August 28, 2009

Those of us from the U.S. who attended the just concluded World Congress of the International Industrial Relations Association in Sydney, Australia experienced a rare treat and learned firsthand how out of synch are America’s efforts to modernize labor and employment policies with what is happening here and around the world. We visited a country in which the last federal election turned on labor policy, where work and employment issues are viewed as a central part of economic policy, and where the newly elected government enacted a major reform and modernization of labor and employment policy within a year of taking office.

Just imagine the following scene from the opening session of the World Congress. Depute Prime Minister Julia Gillard (the number two official in the government) not only came to give a warm welcome to the 900 delegates. She gave a highly substantive speech reviewing the new legislation that she personally had help shape and negotiate through Parliament.

The new law called the “Fair Work Act” is impressive for its comprehensiveness and for its focus. While the centerpiece provisions establish procedures supporting collective bargaining (including new procedures governing union recognition and good faith bargaining), it also covers minimum employment standards, work and family leave, the right to request flexibility to care for young children, and provides options for negotiating and enforcing individual employment contracts that exceed the standards negotiated in collective agreements. As the name of the bill implies, the focus is on restoring fairness in employment relations after the previous government had undone essentially all labor standards and used individual employment agreements to undermine provisions negotiated collectively. The new policy also supports the flexibility needed in modern employment practice and seeks to reestablish the historic connection between increasing productivity and increasing standards of living.

But Ms. Gillard did more than just review the contents of the new policy. She delivered a clear message to the business and labor leaders attending the Congress and others who would read about her speech: the legislation is only the first step. Now its time for business, labor, and government leaders to get to work on building the workplace culture and relationships needed to make this legislative framework pay off for workers, employers, and the economy by finding “new ways to train, reward, consult and work cooperatively together.”

So what lessons do we take away for the U.S.?

First, rather than treat labor policy as simply “special interest” politics best kept separate from economic policy making, integrate it with other policy initiatives aimed at forging a sustainable economic recovery. Rather than leave labor law reform to closed door back room horse trading among Senators to get the votes needed to pass a new law, lead a public debate over how to restore fairness in workplace and employment relations. This is the mandate of Vice President Biden’s Middle Class Task Force. Put it to this task.

Second, rather than separate reforms over labor law from other efforts to strengthen and modernize employment standards, treat these as they are in the modern workplace, namely part of an integrated system. While the U.S. policy process tends to take up issues one at a time, positioning the current labor law debate as one part of a broader updating of wage and hour, safety and health, work and family, and labor market policies would signal that the Administration understands the close interconnections across these issues and would give business, labor, women’s and community groups a broader shared agenda to work on together.

Third, recognize that to make any new workplace legislation realize its objectives, business and labor do need to work together with government leaders to rebuild a culture of mutual respect and engagement of front-line employees and managers. The evidence is clear – front-line, knowledge-driven workplaces are both more productive and better places to work. So make mutual respect and workforce engagement a central part of the objectives of any piece of labor and employment legislation. Give the Secretary of Labor the responsibility and resources needed to get labor and management working together for the common good.

Finally, it did not go unnoticed that the Deputy Prime Minister, the president of the major labor union federation, and the chief executive of the most influential business group in Australia are all women. Maybe that has something to do with the level of civility, substantive dialogue, and mutual respect that was apparent when leaders from these different groups discussed their interests and views on policy and practice in the sessions and informal gatherings.

Our friends down under have set a benchmark for the US to meet. We don’t usually look beyond our boarders for lessons on domestic policy, but Australia has recognized and addressed employment relations as central to economic vitality. Other nations as diverse as France, Brazil, Denmark, and Korea are following Australia’s lead in modernizing key aspects of their employment relations systems through debates that build widespread public awareness of the connection between employment relations and economic vitality. We can and must adapt this central lesson to the U.S. if we are to achieve a sustainable economic recovery and build an employment relations system attuned to the needs of the 21st century workforce and economy.

The American Delegation

Henry and Sue Bass, Merrimack Films
Janice Bellace, University of Pennsylvania
Peter Berg, Michigan State University
Richard Block, Michigan State University
John Budd, University of Minnesota
Bonnie and Robert Castrey, Arbitrators
Paul Clark, Penn State University
Alex Colvin, Cornell University
Joel Cutcher Gershenfeld, University of Illinois
Matthew Finkin, University of Illinois
Lonnie Golden, Penn State University
Raphael Gomez, University of Toronto
Harry Katz, Cornell University
Bruce Kaufman, Georgia State University
Thomas Kochan, Massachusetts Institute of Technology
Anil Verma, University of Toronto
Hoyt Wheeler, University of South Carolina

The letter below summarizes the evidence that leads me to support passage of the Employee Free Choice Act, with a somewhat expanded framing of its objectives and some specific additions to its provisions.  I encourage all who share an interest in or responsibility for employment relations, regardless of your views on the bill, to review the evidence and ideas summarized here, look more carefully at the references cited if you wish, and join the debate over the bill.  I welcome your comments!  TK

Dear Senators and Members of Congress:

As someone who has studied labor policy and worked on improving labor management relations for many years I am delighted that the Employee Free Choice Act is now getting serious consideration. The intent of this letter is to support passage of this critical reform. America’s labor law is badly broken and our labor management system needs to be transformed to better support economic recovery and promote productive, innovative, and fair labor management relations. The Employee Free Choice Act should be viewed as a first, necessary step toward these objectives.

I thought I might be helpful to put in one document issues related to the bill that I have been discussing with many of you and that I’ve been speaking on in various forums:

1. A summary of the key evidence indicating why a systemic solution is needed to fix the organizing and first contract negotiations process;
2. The evidence on why the nation needs labor law reform and a transformed labor management system to support our economic recovery initiatives;
3. A way to reframe the debate and the objectives of the bill to better link it to economic policy;
4. My suggestions for specific provisions of the bill that would provide the systemic fixes needed and serve as a catalyst for innovation and transformation in labor management relations.

The Evidence: Sequential Failures in the Organizing and First Contract Negotiation Process

I won’t repeat all the evidence documenting the failures of the law but instead will just summarize one of the newest, and I believe most compelling, studies of this topic. It comes from John-Paul Ferguson’s MIT dissertation. He assembled data from the National Labor Relations Board (NLRB) and the Federal Mediation and Conciliation Service (FMCS) to track 22,000 organizing drives from 1999 to 2004, something never before done.[1] His results, summarized in four points below, are both clear and sobering.

