The Employee Free Choice Act
June 1, 2009
Questions and Answers:
The evidence is overwhelming that America’s basic labor law is broken and fails to allow workers to exercise their fundamental human right to join a union and enjoy the benefits of collective bargaining without fear of employer reprisal, unreasonable delay, and the unfortunately very real risk of being fired.
Today over 50 million workers would join a union but face significant employer resistance. Three fourths of employers hire anti-union consultants to fight workers’ efforts to organize. Nearly 30,000 workers are fired illegally for supporting unions each year. Under current law, workers are able to achieve the benefits of a collective bargaining agreement in only one out of every five efforts to form a union. If the employer resists to the point where an unfair labor practice is filed, this number falls to about one in ten. Workers can’t even get to an election in one third of the cases where unions submit the showing of interest required by current law. This number goes down by another 25 percent when an unfair labor practice charge is involved. Even when unions win an election, workers realize the benefits of a collective bargaining agreement in only about 60 percent of cases and this percentage falls by another 13 percent when unfair labor practice charges are involved.
Because each step of the process is broken, we need a systematic solution that restores workers’ fundamental rights by addressing the problems in each stage of the organizing and initial contract process.
The Employee Free Choice Act does this. Increased penalties will deter employers from violating the law, recognition on the basis of majority card check will assure access to collective bargaining once a majority indicates this is their preference, and the availability of arbitration will assure that a fair agreement will be reached in a timely fashion.
While the Employee Free Choice Act is needed to restore American workers’ human rights, three large bodies of research demonstrate why it is also essential to putting the country back on the path to sustainable economic recovery and shared prosperity.
Unions are historically the most consistent institutions for achieving gradual improvements in worker wages and for reducing income inequality within and across industries and occupations. Enacting the National Labor Relations Act as part of the New Deal laid the foundation for what became known as the post war “social contract.” From the mid-1940s through the 1970s wages grew roughly in tandem with productivity growth. As management opposition to unions increased and union membership declined precipitously after 1980, this social contract broke down. Productivity grew but the wages of ordinary workers stagnated while corporate profits and CEO pay skyrocketed and income inequality worsened. Restoring workers’ ability to organize is the first step in getting wages and productivity moving together again and gradually but surely rebuilding the middle class and extending its promise to low wage workers and their families.
Another large body of research has demonstrated that major investments like those about to be made in infrastructure, renewable energy, health care, and other areas will realize their full return only if combined with workplace relationships that foster worker engagement, teamwork, coordination, and labor-management partnerships. These innovative workplace practices and the improvements in productivity and service quality they generate cannot be achieved if, as is the case today, conflicts, tensions, and resistance dominate the collective bargaining process. Fixing the basic labor law and following up with industry-specific initiatives to put these innovative practices to work are essential to getting the full return on the investment of these public resources and building the 21st century labor management relationships workers want and the economy needs.
A third stream of research shows that many of the core workplace standards in the US¯from health and safety laws to family medical leave¯are fully implemented only in workplaces where there are unions. Workplaces with unions foster innovative methods that ensure that public policies like improving health and safety are achieved in ways that both improve conditions and make firms competitive. Once the basic labor law is fixed, government regulators can work with progressive employers and unions in new, more flexible ways to achieve the joint gains in performance and employment standards we know are possible.
It is time to replace the divisive ideological debate over labor law with a focus on the evidence that the law is broken and with the recognition that the country needs business and labor to work together for the common good. Passage of the Employee Free Choice Act is the essential first step. It will restore balance and fairness at work, give more workers a chance to form unions and get better health care, job security, and benefits¯and an opportunity to pursue the American Dream for themselves and their families. And it will once again show that labor and management can rise to the occasion in a time of national crisis.
The Opening Statement by Pat and Tom offers the union case for amending the labor laws. Let me briefly address the specific amendments at issue, then turn to their premise that labor “reform” is needed.
First, EFCA’s “card check” provision is antithetical to its supposed purpose. Pat and Tom want employees to decide whether to join a union “without fear” of “reprisal.” But no one eliminates the secret ballot to avoid reprisal. Under EFCA, union organizers would stick “authorization cards” under workers’ noses and intimidate them into signing on the spot.
Second, much of what Pat and Tom call employer “resistance” to unions is First Amendment-protected speech. We don’t let people vote for county sheriff without a chance to hear from both sides. Workers should have the same opportunity when voting whether to form a union, one of the most important votes they’ll ever cast.
Third, EFCA’s compulsory arbitration provision would appoint arbitrators with no experience running a business and no industry-specific knowledge, to write “contracts” that for two years would determine not merely workers’ wages and hours, but vital matters like the company’s ability to contract out work or introduce new technologies. This would produce two years of operating inefficiencies followed by bitter labor disputes once the government-imposed “contract” expired and the parties attempted to negotiate their first true contract.
Richard and I will have more to say later about the many problems with EFCA. What of Pat and Tom’s premise that we must restore the “social contract” that reigned from the 1940s through the ‘70s?
Americans would not tolerate the labor-management relations that existed then. The “historically high strike levels” of the time (Nelson Lichtenstein, State of the Union at 99) led to the provision in the Taft-Hartley Act of 1947 authorizing the president to go to court to enjoin strikes that pose a “national emergency.” President Truman opposed this emergency power on principle, but used it 10 times in 6 years. In 1952 he seized the steel mills, lest their labor troubles interfere with our conduct of the Korean War. Between 1948 and 1973 the UAW shut down at least one of the Big Three at almost every contract renewal. Lichtenstein 136-37. In the 31 years from 1947 to 1978 the Taft-Hartley emergency power was invoked 32 times. In the 31 years since it has been used once—prompting the New York Times to praise George W. Bush for ending a ports dispute that, after only 10 days, “posed a serious threat to an already ailing economy.” Oct. 9, 2002.
Even worse than these labor disputes were the contracts they produced. The most commonly cited example of the “social contract” is the relationship between the UAW and the Big Three. Today, as I write, General Motors is aiming to have 50% or more of its stock owned by the federal government and Chrysler will be majority-owned by the UAW. The “contract” is the main cause of Detroit’s condition. The same is true for steel and other industries. As for the “large body of research” that, it is said, shows “return[s]” on “major investments” to be maximized by investing in unionized companies: While some unionized companies are highly successful, few sophisticated investors write “Get a Union!” atop their list of priorities for management.
