Tuesdays are EFCA Update Days

I’ll start off with a whopper today:  Both the Communist Party USA and the Democratic Socialists of America are strong supporters of EFCA.  After thinking about it, we shouldn’t be surprised, but still, it’s discomforting to see it in black and white.

Mickey Kaus, famed blogger on Slate.com, Harvard Law School Grad, and son of former Democratic California Supreme Court Justice, opined that card check is worse then originally thought.  According to Kaus, “The arbitration parts of the card check bill are so vaguely drawn that nobody knows who the arbitrators will be.  The job appears to be delegated entirely to the Federal Mediation [and Conciliation] Service.  The FM[C]S might decide to use its own employees.  It might decide to use arbitrators from the private sector selected along more traditional lines…. Since thousands of arbitrators might quickly be needed for the expected explosion of mandatory arbitration, it’s unlikely they would all be newly hired GS-12s.”  Kaus continues, “The bill would have the effect of freezing in place hierarchies and job categories both across industries and withing individual firms.  You want to start an innovative job structure that, say, collapses six gradations of pay and authority into one?  You think workers will be happier and more productive if they’re delegated authority in this more non-hierarchical arrangement?  Sorry-if the union objects, then the arbitrator is likely to uphold the old regime on the grounds that that’s the way it’s always been done (and the way everyone else does it).  A recipe for rigor mortis!”

According to economist Anne Layne-Farrar, who studied the card check system in Canada, EFCA would result in 600,000 lost jobs following every 3% gain in union membership.  With this statistic, Ms. Layne-Farrar agrees with me that EFCA will make it harder for the unemployed to find jobs.  Binding arbitration will erase the union’s desire to bargain for a contract, but rather, the union’s unreasonable demands will be the starting point for the arbitrator.  Since FMCS (i.e. the government) will likely be the arbitrators and will impose wage and benefit levels for a 2-year period regardless of the economic consequences, a neo-Nixonesque government wage and price controls on private companies is not too far away.

Another academic found that unionized companies suffer not only lower profits but lower investment in physical and intangible capital and slower growth.  According to economic  Professor Barry Hirsch of Georgia State University, unionized firms tend to lose market share to nonunionized firms, whether foreign or domestic.  Furthermore, companies can survive unionization as long as every other competitor faces the same "tax" or if markets are notcompetitive at all.  “This is why government is the only area where unionization has been growing.”

Following up on Prof. Hirsch’s analysis that unionization only works if it’s the only game in town, Professor Gary Chiason, professor of industrial relations at Clark University in Massachusetts, speculated that if EFCA passed, unions would focus on organizing low-unionization states, i.e. right to work states, making those states less attractive to businesses.  Accordingly, “it’s in Michigan’s interest that Alabama become more unionized.”  Conversely, the Mackinac Center for Public Policy believes that EFCA would likely strengthen unions in Michigan more than other states.  According to the Mackinac, EFCA is bound to lead to the establishment of unions in workplaces where union support is weaker and weaker union support in the workplace means more union opponents who would probably opt out of joining the union and paying union dues, an option that is available in right to work states but not Michigan.  for unions, there will be a strong incentive to focus on states like Michigan where they can be assured of receiving dues from all workers, even if support in the workplace is weak.  “Secondly, because card check is vulnerable to abuse, unions will be tempted to resort to intimidation to secure signed authorization cards.  Intimidation is both easier to engage in and more tempting when one has the advantage of numbers.  Intimidation tactics are also harder to resist when one cannot be sure that the powers that be will protect you.  Michigan, with its sizable number of labor officials and politically entrenched unions, is prime territory for rough recruiting methods.”  I tend to agree with the Mackinac analysis.  How about you?

The Chambers of Commerce in Right-to-Work States agree with Chaison (and not Mackinac).  Specifically, they have 181 Chambers in right to work states have banded together to urge Congress not to pass EFCA.  According to this group, “While some have suggested that businesses in right-to-work states would not be significantly affected by EFCA, nothing could be further from the truth…  Even though workers in right-to-work states do have the right to refuse to pay union dues, if the workplace is organized, they must give up their right to deal directly with their employer.  Likewise, employers would be forced to accept arbitration agreements that may impose conditions inconsistent with established business models and impede the ability to compete.”

I started this post with reminding us all that EFCA is favorable to communists and socialists, so I’ll end it with a little levity.  Last week the AFL-CIO claimed that “Union members aren’t the only ones supporting the Employee Free Choice Act.  This week in Wisconsin, Milwaukee-area business owners got together to talk about why they support EFCA.”  The AFL-CIO’s blog hypertexted “Milwaukee-area business owners,” just like how I hypertext words in this blog that you can click on for more information.  So I clicked on those words on the union’s website and was directed to the below picture.  Correct me if I’m mistaken, but there’s 7 people on a panel and only 1 person in the audience!  So much for that non-union support! 🙂

WI: Business Panel by aflcio2008.

