Research Handbooks in Business and Management series
Edited by Michael Barry, James Skinner and Terry Engelberg
Chapter 8: Industrial action in professional sport: strikes and lockouts
Strikes and lockouts occur in imperfectly competitive labor markets where workers and owners argue over the distribution of economic rents generated by labor. While the number of strikes in the United States has been falling over the past several decades, several high-profile work stoppages in North American professional sports provide an opportunity to discuss the history of the mechanics of the sports labor market in North America and why work stoppages appear to be more common in the late twentieth and early twenty-first century than in the decades of the late nineteenth and first three quarters of the twentieth century. On the surface, strikes and lockouts seem to be rather crude instruments of negotiation. When negotiations between labor and ownership about the distribution of rents generated in an industry or by a business reach a deadlock, workers might strike, thereby reducing the supply of labor to zero, in essence removing the ability for owners to generate revenues and profits. The aspiration by labor is to raise the cost of the impasse to such an extent that a negotiated compromise is preferred by ownership. On the other hand, owners might lockout labor thereby reducing the demand for labor to zero, in essence removing the ability of the workers to earn a wage. The aspiration of owners is to raise the cost of the impasse to such an extent that a negotiated compromise is preferred by labor. In each instance, one side feels they (a) have a natural economic advantage over the other side such that they can outlast the other or (b) that they have more complete information about the actual amount of rents available to be split between labor and owners and are therefore willing to press their advantage (Kennan, 2008).
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