The Agenda

Chattanooga and a New Labor Agenda for the Right

Conservatives are celebrating the defeat of the United Auto Workers in Chattanooga. But the defeat was much narrower than it should have been, and the right needs to think seriously about new, more constructive ways to give workers a voice within large companies.

First, why did the United Auto Workers fail to win the support of a majority of workers at a Volkswagen plant in Chattanooga, Tennessee? One popular explanation is that anti-union hostility from local politicians played an important role. For example, Sen. Bob Corker (R-TN), a former mayor of Chattanooga, warned that if the UAW organizing drive at the plant succeeded, Volkswagen would decide against building a new SUV model at the plant. The trouble is that the head of the local Volkswagen plant replied that Corker had it all wrong, and with good reason. Like many German industrial firms, Volkswagen has heavy employee representation on its board; and it also has board members appointed by the left-of-center coalition government of the German state in which it is headquartered. Volkswagen’s corporate leadership is thus accountable to a board that is very friendly to organized labor, and one has to assume that workers at the Chattanooga plant were well aware of management’s willingness (even eagerness) to work with the UAW. Much has been made of the fact that Tennessee is a Bible Belt border state in the heart of Greater Appalachia, a region that has grown less Democratic and more conservative in recent years. It is also true, however, that the city of Chattanooga is 35 percent black, roughly twice the black share of Tennessee’s population as a whole. Though I haven’t seen hard numbers on the demographic composition of the workforce of the Chattanooga plant, Neal Boudette of the Wall Street Journal observed that African Americans “make up a sizable portion of the voting workforce at the VW plant.”

And local Republicans, like Corker and the region’s current congressman, Charles Fleischmann, are known for their pragmatic streak. As mayor of Chattanooga, Corker’s main crusade was revitalizing the city’s downtown, and Chattanooga is home to one of the country’s only publicly-owned citywide fiber networks, an example of the kind of gee-whiz public sector progressivism that East Tennessee Republicans don’t reflexively dislike. East Tennessee was Republican long before the rest of the state. For one thing, this part of the state was opposed to secession during the Civil War. Unlike Memphis, which has an intensely polarized political culture closely connected to the racial politics of the Mississippi Delta, eastern Tennessee industrialized relatively early, and the heirs of those first industrial fortunes continue to play an outsized civic role. This is a region that defies many easy stereotypes about the southern United States, if you care to pay close attention.

Yet the region is Republican, and it is certainly possible that right-of-center voters at the Volkswagen plant responded to (accurate) claims by outside groups, like the Center for Worker Freedom ( a group affiliated with Americans for Tax Reform), that the UAW backs President Obama. In a similar vein, one can imagine that left-of-center voters at the plant were more inclined to back the UAW on the same grounds. Some pro-UAW observers seem to take it for granted that conservative white evangelicals who opposed unionizing the Chattanooga plant did so on essentially tribal grounds. I have yet to see anyone allow for the possibility that black support for the UAW might have been similarly motivated (or perhaps it is only identity-driven opposition to organized labor that is suspect, and not identity-driven support).

The fundamental reason a majority of Volkswagen workers at the Chattanooga plant opposed the UAW effort seems to be that they were content with existing arrangements at the plant. Indeed, it seems pretty likely that many workers who favored the UAW drive were also content with existing arrangements, as the UAW’s pitch was they aimed to form something like a cooperative, German-style “works council” that would bring labor and management together to resolve common dilemmas. So the promise of an adversarial union that would fight Volkswagen management tooth and nail didn’t appeal to the large segment of workers who were basically happy with the status quo. And the UAW’s willingness to work with Volkswagen management meant that those workers who did yearn for an adversarial union didn’t have much faith that the UAW would play that role. The UAW wasn’t making much of a pitch: we’re not that scary, which is why management loves us; but pay us dues so we can represent you in the workplace and (sotto voce) help finance Democratic campaigns in Tennessee and across the country. Even so, a large number of workers at the Chattanooga plant did back the UAW, despite the fact that workers at the plant were relatively well compensated.

Among the most innovative firms, it’s not the potential for upward pressure on wages that fuels the most determined opposition to organized labor. Rather, it is the concern that unions impose work rules that make it difficult for firms to embrace organizational innovation. Critics of organized labor need to keep in mind that workers have real grievances, and that U.S. labor law doesn’t give them many good options for addressing them. If our goal is to better the lives of workers without making it impossible for firms to adapt to a changing economic environment, we ought to allow employees to organize in new ways. In 2011, Alan J. Haus made the following proposal:

Radically different employee associations that don’t suffocate both their companies and their members need to be created. New types of employee associations should support worker incomes by enhancing worker training and worker mobility between companies. This last goal will be realistic, however, only if there is a wide variety of such jobs to be found—which in turn will require steps to make it easier to organize the employee associations.

Thus, 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 “floors, not ceilings” approach has the potential to appeal to management, which would the flexibility it needs to spur productivity gains, and labor, as it would allow workers to aggregate their influence within the firm to secure more compensation. There is no guarantee that firms with Haus’s employee associations would outperform those without them. But managers wouldn’t be able to blame institutional sclerosis on these employee associations, as they wouldn’t be in a position to impose work rules that hamstring management’s problem-solving efforts.

But Haus’s proposal is just one of many conservatives might pursue. The federal government could create a more expansive version of Glassdoor, in which verified employees at large firms could provide anonymous feedback on their employers. James Sherk, a senior policy analyst at the Heritage Institute, has called on Congress to legalize non-union employee-involvement programs. More broadly, one can imagine a broader legislative package that would allow for employee-involvement programs and employee associations that focus exclusively on compensation while also requiring that traditional unions face periodic recertification elections and that they seek opt-in permission from members to use union dues for political purposes. This would give workers new options for workplace representation while reassuring workers in union workplaces that they have a say in deciding whether or not to be represented by a union, and whether or not their money is being used in ways that reflect their political convictions. Instead of just reacting to the labor movement, this agenda would take affirmative steps to protect the interests of workers.



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