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Misc. Mondays: Unions Hurt the Economy and Cause Unemployment

I am tired of hearing all of the pro-union propaganda that unions create job security.  While it is true that unions eliminate the employment-at-will doctrine, and employees can only be terminated for just cause, that does not create job security.  Rather, a joint study conducted by two liberal universities, Princeton and UC Berkeley, examined the effect unionization has on corporate performance, and thus the economy.  The entire text of the study can be found here.  Without reading the report – written by highly educated economists – here are some of its conclusions:

  • New unionization is associated with a reduction in a company’s market value totaling approximately $40,500 per worker eligible to vote.
  • The negative effects of unionization on the equity value of firms appears fairly stable over time.
  • An examination of the balance sheets and income statements of both sets of companies reveals that union wins are associated with relatively lower growth.

You have all heard me rant how the auto industry and the steel industry are prime examples of union-ladened industries and how they are not only not profitable, but nearly non-existent.  We can quickly add the newspaper industry to this list.  Newspaper employees are heavily unionized, and print newspapers are filing for bankruptcy at record paces.  The Philadelphia Inquirer, Seattle Post Intelligencer, Tribune (Chicago Tribune and LA Times), Connecticut’s second largest newspaper, Miami Herald, Hearst Corp. (San Francisco Chronicle), and Minneapolis Star Tribune have all either filed or are teetering on the brink of filing for bankruptcy.  There may be more.  In addition to the bankruptcies, 1500 people from almost 50 different newspapers were laid off in February, alone – most of them members of a newspaper union.

My sentiments are not just management oriented, either.  Obama’s Director of National Economic Council, Larry Summers, who wrote the “Concise Encyclopedia of Economics” stated in his book:  “Another cause of long-term unemployment is unionization.  High union wages that exceed the competitive market rate are likely to cause job losses in the unionized sector of the economy.  Also, those who lose high wage union jobs are often reluctant to accept alternative low-wage employment.”

Misc. Mondays: VA Barely Holding onto Anti-Union Status

An interesting article was printed in the Washington Post titled, “Unions Making Presence Felt in Va.”  Of course Virginia is a Right to Work State with just 4.1% unionization rate, but that may all change in the near future.  Unions have infiltrated Virginia politics are it’s only a matter of time until they come collecting on their money.

  • $50,000 from SEIU to Fairfax County Supervisor Sharon Bulova who was elected last month
  • Significant resources to the hotly-contested campaign for governor
  • $200,000 from the Laborers’ Political League Education Fund to the Virginia Democratic Party
  • $100,000 from the United Food and Commercial Workers Union to the Virginia Democratic Party
  • $205,000 from the National Air Traffic Controllers Association to the Virginia Democratic Party

Republicans and business leaders are worried that such activity is an effort to repeal Virginia’s “right to work” laws where employees cannot be compelled to join their company’s union.  Ironically, Democrats could face a backlash is they collect too much money said K. Clayton Roberts, executive director of the Virginia Foundation for Research and Economic Education.  “If a candidate appears to be bought and paid for by organized labor, that is a red flag for business.”  Bought and paid for by organized labor – sounds like our current President!

Follow Up Fridays: Solis’ Nomination as DOL Secretary

I had no idea that when I first posted about Obama’s pick for Secretary of Labor that I would still be writing about her nomination process.  But last week two things happened which lead me to believe that either she will not be confirmed as the Secretary or we’ll be hearing a lot more about her in the near future.

First, Solis’ husband paid $6400 worth of outstanding tax liens placed on the company he owns.  LawMemo Blog’s expert, Ross Runkel, a 30-year employment law professor thought that this, alone was enough for Solis to withdraw her nomination, or conversely, Obama’s people “will drop Solis and move on to someone else.  The short-term and long-term costs of hanging onto Solis are simply too high.” 

But just hours before the Senate confirmation vote, the other shoe fell on Solis with The Weekly Standard‘s article “The Nominee who Lobbied Herself.”  Solis, who co-sponsored EFCA in 2007 was the treasurer of the union fronted American Rights at Work who had been lobbying Congress to pass EFCA.  In other words, “she is the official legally charged with the fiduciary duty of approving and signing off on all spending by the organization.  And to make matters worse, she did not reveal to her colleagues in the House of Representatives that membership on her financial disclosure forms, which may constitute a separate ethical violation.”  Members of the House of Representatives are not allowed to lobby or advise on lobbying on behalf of a private organization – even if the work is done for free.