1. Few bargaining units make it from initial petition to a first contract. Only 20 percent, or one in five, of all cases that filed a petition for an election after showing substantial and very likely majority support for representation reached a first contract. Only 12.9 percent reached a first contract within one year of certification, during the NLRB’s certification year.
2. Unfair Labor Practices (ULPs) further reduce the chances of getting a contract. The presence of an ULP further reduced the low likelihood of completing the process by another 30 percent. That is, less than one in ten cases involving an unfair labor practice reached a first contract within a year of certification. Thus both legal and illegal employer resistance limit the ability of workers to form a union and achieve a collective bargaining agreement.
3. ULPs also reduce chances of getting to an election. Unfair labor practices had their biggest effects in the initial stages of the organizing process, after a majority of workers have indicated a desire for representation, by reducing the probability of getting to an election by 25 percent.
4. Even after a majority votes for a union, many units fail to get a contract. Only 56 percent of units in which a majority of employees voted for a union and were certified for bargaining by the NLRB were successful in reaching a first contract. Only 38 percent of such units reached a contract within one year.

These data reinforce the conclusion reached by President Clinton’s Commission on the Future of Labor Management Relations (Dunlop Commission) fifteen years ago that the nation’s labor law is failing to provide workers an effective right to gain representation and a collective bargaining contract. Moreover, these results indicate it will take a systemic solution—one that addresses the failures of the law in the initial stage of organizing prior to an election, during the election or certification period, and through the first contract negotiation process—to fix to fix the law and restore the ability of workers to gain access to collective bargaining.

Why Legal Reform and Transformed Labor Management Relations are Critical to Economic Recovery

To date, debate over this bill has taken place largely separate from the design and implementation of the nation’s economic recovery policies and strategies. This is a serious mistake, given what we know about the role that a modern collective bargaining and labor management relations system could make to the economy. So let me outline why passage of this bill is essential to economic recovery and a return to a sustained and broadly shared prosperity.

Three bodies of research document the contributions collective bargaining has made to the nation’s economy and, if renewed, can make again.

First, collective bargaining has served as the strongest and most consistent institution for achieving gradual improvements in worker wages and for reducing income inequality within and across industries and occupations. The wage formulas that ushered in the post war social contract came out of collective bargaining. From the mid 1940s through the 1970s wages grew roughly in tandem with productivity growth. As union membership declined precipitously after 1980, this social contract broke down. Productivity grew but ordinary workers’ wages stagnated and income inequality worsened.[2] Restoring workers’ ability to organize is the first step in getting wages and productivity moving together again in a way that will return the economy to an era of sustained and shared prosperity.

Second, when unions and employers work together in partnerships that foster worker engagement, teamwork, and coordination they have demonstrated their ability to solve difficult problems and achieve world class levels of productivity and service quality.[3] This is precisely what is needed today to realize the full return on the investment of public resources the nation is making in infrastructure, renewable energy, health care, and other industries. However, these innovative workplace practices and the improvements in productivity and service quality they generate cannot be achieved if, as is the case today, conflicts, tensions, and resistance dominate in organizing processes and bargaining relationships. Fixing the basics in labor law and following this up with industry-specific initiatives to put these innovative practices to work are essential to getting the full return on the investment of these public resources.

A third stream of research shows that many of the core workplace standards in the US –from health and safety and wage and hour regulations to family medical leave practices–are most fully implemented in workplaces where there are unions.[4] Workplaces with unions also tend to foster more innovative methods that ensure that policy objectives like improving health and safety are achieved in ways that make firms more competitive.  Economic recovery and adherence to core workplace standards can go hand in hand. Once the basics of labor law are fixed, government regulators can work with progressive employers and unions in new, more flexible ways to achieve the joint gains in performance and employment standards we know are possible.

How to Link Legal Reforms to Economic Recovery and Transformed Labor-Management Relations

Two additions to the bill are needed to make the economic contributions of a transformed collective bargaining and labor management system a cornerstone of future labor policy.

First, the preamble to the bill should state explicitly its objectives are threefold:

1. To restore workers’ rights to join a union and gain access to collective bargaining by reducing the degree of conflict, delay, and intimidation experienced in the organizing and first contract negotiation processes;
2. To transform labor management relations in ways that contribute to economic recovery and shared prosperity, and;
3. To encourage cooperation, innovation, and improvements in labor management relations.

Second, I would add the following provisions to this bill to ensure the new law is used as a foundation for building the types of innovative and productive labor management relations the modern workforce wants and the economy needs. The Secretary of Labor should be charged with the responsibility and provided the resources needed to carry out three tasks:

1. To create a National Council on Workplace Relations composed of business, labor, and neutral labor relations experts to promote continuous improvements in workplace practices, relationships, and performance;
2. To monitor and evaluate the new law and progress toward improved labor management relations and report the Secretary’s findings back to the Congress and the Administration on a periodic basis, and;
3. To offer the Secretary’s suggestions regarding any further changes in labor law and policy that may be needed.

Adding these provisions would both hold labor policy to the same standards of evaluation and performance as other aspects of economic and social policy and make it clear that fixing these basics in labor law is only the first step in revitalizing our labor management relations system and putting it on a more productive course.

Shaping the Provisions into a Systemic Solution

The draft of the bill does take the type of systemic approach the evidence indicates is required by addressing all three stages of the organizing-first contract bargaining process: pre-election phase in which workers sign authorization cards to demonstrate significant interest in representation; the election phase, and the first contract negotiation phase.

The Ferguson study demonstrates something needs to be done to fix the pre-election process since his data show this is the phase of the process where employer resistance through unfair labor practices have their biggest effects by reducing the chance of even getting to an election. Unfair labor practices in this early phase reduce the chances of holding an election by about 25 percent. The EFCA solution to this problem is to allow for union recognition upon a showing that a majority of the workers in the proposed bargaining unit have signed authorization cards.

I understand that some of you are convinced of the need to modify this part of the bill. One option that has been suggested would give workers the choice when signing a card to check off whether they authorize representation or want to hold an election if 50 percent of their peers also sign. Another is to mail in signed cards to the NLRB or a neutral third party. These are both creative ideas that would overcome some of the concerns voiced about the card check process.

A third option could be to continue to treat elections as the favored process for determining representation but would instruct the NLRB to certify a union on the basis of majority card authorization if the employer engages in any unfair labor practices in the initial stages of organizing prior to an election. This would essentially say that society supports fair elections but employers who violate worker rights forfeit their opportunity to require an election. In turn, any union that is shown to violate the law by intimidating or pressuring workers to sign authorization cards might also forfeit its right to certification on the basis of card check. I believe including this option would serve as a strong deterrent to illegal behavior in this critical early stage of the organizing process and would enhance the ability of workers who want representation to get to an election in a reasonable time frame with less conflict and risk of retaliation.

