The impact of the Taft-Hartley act on the balance of power in industrial relations

The National Labor Relations Act has been cited as responsible for the current disadvantaged position unions experience in industrial relations, and there are calls for its amendment. Before massive amendment is undertaken, it is appropriate to conduct an empirical examination of the impact of the Taft-Hartley Act, a previous amendment to the NLRA, on the balance of power in industrial relations. The hypothesis is that the Act increased the power of management, which can be demonstrated empirically by an increase in the stock prices of a sample of firms likely to have benefitted from the passage of a law. Overall, there is support for the hypothesis that the Taft-Hart;ley Act shifted the balance of power in industrial relations. According to the premises of the efficient market hypothesis, the increase in shareholder returns in response to the Act reflected shareholders' unbiased estimate of the effects of the Act on the future profitability of their firms. The increase in profitability would have been due to the increase in management's power in response to the Act.