINESS, INDEPENDENT UNIVERSITY, BANGLADESH)


FEDEX -The World On Time

ANS- No as a new employee, I do not sign a card to certify a union at FedEx,


moreover, FedEx’s delivery services are generally cheaper than those offered
by UPS with unionization. Besides that, I want to focus on shareholders
perspectives than unionized perspective as I newly joined FedEx.

Factors, why I do not sign a card to certify a union at FedEx.

 It is common knowledge that unions negotiate higher wages for


employees, more lucrative benefit packages, and limit working hours.

 The average union member earns more than the average non-union
worker, however that does not mean that union membership will raise
wages: Few workers who join a union today get a pay raise. The
economy has become more competitive over the past generation.
Companies have less power to pass price increases on to consumers
without going out of business.

 It is also fact that FedEx is the last remaining major express shipper
that is not unionized.

 Employees love this, but from a business perspective this is called an


increase in the cost of doing business. Increased costs result in one of
two outcomes: Higher prices or a reduction in the quality or quantity of
service.

 Other unionized company like UPS, have to compete with non-


unionized FedEx, so forcing FedEx to form a union would be creating a
union monopoly.

 Unions function as labor cartels. A labor cartel restricts the number of


workers in a company or industry to drive up the remaining workers’
wages. Companies pass on those higher wages to consumers through
higher prices, and often they also earn lower profits. Economic
research finds that unions benefit their members but hurt consumers
generally, and especially workers who are denied job opportunities.

 Consumers may have to pay a “hidden package tax” to fund this


bailout. Estimates vary, but a mere 10 percent increase in costs would
result in an extra $9 billion cost for consumers.
 Reduced reliability, longer shipping times and more limited access to
rural markets around the globe.

 This law is viewed as a bailout for the Teamsters union. Membership is


sliding, dues are down, and they need money to accomplish the
union’s goals. Unionizing FedEx by force (i.e. Congressional law)
would provide much needed membership and cash to the Teamsters.

 If FedEx is unionized under national labor relations law. Company will


face serious economical issue or may go bankrupt.

Questions to be asked.

• What happens if This Law Passes?

Consumers may have to pay a “hidden package tax” to fund this bailout.
Estimates vary, but a mere 10 percent increase in costs would result in an
extra $9 billion cost for consumers. Not to mention reduced reliability, longer
shipping times and more limited access to rural markets around the globe.

FedEx’s profit margins will remain the same because it is a publicly traded for-
profit business. As demonstrated above, unions raise a company’s cost of
doing business. Is it unreasonable to assume that a cost increase (the hidden
package tax) will fall on its customers’ shoulders?

 What similar unionized organizations want?

FedEx claimed that UPS was trying to receive a government bailout designed
to “limit competition for overnight deliveries.” The disagreement was over a
provision in a Federal Aviation Administration reauthorization bill, which would
reclassify FedEx’s non-airline employees under the National Labor Relations
Act instead of the Railway Labor Act (RLA), making it easier for them to form
local unions. UPS’s ground workers are already covered by the NLRA, and so
its employees are often members of the International Brotherhood of
Teamsters. While UPS claims that FedEx’s ground employees should be
covered by NLRA so employees performing the same function at different
companies have the same rights, FedEx argued that UPS was trying to force
them to expose customers to local work stoppages that could prevent the
delivery of time-sensitive shipments to lower competition.
 Why Union is bad for newly joined employees?

Unions do not have the resources to monitor each worker’s performance and
tailor the contract accordingly. Even if they could, they would not want to do
so. Unions want employees to view the union–not their individual
achievements–as the source of their economic gains. As a result, union
contracts typically base pay and promotions on seniority or detailed union job
classifications. Unions rarely allow employers to base pay on individual
performance or promote workers on the basis of individual ability.
Consequently, unions do not negotiate higher wages for many newly
organized workers. As I joined the FedEx recently, it is wise to not sign for
unionization at FedEx.

What Economists view on unionizations?

 Economists consistently find that unions decrease the number of jobs


available in the economy. The vast majority of manufacturing jobs lost
over the past three decades have been among union members–non-
union manufacturing employment has risen.
 Research also shows that widespread unionization delays recovery
from economic downturns. Some unions win higher wages for their
members, though many do not. But with these higher wages, unions
bring less investment, fewer jobs, higher prices, and smaller 401(k)
plans for everyone else.
 Economic theory consequently suggests that unions raise the wages of
their members at the cost of lower profits and fewer jobs, that lower
profits cause businesses to invest less, and that unions have a smaller
effect in competitive markets (where a union cannot obtain a
monopoly).
 Studies typically find that unionized companies earn profits between 10
percent and 15 percent lower than those of comparable non-union
firms.”
 Unions effectively tax these investments by negotiating higher wages
for their members, thus lowering profits. Unionized company’s respond
to this union tax by reducing investment. Less investment makes
unionized companies less competitive.
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