Assuming elections will remain as one or the favored means of determining certification, the proposals that appear to be gaining support are to ensure that elections are held in a timely manner, challenges to bargaining units or other procedural issues are addressed post-election so as to not to delay the process, and strengthened penalties to deter illegal behavior. I am pleased to learn that there is growing consensus around these ideas.

The debate now appears to be centering on the provisions in the bill for first contract arbitration. The sparse wording of the bill has made it an easy target for opponents to argue that everyone will end up having a contract imposed by “government arbitrators” who know nothing about business or labor issues. These critiques belie the experiences accumulated in over thirty years of arbitration in the public sector[5] and similarly long experience with first contract arbitration in Canada.[6] It is time to get serious and put an end to these ungrounded misconceptions about how arbitration would actually work.

Anticipating this day would come, Arnold Zack, a past President of the National Academy of Arbitrators, and I worked together with several other experts to review the accumulated evidence with interest arbitration. We used this evidence to spell out a set of design features that are consistent with the objectives and general framework of the EFCA and that address each of the arguments against arbitration put forward by critics of the bill.

Here’s a brief description of how the system we propose would work.[7]

1. FMCS would assign a mediator as soon as a new unit is certified and provide the full range of mediation, education, and facilitation services needed to help the parties reach a voluntary agreement and start their relationship off on a positive footing. The vast majority of cases are likely to be resolved in negotiations and mediation. In fact, settlements are reached over 90 percent of the time in public sector jurisdictions that provide for arbitration. The same has been true for first contract bargaining in the provinces of Canada that provide for first contract arbitration. So contrary to those who argue every case will go to arbitration, the presence of arbitration encourages and enhances the ability of the parties to reach voluntary agreements in negotiation and mediation, and incidentally does so without employees or employers having to bear the risks and costs of a strike to get a contract.
2. The arbitration process would be triggered if the parties that have not reached agreement at a date certain, or at any point prior to that date that FMCS determines the parties are not able to reach a negotiated agreement, unless of course both parties agree to continue negotiating. FMCS would provide the parties with a list of experienced arbitrators who had previously been vetted and judged by a panel of business and labor representatives to be qualified to serve as neutral arbitrators. Note these will not be “government arbitrators” or individuals appointed at the whim of the FMCS as some critics have suggested. To get on this panel, arbitrators would have to meet the standards of experience, expertise, and mutual credibility as determined by business and labor leaders. Moreover, by mutual agreement, the parties would retain the right to jointly select an arbitrator of their own choosing rather than picking one from the FMCS list.
3. The employer and union in a particular case would then choose their neutral arbitrator from this list.
4. The employer and union would appoint their own arbitrators to join the neutral in a tripartite structure thereby building more opportunities for input and mediation in the process and giving the parties another way to inform the neutral arbitrator about how different decision options would affect the business and the workforce. Experience shows that these tripartite deliberations often produce either an agreement or a unanimous decision.
5. The scope of issues to be considered would be limited to wages, hours, and working conditions—the same issues that currently are mandatory subjects of bargaining. So once again this guards against critics’ worry that an arbitrator would somehow intrude on so-called “management rights” to run the employer’s business.
6. The arbitrators would be required to consider standard criteria in reaching their decisions, including the financial and competitive situation of the employer and common practices within the occupation and industry.
7. Further opportunities for mediation and negotiation would be built into the tripartite process during and, if the neutral arbitrator believed it to be useful, even after a draft award has been written.

Experience, reinforced by evidence from econometric studies, demonstrates that the results of this type of arbitration system mirror negotiated settlements in comparable bargaining units in their industry and occupation. Moreover, arbitrators are inherently conservative and are reluctant to impose new ideas of their own that might turn out to be unworkable. The presence of employer and union arbitrators in the tripartite structure and deliberations provides further protection against such a possibility. So there is no factual basis for claims of critics that arbitrators will either inflate labor costs or impose decisions that are harmful to employers or workers.

This is the real-world of collective bargaining under arbitration, not some made up dooms-day scenario painted by those who oppose designing a proven, fair system for resolving first contracts if one or both parties are unwilling or unable to negotiate an agreement on their own. Most importantly, it would ensure an agreement will be achieved, something that has been out of reach under the current failed law for over 40 percent of employee groups that vote for representation. It would also ensure agreements are achieved within a reasonable but certain period of time without the extended delays that would ensue if, as some have suggested, arbitration could only be triggered if the NLRB or the courts determined an employer failed to bargain in good faith.

I urge you to incorporate the design elements proposed above into the bill.

Moving Forward: Passage and Implementation

I hope that this summary of the evidence and the possibility for a reframed and slightly modified Employee Free Choice Act helps move the legislative process along and provides a basis for engaging business, labor, and government leaders in a cooperative effort to work together in meeting the enormous challenges facing our economy and society. In this spirit, I hope it also provides the President a way to engage this issue, see it as part of his economic strategy, and to urge Congress to enact these reforms and to urge business and labor leaders to work with him and his Administration to realize its full potential. A new culture of cooperative and productive labor management relations is needed and with these actions can be achieved. I look forward to continuing to work toward these objectives with you all.

Sincerely,

Thomas A. Kochan

[1] John-Paul Ferguson, “The Eyes of the Needles: A Sequential Model of Union Organizing Drives, 1999-2004.” Industrial and Labor Relations Review Vol. 62, No. 1 (October, 2008), 3-21.

[2] Frank Levy and Peter Temin, “Institutions and Wages in Post-World War II America,” Working Paper, MIT Department of Economics, 2008.

[3] Eileen Appelbaum, Jody Hoffer Gittell, and Carrie Leana, “High Performance Work Practices and Economic Recovery.” www.lerablog.org.

[4] See for example, David Weil, “Enforcing OSHA: The Role of Unions,” Industrial Relations, Vol. 30, No.1, 2008, 20-36.

[5] Thomas Kochan, David Lipsky, Mary Newhart, and Alan Benson. “The Long Haul Effects of Arbitration: The Case of New York State’s Taylor Law,” Draft manuscript, January, 2008. Available at http://mitsloan.mit.edu/iwer/.

[6] Susan Johnson, “First Contract Arbitration: Effects on Bargaining and Work Stoppages, Paper presented at the Labor and Employment Relations Association, January, 2008 available from the author at Department of Economics, Wilfrid Laurier University, Canada.

