Industrial relations refers to processes and outcomes involving employment relationships. Frequently the term is used in a narrower sense, for employment relationships involving collective representation of employees in the form of a labor union or employee association, especially in the United States. At the other extreme, industrial relations has been defined by Thomas A. Kochan, in his book Collective Bargaining and Industrial Relations, as "all aspects of people at work," but there are clearly some aspects of people at work that entail highly technical subjects (e.g., industrial hygiene, ergonomics) which are not normally regarded as falling within the mainstream of industrial relations study.
As an academic subject area, industrial relations is often defined as an interdisciplinary field of applied study. This conception recognizes that employment relationships entail practical problems and other phenomena that transcend any one traditional discipline (e.g., economics). To fully appreciate the multifaceted nature of many industrial relations issues, one must draw from a variety of perspectives, including economics, psychology, sociology, political science, and law, among others. For example, employee compensation issues may be usefully addressed in terms of economic theory, but psychological theories offer useful insights on employee attitudes toward and reactions to compensation matters. Whether the nature of industrial relations issues is sufficiently unique to justify considering industrial relations a" true discipline" has been controversial, but most scholars appear to favor the interdisciplinary subject view. Nevertheless, John Dunlop, a key figure in industrial relations theory, continues to argue (in a 1998 article in Advances in Industrial and Labor Relations) for the advantages of "industrial relations systems theory" over other theoretical disciplines (e.g., economics), and contends that industrial relations is a genuine discipline.
In The Origins and Evolution of the Field of Industrial Relations in the United States, Bruce E. Kaufman attributed the popularization of the term "industrial relations" to a Commission on Industrial Relations created by the federal government in 1912. That commission was created to investigate and report on conditions in "industry" that gave rise to labor problems, including conflict between employers and employees (and their organizations) that often erupted in violence and strikes. Thus the term "industrial relations" referred to "relations" between employers and employees in "industry." Better industrial relations were seen as the solution to labor problems.
Although the term "industry" or "industrial" (as in "industrial relations") connotes for many "heavy" industry (e.g., steel mills, auto assembly plants), this connotation is much narrower than the field's conception of industrial relations. At least to most industrial relations scholars, the term "industrial" is used broadly, as in distinguishing industrialized societies from agrarian societies. As noted by Dunlop (in Industrial Relations Systems) and his colleagues, industrialization gives rise to employment relationships as we know them today, in which large numbers of people work for and in large part follow the direction of others in exchange for wages or salaries and other compensation. This is in contrast to agrarian societies where the farmer is typically self-employed, directing his or her own labor and obtaining his or her livelihood as the difference between revenues and expenses. Thus industrial relations refers to relations between employers and employees not only in heavy industry but also in retailing, government, financial services, education, and recreational services, for example. In fact, even agricultural production, when organized in a form where an employer relies extensively on the services of hired workers, as is increasingly the case, can be said to fall within the purview of industrial relations.
Similarly, industrial relations is not limited to formal employment relationships, but rather to what one might call "functional employment relationships." There are many instances where workers are technically classified as self-employed" independent contractors," and yet for practical purposes these workers are essentially employees. The construction industry provides many examples of this. Many laws governing employment are limited to formal employment relationships, and independent contractor status is often used by firms as a means of cutting labor costs, possibly by avoiding or evading legal obligations to employees. Related to this, temporary employment services whereby firms contract for workers with another firm (which technically employs the workers, paying their wages and possibly benefits such as health insurance), have grown dramatically in recent years. Many firms have found this a cost-effective alternative to traditional employment arrangements. These two types of arrangements are part of a larger and growing work phenomenon that many refer to in terms of the "contingent workforce." This phenomenon contrasts with traditional employment relationships in which one is employed by the firm that controls the work site as a matter of law as well as in a practical sense, and in which the work relationship is generally assumed to be relatively permanent. Some would include many part-time workers as well as many independent contractors and temporary employees in a definition of the contingent workforce. In any case, conceptions of industrial relations as the study of "all aspects of people at work" clearly do not limit the field to formal or legal definitions of employment.
