[Senate Hearing 110-508]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 110-508
 
                THE EMPLOYEE FREE CHOICE ACT: RESTORING
                    ECONOMIC OPPORTUNITY FOR WORKING
                                FAMILIES

=======================================================================

                                HEARING

                                 OF THE

                    COMMITTEE ON HEALTH, EDUCATION,
                          LABOR, AND PENSIONS

                          UNITED STATES SENATE

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                                   ON

EXAMINING THE EMPLOYEE FREE CHOICE ACT, FOCUSING ON RESTORING ECONOMIC 
                    OPPORTUNITY FOR WORKING FAMILIES

                               __________

                             MARCH 27, 2007

                               __________

 Printed for the use of the Committee on Health, Education, Labor, and 
                                Pensions


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          COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS

               EDWARD M. KENNEDY, Massachusetts, Chairman

CHRISTOPHER J. DODD, Connecticut     MICHAEL B. ENZI, Wyoming
TOM HARKIN, Iowa                     JUDD GREGG, New Hampshire
BARBARA A. MIKULSKI, Maryland        LAMAR ALEXANDER, Tennessee
JEFF BINGAMAN, New Mexico            RICHARD BURR, North Carolina
PATTY MURRAY, Washington             JOHNNY ISAKSON, Georgia
JACK REED, Rhode Island              LISA MURKOWSKI, Alaska
HILLARY RODHAM CLINTON, New York     ORRIN G. HATCH, Utah
BARACK OBAMA, Illinois               PAT ROBERTS, Kansas
BERNARD SANDERS (I), Vermont         WAYNE ALLARD, Colorado
SHERROD BROWN, Ohio                  TOM COBURN, M.D., Oklahoma

           J. Michael Myers, Staff Director and Chief Counsel

           Katherine Brunett McGuire, Minority Staff Director

                                  (ii)

  




                            C O N T E N T S

                               __________

                               STATEMENTS

                        TUESDAY, MARCH 27, 2007

                                                                   Page
Kennedy, Hon. Edward M., Chairman, Committee on Health, 
  Education, Labor, and Pensions, opening statement..............     1
    Prepared statement...........................................     4
Isakson, Hon. Johnny, a U.S. Senator from the State of Georgia, 
  opening statement..............................................     6
    Prepared statement...........................................     8
Hohrein, Errol, Former Front Range Energy Employee, United 
  Steelworkers...................................................     9
Estlund, Cynthia L., Catherine A. Rein, Professor of Law, New 
  York University School of Law..................................    11
    Prepared statement...........................................    12
Mishel, Lawrence, Ph.D., President, Economic Policy Institute, 
  Washington, DC.................................................    18
    Prepared statement...........................................    20
Hurtgen, Peter J., Partner, Morgan, Lewis and Bockius, LLP.......    24
    Prepared statement...........................................    27
Clinton, Hon. Hillary Rodham, a U.S. Senator from the State of 
  New York.......................................................    36
Alexander, Hon. Lamar, a U.S. Senator from the State of Tennessee    38
Reed, Hon. Jack, a U.S. Senator from the State of Rhode Island...    39
Roberts, Hon. Pat, a U.S. Senator from the State of Kansas.......    41
    Prepared statement...........................................    42
Brown, Hon. Sherrod, a U.S. Senator from the State of Ohio.......    43
Coburn, Hon. Tom, a U.S. Senator from the State of Oklahoma......    45
    Prepared statement...........................................    47
Obama, Hon. Barack, a U.S. Senator from the State of Illinois....    47
Allard, Hon. Wayne, a U.S. Senator from the State of Colorado....    50
Sanders, Hon. Bernard, a U.S. Senator from the State of Vermont..    52
Hatch, Hon. Orrin G., a U.S. Senator from the State of Utah......    53

                          ADDITIONAL MATERIAL

Statements, articles, publications, letters, etc.:
    Senator Enzi.................................................    59
    Senator Murray...............................................    61
    Letter of Support............................................    63
    Letters of Opposition........................................    63
    CRS Memorandum...............................................    72
    Response to questions of Senator Hatch and Senator Coburn by 
      Peter J. Hurtgen...........................................    73
    Questions of Senator Hatch to Professor Cynthia L. Estlund...    79

                                 (iii)

  


   THE EMPLOYEE FREE CHOICE ACT: RESTORING ECONOMIC OPPORTUNITY FOR 
                            WORKING FAMILIES

                              ----------                              


                        TUESDAY, MARCH 27, 2007

                                       U.S. Senate,
       Committee on Health, Education, Labor, and Pensions,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 9:30 a.m. in Room 
SD-430, Hart Senate Office Building, Hon. Edward Kennedy, 
chairman of the committee, presiding.
    Present: Senators Kennedy, Reed, Clinton, Obama, Sanders, 
Brown, Alexander, Isakson, Hatch, Roberts, Allard, and Coburn.

                  Opening Statement of Senator Kennedy

    The Chairman. We'll come to order this morning. We regret 
very much that my good friend and colleague and Ranking Member, 
Senator Enzi, is necessarily absent this morning with a 
sickness in his family and we're all very hopeful and prayerful 
that they'll get through that challenge. I talked to him last 
night and he understands that the work goes on and we welcome 
very much our good friend here, Senator Isakson, who will take 
on that particular opportunity and I'm grateful to him.
    The fundamental promise of the American Dream is that hard 
work leads to success and a better life for families. It is a 
vision of shared prosperity where we all work to expand the 
economic pie and we all reap the benefits. Unfortunately, the 
American dream has become a false hope for many working 
families. America is no longer growing together. We have an 
economy that works for Wall Street but not for Main Street.
    Our hearings so far have demonstrated the growing 
insecurity faced by millions of working Americans. Men and 
women are working harder than ever, not receiving their fair 
share of the Nation's prosperity. Since President Bush took 
office, corporate profits have increased 65 percent, 
productivity is up 18 percent but household income has declined 
significantly and the wages of working Americans are stagnant. 
Six million more have lost their health insurance and their 
retirement security is fading as well.
    Only one in five Americans today earns a guaranteed pension 
and the American dream is increasingly out of reach. It is 
trying to return to a world where workers obtain their fair 
share of the Nation's economic growth. The best way to do this 
is to give them a stronger voice in the workplace.
    Unions were fundamental in building America's middle class 
and they still have a vital role in preserving the American 
dream. In 1960, the private sector union membership was at its 
peak. All Americans shared in the Nation's rapid growing 
prosperity. The rising tide of prosperity truly did lift all 
the boats. Now, union membership has sunk to record lows and 
working families are falling farther and farther behind.
    Inequality is rising to record levels not seen since the 
gilded age and only those at the very top are profiting from 
our economic growth. Today we have a system where CEO's demand 
the inflated salaries for themselves, but fight to keep workers 
from having a voice on the job.
    Our workplaces have become less democratic and the voices 
of working people have been silenced. In 2005, more than 30,000 
workers were illegally fired or retaliated against for trying 
to exercise their right to have a union in the workplace. Every 
17 minutes a worker is fired or punished illegally for 
supporting a union. Unscrupulous employers routinely break the 
law to keep unions out. They intimidate workers, harass them 
and discriminate against them. They close down whole 
departments or even entire plants to avoid negotiating a union 
contract. It's illegal, it's unacceptable but it happens every 
day.
    It happens to workers like Jeff Lemon of Beaver County, 
Pennsylvania, who worked in the Beaver County Times 
Distribution Center. When he and his co-workers weren't given 
the raise as promised by the company, they tried to form a 
union as the NLRB to conduct an election. At that point the 
company launched its anti-union crusade. Management threatened 
to eliminate their jobs and replace them with outside 
contractors. They forced everyone to sit in meetings and listen 
to why the union shouldn't be allowed in. They spied on workers 
and they distributed information about the union at community 
events. They fired Jeff for his union activity.
    Despite the threats and intimidation, the employees voted 
for the union 2 years ago. They still don't have a contract 
because the company keeps stalling and refusing to reach any 
kind of an agreement. The National Labor Relations Board ruled 
that Jeff was unlawfully fired for his union support and the 
company is appealing the ruling and refusing to restore him to 
his position. It could be years before he gets back the job he 
needs.
    Stories like Jeff are all too common. The current system is 
broken. The law isn't protecting workers. The cops stop the 
anti-worker tactics that take place every day. Penalties for 
misconduct are so minor that employers treat them as just 
another cost of business. The rules of the NLRB are so biased 
that workers never get a chance to have their voices heard. The 
atmosphere has become so tainted that it is impossible for 
workers to make a free choice about whether they want a union.
    That is why we need the Employee Free Choice Act. It will 
make America stronger by improving our economy and restoring 
security and prosperity to the American middle class. Union 
wages are 30 percent higher than nonunion wages. Eighty percent 
of union workers have health insurance compared to 49 percent 
of nonunion workers. Union members are almost twice as likely 
to have paid sick days--four times more likely to have a secure 
and guaranteed pension. Unions mean the difference between an 
economy that is fair and an economy where working people are 
left behind.
    The Employee Free Choice Act will fix our broken system by 
leveling the playing field for employees in three critical 
ways. It supports the right of workers to choose their own 
representatives, requires employees to come to the table to 
talk and it puts real teeth in the law by strengthening the 
penalties for discrimination against workers who favor a union.
    These reforms will enable hard working Americans to make 
their own decisions about whether they want to bargain together 
without the threat of harassment and retribution or fear of 
losing their livelihood. It will empower American workers to 
work together to ensure fair treatment on the job and build a 
better life for their families.
    The Employee Free Choice Act is about more than changing 
our labor laws. It's about giving workers basic dignity and 
respect in the workplace. It's the first of many steps we need 
to restore the voice of the American worker, which has been 
silenced for too long. I look forward to hearing from our 
witnesses today.
    I just want to show very, very quickly with these charts 
what has happened basically to the middle class. If you look at 
where we were coming out of World War II up to the 1970's, you 
will see that all America grew together. These are the 
quintiles that we see from the lowest quintile, the second 
quintile, all the way up to the top quintile. All America, from 
1947 to 1973, and this was the time of greatest union activity, 
all America grew, all America worked together.
    Then what happens from 1973, really 1980, when we had the 
real assault on the unions, we saw the beginning of the 
disparity of the different quintiles and now if you look at 
what is the most recent one, you'll see where the growth is in 
terms of the American economy--completely different. Those at 
the lowest end are falling further behind. You could do a 
parallel chart of what has happened to the trade union movement 
during this period of time.
    For years during the 1947 through 1973, when we had had an 
increase in productivity, it was shared with wages. This 
indicates the abuses of worker's rights that were on the rise, 
you see, from 2000 up to 2005--a growing incidence.
    These are the National Labor Relations Board's own figures 
showing increasing dramatically the tax on workers who are 
trying to form unions, a dramatic increase in this. This chart 
shows the whole question of productivity. This chart goes back 
to 2000 but you'll see they are basically together at the time 
when we had the greatest time of common economic growth. As 
productivity went up, wages went up.
    Now when we find this explosion of productivity that we see 
the increase in disparity. All of those are the economic 
indicators--all those parallels of what is happened to the 
trade union movement. That is one of the factors, I think, if 
we are concerned about what is happening to working Americans, 
concerned with what is happening to the middle class, it is 
important to make sure that their voices are going to be heard 
and they are going to be treated fairly.
    [The prepared statement of Senator Kennedy follows:]

                 Prepared Statement of Senator Kennedy

    The fundamental promise of the American Dream is that hard 
work leads to success and a better life for families. It's a 
vision of shared prosperity where we all work hard to expand 
the economic pie, and we all reap the benefits. Unfortunately, 
the American Dream has become a false hope for many working 
families. America is no longer growing together. We have an 
economy that works for Wall Street, but not for Main Street.
    Our hearings so far have demonstrated the growing 
insecurity faced by millions of working Americans. Men and 
women are working harder than ever and not receiving their fair 
share of the Nation's prosperity.
    Since President Bush took office, corporate profits have 
increased 65 percent. Productivity is up 18 percent. But 
household income has declined significantly and the wages of 
working Americans are stagnant. Six million more have lost 
their health insurance, and their retirement security is fading 
as well. Only 1 in 5 workers today earns a guaranteed pension. 
The American dream is increasingly out of reach.
    It's time to return to a world where workers obtain their 
fair share of the Nation's economic growth. The best way to do 
so is to give them a stronger voice in the workplace. Unions 
were fundamental in building America's middle class, and they 
still have a vital role today in preserving the American dream. 
In 1960, when private sector union membership was at its peak, 
all Americans shared in the Nation's rapidly growing 
prosperity. The rising tide of prosperity truly did lift all 
boats.
    Now, union membership has sunk to record lows, and working 
families are falling farther and farther behind. Inequality is 
rising to record levels not seen since the gilded age, and only 
those at the very top are profiting from our economic growth.
    Today, we have a system where CEO's demand strong contracts 
with inflated salaries for themselves, but fight to keep 
workers from having a voice on the job.
    Our workplaces have become less democratic and the voices 
of working people have been silenced. The National Labor 
Relations Board's 2005 annual statistics show that, in that 
year, more than 30,000 workers received backpay from employers 
based on illegal employer activity.
    This is the Board's own data. I know there have been a 
number of attempts to discredit these numbers, but such attacks 
are based on faulty data.\1\ The simple fact is that 
unscrupulous employers routinely break the law to keep unions 
out--they intimidate workers, harass them, and discriminate 
against them. They close down whole departments--or even entire 
plants--to avoid negotiating a union contract. It's illegal and 
it's unacceptable, but it happens every day.
---------------------------------------------------------------------------
    \1\ An employer-backed organization misleadingly called the 
``Center for Union Facts,'' for example, has claimed that employees are 
illegally fired in only 1 or 2 percent of union campaigns. This report 
is based on data collected from the National Labor Relations Board's 
Case Activity Tracking System (``CATS''), not the Board's own annual 
statistics cited above. The committee contacted the Board about this 
data and was informed in an e-mail from an NLRB Associate General 
Counsel dated March 26, 2007 that the CATS system ``is not able to 
provide reliable data with respect to the occurrence of unfair labor 
practices during union organizing campaigns for fiscal years before 
fiscal year 2007.'' The official explained that, ``While the data entry 
screens [in the CATS system] . . . do contain a field to be selected by 
our personnel when an unfair labor practice case arises in the course 
of an organizing campaign, that field has not been utilized routinely 
because the data was not necessary for case processing. Therefore, that 
data in CATS is unreliable'' for the purpose of collecting data about 
unfair labor practices during organizing campaigns.
---------------------------------------------------------------------------
    It happens to workers like Jeff Lemon of Beaver County, 
Pennsylvania, who worked in the Beaver County Times 
distribution center. When he and his co-workers weren't given 
the raises promised by the company, they tried to form a union 
and asked the National Labor Relations Board to conduct an 
election. At that point, the company launched its anti-union 
crusade. Management threatened to eliminate their jobs and 
replace them with outside contractors. They forced everyone to 
sit in meetings and listen to why the union shouldn't be 
allowed in. They spied on workers when they distributed 
information about the union at community events. And they fired 
Jeff for his union activity.
    Despite the threats and intimidation, the employees voted 
for the union 2 years ago. But, they still don't have a 
contract, because the company keeps stalling and refusing to 
reach any kind of agreement. The National Labor Relations Board 
ruled that Jeff was unlawfully fired for his union support, and 
the company is appealing the ruling and refusing to restore him 
to his position. It could be years before he gets back the job 
he needs.
    Stories like Jeff's are all too common. The current system 
is broken. The law isn't protecting workers, and it can't stop 
the anti-worker tactics that take place every day. Penalties 
for misconduct are so minor that employers treat them as just 
another cost of doing business. The rules of the NLRB are so 
biased that workers never get a chance to have their voices 
heard. The atmosphere becomes so tainted that it's impossible 
for workers to make a free choice about whether they want a 
union.
    That's why we need the Employee Free Choice Act. It will 
make America stronger by improving our economy, and restoring 
security and prosperity to the American middle class. Union 
wages are 30 percent higher than non-union wages. Eighty 
percent of union workers have health insurance, compared to 
only 49 percent of non-union workers. Union members are almost 
twice as likely to have paid sick days, and are four times more 
likely to have a secure, guaranteed pension. Unions mean the 
difference between an economy that's fair, and an economy where 
working people are left behind.
    The Employee Free Choice Act will fix our broken system by 
leveling the playing field for employees in three critical 
ways. It supports the right of workers to choose their own 
representative. It requires employers to come to the table to 
talk. And it puts real teeth in the law by strengthening the 
penalties for discrimination against workers who favor a union.
    These reforms will enable hardworking Americans to make 
their own decision about whether they want to bargain 
together--without the threat of harassment and retribution, or 
the fear of losing their livelihood. It will empower American 
workers to work together to ensure fair treatment on the job 
and build a better life for their families.
    The Employee Free Choice Act is about more than changing 
our labor laws--it's about giving workers basic dignity and 
respect in the workplace. As former Secretary of Labor Ray 
Marshall wrote in a letter of support that I will include with 
my testimony today, this bill ``is important to all Americans, 
not just to workers. We are not likely to have either sound 
public policies or fair and effective work practices if 
millions of American workers' voices remain unheard.''
    This bill is the first of many steps we need to take to 
restore the voice of the American worker, which has been 
silenced for far too long. I look forward to hearing from our 
witnesses today about this important bill and how we can best 
help America's working families build a better life and a 
better future for themselves and their children.

    [The letter referenced above may be found in additional material.]

    Senator Kennedy. Senator Isakson.

                      Statement of Senator Isakson

    Senator Isakson. Well first of all, I want to send our 
thoughts and prayers to Ranking Member Enzi who has a personal 
family situation that we all share in wishing him the very best 
on that. I want to thank Senator Kennedy for calling this 
hearing and allowing us to talk and get all the facts out on 
the table on this important issue and I particularly want to 
thank all our panelists for being here. I have apologized 
already to them because I have to jump up after my remarks and 
run to the Veteran's Committee to introduce three Iraqi wounded 
veterans from Georgia but I'll be right back then so it is not 
that I am not interested--it is only that I have two duties at 
the same time.
    Particularly I want to also recognize the NLRB former 
Chairmen, Peter Hurtgen. Peter, thank you for being here--a 
Clinton appointee and long time servant to the country--we 
appreciate it.
    Often we, as Republicans and Democrats, will share a goal, 
say ending poverty or making the workplace safer, but we will 
differ on methods of achieving it. This is not such a day. I 
simply do not share the desire of this bill's proponents to 
remove worker's fundamental rights.
    Let us be clear, the legislation cleverly named ``The 
Employee Free Choice Act,'' would radically change the way 
millions of employees decide whether or not they want a union 
to become their exclusive representative in the workplace. In 
the vast majority of instances over the past seven decades, the 
critical decision has been made through one of the most 
fundamental institutions of our democracy, the secret ballot, 
which is the private possession of every individual worker. In 
a democratic society, nothing is more sacred than the right to 
vote and nothing ensures truly free choice more than the use of 
the secret ballot.
    Thousands of Americans have died and given their lives to 
ensure the constitutional guarantees of a right to vote and the 
assurance of the privacy of that vote and that it is owned by 
the voter, not a union, not the company and not the country.
    This bill would create a tort type remedy system that would 
bring a smile to any lawyer's face. The vast majority of labor 
management disputes are voluntarily resolved. A tort type 
system, while it will certainly keep trial lawyers busy, will 
clog the system with litigation and simply delay the resolution 
of claims.
    This bill also seriously infringes on due process and the 
right to manage a private business through its mandatory 
injunctive provision. If an individual claimed that he was 
terminated because of his union sentiments, the bill would 
require that he return to work before the merits of his claim 
were resolved. We rightly outlaw employment discrimination on 
the basis of age, sex, religion and national origin but do not 
require individuals claiming to have been discharged on these 
bases to return to work before the merits of their claims are 
determined and we should not do so.
    There is no basis for dramatic change. We are told that 
taking away private ballots is necessary because the election 
process, overseen by NLRB, is increasingly tilted against 
unions. However, the claim simply does not withstand 
examination. The fact is that for the last decade, unions have 
been winning a steadily increasing number of NLRB certification 
elections. In fact, in fiscal year 2005, unions won over 61 
percent of the time, a rate as high as it has ever been before. 
We are also told that employers are making elections unfair. 
These charges don't stand up either.
    The NLRB guarantees the right of free speech to all parties 
involved in union elections. Free speech, open debate, the free 
exchange of ideas and opinions are, like the private election 
ballot, hallmarks of a free and fair democratic society.
    We are told we need to remove a worker's right to a private 
ballot because of rampant employer coercion. The law already 
prohibits conduct in the context of union organization that is 
coercive or threatening. The NLRB scrupulously polices the 
conduct of both unions and employers during an organizing 
election and can invalidate any election if either party 
engages is misconduct or coercion. The rate of elections 
invalidated because of misconduct by either side is 
extraordinarily low and has, in fact, been declining.
    In 2005, over 2,300 certification elections were conducted 
by NLRB. However, the NLRB conducted rerun elections because of 
misconduct by either the employer or the union in only 19 cases 
out of 2,300.
    We are told the current low membership levels in unions 
must be due to unfair law or unfair NLRB election procedures. 
Sorry, those arguments don't hold either. The NLRB has not 
changed in nearly 50 years. The law and procedures governing 
union organization are the same as they were years ago when 
unions enjoyed the highest level of membership among private 
sector employees.
    In conclusion, it has never been the role of government or 
the purpose of Federal labor policy to affect the level of 
union membership among private sector employees. Federal labor 
laws on this issue have always been neutral. It has always been 
clear that it was the employee's decision and their right to 
decide. The private ballot is sacred. This bill passed the 
House without nearly enough debate and I thank Senator Kennedy 
very much for affording us the opportunity to express our 
opinions today on this important issue before this Congress and 
the American people.
    [The prepared statement of Senator Isakson follows.]

                 Prepared Statement of Senator Isakson

    First, I know we all want to send our thoughts and prayers 
to Mike Enzi, who cannot be here today as he attends to a 
family situation.
    I want to thank Chairman Kennedy for holding this hearing 
and offering us the opportunity to get all the facts out on the 
table.
    I welcome our panel, especially the distinguished former 
Chair of the National Labor Relations Board, Peter Hurtgen.
    Often we as Republicans and Democrats will share a goal, 
say ending poverty or making workplaces safer, but differ on 
the methods of achieving it. This is no such day. I simply do 
not share the desire of this bill's proponents to remove 
workers' fundamental rights.
    Let us be clear. This legislation, the cleverly named 
``Employee Free Choice Act,'' would radically change the way 
that millions of employees decide whether or not they want a 
union to become their exclusive representative in the 
workplace.
    Currently, this decision has been made through one of the 
most fundamental institutions of our democracy--the private 
ballot.
    Many critics of the bill are almost too focused on this 
first part of the bill, but as I read through the legislation, 
it only gets worse, not better. This bill would require the 
government to intrude upon the private negotiations between 
labor and management. Essentially, a government bureaucrat will 
be writing the contract for every unionized employer in 
America. Moreover, the bill would create a tort-type remedy 
system that would delight any trial lawyer.
    The proponents of this legislation decry the decline in the 
number of workers who choose to cede their rights to the 
unions. Less unionized workers means less members' dues. That's 
why we're here. Union dues, whether taken from the employee's 
paycheck voluntarily or taken, in some cases, involuntarily in 
non-right-to-work States, are the only source of union income.
    We in Congress should let workers decide for themselves 
whether joining a union is right for them, not decide for them, 
as the so-called Employee Free Choice Act would require. That 
is why the National Labor Relations Act specifically provides 
in its ``bill of rights'' section that employees have both the 
right to form and join labor organizations and the right not to 
do so.
    This bill passed the House without nearly enough debate. We 
will see that this proposal receives much greater scrutiny here 
in the Senate.
    I look forward to hearing the testimony from our witnesses.
    The Chairman. Thank you very much, Senator Isakson. We will 
now hear from our panel. Errol Hohrein has worked as a 
boilermaker for over 20 years. He is a Vietnam veteran and 
father of three. In March 2006, he began a job at the Front 
Range Energy in north Colorado after unsuccessfully voicing his 
concern to management on workplace safety issues and salaries 
and benefit issues. And his fellow workers decided to organize 
formal union with steelworkers in order to improve working 
conditions. He was fired shortly after the successful union 
election.
    The NLRB recently issued a complaint finding probable cause 
to believe that Mr. Hohrein's termination violated the law.
    I am going to introduce each person as they are recognized 
rather than our whole group. We look forward to hearing from 
you. Thank you very much for joining us.
    Mr. Hohrein.