Unions represented 7.6 percent of the private sector workforce in 2008, compared to nearly 40 percent in the ‘50s. Pat and Tom say the decline is because employers have gotten meaner. For instance, three-fourths of them “hire anti-union consultants to fight workers’ efforts to organize.” Consultants? Companies used to “fight” unions with fighters—Pinkertons, even armed militia. It was never the norm for American business to welcome unions. The ‘40s and ‘50s were a period of “corporate-sponsored ideological warfare,” says one historian. Lichtenstein 99.
Indeed, I believe a principal cause of unions’ decline is that workplaces today are seen as more benign, not less: Employment statutes and judicial limitations on employment at-will provide rights that workers once sought from unions; grueling industrial jobs account for a diminishing share of the national economy; workers’ bargaining power is enhanced by increased mobility and access to information; and many businesses have figured out how to offer terms and conditions of employment that keep them a step ahead of the union organizer.
As for the studies that purportedly link union decline to employer misconduct, they typically are unreliable on their face. One frequently-cited study by Professor Bronfenbrenner measured employer misconduct during organizing campaigns by surveying the union organizers. That’s like asking the Cleveland Cavaliers’ last opponent whether LeBron James got too many trips to the free throw line. More careful studies show a different picture, including work based on objective government data by Professors Meltzer and LaLonde and J. Justin Wilson of the Center for Union Facts.
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There is no need for labor law “reform,” and it would be disastrous to return to the labor environment of the 1940s-70s, especially through a law—EFCA—so antagonistic to American principles.
There is a weird sense of unreality in the opening statement of Patrick Syzmanski and Thomas Kochan in support of the Employee Free Choice Act. On the substantive side, their sunny descriptions of EFCA’s key provisions gloss over all the reasons why employers have expressed such intense opposition to the bill. Yet they nonetheless insist that enacting EFCA will usher in a golden age in which “progressive employers” can partner with unions and government regulators to boost this nation’s productive capacity—without saying how.
Their constant appeal to soothing buzzwords, however, conceals an essential truth about how the world works: productive partnerships only arise when all participants want them. Private individuals, wholly without government or union assistance, commonly pool their resources in order to achieve more in combination than they can do separately. These business arrangements often are memorialized in written agreements, but partnership depends on a high level of trust that comes from having the right to choose one’s partners.
The current system of labor relations flunks this test because it depends on a heavy dose of government coercion to get management/labor relations off the ground. Right now the law gives unions a huge boost by letting them gain representation through an organizational process that already infringes company and employee rights. But union victories always come at a heavy price. First unions can bind dissenting workers without their consent. Second, unions can force the employer to the bargaining table when it would just as soon walk away. It is to misuse the English language to call these arrangements voluntary. It is wishful thinking to assume that major improvements in production will often arise out the guarded truce that typically characterizes labor/management relationships under the current law.
EFCA will of course only increase the level of distrust by a new round of coercion. The card check system can hardly be expected to introduce any level of trust. It allows unions to gain the power to represent by collecting cards in wholly unsupervised circumstances that are rife with the risks of coercion and intimidation. Secret ballot elections are out. Even the simplest safeguards against card-check abuse have been uniformly resisted by unions. Worse, once this system is in place, the pitched negotiations between the two sides are replaced with the ultimate in state coercion—a final arbitral decree entered into by an unaccountable panel of arbitrators chosen by the head of the Federal Conciliation and Mediation Service, who will be a political appointee of the Obama administration. Yet the arbitral deliberations are unguided by any substantive principles and the arbitral procedures have yet to be devised.
Syzmanksi and Kochan claim that 50 million workers would choose to join unions if given the chance. But they never once bother to acknowledge what requires no empirical study to support—that any employer that wants to deal with a union can always invite it in. Until that happens, the only serious intellectual debate is on how to roll back the current privileges that unions receive under current law, to shield American business and workers from the kind of harm that unions inflicted on the auto and steel industries. There is no conceivable social case for expanding the stranglehold of organized labor over the American economy.
Eugene Scalia and Richard Epstein oppose not just the Employee Free Choice Act but the very basic right of workers to form an organization of their own choosing to represent them in collective bargaining with their employer. To argue against what has been recognized as a fundamental human right and a bedrock principle of American democracy demonstrates the extremes to which opponents of labor law reform are willing to go. That is not where the majority of Americans is today or has been since the National Labor Relations Act became law in 1935!
But let’s go to the specifics of their responses. To accept Eugene’s view that much of the employer resistance is simply “free speech” belies the fact that it is the illegal actions workers experience at each stage of their organizing and initial contract negotiation efforts that the Employee Free Choice Act seeks to eliminate. No manager should be allowed to fire or otherwise intimidate or block employees from gaining an agreement. That is not free speech; in plain English that is breaking the law and abusing peoples’ fundamental human rights. And, contrary to Eugene’s claims that we rely only on surveys of union organizers, it is the NLRB’s own data, using the methods of researchers he cites as experts, that show illegal firings of union supporters has increased in recent years. (Schmitt & Zipperer, "Dropping the Ax," available at www.cepr.net ).
And yes, surveys done by independent, professional research organizations show that over 50 million workers today want to join a union. This number has nearly doubled over the past 30 years. In 1979, the first national survey ever to ask the question found 30 percent of non union workers would vote to unionize if given the chance to do so; by the mid 1990s this grew to over 40 percent and recent polls now show about 50 percent would vote to unionize. Converted to actual numbers, this means that over 50 million unorganized private sector workers today would join a union if given a fair chance to do so. (Kochan, “How American Workers View Trade Unions,” Monthly Labor Review, vol. 102, April 1979; Freeman, “Do Workers Still Want Unions? More than Ever,” available at www.shareprosperity.org ).
Why has demand for unions increased? Precisely because, as the Conference Board, a leading business research organization has shown, trust in management and satisfaction with unilateral employer decisions regarding pay, benefits, and job security have gone down dramatically in the last two decades. (“U.S. Job Satisfaction Declines,” The Conference Board Press Release, Feb. 23 2007). Eugene would have us believe the opposite—that enlightened employer practices and government regulations eliminate the need for unions. Workers clearly don’t buy this argument.
