THE INDIVIDUAL EMPLOYEE IN THE CONTEXT OF EMPLOYER ASCENDANCY: NEW-OLD ECONOMIC ANALYSIS

Abstract

Through the 1930s, the notion of an inequality of bargaining power between employer and employee provided a rationale for collective bargaining, partly on macroeconomic grounds. More recent economic thinking suggests that in nonunion employment situations, employers will have monopsonistic power, and various aspects of labor-market performance since the 1980s suggest monopsony is present in the workplace. With unions in decline, employer ascendancy in determining wages and conditions of work increasingly provides a rationale for regulating the employment relationship. In the context of employer ascendancy, employee preferences will be underweighted in the employment relationship. Legislative proposals, enactments, and litigation are being considered to re-balance the relationship. The inequality of bargaining power between employees who do not possess full freedom of association or actual liberty of contract and employers who are organized in the corporate or other forms of ownership association substantially burdens and affects the flow of commerce, and tends to aggravate recurrent business depressions, by depressing wage rates and the purchasing power of wage earners in industry and by preventing the stabilization of competitive wage rates and working conditions within and between industries (Preamble to the Wagner Act [1]).