      STATEMENT OF ERROL HOHREIN ENERGY EMPLOYEE, UNITED 
                 STEELWORKERS, GREELY, COLORADO

    Mr. Hohrein. Chairman Kennedy and the members of the 
committee--I'm sorry.
    The Chairman. Relax now, Errol. Errol, just relax now.
    Mr. Hohrein. OK.
    The Chairman. Take a deep breath here.
    Mr. Hohrein. All right.
    The Chairman. Pretend you're back out there in Northern 
Colorado. We are here to listen to you so just relax. Thank you 
very much for coming.
    Mr. Hohrein. Mr. Chairman and members of the committee, 
good morning. Thank you for inviting me to participate in this 
important hearing on workers' rights.
    My name is Errol Hohrein. I live in Greeley, Colorado. I've 
been married for 21 years and I have two sons and a daughter. I 
served in Vietnam and was honorably discharged after losing a 
majority of my hearing as a result of an explosion. For more 
than 20 years, I have been a boilermaker.
    Last year, I began working at Front Range Energy to help 
start up their $50 million ethanol distillery in Northern 
Colorado. Like many of my co-workers, I was hired with the 
promise of good pay, affordable health benefits and a safe 
working environment.
    Workplace safety has always been a top priority for me. A 
boilermaker's work environment can be very hazardous. We often 
work with dangerous equipment, such as flame cutting torches, 
power grinders and large cranes. From every direction, there's 
risk of injury and in some cases, death. While at Front Range 
Energy, I began to notice potential safety risks. I went to 
management several times with my concerns about leaks in the 
ammonia tanks, leaks in steam systems and the inadequate 
storage of reactive chemicals. But my requests fell on deaf 
ears.
    I quickly discovered that this was not the last of my 
problems at Front Range. Despite the distillery's monthly 
million dollar profits, the company callously reneged on their 
pledge of wage increases and benefits. It was theft by 
deception. We were shorted on wages and to make matters worse, 
the company's medical benefits were priced at over $900 a 
month--almost half of our paychecks. One co-worker wrote a 
letter to management about having been shorted on his paycheck 
and days later he was fired.
    I was a union man for years. In fact, my grandfather, 
father, brother and all--have all been union boilermakers. I 
knew what a difference a union could make. I knew the value of 
coming together with co-workers to bargain for better work 
standards.
    My co-workers were worried about workplace safety and fed 
up with the company's misrepresentations about wages and 
benefits and they were aware of my union background. So they 
came to me to ask about how we could go about forming a union. 
I have to say, I was reluctant at first because of how hard I 
knew this would be but my co-workers were adamant about having 
fairness on the job. We decided to organize and form a union 
with the United Steelworkers to improve our working conditions.
    Once the company found out that we were organizing, 
management began trying to intimidate us, targeting those of us 
who were active union supporters. They forced us to attend 
meetings where they slammed the union and where we were not 
allowed to say much. Following one meeting, I was written up 
for insubordination. They threatened that if our campaign was 
successful, our paychecks may suffer. Managers would follow me 
around the workplace at all times. They would not permit other 
workers to talk to me. They isolated me from my co-workers.
    I used to hand out information to co-workers in the break 
room, the only place the company would allow us to do so. One 
day while handing out information to co-workers on the union 
during my break, management ordered me to stop and threatened 
to fire me.
    We held our election on December 18 and 20, 2006 to 
accommodate shift schedules. On both election days, the plant 
manager hung out by the break room where we voted, reminding us 
with his presence of prior threats about what might happen if 
we were to vote in the union.
    Despite Front Range Energy's intimidation tactics and other 
efforts to keep us from organizing, we won our union. But for 
me, victory was short-lived. The threat was real. Within days 
after the union election was certified by the NLRB, I was 
fired.
    I've filed a challenge with the NLRB and it could be years 
before I get my job back. But my organizing efforts at Front 
Range have not ended. My commitment doesn't end until we get 
our first union contract. I'm now sitting at the USW bargaining 
table to negotiate. The company is all smiles, but I know 
better. We won't get a first contract until the Employee Free 
Choice Act is passed by this Congress with a mechanism that 
gets the job done.
    I'm no troublemaker. I served my country in Vietnam, I've 
worked with youth as a junior high school history teacher, my 
wife is a special education administrator, I've raised three 
terrific children and I have one flaw--I tell the truth.
    Labor law in this country is broken. It doesn't support 
working people and we're paying a terrible price for it. No 
matter what the Board rules in my case, I will lose. We're on 
the brink and no one's looking out for us. It's no secret that 
a union contract is the best economic program for uplifting 
working people in this country. What the Employee Free Choice 
Act does is restore the choice to bargain for a better life for 
people like me who have been robbed of that choice.
    Our government needs to take action and do the right thing 
where working people are concerned. Our leaders need to pass 
the Employee Free Choice Act. Thank you for letting me testify.
    The Chairman. Thank you very much, Errol. Our next witness 
is Cindy Estlund, who is a Catherine A. Rein Professor of Law 
at New York University School of Law and leading scholar of 
labor employment laws. She has written extensively on the 
relationship between the workplace and democracy. In recent 
work, she has focused on the current crisis workplace 
governance brought about by the decline of collective 
bargaining. Professor Estlund is a graduate Lawrence University 
and Yale Law School. Prior to entering law teaching, she 
practiced law at the labor law firm, Bredhoff and Kaiser. Her 
recent publication, The Ossification of American Law, 
Rebuilding the Law of the Workplace in an Era of Self-
Regulation and the book, Working Together: How Workplace Bonds 
Strengthen Democracy. Thank you very much, Professor, for being 
here.

 STATEMENT OF CYNTHIA L. ESTLUND, CATHERINE A. REIN, PROFESSOR 
           OF LAW, NEW YORK UNIVERSITY SCHOOL OF LAW

    Ms. Estlund. Thank you, Senator. Good morning. The mic 
doesn't work.
    The Chairman. If the little light is on, you're in.
    Ms. Estlund. Got it. As Senator Kennedy just mentioned, 
much of my scholarship since 1989 has been on serious 
weaknesses in the Nation's labor laws. The most serious is the 
law's inadequate response to the increasingly fierce anti-union 
campaigns that employers have mounted with the help of high 
paid anti-union consultants.
    The problem is both illegal and legal conduct. Far too many 
employers break the law. They fire union activists, threaten 
mass layoffs or a shutdown, they spy on pro-union workers, or 
bribe employees to vote no. The law's response to employer 
illegality has been far too little and too late. Most 
violations result in a slap on the wrist, maybe a rerun 
election many years after the union campaign has been defeated. 
Even anti-union discharges result, generally only in very small 
back pay awards after years of delay and no penalties.
    Meanwhile, the employer gets the benefit of its wrongdoing 
by keeping the union out. As a result, union organizers can no 
longer assure employees that the law will stand behind them if 
they exercise their right to join a union. Employers can afford 
to treat the risk of legal sanctions as an acceptable cost of 
doing business. But the problem is not just employers who break 
the law.
    Employers' control of the workplace and their power over 
workers gives them overwhelming advantages, built in 
advantages, that no incumbent has in a political election. They 
can ban union organizers from the workplace, including the 
parking lot. They can lawfully bombard employees day after day 
with anti-union propaganda in mandatory meetings often one on 
one with the employee's own supervisors.
    Many employers violate the law with near impunity, but 
employers can and do create an egregiously hostile environment 
for union supporters even without breaking the law.
    The Employee Free Choice Act would begin to fix this badly 
broken system. It would provide meaningful remedies and in 
appropriate cases, penalties for serious employer misconduct 
during the organizing process. And it would reduce employers' 
opportunity to mount these fierce anti-union campaigns by 
allowing employees to secure union representation on the basis 
of majority signup.
    I'll focus here on majority signup, which has attracted the 
most attention. First, the Board has always relied on 
authorization cards to determine majority sentiment in some 
circumstances although mainly at the option of the employer. 
The law allows the employer to rely on valid authorization 
cards to recognize a new union if it chooses and it allows or 
even requires employers to withdraw recognition from an 
existing union if the employer knows on the basis of cards or 
otherwise that a majority doesn't support the union. Yet, the 
law does not allow employees and unions to rely on valid 
authorization cards to secure union representation. This bill 
would change that.
    The reason for this change is that the formal campaign has 
become a gross caricature of democracy in which employers hack 
away for months at employee's support for the union by illegal 
and legal means. If the only problem were employee's fear of 
individual reprisals based on the vote they cast at the end of 
the day then the secret ballot might seem to be the obvious and 
democratic answer. But the modern anti-union campaign, which 
has been honed by legions of highly paid consultants, makes the 
secret ballot a wholly inadequate guarantee against employer 
intimidation.
    There are two reasons for that. First, a main goal of the 
employer campaign is to discover every employee's union 
sympathies well ahead of the election, for example, through 
repeated mandatory one on one meetings. After that sort of 
campaign, the secret ballot is a fiction. It gives a misleading 
semblance of democracy to something that is really very 
different. Second, the secret ballot is no protection at all 
against employee's fear of adverse consequences for the workers 
as a group and that is another mainstay of the modern anti-
union campaign.
    Employees are told the employer will close or relocate the 
business, that employees will lose existing benefits and that 
the workplace will become a site of constant conflict. The 
secret ballot does nothing to protect against those types of 
fears.
    Opponents of the bill claim that secret ballots are needed 
to protect against union coercion in securing cards. No doubt 
such coercion could happen. It is illegal. It renders the cards 
invalid and the union loses everything as a result. That is a 
very powerful deterrent against union coercion. In fact, there 
is very little evidence of a problem in the many, many years in 
which authorization cards have been relied upon by the Board.
    A study of recent representation campaigns found the 
employees experienced less pressure from any source in card 
check than in election campaigns and much less pressure from 
unions and employers in either election or card check 
campaigns.
    The current system is badly broken. The law that governs 
the representation process helps to explain why a third or a 
half of nonmanagerial employees who don't have a union wish 
that they did. This bill would help restore some balance to the 
system and allow employees to gain the collective voice that 
they say they want and that they need to bargain for decent 
wages and working conditions. Thank you very much.
    [The prepared statement of Ms. Estlund follows:]

                Prepared Statement of Cynthia L. Estlund

    My name is Cynthia Estlund, and I am a law professor at the New 
York University School of Law. Since 1989, after several years of 
practicing labor law at the firm of Bredhoff & Kaiser here in 
Washington, I have studied, taught, and written about labor and 
employment law at the University of Texas School of Law, Columbia Law 
School, and now at NYU. I have published and lectured extensively on 
the law of the workplace. A significant part of my scholarship has 
addressed the serious weaknesses of our Nation's labor laws and 
particularly the law of the organizing and representational process.

                        I. WHY REFORM IS NEEDED

    Congress has not revisited the core of the National Labor Relations 
Act (NLRA) since 1947, when President Truman was in office, the U.S. 
economy and its manufacturing base were unrivaled, and nearly one-third 
of the workforce was represented by unions. Much has changed. The 
system is now seriously broken, and it needs fixing.
    There are many problems with the labor laws, and this bill only 
addresses a few of them. But it does address one of the major problems 
with the statute, and that is the law's wholly inadequate response to 
employers' fiercely aggressive and often illegal response to union 
organizing drives.
    Any discussion of union organizing, and of fair ground rules for 
determining employees' choices about representation, has to begin with 
a few facts that the law is not going to change: The employer owns the 
workplace, runs the business, determines its scope and its location, 
establishes the rules, and hires and fires its workers. And all those 
things will remain true if the union wins its bid for representation. 
Unlike a political election, the incumbent employer that ``loses'' a 
representation contest retains its position and power over the voters.
    So when workers are told that the employer strongly opposes 
unionization, what many are bound to hear is that union supporters will 
be deemed traitors and dealt with accordingly, or that the employer 
will move or shut down its operations to avoid dealing with a union. 
Many employers faced with an organizing effort explicitly threaten job 
loss. About half of the employers faced with a union organizing 
campaign threaten to close or relocate all or part of their business in 
the event of a union victory.\1\ Employees fear job loss even without 
any explicit threats. A commission headed by John Dunlop, former 
Secretary of Labor under President Ford, reported that 40 percent of 
non-union, non-managerial employees believed that their own employer 
would fire or otherwise mistreat them if they campaigned for a 
union.\2\ Unfortunately, those beliefs are not unfounded. Studies have 
found that between 25 and 30 percent of employers faced with an 
organizing drive fired at least one union activist.\3\ A recent study 
using rather conservative assumptions and methods estimated that about 
one in five active union supporters was discriminatorily fired during 
organizing campaigns in 2005.\4\ Whatever uncertainty there may be 
about the exact numbers, it is safe to say that thousands of employees 
have been fired in the last 10 years alone for their legally-protected 
union organizing efforts. Union organizers can no longer assure 
employees that the law will protect them if they support the union.
---------------------------------------------------------------------------
    \1\ Chirag Mehta & Nik Theodore, Undermining the Right to Organize, 
Employer Behavior During Union Representation Campaigns, p. 5 (American 
Rights at Work, 2005).
    \2\ See Dunlop Comm'n on the Future of Worker-Mgmt. Relations, Fact 
Finding Report 75 (1994).
    \3\ Id. at 70; Mehta & Theodore, supra note 1, at p. 9.
    \4\ See John Schmitt & Ben Zipperer, Dropping the Ax: Illegal 
Firings During Union Election Campaigns, p. 1 (Center for Economic & 
Policy Research 2007).
---------------------------------------------------------------------------
    What does the law do about it? Of course, the law does nothing 
unless Board officials can prove a discriminatory motive on the part of 
an employer who creates and controls nearly all the relevant documents 
and employs nearly all the relevant witnesses. Even if those hurdles 
are overcome and an employee is found to have been illegally 
discharged, often years after the discharge, the employee may be 
granted reinstatement (rarely implemented when years have gone by) and 
backpay (minus any wages the employee has earned, or should have 
earned, in the meantime). In many cases that amounts to almost nothing. 
The employee does not get traditional compensatory damages or punitive 
damages, and no fines are assessed. In the meantime, the damage to the 
organizing effort has long been done, and the law does nothing to 
repair that.
    When comparing these remedies to what is available under other 
Federal antidiscrimination statutes, one can only conclude that the law 
doesn't regard anti-union discrimination, a violation of Federal law 
since 1935, as all that bad.
    One study of the U.S. labor laws for a major international human 
rights organization concluded that ``many employers realize they have 
little to fear from labor law enforcement through a ponderous, delay-
ridden legal system with meager remedial powers.'' \5\ The law's pallid 
response to illegality has led many employers to regard the prospect of 
legal sanctions ``as a routine cost of doing business, well worth it to 
get rid of organizing leaders and derail workers' organizing efforts. 
As a result, a culture of near-impunity has taken shape in much of U.S. 
labor law and practice.\6\
---------------------------------------------------------------------------
    \5\ Lance Compa, Unfair Advantage: Workers' Freedom of Association 
in the United States under International Human Rights Standards, p. 16 
(2000).
    \6\ Id. at 10.
---------------------------------------------------------------------------
                        II. HOW EFCA WOULD HELP

    So what would EFCA do to change this egregious state of affairs? It 
would not further restrict what employers can do or say. Everything 
that is lawful now during the organizing campaign would remain lawful 
under EFCA. Employers would remain entitled to exclude union organizers 
from the workplace--the only place where workers can be counted on to 
convene--and to force organizers to buttonhole employees on their way 
to and from work and to beg for a bit of their precious and pressured 
time outside of work. Employers would remain entitled to compel workers 
to attend ``captive audience'' meetings, en masse and one-on-one, as 
often as they want during the work day, at which their supervisors or 
managers express opposition to unionization, predict various dire 
consequences of unionization, and urge workers to oppose the union.\7\ 
I and other labor law scholars believe that these are serious problems 
in the law of union organizing, but this bill does not change any of 
this.
---------------------------------------------------------------------------
    \7\ These meetings are at the center of the union avoidance 
strategies urged by well-paid consultants. See John Logan, Consultants, 
Lawyers, and the ``Union-Free'' Movement in the USA since the 1970s, 33 
Indus Rel. J. 197 (2002). One recent study found that over 90 percent 
of employers hold one-on-one meetings, and 87 percent hold larger 
mandatory meetings. Mehta & Theodore, supra note 1.
---------------------------------------------------------------------------
    What the bill does do to reform the union representation process 
is, first, to provide meaningful remedies and, in appropriate cases, 
penalties for serious unfair labor practices during the organizing 
process; and, second, to reduce the employer's opportunity to mount an 
aggressive and coercive anti-union campaign by providing for the option 
of union recognition on the basis of majority signup.\8\
---------------------------------------------------------------------------
    \8\ The bill also recognizes that many employers who lose hard-
fought organizing campaigns continue their resistance by refusing to 
bargain in good faith over a first contract. They do so in the 
knowledge that the law's only response will be an order to bargain some 
more, and that the employees' response will often be frustration, 
demoralization, and the erosion of support for the union. In that light 
EFCA would allow recourse to arbitration to establish the terms of a 
first contract. The focus of my comments will be on the first two 
reforms: enhanced enforcement and the majority signup process.
---------------------------------------------------------------------------
                        A. ENHANCED ENFORCEMENT

    EFCA's enhanced enforcement provisions are designed to give some 
teeth to a law whose toothlessness has become an international 
embarassment. The trebling of backpay for an employee who suffers anti-
union discrimination during the representation and initial bargaining 
phase operates as a rough proxy for the more generous damages remedies 
that exist under most antidiscrimination statutes. Given the modest 
amount of backpay that is typically awarded in an individual discharge 
case, this is the least that can be expected to deter anti-union 
discrimination that may be calculated to head off the prospects of 
unionization and collective bargaining that many employers so 
vehemently resist. For employers who persist, and who engage in 
egregious or repetitive acts of discrimination and coercion, the bill 
would authorize the assessment of civil penalties.
    EFCA also provides for expedited investigations and injunctive 
relief in appropriate cases. The statute already recognizes that 
certain violations of the act threaten to accomplish their unlawful 
aims long before the law's ordinary remedial proceedings have a chance 
to run their course; if those wrongs are to be effectively remedied, it 
must be done expeditiously and by injunction. As the law stands, 
however, it is only certain union conduct--illegal secondary pressures 
and recognitional picketing--that trigger that extra measure of 
urgency.\9\ Once again, the implicit premise of existing law seems to 
be that employer interference with the basic right to form a union is 
just not that serious. EFCA would introduce some symmetry to the law's 
remedial scheme.
---------------------------------------------------------------------------
    \9\ Sec. 10(l) of the NLRA, 29 U.S.C. Sec. 160(l).
---------------------------------------------------------------------------
    The discharge of a union activist during an organizing drive is the 
quintessential case of a violation that must be remedied quickly if it 
is to be effectively remedied at all. Too often, the real objective of 
such a discharge is not just to rid the workplace of one employee but 
to intimidate his or her co-workers and stall the organizing drive 
itself. Prompt injunctive relief, subject to all the usual requirements 
and safeguards of injunctive proceedings, is the only effective answer 
to such direct and forceful interference with the right to organize.