Both Eugene and Richard rail without any evidence about how uniformed “government chosen arbitrators” will ruin free enterprise as we know it. So let’s look at the actual evidence and experience with the type of mediation and arbitration system envisioned in the Employee Free Choice Act. (For a summary of this evidence and the elements of system that builds on what we have learned from 40 years of public and private sector arbitration see Arnold Zack at www.lerablog.org .). In brief, the proposed system will (1) provide for negotiation and mediation to help the parties reach a voluntary agreement, (2) arbitrators will be chosen jointly by the employer and the union from a panel of experienced, neutral experts (also nominated and screened by business and labor representatives), and (4) the neutral arbitrator will not act in isolation but instead will be joined by one arbitrator chosen by the employer and one chosen by the union. These features have all proven effective in ensuring that a neutral does not issue a decision that harms either party. Moreover, arbitration statutes routinely specify standards/criteria that the arbitrator must use in making a decision and normally limit the scope of issues to those that are mandatory subjects of bargaining. Experience has shown that dispute resolution systems with these features have produced voluntary agreements over 90 percent of the time in first contract bargaining in Canada and in the public sector in the US, and because arbitrators make decisions on the basis of comparisons with other employers and occupations in the same industry, there are no significant differences between arbitrated and negotiated wages. In short arbitration ensures fair, predictable outcomes and above all guarantees there will be a successful end to the contract negotiations.
The question is which is a more fair outcome: The current situation where by stonewalling negotiations employers can deny an agreement to up to 40 percent of employees who have voted for union representation or a well designed mediation-arbitration system that gets negotiated agreements more than 90 percent of the time and has the safeguards needed to produce a fair outcome in small number of cases where the parties cannot not agree on their own?
Eugene wants to turn the clock back and relive the most adversarial battles of the past and even here he misreads history, misconstrues cause and effect, and is oblivious to state of the art practices and results in labor management relations. The “historically high strike levels” (1946 to be exact) were just that—abnormally high as the pent up pressures of the war exploded. In the decades that followed it was precisely the success of collective bargaining and rational-equitable wage norms that produced agreements without strikes in over 97 percent of negotiations and the percentage of working time lost to strikes in the economy averaged less than one half of one percent. By the late 1960s Secretary of Labor George Shultz concluded that prior Administrations overreacted in their use of Taft-Hartley’s national emergency procedures and he and his successors dramatically reduced its use. Moreover, there is a well-recognized principle in labor relations that “employers get the union they deserve.” If they choose to fight workers when they try to organize and stonewall efforts to negotiate, yes they will recreate battles of the past. But the experience gained (and documented by multiple independent researchers) has demonstrated that if they respect workers’ rights and treat union leaders as partners they get high productivity and service quality. (See Appelbaum, Gittell, & Leana, “High Performance Work Practices and Economic Recovery,” Nov. 23, 2008, available at www.lerablog.org .) That is the goal we should set and the standard to which we should hold management and union leaders alike. Not only is that what workers want; it is what the economy needs. And it can be achieved by enacting the Employee Free Choice Act and applying what we have learned from past experience in building productive-partnership based labor management relationships.
How Fundamental Is the Right of Workers To Organize?
The joint response by Tom and Pat reveals all that is wrong in the current defense of labor unions. They rail against both Gene and myself for insisting that workers do not have an unquestioned right to join unions of their choice. But they never once stop to reflect upon the extreme nature of their own position. The so-called fundamental right to organize is in fact a horizontal combination that, when undertaken by firms, counts as a per se violation of the antitrust laws. The only reason why labor unions are spared that fate is that they have received since 1914 a special exemption from the antitrust laws, which allows them to raise the prices of labor (and the goods it makes) and to reduce the quantity of labor (and the goods it makes), that unambiguously hurts social welfare.
Worse still, neither Tom nor Pat acknowledges that even this enormous legal boost does not allow labor unions to succeed. Rather, they receive a second extraordinary legal subsidy under the current National Labor Relations Act, which requires all firms to bargain with any union that is able to win an election in a designated bargaining unit. At no time does their undefended account of fundamental rights explain why A, B, and C can impose duties to bargain on a stranger; nor do they show any social benefit, given the costs of running the present system.
Instead of acknowledging their current failures, Tom and Pat insist that polls show that perhaps 50 million workers want union membership. On factual grounds, that claim looks bogus, given that unions have only been able to win about half the elections over the last ten or so years, involving annually somewhere between 150,000 and 300,00 workers, of their own choosing. I have collected that relevant data here . On normative grounds, their case is even worse. Let us assume—contrary to fact—that every worker wanted to join a union. Why should that be given any more weight on the social calculus than a similar claim that every maker of widgets would like to be a charter member of a government-backed widget cartel?
Union organizers can hope to capitalize in the field on the current economic insecurities to which—think Chrysler and GM—they have contributed. And these dislocations also prompt ever greater political efforts to substitute a dubious card check system for secret ballots. But if we assume that any rational reexamination of the fundamental premises of labor law is not possible at the current time, it is still imperative to note that the current system is far better than the alternative that Pat and Tom urge. Quite simply, there is no evidence whatsoever that indicates that the NLRB has not done the best job under the circumstances of administering union elections. It doesn’t take a champion of the status quo to recognize that the card-check provisions of the misnamed Employee Free Choice Act are vastly inferior to the status quo.
When I opened Pat and Tom’s post and saw their reference to “a fundamental human right and a bedrock principle of American democracy,” I thought they were going to address EFCA’s denial of the secret ballot and infringement of campaign speech.
No such luck. Their “fundamental right” is increased unionization. It’s fine if this occurs at the expense of the secret ballot, and to defend employer “free speech,” as I did, is to defend “illegal actions” and “firing” union supporters.
Yet the Supreme Court has recognized that employers can and do oppose unionization through constitutionally-protected speech that is not coercive and furthers employees’ own interests. An informed vote is a better vote. That’s why patently implausible data about 50 million Americans wishing to belong to a hypothetical union is meaningless—What would that union’s dues be? How competitive would the company be if unionized? What is the union’s record on ethics, strikes, and actually bettering workers’ conditions? When employees learn these things, they see “cons” to unionizing. Campaigns change minds through information and reasoning—and that’s what EFCA aims to stop. Supposed EFCA “compromises”—such as conducting secret ballot elections within two weeks of a union’s request—share EFCA’s goal of amassing union power through elections-by-ambush that catch employers unawares and give employees less process and information than when voting for school board.