[7] For the details see (see Arnold Zack, “Arbitration of First Contracts: Issues and Design Features,” www.lerablog.org).

Written by Thomas Kochan, February 23, 2009
(Read more on LERA’s “Work in America” initiative)

This is an open letter urging leaders in the labor and employment relations community to work together to support the nation’s efforts to recover from our deep economic crisis.  Our predecessors did so in times of past national crises.  Now it is our time to step up to our leadership responsibilities.  I believe there is a way to do so that meets the needs of the moment and updates the full range of labor and employment policies to catch up with the needs of the 21st century workforce and economy.  What follows is a call to action for responsible leaders in the labor, business, government, and academic communities that make up our profession.

The deepening economic crisis has prompted the nation to embark on the largest and most complex public investment in job creation since the Great Depression. Translating these investments into good jobs and the high productivity needed to generate and sustain them will require major changes in labor policies, labor management relations and workplace practices.  This in turn will require leaders from business, labor, and community groups to work together with government officials toward this common goal.

Unfortunately, this crisis also comes at a time when business and labor are trapped in the biggest ideological battle since the 1930s.  Today, like then, labor law is broken and business and labor are deeply divided over how to fix it.  But as responsible leaders of the labor and employment relations profession—whether we work in business, labor, government, academia, or as independent neutrals–we cannot allow this impasse to continue.  If we are to be worthy of the term “leaders,” we must work together and demonstrate that we can build a modern, 21st century labor management relations system that is part of the solution to our economic crisis, not another dimension of the problem.

The new economic recovery program provides both the opportunity and the need to do so.  All we have learned from research and practice over the past two decades is that to translate the large financial or technological investments into good jobs and high productivity requires complementary investments in training and workforce development, full engagement of worker knowledge and skills to drive problem solving and innovation, teamwork, and coordination across occupational groups, and positive partnership-based labor management relations.

This transformation in policy and practice will not happen if the status quo divide between business and labor is not resolved, or even if we fix labor law and simply recreate the next generation labor management relations in the mirror image of the past.  Instead these investments will be dragged down by bitter and drawn out battles over union representation and traditional adversarial negotiations over wages and other terms of employment.  Moreover, we will not get the diffusion of the high performance work practices needed to generate the productivity essential to support gradual improvements in wages.

I believe there is a way to both break the impasse over labor law and lay the foundation for achieving the transformations in policy and practices needed to support the economic recovery program.  In what follows, I’ll outline a three step strategy for doing so that:  (1) fixes labor law and builds a platform for labor, business, and government to work together to support economic recovery, (2) ensures the public’s resources are matched with labor management and workplace innovations needed to create good jobs and the high productivity that will sustain them, and (3) strengthens and updates the full range of strategies and practices used to enforce America’s labor and employment policies and standards.

Reframing the Debate over Labor Law

The starting point is to reframe the debate over labor law to view it as the first, necessary step in transforming labor policy and practice to support economic recovery and to better match policy and practice to the needs of the 21st century workforce and economy.  To do so the bill enacted has to both fix the demonstrated failure to protect workers’ rights to organize and gain access to collective bargaining and provide a platform that opens the door to a new era of innovation in labor management relations.

Supporting Workers’ Rights. The evidence that America’s labor law is broken is overwhelming. Today over 50 million workers would join a union but can’t do so because management resists.  In the most complete study of the organizing process ever conducted, MIT’s John Paul Ferguson has shown that if management chooses to resist worker efforts to organize to the point that an unfair labor practice is filed, unions have less than a ten percent chance of getting from a request for recognition based on a showing of worker support, through an election process, and all the way to achieving a first collective bargaining contract.   So reform of labor law is warranted on human rights’ grounds alone.

Supporting Economic Recovery. Three large bodies of research also demonstrate why restoring worker rights is also a necessary first step for building a sustained and broadly shared recovery.

Unions have historically been the strongest and most consistent institutions for achieving gradual improvements in worker wages and for reducing income inequality within and across industries and occupations.   The passage of the National Labor Relations Act as part of the New Deal laid the foundation for what became known as the post war “social contract.”  From the mid 1940s through the 1970s wages grew roughly in tandem with productivity growth.  As union membership declined precipitously after 1980, this social contract broke down. Productivity grew but ordinary workers’ wages stagnated and income inequality worsened.   Restoring workers’ ability to organize is the first step in getting wages and productivity moving together again.  Vice President Biden and his middle class task force will not be successful in rebuilding middle class incomes without restoring workers’ ability to gain access to collective bargaining.

Another equally large body of industry specific research supported by the Alfred P. Sloan Foundation has demonstrated that major investments like those about to be made in infrastructure, renewable energy, health care, and others only realize their full return if combined with workplace relationships that foster worker engagement, teamwork, coordination, and labor-management partnerships.  These innovative workplace practices and the improvements in productivity and service quality they generate cannot be achieved if, as is the case today, conflicts, tensions, and resistance dominate in organizing processes and bargaining relationships.  Fixing the basics in labor law and following this up with industry-specific initiatives to put these innovative practices to work are essential to getting the full return on the investment of these public resources.

A third stream of research shows that many of the core workplace standards in the US –from health and safety and wage and hour regulations to family medical leave practices–are most fully implemented in workplaces where there are unions.   Workplaces with unions also tend to foster more innovative methods that ensure that policy objectives like improving health and safety are achieved in ways that make firms more competitive.  Economic recovery and adherence to core workplace standards can go hand in hand.  Once the basics of labor law are fixed, government regulators can work with progressive employers and unions in new, more flexible ways to achieve the joint gains in performance and employment standards we know are possible.

Expanding the Employee Free Choice Act. The immediate locus of debate between business and labor is the Employee Free Choice Act, a bill passed by the House of Representatives last year and that had majority but not filibuster proof support in the Senate.  The elements in the bill address the weaknesses in the law that have been documented in the organizing and the first contract negotiation process by providing for card check recognition, increasing the penalties for labor law violations, and providing for arbitration of first contracts if the parties are unable to reach a negotiated agreement.  This is not the place to debate these specific provisions.  The time will come for that in the legislative process.  I am convinced, however, that, once introduced, an acceptable bill that fixes the basic flaws in the current law can be enacted if the bill is reframed as the first necessary step in revitalizing and transforming labor management relations in ways needed to support economic recovery.  However, trying to enact this bill without showing how it is essential to the economic recovery program will simply perpetuate the business-labor divide and likely continue the thirty year political gridlock over labor law.  If this happens, labor policy will continue to be treated as an economic backwater tied up in “special interest politics” and its needed contributions to economic recovery will be lost.