                          B. MAJORITY SIGN-UP

    Nearly all of the controversy surrounding this bill has been 
generated by the provision for certification of a union not only on the 
basis of a secret-ballot election but also on the basis of majority 
signup, or presentation of valid authorization cards signed by a 
majority of workers designating the union as their representative. 
Under EFCA, elections will still take place, for example, if workers 
prefer a secret ballot (such that a majority does not sign cards 
seeking immediate recognition), or if unions and employers agree to 
proceed by election. But under EFCA, employees and unions would have 
the option of proceeding instead through majority signup.
    As a historical matter, the hue and cry surrounding this provision 
is a bit overwrought. The NLRA has provided for recognition and 
bargaining on the basis of authorization cards since its inception, 
although mainly at the option of the employer.\10\ Moreover, the law 
not only allows but requires an employer to withdraw recognition from 
an existing union if the employer knows, on the basis of valid cards or 
other evidence, that a majority of employees does not support the 
union.\11\ Current law thus allows employers to rely on valid 
authorization cards in lieu of an election to displace an incumbent 
union, and, if the employer chooses, to recognize a new union. Yet 
current law does not allow employees and unions to rely on valid 
authorization cards in lieu of an election to initiate union 
representation. The implicit premise behind that contrast seems to be 
that it is far worse to saddle employees with a union when there is a 
hypothetical possibility that a majority does not want one than it is 
to deny employees a union when, in fact, a majority wants one. That 
implicit premise, to which I will return, has no basis in the policies 
of the act, and should be abandoned.
---------------------------------------------------------------------------
    \10\ Although the law has long required an election for 
certification of a union, for much of the act's history the Board would 
nonetheless order an employer to bargain with a union that presented a 
valid majority of authorization cards (unless the employer petitioned 
for an election to test the union's claim of majority status). It was 
first in Linden Lumber that employers were held to have no duty to 
bargain with a union on the basis of a card majority (absent 
independent ULPs that tended to erode majority support). See Linden 
Lumber Co. v. NLRB, 419 U.S. 301 (1974).
    \11\ See Levitz Furniture Co., 333 NLRB 717 (2001).
---------------------------------------------------------------------------
    There is also an affirmative rationale for allowing employees and 
unions to opt out of the formal election process in favor of majority 
signup: The formal election campaign--which typically lasts about 6 
weeks from the filing of the union's petition but can often be 
prolonged by procedural maneuvers--has become a gory battle scene in 
which employers chop away, by legal and illegal means, at the 
employees' support for the union.
    In principle, the secret ballot, with its strong democratic 
pedigree, seems unimpeachable. And if the only problem with the 
electoral campaign were employees' fear of individual reprisals based 
on their vote, then the secret ballot might seem to be the obvious 
answer. But the modern anti-union campaign, as it has been honed in 
recent years by growing legions of well-paid ``union avoidance'' 
consultants, makes the secret ballot a wholly inadequate guarantee 
against coercion and intimidation. That is true for two reasons.
    First, a main objective of the employer's campaign is to detect 
employee sympathies well ahead of the election; and, unlike most 
political incumbents, the employer has motive, means, and opportunity 
to do that. Although employers may not lawfully ``interrogate'' 
employees about their sympathies or engage in ``surveillance'' during 
off-duty time, they commonly do so anyway. And the employer can in any 
event direct supervisors to discover employees' union sympathies by 
confronting them day after day with anti-union diatribes and observing 
their reaction, and by watching who employees talk to at work. It may 
be possible for some individuals to conceal their union sympathies 
throughout the campaign, and then to vote ``yes'' in the election. But 
it is not normal human behavior, and it is not the nature of an 
organizing campaign, to maintain the secrecy of employees' union 
support up to the day of the election. So the secret ballot is often a 
fiction, if not a farce, in the context of an electoral campaign 
process that takes place on the employer's own turf and under the 
employer's determined and omnipresent gaze.
    Second, the secret ballot does nothing to allay employees' fear of 
adverse consequences for the workers as a group; and instilling such 
fear is another tried and true feature of the modern anti-union 
campaign. The standard employer campaign includes express or implied 
threats to shut down or relocate the business, predictions of violence 
and confrontation, of lost business and degraded workplace relations, 
of refusal to grant concessions or even maintain existing benefits.\12\ 
Most of these threats and predictions are currently legal and will 
remain so; some of them are illegal and might be deterred by the 
enhanced enforcement provisions of EFCA if it becomes the law. But 
there is no reason to believe that employers will stop making 
exaggerated predictions of disaster and of their own recalcitrance that 
lead employees to fear the consequences of forming a union. The secret 
ballot is no protection whatsoever against that kind of intimidation.
---------------------------------------------------------------------------
    \12\ See Logan, supra note 7.
---------------------------------------------------------------------------
    Indeed, the employer's ability to bring about many of the 
consequences that it ``predicts'' will follow a union victory puts in 
question the very idea of a fair election in this setting. In a 
political election, the incumbent may predict dire consequences if the 
challenger prevails, but if the incumbent loses in our democratic 
system, that incumbent gives up power and is not around to bring about 
those dire consequences. In a representation election, by contrast, 
even if the union wins the election, the employer will still be the 
employer, and will still exercise control over the workplace, the 
employees, and their jobs.
    EFCA meets these concerns not by regulating what employers can say 
about unions any more than current law does, but by seeking to limit 
the employer's opportunity to mount this aggressive campaign--that is, 
by narrowing the time period during which the employer is aware of the 
organizing drive and can mount its counter-campaign. Under EFCA, 
employees and unions--and not only the employer--would have the option 
of proceeding instead through majority signup. And much as the employer 
now must withdraw recognition from an incumbent union when a majority 
of employees clearly express that choice through authorization cards or 
other evidence, the employer would be required to grant recognition to 
a new union on the basis of a majority of valid cards in favor of the 
union.
    Opponents argue that, without a formal campaign, employees will be 
deprived of essential information about unions. Information is good. 
But employers who are committed to avoiding unionization are not 
especially reliable sources of such information. The best way to learn 
what it is like to have a union is having a union. That, after all, is 
how employees learn most of what they need to know about their 
employer--by working for the employer. It is hard for an applicant to 
get good information about what it is like to work in a particular firm 
or department, and even harder to know what will happen if a new 
manager takes over or if a new product flops. Applicants ask the 
questions they feel they can ask up front (as employees can with the 
union). Once on the job, they may learn lots of things they did not 
know ahead of time, some good and some bad (as they may with the 
union). Employees, armed with this new information, may decide to stay 
or to quit; the exit option is equally available to employees who find 
they do not like having a union. But employees who are dissatisfied 
with their union--if their views are shared by a majority of their co-
workers--have two options that employees dissatisfied with their 
employers do not: They may tell their employer that they no longer 
support the union, at which point the employer may or even must 
withdraw recognition; or, if they are union members, they may vote out 
the union's leadership in internal union elections.
    Most of the controversy surrounding the proposed use of 
authorization cards is based on fears of union coercion and 
misrepresentation in the solicitation of cards. It is certainly 
possible for that to happen, just as it is possible for employers to 
coerce employees to sign cards seeking decertification of a union. In 
either case, the coercion would be illegal and the cards would be 
invalid, and the Board must pass on those issues before ordering 
certification or decertification.
    But, in fact, there is very little evidence of union coercion or 
fraud in securing authorization cards during the very long history of 
Board reliance on such cards in the representation context. A recent 
study of both card-check and election-based campaigns found that 
employees experienced less pressure from any source in card-check 
campaigns than in NLRB elections, and much less pressure from unions 
than from management in either kind of campaign.\13\ When it comes to 
adjudicated cases, there is even less reason for concern about union 
coercion. The HR Policy Association, an opponent of card-check 
recognition, identified 113 cases in the 70-plus year history of the 
act that it claimed involved coercion, fraud, or misrepresentation in 
the securing of union authorization cards. A skeptical review of those 
cases suggested that such misconduct was actually found in only 42 of 
those cases.\14\ Either way, it is a drop in the bucket compared to the 
thousands of cases of illegal employer discrimination against union 
supporters every year.
---------------------------------------------------------------------------
    \13\ Based on a 2005 survey of 430 workers from both election and 
card-check campaigns, Professors Adrienne Eaton and Jill Kreisky found 
the following: Among all workers in both campaigns, 22 percent said 
management coerced them ``a great deal'' (vs. 6 percent for the union). 
In NLRB elections, 46 percent of workers complained of management 
pressure, while, in card check campaigns, 23 percent reported 
management pressure and 14 percent reported union pressure. Fewer than 
5 percent of workers who signed a card in the presence of an organizer 
felt that the organizer's presence made them feel pressured to sign. 
Fewer workers in card check campaigns than in election campaigns felt 
pressure from co-workers to support the union (17 percent vs. 22 
percent). Adrienne Eaton & Jill Kreisky, Fact Over Fiction: Opposition 
to Card Check Doesn't Add Up, p. 2 (American Rights at Work, 2006).
    \14\ See Testimony of Nancy Schiffer before the House Subcommittee 
on Health, Education, Labor, and Pensions, Feb. 8, 2007, at p. 9.
---------------------------------------------------------------------------
    There are two reasons why unions would not generally be expected to 
coerce and intimidate workers into signing cards: First, unions do not 
have the kind of leverage that employers have over workers. Second, 
union coercion and intimidation of employees is a strategy that is 
likely to backfire. It is no way to build trust among employees and in 
the union, without which a union can accomplish very little. A union 
does not own the workplace; it does not decide whether the employees 
have a job; it has no power at all in the workplace unless a majority 
of workers support it. Without an uncoerced majority, the union cannot 
accomplish anything over the long or medium term (and is vulnerable to 
decertification).
    Again, this is not to say that unions never coerce employees to 
sign cards, but that there is no reason to believe that it is or is 
likely to become a systemic problem, especially as compared to the 
documented history of employer abuses during the formal electoral 
process to which the proposed majority signup procedure affords an 
alternative.

        III. CONCLUSION: TAKING THE RIGHT TO ORGANIZE SERIOUSLY

    There will always be some risk of abuse by both employers and 
unions, and some uncertainty about whether employees have been able to 
express their true preferences. The law should aim to minimize those 
risks and uncertainties on both sides. But current law, and the 
opponents of this bill, seem to assume that the risk that a union might 
be foisted upon employees in the absence of an uncoerced majority is 
much, much worse--orders of magnitude worse--than the risk that 
employees may be denied representation when a majority of employees 
wants it.
    It is hard to see how the status quo could be justified without 
that unspoken premise, given the slight and ephemeral evidence of union 
coercion of cardsigners as compared to the overwhelming evidence of 
employer coercion of union supporters under the existing regime. That 
seems to be the unspoken premise, as well, behind existing law's 
reliance on valid cards to command the employer's withdrawal of support 
for an incumbent union and its refusal to rely on valid cards to 
command recognition of a new union.
    If that is indeed the unspoken premise behind the status quo, it 
would be quite consistent with another set of facts: Surveys indicate 
that between 32 and 53 percent of non-managerial workers who don't have 
union representation wish they did, while only 10 to 13 percent of 
workers who do have union representation wish they did not.\15\ An 
exceedingly generous assessment of the existing regime is that, in 
order to minimize the (very small) risk that workers will be stuck with 
a union in the absence of uncoerced majority support, it virtually 
guarantees that many more workers will be denied union representation 
when an uncoerced majority would have chosen it.
---------------------------------------------------------------------------
    \15\ Richard B. Freeman & Joel Rogers, What Workers Want, pp. 18, 
20 (2d ed. 2006).
---------------------------------------------------------------------------
    But that is not what the law is supposed to do. The law is supposed 
to protect employees' right to form a union and bargain collectively; 
that right is every bit as important as the right to refrain from those 
activities. In a world in which employers, who own and control the 
workplace and on whom employees are inescapably dependent, vehemently 
oppose unionization, the law must stand solidly behind employees who 
seek to exercise that right. The law's failure to do so has contributed 
in some measure to the drastic decline in union membership in the 
private sector, and to the well-documented ``representation gap''--the 
wide gap between what employees have and what they say they want in 
terms of collective representation.\16\ EFCA would take a modest step 
toward enabling employees to narrow that gap by forming a union.
---------------------------------------------------------------------------
    \16\ Freeman and Rogers found in the mid-1990s that 63 percent of 
employees wanted more influence over workplace decisions than they had, 
and that 43 to 56 percent of them believed collective representation 
was a better way to achieve that than individual action. Id. at 12-13. 
A more recent California survey found that 51 percent of respondents 
thought it was very important, and 38 percent thought it was somewhat 
important to have more say in workplace decisions. Id.

    The Chairman. Thank you very much. Our next witness, Dr. 
Larry Mishel, who is a recognized authority in economic policy, 
particularly as it effects middle- and low-income families 
currently serves as President of the Economic Policy Institute, 
a nonprofit, nonpartisan think tank that provides high quality 
research and education to promote a prosperous, fair, 
sustainable economy. He is a graduate of Penn State University. 
He received his Doctorate in Economics from the University of 
Wisconsin, principal author with a research volume on the state 
of working America, a comprehensive review of the labor market 
and living standards. Doctor, good to see you again.

STATEMENT OF LAWRENCE MISHEL, Ph.D., PRESIDENT, ECONOMIC POLICY 
                   INSTITUTE, WASHINGTON, DC.

    Mr. Mishel. Thank you very much. Well, thank you for the 
opportunity to discuss the importance of making it possible, 
once again, for working Americans to exercise their fundamental 
rights to join together in unions of their choosing.
    The topic of today's hearing couldn't be more timely. 
Americans are facing the very challenges that unions help us to 
address. Most Americans are working harder and smarter than 
ever before but they fear their efforts are not being 
recognized and rewarded.
    In our time, we have seen labor movements can be a force 
for freedom throughout the world. We often heard about it when 
it was the Polish Solidarity Union overthrowing communist 
totalitarianism. We note it with COSATU helping to overthrow 
Apartheid. Unions are good at home as well.
    All freedom-loving Americans should favor a strong, vibrant 
labor movement here and abroad. I learned that as a young boy 
in Philadelphia when I was taught that the building next to 
Independence Hall was called Carpenters Hall. That is where the 
First Continental Congress met.
    Twenty-five years ago, a very important book written by 
Harvard Economist James Medoff and Richard Freeman stated, 
unions reduce wage inequality, increase industrial democracy 
and often raise productivity. In the political sphere, unions 
are an important voice for some of society's weakest and most 
vulnerable groups, as well as for their own members. That 
remains an ample summary of the union impact on our country.
    Let's first look at the union impact in the workplace. 
Unions promote opportunity, security and fundamental fairness. 
Through training programs and requirements that job openings be 
posted and filled fairly, unions help working Americans enjoy a 
fair chance to get ahead.
    Unions make sure that workers are rewarded for their years 
of service and have regular hours that allow them to plan ahead 
and spend time with their families.
    Sometimes a union is a matter of life and death. Twenty-
eight percent of coal miners, for example, work in union mines, 
but only 14 percent of the fatalities in mines in recent years 
was in these union mines. This means that it was twice as 
likely to be a coal miner--if you are nonunion, you are twice 
as likely to die as you would if you were a union miner.
    Unions ensure due process through the grievance process. An 
employer must establish just cause before disciplining or 
terminating an employee. This gives members the security to 
complain, to have input into how a business is operated, to 
challenge unsafe, unfair, unlawful, unproductive or wasteful 
practices and to recommend better alternatives.
    Of course, unions' most important contribution is making 
work pay. We know that unions, controlling for many factors, 
provide wages that are much higher, provide health benefits, 
which you are more likely to get and have better pension 
coverage and have more time off.
    It is important to note that even nonunion employees 
benefit from the presence of unions because of what is called 
the threat effect. That is, employers, for fear of having their 
workers organize, pay their nonunion employees more. The 
clearest example of this very recently, Japanese and German 
transplant auto factories which for 25 years have paid UAW 
wages. Now that the UAW is weakened, they are building plants 
and paying people just $10 and $15 an hour.
    How do unions affect competitiveness? Do unions hurt 
companies? Many people think so but 30 years of research and 
over 75 studies would tell you that, in fact, unions do no harm 
to the productivity of firms nor that union firms are more 
likely to lead to a plant closing or insolvency. There is very 
ample research on this.
    Why is that the case? Well, one, unions give employees a 
voice in the workplace allowing them to complain, shape 
operations and push for change. Two, union employees feel freer 
to speak up and it fuels collaboration and information sharing. 
Why would you share with another worker what you know if you 
don't have security on the job?
    Three, the higher pay that unions provide pushes employers 
to do better with their costs, investing in new technology and 
making new investments. And last, union employees get more 
training and participate in higher performance practices.
    Now lets turn to the union effect on the national economy. 
Unions were a force from the mid 1940's through the mid 1970s, 
ensuring that we all grew together as Senator Kennedy's chart 
showed. And it's been the ever-present decline of unionization 
that has helped lead to the fact we no longer are growing 
together, we are growing apart.
    The top 1 percent of income earners now have double the 
share of income they had just 30 years ago. The wealth of the 
wealthiest 1 percent is now 190 times that of the median 
household. It used to be just 125 to 1.
    Union membership and its decline is very much associated 
with that. Many studies show that around 20 percent of the 
growth of the wage inequality in the last 30 years is due to 
the weaker unions and fewer unions that we have. But 
researchers also think this is an underestimate because it 
ignores the union threat effect, the effect on the nonunion 
workers, ignores that unions have benefits, which is even 
greater than on wages and because there is a cultural effect. 
We've had an enormous shift of norms whereby greed is 
worshipped and hard work is not rewarded and that has a lot to 
do with the change in inequality over the years.
    I would also stress the disconnect between work and pay 
that Senator Kennedy had a chart on. Americans are working not 
just harder and longer but more productively. The economy has 
grown enormously, in large part because the American worker has 
been among the most productive in the world. Output per hour of 
work increased 71 percent from 1980 to 2005, making possible a 
dramatic rise in our living standards. The rise of productivity 
is the rise in the size of the pie that we get to distribute.
    The fact is not that it has grown 71 percent over the last 
25, 27 years but that the typical worker does not have much 
higher wages is evidence of a gross failure of our economy to 
be fair to everybody.
    The Chairman. I am going to let you wrap up.
    Mr. Mishel. OK, thank you. I would just point out that over 
the last 5 years, productivity has been almost 20 percent, but 
the wages of both college educated and high-school educated 
workers have been stagnant. Given that, the surveys show that 
over 50 percent of nonunion, nonmanagerial workers would choose 
to have a union tomorrow. It is clear that the line going down 
of union membership represents a gross disconnect between what 
workers want and what they are getting and that is why they 
need The Employee Free Choice Act. Thank you.
    [The prepared statement of Mr. Mishel follows:]

              Prepared Statement of Lawrence Mishel, Ph.D.

    Thank you for the opportunity to discuss how to make it possible, 
once again, for working Americans to exercise their fundamental rights 
to join together in unions of their choosing.
    The topic of today's hearing couldn't be more timely. Americans are 
facing the very challenges that unions help us to address:
    Most Americans are working harder and smarter than ever before, but 
they fear their efforts are not being recognized and rewarded. The 
growing gaps in wages and wealth threaten the productivity of our 
economy and the cohesion of our society. And many Americans are opting 
out of the democratic process at a time when the Nation needs their 
involvement and their ideas.
    In our time, we have seen how labor movements can be a force for 
freedom throughout the world. Recall the achievement of Solidarity to 
overcome Communist totalitarianism in Poland. Recall the efforts of 
COSATU to overthrow Apartheid in South Africa. All freedom-loving 
Americans should favor a strong, vibrant labor movement both here and 
abroad. Here in the United States, unions can also make an historic 
contribution by making work pay for those who labor for low wages, by 
restoring the link between productivity increases and pay increases, 
and by providing training, health coverage, and portable pension 
benefits at a time when most Americans will keep moving from job to 
job.
    We know union members can build a better America because that is 
just what they have done at every crucial moment in our Nation's 
history, from the days when the First Continental Congress met in 
Philadelphia . . . in Carpenters Hall.
    As Harvard economists James Medoff and Richard Freeman wrote nearly 
25 years ago:

          ``Unions reduce wage inequality, increase industrial 
        democracy and often raise productivity . . . in the political 
        sphere, unions are an important voice for some of society's 
        weakest and most vulnerable groups, as well as for their own 
        members.''

    In our Nation's public life, unions have been a powerful voice for 
all working Americans for 150 years. In the 19th century, they won the 
10-hour day and then the 8-hour day so that succeeding generations 
could spend time with their families. In the years before the Great 
Depression, the unions helped America abolish child labor, establish 
workmen's compensation and protect workers' health and safety on their 
jobs. During the Depression, union members helped to preserve democracy 
and restore prosperity by enacting a Federal minimum wage, overtime pay 
and a 40-hour week, creating social security and unemployment 
insurance, and thereby proving that our political system could serve 
the interests of the great majority of people. Labor's victories were 
America's victories.
    In the succeeding years, union members helped America keep its 
promise of ``liberty and justice for all.'' With the visionary 
leadership of A. Philip Randolph, the Sleeping Car Porters were the 
unsung heroes of the civil rights movement from the fight for the Fair 
Employment Practices Commission to the Montgomery Bus Boycott and the 
March on Washington. Walter Reuther of the UAW was at Martin Luther 
King's side in 1963 at the March on Washington. Attorney General 
Nicholas Katzenbach declared that the Civil Rights Act of 1964 would 
not have passed but for the support and determination of the unions. 
And Dr. King gave his life supporting sanitation workers who walked off 
their jobs in Memphis to assert their human dignity. Union members led 
the fights for the Mine Safety Act, the Occupational Safety and Health 
Act, ERISA, and laws to protect migrant farm workers. The health care 
workers and nurses pushed for and won passage of the last improvement 
to our workplace safety laws in 2000, the Needlestick Safety and 
Prevention Act.
    Through all these efforts, and so many more, America's unions made 
the United States a fairer, more productive, and healthier society.
    Unions build our democracy as well as our economy. Union members 
and their families are more likely to vote than the average American, 
and organizations from the Red Cross to United Way benefit from the 
disproportionate contributions and participation of union members.

                        UNIONS IN THE WORKPLACE

    In our workplaces, unions promote opportunity, security, and 
fundamental fairness.
    Through training programs and requirements that job openings be 
posted and filled fairly, unions help working Americans enjoy a fair 
chance to get ahead.
    Unions make sure that workers are rewarded for their years of 
service and have regular hours that allow them to plan ahead and spend 
time with their families.
    Union employers are less likely to violate civil rights laws, less 
likely to violate minimum wage and overtime laws, and more likely to 
follow workplace safety standards. Twenty-eight percent of coal miners, 
for example, work in union mines. Yet from 2004 to 2006, only 14 
percent of fatalities occurred in union mines. The odds of dying in a 
non-union mine were more than twice as great as in a union mine.
    Unions ensure due process. In every State but Montana, employment 
is at will. Employers can fire employees for no reason or any reason, 
except those specifically proscribed by law, which usually pertain to 
race, religion, age, gender or ethnicity. Employees with no union to 
protect them can be fired on a whim, for complaining, for 
whistleblowing, for dressing wrong, because the foreman doesn't like 
them, or for their appearance. Unions, by contrast, almost always 
demand and win a right to due process and a requirement that the 
employer establish just cause before disciplining or terminating an 
employee. By insisting on just cause and due process, unions give their 
members the security to complain, to have input into how a business is 
operated, to challenge unsafe, unfair, unlawful, unproductive or 
wasteful practices and to recommend better alternatives.
    In times of hardship, unions help hardworking people have access to 
the benefits that they have earned, such as unemployment insurance, 
worker's compensation, or Trade Adjustment Assistance. Unions often 
advocate on behalf of their members with government agencies when 
benefits are denied or delayed.
    Of course, unions' most important contribution is making work pay 
and compensation more equitable.
    When one compares workers whose experience, education, region, 
industry, occupation and marital status are comparable, those covered 
by a union agreement enjoy:

     14.7 percent higher wages;
     28.2 percent more likely to have employer-provided health 
insurance;
     53.9 percent more likely to have pension coverage; and
     14.3 percent more paid time off.

    The union wage premium varies by race, ethnicity and gender, but is 
large for every group:

     Whites--13.1 percent
     Blacks--20.3 percent
     Hispanics--21.9 percent
     Asians--16.7 percent
     Men--18.4 percent
     Women--10.5 percent

    In unionized settings there is much less inequality as people doing 
similar work are similarly paid, as race and gender differentials are 
less, as occupation differentials are less, and as the wages of front-
line workers are closer to that of managerial workers. Unions also 
lessen inequality because they are more successful at raising the wages 
of those in the bottom 60 percent of the wage pool.
    It is important to note that even non-union employees benefit from 
the presence of unions in their industry and area. Because of the so-
called ``threat effect,'' non-union employers give their employees 
higher wages and more generous benefits in order to prevent their own 
employees from organizing. The clearest example is the Japanese and 
German transplant auto factories, which for 25 years have paid UAW 
wages to their non-union employees, even in the rural deep South where 
wages are generally low, in order to keep them from unionizing. Now 
that they perceive the UAW as weakened, the transplants are beginning 
for the first time to pay lower wages--$10-$15 an hour less in some 
cases.
    More generally, unions have raised the standard for most employers 
and the expectations of most employees by negotiating paid lunch 
breaks, health benefit coverage, paid vacations, and paid holidays, 
none of which (shamefully) is required by Federal law.

                THE EFFECTS OF UNIONS ON COMPETITIVENESS

    So do unions help or hurt companies? How does unionized Costco, for 
example, compete successfully with non-union Wal-Mart even though 
Costco's labor costs are 40 percent higher? How does Costco generate 
almost twice as much profit per employee as Wal-Mart's Sam's Club?
    Decades of research show that unions can have substantial positive 
effects on firm performance.
    At least four factors account for the positive impact on 
performance:

    1. Unions give employees a voice in the workplace, allowing them to 
complain, shape operations, and push for change, rather than simply 
quitting or being fired. That leads to reduced cost from lower 
turnover.
    2. Union employees feel freer to speak up about operations, leading 
to improvements that increase productivity. Employment security fuels 
collaboration and information sharing, leading to higher productivity.
    3. Higher pay pushes employers to find other ways to lower costs--
with new technology, increased investment, and better management.
    4. Union employees get more training, both because they demand it 
and because management is willing to invest more to get a return on 
their higher pay.

    Research shows that the likelihood of union firms closing or going 
bankrupt is no greater than for non-union firms. The bottom line is 
that union firms are just as productive as non-union firms. In the auto 
industry, for example, even though the non-union foreign transplant 
companies generally have newer facilities, 6 of the 10 most productive 
assembly plants are union.

