Employees: Free to Choose?

Posted March 11, 2009

As befits a vanguard organization. Espresso Workers Local One was ahead of its time. It was a project of the Industrial Workers of the World (the IWW, or Wobblies), a bunch of colorful commies who took their class struggle fully caffeinated and with a healthy dose of sugar.

We organized the local in Santa Cruz in 1976, when Tom Scribner still graced the Pacific Garden Mall with his musical saw and tales of the great Wobblie timber strikes.

Local One did not last long. The employer busted the union faster than you could say macchiato. When he couldn’t figure out who the instigator was, he just fired everybody.

Since I had organized unions at several local restaurants for the hopelessly capitalist Hotel Restaurant Workers union, I served as a clandestine adviser to the effort. It was not surprising that the employer could not finger the instigator — a Zonker Harris look-alike barista named Scott. The lockout and raucous picketing that followed gave the dozen workers more circus than bread – and quickly doubled the business of the tiny café behind Bookshop Santa Cruz.

Federal law then as now prohibits the boss from firing employees for trying to organize a union. If this law were actually enforced, every slacker about to get the sack might quickly start passing out union cards. The law has never been well-enforced — but it should be.

For years, organizing a union has been an excellent way to get fired. Employers flout the law and fire about one organizer in four. In traditionally nonunion industries your odds of getting canned for organizing a union approach 100%. Even when they don’t fire organizers, managers pay employees to attend mandatory indoctrination sessions and require supervisors to meet one-on-one to determine each employee’s union sympathy. This is where the real coercion happens. Companies hire lawyers and campaign specialists who can easily drag representation campaigns out for months.

It works. Although most unions will not petition the government for an election unless they have the support of 60-70% of the workforce, by the time the election comes around, the employer usually wins. And even when unions win a certification election, 40% of the time they are not able to bargain a first contract. Today only 12.4 percent of all workers and 7.6 percent of private sector workers belong to unions – a lower share of the private sector than when FDR signed the Wagner Act in 1935.

Unions have long believed that they could start growing again if only they could protect sympathetic employees from being fired and get the government to impose a first contract with binding arbitration. Now that Democrats are running the federal government, the Employee Free Choice Act (EFCA) is working its way through the US Senate (it passed the House last March). During the next month, you are going to hear a LOT about EFCA – this will be an epic and nasty political fight.

EFCA: A FLAWED SOLUTION TO A REAL PROBLEM

Plain and simple, EFCA makes it easier to organize a labor union. It imposes serious penalties for firing organizers, allows the government to certify unions by petition instead of election, and mandates binding arbitration so that employees who petition for a union are guaranteed a contract. The politics of the bill are clear: unions and their supporters love EFCA. If you dislike unions, you hate it.

The politicized part of the business world has worked itself into a class fever over the legislation. Home Depot co-founder Bernie Marcus termed EFCA “the demise of a civilization”. (This from the guy who wrote a $210 million severance check to Home Depot CEO and Bush buddy Bob Nardelli, who then turned up as CEO at all-union Chrysler. One can but wish that EFCA would end “civilization” as Bernie Marcus knows it.)

As a union organizer who became a business guy, I start with a fundamental sympathy for EFCA because I dislike the growth of income inequality in the United States. Many social problems would be less acute if the bottom third of the income distribution made more money, got better benefits, and enjoyed more protection at work. Unions can arguably help achieve this.

But EFCA is deeply flawed. It gives workers less power, not more. It facilitates 19th century unionism but does nothing to promote or even reflect the reality of modern work. It gives unions no incentive to modernize. EFCA is a long way from the end of civilization, but we can and should do a lot better. Since most progressives favor EFCA, lemme ‘splain.

Although this bill is being voted on as a referendum on unions, that is not the issue for most Americans. Of course managers dislike labor unions just like the President wishes Congress and the courts would go away. Power, like dessert, is more enjoyable if you don’t have to share. That is an issue here, but it’s not the main issue.