Why change the election apparatus? For each of the last 12 years, unions have won more than half the representation elections. (Daily Labor Report, May 5, 2008). In 2007 their win rate was 60 percent. In 2008 it was nearly 67 percent, the highest since 1955. In a 2008 paper, Tom and a co-author concluded that an unfair labor practice, or “ULP,” makes a union “no less likely to win an election.” (“Sequential Failures In Workers’ Right To Organize” at 3). In another article Tom’s co-author reiterated that “pre-election ULP charges seem to have no effect on election outcomes.” (John-Paul Ferguson, “The Eye of the Needle,” Ind. & Lab. Rel. Rev. at 17 (Oct. 2008)).
Tom and others claim that illegal employer conduct outside the election process affects organizing and bargaining, and we can address that later if they wish—but the fact is that with EFCA, unions are trying to “fix” elections in the worst sense of that phrase.
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In addition to erroneously asserting that I oppose a statutory right to organize, Pat and Tom say that I want to “turn the clock back” to an earlier era of labor-management relations. That was their suggestion, not mine—I merely supplied a reminder how acrimonious and destructive labor relations once were. I am confident that our readers know how tumultuous that period was (just as I’m confident they recognize that “union leaders” seldom are “partners” who seek “high productivity” and “service quality”). But those interested in learning more about the days EFCA’s proponents want to bring back—and the mistaken romanticization of the era—should read the chapter in the Lichtenstein book cited in my first post.
It is not “increased unionization” that is the fundamental human right at stake here as Eugene argues. What is at stake is the fundamental right of workers as stated in the 1998 Declaration of Fundamental Principles and Rights at Work” by the ILO, a branch of the UN. One of the four fundamental principles (endorsed by the US and 272 other countries) is: “Freedom of association and effective recognition of the right to collective bargaining.” So it is workers’ rights not the rate of unionization that needs to be both protected and fostered by our law and our practices.
Richard similarly seems to have forgotten that as far back as 1914, the Clayton Anti Trust Act (echoing scholars of the day) declared that “labor is not a commodity.” The entire corpus of employment law enacted since then has recognized the need to reflect the human values and expectations society has for work and employment relationships. So to try to apply the same concepts regarding “horizontal combination” or “cartels” of firms to workers would roll us back to nineteenth century legal doctrines—something very few Americans would consider seriously.
Both Eugene and Richard argue the status quo in labor law is just fine thank you. The facts belie such complacency. Moreover Eugene misreads the evidence in our student and colleague John-Paul Ferguson’s research on the full sequential process of organizing and bargaining a first contract. Unfair labor practices do significantly lower the chance of even getting to an election (by 25%) and the chance of getting through the entire process to get a first agreement by 30%. Here are the facts as we reported them in the paper Eugene cited:
1. Few bargaining units make it from initial petition to a first contract. Only 20 percent, or one in five, of all cases that filed a petition for an election after showing substantial and very likely majority support for representation reached a first contract. Only 12.9 percent reached a first contract within one year of certification, during the NLRA's contract bar.
2. Unfair Labor Practice Charges (ULPs) reduce the chances of getting a contract. The presence of an ULP charge reduced the likelihood of completing the process by 30 percent. That is, fewer than one in ten cases involving an unfair labor practice reached a first contract within a year of certification.
3. ULPs reduce chances of getting to an election. Unfair labor practice charges had their biggest effects in the initial stages of the organizing process, after a majority of workers have indicated a desire for representation, by reducing the probability of getting to an election by 25 percent.
4. Even after a majority votes for a union, many units fail to get a contract. Only 56 percent of units in which a majority of employees voted for a union and were certified for bargaining by the NLRB were successful in reaching a first contract. Only 38 percent of such units reached a contract within one year.
These results provide clear evidence that the nation’s labor law, and the election and first-contract negotiation procedures embedded in the law, are failing to provide workers with an effective right to gain representation and a collective bargaining contract. The entire system is broken and that is why a systemic solution is required.
Against Compulsory Interest Arbitration
In their last joint communiqué Tom and Pat have also extolled the virtues of the mandatory interest arbitration provisions of EFCA. Under their account “experienced and neutral experts” will run the show and create agreements that will not harm anyone. They envision a panel where one arbitrator is chosen by the union, one management, and one neutral arbitrator. In support of this happy conclusion they note that under the regime now in place 90 percent of disputes under compulsory arbitration end in voluntary settlements.
Even if by some miracle these conditions are satisfied, compulsory arbitration produces results that are not defensible, if only because they build in such rigidities in labor force management that it is impossible to introduce fundamental reform, whether we speak of prison guards or teachers. Just avoiding a strike is no test of social welfare. It is in this context a guarantee of institutional stagnation and decline.
Worse still is the extraordinary disconnect between their account of mandatory arbitration and what the EFCA provides—which in this instance is nothing but a massive delegation to the Federal Mediation and Conciliation Service to devise some system under which arbitration will take place. They don’t describe the “proposed system” at all. There is nothing in the EFCA that speaks about the rules for selecting arbitrators, including that all-critical neutral arbitrator, which in most contractual arbitrations is chosen by the two party arbitrators. There is a studied silence on who chooses that critical third arbitrator here. The quiet implication is that it could be the head of FMCS. And don’t think that he or she won’t remember how arbitrators perform in some key negotiation before deciding on whether to use them in the next case. Quite simply, EFCA offers not a shred of protection for the independence of arbitral decisions.
Tom and Pat also note that some compulsory arbitration statutes “routinely specify standards/criteria” for decision-making, without troubling to mention of course that the EFCA doesn’t. Nor do they minimize the scope of the changes by suggesting that the arbitration is limited to “mandatory topics of bargaining.” Alas, these include the most sensitive issues in labor relations, including clauses that could force management to yield its power to decide whom to hire, when to contract out, and how to handle workforce attrition. No current agreement of which I am aware has ever ceded total control of matters to a labor union. Nothing in EFCA prevents this arbitral panel from doing just that
At bottom, EFCA presents the spectacle of imposing in the private sector a revolutionary system that has been never been tried. There are no “experienced” arbitrators to deal with the bewildering set of cases that comes down the pike. Tom and Pat know full well that no employer group thinks that it will get a fair shake under the EFCA. Yet without the slightest evidence of any kind of political consensus, they are prepared to impose this system on the entire industrial base of the United States. Talk about abuses of legislative power!
