Quiz 12: Labor Relations


The issue started over the proposed new wage and benefit structure for employees of the company (B). The local union rejected the proposal as it was proposing severe cuts in salaries and pensions. During initial voting the proposal faced rejection by the union members. The company then decided to move to some other location and started searching for it. After failure of the initial voting, the governor and the senator acted as a mediator between the company's top management and the union's representatives. They acted in good faith and urged both the parties to remain engaged in negotiations even after the initial voting. They privately called the leaders to come on same platform and forge an agreement. As a government officer they carry no official stake in this deal, but the severity and importance of the matter for the state people motivated them to continually try and find a middle way for continued production in the state of Washington. Hence, the criticism of the governor and the senator is not appropriate.

States often provide incentives to businesses for attracting them to develop new facilities in the states. These incentives can be given in the following forms: 1. Lower tax brackets, 2. Tax breaks, 3. Rebates, 4. Free or discounted land The offerings facilitate a low-cost ground to entrepreneurs and developed organizations for setting up business in incentive offering states. Every state is different in its own way. They own different productive resources as well as have different requirements. Each state acts in a socially responsible way to ensure prosperity for its citizens by providing them opportunities for employment through efficient allocation and utilization of state's resources. A state offers incentives to businesses in certain areas to develop production facilities and economy of the state. Development of business in a state provides opportunities for employment to local people as well as helps to develop the nearby area. This strengthens the economic system of the state as well as boosts the nation's economy. The $9 billion tax will motivate company to set up the facilities in the state. This will boost the economy and will provide direct and indirect employment to thousands of people. Hence, the decision to provide tax break is a fair decision.

Labor relations refers to the relationship between the labor and the company owners and management. This relationship is the basis of various work contracts between them. While labors try to get maximum benefits such as high salaries, job security and freedom to strike, the company tries to minimize its operating costs and risk by minimizing the wages and outsourcing the jobs. Yes, it is healthy for economy of US if two states compete to attract companies for following reasons: • When states compete with each other they try to give maximum concession to business, so that it becomes more lucrative to setup business in one state than the other. This gives business huge advantage in terms of low operating costs and undisruptive work environment. This expands the profit of business and consequently the economy of nation. • In competitive environment businesses have to cut costs to compete with their rival firms. For this purpose, business they look for low cost high skilled labor. If states do not compete with each other, then it is difficult to cut costs on labor wages and benefits. This will ultimately push companies to look for overseas locations for manufacturing of their products. This will result into jobs moving out of US and thus hamper the economy. • For the economy of nation to grow, the business of home companies must grow. The states competing with each other once successful in attracting the company will provide favorable support to the company. The company can come up with new products and services without fearing the unreasonable and highly disruptive protests. This will help company and economy of nation to grow. • If states compete with each other, it will motivate companies to perform better by utilizing all the benefits provided to them. If companies perform better it will subsequently expand its business which in turn will create more jobs. This will ultimately help economy to grow.