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Blog: Workforce Washington
 

January 19th, 2009

Unionization Bill Victory May Depend on Making Economic Case

When Washington gets back to work after the inauguration on Tuesday, January 20, the Senate will resume debate on a pay discrimination bill that would overturn a recent Supreme Court ruling.

The House has already passed that bill and another one that would allow unlimited punitive and compensatory damages for pay discrimination cases.

Although unions strongly support the pay legislation, if they had their druthers, the bill that would be in the pole position for quick action by the new Congress would be one that would allow workers to form collective bargaining units by signing cards. Under current law, a business can insist on a secret-ballot election monitored by the National Labor Relations Board.

Supporters estimate that Congress will vote on the Employee Free Choice Act by the Memorial Day recess. In legislative terms, that’s still pretty quick. But considering that it’s the top priority of organized labor, it’s an extended time frame.

Part of the slowdown could be attributed to the fact that President-elect Barack Obama has not pushed the bill to the top of his agenda. Obama was a co-sponsor of the measure when he was in the Senate and promoted it on the campaign trail.

But since the election, he has been silent on the issue in speeches and statements. For instance, when he announced the appointment of Rep. Hilda Solis as labor secretary, he did not mention EFCA by name. During her Senate confirmation hearing, Solis didn’t state a position on the bill.

Labor leaders say Obama did tout the bill in at least one media interview. And they are confident that Capitol Hill Democrats will move the measure with alacrity and that Obama will sign it.

But in his hesitation, Obama may be signaling that he is willing to listen to vociferous opposition to the measure from the business community, which is ready to go to war over the bill.

Opponents say that the bill would take away a worker’s right to a secret-ballot union election and subject him or her to strong-arm tactics from labor organizers. They also say that increased unionization will raise the cost of doing business at the worst time—in the heart of a recession.

But EFCA advocates say the bill does not remove the secret ballot as an election option. It just gives workers the right to form a union through the card-check process, which already occurs at companies willing to acquiesce. In addition, they argue that companies are the intimidators, firing one in five employees involved in union activities.

We will have several months for each side to make its case. Some of the strongest arguments in favor of EFCA come from Dean Baker, co-director of the Center for Economic and Policy Research in Washington.

Increased unionization would help workers gain their fair share of a growing economy, according to Baker. Since 1980, productivity has increased by about 46 percent, while total compensation has risen by about 20 percent.

As the percentage of private-sector workers belonging to a union has decreased—to 7 percent—they have less leverage to negotiate their share of the productivity gains, Baker said. The “union effect” may account for more than one-third of the difference.

In Baker’s formula, greater unionization would increase wages, which increases demand and ultimately leads to higher company profits and more investment. The last time major labor law was passed was during the Great Depression. Baker says that the unions it fostered helped boost the economy in the late 1930s and early 1940s.

That’s why he dismisses warnings that EFCA should not pass during a recession. “What we need to do is increase demand. Now is as good a time as any, probably better than most,” he said at a Washington event on January 13 sponsored by American Rights at Work.

The group is now airing television ads that compare an average worker’s struggles in a recession with the exorbitant executive pay and bonuses. “It’s time the economy worked for everyone again,” the ad states.

The challenge for business interests is clear. They have to go beyond decrying the loss of a secret ballot and worker privacy. They have to explain how employees will share in the greater prosperity that will come, in their view, from defeating the unionization bill.
 


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Comments

Unions are almost always good for existing employees, until they kill the company (see: UAW). What unions generally do not do well, is promote innovation and change, because innovation and change have often resulted in organizational restructuring, automation, and other events that require job elimination and redesign. Job elimination and job redesign are the antitheses to the unions\’ number one priority: protect the jobs and the pay of its current members.

Unions present one of the great catch-22\’s:
Unions initially improve worker productivity, promote safer work practices, and are generally good for both the firm and the worker. Over time, though, they become an obstacle for firm innovations; impede worker productivity, and protect incumbent workers from being replaced by more productive outsiders.

Finally, to some extent increasing the threat of unionization (which such a bill would do) may do more to improve to situation for workers than actual unionization. Under a real threat of unionization, the company (management) will be pressured to provide for the employee much of the benefits of a union. The employee may not recieve the same type of job security, but benefits the union might not have won may also emerge.

There are numerous studies out there, that demonstrate both the good and the bad of unions. But best I can tell, the net effect of this legislation will, in the short term, likely be a small (near zero) net benefit. The long run net result is much more complex.


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