To jumpstart the needed transformation, the preamble to the bill should state explicitly its objectives are threefold.

1. To restore workers’ rights to join a union and gain access to collective bargaining;
2. To transform labor management relations in ways that contribute to economic recovery and shared prosperity, and;
3. To encourage cooperation, innovation, and improvements in labor management relations.

A provision of the bill should then instruct the Secretary of Labor and the Director of the Federal Mediation and Conciliation Service (FMCS) to work proactively with business and labor leaders to achieve these objectives and to report  back to the Congress and the Administration  within three years on progress toward them and to suggest further changes that may be needed.

Putting the Law to Work. The central responsibility for making this law work will lie with a greatly expanded and revamped FMCS.  The FMCS will need a well executed strategy to help newly formed bargaining units achieve first contracts and build modern high quality labor-management relationship right from the start.  Specifically, FMCS should:

• Assign a mediator to each new unit immediately upon certification and empower the mediator to offer the full range of FMCS services—education, training, facilitation, mediation, and once an agreement is reached, access to funds to support continuous improvements.
• Work with employer, union, and neutral experts to design the arbitration procedures in the new law to maximize the effectiveness of negotiations and mediation (i.e., minimize use of arbitration) and assure arbitration decisions fully reflect the needs, economic circumstances, and features of the industry and organizations involved.  A wide variety of design options and administrative processes are available to meet these objectives.  The key is to build a process that serves the public interests and has the trust, confidence, and support of responsible employer and employee representatives.
• Initiate and support a broad educational effort, working in cooperation with business, labor and educational institutions, to train the next generation of labor relations professions in state of the art negotiations, problem solving, dispute resolution, and partnership practices and skills.
• Develop the capacity to facilitate the labor- management and workplace innovations needed for industry specific investments to realize their full return.  The FMCS should also be instructed to work directly with other agencies of government responsible for distributing and overseeing the use of federal stimulus investments to ensure that state of the art labor management and high performance workplace practices are put in place in order to achieve the full return on the public’s investments.
• Create a national advisory council of business and labor leaders to help oversee this effort, with industry-level sub councils in those sectors in which public funds are invested.

If reframed, enacted, and implemented as outlined above, the new labor law can serve as a platform for labor, business, government, and community leaders to work together to achieve the transformations in workplace practices needed to translate the economic investments into good jobs and high productivity and to get on with the task of modernizing the full range of policies and regulations governing the workplace to better reflect the 21st century workforce and economy.

Translating Industry Investments into High Performance

The stimulus program calls for investments designed to create jobs and repair the nation’s infrastructure, promote energy conservation and development and use  of green technologies, and expand use of new technologies as a first step toward more comprehensive health care reform.  Each of these initiatives requires a workforce strategy to realize its objectives and expand middle class jobs.  Policies should be put in place to hold business and labor accountable for creating jobs and workplaces that not only comply with all workplace laws and regulations, but that build the knowledge-based work systems and labor management relationships necessary to achieve high productivity and high wages.  To do so the Secretary of Labor and the Director of FMCS should be instructed to create industry councils to identify, learn from, and diffuse practices needed to build and sustain high performance workplaces across these industries.  Investment funds should be allocated and/or reallocated to provide incentives and to reward those firms that have state of the art practices in place.

These efforts will need to be tailored to meet the specific circumstances of the different industries.  I illustrate here what such an effort would entail for the infrastructure/green jobs sector.

Infrastructure Repair and Energy Conservation. The President has issued two Executive Orders that need to be taken into consideration in designing a workforce and workplace strategy for this sector.  One prohibits use of federal funds to discourage unionization and the other reauthorizes use of Project Labor Agreements (PLAs) on federal projects.  FMCS and the Department of Labor should take the following steps to ensure these new PLAs promote constructive labor management relations, access to training and jobs for  underrepresented groups, complete projects on time, safely, and within budget:

• Create and facilitate a national construction industry labor-management council composed of industry, labor, community and academic experts to advise on best practices, develop model language for new PLAs and review and approve agreements as a condition of receiving funding.
• Charge the council with developing human resource recruiting/training plans needed to match supply and demand and to assure women and under-represented minorities have full access to the jobs created.   Coalitions to promote green collar job opportunities for underrepresented minorities have begun a very constructive dialogue with representatives of building trades’ unions and apprenticeship programs.  These efforts need to be encouraged and facilitated to expand job opportunities and match supply and demand.
• Facilitate negotiation of PLAs and promote innovations in labor-management practices needed to achieve high levels of productivity, safety, and labor-management cooperation.
• Work with the Occupational Safety and Health Administration (OSHA) to explore the possibilities for certifying qualified projects/worksites under OSHA’s Voluntary Protection Program to promote improved safety and health through an engaged workforce and union-management relationship.
• Evaluate the effects of PLAs and related workplace practices/innovations, report and disseminate results.

Similar efforts will need to be tailored to fit the needs of the health care, auto, airline, and other sectors likely to receive federal funds.

Strengthening and Updating Enforcement of Employment Standards

The third step in transforming labor policy requires a longer term effort to strengthen and modernize the enforcement of the myriad of regulations governing employment relations. Years of neglect and in some cases active undermining of the enforcement duties of key agencies in the Department of Labor such as the Occupational Safety and Health administration and the Wage and Hour Division need to be overcome. However, even in the absence of an economic crisis, there never would be enough funds available to provide the number of inspectors or enforcement agents to police these employment standards in the traditional command and control way.  Given the economic crisis, resources will be even more limited.  Each of these agencies will need to experiment with ways both to strengthen traditional enforcement strategies and to draw on and leverage the expertise and resources of labor unions, community groups, progressive employers, and dispute resolution professionals.  To build support for these experiments the Secretary of Labor and other Administration departments should work with labor and employer representatives to update administrative practices, enforcement strategies, and regulatory processes of the key agencies governing the workplace.

Moving Forward

This is a pivotal historic moment for our profession. If we step up to our responsibilities as leaders and professionals, we can both help manage our way through this crisis and come out of it with a transformed labor and employment relations system our workforce wants and our economy needs.  Let’s roll up our sleeves and get on with the job.

End Notes

[1] For a summary of this research see Eileen Appelbaum, Jody Hoffer Gittell, and Carrie Leana, “High Performance Work Practices and Economic Recovery, November, 2008. Available at http://lerablog.org

[2] Richard B. Freeman, “Do Workers Still Want Unions? More than Ever,” Economic Policy Institute Briefing Paper, February 22, 2007. Available at www.sharedprosperity.org.