As noted earlier, in the United States especially, the term industrial relations is sometimes viewed more narrowly as referring solely to relations between employers and employee representation organizations, i.e., labor unions, and related phenomena such as union organizing, collective bargaining (negotiations between employers and unions over work matters), and the effects of unions on employment terms and society. In this view, the importance of industrial relations in the United States has fallen apace with the decline of unions over the past four decades. Since the mid-1950s, when unions represented roughly one-third of employees, U.S. union representation has declined so that today unions represent about one-seventh of employees (13.9 percent in 1998). (This overall unionization rate conceals considerable variation across industries. To illustrate, the unionization rate, according to the U.S. Department of Labor's Bureau of Labor Statistics, is about 10 percent in private sector employment, but close to 38 percent in public sector employment.)
The terms "human resources" and "human resources management" have emerged as preferred labels referring to employment issues in the absence of unions, although these terms are not always sharply distinguished from industrial relations. For some, industrial relations is a field within human resources while for others human resources is a field within industrial relations. Clearly, however, the human resources terms have become more popular and the industrial relations term has become less popular as unions have declined. It would be a mistake to regard these changes as merely semantic. Perhaps at the heart of the substantive matter, in simplified form, is the question of whether employment matters will be determined unilaterally by management (the human resources view) or jointly by employers and employees through negotiations with employee representation organizations. Unilateral management determinations tend to be viewed as the norm in setting employment terms or at least specifying the conditions and limitations of employee influence under the human resources view, and collective bargaining tends to be seen as exceptional and often stemming from management's failure to manage properly its human resources (i.e., unions are seen as a result of management's mistakes). In contrast, industrial relations specialists tend to view collective bargaining (and other forms of joint determination) as a normal and legitimate process, or even a preferable process, for determining the bulk of employment matters. Legislation, such as minimum wage laws or bans on child labor, is also seen as a means to remedy labor problems. (It is noteworthy that federal laws declare collective bargaining to be a favored national labor policy although many question the effectiveness of laws promoting this policy [see Restoring the Promise of American Labor Law, edited by Sheldon Friedman and others].) Of course, markets, laws, technology, worker attitudes, and social norms present constraints on determining employment matters in any case.
At this time industrial relations remains the preferred term for describing the field among scholars. One indicator of this is that the major professional association among scholars, which also includes many practitioner members (especially in its local chapters), is the Industrial Relations Research Association. Many industrial relations scholars are also active in the Academy of Management's Human Resources Division, in discipline-based professional associations such as the American Economics Association or the American Psychological Association, or in more specialized professional associations (e.g., for dispute resolution specialists). There has, however, been controversy concerning whether the field has become too closely associated with the narrower conception of industrial relations, i.e., union-management relations, and there have been calls for name changes with the intent of better conveying the broad sense of the field (e.g., "employment relations") or to signal that the field recognizes and wishes to keep in step with trends toward a greater predominance of nonunion employment settings. In the 1980s and 1990s especially, many firms and academic programs tended to play down or even eliminate reference to industrial relations terms, and instead tended to elevate or adopt human resources terms in their job titles, department names, etc. In The New Look in Wage Policy and Employee Relations, Audrey Freedman documented many changes in managerial approaches to industrial relations in leading U.S. firms during the late 1970s and early 1980s.