The central provision of the National Labor Relations Act is Section 7 (29 U.S.C. §187). It says simply and directly, “Employees shall have the right to self organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid and protection.” The readers will judge for themselves, but I think Tom and I have shown the law is badly broken, that the current procedures are utterly inadequate to protect employees who exercise this right, and that the Employee Free Choice Act is the most effective way to correct the problem.
Consider two cases. In late 1989, 300 employees at Domsey Trading Corp. in Brooklyn, New York, exercised their guaranteed right to organize. On December 1, 1989, Giles Robinson, a key union supporter with 27 years seniority and an unblemished work record, told Peter Salm, the owner’s son, that the Union was there to see him. The union had signed authorization cards from more than two thirds of the employees. Fifteen minutes later, Salm fired Robinson. That afternoon, Domsey’s attorney said he wasn't worried about the discharge because, even if Domsey had to reinstate Robinson, the back pay liability wouldn't amount to much.
In late January, Domsey illegally fired another worker and more than 200 workers went on strike to protest the illegal firings. Domsey harassed the predominantly Haitian workers in a series of violations that I won’t detail because of their extreme vulgarity. At one point Salm directed a truck driver to crash into an organizer's car. The litany of violations is reported in the decision of the Administrative Law Judge. Domsey Trading Corp., 310 N.L.R.B. 777 (1993). There was a federal court injunction, Domsey was held in contempt, the strikers were ordered reinstated and in 1994 the United States Court of Appeals for the Second Circuit denied Domsey’s appeal and enforced the NLRB’s order. 16 F.3d 517. The ALJ decision awarding back pay to Giles Robinson and the other workers was issued on October 4, 1999. The NLRB didn’t issue its order until 2007. 351 N.L.R.B. No. 33. Giles Robinson, discharged in 1989, never did receive his back pay, the back pay Domsey’s lawyer back in 1989 said wouldn’t amount to much, because Robinson died while the case was being litigated. And, of course, the Domsey workers never had the collective bargaining agreement the law says they should have enjoyed.
Workers at Smithfield Foods in Tar Heel, North Carolina, exercised their rights beginning in 1994. Elections were held in 1994 and 1997 but both were overturned because Smithfield threatened to fire employees who voted for the Union, to freeze wages and shut the plant if the employees unionized, and to discipline employees who engaged in union activity, and because Smithfield interrogated employees about their union support, confiscated union materials, videotaped and otherwise spied on its employees' union activities, and fired workers because they supported the union. The initial complaints were filed in 1995. The Administrative Law Judge’s decision, which catalogues Smithfield’s misconduct, was issued in 2000. The NLRB affirmed the decision in 2004 (344 N.L.R.B. No. 1), and the Court of Appeals entered its order in 2006. UFCW Local 204 v. NLRB, 447 F.3d 821 (D.C. Cir.).
There are many, many similar cases. Section 7 of the National Labor Relations Act guarantees workers the right to organize, but there was no right at Domsey or Smithfield or in any of the similar cases. Recognizing a union based on signed, voluntary, unambiguous authorization cards eliminates the opportunity for unscrupulous employers to penalize employees for exercising their right to organize. Providing for impartial first contract arbitration means workers will actually realize the benefits of a collective agreement covering their wages, hours and other terms and conditions of employment. It’s just that simple if you believe that the rights guaranteed by Section 7 should mean something.
Getting Real About Interest Arbitration
Richard is correct that the Employee Free Choice Act does not spell out how arbitration would actually work. This will have to be done as the bill is marked up in the legislative process or by rule making. So it is time to get serious and put an end to the ungrounded misconceptions in his statements about how the system would work consistent with the established practices in interest arbitration cases.
Anticipating this day would come, Arnold Zack, one of America’s most respected and experienced neutral arbitrators and a past President of the National Academy of Arbitrators, and I worked together in reviewing established practices and describing procedures appropriate for mediating and arbitrating first contracts.
Here’s a brief description of how it would work. (For the details see Zack, “First Contract Arbitration: Issues and Design,” www.lerablog.org ).
1. FMCS would assign a mediator to each newly certified unit and provide the full range of mediation, education, and facilitation services needed to help the parties reach a voluntary agreement and start their relationship off on a positive footing.
2. If an agreement was not reached in negotiation or mediation FMCS would provide the parties with a list of neutral, experienced, and expert arbitrators who had previously been judged by a panel of business and labor representatives to be qualified to serve as neutral arbitrators. These would not be “government arbitrators” or individuals appointed at the whim of the FMCS Director as Richard suggests.
3. The parties would then choose the neutral arbitrator from this list.
4. The employer and union could appoint their own arbitrators to join in a tripartite structure thereby building more opportunities for input and mediation in the process.
5. The scope of issues to be considered would be limited to wages, hours, and working conditions—the same issues that currently are mandatory subjects of bargaining—not ones as Richard warns would infringe on “management rights.”
6. The arbitrator(s) would be required to consider standard criteria in reaching their decisions, including the financial and competitive situation of the employer and common practices within the occupation and industry.
7. Further opportunities for mediation and negotiation could be built into the tripartite process during and even after a draft award has been written.
Experience with this type of system has demonstrated that:
1. Agreements are reached in negotiations or mediation without resort to arbitration over 90 percent of the time.
2. Arbitrators are inherently conservative and do not issue awards that are harmful to either the employer or the workforce.
3. Results of arbitration mirror those reached in collective bargaining in comparable bargaining units in their industry and occupation.
Interest arbitration is a tried and proven process that has been working to resolve difficult labor-management disputes for more than fifty years. This is the real-world of collective bargaining under arbitration, not the made-up doomsday scenario painted by Richard and others who oppose designing a proven, fair system for resolving labor management disputes. Most important it would ensure an agreement will be achieved, something that has been out of reach for over 40 percent of certified bargaining units under the current failed law.
Tom and I find some common ground with his emphasis on workers’ freedom of association rather than unionization per se. A corollary to the freedom of association is the freedom not to associate with those whose views you oppose. Existing labor law already intrudes on this First Amendment interest by “compel[ling] workers to help finance a union even though their “moral or religious views . . . may not square” with the union’s or, indeed, they may “have economic or political objections to unionism itself.” Abood v. Detroit Board of Education, 431 U.S. 209, 222 (1977).