[3] John-Paul Ferguson, “The Eyes of the Needles: A Sequential Model fo Union Organizing Drives,’ Industrial and Labor Relations Review, Vol. 62, No. 1 (October, 2008), 3-21.

[4] Frank Levy and Peter Temin, “Institutions and Wages in Post-World War II America,” Working Paper, MIT Department of Economics, 2008.

[5] Appelbaum et al, “High Performance Work Practices and Economic Recovery.”

[6] See for example, David Weil, “Enforcing OSHA: The Role of Unions,” Industrial Relations, Vol. 30, No.1, 2008, 20-36.

             It is time to report John McCain’s answer to the question on the minds of many voters this year:  “What would you do to reverse the decline in jobs and wages?’ 

The urgency around this question increased with the August job numbers reported on Friday:  Another 84,000 jobs were lost, totally over 600,000 so far this year.  Unemployment is up to 6.1 percent.  Even that number understates the size of the problem.  If the number of part-time workers who can’t find full time jobs, the number of discouraged workers who want to work but have given up looking for a job, and the number marginally attached to the labor force are added to the official unemployment number, more than 10 percent of labor force can’t find a job that meets their minimal needs.
           

            So it is not surprising that this question is registering loud and clear with all candidates running for office this year.  John McCain mentioned it specifically in his acceptance speech, using examples from several workers and families struggling with unemployment, multiple jobs, and rising health costs.

            His answer starts with his tax policy, aimed at fostering job growth through business growth, particularly growth of small business.  He would continue the tax cuts enacted during the Bush Administration and cut the corporate tax rate from 35 percent to 25 percent.  He would also enact and make permanent a 10 percent tax credit for investment in research and development.  So his major strategy is to stimulate job growth through entrepreneurship, innovation, and business growth.

            In his acceptance speech Senator McCain also noted the need to modernize the nation’s unemployment insurance system and to simplify and expand training programs.  He noted that unemployment insurance was designed for a 1950’s economy, largely to deal with temporary layoffs of male breadwinners who had a reasonable chance of being recalled to their old jobs when the economy improved.  While Senator McCain has provided the details of how he would reform the unemployment insurance system, he has suggested the need to help workers move to new jobs with more training assistance and perhaps to provide some form of wage insurance—subsidies that make up the difference in the wages of the job lost and the job found. 

            John McCain’s policy papers also speak to one other pressing labor market issue:  the need for greater flexibility and choice for workers to balance their work and family responsibilities. He notes he supported passage of the Family and Medical Leave Act in 1993 and further supports a bill that would allow businesses and workers to substitute time off (“comp time”) in lieu of overtime pay after 40 hours of work. 

He further calls for creation of a bi-partisan  National Commission on Workplace Flexibility and Choice to advise him  on “how modernizing our nation’s labor laws and training programs can help workers better balance the demands of their job with family life and to enable workers to more easily transition between jobs.”  The Commission would be asked to explore ways of modernizing labor laws to promote flexible scheduling, tele-work, homework and benefit portability.

            So the good news is that both parties and candidates have jobs and labor market policy issues on their agendas.  The Democrats have a broader and more ambitious set of specific policy actions (see my August 27^th blog); the Republicans take a more indirect approach of using tax policy to stimulate business growth and look to training, labor market adjustment, and flexibility in balancing work and family lives to help workers better navigate the changing world of work.

            The differences in substance, focus, and approach provide voters with a clear choice.  Which one sounds right to you? 

In a recent LERA blog I suggested that one of the biggest questions voters want to ask candidates this year is:   What will you do to reverse the decline in jobs and wages?

The Democrats’ answer is emerging this week out of the many policy forums and speeches taking place at their convention.  And they are delivering their message by drawing on political history, economic facts and analysis, and personal stories.  Their bottom line is the crisis facing working families requires a transformational strategy to create new jobs, increase workers’ bargaining power, and raise wages in line with future productivity growth.  

This message was conveyed through personal stories by Hillary Clinton in her unifying speech to the convention.  She spoke about hard working families she met during her campaign who were struggling to make it on the minimum wage, coping with a catastrophic illness, or working multiple jobs so they could send their kids to college.  It was reinforced by other speakers such as the laid off auto worker about to lose his health insurance and the woman who lost her battle for equal pay because the Supreme Court ruled she didn’t file it on time (even though she didn’t discover she was paid less than men doing the same work until years after the discrimination had started).  AFL-CIO President John Sweeney focused on how the economy is failing ordinary workers in his speech and in his introductory remarks at a morning panel on “All Boats Rising:  Transforming the American Economy.”

 Throughout the week the Economic Policy Institute provided delegates with the more analysis and facts showing why working families have reason to be distressed and worried.  So far this year the US economy lost over 500,000 jobs and over one million part time workers can’t find full time work.  What really frustrates workers is that they are doing their part to contribute to economic growth but not getting their fair share in return. Since 1980 productivity grew by over 70% and wages of average workers grew less than 5% and wages are now in falling further as inflation surges. 

The panelists at the AFL-CIO and The American Prospect All Boats Rising panel put these issues in historical perspective by drawing on the legacies of prior presidents like Lincoln, FDR, Johnson, and Reagan who responded to the crises they inherited with bold new policies that transformed the nation.  Indeed, panelists from Paul Krugman to Robert Kuttner and Julianne Malveaux suggested a broad consensus on what needs to be done is emerging across diverse set of economists and policy advisors.  They argued that Barack Obama could become a truly transformational leader and President if he seizes the moment and translates the crisis facing working families into a bold set of policies.

The Obama campaign has responded with a policy agenda that moves in this direction.  For those at the bottom of the wage distribution President Obama would increase the minimum wage and tie it to future increases in inflation.  To help young people (and adults willing to go back to school) get the education and skills needed to gain access to the better paying jobs he would expand grants and tax credits for college and encourage unions and employers to increase their investments in training and workforce development funds that have proven their value in industries as diverse as construction, health care, hotels, and telecommunications.

Moreover, Obama would be the first president since Franklin Roosevelt to say directly that he sees unions as the key to providing the bargaining power workers need to secure a decent middle class living.  He has committed to amending the nation’s labor law so that the more than 50 million workers who say they want to join a union will be able to do so without fear of getting fired or having their efforts frustrated by employer opposition.

