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Bovee/Thill, Business in Action 8/e, Global Edition Instructor’s Manual

Chapter 12
LABOR RELATIONS

Chapter Overview

This chapter continues to examine the business function of human resources


management and explores the relationship among management, workforce, and labor
unions. It introduces labor unions and the different perspectives of employers and
employees regarding unions. It addresses important pieces of labor relations
legislation and explains the collective bargaining process. Finally, it describes the
procedures of addressing employee grievances and arbitration disputes, and lists
major challenges facing unions today.

Chapter Outline

I. The Role of Labor Unions


A. Labor relations is the relationship between organized labor and
management
B. Labor unions are organizations that represent employees in negotiations
with management
C. The effects of unionization from an employee’s perspective include:
1. Higher compensation – union employees earn more than nonunion
workers
2. Greater benefits – union employees receive greater employee benefits
than nonunion workers
3. Influence over hiring, promotions, and layoffs – union contracts have
specific provisions about hiring, promotion, and layoffs, especially with
respect to seniority – the length of time a person has worked for his/her
current employer
4. Working conditions and workplace safety
5. Formal processes for employee grievances, discipline, and other matters
6. Solidarity and recognition
D. The effects of unionization from an employer’s perspective include:
1. Direct costs in terms of wages and employee benefits are increased
2. Union contracts often include work rules that specify such things as the
tasks employees are required to do or are forbidden to do
3. Mixed results in terms of productivity

II. Unionization in Historical Perspective


A. Congress passed the National Labor Relations Act (also known as the
Wagner Act) in 1935. Key provisions included:
1. Giving employees the right to form/join unions, bargain collectively with
employers through elected union representatives, and engage in strikes
2. Outlawing attempts by employers to interfere with employees’ rights to
organize and union activities

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3. Requiring employers to bargain in good faith with unions


4. Establishing the National Labor Relations Board (NLRB)
B. The Labor-Management Relations Act (also known as the Taft-Hartley
Act) was passed in 1947. It addressed many concerns raised by business
owners and shifted the balance of power. Key provisions included:
1. Guaranteeing the right of employees not to join/support unions and
outlawing coercion by unions
2. Requiring unions to bargain in good faith with employers and restricting
certain strike activities by unions
C. The Labor-Management Reporting and Disclosure Act (also known as the
Landrum-Griffin Act) was passed in 1959 to address internal operations of
unions, including democratic processes and financial accountability

III. The Organizing Process


A. When a union negotiates a contract, it obtains union security – measures that
protect a union’s right to represent workers
1. In a union shop, employees are required to join the union within a
specified period of time after being hired
2. In an agency shop, employees are not required to join the union but must
pay the equivalent of union dues
3. Twenty-two states have passed right-to-work laws that prohibit union
and agency shops
B. There are two basic types of unions: craft unions and industrial unions
1. A craft union offers membership to workers with a specified craft or skill
(i.e., carpentry, masonry)
2. An industrial union seeks to represent all workers at a given employer or
location, regardless of profession or skill level
C. Unions are organized at the local, national, and international levels
1. Locals are local unions that represent employees in a specific geographic
area or facility
2. A national union is a nationwide organization composed of many local
unions that represent employees in specific locations
3. International unions have members in more than one country
D. The union organizing drive has several steps:
1. Unions persuade workers to sign authorization cards, which indicate
interest in having a union represent them
2. If the employer does not voluntarily accept the union, employees or the
union may petition the NLRB to conduct a secret certification election
3. If the union wins a majority of votes cast in the election, the NLRB
grants the union the authority to begin negotiating on the employees’
behalf
a. The employer is required to negotiate with the union for at least one
year
b. If employees no longer wish to be represented by the union,
members can cast a decertification vote to take away the union’s
right to represent them
E. Management efforts to avoid unionization
1. Management can launch a campaign to dissuade workers from voting for
union; called union avoidance by management but called union busting
by union

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2. Management can provide factual information about the union but they
cannot threaten employees for engaging in union activities