The Supreme Court has accepted this “interference” with associational rights in deference to Congress’s assessment that compulsory unionization is “important” to our current “system of labor relations.” Id. Card check is far more intrusive, however. Workers will be bound by a union against their wishes, without notice, by co-workers who were intimidated to “vote” union with neither the protections of the secret ballot nor the opportunity to be informed by the views of the company and anti-union co-workers. EFCA’s infringement of associational rights will be among the constitutional challenges it confronts if enacted.
Tom says I misread an article by his student John-Paul Ferguson. Not so. A central tenet of EFCA is that employer misconduct is causing unions to lose elections. Ferguson’s paper shows that election outcomes are not affected by election campaign misconduct. Claims about illegality in other stages of the organizing process cannot justify corrupting this stage by replacing the secret ballot with a card check process that Pat and Tom have yet to dispute will foster intimidation and abuse.
Incidentally, Ferguson’s paper does not substantiate EFCA’s other central tenet, that employer bad faith bargaining is preventing unions from achieving first contracts. While his data is murky, it appears that out of nearly 700 negotiations examined, 5 at most—less than 1 percent—were determined to involve bad faith bargaining. Table 2. Professor Bronfenbrenner—an EFCA proponent—has said that “one area that unions have been making improvements in is first contracts”; “the rate in the private sector [of] not getting contracts within two years of the election is more likely to average closer to 15%.” http://www.workinglife.org/blogs/view_post.php?content_id=5107&highlight=meisburg .
These are analyses by proponents of EFCA. (For an opponent’s take on the data, see J. Justin Wilson, “An Analysis of Current NLRB Data,” Center for Union Facts (Feb. 26, 2009)).
* * *
Pat describes two cases involving reprehensible conduct that was found to violate existing law. The principal problem appears to have been a glacial legal process. That is a reason to accelerate the handling of labor cases, not to run roughshod over rights of individual workers and employers.
I prefer the point Pat made in a Supreme Court brief this Term in a case concerning unions’ ability to bind members to arbitration of statutory claims: A labor union has a “‘self-interest of its own to serve’” which sometimes poses a “direct conflict of interests with respect to an employee’s choice.” Brief of the AFL-CIO and Change to Win as Amici Curiae at 13, 14 Penn Plaza LLC v. Pyett (quoting NLRB v. Magnavox Co., 415 U.S. 322 (1974)). This self-interest is at its zenith when the “choice” is whether to accept a union. Someone other than union organizers ought to supervise that voting.
Getting Real About Arbitration Continued
Tom’s defense of a system of compulsory arbitration offers at least this consolation: the bare bones version of EFCA will not pass in its current form. But Tom’s new list does not make the revised system at all palatable.
First, how do we know that the Federal Mediation and Conciliation Service will supply a sensible mediator and the appropriate back up services? Talk is cheap, budget appropriations are not. If either side disagrees with the appointment of this mediator, what recourse does it have? None, it appears, certainly not within the tight 30-day statutory time line.
Second, who says that the arbitrators put on the FMCS list will be neutral, experienced and expert? No one alive today fits that description because no arbitrator has ever done one private firm interest arbitration. If there is dissatisfaction with the list, who resolves it, and how? And what is done during the inevitable delays?
Third, adding one arbitrator from each side will not solve this problem. No employer wants to face a neutral arbitrator chosen by an Obama administrator who can team up with the union arbitrator to force an unacceptable deal. If this system made sense, Tom could sell it to some firm without using state coercion. My bet is that he could not win over a single employer convert.
Fourth, mandatory arbitration is very broad under current law. It covers pensions, promotions, contracting out and the like. Surely any agreement has to cover all mandatory issues or the so-called agreement is full of holes. I know of no expert or neutral arbitrators that can fashion any collective bargaining agreement out of whole cloth.
Fifth, this gap cannot be filled by a resort to “standard criteria,” when quite commonly none exist. Entrepreneurial success depends on competition in devising job classifications and compensation packages. “Standard criteria” is just a fancy code word for eliminating inter-firm competition in these crucial labor areas.
Sixth, mechanisms for subsequent modification won’t work. If these require mutual consent, they build in the labor rigidities that sank the automobile and steel industry in the United States. Yet massive distrust on both sides will preclude any needed unilateral variations.
Make no mistake about it. Tom’s cosmetic changes do nothing to limit the enormous intrusion of government in labor relations. Tom insists his system is tried and proven. Not so. Legislation mandates its use in the public sector, with unsustainable labor contracts from California, New Jersey and New York for starters.
Tom claims that 40 percent of collective bargaining agreements don’t get completed. I assume this number is true. Still, these negotiations do not fail because of unfair labor practices. They fail because the agreements proposed don’t make economic sense. Those failures are signs that the system is working, after a fashion. State coercion of the type he champions conceals these deep breakdowns. And it sets the stage for a real brawl when the two-year contract period is over—unless of course EFCA is extended to apply to contract renewals. The current system is bad enough. We don’t need to make it worse with a sugar-coated system of mandated labor contracts.
I want to ensure that two issues are clear to our readers, and then comment on Tom’s assurances about mandatory arbitration.
First, in popular culture unionization is portrayed as a bottom-up, grassroots movement with so many Norma Raes banding together to challenge domineering corporate titans. In truth, union organizing is directed and typically initiated by paid union organizers from outside the worksite who unionize companies for a living. An organizing campaign pits them and a well-financed national union against a company that may have a smaller annual budget than the union and no experience with organizing campaigns. EFCA—and suggested EFCA “compromises”—seek to exploit this advantage by enabling a union to conduct an organizational blitzkrieg that succeeds before the company knows what’s happening or, at least, before it can retain advisors with expertise to match the union’s to devise and implement a response.
Second, what we are discussing is to a degree the antithesis of arbitration as commonly understood: The “interest” arbitrator acts not as judge, interpreting the parties’ agreement, but as legislator, writing the “terms and conditions” of employment, a broad concept as Richard explains that affects fundamental operational matters (subcontracting; introduction of cost-saving technology), not merely wages and hours. Such government-imposed labor “contracts” fly in the face of long-standing American labor policy. In the words of New-Dealer Hugo Black: “[I]t was recognized from the beginning [under our labor laws] that agreement might in some cases be impossible, and it was never intended that the Government would in such cases step in, become a party to the negotiations and impose its own views of a desirable settlement.” H.K. Porter Co. v. NLRB, 397 U.S. 99, 103 (1970).