Apart from this trend, the industrial relations field, like many, has associated with it a large number of alternative or closely related terms, including labor relations, collective bargaining, employee relations, and union-management relations. The collective bargaining term may be particularly significant. As noted earlier, collective bargaining, whereby employers negotiate with unions representing employees to establish contracts specifying terms and conditions of employment, holds a central and legitimate place in the view of most industrial relations specialists. In broad conceptions of industrial relations, it is merely one of a number of alternative mechanisms for establishing terms and conditions of employment. Yet to many, collective bargaining is or at least has traditionally been the "heart" of industrial relations in the United States. Thus it is not unusual to find introductory courses and texts in industrial relations referencing collective bargaining in their titles. In a sense, the view this terminology suggests is that union formation, labor law, and certain other matters are essentially preludes to collective bargaining, whereas contract administration (especially grievance procedures and grievance arbitration whereby employee complaints of contract violations are resolved through union-management negotiations or a neutral party's decision in the event negotiations fail), union effects on employment matters, and so on, are consequences of collective bargaining. Yet in much of the world, and increasingly over recent decades in the United States, collective bargaining per se occupies a less central place in industrial relations.
In addition, the disciplinary areas that contribute to industrial relations often have their own terms that refer to industrial relations but which also may include additional related subjects within the discipline. These include labor economics, industrial psychology, industrial sociology, labor law, and labor history. Similarly, management scholars often regard human resources management as a field within management that includes industrial relations or labor relations as one of its more specialized areas.
Whether one defines industrial relations broadly or narrowly of course influences which topics one would consider specializations within industrial relations. Under a narrower definition of industrial relations, specialized subjects could include industrial relations theory; labor organizations (unions and employee associations); management of industrial relations; labor and management history; labor and business law; collective bargaining and negotiations; industrial conflict (especially strikes); grievance procedures, arbitration and mediation, and other dispute resolution techniques; worker participation or industrial democracy; the effects of unions on employment terms and on society more broadly; and "comparative" or internationally oriented perspectives on industrial relations. A broader definition of industrial relations would include not only these but also topics that fields such as human resources tend to see as their domain, including training and development, workforce diversity, compensation, selection and staffing, and other employment legislation (laws and regulations directly affecting employment terms, such as laws on pensions, safety, and minimum wages, as opposed to "labor law," which mainly governs relations between employee organizations and employers).
As an academic subject, industrial relations tends to be taught either as a subject within management (what one might call "the business school model") or as a separate subject within an institute or school devoted primarily to industrial relations or industrial relations and human resources. After World War II, when unions were still in ascension and had already established themselves as a major power in the U.S. political economy, many of the more industrialized states established or expanded specialized institutes or schools for industrial relations at their major universities. Typically, a major force for this movement was the state's organized labor movement (unions and employee associations), arguing that just as business schools at public universities served the needs of industry, schools were needed to serve the needs of workers. The political compromises struck in state legislatures generally produced a more neutral institution with an emphasis on studying how to maintain and promote industrial peace as well as training students in industrial relations to be employed by industry, government, and labor organizations. In addition to research and more traditional academic degree programs, these institutions often included a "labor education" or "labor studies" component aimed clearly at the needs of organized workers and their organizations. Examples of these institutions include the Institute of Labor and Industrial Relations at the University of Illinois, the School of Labor and Industrial Relations at Michigan State University, the Industrial Relations Research Institute at the University of Wisconsin, and the New York State School of Industrial and Labor Relations at Cornell University. Similar programs were established or expanded in many other states in the Great Lakes region, the Northeast, and on the West Coast. These programs tend to stress graduate and professional level education, although some offer undergraduate courses and degrees.
With the decline of unions in recent decades and the tremendous expansion of business schools at many universities and colleges, at least two important changes in the research and teaching of industrial relations have occurred. First, the specialized industrial relations institutions have tended to follow industry's call for more emphasis on human resources management and less on union-management relations. Second, business schools have become major centers of industrial relations research and teaching, but more as a result of their sheer size and number than as a result of its emphasis within the business school curriculum. In fact, due to its distinctive values and assumptions (see below) industrial relations has often been something of an awkward fit within business schools, which have found human resources management a more comfortable fit. In any case, currently both business schools and specialized schools or institutes in industrial relations are major centers for research and teaching of industrial relations. In addition, some traditional discipline programs (e.g., economics, psychology) are major centers for research and teaching on some aspects of industrial relations.