IV. The Collective Bargaining Process


A. Collective bargaining is the negotiation between union and management to
work together in forging human resources policies that apply to all
employees covered by the contract
B. Collective bargaining agreements (CBAs) are the contracts that result from
this process
C. Contract negotiations go through four basic steps:
1. Union officials determine needs of its members and management
determines what it is willing to offer
2. Both sides present their demands, and offers and counteroffers are made
during the bargaining process
a. If negotiations stall, the parties may opt for mediation – use of an
impartial third party to help resolve the bargaining impasse
b. When a legally binding settlement is needed, negotiators may submit
to arbitration – a decision process in which an impartial referee
listens to both sides and makes a judgment
3. If bargaining is successful and a tentative agreement is reached, union
members vote for ratification
4. If union members approve the agreement, it is signed by union and
company leaders
D. If the parties cannot reach agreement, each side has several options
1. The union can:
a. Strike – a temporary work stoppage aimed at forcing management to
accept union demands
b. Boycott – a pressure action by union members and sympathizers
who refuse to buy or handle the product of a target company
c. Publicity
d. Injunctions – court orders that require one side in a dispute to
refrain from or engage in a particular action
2. Management can:
a. Hire strikebreakers – nonunion workers hired to do the jobs of
striking workers
b. Lockouts – pressure actions by management to prevent union
employees from entering the workplace
c. Injunctions

V. Grievance, Discipline, and Arbitration Procedures


A. During organizing campaigns, contract negotiations, and throughout the
duration of the CBA, unions and management are prohibited from engaging
in unfair labor practices – unlawful acts made by either side
B. If an employee or a union believes the employer is not abiding by the terms
of the CBA, most contracts specify procedures for filing a grievance – a
formal complaint against the employer
1. Grievance procedures usually specify a multistep escalation process
C. The CBA also outlines procedures for disciplining employees. This is
typically done through progressive discipline, an escalating process of
discipline that gives employees multiple opportunities to correct performance
problems before being terminated

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D. Arbitration can also be used to interpret or apply the provisions of the CBA

VI. The Future of Labor


A. Union membership has decreased over the last several decades and
membership in the U.S. is now at only 6.6% of private sector workers
B. Do more U.S. workers want to be represented by unions? Different surveys
give different results
C. Alt-labor movement – organizing workers without forming unions, and using
union tactics like strikes, boycotts, etc., but without the legal force of
collective bargaining

Learning Catalytics is a "bring your own device" student engagement, assessment,


and classroom intelligence system. It allows instructors to engage students in class
with real-time diagnostics. Students can use any modern, web-enabled device
(smartphone, tablet, or laptop) to access it. For more information on using Learning
Catalytics in your course, contact your Pearson Representative.

Classroom Activities

Break-Out Group Discussion: Pros and Cons of Unions


Goal: Ask students to discuss the benefits and pitfalls of unions in a group setting and
then debate in front of the whole class.

Time Limit: 20 minutes

Details:
1. Break students into groups of four or five. (2 minutes)
2. Ask half of the groups to come up with some major benefits of unions, and
ask the other half of the groups to come up with some major pitfalls of
unions. Elect a group leader/facilitator and a note taker in each group. Ask
each group to finalize their viewpoints from notes and then elect group
representatives or speakers. (10 minutes)
3. Ask representatives/speakers from two opposing teams to debate each other
in front of the whole class, using ideas generated in prior group discussions.
One group will address the benefits of unions, while the other will counter
with pitfalls of unions. The teams may go back and forth, attacking each
other’s viewpoints and rationales. (8 minutes)

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End-of-Chapter
Behind the Scenes
Boeing and the IAM: A Project Saved, But Strife Remains

Critical Thinking Questions


12-1 Some union members criticized Washington governor Jay Inslee and the
state’s U.S. Senator Patty Murray for their role in brokering the contract
presented to the IAM. Is this a fair criticism? Why or why not?
Student responses will vary according to personal opinions. Students might cite
that these elected officials have an obligation to work for the best interests of
the people they represent, not just the subset of people represented by the
union. Also, it was ultimately the decision of union leadership itself to bring
the contract to a vote, not these officials. (LO: 12.4; AACSB: Reflective
thinking)