                    UNIONS AND THE NATIONAL ECONOMY

    One of the most important effects of unions has been on reducing 
inequality. The ``great compression'' of the mid-20th century, when a 
huge gap between the wages and incomes of workers on the bottom and at 
the top closed, began as deliberate government policy during World War 
II, but was maintained for 30 years by the power of unions to raise 
workers' wages and hold the CEOs in check. The American middle class 
was created in the 1940s, 1950s and 1960s, when unions were strong and 
guaranteed that the productivity and profit of American industry was 
broadly shared.
    For the last 30 years, as union density has declined, that 
compression has reversed and inequality has been on the rise. Since 
1973, according to Picketty and Saez, the share of market income going 
to the top 1 percent has more than doubled, from less than 10 percent 
of all income to almost 22 percent in 2005. The ratio of the wealth of 
the wealthiest 1 percent of Americans to those in the middle (e.g., the 
median) was 125 to 1 in 1962. By 2004, it was 190 to 1.
    Studies show that the decline in union membership has been a 
substantial factor in this rising inequality--responsible for at least 
20 percent. My own research suggests the effect is larger, since most 
estimates ignore the union threat effect and its loss, the union effect 
on benefits, and as Paul Krugman points out, unions have had a cultural 
effect, helping impose norms that made greed and inflated CEO 
compensation unacceptable. When unions were strong, CEO pay was 
``only'' 24 times the pay of average workers. Today, with unions 
weakened, CEO pay is 262 times the pay of average employees.
    For 30 years after World War II, a rising economy truly lifted all 
boats, and Americans at every wage level saw their income rise 
together. For most of the last 30 years, and particularly in the last 5 
years, with union representation at its lowest share of the labor force 
since the 1930's, the Nation's enormous wealth has not been fairly 
shared. Since 1980, the U.S. economy has grown at an annual rate of 3 
percent per year, but the benefits of this growth have gone, as I noted 
earlier, overwhelmingly to the best-off 10 percent and among these, 
especially to the upper 1 percent. Average working Americans have been 
getting a shrinking piece of the pie. Inequality has reached levels not 
seen since before the Great Depression.
    Since the late 1970's, inflation-adjusted wages and income for the 
vast majority of Americans have risen much more slowly than the 
Nation's productivity and wealth. To the extent that the typical 
family's or household's earnings have risen, it is mostly because 
family members, especially married women, have worked longer hours. The 
typical middle class family today works more than 10 hours more per 
week than a similar family worked in 1979. Between 1975 and 2000, prime 
age families with children increased their time in the labor market by 
900 hours a year--5 months more work! It's no wonder that families feel 
squeezed both in terms of finances and time.
    Americans are working not just harder and longer, but more 
productively. The economy has grown enormously, in large part because 
the American workforce has been among the most productive in the world. 
Output per hour of work increased 71 percent from 1980 to 2005, making 
possible a dramatic rise in our living standards. But the real 
compensation, including benefits, of nonsupervisory employees rose only 
4 percent. Productivity over the past 5 years rose almost 20 percent, 
but inflation-adjusted wages for workers with a college education have 
been flat, just as they have for those with a high school diploma. (See 
Figure)



                      THE EMPLOYEE FREE CHOICE ACT

    I have shown that the decline in union representation has been a 
major cause of two disturbing trends in our economy: the rise in 
inequality and the failure of average working Americans to share in the 
benefits of rising productivity. By reducing the opportunity for 
employers to intimidate and discourage workers from unionizing after 
they have reached a collective decision to do so, the Employee Free 
Choice Act can help restore and spread the benefits that unions bring 
to workers and the economy.
    Employees understand the benefits unions bring. Research by Harvard 
economist Richard Freeman (that I have attached to this testimony) 
shows that a majority of nonunion non-managerial workers in 2005 would 
have voted for a union if given the opportunity. If even half of the 58 
percent of employees who want a union had one, the entire economy would 
be transformed, and I have no doubt that the result would be a much 
fairer distribution of the economic wealth our Nation produces.
    The authors of the Wagner Act understood perfectly well that 
individual employees cannot strike a fair bargain with much more 
powerful employers. They knew, as Sen. James Webb says, that employees 
need an agent. Their conclusions are still part of the National Labor 
Relations Act's Findings and Declaration of Policy:

          ``The inequality of bargaining power between employees who do 
        not possess full freedom of association or actual liberty of 
        contract, and employers who are organized in the corporate or 
        other forms of ownership association substantially burdens and 
        affects the flow of commerce, and tends to aggravate recurrent 
        business depressions, by depressing wage rates and the 
        purchasing power of wage earners . . .''

    By requiring employers to accept their employees' choice of 
bargaining representative, deterring employer violations of the law, 
and by requiring arbitration of first contracts when necessary, the 
Employee Free Choice Act will help restore the purchasing power of 
average Americans and lift the living standards of the 90 percent of 
Americans who have endured the middle class squeeze or been left out of 
our economic gains altogether.

    The Chairman. Thank you very much. Our final witness will 
be Peter Hurtgen, who is a former member and Chairman of the 
National Labor Relations Board as well as former Director of 
the Federal Remediation Conciliation Services and a graduate of 
Georgetown University. He also has a law degree, currently a 
partner of the law firm, Morgan and Lewis, where he practices 
labor and employment law focusing on issues regarding 
collective bargaining and National Relations Act. Have you 
recovered from that game--North Carolina----
    Mr. Hurtgen. I have Senator, but I am now looking obviously 
to Ohio State on Saturday.
    The Chairman. I was about to say that's good. I'll tell 
you, you can look at a lot of sporting events but rarely will 
you see a comeback like that game.
    Mr. Hurtgen. I agree. I don't want to say I was giving up 
toward the end but it didn't look good.

   STATEMENT OF PETER J. HURTGEN, PARTNER, MORGAN, LEWIS AND 
                          BOCKIUS, LLP

    Mr. Hurtgen. Senator, thank you and members of the 
committee for this opportunity to talk to you today about The 
Employee Free Choice Act. I, as you noted, served as a member 
of the National Labor Relations Board from 1997, appointed by 
President Kennedy and confirmed by the Senate. Until August 
2002, I was the Chair appointed as such by President Bush in 
May 2001 until I left the Board in the August 2002 and then 
took on the directorship of the Federal Remediation and 
Reconciliation Service in August 2002 and stayed in that 
position until December 31, 2004. I then returned to the 
practice of labor law on behalf of management, which is what I 
had done for some 30 years prior to going to the National Labor 
Relations Board.
    I am not here to speak to the efficacy of unions or their 
role on our society or in our workplace. As I grant that, I 
have spent my entire professional career representing employers 
with unions and have negotiated in excess of 175 collective 
bargaining agreements and as I thought about my testimony 
today, I thought as far back as I can I think, I have never had 
a bargaining situation where it even produced a strike. But 
obviously, those unfortunate events occur and the law deals 
with them.
    There are two features at least, however, of this proposed 
legislation, which I think are fundamentally flawed. This act 
was created in 1935. It put into place a system that took labor 
disputes out of the streets and out of the courts and put them 
into the National Relations Labor Board, an administrative, 
quasi-judicial agency. That act was amended substantially in 
1947, as we know, and less so in 1959. But when Congress 
enacted the act in 1935 and when it was amended in 1947, it 
could not have appreciated how the world of work has changed. 
How global markets for capital, for goods, for services, for 
employees have changed so radically, how societal changes have 
occurred. Indeed, how the individual rights in the workplace 
have transcended the collective rights starting in 1964 with 
Title VII. Congress has added rights to employees regularly and 
that has served in substantial part, ironically, probably to 
disserve the growth of unions, but it is what it is.
    I'm not here to argue that it's not time to overhaul this 
statute to reflect today's workplace but the act as presented 
or the bill as presented in the so-called Employee Free Choice 
Act clearly doesn't do it. The preamble to the statute uses the 
term full freedom of choice and that is essentially what we are 
talking about in two major pieces of this legislation.
    It states in part, ``the Act is designed to protect the 
exercise by workers of full freedom of association, self-
organization and designation of representatives.''
    It seems, frankly, to me, self-evident that the full 
freedom can only be achieved, as did Congress in 1935, by a 
secret ballot when choosing a representative.
    You've heard, and it is true that employers in unions 
contest employee choice vigorously and it's true that sometimes 
that one or both parties will exceed the bounds of the law in 
doing that, but the NLRB has vigorously enforced the rights of 
employees to organize since its enactment and it continues to 
do so today.
    It doesn't help to take these disputes over organizing out 
of the regulatory channels of the Board and into the back 
allies of card signing campaigns. That is exactly what would 
happen.
    Right now, the Board's rules and regulations have created 
critical periods during which employer conduct as well as 
employee conduct is looked at specifically with the idea of 
making sure, as best it can, that employee's rights, when they 
go to the ballot box, which is run and operated by the 
government, that they will cast a free and uncoerced and 
unintimidated ballot. There is absolutely no way the Board or 
any other quasi-judicial agency, in my view, will be able to 
police the vigorous campaigns that will go on if this whole 
issue is relegated to whether employees sign a card or not.
    So if we want to create a system that more likely will 
produce litigation and consternation and disharmony in the 
workplace, this is the way to do it.
    If employers are attacked by unions in the organizing 
campaign, they are going to respond. Now, the law controls that 
response and it regulates it. If you take it out of those 
controls and regulations and simply let it go on with regard to 
no time period and whenever with regard to signing or not 
signing of cards, it will not serve the purpose of the original 
enactment of this law. It will not help the societal problems 
in the workplace that other speakers feel needs to be 
corrected. It will just simply create more opportunity for 
lawlessness than sound labor policy.
    I want to spend more time, frankly, talking about the other 
aspect of this legislation, which on the face of it would seem 
more reasonable, but is seriously flawed in my view. Also on 
that is the requirement that if a first contract isn't 
negotiated within 120 days that it will be submitted to binding 
arbitration. Again, we are talking about full freedom here. In 
this case here, that is the freedom to contract.
    The U.S. Supreme Court said in its seminal decision in H.K. 
Porter and I've cited it in my remarks, with regard to 
collective bargaining agreements--the objective of this act was 
not to allow government regulation of the terms and conditions 
of employment but rather to ensure that an employer and their 
employees could work together to establish mutually 
satisfactory conditions.
    The basic theme of the act was that through collective 
bargaining the passions, arguments and struggles of prior years 
would be channeled into constructive, open discussions leading, 
it was hoped, to mutual agreement. But it was recognized from 
the beginning of that agreement, in some cases, it might be 
impossible and it was never intended that the government would, 
in such cases step in, become a party to the negotiations and 
impose its own views of a desirable settlement.
    A collective bargaining agreement is a complex, large 
document involving the entire workplace and its terms and 
conditions of employment. Nobody said it better in describing 
than Justice Douglas in the case of United Steelworkers versus 
Warrior and Gulf, 1960. This is what Justice Douglas said, the 
collective bargaining agreement states the rights and duties of 
the parties. It is more than a contract, it is a generalized 
code to govern a myriad of cases, which the draftsmen cannot 
wholly anticipate--the collective agreement covers the whole 
employment relationship. It calls into being a new common law--
the common law of a particular industry or of a particular 
plant.
    Now it's true. The first contracts are harder. It's because 
they are first contracts. There will be intransigence and there 
will be problems that have developed because of the campaign 
for or against the union leading up to this certification by 
the Board. But the parties work through that and it is critical 
that they be allowed and required to work through that.
    Interest arbitration. as opposed to rights arbitration, 
doesn't have standards for guidelines. There are no experts out 
there that can put an entire collective bargaining agreement 
together for the parties. Now that has been attempted in some 
States in the public sector because they do not want to allow 
employees the right to strike. So they replace it with interest 
arbitration. I have been involved in that process in Florida 
for 20 years.
    The Chairman. We will give you a chance to wrap up if you 
would please.
    Mr. Hurtgen. I will Senator, thank you. When you have that 
kind of bargaining, it isn't really bargaining. It is simply 
posturing to get a whole bunch issues teed up for a hearing 
before an arbitrator who will then try to be solemn and none of 
them are, and resolve these bargaining disputes. It doesn't 
work. It would clearly not work here. It would destroy the 
freedom of both parties to engage in collective bargaining. 
Thank you.
    [The prepared statement of Mr. Hurtgen follows:]

                 Prepared Statement of Peter J. Hurtgen

    Chairman Kennedy, Senator Enzi, and members of the committee, I am 
pleased and honored to be here today. Thank you for your kind 
invitation.
    By way of introduction, I was appointed by President Clinton, 
confirmed by the Senate, and served as a member of the National Labor 
Relations Board from November 1997 until August 2002. From May 2001 
until August 2002 I served as Chairman of the Board. In August, 2002 I 
was appointed by President Bush and confirmed by the Senate as Director 
of the Federal Mediation and Conciliation Service. Before becoming a 
member of the Board, I practiced as a labor lawyer representing 
management in private practice from 1966 to 1997. I returned to private 
practice on January 1, 2005 and am a Senior Partner in the law firm of 
Morgan, Lewis & Bockius LLP.
    The National Labor Relations Act was enacted in 1935 and has been 
substantially amended only twice--once in 1947 and once in 1959. The 
act establishes a system of industrial democracy that is similar in 
many respects to our system of political democracy. At the heart of the 
act is the secret ballot election process administered by the National 
Labor Relations Board. In order to understand how recent trends in 
Union organizing are diluting this central feature of the act, some 
background is necessary.

               THE NLRB'S SECRET BALLOT ELECTION PROCESS

    If a group of employees in an appropriate collective bargaining 
unit wish to select a union to represent them, the Board will hold a 
secret ballot election based on a petition supported by at least 30 
percent of employees in the unit. The Board administers the election by 
bringing portable voting booths, ballots, and a ballot box to the 
workplace. The election process occurs outside the presence of any 
supervisors or managerial representatives of the employer. No 
campaigning of any kind may occur in the voting area. The only people 
who are allowed in the voting area are the NLRB agent, the employees 
who are voting, and certain designated employee observers.
    The ultimate question of union representation is determined by 
majority rule, based on the number of valid votes cast rather than the 
number of employees in the unit. If a majority of votes are cast in 
favor of the union, the Board will certify the union as the exclusive 
bargaining representative of all employees in the collective bargaining 
unit. Unlike joining a club, once a union is certified by the Board, it 
becomes the exclusive representative of the entire unit of employees, 
regardless of whether they voted for the union. The employer is 
obligated to bargain with the union in good faith with respect to all 
matters relating to wages, hours, and working conditions of the 
bargaining unit employees.
    The Board is empowered to prosecute employers who engage in conduct 
that interferes with employee free choice in the election process, and 
may order a new election if such employer interference with the 
election process has occurred. The Board also will order the employer 
to remedy such unfair labor practices, for example by ordering the 
employer to re-instate and compensate an employee who was discharged 
unlawfully during the election campaign. In extreme cases, the Board 
may even order an employer to bargain with the union without a new 
election, if the Board finds that its traditional remedies would not be 
sufficient to ensure a fair rerun election and if there is a showing 
that a majority of employees at one point desired union representation. 
The Supreme Court affirmed the Board's power to issue this 
extraordinary remedy in NLRB v. Gissel Packing Co., 395 U.S. 575 
(1969). When issuing a Gissel bargaining order, the Board will 
determine whether majority support for the union existed by checking 
authorization cards signed by employees during the organizing process.
    As the Board and the Supreme Court have acknowledged, the use of 
authorization cards to determine majority support is the method of last 
resort. A secret ballot election is the ``most satisfactory--indeed the 
preferred--method of ascertaining whether a union has majority 
support.'' Gissel Packing, 395 U.S. at 602. Despite its strong push for 
card check legislation, organized labor has acknowledged the 
superiority of secret ballot elections in determining employee choice. 
At a time when it was enjoying a high success rate in such elections, 
the AFL-CIO once acknowledged that authorization cards are not reliable 
indicators of employee sentiment in favor of a union. A 1961 handbook 
for organizers noted:

        [C]ards are at best a signifying of intention at a given 
        moment. Sometimes they are signed to ``get the union off my 
        back.'' \1\
---------------------------------------------------------------------------
    \1\ NLRB v. S.E. Nicholls Co., 380 F.2d 438, 445 n.7 (2d Cir. 
1967), quoting AFL-CIO Guidebook for Union Organizers, (1961).

    Indeed, as recently as 1998, in making the case for requiring 
secret ballot elections for employees to get rid of unions (i.e., 
decertification), the AFL-CIO, the United Auto Workers (UAW), and the 
United Food & Commercial Workers (UFCW) argued to the National Labor 
---------------------------------------------------------------------------
Relations Board:

        a representation election ``is a solemn . . . occasion, 
        conducted under safeguards to voluntary choices,'' . . . other 
        means of decisionmaking are ``not comparable to the privacy and 
        independence of the voting booth,'' and [the secret ballot] 
        election system provides the surest means of avoiding decisions 
        which are ``the result of group pressures and not individual 
        decision[s].'' In addition, . . . less formal means of 
        registering majority support . . . are not sufficiently 
        reliable indicia of employees' desires on the question of union 
        representation to serve as a basis for requiring union 
        recognition.\2\
---------------------------------------------------------------------------
    \2\ Joint Brief of the United Automobile, Aerospace, and 
Agricultural Implement Workers of America, the United Food and 
Commercial Workers, and the AFL-CIO in Chelsea Industries and Levitz 
Furniture Co. of the Pacific, Inc., Nos. 7-CA-36846, 7-CA-37016 and 20-
CA-26596 (NLRB) at 13 (May 18, 1998), quoting NLRB v. Gissel Packing 
Co., 395 U.S. 575, 602 (1969) and Brooks v. NLRB, 348 U.S. 96, 99, 100 
(1954).

    Even the lead sponsor of the Employee Free Choice Act in the House, 
Education, and Labor Committee Chairman George Miller (D-CA), joined by 
15 other pro-labor members of Congress wrote in a 2001 letter, in the 
context of Mexican labor laws, that ``the secret ballot election is 
absolutely necessary in order to ensure that workers are not 
intimidated into voting for a union they might not otherwise choose.'' 
\3\
---------------------------------------------------------------------------
    \3\ Letter from U.S. Rep. George Miller et al., to Junta Local de 
Conciliacion y Arbitrraje del Estado de Puebla, Aug. 29, 2001.
---------------------------------------------------------------------------
    Although authorization cards adequately may reflect employee 
sentiment when the election process has been impeded, the Board and the 
Court in Gissel recognized that cards are ``admittedly inferior to the 
election process.'' Gissel Packing, 395 U.S. at 602. Other Federal 
courts of appeal have expressed the same view:

     ``[I]t is beyond dispute that secret election is a more 
accurate reflection of the employees' true desires than a check of 
authorization cards collected at the behest of a union organizer.'' 
NLRB v. Flomatic Corp., 347 F.2d 74, 78 (2d Cir. 1965).
     ``It would be difficult to imagine a more unreliable 
method of ascertaining the real wishes of employees than a `card 
check,' unless it were an employer's request for an open show of hands. 
The one is no more reliable than the other. . . . Overwhelming 
majorities of cards may indicate the probable outcome of an election, 
but it is no more than an indication, and close card majorities prove 
nothing.'' NLRB v. S. S. Logan Packing Co., 386 F.2d 562, 565 (4th Cir. 
1967).
     ``The conflicting testimony in this case demonstrates that 
authorization cards are often a hazardous basis upon which to ground a 
union majority.'' J. P. Stevens & Co. v. NLRB, 441 F.2d 514, 522 (5th 
Cir. 1971).
     ``An election is the preferred method of determining the 
choice by employees of a collective bargaining representative.'' United 
Services for the Handicapped v. NLRB, 678 F.2d 661, 664 (6th Cir. 
1982).
     ``Although the union in this case had a card majority, by 
itself this has little significance. Workers sometimes sign union 
authorization cards not because they intend to vote for the union in 
the election but to avoid offending the person who asks them to sign, 
often a fellow worker, or simply to get the person off their back, 
since signing commits the worker to nothing (except that if enough 
workers sign, the employer may decide to recognize the union without an 
election).'' NLRB v. Village IX, Inc., 723 F.2d 1360, 1371 (7th Cir. 
1983).
     ``Freedom of choice is `a matter at the very center of our 
national labor relations policy,' . . . and a secret election is the 
preferred method of gauging choice.'' Avecor, Inc. v. NLRB, 931 F.2d 
924, 934 (D.C. Cir. 1991) (citations omitted).

    Having recognized in Gissel that a secret ballot election is the 
superior method for determining whether a union has majority support, 
the Supreme Court in Linden Lumber v. NLRB, 419 U.S. 301 (1974), held 
that an employer may lawfully refuse to recognize a union based on 
authorization cards and insist on a Board-
supervised secret ballot election. Thus, an employer may, but cannot be 
compelled, to forgo a secret ballot election and abide by the less 
reliable card check method of determining union representation. The 
only exception to an employer's right to insist on an election is when 
the employer, as in the Gissel situation, has engaged in unfair labor 
practices that impair the electoral process.

 THE INCREASING USE OF NEUTRALITY/CARD CHECK AGREEMENTS IN ORGANIZING 
            CAMPAIGNS AND THE ATTEMPT TO MANDATE CARD CHECK

    One of the highest priorities of unions today is to obtain 
agreements from employers that would allow the union to become the 
exclusive bargaining representative of a group of employees without 
ever seeking an NLRB-supervised election. These agreements, which are 
often referred to as ``neutrality'' or ``card check'' agreements, come 
in a variety of forms. In some cases, the agreement simply calls for 
the employer to recognize the union if it produces signed authorization 
cards from a majority of employees. In many cases, the agreement 
includes other provisions that are designed to facilitate the union's 
organizing campaign, such as:

     An agreement to provide the union with a list of the names 
and addresses of employees in the agreed-upon unit;
     An agreement to allow the union access to the employer's 
facilities to distribute literature and meet with employees;
     Limitations or a ``gag order'' on employer communications 
to employees about the union;
     An agreement to start contract negotiations for the newly-
organized unit within a specified (and short) timeframe, and to submit 
open issues to binding interest arbitration if no agreement is reached 
within that timeframe; and
     An agreement to extend coverage of the neutrality/card 
check agreement to companies affiliated with the employer.

    Whatever form the agreement may take, the basic goal is the same: 
to establish a procedure that allows the union to be recognized without 
the involvement or sanction of the National Labor Relations Board. 
Neutrality and card check agreements therefore present a direct threat 
to the jurisdiction of the Board and its crown jewel, the secret ballot 
election process.
    An even greater threat to that crown jewel is the grossly misnamed 
Employee Free Choice Act--which more accurately should be described as 
the Employee Forced Choice Act. The provisions of that proposed 
legislation in the House of Representatives would, in nearly all cases, 
eliminate government-supervised secret ballot elections and instead 
turn the National Labor Relations Board into a card counting agency.
    The motivating force behind neutrality/card check agreements and 
the proposed legislation is the steady decline in union membership 
among the private sector workforce in the United States. Unions today 
represent only about 7.4 percent of the private sector workforce, about 
half of the rate 20 years ago. See U.S. Department of Labor, Bureau of 
Labor Statistics, Union Members in 2006 (Jan. 25, 2007), available at 
http://www.bls.gov/news.release/union2.nr0.htm. There are many 
explanations for this precipitous decline: the globalization of the 
economy and the intense competition that comes with it, the increasing 
regulation of the workplace through Federal legislation rather than 
collective bargaining, and the changing culture of the American 
workplace. While unions may not disagree with these explanations to 
varying degrees, they claim that the NLRB's election process is also to 
blame. Unions argue that the NLRB's election process is slow and 
ineffective, and therefore an alternative process is needed--namely, 
neutrality/card check agreements.
    I believe there are two basic problems with this argument. First, 
it is not supported by the facts. The NLRB's election process is 
efficient and fair, as demonstrated by hard statistics. Legislative 
change is not needed. Second, neutrality/card check agreements limit 
employee free choice and are generally the product of damaging leverage 
exerted by the union against the employer, which redounds to the 
detriment of employee knowledge and free choice.

