From Wall Street Opinion Journal: A union compromise on card check deserves a much closer look.
Big Labor’s top legislative priority, “card check,” might be stalled in the Senate, but that doesn’t mean the unions are rolling over. While talk of compromise is in the air, we hope business leaders and Senators stay alert.
To wit, the problem with the Employee Free Choice Act isn’t merely the provision that would allow unions to organize a work site after collecting the signatures of a majority of workers. This has gathered most of the publicity because it would make it easier for unions to intimidate workers to endorse the union without a secret ballot. Equally as damaging, however, is a separate provision known as “binding arbitration.” The more accurate term would be federal wage setting.
Under current labor law, unions and employers are obliged to bargain in good faith over labor contracts, a process that is often contentious but usually works. Employers have an incentive to offer fair terms, or risk a strike. Union officials have an incentive to keep their demands within reason, lest management conclude a strike is preferable and workers lose their livelihoods.
Binding arbitration under card check would turn these incentives upside down. The bill says that if management and a newly created union can’t agree to a first contract within 90 days, either side can demand that the dispute go a federal arbitrator, who would have the power to impose a contract on both sides. Knowing that contracts are destined for arbitration, both sides would have every incentive to make maximum demands. Unions in particular will be inclined to ask for the moon, knowing they will do well even if an arbitrator merely splits the difference.
At least when the Detroit auto makers signed too-rich contracts, they did it of their free will. Under binding arbitration, the process would land with the Federal Mediation and Conciliation Service, an agency whose director is appointed by the President. This would typically mean the appointment of a government arbitrator, who naturally would be subject to political, er, incentives. This would put a government employee, with no real stake in a company’s future, in charge of divining the perfect wage and work rules for that company.
“It may not be blatant, it may not be overt . . . but the political outlook of that arbitrator will matter. And that someone will be empowered by the government,” says Paul Kersey, director of labor policy as the Mackinac Center for Public Policy. What the bill doesn’t explain is what happens when the government imposes a contract that a company can’t afford. Ask for a bailout?
Binding arbitration has its uses in dispute resolution, though it’s best suited to resolve arguments over existing contracts — that is, in tort law. Its track record in labor negotiations is less impressive. Michigan has used binding arbitration for 40 years with police officers and firefighters, and by statute a Michigan arbitration case should finish in under two months. In reality, fewer than one out of four cases are resolved within 300 days. Local governments must delay decisions, as they wait to see if they will be hit with huge back-pay awards.
The binding arbitration rule would also strip workers of valuable rights. They would no longer be able to vote on a contract that their unions negotiated with management and submitted back for rank-and-file approval. This will make union leaders less accountable.
Arbitration would also make the difficult job of getting rid of a union harder. Federal law limits the time periods when workers can petition to decertify a union. For new unions, workers can petition if the union has gone a year without securing a contract. Under arbitration, workers could only boot their union at the end of the government-imposed contract. So the bill also provides a form of job protection — for unions, not workers.
The Senate’s newest Democrat, Arlen Specter, has stated his opposition to ditching the secret ballot, but is now said to be working on a “compromise” with Iowa’s Tom Harkin to “reform” labor laws. Some Democrats have stepped back from the “secret ballot” provision, but think they might be able to get away with new arbitration rules. They should understand that both are unacceptable job killers.