Tom says the Obama Administration would offer a list of neutral, expert arbitrators. We do not settle for such assurances about other government decision-makers: Judges must be confirmed by the Senate and their decisions can be appealed. Civil servants operate under statutorily-prescribed ethical rules and their actions are appealable too. An EFCA arbitrator would hold more sway than the Secretary of Labor over a given workplace. Yet the text of EFCA provides no opportunity to challenge the slate of arbitrators, or to appeal their awards. Does Tom’s embellishment of the statutory text provide either of those protections? Government regulators are politically accountable. Will EFCA’s arbitration overseers be? If not, how is their position constitutional?
As to the assurance that arbitrators will impose “standard” terms that are “common” in the industry and “mirror” other collective bargaining agreements: What a terrible prescription for a national economy that depends on innovative—individual businesspeople identifying how to do things differently and more effectively than their competitors. “Fear not, Toyota, you’ll get GM’s work rules” is slim consolation. The prospect of overworked government appointees imposing unimaginative cookie-cutter operating rules on broad swaths of American industry is nearly as disturbing as the back-hall maneuvering between political appointees and labor unions that will produce EFCA’s slate of “neutral” arbitrators. Practices in the non-competitive public sector and experimentations of a few Canadian provinces cannot justify putting this straitjacket on the American economy.
Labor Relations, Made Easy
During the course of this debate, Gene and I have crossed swords with Pat and Tom on a number of issues. In closing it might be useful to locate the key difference between our two approaches. Tom and Pat treat labor law as a special field that only works properly when governed by its own distinctive rules. They believe that ordinary market processes always let workers down and systematically advantage employers. They perceive that some deep inequality of bargaining power necessarily defeats the use of ordinary market principles to labor relations. They call for ever more government intervention to redress some perceived economic imbalance.
That basic approach ignores this simple response. In the absence of government intervention, labor markets will almost always be competitive. The greatest protection for any worker lies in his or her ability to go elsewhere. Free entry of new employers is the greatest protection. And that entry is most free when the government enforces the contracts that workers make. It is at its low ebb when the government seeks to regulate labor negotiations through collective bargaining, or, worse still, compulsory interest arbitration.
Quite simply, the current defenders of modern labor law cannot show any social improvement that justifies the huge administrative costs needed to keep the current system afloat. A fortiori, they most certainly cannot show any social gains under EFCA’s triple threat of card-check, compulsory arbitration, and heavier penalties for unfair labor practices in organization drives.
Pat and Tom demur. The believe that there exists in some Platonic universe expert, experienced and neutral arbitrators who can do more for parties than they can do for themselves. But 60 years of modern administrative law shows that these claims of centralized expertise come out second-best to decentralized markets in labor law or any other competitive industry. The parties to any transaction have more information and more incentive to get matters right than any government planner or regulator.
This basic point applies in bad times as well as good times. Just think of EFCA as a large tax on the employment relationship, which can in the end only reduce in lockstep fashion employment levels, wages rates, and firm profitability. What better way is there to describe the support that governments and unions need to inflict this untested on the entire US economy? That tax makes employers pay more than workers receive, which in turn removes the potential gains from trade in labor markets. My colleague at LECG, Anne Layne-Farrar has produced a careful empirical study which brings home the basic lesson. Increase the level of unionization by 1 percent, and you increase the level of unemployment by 0.30 to 0.35 percent, which is the last thing that we need now. There is no easy way to return to prosperity. But EFCA is an easy way to wreck today’s fragile labor markets. It never deserves to become law.
Richard and Eugene keep grasping at imaginary straws to oppose a fair, proven system for engaging neutral experts as mediators and arbitrators to ensure workers and employers achieve a collective bargaining agreement tailored to meet their needs. Among their erroneous imaginations:
“No recourse if either party disagrees with appointment of a mediator…?” They should know better than this. Mediation is a voluntary process; mediators have no authority to force anyone to agree to anything. The parties are always free to hire a mediator of their own choosing if they don’t have confidence in the one provided by FMCS.
“Who says the arbitrators put on the FMCS list will be neutral . . . ?” Business and labor representatives that’s who! They will control who gets on the list of neutral arbitrators. And by the way, I just spoke before the National Academy of Arbitrators who gathered with over 300 business and labor representatives who attest to the acceptability, neutrality, and expertise of members of this Academy. These are hard-nosed advocates who have considerably more first-hand experience than either Richard or Eugene in working directly with these and other neutrals. I trust their judgment.
And contrary to Richard’s claim, some “Obama administrator” will not choose the arbitrators. Once again the parties make this choice and if they prefer they can select an arbitrator of their own choosing who is not on the list their management and labor peers have approved.
“No interest arbitrator alive has ever done one private interest arbitration.” Patently wrong! In the audience I addressed were numerous arbitrators who have done interest arbitrations in construction, utilities, airlines, railroads, health care, and other industries.
Eugene also insists on misstating and misusing the evidence from Ferguson’s study (I supervised this dissertation so I think I understand his methods, data, and findings pretty well). The whole point of his research is that you have to look at the full sequence of the organizing and bargaining process to understand the devastating effects of illegal behavior. The biggest effects, not surprisingly, come before an election is even held—illegal behavior in the pre-election phase reduces the chance workers will get to hold an election by 25 percent. This is the reason a fix is needed for this phase. Employers who violate the law to suppress worker efforts to hold an election have no basis for making pious claims about their support for “democratic elections.” By their behavior they show they will break the law and take away workers’ right to a free choice.
But enough of the details. Let’s strip away all the hyperbole, lack of understanding, and misinformation Eugene and Richard continue to rely on in their arguments and get to the bottom line. Either you respect workers’ rights to make their own decisions about whether or not to be represented and then follow through and provide them with a voice through collective bargaining in shaping the decisions that affect their jobs and their families’ well-being or you don’t. We can continue to debate the specifics of how to do this but there is no credible basis left for ignoring the clear evidence that the law is broken, no longer protects workers’ fundamental human rights, fails to support the workplace innovations critical to our economic recovery, and needs to be fixed. The Employee Free Choice Act, as filled out in more detail in my comments, is a major step toward restoring worker rights, fairness and the potential for the more productive and innovative labor management system workers and employers want and the economy needs.