In Collective Bargaining and Industrial Relations, Kochan suggested that an important factor distinguishing industrial relations from its contributing disciplines and related applied areas of study (e.g., human resources) is a distinctive set of values and assumptions. These include the following propositions:
Some of these assumptions (e.g., inherent conflict of employer-employee economic interests) can be traced at least as far back as the 19th century and the work of German political philosopher Karl Marx (1818-1883); in fact, some regard Marx as the intellectual father of industrial relations. In the United States, however, the "Wisconsin School" of institutional economics, led by John R. Commons (1862-1945) and Selig Perlman (1888-1959) in the early 20th century, rejected Marx's prediction of pathological conflict escalating into inevitable class warfare between workers and capitalists and the ultimate demise of capitalism. Instead, Commons and his followers argued that collective bargaining and legislation could temper the excesses of capitalism, allowing workers and management to resolve their conflicts for the sake of greater common interests within the capitalist economic system. Commons is generally regarded as the intellectual father of American industrial relations.
The dominant paradigm or conceptual framework for the study of industrial relations is the "Industrial Relations Systems" model advanced by Dunlop in his book of the same name. The concept of a system is applied in the sense that industrial relations, according to Daniel Quinn Mills, author of Labor-Management Relations, consists of the "processes by which human beings and organizations interact at the workplace and, more broadly, in society as a whole to establish the terms and conditions of employment." In other words, certain inputs (e.g., human labor, capital, managerial skill) from the environment are combined via alternative processes (e.g., collective bargaining, unilateral management decisions, legislation) to produce certain outcomes (e.g., production, job satisfaction, wage rates). Consistent with the definitions of industrial relations noted above, the study of industrial relations and the systems model focus on outcomes most closely related to the interaction of employees and employers and the "web of rules" concerning employment that they and their organizations, along with government, establish to govern employer-employee relations. Thus production per se is a system outcome, but not a principal focus of industrial relations. It has been noted that the industrial relations system concept may fall short of the definition of a system in the physical or biological sciences, but nonetheless the concept has proved useful and endured. Dunlop, in Industrial Relations Systems, noted that industrial relations systems can be thought of as being embedded in broader social systems. In Collective Bargaining and Industrial Relations, Kochan observed that like any complex social system, industrial relations systems are best understood by identifying and analyzing their various components and how they interact with one another to produce certain outcomes.
The major components of the industrial relations system are:
The basic purposes of the industrial relations systems concept are to provide a conceptual framework for organizing knowledge about industrial relations and for understanding how various components of an industrial relations system combine to produce particular outcomes (and hence why outcomes vary from one setting to another or over time). Thus for example, wage rates for a particular group of workers might be understood as reflecting the interactions of their unions with management via collective bargaining within the constraints of a particular market, technological, and community environment.
The precise specification of system components may vary with the level of analysis and from one system to another. For example, when applied to a particular work site, legislation may be best understood as an environmental constraint upon the immediate parties to the employment relationship (workers, management, and possibly unions). But when speaking of a nation's industrial relations system or systems, legislation can be viewed as a process by which the parties (via government) establish terms and conditions of employment or the rules workers and management must follow in establishing those terms and conditions. As another example, when comparing industrial relations systems at a given level of analysis, the roles of the various actors may differ. Unions may play a critical role in one system, and virtually no role in another. In some national systems (e.g., within certain Latin American countries), other actors such as the military or organized religious institutions may play influential roles. The nature of actor roles may also vary across industries within a nation, perhaps as best illustrated by public sector employment, where government is also the employer.
Although it has endured, the industrial relations systems concept has been criticized and challenged. Criticisms have included charges that it is too static, failing to specify how change occurs in industrial relations; that its treatment of ideology is too simplistic; and that it is too deterministic or does not encourage sufficient appreciation for strategic choices made by the actors.