The Obama job creation strategy is equally bold.  Again he would be the first president since Roosevelt who is committed to investing public funds to create an estimated 5 million new jobs by jumpstarting a renewable energy industry, repairing the nation’s infrastructure, and providing universal health care coverage.

Robert Kuttner made the point that a transformational agenda requires a transformational leader.   In his view what has attracted so many Americans to Barack Obama is that Obama has demonstrated throughout this campaign exactly the type of moral and inspirational leadership needed to bring the country together.  So the key to implementing the agenda lies in Obama’s ability to mobilize the collective energy required from business, labor, government, and workers to build an innovative and productive economy and a shared prosperity in which all boats do in fact rise together. 

We can expect to hear a great deal more about this job and wage issues as Labor Day approaches, and if these policy analysts are right, for a long time after that.

The American Dream seems to be on everyone’s mind these days, especially as the 2008 elections approach.

The essence of the American Dream is that by working hard and playing by the rules members of each generation should be able to improve on the standard of living they experienced growing up. Yet that dream is at risk for today’s working families, and particularly for our children and grandchildren.

Many of us in the Labor and Employment Relations Association (LERA) have been concerned about this for a long time. It was the focus of our 2008 National Policy Forum. I wrote a book about it several years ago (Restoring the American Dream: A Working Families Agenda for America, MIT Press, 2005). So I am especially pleased to see that this issue is playing such a prominent role in this year’s Presidential and Congressional election campaigns. Indeed, Barack Obama and the Democrats have made “Renewing the American Dream” a major theme for their platform and vision for the future. I expect John McCain and the Republican Party will counter with their own vision on this issue when they convene in early September.

The challenge lies in turning their grand visions into concrete and forward-looking policies and actions that speak to the needs of today’s working families. Workers have good reason to be skeptical. They know first hand that they have been working harder and longer than ever before yet are seeing their incomes decline and their jobs, health care coverage and costs, and retirement security all be put at risk. They want and deserve concrete answers to the question of just how will candidates give them and their children the tools they need to contribute to and prosper in today’s economy and the world of work.

So I want to use this blog, and others to come in the next several weeks, to report on just what the political parties and their candidates plan to do to “restore or renew” faith in the American Dream. I will start here by laying out the key questions I believe workers want and need answered and then report next week on how these questions are being addressed at the Democrats at their Convention. Later, when the Republicans convene, we can explore how they are preparing to address these issues. As we proceed, I invite you to email me your own questions, or to comment on the answers I report.

For the sake of full disclosure I should tell you where I am coming from. For the past year I’ve served on the Labor, Employment, and Work Policy Committee for the Obama Campaign. I do not speak for the campaign. My comments here will be just my personal views, based on my own research and work on labor and employment issues over the past 30 some years.

So for what they are worth, here’s my list of some of the challenges working families face today and the questions I think they want answered and that I’ll be listening for as the election debate unfolds:

It all start with jobs and wages: Will there be good paying, sustainable jobs available for all who want to and need to work? We have lost over 500,000 jobs just this year and over 1 million part time workers can’t find full time jobs. Meanwhile wages have essentially not grown for the past two decades and now are falling faster as inflation surges. Young people and recent graduates are especially hard hit by the scarcity of good jobs. So the first and foremost question for our candidates has to be: What will you do to reverse the decline in jobs and wages?

Today it takes two working parents to make ends meet but our employment policies still seem to assume that the average worker is a male breadwinner with a wife at home who can take care of children, aging parents, and other family responsibilities. What will you do to help working parents meet their dual responsibilities—at work and at home?

We all have a stake in resolving America’s health care crisis. How will you provide health care coverage for the uninsured and improve the quality and control the costs of health care delivery? And on behalf of those working in health care, how will you ensure that the we fully engage and utilize the skills, knowledge, and commitment of health care workforce as we take up these challenges?

There is overwhelming evidence that labor law is broken and many of its doctrines no longer capture work as it is carried out today. Workers have less than a one in ten chance of getting access to collective bargaining if their employer resists their efforts strongly. So how will you fix labor law to ensure the more than 50 million workers who want to join a union are able to do so without risking their jobs or having to deal with the stresses and delays of heated campaigns. And what will you do to build the type of cooperative, respectful, and productive labor management relationships workers want and the economy so badly needs?

Few workers today either know what their rights are or trust the government agencies that are supposed to enforce them. This not surprising since the budgets of many of these agencies have been starved in recent years and the people in charge of of some of them who don’t believe in their missions. What will you do to restore trust in these government agencies, to protect workers from unscrupulous employers, and to level the playing field for employers who respect worker rights and meet or exceed the minimum standards in our labor and employment laws?

Unemployment arises today for reasons that are very different than the ups and downs of the business cycle the UI system was designed to address. Today most of those unemployed today have either lost their job permanently, are coming back into the labor force after taking needed time to care for family responsibilities, or to get further education. That’s why UI now covers only about 1/3 of those out of work. How will you update our UI system to deal with these new realities?

Finally, most Americans are fed up with and want to get beyond the ideological labor versus management battles of the past. They just want to be treated with dignity and respect and to work together to improve products and services they deliver to their customers, patients, students, and communities. What will you do to promote cooperation, innovation, and respect among their co-workers, managers, union leaders, and everyone else at work?

In the days ahead, I’ll report on the answers I hear to these and other questions from our candidates. And I invite you to ask the questions most on you mind, or to report the answers you hear as well.

Thomas A. Kochan

George M. Bunker Professor of Management

MIT Sloan School of Management

“Shared fury and frustration among the employees of US Airways brought us together today in an effort to get management to complete the merger that began nearly three years ago. We are furious that, due to management inaction, we have become the poster child for what not to do in a merger. We are frustrated with management’s hands-off approach to resolving labor issues.
“Instead of working with labor to develop long-term solutions that would fix the problems plaguing our airline, US Airways management continues employing tactics that demoralize its workers. As a result, employee morale is at an all-time low, our stock has plummeted, and our passengers are left literally holding their bags.
Air Line Pilots Association Association Website: www.alpa.org
Downloaded February 4, 2008

How the merger discussions now underway among a number of the nation’s largest airlines are handled will either avert or move up the day the industry experiences what our research predicts will be a “perfect storm.” The industry is in a crisis that, if left unattended, could soon result in what we characterize as a perfect storm.

