Collective bargaining negotiations help level the playing field between individual employees and management by enabling employees to organize and find strength in numbers. But when collective bargaining negotiations fall apart, the result can be a devastating strike.
In recent decades, high-profile strikes across entertainment, transportation, education, manufacturing, and professional sports have shown how costly these disputes can become for workers, employers, and communities alike.
To take just two examples, back in 1988, the Writers Guild of America (WGA) strike lasted five months and cost approximately $500 million in lost revenues and wages. The 1994 Major League Baseball (MLB) players’ strike led to the cancellation of the season and resulted in owners and players losing an estimated $1 billion in the years that followed.
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Usually, disputing parties would do better to remain at the negotiating table than to head for the picket lines. Yet many negotiators fail to recognize this fact until it’s too late.
Quick Answer: Why Do Collective Bargaining Negotiations Lead to Strikes?
Strikes most often occur when:
- Both sides become overconfident in their position,
- Negotiations turn into win-lose battles,
- Representatives face political or internal pressure to hold firm,
- Perceived unfairness outweighs economic logic, or
- Parties become trapped by sunk costs after a strike begins.
Understanding these dynamics early can help negotiators avoid costly escalation.
Causes of Strikes in Collective Bargaining
A number of factors contribute to strikes and prevent parties from reaching agreement in collective bargaining negotiations:
Overconfidence: Negotiators on both sides often believe their cases are stronger than they really are while underestimating the other side’s willingness to stand firm. When one side doubts the other side’s claims, a strike can seem tempting—or inevitable.
Fairness concerns: Negotiators sometimes reject deals that would leave both sides better off because the agreement feels unfair. Research consistently shows people are often willing to sacrifice gains simply to avoid rewarding behavior they perceive as unjust.
Misaligned Agents at the Table: Agents negotiating on behalf of others may have incentives that differ from the people they represent. For example, elected union representatives may feel pressure to appear tough to maintain internal support, while management negotiators may feel pressure from shareholders or boards to hold the line.
Win-Lose Thinking: Viewing negotiation as a competition to be “won” keeps parties focused on distributive bargaining—dividing a fixed pie—rather than integrative bargaining, which seeks solutions satisfying multiple interests.
Escalation and Sunk Costs: Incremental commitment to a strike makes it harder to end one. Decisions to “hold out a few more days” pile up. Economists warn against allowing past investments of time and money—sunk costs—to influence future decisions, but emotionally and politically, backing down becomes increasingly difficult.
How to Defuse or Avoid a Strike in Collective Bargaining Negotiations
Strikes often waste time and money for everyone involved. To avoid—or end—a strike, negotiators can use these practical steps and enhance your negotiation skills:
- Avoid extreme demands: When talks heat up, negotiators often draw hard lines. But rigid demands reduce flexibility and encourage escalation. Leaving room for alternatives increases the odds of finding solutions that still meet core interests.
- Take the Other Side’s Perspective: Far too often in negotiation, we assume we fully understand the other side’s interests and goals. This is especially true in competitive situations such as competitive bargaining negotiations, where we tend to fall back on stereotypes. By looking for nuances in each other’s positions, we can open up opportunities to brainstorm the types of creative solutions we propose below.
- Get an outside opinion: When talks grow heated, neutral third parties can restore perspective.
Before or during a strike, parties should consider:- Mediators or facilitators,
- Industry experts,
- Labor relations specialists,
- Experienced negotiators not emotionally tied to the dispute.
An objective critique can expose blind spots and identify alternatives.
- Consider a “Virtual Strike”: During the 1994 baseball strike, Harvard Business School professors Michael Wheeler and James K. Sebenius proposed an innovative solution: resume play while placing revenues and salaries into escrow until a deal was reached. A virtual strike maintains operational continuity while preserving leverage. Funds accumulate but are released only after settlement, motivating both sides to resolve the dispute without destroying long-term value. Some negotiators now explore similar mechanisms, including temporary profit escrow or delayed compensation clauses, to reduce strike damage.
- Structure Contingent Agreements: If parties disagree about revenue or profits, they can:
- Create multiple compensation formulas,
- Tie outcomes to future performance,
- Adjust terms based on measurable results.
Rather than arguing endlessly about predictions, negotiators let future results decide.
The Bigger Lesson
Strikes may sometimes be unavoidable. But in many cases, they arise not from impossible differences but from predictable negotiation mistakes—overconfidence, escalation, and rigid thinking.
When negotiators stay flexible, seek perspective, and explore creative solutions, collective bargaining negotiations are far more likely to produce agreements that preserve both relationships and long-term value.
What advice would you add from your own experiences with collective bargaining negotiations?
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Up close to two strikes
I would like to join the discussion about strikes. I was asked by the parties to analyze the reasons for a lengthy strike that took place in 2004 in the hotel-casino industry in Atlantic City, New Jersey. Management wanted a five-year contract to bring negotiations there in line with those in Las Vegas. The union leadership felt its Atlantic City members had become complacent and were not as energized in their support of the union as were their counterparts in Las Vegas.
It is hard to see how the strike could have been avoided. The union leadership wanted to mobilize the membership and use the pressure of a large negotiating committee to persuade management to continue the three-year contract duration. They saw picket lines and rallies as a way to build solidarity and a committed membership.
After a four-week strike and all the time and costs that build up in strike preparation, the union ended up accepting a five-year contract but also won safeguards in the contract’s outer years that would guarantee adequate company contributions to union health and welfare funds.
More recently, in 2016, I served as a mediator (along with Professor Larry Katz) in the strike by dining hall workers (also organized by UNITE HERE) against Harvard University. Harvard dining hall workers, for the most part, are laid off during the summer months when Harvard has no undergraduate students, and for years the issue of no summer pay had been looming. Management miscalculated the importance of this demand and thought that by introducing the summer compensation plan that had been put in place at Columbia University, an agreement could be reached. The union demanded a much better compensation package than the Columbia “pattern.”
Ultimately, after a three-week strike, the union won everything it had demanded.
These two strikes illustrate many of the points that have become accepted wisdom in our field; namely if management wants to win a strike it had better be willing to take a long one. That certainly describes the casino strike in Atlantic City: management endured a four-week strike, and every indication is that the hotels and casinos were prepared to hold out much longer. In the end, the union agreed to the employers’ main demand and signed a five-year agreement.
At Harvard, the union won after three weeks. Could Harvard management have won had it been willing to hold out and take all the public relations “hits” of a well-endowed university denying what the union termed “adequate compensation” for its food service workers?
Strikes have both tangible and intangible outcomes. The short strike at Harvard not only won important economic gains for the workers, but also produced greater involvement by the union members. The longer strike in Atlantic City also achieved solidarity, but failed to deliver a contract any better than what the union would have gotten had it settled at the deadline. Perhaps the bottom line is that even putting aside various economic efforts to model strike behavior using rational calculations of expectations and assumptions about having full information, strikes serve a variety of functions that can’t be valued by such a “straightforward” economic calculus.
Strikes can also be a mechanism for releasing pressure. They may be a last-ditch effort to protest in support of a matter of principle. They can be about building solidarity; in some cases, they destroy solidarity.
Above all, strikes reflect a core democratic principle in a society that values and protects freedom of association, expression, and action. So while strikes never come without costs to the parties involved, and often to the public, a democratic society worthy of its name has to preserve and respect the right to strike in some fashion.