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The debate over labor laws and government intervention in labor-management relations in the United States has been present since the colonial era 300 years ago (Van Wezel Stone, 1981); however, it was with the industrial revolution that unions in the industrial workforce began to organize. The massive demand for labor following the emergence of countless industries brought with it subhuman working conditions. The unwillingness of a large part of the labor force to work under such conditions was the breeding ground for workers' organization; thus arose the struggle for labor rights in the United States.
In recent years, changes in the labor field have been discussed, specifically regarding labor laws - the field that regulates relations between employers and employees and their representatives (unions, syndicates, etc.). For the past 30 years, some of the laws governing labor relations have stagnated harming organized as well as unorganized labor (Estlund, 2013). Technological advances have transformed the labor environment and now the labor requirement is lower in many sectors. It is essential to adapt legislation to promote a "competitive, dynamic, people- and talent-centered" labor market; as well as laws that drive "the growth of start-ups and innovative service ecosystems" (Perez, 2022).
Labor laws in the United States establish the way in which management and labor discuss and agree on the rules that will govern the workplace (Van Wezel Stone, 1981). Today there are those who consider that the paradigms and concepts developed in the Fordist and post-Fordist era have become obsolete to the realities of this post-industrialization labor era. In the effort to innovate in the field, neoclassical thinking has become the norm. In the government's quest for flexibility and job creation, workers have had to learn to market themselves and see themselves as entrepreneurs, rather than simply finding a job.
In the 19th century, wage contracts were redefined to be a private agreement between two individuals - a seller and a buyer of services - not subject to legislative intervention (Van Wezel Stone, 1981). In other words, the law was limited to simply facilitating the transaction; however, in 1935 the Wagner Act was passed, which gave workers the right to organize into unions and bargain collectively with their employers. Two years later, after hearing the case of Coast Hotel Co. V. Parrish, the supreme court ruled that states may establish minimum wages in the workplace (Van Wezel Stone, 1981). Since 1937, federal and state laws have been passed regulating minimum wages, health and safety conditions, sex, race and age discrimination, and some terms of private pensions (Van Wezel Stone, 1981).
The landscape began to change for labor unions beginning in 1947. After a period of increasing labor militancy and union abuses, the U.S. Congress passed the Taft-Harley Act (Andrias, 2016). This law allowed employees to decide whether they wished to pay union dues or not, authorizing states to enact "right to work" laws (Andrias, 2016); in other words, it was no longer mandatory for employees to contribute to union dues. Employers found ways to reduce unionization of workers by increasing efficiency, reducing labor costs, and focusing on their business competencies (Andrias, 2016). This process was accompanied by a decline in unionization, between the 1960s and early 1980s. In that period there were fewer union elections, a decline in union victory rates in the elections held, and an inability of the newly unionized to obtain first labor contracts (Mishel et al., 2020).
According to Acemoglu (1998), Nickel and Layard (1999), Blanchard (2000) and others, when labor law burdens are low compared to productivity there is plenty of opportunity to innovate and increase investments; on the contrary, Calcagnini et al. (2016) indicate that if labor regulations are burdensome, innovation and investment may be stifled destabilizing the productivity of the state, although two opposite effects were identified. Calcagnini et al. (2016) argue that, on the one hand, labor regulations increase the adjustment costs of labor and capital, slowing down innovation; and, on the other hand, they state that strict labor regulations can stimulate firms to innovate and invest to recover productivity and profits in the long run.
For several decades, American labor law has been in decline. After more than 50 years without significant changes to labor law statutes, the science of the law has seemed useless to labor law scholars (Estlund, 2013). Today there is an urgent need for an effective regulatory design of labor law that takes into consideration its feasibility and practical policy impact. Today's reality is that unions represent a low percentage of the U.S. workforce. In 2021, the percentage of unionized wage and salary workers in the United States was 10.3; for public sector workers it was 33.9; and for private sector workers it was 6.1 (Bureau of Labor Statistics, 2022).
The collective bargaining agreement has become a thing of the past and individual employment rights have become the present and future (Corbett, 2002). According to Schwab (2001), unions have not fully fulfilled their purpose of protecting the vast majority of the labor force, so the weakening of collective rights and agreements has been foreseeable; however, this should not serve as an excuse to deprive the labor force of its rights, but to create new labor laws that adjust to the needs, problems and employer overreach that workers may face today.
References
Andrias, K. (2016). The new labor law. Yale LJ, 126, 2.
Acemoglu, D. & Zilibotti, F. (1998). Productivity Differences, MIT Department of Economics Working Paper Series No. 98-15 and Institute for International Economic Studies Seminar Paper No. 660, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=141169
Blanchard, O. (2000). The Economics of Unemployment. Shocks, Institutions, and Interactions., https://www.academia.edu/download/44441790/The_Economics_of_Unemployment.pdf
Bureau of Labor Statistics. (2022). Union members 2021. U.S. Department of Labor. https://www.bls.gov/news.release/pdf/union2.pdf
Calcagnini, G., Giombini, G., & Travaglini, G. (2016). How labor regulation affects innovation and investment: A neo-Schumpeterian approach. Money and Finance Research Group Working Paper, (132).
Corbett, W. R. (2002). Waiting for the labor law of the twenty-first century: Everything old is new again. Berkeley Journal of Employment and Labor Law, 23(2), 259‒306.
Estlund, C. (2001). Reflections on the declining prestige of American labor law scholarship. Comp. Lab. L. & Pol’y J., 23, 789.
Estlund, C. (2013). Labor law reform again: Reframing labor law as a regulatory project. NYUJ Legis. & Pub. Pol’y, 16, 383.
Layard, R. & Nickell, S. (1999), Labour Market Institutions and Economic Performance, https://econpapers.repec.org/bookchap/eeelabchp/3-46.htm
Mishel, L., Rhinehart, L., & Windham, L. (2020). Explaining the erosion of private-sector unions. Economic Policy Institute. https://www.epi.org/unequalpower/publications/private-sector-unions-corporate-legal-erosion.
Pérez Martínez, N. (2022, 30 de abril). Puerto Rico necesita un contexto laboral de vanguardia. El Nuevo Día. https://www.elnuevodia.com/opinion/punto-de-vista/puerto-rico-necesita-un-contexto-laboral-de-vanguardia/
Schwab, S. J. (2001). Predicting the future of employment law: Reflecting or refracting market forces. Ind. LJ, 76, 29.
Van Wezel Stone, K. (1981). The post-war paradigm in American labor law. Yale LJ, 90, 1509.