           THE NLRB'S ELECTION PROCESS IS EFFICIENT AND FAIR
 
   The standard union criticisms of the NLRB's election process are 
more rhetorical than factual. Unions argue that the NLRB's election 
process is slow and allows employers to exert undue influence over 
employees during the pre-election period. Both of these arguments are 
not supported by the facts.
    The NLRB's election process is not slow. In fiscal year 2006, 94.2 
percent of all initial representation elections were conducted within 
56 days of the filing of the petition. Memorandum GC-07-03, Summary of 
Operations (Fiscal Year 2006), at 
p. 8 (January 3, 2007), available at http://www.nlrb.gov/shared_files/
GC%20 
Memo/2007/GC%2007-03%20Summary%20of%20Operations%20FY%2006.pdf. During 
that same time period, the median time to proceed to an election from 
the filing of a petition was 39 days. Id. Based on my experience over 
the past 40 years, these statistics demonstrate that the Board's 
election process has become even more efficient over time.
    Unions are currently winning well over 50 percent of NLRB secret 
ballot elections involving new organizing. This is the category of 
elections that unions are seeking to replace with neutrality/card check 
agreements, and it is also the same category of elections that would be 
replaced by the so-called Employee Free Choice Act. If anything, 
unions' win rate in representation elections currently is on the rise. 
The NLRB's most recent election report summary shows that unions won 
59.6 percent of all elections involving new organizing. See NLRB 
Election Report; 6-Months Summary--April 2006 through September 2006 
and Cases Closed September 2006, at 
p. 18. This figure is about the same as it was 40 years ago. In 1965, 
unions won 61.8 percent of elections in RC cases (cases that typically 
involve initial organizing efforts, as opposed to decertification 
elections or employer petitions). See Thirtieth Annual Report of the 
National Labor Relations Board, at p. 198 (1965). After 1965, unions' 
election win rate declined before rising back to the level where it is 
today:

     In 1975, unions won 50.4 percent of elections in RC cases. 
See Fortieth Annual Report of the National Labor Relations Board, at p. 
233 (1975).
     In 1985, unions won 48 percent of elections in RC cases. 
See Fiftieth Annual Report of the National Labor Relations Board, at p. 
176 (1985).
     In 1995, unions won 50.9 percent of elections in RC cases. 
See Sixtieth Annual Report of the National Labor Relations Board, at p. 
153 (1995).
     In 2005, unions won 56.8 percent of elections in RC cases. 
See Seventieth Annual Report of the National Labor Relations Board, at 
p. 16 (2005).

    These statistics undermine any argument that the NLRB's election 
process unduly favors employers, or that the recent decline in union 
membership among the private sector workforce is attributable to 
inherent flaws in the NLRB's election process. Unions are winning NLRB 
elections at the same or higher rate now than they have in almost 40 
years. To be sure, there are ``horror stories'' of employers who abuse 
the system and commit egregious unfair labor practices in order to 
prevail in an election. I hold no brief for those employers. I have 
never represented an employer engaged in such conduct. Indeed, I have 
never been involved in a Board-conducted election which was overturned. 
As a member of the National Labor Relations Board, I vigorously 
enforced the law. In cases of unlawful conduct, the law provides 
remedies for the employer's behavior, including Gissel bargaining 
orders. But these situations are the exception rather than the norm. 
And, there is nothing new about the fact that some employers abuse the 
system. In the overwhelming majority of cases where employees choose 
not to be represented by a union, they do so based on the information 
that is presented by both sides during the campaign process.
    Unions attempt to portray the Board's secret ballot election 
process as fundamentally unfair (except when unions are faced with a 
challenge to their majority status) by making unfavorable comparisons 
between Board elections and a typical political election in the United 
States. In doing so, unions frequently ignore several important facts 
about the NLRB election process:

     The union controls whether and when an election petition 
will be filed. Imagine if the challenger in a political election 
controlled the timing of the election.
     The union largely controls the definition of the 
bargaining unit in which the election will occur, because the union 
need only demonstrate that the petitioned-for unit is an appropriate 
bargaining unit. Imagine if the challenger in a political election had 
almost irreversible discretion to gerrymander the voting district to 
its maximum advantage.
     The union usually has obtained signed authorization cards 
from a majority of employees at the time the petition is filed. Thus, 
the union already knows the voters and has conducted a straw poll 
before the employer is even aware that an election will be held. 
Imagine if the challenger in a political election could campaign and 
poll the electorate without the incumbent's knowledge, wait until the 
polls show that the challenger has majority support, and then give the 
incumbent less than 60 days' notice of the election.
     Even though the union already knows the voters well by the 
time the election petition is filed, the employer must give the union a 
list of all of the voters' names and home addresses after the petition 
is filed. The union, but not the employer, is permitted to visit the 
employees at home to campaign for their vote.
     The union, unlike the employer, can make campaign promises 
to the employees to induce them to vote for the union.
     The union, like the employer, may designate an observer to 
be present in the voting area for the duration of the election, in 
order to check every voter and make sure that no irregularities occur.

    These facts illustrate that, far from being unfair to unions, the 
NLRB's election process offers unions many unique advantages.

             PROBLEMS WITH NEUTRALITY/CARD CHECK AGREEMENTS

    The fundamental right protected by the National Labor Relations Act 
is the right of employees to choose freely whether to be represented by 
a union. 29 U.S.C. Sec. 157. Neutrality/card check agreements limit 
employee free choice by restraining employer free speech. Section 8(c) 
of the act protects the right of employers to engage in free speech 
concerning union representation, as long as the employer's speech does 
not contain a threat of reprisal or a promise of benefit. 29 U.S.C. 
Sec. 158(c). Unions, through neutrality/card check agreements, seek to 
restrain lawful employer speech by prohibiting the employer from 
providing employees with any information that is unfavorable to the 
union during the organizing campaign. Such restrictions or ``gag 
orders'' on lawful employer speech limit employee free choice by 
limiting the information upon which employees make their decision.
    A second problem with neutrality/card check agreements is the 
method by which they are negotiated. In my experience, neutrality/card 
check agreements are almost always the product of external leverage by 
unions, rather than an internal groundswell from unrepresented 
employees. The leverage applied by the union can come from a variety of 
sources. In many cases, the union has leverage because it represents 
employees at some of the employer's locations. The union may be able to 
use leverage it has in negotiations for employees in an existing 
bargaining unit, in order to win a neutrality/card check agreement that 
will facilitate organizing at other locations. Bargaining over a 
neutrality/card check agreement, however, has little or nothing to do 
with the employees in the existing bargaining unit, and it detracts 
from the negotiation of the core issues at hand--wages, hours, and 
working conditions for the employees the union already represents.
    In other cases, the union exerts pressure on the employer through 
political or regulatory channels. This typically occurs by demonizing 
the employer. For example, if the employer needs regulatory approval in 
order to begin operating at a certain location, the union may use its 
political influence to attack the company and force the employer to 
enter into a neutrality/card check agreement for employees who will be 
working at that location. Political or regulatory pressure is often 
coupled with other forms of public relations pressure in order to exert 
additional leverage on the employer. In general, this combination of 
political, regulatory, public relations and other forms of non-
conventional pressure has become known as a ``corporate campaign,'' and 
it is this type of conduct--rather than employee free choice--that has 
produced these agreements.
    Thus, when a union succeeds in obtaining a neutrality/card check 
agreement, it generally does so by exerting pressure on the company 
through forces beyond the group of employees sought to be organized. 
The pressure comes from employees at other locations, and/or it comes 
from politicians, regulators, customers, investors, and the public at 
large. It is a strategy of ``top down organizing,'' meaning that the 
target of the campaign is the employer rather than the employees the 
union is seeking to organize. And, with the proposed legislation, 
unions are seeking to have the government mandate the card check 
portion of neutrality/card check for them.
    The strategy of ``top down organizing'' stands in stark contrast to 
the model of organizing under the National Labor Relations Act. Under 
the act, the pressure to organize comes from within--it starts with the 
employees themselves. If a sufficient number of employees (30 percent) 
desire union representation, they may petition the NLRB to hold a 
secret ballot election. If a majority vote in favor of union 
representation, the NLRB certifies the union as the employees' 
exclusive representative and the collective bargaining process begins 
at that point. At all times, the focus is on the employees, rather than 
on the employer or the union.
    There is no cause for abandoning the secret ballot election process 
that the Board has administered for seven decades. The act's system of 
industrial democracy has withstood the test of time because its focus 
is on the true beneficiaries of the act--the employees. In my view, the 
Employee ``Forced'' Choice Act is not sound public policy because it 
would deprive employees of the fundamental right to determine the 
important question of union representation by casting their vote in a 
Board-supervised secret ballot election. Indeed, that it would be 
unwise public policy to abandon government-supervised secret ballot 
elections in favor of mandatory card check appears to me to be a self-
evident proposition. It likewise would eviscerate the proud tradition 
of industrial democracy that has been the hallmark of the NLRB for 
nearly seven decades.
     the employee free choice act's interest arbitration provisions
    In addition to mandating recognition by card check rather than a 
secret ballot election, the act would eviscerate another fundamental 
tenet of U.S. labor law: voluntary agreement. As the Supreme Court held 
in H. K. Porter v. NLRB, 397 U.S. 99 (1970), the act is founded on the 
notion that the parties, not the government, should determine the 
applicable terms and conditions of employment:

          The object of this act was not to allow governmental 
        regulation of the terms and conditions of employment, but 
        rather to ensure that employer and their employees could work 
        together to establish mutually satisfactory conditions. The 
        basic theme of the act was that through collective bargaining 
        the passions, arguments, and struggles of prior years would be 
        channeled into constructive, open discussions leading, it was 
        hoped, to mutual agreement. But it was recognized from the 
        beginning that agreement might in some cases be impossible, and 
        it was never intended that the Government would in such cases 
        step in, become a party to the negotiations and impose its own 
        views of a desirable settlement.

Id. at 103-04 (emphasis added). The Employee Free Choice Act would 
destroy this bedrock principle of the National Labor Relations Act by 
mandating that, if the parties are not able to reach agreement on a 
first contract within a 120-day period, the terms of the contract will 
be set by an arbitration panel designated by the Federal Mediation and 
Conciliation Service. As with the abandonment of the secret ballot 
election, I believe this interest arbitration requirement is unwise 
public policy. With respect to employees, it would parlay the taking 
away of a vote on representation with the taking away of a vote on 
ratification. This is because the contract mandated by the interest 
arbitrator renders moot employee endorsement. Likewise, it is the 
employer that must run the business, remain competitive, and pay the 
employees each week.
    Newly certified unions often bear a heavy burden to make good on 
promises made to employees to gain recognition. In a card check 
situation, where there may have been little or no opportunity for the 
other side to be heard, expectations are likely to be even higher. But 
when these promises come up against reality at the bargaining table, it 
is often very difficult to reach agreement, especially where an 
employer is already offering competitive wages and benefits to its 
employees. When this reality is combined with a lack of any historic 
track record between the parties, especially where coupled with 
inexperienced negotiators at the bargaining table, reaching agreement 
on a package that satisfies the union's political needs while being 
economically realistic or even feasible for the employer can be 
extremely difficult and time consuming.
    In my career to date, I have negotiated in excess of 175 collective 
bargaining agreements. As the Director of the Federal Mediation and 
Conciliation Service, I personally mediated high profile bargaining 
disputes involving multiple contracts covering tens of thousands of 
employees. These negotiations are often difficult and first contract 
negotiations particularly so. The genius of this system, however, is 
that it produces agreements, not imposed solutions to difficult issues.
    These agreements are, as Justice Douglas wrote in the seminal 
Supreme Court case of United Steelworkers of America v. Warrior & Gulf 
Co., 363 U.S. 574 (1960):

          ``The collective bargaining agreement states the rights and 
        duties of the parties. It is more than a contract; it is a 
        generalized code to govern a myriad of cases which the 
        draftsmen cannot wholly anticipate . . . The collective 
        agreement covers the whole employment relationship. It calls 
        into being a new common law--the common law of a particular 
        industry or of a particular plant.'' (Id. at 578-579).

    No outside agency, whether arbitration, courts, or government 
entity has the skill, knowledge, or expertise to create a collective 
bargaining agreement. If it is not a creature of the parties' creation 
it likely will fail of its purpose. The negotiation of a collective 
bargaining agreement is the search for mutually resolving each side's 
interests. It must be done with trade-offs and separate prioritizing. 
Only the parties can do that. There are no standards for arbitrators to 
apply. There is no skill set for arbitrators to use. Solomon is simply 
unavailable.
    I spent 20 years of my practice in Florida where I represented many 
public employers in the negotiation of their collective bargaining 
agreements. That process, under State law, ended in non-binding 
interest arbitration. More often than not, the parties bargained simply 
to set the issues up for the arbitrator which resulted in days and 
weeks of hearings. The process led to hearings and imposed legislative 
body decisions--not agreements. Any process which ends with an imposed 
contract will perforce put the parties into their positioning and 
arbitrating shoes, not their bargaining shoes.

                               CONCLUSION

    This concludes my prepared oral testimony. I look forward to 
discussing my comments in more detail during the question and answer 
period, but before that, I would again like to thank the subcommittee 
for inviting me here today, and for its attention to these very 
important developments regarding labor law in the 21st century.

    The Chairman. Thank you very much and we will have quite a 
group of our Senators here so we will try and limit our time to 
5 minutes.
    Mr. Hurtgen, one of the criticisms of the labor laws that 
they allow employers to violate the law with almost no 
penalties. An employer breaks the law. Unless the worker is 
fired the employer typically just has to post a sign saying it 
won't continue to violate the law. Even when the worker is 
fired, the financial implications are small, far smaller than 
any other Federal employment law.
    The average back pay remedy for a violation of workers' 
rights in 2005 was $3,800. This back pay award is of 10 years 
in coming. Do you think the minimal penalty structure provides 
a real deterrent to unlawful conduct?
    Mr. Hurtgen. I do, Senator, and the answer there is that in 
the vast majority of cases, it does. If we focus on the 
relative minority of cases where it drags on and on and on and 
the income replacement to the employee comes at the end of too 
long a period of time, well then it is obvious that that's a 
shortcoming and if we could change and fix that, we should. But 
to add, as this bill does, to the litigation aspect of these 
issues is simply going to prolong it, sir. It isn't going to 
bring it to a more quick resolution.
    The Chairman. Well, I heard you on that. I was interested, 
particularly, in the penalties.
    Mr. Hohrein, comments have been made that a secret ballot 
is the only way to have a free ballot. What happened in your 
situation out there? Whether they had a secret ballot, was that 
a free ballot? Is that the equivalent?
    Mr. Hohrein. We had a secret ballot election and it didn't 
make any difference immediately. The company put pressure on 
the people that they believe supported the union. They not 
only----
    The Chairman. Well how can they tell if it's a real secret 
ballot? What you just heard from Peter is that your cards 
aren't good because people are going to know the end result. 
What we need is really a secret ballot and that is the way this 
country has proceeded in the past and I want to hear that you 
had a secret ballot--was it really a free ballot out there? 
What can you say or was it--did you feel that it wasn't such a 
free ballot?
    Mr. Hohrein. The company questioned everyone how they were 
going to vote. They took people in back rooms and browbeat 
them, threatened them with their jobs. They explained that they 
wanted to know how they voted and if the union got in, they 
were going to suffer. They were going to lose their job or they 
were going to shut down the plant or they would simply just 
replace everybody in the plant if that is what they had to do. 
They had absolutely no respect for this election. They 
intimidated people right up to and including the time of the 
election.
    The Chairman. Let me ask the Professor one additional 
question. What has happened over the period of the last 30 
years from the time when we had this strong union procedure to 
what we have now. What has altered or changed the circumstances 
that has brought us to the current situation?
    Ms. Estlund. Well employers do seem----
    The Chairman. If you can, answer in a minute or so because 
I have one final question.
    Ms. Estlund. Employers do seem much more anxious to avoid 
unionization and they have brought in and actually created a 
huge industry of anti-union consultants who have intensified 
and raised the level of sophistication of these anti-union 
campaigns. Millions, millions, millions of dollars are going 
into these anti-union consultants who guarantee victory. So on 
the question of penalties, one anti-union consultant told 
employees at a seminar what happens if you violate the law. The 
probability is that you will never get caught. If you do get 
caught, the worst thing that can happen to you is you get a 
second election and the employer wins 96 percent of second 
elections. So the odds are with you. That's the kind of 
deterrent that the law provides currently.
    The Chairman. And even if they have findings to go to the 
courts, the District Courts, and ruled against the NLRB in a 
number of these cases as well. Is that correct?
    Ms. Estlund. Yes, that is absolutely right.
    The Chairman. Let me ask you--there has been a number of 
companies that signed up, Professor--we have Cingular, the CEO 
for Cingular in 2002 signed up for this kind of a card, a 
reflection of members and they decided to go union and they 
have retained the industry leadership in a very competitive 
wireless communication field. CWA won. Kaiser Permanente has 
done something similar--after years of clashing--they decided 
to permit this process to move forward and have had remarkable 
success.
    I have the list of a variety of different companies that 
have done it. Perhaps you would just comment about what has 
happened in places where they have tried and where they have 
abided by the outcome of this. What has happened at some of the 
larger companies, medium companies, and small companies? Has it 
been in their economic interest? Have they had a greater kind 
of productivity? Have they shown they've been increasingly 
competitive? What can you tell us?
    Ms. Estlund. Well I think I'd have to rely on the company's 
own judgment as to whether it has been good for them. It 
appears to have been a very good process and that is what this 
law tries to do--it tries to get employers to accept the 
employees' right to join a union and the fact of collective 
bargaining as a fact of life. Once companies accept collective 
bargaining as a fact of life, they can sit down cooperatively 
and work out agreements and arrangements that work best for 
their particular workplace. That is the genius of collective 
bargaining.
    The Chairman. Thank you very much.
    Senator Isakson.
    Senator Isakson. Mr. Hohrein, in that example you were 
using, where the company was intimidating, I guess it was Front 
Range Energy, is that correct?
    Mr. Hohrein. Yes sir.
    Senator Isakson. Who won that election?
    Mr. Hohrein. The union won that election.
    Senator Isakson. I was thinking that my colleagues here--we 
go through this process every 2 years of electing our 
leadership. The Democrats do it and the Republicans do it. 
Senator Alexander was a candidate for the WHIP this year and I 
remember the day after the election, he said, I'm writing 27 
thank-you notes to 25 people because going into the election 
and talking to them one on one, he felt like he had 27 votes 
but when the secret ballot occurred and we all get to vote 
secretly, the election went the other way. I say that because--
--
    Senator Alexander. It was 24.
    Senator Isakson. Oh, it was 24, I'm sorry. I have been in 
races where the night before the election, the polls were 
telling me good news and the next day I got bad news. That's 
because people will respond differently when you ask them face 
to face or you can poll them on the telephone but they all have 
the insurance policy of the secret ballot, which they own.
    Mr. Hurtgen, you were an appointee of President Clinton?
    Mr. Hurtgen. That is correct.
    Senator Isakson. And you also served under President Bush? 
I think you made a statement--the law is what it is but there 
may be some things that do need to be overhauled. Do you have 
any suggestions on that?
    Mr. Hurtgen. Well, not in the moments that I have here, 
Senator. I think it probably needs a fundamental overhaul and 
that means that we shut down and look at what the workplace is 
really like today and what role unions can play and how they 
will play it and always keeping in mind that we have employee 
interests that need to be served but we have our competitive 
employers in a furiously competitive world that has to be 
served as well. So our system of labor and employment 
regulation and dispute resolution has to be brought into the 
21st century and one piece of that legislation or another isn't 
going to do it. I think it needs an overhaul, sir.
    Senator Isakson. In 2005, there were over 2,300 NLRB 
elections. In 19 of those elections, a re-vote was needed. 
That's 19 out of 2,300. That's .8 of 1 percent. Has that 
declined over the years since the passage of labor law or is 
that pretty indicative of what it has always been?
    Mr. Hurtgen. I can't give you an accurate answer to that 
question, Senator, but I can tell you from my own experience 
both as a practitioner as well as a member of the Board, the 
number of elections that have to be rerun has always been 
small. But I can't tell you how those percentages are changing 
over time.
    Senator Isakson. Dr. Estlund, you might be able to help 
with this particular question because I think and I may have 
heard it wrong so please, pause if I did. I think in answering 
one of Senator Kennedy's questions, you were referring to rerun 
elections overturning the first election, is that correct?
    Ms. Estlund. The standard, the worst that can happen in the 
case of illegality is that there has to be a rerun election and 
employers win 96 percent of the rerun.
    Senator Isakson. Of the reruns.
    Ms. Estlund. That was quoting anti-union consultants.
    Senator Isakson. Does NLRB act on its own violation or can 
any organized labor union who is petitioning for a vote and has 
a vote and loses, can they petition immediately to have a 
rerun, based on grounds of coercion?
    Ms. Estlund. Well, the problem, Senator, is that it takes 
off 10 years for these unfair labor practice charges and 
charges of tainted elections, to work their way through the 
process. So by the time the Board gets around to invalidating 
the first election, years have gone by and the organizing drive 
is just long gone. The turnover in the workplace, just the 
natural turnover in the workplace as well as the forced 
turnover--employers' efforts to rid the workplace of union 
supporters means that the organizing drive is just long dead 
and gone by the time that rerun election comes along.
    Senator Isakson. Thank you very much. Thank you, Mr. 
Chairman.
    The Chairman. Senator Clinton.

                      Statement of Senator Clinton

    Senator Clinton. Thank you very much, Mr. Chairman and 
thanks so much for holding this hearing about this important 
legislation. I really appreciate all the witnesses being here 
and I'm struck by the testimony--
    My goodness. Bring in a union electrician.
    [Laughter.]
    I'm struck by the testimony from both Dr. Mishel and 
Professor Estlund about the direct connection between the 
upward movement of American living standards and the creation 
of the American middle class and the successful effort to 
unionize our workforce starting in the 1930s and moving through 
the 1960s and now we can see a drop off and what Dr. Mishel 
appropriately calls Middle Class Squeeze, in part because 
workers----
    [Laughter]
    The Chairman. Do you want it turned off? Hold just a 
second. I don't know whether that's going to be the answer. 
Maybe if we're all very quiet, we can hear.
    Senator Allard. You can come over here on this side and 
we'll be happy to have you use one of our mics.
    [Laughter.]
    We're very generous that way.
    Senator Clinton [continuing]. And I really would like to 
emphasize a few points. Too often, we get into this conflict--
are we pro-union or pro-employer? What are we really--whose 
side are we on? And I think we're all on the American side and 
it seems to me that we had a real decline in the unionized 
workforce and a number of us are concerned about what that is 
doing to not just labor standards but living standards. So 
we're trying to figure out, what is the best way to get back to 
a level playing field with a balance of power that worked so 
successfully through much of the 20th century.
    Dr. Mishel, I'm struck by--in your written testimony, the 
section about your decades--the decades of research that has 
been done. A substantial effect unionization can have on 
performance and you pointed out that it seemed at first to be a 
mystery. How did unionized costs go, for example and keep 
successfully with nonunion Walmart, those Costco's labor costs 
are higher. And I think it is important to just reiterate those 
four basic findings that have been proven not just by personal 
observation but by decades of research as to why that seeming 
contradiction would, in fact, be understandable.
    Mr. Mishel. Thank you very much, Senator. First of all, the 
point that for the vast middle class to benefit from economic 
growth, to have a strong vibrant labor movement is essential to 
that, that point you first made. I would note that in the last 
year for which we have data, from 2004 to 2005, the bottom 90 
percent of the population did not receive any income growth. 
Only the upper 10 percent and the upper half of the upper 1 
percent received a 16 percent rate of growth. Some of that is 
because of great capital gains. They own wealth. They get 
income from that but those who are primarily wage earners have 
not seen growth for many years.
    Employers, on the other hand, are doing spectacularly well 
with their profits. Capital income is a share of total income 
being really the highest in many years. So yes, workers can get 
a union. Unions can help equalize wage income within the union 
sector and in the economy as a whole and they don't hurt 
productivity because workers with a voice don't quit. There is 
lower turnover. Workers with a voice help their employers be 
more productive. Unions that force higher wages have employers 
who tighten up on management, increase investment and improve 
technology and last, unionized employers use high performance 
workplace practices and get training and so the idea that 
somehow unions get work rules that make employers uncompetitive 
is just not true.
    Senator Clinton. And Professor Estlund, you have mentioned 
that available data indicates that far more workers claim 
coercion from employers during an election than claim coercion 
from their coworkers with card check. Again, I think there is 
this assumption that if your coworker just came up to you and 
said, You really want a union, don't you, so please sign this?, 
that that would be more intimidating than somebody saying, 
you're going to lose your job if you sign that. I mean, I think 
your job is a huge impediment to people feeling free to express 
their opinion. But, would you say that the data is consistent 
with what seems to be common sense that the employer holds a 
lot more sway than a coworker does?
    Ms. Estlund. Absolutely. In fact, maybe more surprisingly, 
the data suggests that workers feel much less pressure from the 
union than from the employer, even in a card check election, 
which the concern has been expressed that only the union is 
able to put pressure. That's just not true. The employer is in 
that process. This is not a secret process. The employer has 
the opportunity and has used the opportunity to exert pressure 
on employees as well as to give them information. So yeah, 
employees experience less pressure in card check than in 
election campaigns from any source but much less pressure from 
unions than from employers, even in card check.
    Senator Clinton. Is it your experience that the friend-to-
friend, worker-to-worker situation is less coercive than the 
employers' attempt to try to influence the outcome of an 
election?
    Mr. Hohrein. The employer is a potentate. They hold all of 
the control. I am the example of union coercion in the plant. I 
asked people a simple question. I said, if you had the 
opportunity, would you vote for a union and they either said 
yes or no and that was the extent of that coercive 
conversation.
    Senator Clinton. Well, Mr. Chairman, I think it's important 
to put this in a larger context and to look at the benefits to 
our economy by increasing the share of unionized workers in the 
private sector because we are moving around and it has been my 
experience. A lot of people on the front line and doing the 
work have a lot of wisdom about how this would work--because 
there is no real way to get that way first. So again, Mr. 
Chairman, thank you for the hearing.

