Will the New Industrial Relations Last? Implications for the American Labor Movement

This paper reviews changes occurring in the U.S. industrial relations system at the workplace, in collective bargaining, and at the level of strategic decision making within business and labor organizations. By relating these current developments to longer term pressures on the post New Deal industrial relations system, we suggest that the system is undergoing fundamental transformation. To adapt to these changes unions will need to redefine their roles at the workplace by reorganizing work and fostering worker participation, adjust their wage bargaining objectives to promote employment continuity and compensation systems that are more closely tied to firm performance, and play a more direct and central role in business strategy decisions within the firm. These changes at the micro level of industrial relations are only likely to be successful If macro economic policies are reformed to provide a more supportive role for labor movement in society. Thomas A. Kochan is a professor in the Industrial Relations Section, MIT Sloan School of Management. He received his Ph.D. in industrial relations from the University of Wisconsin and was previously on the faculty of the Cornell University School of Industrial and Labor Relations. He is currently directing a collaborative project involving the faculty and students in the Industrial Relations Section titled "U.S. Industrial Relations in Transition." This paper draws heavily on the tentative conclusions of that research. Michael J. Piore is a professor of Economics and Mitsui Professor for Problems in Contemporay Technology at MIT. He received his Ph.D. in economics from Harvard University. He is currently working on a forthcoming book with Charles Sabel, The Second Industrial Divide. Will the New Industrial Relations Last? Implications for the American Labor Movement The industrial relations system in the U.S. has been changing in a number of important ways in recent years. The role of collective bargaining as a pace-setter in improving wage and benefits has been called into question by widespread wage, benefit, and work rule concessions negotiated in major industries since 1980. However, equally important changes have been occurring more quietly over a longer period of time both below and above the levels at which collective bargaining takes place. In the workshop, new, more flexible, forms of work organization and experiments in more direct employee participation and communications have emerged in nonunion firms and now are being introduced in some union settings as well. And above collective bargaining at the highest levels of managerial decision-making employers have designed and implemented policies that better integrate industrial relations practices with their strategic business objectives and that have the effect of putting labor unions