All of these criticisms have been embodied in recent writings arguing that U.S. industrial relations have been undergoing profound transformations in recent years. Kochan, Harry C. Katz, and Robert B. McKersie—the authors of The Transformation of American Industrial Relations —although not rejecting the systems concept entirely, argue that as it has been widely understood, the systems concept has not prepared us to appreciate the nature and extent of the transformation taking place. In particular, they stress how the strategic choices of management to avoid and oppose unions (both legally and illegally), often in conjunction with decisions to open or close facilities or locate production abroad or in areas where unions are weak, have fundamentally altered U.S. industrial relations. They note for example, that in the 1950s, when unions represented roughly one-third of U.S. workers, the unionized sector of the economy was often the leader in introducing workplace innovations, including innovations in employment terms and work methods. Further, that level of unionization was sufficiently high to provide a compelling model (or perhaps threat) for nonunion firms, such that they tended to follow the lead of the unionized sector. By the 1980s, however, innovation came to be associated more with the nonunion sector, and with unionization falling, the power of the unionized sector as a model to be emulated by nonunion firms was diminished in tandem. For example, although unions themselves represent a form of employee participation, many of the recent innovations in employee participation at the workplace level (e.g., employee involvement programs, team concepts, quality circles, employee empowerment, etc.) are more closely associated with the nonunion sector. In addition, Kochan and his coauthors stress that there are multiple levels of interaction between employers and employees—strategic (e.g., top executives' decisions to open or close facilities), functional (e.g., collective bargaining), and workplace (e.g., day-to-day supervisor-subordinate relations)—arguing that the industrial relations systems conception has tended to encourage excessive preoccupation with the functional level and thereby neglect of the other levels.
During the same time, public policy on employment matters had shifted from a reliance on collective bargaining (and markets) to more of an emphasis on individual worker rights established by statute and judicial decisions. Equal employment opportunity laws and judicial decisions narrowing the notion of employment-at-will (the notion that employer and employee are free to enter or terminate an employment relationship at any time for good reason, bad reason, or no reason in the absence of a formal contract) are prominent examples of this trend.
Reflecting its temporal origins, Dunlop's industrial relations systems concept had tended to portray or least be perceived as portraying collective bargaining as the principal mechanism for setting employment terms, although this is not inherent in the industrial relations systems concept. By the 1980s and 1990s, this tendency (or interpretation) was clearly open to question, if not clearly inaccurate.
Although not denying change, several scholars have argued that even though major transformations in industrial relations may be occurring, they are not inconsistent with traditional understandings of industrial relations or the systems concept. For example, in his essay "Industrial Relations as a Strategic Variable," which was published in Human Resources and the Performance of the Firm, David Lewin noted that many managerial decisions that have been called strategic choices can easily be viewed as managerial responses to environmental imperatives. Thus to the extent that increased domestic and foreign competition put cost-cutting pressures on employers, these can be seen as strongly influencing employer choices to avoid and oppose unions as well as influencing other employer choices about how to organize production to improve quality and minimize costs. In a recent study of possible industrial relations system transformation in several countries, which was published in Industrial and Labor Relations Review, Christopher L. Erickson and Sarosh Kuruvilla noted that the "transformation debate" persists partly because there is no clear consensus on what constitutes transformation.