                     Statement of Senator Alexander

    Senator Alexander. Thank you, Mr. Chairman. Mr. Hurtgen, 
these proposals seem to me to be really breathtaking in their 
scope in terms of changing labor law in this country. I mean, 
one gets rid of the secret ballot for union elections. Two 
seems to fundamentally get rid of free collective bargaining, 
at least that's my impression and Senator Isakson already 
reminded us of the experience that we have here in the Senate. 
We all have it in our everyday lives, in our clubs and when we 
elect people. Here, when we elect our leadership. Sometimes 
over a period of time that you can line up 27 votes and then on 
election day, when secret ballot comes, you end up with 24 and 
the objective--the objective is to really find out what a 
majority wants to do.
    It seems to me that the secret ballot is essential to that 
in a union election. So I wondered if you could say something 
more to me about the origins of the secret ballot in union 
elections, why it was thought to be fair. Common sense would 
say to me that it would be one of the last things we would want 
to throw out. But why was it put in in the first place?
    Mr. Hurtgen. Well, Senator, I haven't reviewed the debates 
from 1935 when the Wagner Act was originally introduced and 
passed, but I have seen quotes or statements from it that even 
then, discussion was had about maybe there needn't have to be a 
secret ballot election. It was indicated back then that the 
secret ballot was far preferable to any other way of 
determining employee choice. It has always been lawful for an 
employer to recognize a union based on cards signed but it has 
always been felt to be highly less desirable. The unions 
themselves, as recently as 1998, when I was a board member, 
there was a case before us, Levitz Furniture and the AFL/CIO, 
the United Auto Workers as well as United Food and Commercial 
Workers, in their brief to us at the board said, a 
representation election is a solemn occasion conducted under 
safeguards to voluntary choices. Other means of decisionmaking 
are not comparable to the privacy and independence of the 
voting booth and the secret ballot election systems provides 
the surest means of avoiding decisions, which are a result of 
group pressures and not individual decisions.
    In addition, less formal means of registering majority 
support are not sufficiently reliable indicia of employees' 
desires on the question of union representation to serve as a 
basis for requiring union recognition.
    Senator Alexander. But may I go on?
    Mr. Hurtgen. That's what the unions said.
    Senator Alexander. But may I go on to another question--I 
was trying to imagine the outcry if we suggested that in our 
Presidential election, for example, we said to the Democratic 
party and the Republican party, go out and spend the rest of 
the time between now and November 2008 getting people to sign 
cards about how they want to vote, what they want the result to 
be. We don't do that. We do as we do in union elections. We are 
very careful about making sure the ballot is secret and that 
they are counted carefully.
    I felt like you didn't have quite enough time although 
Senator Kennedy was generous with time to you, to say 
everything you want to say about binding arbitration. Again, 
that seems to me to be as breathtaking in its scope as the 
abolition of the secret ballot. Free collective bargaining in 
my idea has always been the idea that once a union is 
recognized by a majority vote, by secret ballot, then it 
becomes the exclusive bargaining agent and it's bargaining. 
It's not vocation by an outside party--this changes that.
    Mr. Hurtgen. Yeah, it does and it changes it fundamentally, 
Senator. To add to what I said previously, I think I would only 
say that the collective bargaining agreement is a complex set 
of trade-offs and prioritization by employers and by unions and 
the first time they do this, it is very difficult, 
understandably.
    There are two silent parties at that bargaining table 
besides the employer and the union involved. It's the 
employer's competitors and it's the other employers' union 
contracts that that union has secured in that industry and that 
business and it is critical to the employer in those 
negotiations that they not lose ground to their competitors and 
it's important to the union that it doesn't give up something 
that it has secured from other employers with whom it has a 
contract.
    So both sides have a motive to be particularly intransigent 
on some items. But the beauty of collective bargaining is that 
if it's done in good faith, it will produce an agreement and it 
will produce the tradeoffs and the prioritizations that are 
necessary and no outside entity, whether it is an arbitrator or 
a court or the Labor Board or any other entity, no outside 
entity can do that for the parties. They have to do it 
themselves. That's the nature of the bargain and if they do it 
in bad faith, the board will remedy that and order them to do 
it until they get it right. Now, that's unusual but it happens 
but the vast majority of collective bargaining negotiations in 
this country are done with difficulty but they get done.
    The Chairman. You're up, Jack--Senator Reed.
    Senator Reed. Thank you very much, Mr. Chairman.
    The Chairman. And you'd follow Senator Brown.
    Senator Reed. I'll be brief as well as short.
    [Laughter.]

                       Statement of Senator Reed

    I think it is important to underscore the point that 
Senator Kennedy made in his opening remarks--that the growing 
inequality of income and wages and of opportunities in this 
country has to be addressed and one of the contributing factors 
to that is the declining unionization and Chairman Bernanke 
made a speech in Omaha in February and he pointed out, whatever 
the precise mechanism through which lower rates of unionization 
affected the wage structure, the available research suggests 
that it can explain between 10 percent and 20 percent of the 
rise in wage inequality among men during the 1970s and 1980s 
and frankly, I think since the 80s, it has accelerated.
    So if we're really committed to equality of opportunity and 
more equal distribution of the success of our productive 
enterprises, I think we should be committed to allowing a 
better procedure for selection of representation and I think 
this act might offer that.
    Professor Estlund, one of the points that struck me when 
you made your statement is the fact that the notion of the 
secret ballot is really more fiction than reality because there 
is a deliberate attempt on behalf of many organizations to hire 
very sophisticated people and use techniques, legal techniques, 
to determine precisely how people will vote before they are 
going to vote, influence them in positive or otherwise ways to 
vote against unionization. This is very much unlike what is 
done in our ideal secret ballot where people are not 
individually persuaded. Is that a fair estimate?
    Ms. Estlund. Yes, imagine Senator if in your first run for 
election, the incumbent employed all the voters and got to 
spend 8 hours a day job owning them about why they should vote 
against you. It's not like anything that we normally associate 
with a secret ballot election. Job owning the worker, trying to 
find out how they're going to vote and inducing them to fear 
what is going to happen in general and that whatever the result 
of the election, your incumbent would stay in office. They are 
still around to bring about the terrible consequences that they 
predict will happen if the union is in place.
    So unfortunately, the secret ballot becomes a kind of 
trapping of democracy that--it's more of a parity of democracy. 
That's the only point in the process that the NLRB actually 
supervises, is the casting of ballots but given all that has 
often come before, it's not something we would recognize as 
democracy.
    Senator Reed. And you've made the point, too and I think 
Dr. Mishel also has that there is less apparent complaints in 
the card check process than there is in the ballots. Is that 
based upon data analysis? It's not just----
    Ms. Estlund. Yes, it's based on a 2005 survey that was 
looking at 2002 elections, both formal elections and card check 
procedures and what they found was less coercion overall in the 
card check process but less coercion from the union than from 
the employer, both in card check and in the election process.
    Senator Reed. Dr. Mishel, I just want to ask a question. If 
more reliance is going to placed on the card check, are there 
things that should be done to make that a fairer system? I 
mean, after all, I think we'd like to feel that any system we 
employ gives a fair chance, not only to members seeking 
representation by unions but also the management to make their 
case.
    Mr. Mishel. Research has shown there's never been a wider 
gap between employee desire for union representation and their 
ability to get representation right now. It's hard to think of 
a more broken system. But I'm actually quite enlivened by the 
discussion here today, the commitment to free collective 
bargaining by fellow panelists and some of the senators. I 
would suggest that there are 30 percent of workers in this 
country that are denied free collective bargaining in the 
public sector. We must forthwith legislate that there be 
collective bargaining for all public employees and that all 
public employees subject to not allowing free collective 
bargaining and the right of strike that are subject to 
arbitration, such as in Florida, or Wisconsin where I went to 
grad school or New York State where I was a Professor at 
Cornell. We need to abolish these forthwith. Thank you.
    The Chairman. Thank you very much.
    Senator Roberts.
    He's inviting your employees to organize.

                      Statement of Senator Roberts

    Senator Roberts. Senator, did you have to mention the final 
four when you started out? Was that something that you had to 
mention?
    The Chairman. I hoped we had gotten one by you but----
    Senator Roberts. But we're going to unionize the University 
of Kansas basketball team by a not-so-secret ballot to see if 
we can't get something done.
    [Laughter.]
    We have a Tyson's plan out in Holcomb, Kansas. We have 
about 35,000 people in a very large operation, who aren't 
unionized and at this particular plant, they pay the highest 
wages and the benefits of any plant of the 300 that they have. 
This is a very big operation. And they put this method to the 
test after some union organizers and I don't mean to use that 
as a majority by any means but it was largely a steelworker's 
rep who came out to Holcomb, Kansas after finding it, from 
Kansas City and they submitted enough signed cards to the NLRB. 
This was the second time around, once in 2000 and then now and 
it was only 30 percent because of the nature of the complaint 
and requested a secret ballot vote.
    The workers overwhelmingly rejected the effort to unionize 
at the plant by a 3 to 1 vote, 2,466 workers, 1,610 voted in a 
private way to reject the unionization.
    I think it is clear from these results that the employees 
who had initially signed cards in front of the union organizers 
and their persuasion, changed their minds once in the privacy 
of an election booth. Now I wasn't present there. I don't know 
about the pressures that were brought to bear by the so-called 
professional people there at Tyson's, et cetera, et cetera.
    But if the Employee Free Choice Act was in place, 1,610 
employees would be represented by a union against their wishes. 
That was more than the first time around, when about 80 percent 
in 2000 voted the same way. So I guess my question would be to 
Ms. Estlund, if this legislation were enacted, would there be a 
way that an employee could request that their card not be 
counted if they change their mind?
    Ms. Estlund. Absolutely. The law would provide that the 
NLRB has to pass on the validity of the cards before they can 
change the status quo. So one thing to point out----
    Senator Roberts. If an employee wanted to change their card 
after being presented the card by their peer group, which of 
course, is a pretty powerful instance, could the employee, 
without any NLRB or meetings, could they change that?
    Ms. Estlund. Before the process is finished, yes. They can 
change their mind during that process. One interesting thing to 
note is that there is a way in which card check is a better 
protection of the minority than the election and that is 
because you have to get over 50 percent of the entire 
bargaining unit, not just 50 percent of those people who show 
up at the voting booth and as you all know, voter turnout makes 
a difference.
    We have to keep in mind that first of all, this law will 
not abolish secret ballot elections. They will take place under 
a variety of circumstances. We also should keep in mind that 
there is nothing either inherently suspect or dramatically new 
about reliance on cards. Until 1947, employers did not have the 
right to reject majority signup and to refuse to recognize a 
union that presented a majority of cards and even now----
    Senator Roberts. The only point that I would make and my 
time is expiring and I apologize for interrupting. I have to 
lower taxes for Massachusetts and the Finance Committee here in 
about 5 minutes. So at any rate, you have a situation where 
we're 50 percent--actually it wasn't, it was 30 percent but 
because of the nature of the complaints, why the NLRB said 
okay, let's go ahead and have this but you have for 50 percent 
in one case and 30 percent on a card check in another place and 
then 80 percent votes going the other way. I can't imagine any 
kind of arm-twisting that would have produced that and were 
this the case, I think that the democratic process that we all 
want to see would have been subjected to something that 
shouldn't have happened. I thank you very much and I apologize 
for interrupting.
    [The prepared statement of Senator Roberts follows.]

                 Prepared Statement of Senator Roberts

    Thank you Chairman Kennedy and Senator Isakson for calling 
this hearing. Thank you also to the witnesses for taking time 
from your busy schedules to provide your insight regarding the 
National Labor Relations Board.
    I want to start by affirming that I support worker's 
rights. The 1935 National Labor Relations Act (NLRA) created a 
set of rules to protect employees in the workplace. During that 
time, card-check was used as the sole source to form a union. 
In the next 10 years that followed, it became clear this system 
was flawed. Union organizers were becoming notorious for 
intimidating workers to sign cards. Workers demanded a change, 
and in 1947, the NLRA was amended to include secret ballot 
elections.
    The Employee Free Choice Act as passed by the House would 
undo this fix, and allow us to return to the failed policy of 
card-check unionization. I am deeply concerned with this 
legislation. I believe the secret-ballot is essential in 
protecting employees from intimidation from both employers and 
unions. In fact, NLRB reports that only about 1 percent of 
secret-ballots have been re-run due to allegations of 
misconduct. Put simply, the secret ballot works.
    The folks at the Tyson's plant in Holcomb, Kansas recently 
put this method to the test. After union organizers were 
successful in submitting enough signed cards to the NLRB, they 
requested a secret ballot vote. Workers overwhelmingly rejected 
the effort to unionize at the plant by a 3 to 1 vote. Out of 
2,466 workers, 1,610 voted in a democratic and private way to 
reject unionization. It is clear that from these results, 
employees who had initially signed cards in front of union 
organizers, changed their minds once in the privacy of an 
election booth. If the Employee Free Choice Act was in place, 
1,610 employees would be represented by a union against their 
wishes.
    The card check portion of the bill is not the only 
troubling part of the Employee Free Choice Act. Additionally, 
the bill demands government arbitration if a contract is not 
successfully negotiated in a certain amount of time. 
Consequently, instead of the employers and unions working 
together to reach an agreement, government arbitrators with 
limited knowledge of the company or the employees, will be 
making binding contract decisions.
    After reading through the bill in its entirety, it appears 
as though the Employee Free Choice Act is grossly mistitled. 
The legislation actually strips workers of their fundamental 
right to vote in secret. While claiming to be a benefit to 
workers, it seems as though the only benefits gained are 
enjoyed by union leadership.
    Now I would like to ask a few questions to the witnesses:
    Mr. Hurtgen: From your experience at the NLRB, do you think 
we could see a repeat of what happened in the 1930's with union 
intimidation if this bill were to succeed?
    Mr. Mishel: In your testimony, you talk about democracy, 
and how unions have restored democracy and allowed weak and 
vulnerable groups to be heard. If the Employee Free Choice Act 
were enacted, that plant I talked about in Holcomb Kansas would 
be unionized right now despite the fact that only 25 percent of 
workers actually want it. How is this a democratic process?
    Ms. Estlund: If this legislation were enacted, how could an 
employee request that their card not be counted if they changed 
their mind?
    Mr. Hurtgen: Why do you think unions have experienced a 
drop in membership over the years? Do you think it is because 
of the secret-ballot election?
    The Chairman. Senator Brown.

                       Statement of Senator Brown

    Senator Brown. Thank you, Chairman Kennedy. I want to 
expand on the Chairman's charts on the shrinking middle class 
and what's happened in the postwar years, especially what has 
happened in the last 30 years to declining wages and increasing 
productivity. I want to illustrate with a story about--a few 
years ago, on my own expense, flew to McCallum, Texas and with 
a couple of friends, rented a car and went across the border to 
Reinosa, Mexico and I visited an auto plant that looked just 
like an auto plant in Lorraine, Ohio or anywhere else in our 
country except it was newer and probably had even more updated 
technology. The floors were clean, the workers were working 
hard, the technology was new. There was one difference between 
the American auto plant and the Mexican auto plant and that is, 
the Mexican auto plant didn't have a parking lot because the 
workers don't make enough to buy the cars they make and you can 
go to a Nike plant in China and the workers don't make enough 
to buy the shoes they make or you can go to a Disney plant in 
Costa Rica and the workers don't make enough to buy the toys 
for the kids that they make or to a Motorola plant in Malaysia 
and the workers don't make--one after another and that's there, 
this is here. That's a place where they don't have free trade 
unions.
    This country, as Senator Kennedy's chart earlier, showed 
that what our history was, was that productivity--as workers' 
productivity went up, wages typically went up with workers' 
productivity. The lines were generally historically pretty 
parallel. If workers are making more money for their bosses, 
then they make more money. They share in the wealth they 
created and we have seen in the last few years in this country, 
productive workers are not sharing in the wealth they create to 
the degree that they used to and that's why the middle class or 
fundamentally, that's why the middle class has shrunk.
    Unionization is not the whole answer, to be sure but we 
surely can trace, as Senator Kennedy did, the declining rates 
of unionization with a declining connection between 
productivity and wages. So I would like Professor Estlund--you 
had talked about the highly paid consultants coming in and 
getting better and better and more and more sophisticated, more 
and more refined in their techniques. You didn't give us much 
detail. Would you sort of run through--take 2 or 3 minutes if 
you would and run through what exactly these consultants, these 
law firms, these firms that specialize in union activity for 
management side, what they do.
    Ms. Estlund. Well, first of all, something over 80 percent 
of employers hire anti-union consultants so we shouldn't think 
this is an isolated or unusual phenomenon and I wouldn't want 
to suggest that all anti-union consultants or all consultants 
in this situation act identically but there is a very, very 
strong pattern of encouraging and guiding employers step-by-
step through a really relentless process of first of all 
finding out who supports the union. People suggest having 
multiple meetings per day with employees that they fear are 
supporting the union.
    So when we ask, what kind of arm-twisting would it take, 
well, these consultants have it down to an art. They guarantee 
victory and they tell employers exactly what kind of arm 
twisting----
    Senator Brown. They literally say, we don't get paid unless 
we win, in some cases?
    Ms. Estlund. Yes, right, exactly. They give sort of a 
money-back guarantee that you will win this election because 
we'll show you how to do it. We've done this. We've got time-
tested techniques and it's relentless pressure on the workers 
and some of it is legal; some of it is illegal. But it's quite 
possible to create an egregiously hostile environment. Under 
any discrimination statute, we would call it the worst kind of 
hostile environment, actionable with damages. Here, it's 
considered to be management's prerogative.
    Senator Brown. What is legal that they do in addition, in 
these meetings? What can they legally do?
    Ms. Estlund. Well, first of all, the fact that they can 
compel employees to come to these meetings on pain of discharge 
and they can basically tell them they can't--the pro-union 
employees in these group meetings, as Errol reported, are not 
allowed to speak. So they can have these captive audience 
meetings, both in groups of workers and one on one with the 
employees' own supervisors, hammering away on why a union would 
be bad, not just why you're going to get fired for supporting a 
union but why you and your coworkers will be living in a 
hellish environment if the union gets in--nothing but conflict, 
violence, strikes--we won't give an inch. A great deal of that 
is entirely lawful. It's considered to be management's 
prerogative in running its business. We don't see things that 
way under any other discrimination law.
    Senator Brown. Thank you. Thank you, Mr. Chairman.
    The Chairman. Senator Coburn.

                      Statement of Senator Coburn

    Senator Coburn. I just want to respond, having had three 
elections of the Teamsters in plants that I ran. Your testimony 
is entirely erroneous. There are very specific rules under 
which employers have to follow. You cannot threaten to fire. 
You cannot threaten to close a plant. You cannot threaten to 
demote. If you do, that complaint can be--and every time that's 
happened and that gets adjudicated, the employer loses. So 
let's be fair about what employers can and can't do. There is a 
very strict bar set of what employers can and cannot do.
    Senator Kennedy, would you please list--put that chart of 
yours back up on productivity and wage growth? Because I think 
it's very important. One thing we haven't talked about--how do 
we explain this? How do we explain what is happening? I'm going 
to offer an explanation. It's called 12 million illegal aliens, 
is one of the reasons that we haven't seen the wage rise in 
this country because you have 12 million people competing for 
jobs that otherwise wouldn't be here, which would raise the 
demand for workforce, which would markedly increase salaries in 
the lower/middle income. That's one of the reasons why we have 
to address the immigration problem that's in front of us.
    I want to also follow on a little bit of a line. If the 
State of Oklahoma allows initiative petitions and we have a 
requirement that you have to have so many hundred thousand 
signatures and if you do that, then you can have a ballot 
initiative. If we were to correlate that with what we're 
proposing in the Employee Free Choice Act, what it would say is 
a vast minority of the people of Oklahoma could change the law 
without it ever going to a ballot because we could say you 
could have an Employer Free Choice Act in the State on an 
initiative ballot. The legislature would never have to put it 
on the ballot. The people would never have to vote and whoever 
could come up with an initiative, we'd take away the right to 
vote.
    I also want to go back and ask this question. Of the firms 
that have now agreed to card check, none of those firms that 
I'm aware of agreed to binding arbitration at 120 days, did 
they?
    Ms. Estlund. I don't know what they did but these are firms 
that apparently are willing, if the workers accept--want to 
have a union, they are willing to sit down. That's not the 
problem.
    Senator Coburn. I understand but that is their choice to do 
that and they can do that today without any change in the law. 
As a matter of fact, they're doing it today without any change 
in the law. But none of those firms who agreed to do that, 
agreed to have binding arbitration within 120 days. And that's 
a very big difference. If you told those firms, you're going to 
an Employee Free Choice Act and you can agree to do that but if 
you do that, you have to have binding arbitration. If you can't 
negotiate the labor agreement with your employees, then in 120 
days, we're going to find one for you.
    Mr. Mishel. Senator, there is an old saying that the 
majesty of the law prohibits both beggars and rich people from 
sleeping under bridges and the fact is that the workers who 
need the binding arbitration of first contracts are not 
necessarily the ones where the employers now will permit 
majority signup. So you're basically----
    Senator Coburn. I understand but the point is----
    Mr. Mishel. The point is, the people who need the arbitra- 
tion----
    Senator Coburn. The point that was made is we held up an 
example of firms that are doing that today and yes, they are. 
They have the right to do that today. But they did it not under 
the coercive nature of knowing that in 120 days, somebody is 
going to write a contract for them. Somebody outside of their 
best interest and their employees' best interests, maybe. We 
don't know.
    Finally, when it comes to job owning, the experience that I 
had in three episodes of organizing attempts is we erred on the 
side to be sure that we didn't and quite frankly, the NLRB 
rules are very pro-union when it comes to what you can say and 
what you can't. And I'll give you some specific examples. Three 
hundred and fifty employees in Petersburg, Virginia--the union 
told them they'd get an immediate $3.00 an hour raise if they 
voted in the union. I couldn't comment on it under the laws of 
the NLRB. I couldn't comment whether you would or you wouldn't. 
I could make no comment under the law about that claim. Now, 
you tell me if that's a fair set of rules.
    I don't doubt your testimony, Professor, that they violate 
that. I'm not doubting that. I'm sure that happens a lot. But 
the idea that job owning is a threat to organizing is something 
that hasn't changed in years. It's whether or not we enforce it 
and maybe the problem is that we need heavier enforcement from 
the NLRB on the processes.
    The final point I would make is one of the reasons I think 
that we haven't seen the amount of unionization that many in 
this Congress would like to see is because basically, the 
unions don't offer what they used to offer. One reason is, many 
of the things that unions offer, we've now put into law. There 
are Federal statutes that require segment after segment after 
segment after segment of things that used to be negotiable are 
no longer negotiable because they are Federal law. So I would 
think our best efforts would be more likely successful if we 
spent time improving the value that the union offers to the 
employee rather than changing the voting.
    Mr. Chairman, I'd like to enter in a response from the 
Congressional Research Service about secret ballots that we 
requested and also an opening statement, if I could.
    The Chairman. Good. It will be so included.
    [The prepared statement of Senator Coburn follows:]

    [The Congressional Research Service response can be found in 
additional material.]