The main issue is what kind of labor unions we want and how our laws can empower employees with real decisions, not satisfy the desires of bosses or union flacks.

EFCA gives workers less power and exposes the union certification process to corruption. A bit of history makes this clear. As noted here, the United States did not adopt secret ballots in public elections until 1908. Before that, your vote was public and could therefore be purchased. The market for votes required transparency, so that when I paid for your vote, I could make sure that I got it. Secret ballots all but shut down the market for votes (it became a market for politicians – a longer story). Once I have no way of knowing whether I am getting what I pay for, I’m a fool to pay.

Would unions pay people to sign certification petitions? Sure, some would (and I speak as a former federal enforcer of union election laws). Others rely on peer pressure – or the simple desire to get me off of your doorstep because the soup is boiling and the baby is crying. I got hundreds of union cards signed when I did this for a living a quarter century ago. I am quite sure that I did not get as many votes as I got signatures. Nobody ever does.

Petitions are simply not elections. I would not tolerate my mayor or my Congressman being selected based on how many signatures he or she gathered. A fair, open contest, a strong clash of ideas and an honest, secret ballot vote is better. This is why once America tried the “Australian ballot”, as the secret ballot was called when first introduced, we never went back. Nobody ever does.

Elections confer much more legitimacy than petitions. A union that wins a secret ballot election arrives at the bargaining table with real authority and credibility. A union certified by petition will have less bargaining power. Under EFCA, unions have a less incentive to bargain, since the failure to reach an agreement entitles the government to impose one. Under EFCA, weakened union legitimacy will lead to a large share of first contracts being imposed by arbitrators.

At which point EFCA denies workers a second democratic election (and even my union pals are often surprised to learn this). After a union wins an election, workers pick a small team (typically the activists) to join the union rep and bargain a contract with the employer. If they get a contract, workers vote on it. This ratification vote is not required by law but is almost universal. Since local union leaders are nearly always elected, it is also good politics. Ratification votes are not trivial or simple. They keep the bargaining committee and the process honest.

But EFCA removes the ratification vote by mandating binding arbitration after 90 days of bargaining and a bit of mediation. An arbitrator shows up and decides what is in the contract and what is not. This arbitration is not only arbitrary, it is a huge change. It replaces a system built on a deal between private parties with a government-backed mandate from someone with no knowledge of the business or the workforce. Collective bargaining may be a shopworn tool, but it is built on mutual consent and a modicum of democracy. It never forces parties into a deal they find unworkable. Binding arbitration can and does. And workers do not get to vote on the contract that results. They just live with it, as does the company. The only party guaranteed to benefit from binding arbitration is the union itself.

PROTECTING EMPLOYEE RIGHTS

EFCA is a flawed way to make the unions we have now easier to organize. But the folks down at the union hall are right when they argue that the current system is broken and unfair. Here is a better answer: create a truly level playing field. EFCA should mandate:

Fast elections. A secret ballot election would be held within two weeks of the filing of a certification petition with the NLRB (the government agency that oversees these things). Elections today take about eight weeks and some much longer. Mandate that the hearings that delay elections be held afterward. Making the election speedy means a lot less tension and divisiveness at work. Fast is not always fair, but slow is nearly always unfair. (By the way, when employees petition to decertify a union, the election would be handled just as quickly. What’s sauce for the goose…). Is this practical? Former NLRB Chair and Stanford Law professor Bill Gould says yes.

Shared access to employees and information. All meetings on the subject of unionization – either group or a one-on-one meetings, would be attended by both union representatives and managers, who would get equal time. Worker contact information, phone numbers and emails would be shared and protected. We can and should mandate a level playing field.

Mediation, not arbitration. Collective bargaining needs to remain private and workers need to be able to vote to approve or reject their contract. Mediation is a proven approach to bridging differences (as are strikes or lockouts if it comes to that). Any solution agreed to by the two parties will be better over the long term than one imposed by an outsider (whether the outsider is public or private is not the issue).