12-2 Would it be fair to the residents of Washington state for Boeing to get
nearly $9 billion in tax breaks–money that could have been used for
schools, roads, and other public needs? Why or why not?
Student responses will vary according to personal opinions. Some might feel it
is not fair to the general public to allocate the funds to a private company
instead, while others might believe that this investment is worth it to keep the
jobs in Washington, and secure the resulting benefits this has for the economy.
(LO: 12.4; AACSB: Ethical understanding and reasoning)

12-3 Is it economically healthy for the United States when individual states
compete against one another to attract companies, as Washington and
South Carolina have done in the case of Boeing, for example? Why or why
not?
Student responses will vary according to personal opinions. Some might feel it
is not wise for states to undercut each other like this, while others might feel
that this helps keep companies lean and competitive. (LO: 12.4; AACSB:
Analytical thinking)

Learn More Online


Visit www.goiam.org and search for information about the IAM’s efforts to unionize
Boeing’s facility in North Charleston, South Carolina. Has the IAM held an election
to unionize this plant? If so, what was the outcome?
Students’ responses will depend in large part on the material currently posted on the
website. (LO: 12.4)

Test Your Knowledge

Questions for Review


12-4 From an employee’s perspective, what are the potential benefits of
unionization?
From an employee’s perspective, the potential benefits of unionization are:
higher compensation; greater benefits; influence over hiring, promotions, and

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layoffs; better working conditions and workplace safety; formal processes for
employee grievances, discipline, and other matters; as well as solidarity and
recognition. (LO: 12.1)

12-5 How did the Wagner Act affect the balance of power between unions and
employers?
The Wagner Act tilted the balance of power towards unions by affirming and
protecting rights of employees to join and assist labor unions, and outlawing
attempts by employers to interfere with employees’ rights to organize unions.
Union membership grew dramatically in the decade that followed, to the point
where unions could virtually shut down entire industries through strikes. (LO:
12.2)

12-6 Discuss the history of unionization.


In answering this, students should be considering events from the European
guilds as well as the Industrial Revolution right through to the present day. It
would be expected that students would focus on the reasons for why unions
came about, specifically disputes over working conditions and unsafe working
environments. (LO: 12.3)

12-7 Explain the role of labor unions.


Labor unions exist to protect employees’ interests. They negotiate on behalf of
the employees with employers for better wages, greater benefits, safe working
conditions, and addressing grievances. (LO: 12.4)

12-8 Why might employees find unions appealing?


Unions give the employees a better negotiating position with their employers,
there is greater strength in numbers, and they offer a number of benefits to
employees which may be appealing to them. (LO: 12.4)

Questions for Analysis


12-9 Explain the difference between craft and industrial unions. Use examples
to illustrate your answer.
Craft unions offer membership to those with a specific craft or skill, such as
carpenters. Industrial unions offer membership to a much wider audience with
no restrictions on position or skill level. (LO: 12.2; AACSB: Analytical
thinking)

12-10 How does the relationship between labor and management reflect the
potential for conflict in the stakeholder model?
The stakeholder model states that various stakeholders of a company,
including both management and employees, may have conflicting interests
and motives. On one hand, management’s main goal for the company is to
maximize profitability. Such a goal can be partially achieved by minimizing
labor costs. Labor union’s main goal, on the other hand, is to maximize its
members’ wages and benefits. In this case, the goals of management and labor
unions are in direct conflict with each other. (LO: 12.1; AACSB: Analytical
thinking)

12-11 What are some of the explanations for the decline in labor union
membership in the past 50 years?

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Students’ answers will vary. True to the often-combative nature of the union-
management relationship, each side blames the decline of organized labor on
the other. Some business leaders say unions don’t have anything relevant to
offer workers in today’s environment of more enlightened and supportive
management. Union leaders often accuse management of using every tactic
they can think of, both legal and illegal, to thwart unionization efforts. (LO:
12.6; AACSB: Analytical thinking)

12-12 Why have alt-labor groups caught on in the past few years, when the
union model is already in place as a way to advocate for workers?
Student responses will vary. Answers might include the idea that this
movement is trying to take power back into the hands of the rank and file,
reacting negatively to union leadership, which may have grown so powerful as
to be seen as an “other” with its own agenda in the same way that
management can. (LO: 12.6; AACSB: Analytical thinking)