                  Prepared Statement of Senator Coburn

    Chairman Kennedy, thank you for holding this hearing. This 
is an extremely important issue for our economy and I'm glad we 
will be studying this bill closely before acting on it.
    The testimony is puzzling because the positions are so 
opposite. Usually in testimony you can find some common ground 
or some place to begin, but not so with this issue. You have 
witnesses telling us that the situation is as different as 
night and day which should cause us to really scrutinize this 
bill.
    The other thing that doesn't make sense is why this 
legislation is needed. The data from the National Labor 
Relations Board shows that when union elections occur, unions 
are winning nearly 60 percent of the elections. That seems like 
a pretty good win ratio. I'm not sure if the aim of this 
legislation is to increase that win percentage to 75 percent or 
90 percent or what but what the NLRB data shows is that 60 
percent is as high as it has been historically over the past 
few decades.
    The general voting public does not seem to support this 
legislation. A 2007 survey found that 87 percent of voters 
agree that workers should continue to have access to a secret 
ballot election. Eighty-nine percent say that a worker's vote 
on whether to organize a union should be kept secret and the 
same amount believes the secret ballot is a better process than 
card check. In addition to that, a Zogby poll shows that 56 
percent of all non-union workers would oppose bringing a union 
to their workplace. The same Zogby poll shows that more than 70 
percent of workers are content with their job and 64 percent 
say they have opportunities to advance with their present 
employer.
    The survey indicators suggest that this bill may just be a 
political payoff to special interest groups because it doesn't 
look like the unions need help winning the elections or that 
workers see a great need for unionization. There's been a lot 
of talk up here about doing things that are just for political 
purposes so I hope we won't rush this and we will take our time 
to really scrutinize the substance of this bill.
    The Chairman. Just as a comment on my chart, I thought we 
had about 135 million people in the labor market, if we're 
going to address the immigration but if there are 3 or 4 
million that are undocumented that are working, I'll be 
surprised. Out of a 135 million, to explain that chart because 
it's undocumented, I find that's a stretch but the Senator--we 
may differ on that.
    Senator Coburn. Well, it's called the in-elastic supply 
demand curve associated with either an excess or a decrease of 
workers.
    The Chairman. I'm familiar with that. I still don't see how 
that applies to that particular chart. I think we both have 
expressed ourselves and we have Senator Obama.

                       Statement of Senator Obama

    Senator Obama. Thank you, Mr. Chairman. Thank you to the 
panelists. It's been a very informative conversation and I 
appreciate the testimony that was provided. This may have 
already been mentioned prior to my arrival but I just want to 
make sure that we highlight this point.
    Under current law, employers are not only allowed to but 
required to withdraw recognition from an existing union if the 
employer knows, on the basis of valid cards or other evidence, 
that a majority of employees does not support a union. I'm just 
reading off your testimony. Current law thus allows employers 
to rely on valid authorization cards in lieu of an election to 
displace an incumbent union and if the employer chooses to 
recognize a new union.
    So I just want to be clear on this, that the way the law is 
currently structured, if an employer decides, you know what? We 
want to go without a secret ballot and collect a bunch of cards 
showing that in fact we want to de-certify, that's permissible, 
am I right?
    Ms. Estlund. Yes, that's right. I think if you step back 
and look at the way the law regards authorization cards, it 
looks like the assumption behind the law is that we just have 
to be a whole lot more careful about letting employees get a 
union than we have to be about denying them a union.
    Senator Obama. Right. OK, just another aspect in your 
testimony, Professor, that I want to highlight. The HR Policy 
Association, an opponent of card check recognition, identified 
113 cases in the 70-plus year history of the act that they 
claimed involved coercion, fraud or misrepresentation in 
securing union authorization cards. Is that accurate?
    Ms. Estlund. That's my understanding and fewer than half of 
those actually, upon closer scrutiny, seemed to actually 
involve union coercion. It's obviously a drop in the bucket 
compared to the history of employer coercion.
    Senator Obama. OK. One of the difficulties of this kind of 
hearing is that the facts often don't get in the way of 
ideology and we have a situation here where some people feel 
very strongly that unions aren't the important contribution to 
the economy or an impediment in economic growth and there are 
those of us like myself who think that that chart that Senator 
Kennedy put up describes in vivid illustration the fact that as 
workers have gotten less bargaining power, they are less able 
to extract a fair share of the enormous gains in productivity 
and wealth creation that this country has enjoyed.
    So I do want to give any of you a chance to address what 
seems to be a discrepancy. It may just be that Senator Coburn, 
when he was running that plant, was following the rules to the 
letter and that's not the typical experience. But does anybody 
want to talk to his point that in fact, the problem here may 
just be simply one of enforcing the existing rules as opposed 
to a need to change the rules?
    Mr. Hurtgen. Senator, I thank you for the opportunity to 
elaborate. I think what Senator Coburn said is exactly correct. 
The vast majority of employers take seriously the current law 
concerning what they can and cannot say during these campaigns 
and they stay within the limits of the law. Now, Professor 
Estlund disagrees with some of the legal statements employers 
can make and that is, of course, a debate that reasonable 
people can have. But Senator Coburn's experience mirrors my 
experience of over 40 years. Employers don't set out to violate 
the act.
    Senator Obama. Mr. Hurtgen, let me just stop you there 
because I want to make sure that I pinpoint the issue that 
you're raising here. What you're arguing is that the employers 
are abiding by the letter of the law. Is that your basic 
argument?
    Mr. Hurtgen. That's correct.
    Senator Obama. So if that is the case and yet despite the 
majority of employers observing the letter of the law, it turns 
out that we still have an overwhelming number of workers who 
would like to join unions finding themselves unable to do so, 
then it would suggest to me that we need to change the law to 
make it a little easier for them.
    Mr. Hurtgen. You put the rabbit in the hat, Senator, when 
you say the overwhelming majority of employees want to join a 
union. The issue is how do you decide that?
    Senator Obama. Are you disputing then or do you think that 
the statistics that have been presented in terms of the number 
of workers who, when polled, say that they would like to join a 
union versus the number of workers who are actually in a 
union--do you think those numbers are being doctored? Or do you 
think----
    Mr. Hurtgen. I don't attribute any inappropriate conduct by 
the takers of those polls but they are difficult to interpret 
and I can't extract macro poll numbers and say therefore the 
employees of this particular bargaining unit in this employer's 
workplace, in this city or county or town, should have a union. 
That's for them to decide. That's my whole point. They should 
have a secret ballot to make that decision and if you're right 
and the others are right, that the overwhelming number of 
people who are given that opportunity would see it your way, 
then they'll vote yes.
    Senator Obama. So you don't think there are any structural 
barriers at all for workers to join a union at this time?
    Mr. Hurtgen. I don't think the National Labor Relations Act 
as such, provides structural barriers, no sir, I don't.
    Senator Obama. Mr. Hohrein.
    Mr. Hohrein. The company I work for, Senator, had no 
respect for their people, had no respect for the law. They 
violated the law constantly. Their attorney that was the labor 
buster actually told them not to allow even the discussion of 
union in the workplace, even though that's legal. They simply 
violated my rights and the rights of those people in that plant 
to have a legitimate union campaign and I would really like to 
emphasize that unless something happens in this country pretty 
soon, we're going to see some dire straits for working people 
and I really appreciate the opportunity to let you know that.
    Senator Obama. Mr. Chairman, I know I'm out of time but I 
just want to make one last point, if the committee will bear 
me. Mr. Hurtgen, I guess one last point I'm just curious about 
in your view, when you've worked with the National Labor 
Relations Board. Is it fair to say that if you are a worker 
trying to start a union drive and you get fired, even if it is 
illegally, that you getting recourse through the legal process 
is difficult and that if you are somebody who is earning maybe 
$30,000 a year, you might be going 6 months without a paycheck, 
a year without a paycheck, 2 years without a paycheck. Is that 
under existing law? Is that a fair characterization?
    Mr. Hurtgen. It is possible, Senator but I counsel that in 
the vast majority of such cases, if that employee--himself, 
herself or through some representative, gets to the Regional 
Office of the National Labor Relations Board, that Office of 
the Board will jump right on it and do the best they can for 
the employee.
    Senator Obama. How long do you think it would typically 
take?
    Mr. Hurtgen. Ninety-some percent of the cases get settled 
at that level in weeks. Now some don't. Some last 6 months, 
some last longer and you are correct. In those few cases, an 
employee can wait too long to be reimbursed. I understand that. 
I accept that.
    Senator Obama. Mr. Chairman, thanks.
    The Chairman. As was pointed out, Senator, we have 31,000 
cases settled this year so it's not a small amount.
    Senator Allard.

                      Statement of Senator Allard

    Senator Allard. Mr. Chairman, thank you and I want to join 
you in welcoming our Colorado--Greeley residents, Errol 
Hohrein, here to the panel. It's good to see you and I know 
it's not always easy to come all the way to Washington to get 
your point of view across and I'm glad you made that effort to 
be here.
    In Colorado, we had a rather contentious bill go before the 
Democratic Governor recently and he vetoed a State effort to 
pass a very similar piece of legislation that we have before us 
in this committee right now. In my view, the governor, Governor 
Ritter's efforts protected 92 percent of Colorado workers who 
aren't members of unions and now, union leaders are--well, let 
me go--before I go, let me make this point. I support what 
everybody said about the value of a secret ballot. I think it 
protects the employee or the worker from coercion from both 
sides, from coercion from the employer or even coercion from 
maybe his fellow workers who may feel very strongly about 
unionizing--he may not share those views.
    So, now what's happened with the veto by the Governor of 
this particular piece of legislation in Colorado, union leaders 
are threatening to move the Democratic Convention from Denver 
if they don't get their way and the question that comes up, 
well, couldn't such actions be cited as one act of union 
coercion on State lawmakers? And another question, I think, 
that comes up, if such unions make such able threats to State 
governments, what keeps them from making coercive action upon 
workers who choose not to join the labor organization? Anybody 
want to answer that? Maybe Dr. Mishel, maybe you'd like to 
respond to that.
    Mr. Mishel. Can you say that again? What was the coercion 
that the unions were doing?
    Senator Allard. Union labor leaders are threatening to move 
the Democratic Convention from Denver if they don't get their 
way. That is, they're upset because Governor Ritter vetoed a 
very similar piece of legislation that is before this 
committee.
    Mr. Mishel. So you think it is inappropriate for anyone to 
apply their economic power in pursuit of----
    Senator Allard. Is that coercive? Is that coercive action?
    Mr. Mishel. I don't know. Is an employer lock out coercive? 
Is an employee strike coercive?
    Senator Allard. Yes, but it's affecting public policies, a 
public policy that has been for the people of Colorado, have 
voted in this Governor Ritter and he--this was a promise that 
he made during the campaign and now people are upset because 
the majority of people in Colorado maybe have a different view 
than 92 percent of the workers who don't belong to a union.
    Mr. Mishel. Well, it's my understanding that the Governor 
promised to sign that piece of legislation before he was 
elected when he sought the support of the unions involved. I 
would just say that there is a law in our land that says you 
help your friends and punish your enemies and I think most 
people pursue that and I don't see the problem. I also don't 
understand why everybody seems to think that if you have a 
secret ballot election at the end of a process, no matter what 
else the process, it must therefore, act as a sufficient factor 
to be called free and fair. Our State Department calls all 
sorts of elections around the world not free and fair.
    Senator Allard. Mr. Chairman, can I reclaim my time, 
please? And I'm sorry we have to do that but I do have limited 
time and I need to get moving. But I do happen to feel that a 
fundamental right is to have a secret ballot and I would hope 
that we would not take that away, no matter what the 
circumstances, whether it is a local community election or a 
homeowners association or whether it's unionization or whatever 
because I think the rights of the individual are more protected 
in that environment than any other environment and I recognize 
the fact that there might be extenuating circumstances beyond 
that, that could affect that vote and I'm not sure how we 
control those. But I do get concerned when that type of action 
is taken, when lawmakers in the State of Colorado had decided 
to pursue a different route.
    The other question I wanted to ask, Mr. Chairman, is that 
if we look back historically on the last few years, our economy 
has done well. In fact, wages have gone up and some sources 
even said that wages have gone up a little bit more than 
actually the cost of living has been. Now if wages are such a 
good deal--I mean, if being in a union is such a good deal, why 
is union membership declining?
    Ms. Estlund. One thing to realize is that the natural 
process of creative destruction in the economy means that 
unions have to organize hundreds of thousands of workers every 
year just to maintain parity. When we look at what happens 
when----
    Senator Allard. You mean, the growth--the workforce is 
growing so rapidly?
    Ms. Estlund. Well, it's a combination of firms--unionized 
firms going out of business and of course, every new firm that 
starts up starts out nonunion. A firm never turns union until a 
majority of people have made their voice clear through a 
process that the law recognizes. So that means that unions are 
constantly falling behind unless they are organizing. So that's 
part of the problem but when we see what has happened to people 
who do try to organize a union and the employer making it as 
clear as possible that they will still be there to make sure 
that the union can't get them anything, that terrible things 
will happen, that's certainly part of the explanation for why 
unions have not been able to keep up. It's not the entire 
explanation.
    Senator Allard. Mr. Chairman, thank you. I see my time has 
expired.
    The Chairman. Thank you.
    Senator Sanders.

                      Statement of Senator Sanders

    Senator Sanders. Thank you. This is an important hearing 
and it's a discussion that we should be having far more often 
because the reality of American society today is that despite 
an increase in worker productivity, huge increases in 
technology, the middle class is shrinking.
    There are millions of workers today who are working longer 
hours for lower wages than was the case 20 years ago. Poverty 
is increasing. In the last 5 years, five million more Americans 
slipped into poverty and what we don't talk about as often as 
we could--Professor Mishel raised that issue, is the growing 
gap between the rich and the poor and the fact that the United 
States has, by far, the most unequal distribution of wealth and 
income of any major country on earth.
    Now, why is that? Well, a lot of reasons why but one reason 
is that we have people here in Washington who have fought 
vigorously against raising the minimum wage and are still 
fighting against that today, despite an obscene minimum wage of 
$5.15 an hour. Another reason is our disastrous trade policies, 
which have allowed corporate America to throw American workers 
out on the street, go to China and hire people there at 30 
cents an hour and intimidate workers, that if they stand up for 
their rights in any way, that plant is going to shut down, move 
to China, move to Mexico and the last aspect I think is 
precisely what we're talking about today. That is, the attack 
on workers rights and the attack on the ability of workers to 
form unions. You know, this is a beautiful hall right here in 
Washington, DC. This is not reality. This is not the back room 
of a factory with some guy who is working 40 or 50 hours a 
week, is brought into a room and to say, listen, if you stand 
up for that union, you're going to lose your job. Oh, I know 
that it's illegal but that illegal activity is taking place 
every day all over this country and has for many, many years. 
And if some worker--after years of effort--goes to the National 
Labor Relations Board and makes his claim, having not had a 
paycheck, what happens to that worker? There is a slap on the 
wrist and the employer understands that and will continue that 
process.
    I'm very glad this legislation is before us now. In 1992, 
soon after I became a Member of the Congress and the House of 
Representatives, I introduced that legislation. I would like to 
ask Professor Estlund, is this concept a new concept or do 
other countries, allies of ours, other industrialized countries 
like Great Britain, Canada, have similar approaches?
    Ms. Estlund. Yes, there is quite a lot of experience with 
majority sign up in Canada and the best I can ascertain talking 
to people who are very knowledgeable about the process is 
nobody seems to be aware of any problem or any significant 
problem of union coercion in sign up and it's not surprising 
because the union just doesn't have the leverage over employees 
that the employer does and in this--this bill has an extra 
layer of protection that the Board has to pass on the validity 
of the cards. So a majority signup is first of all, already 
valid for things like getting rid of an incumbent union. It's 
already good enough if the employer chooses to recognize----
    Senator Sanders. But this approach has also been used in 
other countries, am I correct?
    Ms. Estlund. Yes, it has.
    Senator Sanders. All right, let me ask you this, Professor 
or anyone else can jump in. Union workers form a union. They 
negotiate. They sit down and try to negotiate a first contract. 
How often is the case where an employer says, in so many words, 
well, we're going to talk and we're going to talk and we're 
going to talk and we're going to talk. And you know what? You 
are never going to get that first contract. Is that uncommon?
    Ms. Estlund. I'm really glad you asked that because the 
problem that the first contract arbitration responds to is 
really a terrible one. The idea of first contract arbitration 
is really to get the parties to take seriously the obligation 
to bargain because as things stand now, employers can do 
exactly what you suggest. They can stall. All they need to do 
is get to impasse. The region impasse--they can implement their 
proposal. All the workers can do is threaten to strike and that 
may be exactly what the employer wants because at that point, 
the workers can be permanently replaced.
    Senator Sanders. And this is not uncommon. I know of one 
instance in the State of Vermont where this process has gone on 
and the workers became demoralized.
    Ms. Estlund. Absolutely. And in fact, the anti-union 
consultants include, in the event that you lose an election, 
will make sure that you don't ever get stuck with a contract. 
We'll walk you through the process of avoiding a contract.
    Senator Sanders. So you can go through dragging out the 
contract and then working on a re-certification.
    Ms. Estlund. And at the end of the day, a refusal to 
bargain in good faith results in an order to go bargain some 
more.
    Senator Sanders. Right. Mr. Chairman, let me just conclude 
by saying that this is an excellent panel and I thank all the 
panelists for being here. Workers in our country are being 
beaten over the head. A gap between the rich and the poor is 
getting wider. Employers are getting away with murder and 
frankly, the time is long overdue for this Congress to start to 
stand up for the working people of this country and if our 
friends on the other side want to filibuster this bill, let 
them. But I think the time is now to pass action that to make 
it easier for workers to form unions so they can earn a living 
wage. Thank you, Mr. Chairman.
    The Chairman. Thank you very much.
    Senator Hatch.