Severe penalties for firing union activists. EFCA gets this part right. This is exactly the sort of abuse of power that causes workers to organize unions in the first place.

This modified EFCA would address union concerns and make it much easier for workers to organize traditional labor unions.

Who would take advantage of this new law? What problem do workers want to solve when they organize unions in the first place? Many managers assume that the issue is money and benefits. But everybody wants more pay and not everybody organizes a union. Money plays a role, but my experience is that workers organize unions to punish arrogant managers.
Norma Rae stood on her chair because her bosses were flaming @$$hole$.

If you are a manager and your workforce organizes a labor union, you either richly deserve it or, like liberal Democrat Michael Powell in Portland, you hired too many sociology majors with dreams of proletarian paradise. Either way, the big bookstore in Portland got work rules and a three step grievance procedure. And maybe a better health plan, which ain’t nothin’.

Unions believe that but for lawbreaking bosses, workers would flock to join. It has to be true that if employers did not flagrantly violate the law, unions would win more elections. For this reason alone, it makes sense to either increase penalties.

On the other hand, many workers do not buy what unions want to sell. Last I looked, if unions had won every certification election they petitioned for and bargained a successful contract, they would not have significantly increased their share of the US workforce (of course their share would not have declined as fast). Union leaders and Congressional Democrats often cite a 2005 Peter Hart survey commissioned by the AFL-CIO but never published that allegedly concluded that 53 percent of non-union workers, or 57 million workers,
would like to belong to a union. Another poll by Opinion Research Corp showed 82 percent of non-union workers do not want their workplace to be organized. Who is right? My guess if demand for unions is the product of management arrogance, there is little danger that it will dry up but that unless unions modernize, they will be seen as a good solution by an ever smaller share of the US workforce.

Just ask what do unions offer the great majority of people who work for decent managers? Less than they should. EFCA reinforces a model of unions born of industrial combat. And workers who are desperate enough to need a powerful weapon find that a strong union fits the bill nicely (one of the reasons that workers historically found it in their interest to tolerate thuggish unions was that they were extremely handy when you had to combat thuggish managers). What incentives does EFCA provide for unions to grow into the modern age? None that I can see.

REVITALIZING UNIONS

Unions can make a huge difference in low skill, low pay industries – even if most of those industries are shrinking and the lowest skill jobs are increasingly done by immigrants. But why embrace an industrial relations framework that addresses the needs only of the desperate and the victimized? Why apply 1935 era collective bargaining to the 21st century world of work?

Collective bargaining was designed for an economy of large, stable, industrial enterprises in a world with hardly any local competition — much less competition that is intense and global. Collective action made sense when people rarely changed jobs, markets did not penalize lousy employers, and huge workforces had modest skills and little mobility. But the industries, jobs, skills, opportunities, and threats facing American workers today are radically different.

People have dozens of jobs over the course of a lifetime – so a system of bargaining that ties rights and benefits to seniority make no sense. But privileging seniority is the throbbing core of most labor agreements.

For many people it is easier to change jobs than to organize against an arrogant boss and in some industries, it’s easier to penalize a boss by leaving than by organizing. Collective bargaining imagines that the only professional relationship that matters to people is with their employer. For many people, their profession or even their region matter as much or more.

Since 1935, women have not only joined the workforce, but they are increasingly acquiring more skills than men (57% of college students are now women — and they get better grades and are more likely to graduate). The most encrusted unions remain heavily male (definitely not true of the unions that are growing, mostly in the public and service sectors).

The average employer is much smaller and competes hard for business. Many cannot afford health or retirement plans. Very few are unionized or can tolerate being unionized. Collective bargaining exists in the dinosaur sector of the economy — large, traditional industries and the public sector (our largest, most traditional industry).

Even though the macroeconomics of the moment are more like 1935 than we’d like, the structure of the American economy and the needs of the American worker are very unlikely to be met by laws that reinforce a 1935 industrial relations framework. I earlier argued that unions would do well to add some new tools to their tool kit. What are these tools and what might they mean for EFCA?