Finally, I’ll make another proposal and challenge Richard, Eugene, and anyone else who still thinks the sky will fall if the Employee Free Choice Act is passed. Let’s enact it and test how it actually works in practice. We know what the data and record show for the present law. Pass this bill, subject it to independent academic evaluation by comparing it to the experiences under the current law, make the data available and transparent for the public to see, and if necessary make corrections or further improvements based on the real results. What is more American than that?
So, we’ve come to our final posting in this debate, and I want to end with a focus on the first contract arbitration issue. Professor Kate Bronfenbrenner from the Cornell University Industrial Relations School recently released an update of her previous studies of employer opposition to organizing (Economic Policy Institute, http://www.epi.org/publications/entry/bp235/ ). The report is based on a random sample of 1,004 NLRB elections that took place during the period of 1999-2003 and an in-depth survey of 562 campaigns within that sample. I’m sure Eugene will criticize the report as he has the Professor’s previous work, but (and you can look it up) hard facts based on government documents show that employers have increasingly resorted to threats, discharges, interrogations, surveillance, and changes in wages and benefits to undermine union organizing efforts.
In 52% of the cases where a union is certified, workers are without a collective bargaining agreement one year later and 37% are still without a contract two years after an election. Of course, Section 8(a)(5) of the NLRA makes it an unfair labor practice for employers to “refuse to bargain collectively with the representatives of his employees.” But the only way to enforce this obligation is an unfair labor practice proceeding (investigation, complaint, administrative law judge hearing, appeal to the Board, enforcement by the Court of Appeals) that takes two to three years before there is any enforceable order. And, at the end of the process the only remedy is an order telling the employer to go back to the table and “bargain in good faith.” It’s like telling a bank robber he can keep the swag but don’t go robbing the bank again.
The Employee Free Choice Act would correct the lack of any real remedy by providing for binding first contract arbitration. Tom has described the process and answered the glaring misstatements made in the parade of horribles conjured by Richard and Eugene. It’s important to understand that, like any remedy, the main purpose is to encourage voluntary compliance. And, as Tom has noted, the evidence from jurisdictions that have mandatory contract arbitration shows that this is in fact exactly what it achieves. Those jurisdictions see 95 percent or more of first contracts resolved between the parties without any need for mandatory arbitration. There is no reason to believe that the result will be significantly different under the Employee Free Choice, and therefore every reason to expect that 95 percent of first contracts would be the result of the agreement of the parties and not contracts determined by impartial arbitrators. The remaining 5 percent would be handled responsibly, by impartial arbitrators, through procedures and standards that have been developed and applied in similar situations over the last 50 years. This is not a novel or untested process. It’s certainly not the Rube Goldberg Spanish Inquisition that Richard and Eugene describe.
The basic problem is the refusal to respect the rights of workers and, in particular, the right to organize and bargain collectively that is guaranteed by the National Labor Relations Act. The Act says “Employees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid and protection.” And the Act says “It is declared to be the policy of the United States to . . . encourage[e] the practice and procedure of collective bargaining and by protecting the exercise by workers of full freedom of association, self organization, and designation of representatives of their own choosing, for the purpose of negotiating the terms and conditions of their employment or other mutual aid or protection.”
As the law stands, employers can deny these rights with virtually no consequence. The Employee Free Choice Act would change that and make the rights guaranteed by the Act real rights with real remedies.
The role of government in bettering the terms and conditions of employment was one of the most important debates of the first part of the last century, as reflected in the numerous watershed constitutional cases involving employment regulation, including Lochner and the “switch in time that saved nine” in West Coast Hotel.
Two types of employment regulation were advanced—direct legal regulation of employment terms, and bolstering workers’ leverage to negotiate terms for themselves, through labor unions.
Today, direct legal regulation in the area of employment is—as in virtually all economic spheres—widespread and firmly established. It is performed by government agencies and a new class of employee champions, the plaintiffs’ bar, who today may put more dollars in workers’ pockets than unions. As politicians—joined by common law judges—have endeavored to do more for workers, unions have been needed less. Further, international competition has curtailed business’s ability to pass the costs of unionization onto consumers, making employers in some instances more resistant to unionization (albeit less belligerently so) and limiting what unions can deliver for a dollar in membership dues.
Direct legal regulation of employment and unionization are intended to achieve many of the same things; dual regulation is inefficient and to some extent undesirable for employers and workers; although there are arguments to be made for the union model that even conservatives can like (see Eugene Scalia, “Ending Our Anti-Union Federal Employment Policy,” Harv. J. L. P. Pol’y, 2001), direct legal regulation is ascendant.
These and the other factors identified in my first post are the reasons for unions’ decline, not a supposed rise in employer hooliganism that pales beside the violent employer misconduct of unions’ heyday.
Compared to unionism, an advantage of direct regulation is labor peace and relative predictability. One of the most significant parts of this exchange was Pat and Tom’s statement that EFCA will turn the clock back to the labor relations of the 40s through 70s. That was a period of labor turmoil—the historical record speaks for itself—that employees, employers, and consumers do not want again. Pat and Tom may believe that the 21 times Democratic presidents sought “national emergency” injunctions against strikes were mistaken, but The New York Times’s demand for an emergency injunction in 2002 after just a 10-day work stoppage on the ports illustrates that even some of EFCA’s most vocal supporters could not abide the labor conditions this bill would bring.
Senators and congressmen wishing to demonstrate support for organized labor by voting for labor “reform” need to consider whether returning to the labor environment of the 40s, 50s, and 60s is an “achievement” their constituents would soon forgive.
So much for the diagnosis. The cure? Pat and Tom have essentially declined to defend card check, with its obvious opportunities for abuse and intimidation. Just remember, the “compromises” that union supporters are now proposing are different means to the same end—denying employees a free, informed choice on one of the most important votes of their lives, in order to “fix” elections that are not broken. And “interest” arbitration? Here too, Pat and Tom have declined to defend EFCA as written. And we do not need the largest government intervention in the terms and conditions of employment in our history to prop up a labor movement that—while it has achieved commendable things—is not needed to the extent it once was.