12-13 Ethical Considerations. Is it wrong for employees to try to convince each


other to vote for or against unionization? How much pressure should
employees be allowed to exert on each other during union organizing
campaigns?
Visit MyBizLab for suggested answers. (LO: 12.3; AACSB: Ethical
understanding and reasoning)

Questions for Application


12-14 You work as an organizer for a union that is trying to persuade workers
in the banking industry to unionize. You’ve collected authorization cards
from 52 percent of the workers at a particular company. Should you file a
petition with the NLRB for a secret-ballot election? Why or why not?
Students’ answers will vary, but at a minimum they should address that
banking employers have to accept the union as the employees’ representative
if more than 50% of the affected employees have signed authorization cards.
If the employers do not voluntarily accept the union, employees or the union
can petition the NLRB to conduct a secret-ballot certification election.
However, unions don’t typically request a vote until they have cards from 60
or 70 percent of the bargaining unit, because a significant number of
employees who sign cards end up voting against the union. (LO: 12.3;
AACSB: Application of knowledge)

12-15 What advice would you give the founders of a new company who want to
avoid unionization efforts among their workforce as the company grows?
Students’ answers will vary, but at a minimum they will need to advise the
founders to tread carefully and learn what they are allowed and not allowed to
do under the Wagner Act. For instance, managers and owners are allowed to
provide factual information about the union and labor relations laws and share
personal experiences about life in a unionized workplace. However, they are
not allowed to threaten employees for engaging in union activities or
interrogate employees regarding union sympathies or voting plans. (LO: 12.3;
AACSB: Application of knowledge)

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12-16 A co-worker is arguing that the President should not have the authority
to issue an injunction to stop a strike because doing so violates the legal
rights of workers. How would you respond?
Visit MyBizLab for suggested answers. (LO: 12.2; AACSB: Application of
knowledge)

12-17 Concept Integration. Which motivation theory or theories discussed in


Chapter 10 help explain the sometimes contentious nature of labor
relations?
Visit MyBizLab for suggested answers. (LO: 12.1; AACSB: Analytical
thinking)

Expand Your Knowledge

Discovering Career Opportunities


The negotiations of the employees and the management are long. Both groups
may be unable to reach consensus. Hence, mediation and arbitration have been
used to settle differences. Identify a few industries in your home country which
have pursued mediation and arbitration effectively or non-effectively. The
internet might offer you the information about how the representatives from the
industries exercise the negotiation process. Based on the information you read,
what will be the essential skills an mediator and an arbitrator? Do you possess
the skills? For the skill-set boxes you have yet checked, how would you acquire
the skill-set(s)? Even if you do not lack or lacked of the skill-set(s), will you still
be keen to pursue a career as mediator or arbitrator?
Students’ answers will vary depending on personal opinions and experiences. (LO:
12.4; AACSB: Reflective thinking)

Improving Your Tech Insights: Employee Monitoring Software


Who is watching while you work? Chances are good that at least one form of
electronic activity will be monitored at whatever company you work for now or will
join in the future. The costs of inappropriate behavior can be so high that the majority
of employers now monitor or control access to the Internet, telephone conversations
(although employers are not allowed to record personal calls), voicemail, email,
instant messaging, text messaging (on company-issued phones), and other electronic
media. Many employers also use keystroke monitoring or screen-image recording
software to keep track of what employees are doing at their computers. Many
businesses also use video monitors throughout company facilities.

Employers have a number of concerns, including lost productivity, release of


company secrets or confidential customer records, the viewing and sending of
inappropriate material, and illegal activities by employees. Privacy advocates may
not like all the monitoring, but current laws provide little protection for employee
privacy, and courts have ruled that employers have the right to control the use of
company-owned systems and to protect confidential information.

In a brief email message to your instructor, summarize this dilemma and its
possible effects on employee-management relations.