EFCA should promote voluntary professional associations as well as collective bargaining. These associations make a lot more sense than traditional labor unions in an economy where manual, sales, and clerical jobs have declined for decades and professional and managerial jobs have grown. EFCA should encourage and even fund professional associations.

Most would have nothing to do with collective bargaining and everything to do with shaping collective professional identity. Would they raise living standards? Sure, because professional associations are a good way to promote licensure.

Why promote licensing? Because licensed professionals earn more money. Employers need to know what you are good at. If they don’t, they get paid to take the risk of finding out. Alan Krueger, who is about to be confirmed as Assistant Treasury Secretary for Economic Policy, recently published research showing that licensure increases wages by about 15% – or roughly the same amount that unions do (and if you factor in the difficulties of comparing union and nonunion wages, there is a good argument that licensure effects are actually stronger). There are different kinds of licensure and they have different effects, but in general it helps workers and managers both if skills are certified.

A dental hygenist is certified. Some but not most database administrators are certified by software companies. Who certifies taxi drivers, graphic artists, or credit analysts? Who gathers regional wage and benefit data and shares it with employers of day care workers, chefs, college counselors, or graphic artists? Professional associations do this. Extending the reach of professional associations and private licensure should be a top priority of policy makers who care about increasing income equality.

Of course the definition of a profession constantly evolves. About 70% of what we spend money on did not exist a hundred years ago — so neither did the jobs to design, make, or service it. Many people have jobs that did not exist for their parents and almost everybody does a job that did not exist at the time of the Civil War. As recently as 1980, nobody designed, sold, or serviced websites, GPS devices, or cell phone towers. Nor did they perform Lasik surgery. But government does not need to decide professional boundaries because most professions self organize. Baristas, cosmetologists, and dry cleaning employees use meetup.org, Facebook, or MySpace to define and advance shared interests. Much of this takes place with no federal help at all and none is needed. But it shows that most “organizing” at work already takes place outside of collective bargaining.

Unions should promote professional associations (historically, a few unions have done this and it has often worked well). Unions can provide workers with many services outside the framework of collective bargaining. They can advocate financially for workers during restructuring and M&A transactions.

Unions should compete with Craigslist by creating powerful online employment agencies. Some of this is happening in fits and starts. According to the Economist, the entrepreneurial Freelancers Union is now America’s fastest-growing. They address

“..the practical needs of independent workers, who now account
for around one-third of the workforce. Over the past six months,
membership growth has jumped from 2,000 to 3,000 a month, and it now
has over 100,000 members.

The nature of their work means the union does not get involved in collective bargaining. Instead, it provides a marketplace for freelance jobs, cheaper health-care insurance (through a for-profit insurance company it has created), and political activism on behalf of its members. A notable success was to convince New York’s mayor, Michael Bloomberg, to reduce taxes on freelance work.”

Similar initiatives are not hard to imagine nor are they expensive or difficult to execute. Unions could enable their members to review their bosses and to document each other’s skills and achievements. But unions need they capabilities beyond the standard 1930’s one-two punch of collective bargaining and political action.

Unions are not likely to do this unless legislation like EFCA stops protecting them from the consequences of their insularity. Current laws do unions no favor by protecting them from competition (I have often wondered if the legislators who designed our labor laws secretly wanted to produce moribund labor organizations). Like any organization (say, public schools), unions will stagnate if there is no reward for innovation or penalty for failing to adapt. In fairness, some unions have been extremely innovative — I have blogged about Andy Stern and the Service Employees, Leo Gerard and Ron Bloom and the Steelworkers, and a handful of others. But many labor organizations remain frozen in time, protected from competition because federal law gives them monopoly bargaining rights and allows them to form cartels to not compete with each other for members. The result, is weaker, dumber unions that serve the nation poorly. Force unions to compete and innovate by repealing the laws that give them monopoly protection and free choice for employees will become more than a legislative slogan.