Alan Haus on New-Model Unionism

by Reihan Salam

Nick Schulz reminded me of a recent essay by Alan Haus on a theme of enduring interest to me, new-model unionism. The first time I encountered this idea was in an excellent Virginia Postrel article published in 1998, but it has only become more relevant in the intervening years. The following is from Haus:

Congress should authorize employee associations that are easier to form than current unions, but which do not have the power to interfere with managerial prerogatives (which is pretty much every subject other than employee compensation as determined by a collectively bargained contract). Of course, if the new types of employee organizations are not suffocating their members, they may in fact find it easier than old unions to attract new members.

A related issue goes to the heart of labor relations as it has traditionally been practiced in unionized companies: structures for worker compensation. Uniform compensation for workers of the same job classification led to a “race to the bottom” with regard to worker productivity. Workers of the same job classification who receive the same compensation lack incentive to be productive, and indeed those who could be more productive have been subject to social peer pressure not to make co-workers look bad.

This highlights a difference between aggregations of capital bargaining for economic returns and aggregations of labor bargaining for economic returns. When capital bargains with management for returns to capital, each dollar is more or less the same, while in collective bargaining by labor there can be significant differences in the productivity of individual workers.

A solution for retaining the appropriate aggregation of bargaining power in collective bargaining by labor, while allowing for differences in productivity of workers, is that the new employee organizations should be negotiating minimum compensation levels for workers. Each individual worker can then negotiate for additional and incentive compensation above the minimum. This could include, as one example, workers negotiating for individual grants of stock options, which would help link the worker’s success to the company’s success. Tax laws could be changed to promote such grants.

Some years ago, I expressed enthusiasm for the idea of legalizing so-called “company unions,” as survey data suggests that they’d fill a desirable niche. We don’t have very good survey data on attitudes regarding the workplace, but creating a wider range of institutional forms designed to meet the needs of workers strikes me as sensible.  

The Agenda

NRO’s domestic-policy blog, by Reihan Salam.