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Students’ email messages will vary depending on personal opinions. (LO: 12.1;
AACSB: Information technology)

Practice Your Skills

Sharpening Your Communication Skills


Undertake Internet-based research on a significant event involving unions that
you feel had a huge impact on the wider economic environment in the last 100
years. You could choose an example that has had a more international impact.
Create a poster that highlights your research and focuses on key information.
Students should produce a poster to show their research on any chosen event fitting
the criteria in the question itself. Ideally, students will look to an example outside of
their home country. (LO: 12.4; AACSB: Written and oral communication)

Building Your Team Skills


Form an even number of small teams within your class. Pair teams together so
that you can undertake an in-class debate. Each team should spend 30 minutes
on research and team discussions in order to formulate their argument.
Consider the following statement: Unions are bad for business and should
therefore be banned. Each team in the pair should argue opposing sides.
Students’ debate will vary depending on which group and issue(s) are selected. (LO:
12.4; AACSB: Written and oral communication)

Developing Your Research Skills


Find information about one of the many “alt-legal” groups or worker centers
now advocating on behalf of workers in a particular industry. (You can start
with InterFaith Worker Justice, www.iwj.org; National Day Labor Organizing
network, www.ndlon.org; or the FoodChainWorkersAlliance,
http://foodchainworkers.org.) Choose a group or center of interest and outline
the workplace issues it is trying to improve on behalf of a particular employee
population.
Students’ answers will vary depending on which group and issue(s) are selected.
(LO: 12.6; AACSB: Application of knowledge)

MyBizLab Assisted-Graded Assignments


12-18 If union members strike because of what they perceive to be unfair
treatment by managers, would strikebreaking replacements be guilty of
an ethical lapse by temporarily filling those positions? Why or why not?
Visit MyBizLab for suggested answers. (LO: 12.4; AACSB: Ethical
understanding and reasoning)

12-19 Should the federal government step in and mandate one set of union laws
for all 50 states so that companies can play states against each other in
labor negotiations? Why or why not?
Visit MyBizLab for suggested answers. (LO: 12.4; AACSB: Ethical
understanding and reasoning)

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CHECKPOINTS
LEARNING OBJECTIVE 12.1: Explain the role of labor unions, and contrast
the perspectives of employees and employers on the issue of unionization.

Critical thinking:
(1) Why is it so difficult to come up with a single conclusive answer about the effects
of unionization on business productivity?
In a review of 73 studies on unionization, researchers found 45 studies that showed a
positive effect of unions on productivity and 28 studies that showed negative effect.
The same analysis suggests that unions have had a net negative effect on productivity
in the UK and Japan but a net positive effect on productivity in the U.S.

(2) How do labor relations demonstrate the stresses inherent in the stakeholder
model?
Labor relations involve managers and employees, two of the major stakeholders for
businesses. They have conflicting interests and goals, in that managers want to
reduce labor costs to maximize profitability, while employees and unions want to
maximize the income and benefits of employees. Such conflicts are consistent with
the stresses inherent in the stakeholder model.

It’s your business:


(1) Union supporters often talk about the need for greater democracy in the
workplace. Explain why you agree or disagree with this sentiment.
Students’ positions and explanations will vary depending on personal opinions.

(2) Would you rather be promoted on the basis of seniority or of merit? Why?
Students’ answers will vary depending on personal opinions.

LEARNING OBJECTIVE 12.2: Identify the three most important pieces of


labor relations legislation enacted in the 20th century.

Critical thinking:
(1) Why are disputes between labor and management often more complicated than
just matters of money?
Such disputes are often more complicated than just matters of money because
supporters and opponents of unions often have profoundly different beliefs about
fundamental economic principles and the ideal nature of society itself.

(2) Would you agree that the struggle between labor and management has, to at least
some degree, been a matter of legislative overcorrection? Why or why not?
Students’ answers may vary, but the statement is true to a certain extent since history
has indicated the back-and-forth power shift between unions and management as
legislators passed laws that alternately favored unions and management.

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It’s your business:


(1) Do you believe it is appropriate for unions to be involved in political activities?
Why or why not?
Students’ answers will vary depending on personal opinions.

(2) Given the long and complex history of unionization, many people now have an
emotional response to the word union. Do you respond positively or negatively when
you hear the word? Why?
Students’ answers will vary depending on personal opinions.

LEARNING OBJECTIVE 12.3: Explain how unions are structured, and


describe the organizing process.

Critical thinking:
(1) Why does the concept of an agency shop exist, since employees in such facilities
aren’t required to join the union?
The concept of an agency shop exists even though employees in such facilities aren’t
required to join the union because it effectively “forces” the employees to join the
union. Since employees in an agency shop are required to pay the equivalent of union
dues even if they are not required to join the union, most employees in agency shop
situations would just go ahead and join the union—“I might as well get the benefits
since I am already paying.”

