The term "featherbedding" is usually used by management to describe behaviors and rules sought by workers. But featherbedding has also been occasionally used to describe rent-seeking behavior by corporations in response to economic regulation. The term may equally apply to mid- and upper-level management, particularly in regard to top-heavy and "bloated" levels of middle- and upper-level management.
Since the mid-1800s, "featherbedding" has been most commonly used in the labor relations field. Increasingly, the term has come to refer only to work rules or collective bargaining agreements demanded by labor unions.
In nations where trade union activities are legally defined, legal definitions of featherbedding exist. These definitions are few in number, and tend to be narrowly drawn. For example, the Taft-Hartley Act in the United States defines featherbedding in Section 8(b)(6) as any agreement or union demand for payment of wages for services which are not performed or not to be performed. However, in 1953, the Supreme Court of the United States ruled that the Act's definition only applies to payments for workers not to work. Therefore, work rules requiring minimum crew sizes, the assignment of duties to craft workers, and other "make-work" agreements do not constitute featherbedding.
Economists often argue that featherbedding is the most economically optimal position from both an employer's and employee's perspective. Featherbedding only emerges under certain circumstances. Chief among these is that the employer has an exploitable surplus (e.g., profit) to support the practice. Featherbedding also arises where market forces fail and organizations are permitted to be noncompetitive. Under this analysis, corporations (for example) are already inefficient and featherbedding does not make them more or less so. Featherbedding can, in some circumstances, take excess resources (profits) away from the employer and give them to workers in the form of more income per worker or higher numbers of employees at the same income level. Featherbedding is considered economically efficient because it occurs in the give-and-take of collective bargaining. If employers were relatively strong vis-a-vis unions, unions would be unable to impose featherbedding on them. As the politico-socio-economic strength of each party changes over time, collective bargaining outcomes will as well, enlarging or reducing the number and impact of featherbedding rules on the employer.
More recent political analyses of featherbedding have concluded that featherbedding is not necessarily economically optimal, but is better than other forms of bargaining. Under this analysis, the best form of collective bargaining would be one in which the union and employer bargain not only over wages but the level of employment. Most unions in the United States, for example, bargain solely over wages. Bargaining over work rules (featherbedding) as well as wages achieves outcomes close to those reached by bargaining solely over wages, but is better than bargaining over wages alone.
Seizing on economists' emphasis on power in the workplace, other social theorists conclude that featherbedding is a result of weak labor unions and unenforced and unprotected worker rights. Under this analysis, featherbedding is a response by unions to their weakness, not strength.
Others see certain kinds of featherbedding as a corrective for market failures. For example, the delivery of social services is often not quantifiable except in the extreme. When the market is unable to quantify a good or service, the market will fail to accurately price it. Market failure results. In complex organizations, or in those whose inputs and outputs are difficult to quantify, it becomes increasingly difficult to determine what constitutes featherbedding. For example, defining "quality health care" is problematic, as is defining a "quality education. In such situations, frontline professional workers place heavy emphasis on work rules and minimums. Many white-collar professionals (in particular those such as nurses and teachers) and highly skilled craft workers place heavy emphasis on staffing minimums, for example, as a means of ensuring a "high quality" outcome. While some argue that this is an exercise in the professional judgment of such workers, others call this featherbedding and point to the low level of evidence that such rules improve outcomes.