“Now [Obama] has a nominee for Labor Secretary who apparently broke House ethics rules by lobbying for legislation that she sponsored, but who did not admit that she failed to reveal that fact on her financial disclosure forms until after her nomination became an issue.”  The Weekly Standard.

Like some of Obama’s other appointees, i.e. Tom Daschle’s $140,000 in back taxes and interest, Tom Geithner’s $42,000 in taxes and interest, and the lien placed on Nancy Killefer’s home for not paying unemployment taxes for her domestic help, Solis forgot to mention her affiliation with American Rights at Work in disclosure forms filed with the House of Representatives from 2004-2007.  In typical fashion, a White House spokesman chalked up the omission as an “unintentional oversight.”

But guess who’s still supporting Solis!  John Sweeney, AFL-CIO President urged the committee to move ahead with a vote as soon as possible to confirm Solis’ nomination and Andy Stern, President of SEIU said, “We urge [the] U.S. Senate to move swiftly in a bipartisan manner so Representative Solis can bring her work to improve lives for millions of workers in America.” 

For now, though, the vote is on hold until her ethical violations are fully explored and a decision whether to continue her nomination process is made – assuming she won’t withdraw her name in the interim.

Follow Up Friday: Patriot Employer Act Not Good for the World

The Patriot Employer Act, which is an overt Act of protectionism and a big blow to outsourcing.  According to an insightful article from India that only looked at the first requirement of the Act, “in a world as highly competitive as it currently is, any concerted effort to reverse the trend of outsourcing will not only impact the US corporations (for many of whom outsourcing is a way of being competitive in the global market) themselves but also impact a whole host of companies outside the boundaries on the US.”  Likewise, an article from an European think tank chastises Obama’s support of the Patriot Employer Act in todays economy because today we need countries to trade with each other, not close their borders and become less productive.

Follow Up Friday: Stimulus Funds will Blacklist Non-Union Workers

By now we’ve all heard about Obama’s Executive Ordersaimed at pacifying labor until EFCA rolls into town.  Now, any unfair labor practice charges leveled against a contractor – perhaps during a union organizing drive – could be used to bar the contractor from competing for taxpayer-funded federal work.  According to National Right to Work, “Now that union operatives at DOL have the power to blacklist a company from federal contracting simply by lodging a few spurious (even unadjudicated) charges, it’s pretty clear union bosses are in for a massive payday when the “stimulus” bill passes.”

For many years, I have seen first hand how union-filed prevailing wage complaints against non-union contractors cost them locally and state funded work, even if the charge doesn’t have merit or is settled for pennies on the dollar.  Unfortunately, the filling of such charges is a one-way street.  Non-union contractors, for some reason, don’t file charges against union contractors.  Assuming non-union contractors continue to not file charges – whether for prevailing wage violations or unfair labor practice charges for harassment on job sites – only non-union companies will be blacklisted from performing some of the $188 billion worth of federal work currently earmarked in the stimulus package.

Union Inflatable Rats

A union’s inflatable rat is an often used propaganda piece meant to intimidate non-union companies and drive non-union companies into either agree to sign a union contract or go out of business because of negative publicity.  Here’s a picture of the rat I’m talking about:

Unfortunately, there’s not a lot you can do if this creature shows up at your workplace.  Historically, rats were used exclusively in the construction arena to let everyone know that non-union labor was on the job site.  The National Labor Relations Board has routinely held that rats are a permissive way of signal picketing, meaning when the rat shows up, union workers walk off the job site.  Frequently, the rats are put in parking spaces on the road and a couple of union workers feed the meter all day.  For a picture of what that looks like, click here.

The best thing for a company owner to do is to make a joke out of the rat.  Like with any other type of bully, if they’re not getting a reaction from what they’re bullying, they’ll move on.  Don’t bother calling the police – they won’t get involved unless you are successful in getting an injunction, which is pretty much impossible to do.  I have heard the argument that on a very windy day, the rat could become a safety hazard, akin to an untethered Macy’s Parade Balloon.

The rat just won another round of litigation, this time in New Jersey where NJ Supreme Court ruled that the rat is a constitutionally protected form of free speech.  In that case, the rat showed up at a health club’s grand opening because the club did not employ unionized workers to build the club.

Ironically, union rats are made by a non-union company!  Big Sky Balloon and Searchlights in Chicago makes a few different types of rats, a “greedy pig,” “cockroach,” “skunk,” and a “corporate fat cat” strangling a construction worker.  Click here to look at those balloons.