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Labor Union Bill Raises Broader Capitalism Issues

Alec MacGillis

Sen. Tom Harkin (D-Iowa) talks to reporters on Capitol Hill after a news conference to announce the introduction of the Employee Free Choice Act. (Photo by Susan Walsh/Associated Press)

WASHINGTON - The Employee Free Choice Act seemed destined to be a relatively narrow clash between unions and employers. But amid the economic downturn, it is turning into a debate over fundamental questions of American capitalism.

After years of girding for this fight, labor supporters and business groups are scrambling after the bill's reintroduction last week to adapt their long-established arguments to suit the crisis. For those opposed to the bill, which would make it easier to form unions, the new message was that it would be a disaster for businesses reeling from the recession.

"In a time when we have an economy that's already struggling, we can't put more burdensome regulations on employers," said Sen. John Thune (R-S.D.). "This is a job killer for our economy when we really don't need it."

The bill's supporters are pointing to the downturn as the ultimate proof of their arguments that labor's decline has helped put the economy out of balance and that only by restoring workers' purchasing power can the nation return to broadly shared prosperity.

"In 1935, we passed the Wagner Act that promoted unionization and allowed unions to flourish, and at the time we were at around 20 percent unemployment. So tell me again why we can't do this in a recession?" said Sen. Tom Harkin (D-Iowa), invoking the pro-labor changes of the New Deal. "This is the time to do it. This is exactly the time we should be insisting on a fairer playing field for people to organize themselves."

The bill, first introduced in 2003, gives workers the choice of whether they want to organize by getting a majority of workers to sign pro-union cards, instead of having to hold secret-ballot elections. As it stands, it is up to employers to decide which method is used, and most require elections. The bill increases the penalties for employers who retaliate against employees and mandates binding arbitration when employers do not agree to a contract within three months after a union election.

Unions say the bill is needed because employers intimidate or retaliate against workers before elections, making the votes something less than true democracy; and because employers often merely go through the motions of negotiating, nearly half of new unions fail to get a first contract. Employers say that forming unions without secret ballots violates American notions of democracy and exposes workers to union coercion. Mandatory arbitration, they assert, is an intolerable intervention.

But the environment in which the bill is being debated has further ratcheted up the rhetoric, revealing a divide as wide as that on any other major issue on President Obama's agenda. The two sides put forth starkly different versions of both history and present-day reality, making it hard to imagine how the two sides could compromise.

The pro-labor version of history starts during the New Deal with the Wagner Act (better known as the National Labor Relations Act), which expanded the rights of private-sector workers to unionize. The Fair Labor Standards Act of 1938 established the minimum wage and 40-hour workweek.

"The truth is that Franklin Roosevelt passed those laws under similar circumstances, and from 1945 to 1974, we had an era where workers' wages and productivity was joined together," said Andrew Stern, president of the Service Employees International Union. "It was probably the most tested economic stimulus of any public policy that has worked for us."

In the telling of labor supporters, the decline in private-sector union membership -- from a peak of 36 percent in the early 1950s to 7.5 percent today, a level not seen since 1900 -- is a result not only of economic shifts but also of an increasingly pro-employer tilt in labor policy. As they see it, the decline of unions has contributed to the growing income inequality over the past three decades, when economic productivity has outpaced wage growth.

Lawrence H. Summers, the National Economic Council director, has long been regarded warily by unions, but in a speech Friday at the Brookings Institution, he made roughly this case for boosting organized labor.

"If we want to propel this economy forward [and] have a sound expansion, it has to be an expansion whose benefits are more broadly shared," he said. That involves tax policy and education, he said, but also "goes to the question of having a healthy and well-functioning trade union movement. . . . It is hard to avoid the conclusion that the way in which our labor laws have functioned, and have been enforced and been acted on over many years, have not been constructive from the point of view of having a healthy trade union movement. And an attempt to redress that balance seems to me something that is appropriate at such a time."

In the other side's version of history, organized labor played a small (and probably negative) role in the climb out of the Depression, and postwar prosperity had far more to do with technological advances and American economic dominance, which allowed manufacturers to reward workers with wage gains and benefits. Globalization produced a much more competitive climate in which unions hamstrung companies and contributed to the demise of industries such as steel and auto manufacturing.

The decline of unions, in this telling, is the result of the decline of manufacturing and of workers' realization that unions are not in their self-interest. To link the current crisis to a slide in labor strength is ludicrous, they say.

"They're trying to wave a wand to explain the origins of a tornado," said University of Chicago law professor Richard A. Epstein, a leading opponent. "If you want to look at the factors that account for the ups or down of the economy, labor policy -- which has been totally constant -- would be 83rd on the list."

Price V. Fishback, an economics historian at the University of Arizona, said both sides overstate their case. The growth of unions did lead to wage gains both in union and non-union companies, he said. But to attribute mid-century prosperity to unions is going too far -- for one thing, union density began to go into decline in the early 1950s, after the passage of the anti-union Taft-Hartley Act.

"It's a much more complex set of things than either side is talking about," Fishback said.

The bill's opponents go on to say that expanding union membership via "card check" would reverse a natural trend when business can least afford it. "It's very clear that things have changed from the 1940s, '50s and '60s, and we need to change, as well," said Pennsylvania building contractor Jerry Gorski, the national chairman of the Associated Builders and Contractors. "Just to go back to the old ways and say unions get a certain amount of pay is not a help to our society."

Anne Layne-Farrar, an economist with the consulting firm LECG who produced a study predicting job losses if the bill passes, said in a conference call organized by employers that increased productivity had not resulted in larger wage gains in recent decades because the growth was mostly the result of technology. "If the productivity of labor went up, then the wages of labor would go up," she said.

Bill Samuel, the AFL-CIO's chief lobbyist, scoffed at this logic. "So, the [business community] no longer believes in the unique power of the American workforce?" he asked. The opponents' shift from emphasizing the bill's alleged undemocratic nature to its job-killing potential, he added, also undermined one of business's long-standing rhetorical stances: that it is not opposed to unions per se but only to corrupt and coercive unions.

"The mask has come off, and now it's clear that the Chamber of Commerce is against unions. Now they're saying they just don't want to see unions grow and have access to collective bargaining," he said. "There are a lot of members of Congress who are not necessarily supporters [of the bill] but recognize there is a problem to be fixed, and the Chamber is going to lose them because of this attitude. The majority of members are not anti-union."

Chamber general counsel Steven J. Law countered by refining the Chamber's argument, saying it is opposed not to all unions but to a sudden surge in union growth. "Rapid unionization would have an economic impact," he said.

The bill's opponents say their case against passing it amid a recession is taking hold in the Senate, where it needs 60 votes to overcome a filibuster. Sen. Blanche Lincoln (Ark.), a key centrist Democrat, questioned the bill's timing, telling the Associated Press last week, "The question is: Is there a need for this legislation right now?"

But House Education and Labor Committee Chairman George Miller (D-Calif.) expressed confidence that most in Congress would reject employers' warnings about further job losses. "The members of Congress who support this legislation know exactly what's at stake and have respect for these workers, and don't think that [the workers] are trying to negotiate themselves out of a job," he said. "Everyone's aware of the economic condition, and everyone understand this proposal . . . is compatible with it."

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