The National Labor Relations Act of 1935 marked a major departure from common law principles, which were modified but not rejected with the passage of the Taft-Hartley Act in 1947. Since that time, the legal regime governing labor relations has been relatively stable. Today, the looming presence of the Employee Free Choice Act of 2009 (EFCA) threatens to alter that balance radically. The EFCA seeks in a few short paragraphs to erect a labor regime whose untested provisions and coercive power will add countless business casualties to our already suffering economy.
Labor unions claim that the unfairness of our labor law has led to a decline of union membership in the private sector from a high of 35 percent in the mid-1950s to about 8 percent today. The stable labor law regime is not the source of that decline, which is attributable to other factors:
1.Â Globalization.Â The general liberalization of trade over the last sixty years has undercut the price structure of unionized firms facing foreign competition. Workers will not join unions that cannot deliver supra-competitive wages.
2.Â Labor mobility.Â Increased job switching in the United States has compromised the position of unions. Workers who do not expect lifetime employment will not invest heavily in union activity.
3.Â Internal governance conflicts.Â Under intense competitive pressures, senior union workers used two-tier wage systems that have undermined the loyalty of younger workers.
Management’s unfair labor practices are not a significant reason for unions’ decline. Unions win a majority of elections but typically in units of 100 or fewer workers. These new workers cannot replace the hundreds of thousands of jobs lost through attrition when unionized firms cannot compete successfully in an open economy.
Nonetheless, unions hope through the EFCA to ramp up their organization by seeking higher penalties against management that campaign in opposition. Far more significant are the “card check” certification procedure that bypasses the secret-ballot election; and a new and undefined compulsory arbitration system that would allow government arbitrators appointed by the Federal Mediation and Conciliation Service in the Department of Labor.
Card check.Â Under current law, a union that gets 30 percent of the workers to sign cards can demand a union election by secret ballot (almost always within sixty days). Under the EFCA, a union that collects cards from a majority of workers is recognized—no questions asked. Without the protection of a secret ballot, workers are exposed to union intimidation. Yet the EFCA provides no supervision on how unions collect, keep, or use signed authorization cards. And by design, the EFCA does not allow a card check to displace an existing union. Nor may the employer use the card-check procedure to decertify a sitting union. It is a one-way ratchet.
Compulsory arbitration.Â Under existing labor law, union-management contracts necessarily result from detailed and complex negotiations. Under the EFCA, if a contract is not reached after ninety days of negotiation and thirty days of mediation, the dispute is referred to a panel of arbitrators selected under yet unwritten procedures to be crafted by the Federal Mediation and Conciliation Service. The EFCA places no limits on the arbitration panel’s discretion, and its decision would be binding—without any substantive judicial review—for two years.
As constructed, the “free choice” act excludes workers from two areas vital to their welfare: union selection and contract ratification. Its compulsory arbitration structure introduces a partial but large-scale, covert government takeover of the private sector. As America faces imploded financial markets and the highest structural unemployment in a generation, the EFCA is a misguided law that it cannot afford.