Since 2001 the industry has cut over 100,000 jobs, lost $30 billion dollars, employees have lost over $15 billion in wages and seen their pensions reduced or taken away, morale has plummeted to all time low levels. Customers have endured increased traffic delays and more lost baggage, and not surprisingly customer complaints are at all time highs. The air traffic control system needs a major technological upgrade, airport congestion is stressing the system, and air traffic controllers can’t be hired and trained fast enough to replace those retiring. So on all these dimensions the nation’s air transportation system is being stressed and perhaps approaching its limits. The prospect for a perfect storm in which the pressures explode together is growing and may come to a head when labor contracts covering employees who took the deepest cuts in wages and benefits come due for renegotiations in early 2009. Or it could come sooner if the merger talks underway involving Delta and Northwest and United and Continental proceed without a plan for dealing with the workforce and customer service problems under their control.

The quote at the top of this essay from the union coalition at US Airways shows what happens when workforce issues are not addressed up front as part of the business plan for the merged organization. Figure 1 shows that these union protests are based in reality: In 2007, two years after its merger with America West, US Airways has ranked at or near the bottom of major airlines in on-time arrivals, baggage lost, and passenger complaints.

The potential for similar result exists in the mergers now under discussion. In both cases the mergers would bring together companies with very different cultures, labor relations traditions and systems that will be difficult to integrate in ways that avoid prolonged conflicts and further declines in passenger service. Except for its pilots, Delta is largely a non-union company while nearly all eligible Northwest employees are unionized. Continental and United are both highly unionized by have dramatically different labor management relationships. Since 1994 Continental has worked hard and successfully to turn around a hostile labor management relationship from the 1980s and to the point it has become, according to Fortune Magazine one of the 100 best places in America to work. United has one of the most adversarial labor management relationships in the industry. So if these issues are not addressed up front as part of the merger or if the adversarial culture of bigger United organization dominates the more positive Continental culture, we can expect the day of reckoning to come sooner than later.

There is an alternative. The fact that the Delta-Northwest merger is being held up pending negotiations over how to merge the two pilot groups is actually a good first step. Merging seniority lists is one of the biggest sources of tension in airline mergers. But it is only the tip of the iceberg. Our research shows that there are steps that can be taken to build a sustainable airline that addresses the interests of customers, employees, and investors and that contributes to the national interest in having a strong, safe, reliable, and profitable airline industry. Our basic finding, drawn from both quantitative and qualitative research, suggests that to avoid the perfect storm and to achieve a sustainable recovery airlines need to (1) build a positive workplace culture in which the different occupational groups work together in a coordinated fashion, (2) redesign union-management processes for deciding and resolving worker representation issues and contract negotiations to avoid the long delays and protracted conflicts that have come to characterize both processes, (3) agree on a long term compensation plan in which wages of all employee groups (and managers and executives) increase in a steady, predictable fashion in relationship to overall economic trends in cost of living and in the revenues and profitability of the airline.

Given these findings, we propose the government (not to mention potential investors) should require any merger plan to specify how they will deal with the following issues, all of which will affect the success of the merged enterprise.

1. Management and labor leaders should agree on a process for determining whether and/or which unions or associations will represent different occupational groups in the merged organization that avoids long delays, conflicts, and negative/disparaging anti-union or anti-management rhetoric or actions. The probability that the merged Northwest-Delta organization will continue to have multiple unions representing their employees is very high. Prior experience suggests that Northwest employees will not want to give up union representation. Previous studies have found that between 80 and 90 percent of union members want to continue to be represented if given the choice of representation versus no representation. The likelihood that a majority of Delta employees will want to remain non-union is likewise relatively small. They will quickly see that they need a voice in the merged organization and the question will be who should represent them and what kind of voice-adversarial or partnership-will they want. A prolonged battle over these issues will be disastrous for the merged organization and the public. We found in our research that labor conflicts like this reduce productivity, profits, and customer service. So a plan for dealing with the process for resolving representational issues in an expeditious and respectful manner should be required.

2. Management and labor leaders should have a well developed plan for jointly working to improve the culture of the workplace so that different occupational groups (ground crews, pilots, flight attendants, etc.) work together with their managers to deliver reliable, high quality customer service. United’s infamous employee stock ownership experiment of the 1990s failed largely because it never changed the workplace culture. Continental, on the other hand, was successful in doing so by working hard to communicate with its employees, rebuild trust with its unions and to negotiate fair labor agreements in a timely fashion, and provide incentives and reward for meeting on time performance and other goals that affected both the company’s bottom line and the quality of customer service. The record speaks for itself. So a clear plan for learning from the Continental experience should be required.

3. Management and labor leaders should negotiate a long term labor agreement that gradually restores workers wage and benefits by linking them to increases in the cost of living, management and executive compensation increases, and the financial performance of the firm. The parties should also be required to develop a process for assuring future agreements are negotiated in a timely fashion without resort to work stoppages. The top priority concern of airline employees, and the one that could trigger the perfect storm when their contracts come up for renegotiations is whether they will see their wages recover as the organization and the industry recovers from the recent period of financial losses. Again, if negotiations over this issue bogs down at a minimum our research suggests it will perpetuate or exacerbate financial losses and lower customer service. If, as we predict, the different employee groups will band together to demand their wage and benefits be restored to pre concession levels, the prospect for a strike that is larger than any ever experienced in the industry will loom, and likely require government intervention. Thus, waiting to deal with these issues or dealing with them in the traditional manner will bring the industry right to the brink of a perfect storm situation. Steps to avoid this need to be taken now.

So the merger discussions now underway represent a pivotal moment in the history of American aviation. How government, management, and labor leaders handle this opportunity will determine whether we avert or speed up the arrival of the perfect storm looming on the horizon.

Figure 1
Service Quality Comparisons Across US Airlines
Consumer On Time            Mishandled              Complaints             Arrivals           Baggage
Southwest                            0.3                             80.4                         6.0
Alaska                                   0.8                             71.5                          6.6
JetBlue                                  0.8                            69.3                          5.8
Continental                           1.1                             74.7                           5.7
Northwest                            1.5                             69.7                           5.1
American                             1.8                              69.5                          7.4
Delta                                     1.9                             76.9                           7.7
United                                   2.3                            71.8                           6.0
US Airways                          3.4                            68.0                           8.8
Customer Complaints = complaints per 1,000 passengers, January-September, 2007
On Time Arrivals = Percent total on time arrivals, November 2006-October 2007
Mishandled Baggage = Reports per 1,000 passengers, January-September, 2007.
Sources: Transportation Department and Bloomberg Financial Markets.
Reprinted from Jeff Bailey, “Fliers Fed Up? The Employees Feel the Same, New York Times, December 22, 2007, p. A16.