President Obama and his advisers insist that they place national economic recovery over every other policy objective. However, when it comes to labor policy, they support measures that economic history indicates would significantly hinder such recovery.
Perhaps the most shocking is Sen. Ted Kennedy’s cynically mislabeled Employee Free Choice Act, known more generally as “card check.” Card check would not promote “free choice” but would instead take away employers’ right to demand secret-ballot elections for union representation. By pressuring workers into signing cards rather than voting in booths, union officials could gain bargaining power over millions of private-sector workers. Almost invariably, these workers would fall under “monopoly bargaining power” — meaning that even if an employee chooses not to join, union officials have the sole power to negotiate wages, benefits, and working conditions on his behalf.
Monopoly bargaining violates employees’ freedom and is therefore in itself bad policy. But for Congress and the Obama administration to help Big Labor foist monopoly bargaining on millions more workers now, as the national economy reels from the combined impact of the housing and stock-market crashes, would be fatal to our hopes of timely recovery. And we can expect that the increase in unions’ power and numbers will impair U.S. competitiveness for generations to come.
Experience shows the link between increased unionization and reduced job and income growth. The ten states with the highest rates of private-sector union membership in 1997 had two-thirds less aggregate private-sector job growth by 2007 than did the ten states with the lowest rates. The ten most unionized states had only half as much real personal income growth as the ten least. Also, businesses prefer to locate in right-to-work states, where unions cannot enforce “closed shops” — that is, where union membership can’t be made a precondition for employment, and where fewer employees tend to fall under monopoly bargaining power. Similarly, if card check increases unions’ power through the whole country, many businesses would have no choice but to relocate to other countries whose policies are less tilted in favor of monopolistic unionism.
The Kennedy card-check scheme is far from the only economy-crushing Big Labor special-interest legislation that Obama has endorsed. The trial-lawyer-friendly “Lilly Ledbetter Fair Pay Act” already has been enacted, removing time limits on wage-discrimination cases. Alleged victims can now bring such cases long after any alleged discrimination has occurred, even after the alleged discriminators have died. Employers will surely respond by setting aside more money to settle future employment-discrimination claims — money that otherwise could be put to productive use.
A third example is the Public Safety Employer-Employee Cooperation Act. This legislation would force states and localities to recognize unions as the representatives for their police officers, firefighters, and EMTs — and thus force countless workers to accept unions as their monopoly-bargaining agents, even if they have never voted to unionize.
The new administration is bringing Big Labor far closer to its decades-old goal of enacting a federal law forcing unions on state and local government employees of all types across America. Similar policies adopted at the state and local levels are already helping drive taxpayer-funded public-pension and health-care costs sky-high. The city of Vallejo, Calif., went bankrupt in 2008 because of the excessive costs of public-safety monopoly bargaining — an extreme case, but an indication that it would take exorbitant taxes to support the forced unionization of government employees nationwide. This would deter business formation and growth, exacerbating America’s unemployment woes.
If the new president and his allies in Congress are to succeed in reviving the economy, they must first do no harm. This will mean abandoning all such Big Labor schemes. Otherwise, what the stimulus plan could give, labor legislation will take away — and the economy will stay in recession.
– Mallory Factor is a merchant banker and the co-chairman and co-founder of the Monday Meeting, an influential gathering of economic conservatives, journalists, and corporate leaders in New York City.