                       Statement of Senator Hatch

    Senator Hatch. Well, thank you, Mr. Chairman. I have 
appreciated all four of you and your testimony here today. 
Professor Estlund, I noticed you had not a lot to say about 
compulsory binding interest arbitration of first contracts. 
Have you negotiated, and if so, how many first contracts have 
you negotiated?
    Ms. Estlund. I haven't negotiated any, Senator.
    Senator Hatch. Not any. Well, you're aware that many union 
negotiators have resisted even voluntary interest arbitration 
to address protracted bargaining disputes, such as the recent 
West Coast port strike, where the parties were at an impasse at 
the bargaining table. Now, we're informed that many local 
unions do not support the compulsory binding first contract 
interest arbitration provision in H.R. 800. Are you aware of 
that as well?
    Ms. Estlund. That is often the case that unions will resist 
first contract arbitration.
    Senator Hatch. Sure. Let me turn to you, Mr. Hurtgen.
    Mr. Hurtgen. Yes, Senator?
    Senator Hatch. I only have limited time but it seems to me 
you are uniquely qualified as having been a member of the 
Board, certainly to address the subject of compulsory binding 
interest arbitration of first union contracts. Now, I gather 
from your testimony that you are strongly opposed to that 
provision, that as it is listed in H.R. 800.
    Mr. Hurtgen. That is correct, sir.
    Senator Hatch. You practiced labor law in Florida for over 
30 years, between 1966 and 1997 and I think if I recall it 
correctly, you negotiated somewhere like 175 collective 
bargaining agreements, both in the private and public sectors 
during that time.
    Mr. Hurtgen. That is correct, Your Honor--Senator, excuse 
me. It's been a while since I've done this. I would say----
    Senator Hatch. It's been a while since I've done this, too.
    [Laughter.]
    Mr. Hurtgen. I negotiated probably 20 to 30 collective 
bargaining agreements in the public sector in Florida and the 
vast majority of them were not negotiations like we conceive of 
it because the process ended in a hearing before an arbitrator 
called a Special Master, whose decision was final and binding 
on the parties except it had to go to the legislative body of 
the employer, the school board, the county commission, the city 
commission, the council, whatever.
    Senator Hatch. Sure. But the public sector bargaining 
process in Florida ends in a nonbinding interest arbitration. 
So I'm going to ask you just a few questions about that 
experience and whether or not it should be required. In other 
words, ``binding`` on all private sector employers unions and 
employees for first contracts. Now we all know what is provided 
in H.R. 800 concerning compulsory binding first contract 
interest arbitration. But I just want you to confirm a few of 
the effects of that provision.
    Now it is my understanding that because the first contract 
imposed by the Federal Government through compulsory 
arbitration is binding on the parties under this bill. The 
employees who are subject to the government's imposed wages, 
benefits and other terms and conditions of employment will have 
no right to a ratification vote to approve or reject a 
contract, is that correct?
    Mr. Hurtgen. I think that is correct, Senator.
    Senator Hatch. As they would under law.
    Mr. Hurtgen. Well, they would have that under the current 
law. In fact, that is the requirement that they choose to 
ratify or not.
    Senator Hatch. That is if the contract was negotiated 
without governmental interference.
    Mr. Hurtgen. That is correct.
    Senator Hatch. In other words, it doesn't matter, according 
to the words of this bill, what the employees think or want, 
once the Federal Government has spoken, the contract is binding 
for 2 years, like it or not, is that correct?
    Mr. Hurtgen. That is correct.
    Senator Hatch. Let me ask you this. Because the government 
imposed contract is binding on the parties, the employees will 
not be allowed to strike to enforce their contract demands if 
the parties reach impasse, is that correct?
    Mr. Hurtgen. Well, I think that's unclear, Senator. 
Clearly, I think it would be the case after the contract, so to 
speak, is imposed is that they would not be able to strike 
because the imposed contract is binding upon them as it is the 
employer.
    Senator Hatch. But if they have a right under current law 
to----
    Mr. Hurtgen. They do have the right under current law to 
strike until they get the terms they want.
    Senator Hatch. But they would not be permitted to strike 
during the duration of the contract.
    Mr. Hurtgen. That is correct.
    Senator Hatch. That's my point. Now, since the government-
imposed contract would be binding for 2 years under the 
``contract bar'' doctrine, neither the employer nor the 
employees would be permitted to challenge the union's 
continuing majority status through an NLRB supervised secret 
ballot de-certification or de-authorization election for the 
term of the contract.
    Mr. Hurtgen. That is correct.
    Senator Hatch. Now, as I view it, that's an additional 2-
year denial of the right of workers to a secret ballot election 
to express their views on the union, is that correct?
    Mr. Hurtgen. That is correct.
    Senator Hatch. And I want to ask just a few--do I have some 
time here? I'm running out. I want to ask a few questions about 
the effect of compulsory binding interest arbitration on the 
national labor policy of free collective bargaining.
    First I want to establish the difference between interest 
arbitration and grievance arbitration. Is it correct that in 
grievance arbitration--Mr. Chairman, could I have just a little 
bit more time? I know you're tired and weary and worn out from 
all these questions.
    Mr. Hurtgen. And he's not even having to answer them.
    The Chairman. There is no reason you shouldn't have 10 more 
seconds.
    [Laughter.]
    Senator Hatch. You've always been very generous to me.
    The Chairman. All right. A couple more minutes.
    Senator Hatch. Thank you, sir. I appreciate it. In 
grievance arbitration, the answers to the dispute are to be 
found within the ``four corners'' of the pre-existing contract. 
The arbitrator's job is interpreting and implying what the 
parties have agreed to.
    Now, interest arbitration, on the other hand, is an 
arbitrator's judgment imposed on the parties in the absence of 
a contract as to what in his opinion the parties should have 
agreed to or would have agreed to, absent arbitration. So such 
determinations imposed on the parties will be affected by the 
arbitrator's own economic or social theories often without the 
benefit or understanding of practical, competitive economic 
forces. You would agree with all of that, wouldn't you?
    Mr. Hurtgen. Yes, I would.
    Senator Hatch. It is for that reason that most employers 
shudder at the thought of an outside government arbitrator with 
the power of the company's economic life and death in the 
balance. Do you understand that?
    Mr. Hurtgen. I would accept that. I'd add that I think if 
not most, many unions would agree with that statement.
    Senator Hatch. Now, do you agree with Elkouri and ``How 
Arbitration Works,'' do you acknowledge that that is a premiere 
basic text on arbitration.
    Mr. Hurtgen. Right.
    Senator Hatch. And according to that text--I ask whether 
you agree or disagree with the following statements about 
compulsory binding interest arbitration--``Broadly stated that 
one, it is incompatible with free collective bargaining. Two, 
it will not produce satisfactory solutions to disputes. Three, 
it may involve great enforcement problems and four, it will 
have damaging effects on the economic structure.'' Do you agree 
with that, sir?
    Mr. Hurtgen. I agree with that.
    Senator Hatch. Professor Estlund, do you agree that Elkouri 
and Elkouri is the premiere basic text in arbitration?
    Ms. Estlund. I do want to correct a misstatement that I 
made. I don't know of any union that has ever resisted first 
contract arbitration, interest arbitration. In a mature 
collective bargaining agreement, it's not the ideal answer.
    Senator Hatch. It is the difference between having the 
right to do that and having it imposed on you, isn't it?
    Ms. Estlund. It is and if there were not a problem with 
employers avoiding serious collective bargaining, then I don't 
think this proposal would be on the table. This is responding 
to a problem of employers continuing their anti-union campaign 
past the certification period.
    Senator Hatch. Well, I would like to ask both of you a 
number of questions about what Elkouri versus Elkouri, the 
premiere basic text on arbitration has to say because it 
certainly rips this part of the bill apart and I'm very 
concerned about it as well and there is a number of parts of 
this bill that I'm very concerned with. I do believe in 
collective bargaining and I do believe that unions should have 
a right to compete. I do believe that under current law, they 
have a lot of rights. Now, if there are abuses in this process, 
of course, I think most times, the law is there to take care of 
them but I understand some of the concerns that you have, 
Professor Estlund but I also understand what you've said, Mr. 
Hurtgen. Is there any further comment on what I have said?
    Mr. Hurtgen. Trying the Chair's patience, no.
    Senator Hatch. OK. I don't want to try his patience anymore 
either. I've been there before.
    [Laughter.]
    The Chairman. Your time is up.
    [Laughter.]
    Thank you. I just have a final one for Professor Estlund. 
In your testimony, you point out that prior to the 1970s, 
employers were required to bargain with a union that presented 
the evidence of majority support. Other countries, such as 
Canada, still have this system in place even today, signing 
authorization cards are a lawful and common way to form a union 
and employers will recognize the union on this basis. So based 
on these experiences of majority signup, has any compelling 
evidence emerged that coercion by their fellow workers will 
interfere with employees' free choice? And if you have a direct 
knowledge about how the Canada system is working.
    Ms. Estlund. Well, I don't want to get too much into the 
details but I do understand that they have not had really any 
significant problem and people who have looked at the record in 
this country with the use of majority signup, have not found a 
significant record of a problem. The studies that have been 
done suggest that very few people report being pressured by a 
union and why should we be surprised? What does the union have 
to hold over them? It just doesn't have--if the worker comes up 
before the Board later and says, I was pressured, that puts the 
union's whole victory--so unions are very strongly deterred 
against that sort of coercion and they really have no leverage 
over the employees as compared to the employer so that's just 
not where the problem is.
    The Chairman. Thank you very much.
    Senator Isakson.
    Senator Isakson. Thank you, Senator Kennedy. I just wanted 
to make a couple of observations. This has been a great hearing 
and I appreciate all of the witnesses. A couple of things that 
have come out in my mind, just for us to reflect on.
    First, Mr. Hohrein--Hohrein (How-rein), is that correct?
    Mr. Hohrein. Hohrein (Hoe-rein) by pronunciation.
    Senator Isakson. Hohrien?
    Mr. Hohrein. Hohrein.
    Senator Isakson. Hohrein, I'm sorry. I always hate it--I've 
got Isakson and people always blow that one so I hate to do it 
to somebody else. Your testimony demonstrates that the current 
law works pretty well because you had what was apparently an 
adversarial situation and the vote ended up going in favor of 
the union, is that correct?
    Mr. Hohrein. We won the union vote but that is not the 
case. If we had 75 percent of the people that were signed up as 
far as the petition drive and by the time we got to the vote, 
it was 11-12. An awful lot of coercion went on in between and 
it wasn't on the union side.
    Senator Isakson. But the point I was making was with regard 
to the current law we have. You had an adversarial relationship 
between the company and the employees and the employees won in 
terms of unionization.
    Second, Dr. Mishel, I appreciate the comment about 
rewarding friends and punishing enemies. I don't believe it is 
a principle. I believe it is a practice. I ran a company for 22 
years and employees are not necessarily enemies and employers 
are not necessarily enemies, which is my other point that I 
want to make because there is a lot of good, on both sides.
    Last, one observation, having run a business, one of the 
key things when you look at the Senator's many charts, about 
productivity and wages, I do want to point out, the 
corresponding increase--and I went through this in my company--
Bill Gates did more to increase the productivity of the 
American workplace and technology than any single thing. It 
displaced some workers and it dramatically increased others, so 
granted, I'm not arguing that your chart may not be indicative 
but I am saying, there are external factors that came out of a 
great free enterprise system, like the generation of Microsoft 
software and the computer and technology that naturally are 
going to increase productivity disproportionately to what 
increases might take place in wages. I just wanted to get that 
comment in there.
    Mr. Mishel. Senator, may I just point out that I was 
quoting Samuel Gompers. I know you've studied him well. He was 
the founder of the American Labor Movement in the 1800s and it 
was his phrase that the way you practice politics is to reward 
friends and punish enemies.
    Senator Isakson. And I appreciate that point because that 
kind of ratifies what I was saying. When unions started 
growing, they grew out of what was a very adversarial 
relationship between employers and employees and because of 
what has happened over the years, that's not necessarily the 
rule in employment. It can't happen where you have adversarial 
relationships but it's no longer the rule like it was then.
    Mr. Mishel. Well, he was discussing the practice of 
politics, which I guess you're more familiar with than I so 
I'll leave it at that.
    Senator Isakson. It's always adversarial. Thank you, Mr. 
Chairman.
    The Chairman. Thank you. I thank our panel very, very 
helpful and very informative.
    Senator Isakson. Can I ask one more question?
    The Chairman.Unfortunately, I have to leave.
    Senator Isakson. Yes, I know you have to leave.
    The Chairman. The committee will stand adjourned.
    [Additional material follows.]

                          ADDITIONAL MATERIAL

                   Prepared Statement of Senator Enzi

    I want to thank Chairman Kennedy for holding this hearing 
and offering us the opportunity to get all the facts out on the 
table. This is an important issue and, unlike the process my 
colleagues faced in the House of Representatives who were 
entirely shut out of the process, I am encouraged that the 
Chairman is willing to open up the card check bill to greater 
scrutiny here in the Senate. I believe this hearing is an 
important first step in that direction.
    Legislative initiatives are invariably driven by real world 
facts and real world experience. Therefore, we should begin any 
review of the cleverly named ``Employee Free Choice Act'' by 
first examining some basic facts. This legislation would, in 
part, radically change the way that millions of employees over 
nearly seven decades have decided whether or not they want a 
union to become their exclusive representative in the 
workplace. In the vast majority of instances this critical 
decision has been made through use of the most fundamental 
institution of our democracy--the private ballot. In a 
democratic society nothing is more sacred than the right to 
vote, and nothing insures truly free choice more than the use 
of a private ballot.
    Beyond assaulting free choice and the right to vote, this 
bill would gravely damage the freedom of contract that has been 
a hallmark of our private sector labor/management relations. 
Our system recognizes the reality that in labor/management 
relations, as in other contractual situations, the parties that 
must live by the contract are the parties that must make the 
contract. Can you imagine either buying or selling a house and 
being told that someone from the government would decide the 
terms of the sale; and, even if you didn't agree, you'd be 
forced to go through with the deal? Whether it is buying a 
house, or negotiating a labor contract, this notion is simply 
untenable.
    Lastly, the bill would substitute a tort-like remedy system 
for the make-whole remedy system that has served well since the 
inception of the NLRA. The vast majority of labor/management 
disputes are voluntarily resolved. A tort-type system, while it 
will certainly keep trial lawyers busy, will clog the system 
with litigation and simply delay the resolution of claims. The 
bill also seriously infringes on due process and the right to 
manage a private business through its mandatory injunction 
provision. If an individual claimed that he was terminated 
because of his union sentiments, the government would require 
that he be returned to work before the merits of his claim were 
resolved. We rightly outlaw employment discrimination on the 
basis of age, race, religion, sex, and national origin, but do 
not require individuals claiming to have been discharged on 
these bases be returned to work before the merits of their 
claims are determined and we should not do so here.
    So then, what are the facts that would cause some to so 
quickly cast aside such fundamental guarantees as the right to 
vote, the right of free speech, the right to adequate legal 
process and the right to form private contracts? There is only 
one fact--labor unions represent a steadily declining 
percentage of the private sector workforce. Today, union 
membership among private sector employees stands at its lowest 
level in decades. The Labor Movement needs members because 
members' dues, whether taken from the employee's paycheck 
voluntarily or taken, in some cases, involuntarily in non-
right-to-work States, are the only source of union income. Make 
no mistake about it. That is the only fact that is driving this 
proposed legislation.
    You don't have to take my word for it. The labor unions' 
own research association said it plainly in an article titled 
``Union Members Hit Harder by Job Loss Numbers.'' As they 
wrote, ``The push for card check recognition is absolutely 
critical to reverse the decline in union membership.'' (Labor 
Research Association, July 27, 2005)
    There is not a Member in this body, on either side of the 
aisle, who would ever sanction depriving individuals of the 
right to vote when electing their governmental representatives. 
Why would we ever even consider depriving individuals of the 
right to vote over the issue of their workplace 
representatives? Why would we ever say to the working men and 
women of this country that democracy ends at the factory gate 
and individual rights have no place on the shop floor? Why 
would we have the Federal Government dictate the terms of 
private labor agreements? And why would we allow the Federal 
Government to interfere and reverse personnel decisions before 
discrimination is proven? What are the facts that could 
possibly support these radical notions?
    First, we are told that taking away private ballots is 
necessary because the election process overseen by the National 
Labor Relations Board is increasingly tilted against unions. 
However, that claim simply does not withstand examination. The 
fact is that for the last decade unions have been winning a 
steadily increasing number of the NLRB certification elections. 
In fact, in fiscal year 2005 unions won over 61 percent of the 
time--a rate as high as it has ever been. When you are shooting 
better than 61 percent from the three point line, it's a little 
difficult to claim that the game is unfair, or that you need to 
have the line moved closer to the basket.
    Then we are told, well wait a minute, that's not quite it. 
The real problem is that employers are making elections unfair. 
This claim doesn't stand up either.
    The National Labor Relations Act guarantees the right of 
free speech to all parties involved in union elections. Free 
speech, open debate, and the free exchange of ideas and 
opinions are, like the private ballot election, hallmarks of a 
fair and democratic society. The law, however, also prohibits 
conduct in the context of union organizing that is coercive or 
threatening. The NLRB scrupulously polices the conduct of both 
unions and employers during an organizing election and can 
invalidate any election if either party engages in misconduct 
affecting the results. The rate of elections invalidated 
because of misconduct by either side is extraordinarily low and 
has, in fact, been declining. In 2005, over 2,300 certification 
elections were conducted by the NLRB, yet the NLRB conducted 
re-run elections because of misconduct by either the employer 
or the union in only 19 cases.
    Finally, we're told, you still don't get it. It's because 
employers are increasingly committing unfair labor practices. 
Well, guess what, that's not true either. The number of 
allegations--and I stress the word allegations since the 
majority of claims are withdrawn or dismissed for want of any 
evidence--of employer unfair labor practices has been steadily 
declining for the last decade. In fact, last year, it was at 
the lowest level in many, many decades.
    Surely, however, the current low membership levels must be 
due to an unfair law, or to unfair NLRB election procedures. 
Sorry, those arguments hold no water either. The National Labor 
Relations Act has not changed in nearly 50 years. The law and 
procedures governing union organizing are the same today as 
they were in all the years when unions enjoyed their highest 
level of membership among private sector workers. Such argument 
further ignores the fact that union's election win rates are 
dramatically higher today than they were 10, 20, or 30 years 
ago, and allegations of employer misconduct are dramatically 
lower than in those same times.
    According to opinion poll after opinion poll, the low 
levels of union membership are the result of the public's 
perception of unions, not some problem with the law surrounding 
organizing that hasn't changed in decades. Those polls indicate 
that workers find unions increasingly irrelevant, too costly, 
too detached and too political. The unions have not kept pace 
with the modern workforce. Whether true or not, that is the 
public's view, and that is the problem for unions--not some 
manufactured problem with the underlying law.
    One final thought is important to bear in mind as we 
consider this issue. It has never been the role of the 
government, or the purpose of Federal labor policy to increase 
or maintain the level of union membership among private sector 
employees. Federal labor policy on this issue has always been 
neutral. That is why the act specifically provides in its 
``bill of rights'' section that employees have both the right 
to form and join labor organizations and the right not to do 
so.
    Our Federal labor policy has been consistently based on 
``rights'' not bolstering union membership levels. This new 
proposed policy of government intervention to increase 
unionization will be constructed on a pile of discarded 
rights--the right to vote, the right to privacy, the right of 
free speech, and the right to contract.
    I believe the Senate will stand with me to protect these 
most fundamental rights and to continue fostering a national 
labor policy that is balanced and neutral.
    I look forward to hearing the testimony and engaging in a 
healthy exchange of ideas and differences.

                  Prepared Statement of Senator Murray

    Mr. Chairman, thank you for holding this hearing, and I 
want to thank our witnesses.
    Over the past few years, our country has had really 
impressive economic growth, and I want to make sure that every 
American shares in that prosperity. One way to do that is to 
ensure workers have the option to organize.
    Unfortunately, today, in too many workplaces, workers who 
try to exercise their legal rights are blocked by an unbalanced 
system that can trap them in unacceptable working conditions.
    The Employee Free Choice Act will make the promise of 
employee choice a reality and will restore balance to the 
relationship between employers and employees.
    First, the bill ensures that employees who want to organize 
can do so without interference.
    Second, this bill ensures there's time for reasonable 
negotiations, but it does not allow one side to act in bad 
faith and string employees along in a never-ending process 
that's designed to block their ability to self-organize.
    Third, this bill will hold bad actors accountable if they 
break the law. According to ``American Rights at Work,'' every 
23 minutes in America, an employer fires or retaliates against 
a worker for their union activity.
    We shouldn't tolerate illegal discrimination and 
retaliation against workers who are just trying to exercise 
their rights. If a corporation violates the rights of its 
employees and is charged by National Labor Relations Board, 
this bill will impose stricter penalties. This will ensure that 
breaking the law doesn't just become part of ``the cost of 
doing business.''
    I'm pleased that this bill gives employees the opportunity 
to vote by secret ballot if they so choose. For too long, some 
corporations have had control over the balloting process, and 
this bill gets the balance right by making sure employees have 
the free choice to use a secret ballot.
    One thing this bill does not change is the access to 
employees that exists today. Currently, employers have full 
access to employees during the workday. Unions do not. This 
bill leaves that relationship unchanged.
    We all know that a fair labor market can only exist when 
corporations and employees have a voice in the system. 
Unionized workers earn 30 percent higher wages, are twice as 
likely to have employer health coverage, and are more likely to 
have paid sick days and a pension. Clearly, unions empower 
workers to access better benefits and provide a better life for 
their families.
    In my home State of Washington, we've seen proof that 
companies can remain competitive and profitable and still 
follow the law and respect worker rights. Cingular Wireless is 
a national wireless phone company that gave its workers in 
Bothell, Washington the free choice they're entitled to. As a 
result, nearly 1,000 workers in my hometown decided to 
organize, and Cingular won praise for its responsible, 
respectful approach to employee choice.
    It's time to empower our workers and give them their voice 
back. I sincerely hope we can work together to restore free 
choice to employees by moving this bill forward quickly in our 
committee.
                           Letter of Support
        Lyndon B. Johnson School of Public Affairs,
                 The University of Texas at Austin,
                                  Austin, Texas 78713-8925,
                                                    March 21, 2007.
Hon. Ted Kennedy,
Chairman,
Committee on Health, Education, Labor, and Pensions,
U.S. Senate,
Washington, DC. 20510.

    Dear Senator Kennedy: I regret very much that a scheduling conflict 
precludes the opportunity to accept your invitation to testify on the 
Employee Free Choice Act (EFCA), which I strongly support.
    There is abundant evidence that free and democratic societies and 
broadly shared prosperity require strong and democratic organizations 
to represent employees at work and in the larger society. This is one 
reason all democratic countries, including the United States, have 
declared the right of workers to organize and bargain collectively to 
be fundamental human rights.
    Unfortunately, despite our support of this declaration, U.S. labor 
law actually makes it very difficult for American workers to bargain 
collectively, even though polls show that nearly 60 million of them 
wish to do so. Indeed, unlike most other advanced democracies, the 
United States requires workers to engage in unfair high-stakes contests 
with their employers to gain bargaining rights. Numerous studies, 
including those by the Commission on the Future of Worker-Management 
Relations (the Dunlop Commission) have documented the failure of 
American labor law to adequately protect workers' bargaining rights. 
The National Labor Relations Act's (NLRA) major weaknesses include:

     giving employers too much power to frustrate workers' 
organizing efforts, often through unlawful means;
     weak penalties for illegal actions by company 
representatives; and
     employers' refusal to bargain in good faith after workers 
vote to be represented by unions.

    By strengthening the right of workers to select bargaining 
representatives without going through lengthy and unfair election 
processes, facilitating first contracts, and creating stronger and more 
equitable penalties, the EFCA would cause the NLRA to be much more 
balanced.
    The EFCA is important to all Americans, not just to workers. We are 
not likely to have either sound public policies or fair and effective 
work practices if millions of American workers' voices remain unheard. 
It is significant that stagnant and declining real wages for most 
workers, along with growing and unsustainable income inequalities, have 
coincided with declining union strength.
    Good luck with this important legislation. Please let me know if I 
can help in 
any way.

            Sincerely,
                                              Ray Marshall.
                                 ______
                                 
                         Letters of Opposition
   Associated Builders and Contractors, Inc. (ABC),
                                            March 26, 2007.
Hon. Edward M. Kennedy,
Chairman,
U.S. Senate,
Committee on Health, Education, Labor, and Pensions,
Washington, DC.

Hon. Michael B. Enzi,
Ranking Member,
U.S. Senate,
Committee on Health, Education, Labor, and Pensions,
Washington, DC.
    Dear Chairman Kennedy and Ranking Member Enzi: On behalf of 
Associated Builders and Contractors (ABC), and its more than 24,000 
contractors, subcontractors, suppliers and construction-related firms 
across the country, I am writing to express our strong opposition to 
the ``Employee Free Choice Act,'' scheduled for debate by the committee 
tomorrow.
    Passage of the ``Employee Free Choice Act'' would rob American 
workers of their right to a private ballot election overseen by the 
National Labor Relations Board (NLRB) when deciding whether or not to 
join a union. It would replace the private ballot election with a 
scheme called ``card check.'' Under ``card check,'' workers are forced 
to vote in public--inviting intimidation and coercion into the 
workplace.
    NLRB case law is full of examples where the use of card checks have 
been challenged because of incidents that involved misrepresentation, 
forgery, fraud, peer pressure, and promised benefits. Tactics have 
included threats of termination, deportation, and loss of 401(k) and 
health benefits for not signing a card. For signing a card, employees 
have been promised green cards, termination of supervisors, turkeys, 
and waiving of union dues. The expansion of this practice via this 
legislation would only lead to more egregious threats upon workers.
    Federal courts have repeatedly ruled that secret ballot elections 
are the preferred method of ascertaining union support from employees. 
In a brief to the Ninth Circuit Court of Appeals, the NLRB stated,

          ``Congress and the Supreme Court regard a secret ballot 
        election conducted under the Board's auspices as the preferred 
        method for resolving representational disputes in the manner 
        that best ensures employees free and informed choice.''

    Simply put, the private ballot is absolutely essential to 
protecting the integrity of the union election process.
    The bill also contains an infringement on a private employer's 
right to contract. It provides that if an employer and a union engaged 
in their first collective bargaining agreement are unable to reach 
agreement within 90 days, then either party may refer the dispute to 
the Federal Mediation and Conciliation Service (FMCS). If the FMCS is 
unable to bring the parties to agreement after 30 days of mediation, 
then the dispute would be referred to arbitration. The results of the 
arbitration would be binding on the employer, the union, and ultimately 
the employees for 2 years.
    Besides departing from seven decades of precedent and law under the 
National Labor Relations Act, this provision would completely undermine 
the collective bargaining process by creating an incentive for bad 
faith bargaining. Unions could deliberately stall collective bargaining 
with impossible demands, expecting the Federal Government to grant some 
or all of their demands through binding arbitration.
    This provision also represents a serious threat to small 
businesses, by allowing the Federal Government to set a private 
company's wages and benefits during binding arbitration.
    The ``Employee Free Choice Act'' in fact does nothing to enhance 
freedom in the workplace. Instead, it tramples on both the privacy of 
individual workers and the freedom of employers to bargain 
collectively. We strongly urge you to oppose this dangerous bill.
            Respectfully submitted,
                                        William B. Spencer,
                                Vice President, Government Affairs.
                                 ______
                                 
                    Americans for Tax Reform (ATR),
                                           Washington, DC.,
                                                    March 26, 2007.
Hon. Edward Kennedy,
U.S. Senate,
Washington, DC. 20510.

Hon. Michael Enzi,
U.S. Senate,
Washington, DC. 20510.
    Dear Chairman Kennedy and Ranking Member Enzi: On behalf of 
Americans for Tax Reform, I write to express my strong condemnation of 
H.R. 800, the so-called ``Employee Free Choice Act.'' The Senate HELP 
Committee will be considering the merits of this bill tomorrow. This 
anti-worker bill should be dismissed as the thinly veiled sop to Big 
Labor that it really is.
    For generations, American workers have had the right to a federally 
supervised, private ballot election when deciding on union membership. 
This bill would strip workers of this democratic right. The bill would 
also impose wage and benefit terms on newly-unionized small businesses, 
giving a decisive advantage to unions over entrepreneurs.
    Taxpayers are the big losers if this bill were to become law. 
Within the next 3 years, experts predict that a majority of labor union 
members will be government employees. At that point, the majority 
interest of Big Labor will undoubtedly be higher taxes, more spending, 
and a bigger workforce to run it all (and pay union dues). By tipping 
the scales in favor of Big Labor, this bill lays the groundwork for a 
massive expansion of government and a crushing tax burden.
            Sincerely,
                                           Grover Norquist.
                                 ______
                                 
       Chamber of Commerce of the United States of 
                                           America,
                                           Washington, DC.,
                                                    March 27, 2007.
Hon. Ted Kennedy,
Chairman,
Committee on Health, Education, Labor, & Pensions,
U.S. