Regional Competitiveness: Labor-Management Relations, Workplace Practices, and Workforce Quality

By Kleinhenz, Jack; Smith, Russ | Business Economics, April 2011 | Go to article overview

Regional Competitiveness: Labor-Management Relations, Workplace Practices, and Workforce Quality


Kleinhenz, Jack, Smith, Russ, Business Economics


This paper examines regional competitiveness as it relates to regional labor-management relations. A survey of recent literature provides perspective and secondary evidence regarding labor-management relations, workplace practices, and workforce quality. It does not answer the question, "Are unions good or bad?" Rather, it investigates the themes of productivity, wage premium, job security, innovation, communication, and economic development--the larger picture to consider when evaluating the impact of unions. The information, issues, and data gained from the literature survey provided a background for several case studies that took the form of structured, group interviews that included both selected management and union representatives. Interview findings provide evidence that union-management cooperation in the workplace is both feasible and productive, supporting findings in the literature.

Business Economics (2011) 46, 111-124.

Keywords: regional competitiveness, labor-management relations, productivity, unions, wage premium

Efforts put forth by county or multicounty entities to develop business can be hindered by the "union town" belief and the stigma it carries. When a location consultant for a firm regards a particular region as being "highly organized," the implication is clear: he believes that high-cost and difficult-to-work-with labor is the problem. The perception of being a union town or region makes efforts to attract new or additional investment difficult.

This is especially important as regions with a historically strong union presence- particularly in the Midwest and Northeast--attempt to remake themselves in this changing global economy. Generating start-up companies in bio-tech, aviation, computer network engineering, and other growing industries is of particular interest. Leaders of business attraction efforts are caught not wanting to offend either management or unions: the business attraction leaders are probusiness by trade but recognize that unions exist, and the workers they represent are significant constituents within the local economy.

On the other hand, misconceptions or uncertainties regarding unions can be detrimental to firms considering investing or reinvesting in a region. The potential investor has important questions when contemplating such a decision. Directly addressing the uncertainty with accurate information will lead to appropriate cost/benefit calculations made on the part of the potential investor.

This study investigates the issues concerned with how unions and management actually relate to one another and the impacts that unions have on productivity and competitiveness. Its findings will have the effect of updating the potential investors regarding current union-management relations.

In this investigation, the authors resorted to a two pronged attack. First, a literature review was conducted regarding the topic of unions' impacts at the workplace level and how unions interacted with management at the operational level of the workplace (as opposed to the bargaining table). This review is not a comprehensive examination and reassessment of the theory and empirical work on these topics. Rather, it is an attempt to provide a balanced and fair viewpoint on what the literature says. It is intended to advance the state of knowledge about labor unions and to inform those involved in the investment process. The literature that was surveyed was selected from the works of authors who have a reputation for high quality, and their work represents examinations of both economic and noneconomic effects of unions.

The literature revealed areas of common ground shared by management and unionized workers. Several cases where union-management interactions resulted in positive outcomes were noted. Armed with case studies and modeled benefits from the literature, the authors developed a short questionnaire or field guide with which to interview labor and management while sitting at the same table. …

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