(2) Why do union organizers usually gather authorization cards from well over 50
percent of the employees in a bargaining unit before petitioning the NLRB for a
certification election?
Research indicates that a significant number of employees who sign cards end up
voting against the union in the secret-ballot election.

It’s your business:


(1) If you were an entrepreneur ready to start a new company, would state right-to-
work laws affect your decision about choosing a location for your business? Why or
why not?
Students’ answers will vary depending on personal opinions.

(2) Union supporters argue that all workers benefit from the improvements in
working conditions that unionization has helped bring about over the years; do you
agree that all workers are in unions’ debt? Why or why not?
Students’ answers will vary depending on personal opinions.

LEARNING OBJECTIVE 12.4: Describe the collective bargaining process.

Critical thinking:
(1) Given the history of union-management relations, why do you think mediation
tends to be so successful at resolving bargaining impasses?
Mediation tends to be more successful in resolving bargaining impasses since an
impartial third party is involved to study the situation, explore new options, improve
communication, and make recommendations for resolution of the differences.
Another important reason for its success is that it does not require a legally binding

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settlement, as in the case of arbitration. In arbitration, both sides will lose the
freedom to negotiate and the arbitrator could decide wage, benefits, work rules and
other essential aspects of operating a business, even though the arbitrator may have
little or no experience in that industry.

(2) Why would an employer resort to a lockout?


An employer would resort to a lockout as a preemptive measure designed to force a
union to accede to management’s demands.

It’s your business:


(1) Should U.S. consumers be pressured to buy products made in the United States?
Why or why not?
Students’ answers will vary depending on personal opinions.

(2) Would you refuse to shop at a store that was being picketed by union members?
Why or why not?
Students’ answers will vary depending on personal opinions.

LEARNING OBJECTIVE 12.5: Explain the procedures for addressing


employee grievances and arbitrating disputes.

Critical thinking:
(1) Is it in a union’s best interest for its members to comply with all the terms of a
CBA? Why or why not?
Yes. A union is in the best negotiation position with the management when its
members are in compliance with the terms of a collective bargaining agreement.

(2) What risks do unions and employers take in deciding to use arbitration?
In arbitration, unions and employer will lose the freedom to negotiate and an
arbitrator could decide wage, benefits, work rules and other essential aspects of
operating a business, even though that the arbitrator may have little or no experience
in that industry.

It’s your business:


(1) How would you respond if you discovered a fellow employee stealing or
committing another serious offense on the job (and you were the only other person
who knew about it)?
Students’ answers will vary depending on personal opinions.

(2) Do you believe that employees should be given multiple chances after committing
minor offenses in the workplace, as progressive discipline procedures allow? Why or
why not?
Students’ answers will vary depending on personal opinions.

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LEARNING OBJECTIVE 12.6: Characterize the ongoing conflict over union


organizing efforts.

Critical thinking:
(1) What evidence would you need to reach a solid conclusion about why union
membership has declined in the private sector over the past 50 years?
Students’ answers may vary, but true to the often-combative nature of the union-
management relationship, each side blames the decline of organized labor on the
other. Some business leaders say unions don’t have anything relevant to offer
workers in today’s environment of more enlightened and supportive management.
Union leaders often accuse management of using every tactic they can think of, both
legal and illegal, to thwart unionization efforts.

(2) Why do you suppose different surveys generate such wildly varying responses to
questions about whether nonunion employees would like to join a union?
Responses to such surveys vary depending on who is doing the asking and how the
question is phrased. For instance, answers become very different when respondents
were asked a simple yes or no question rather than “definitely” and “probably,”
regarding whether nonunion employees want to join the union or not.

It’s your business:


(1) With everything you’ve learned about labor relations so far, would you describe
yourself as more pro-union or more anti-union? Why?
Students’ answers will vary depending on personal opinions.

(2) Would you support the efforts of an alt-labor group if attaining its goals would
result in higher prices for you as a consumer? Why or why not?
Students’ answers will vary depending on personal opinions.

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