This is the second of a three-part series explaining the American labor movement and the state of current labor law.
Our economy is in the worst crisis since the Great Depression. But unlike the weather, economic vicissitudes are influenced by pubic policy. We arrived where we are thanks to economic policy decisions made by both Democratic and Republican administrations over at least the last 25 years. Now the new Congress and the Obama administration are shaping an economic recovery plan.
The question for this Congress is will the Employee Free Choice Act become part of the economic recovery plan? To explore whether a change in labor law is needed, it’s important to learn a little about labor unions and if that labor law is working as originally intended.
In 1935, the National Labor Relations Act (NLRA) was enacted over the objections of employers and their allies. It was part of the Roosevelt administration’s recovery package. The NLRA was intended to counteract a long history of hard-core anti-union employer conduct and to create an unfettered employee right to form unions and collectively bargain. It became the official policy of the U.S. “to encourage collective bargaining by protecting the exercise by workers of full freedom of association, self-organization, and designation of representatives of their own choosing.” For the first time, the federal government viewed labor unions as essential to providing for the common good. The right to join a union became a legally recognized human right. It was hoped that employees would be able to form unions with the same ease that companies joined the Chamber of Commerce.
The NLRA is administered by the National Labor Relations Board (NLRB), which oversees union organizing and collective bargaining. Violations of the NLRA are called unfair labor practices (ULPs). A 1940 NLRB procedures and practices manual stated that employers were to “Stay completely neutral during [union representation] elections.” Companies that illegally influenced their employee’s choice committed a ULP.
Consumer spending accounts for a little over two-thirds of our gross domestic product. Today, as in the past, an important cause of our economic downturn is a significant decrease in consumer spending. The NLRA was intended to help put money in the pockets of wage earners. President Franklin Roosevelt described its importance this way: “It is to the real advantage of every producer, every manufacturer, and every merchant to cooperate in the improvement of working conditions because the best customer of American Industry is the well-paid worker.”
The most widely understood aspect of labor unions is their collective bargaining function. Collective bargaining is understood as the primary way by which employees achieve economic self-sufficiency. But collective bargaining does more than improve a union member’s wages; it also betters fringe benefits and working conditions.
What isn’t appreciated is that collective bargaining has a “spillover” effect for nonunion employees as well. When union density in an industry or geographic area is high, nonunion companies, who want to attract and retain qualified employees, have to match the wages and benefits found in similar union workplaces. Unlike soaring CEO pay, when union members negotiate improvements in wages and fringe benefits, it often triggers improvements for other nonunion employees of the same employer as well.
A union spillover effect also applies to workplace rights. Unions play an important role in supporting workplace legislation that extends rights not merely to union members but to all employees. Here’s a short list of union-supported legislation: the Fair Labor Standards Act, the Equal Pay Act, the Civil Rights Act, the Occupational Safety and Health Act, the Age Discrimination in Employment Act and the Family Medical Leave Act.
During a remarkable period from the late 1940s to the mid-1970s, when union density was over 25 percent, unions achieved the ability to negotiate one-for-one wage increases that were tied to increased worker productivity. As a result, the American labor movement was able to insure that our nation’s economic growth was broadly shared by all the workers who made it possible. This shared prosperity was an important factor in expanding the middle class.
The passage of labor laws didn’t end the debate about who should be at the table when terms and conditions of employment are decided. According to Ellen Dannin, of Penn State’s Dickenson School of Law and a former NLRB attorney, the NLRA has been so amended over the years that its been robbed of its original intent to let employees freely decide to form unions and collectively bargain.
Partially as a result of a weakened law, union density has declined during both Democratic and Republican administrations. In the mid- to late 1970s, union density declined to a point where the link between increasing productivity and wages was lost. With it broken, the increasing profits made possible by the most productive workforce on earth were no longer equitably shared. A resulting loss in purchasing power and a disappearing middle class were the direct results of reduced union density. Ben Bernanke, head of the Federal Reserve, directly tied increasing economic disparity to declining union density in a February 2007 speech before the Greater Omaha Chamber of Commerce.
With decreasing unionization comes a fading American Dream, declining social mobility and increasing family indebtedness. The average American is working longer hours for less income than 30 years ago. It’s no wonder that a November 2008 survey by Lake Research Partners revealed that 84 percent of Americans believe our economy is going in the wrong direction. The majority of Americans understand that they are one paycheck (or serious medical emergency) away from disaster.
But amazingly, even with lowered density, there’s still a “union difference.” And it’s a difference that anti-union corporations and their allies would like to go away.
Today, union members on average earn 26 percent more than nonunion workers. And when this wage difference is examined more closely, there’s an even more significant benefit for blacks, Latinos and women. Predictably, union-represented employees also enjoy a sizeable advantage when it comes to fringe benefits. In addition to collective bargaining, unionized employees have a meaningful say in what happens at work. Unlike at-will employees, union-represented employees can dispute unfair treatment and arbitrary discipline through a negotiated grievance process.
Unfortunately, the decrease in union density has been misinterpreted to mean unions are no longer needed or wanted. According to Harvard’s Richard Freeman, surveys conducted over the last dozen years indicate over 80 percent of private sector workers want significantly more representation in the workplace than they currently have! Importantly, Freeman notes that the majority of surveyed employees also believe that increased democracy would benefit both the employer and the workforce. Other recent polls reveal that 57 million employees would like a union in their workplace right now.
The primary reason that so many employees want but cannot attain a union in their workplace is that the NLRA is seriously broken. The legal right to form a union is no longer perceived to be a safe option for workers. Employees today are afraid that by supporting unions they are putting their jobs and the welfare of their families at risk. Union advocates argue that the law originally intended to promote employee rights has become a barrier to expressing those rights.
In addition to weakened labor law, the biggest factor in helping companies keep union density low is the growing union-avoidance industry. Many firms specializing in labor relations are now helping clients remain “union-free.” Consultants are more than willing to help companies become “proactive” in keeping unions out. With the help of consultants, companies educate employees about their “union-free” status beginning in orientation and followed with regular updates throughout their employment. Union-avoidance seminars are advertised on the Web and regularly held all across the nation. Employers who aren’t proactive will be sought out by consultants as soon as a petition for a union election is filed with the NLRB.
The next installment of this series will examine more closely the weaknesses in the current NLRA and how the Employee Free Choice Act may work to strengthen those weaknesses.