Whether attributable to employer strategic choices or more fundamental environmental changes that govern those choices, U.S. industrial relations have clearly undergone significant change in recent years and are likely to experience further dramatic change in the years ahead. As already noted, unionization has declined dramatically. With that decline, collective bargaining has diminished in importance as a mechanism for setting employment terms of U.S. workers; rates of increases in wages and benefits for unionized workers frequently lag behind those of their nonunion counterparts (although the union-nonunion wage differential is still estimated to be fairly sizable, in the range of 10 to 20 percent with a higher differential for benefits); strike activity has set new record lows; and union political "clout" is seriously questioned. Many U.S. unions have undergone unprecedented soul-searching in their efforts to develop strategies to respond to these changes. Mergers between unions, new forms of membership and new membership benefits, and new organizing, bargaining, and political strategies and tactics have been proposed and implemented as part of union efforts to reverse their decline. In the 1994 report The New American Workplace: A Labor Perspective —compiled by the Committee on the Evolution of Work of the American Federation of Labor-Congress of Industrial Organizations (AFL-CIO)—unions expressed a much more positive stance toward union-management cooperation than is usually attributed to them. But in 1995, John Sweeney, then-president of the Service Employees International Union, launched an almost unprecedented and successful challenge to the incumbent leadership of the AFL-CIO, stressing a renewed commitment to organizing as a central theme. Since Sweeney's election as AFL-CIO president, the federation has made substantial changes in staff, strategies, and tactics. The AFL-CIO and some of its affiliates seem to have taken more aggressive approaches to organizing, bargaining, and politics under Sweeney's leadership. As yet there has not been a dramatic turnaround in union organizing success. In fairness to Sweeney, the contemporary decline of unionization has been in the making for roughly 50 years, and expectations for a quick turnaround might be unrealistic. In bargaining, a large-scale strike in 1997 by the Teamsters against the United Parcel Service was hailed by some as indicating that labor still had clout, as the Teamsters were able to achieve some important gains. But attempts to play a larger role in the 1996 national elections achieved only limited success, and appear to have spurred efforts by union opponents to limit union political activity.
Public policy makers have also considered other significant changes. Early in his first term, President Bill Clinton appointed a Commission on the Future of Worker-Management Relations (headed by Dunlop and including many academics as well as union and management representatives) to offer recommendations for public policy changes. Some scholars argue that the present legal framework governing union formation and union-management relations in most of the private sector (e.g., the National Labor Relations Act of 1935 or Wagner Act, as amended by the Labor Management Relations Act or Taft-Hartley Act of 1947, and other legislation) may have been reasonably well-suited to the United States of the 1930s and 1940s, but that subsequent economic and social changes necessitate significant amendments or even a major overhaul. Among the issues the commission considered were whether current legal bans on company-dominated unions unduly intrude on legitimate employee participation programs in nonunion firms; whether statutory protections of employee rights to join and form unions are adequate, and how to effectuate those rights in the face of intense employer opposition; and whether public policy can promote a more cooperative and less adversarial relationship between employers and employee organizations.
Some scholars (such as Bruce E. Kaufman and Morris M. Kleiner, editors of Employee Representation: Alternatives and Future Directions) assert that employee representation is a more fundamental issue than representation of employees by unions, noting that many nonunion firms willingly establish some form of representation system, and that the public is more supportive of this principle than of union representation. Coupling these observations with the current low level of union representation (and perhaps with the conclusion that the decline of unions is irreversible), some have proposed that the United States should seriously consider establishing works councils similar to those in many European nations. Works councils are legally mandated employee representation mechanisms independent of unions which require that all employees (usually in establishments with a minimum number of employees, perhaps ten) elect representatives to the works council to confer with management and to ensure that workers' statutory rights are observed. Although they generally do not bargain over wages and benefits, works councils address many of the issues that U.S. unions have traditionally addressed, including layoffs, discipline systems, and workplace safety.
Even in a Democrat-controlled Congress, any major changes to labor relations law could face stiff opposition. After more business-friendly Republicans gained a slight majority in Congress in the 1994 elections, prospects for any significant changes in legislation appeared to evaporate. Relatively strong performance for the economy during most of the 1990s probably contributed to Congressional inaction as well.
(Acknowledgment: The author thanks Roy J. Adams, William P. Anthony, Daniel G. Gallagher, Paul Jarley, and Bruce E. Kaufman for helpful comments, but retains sole responsibility for any errors.)
SEE ALSO : Labor-Management Relations
[ Jack Fiorito , Ph.D. ]
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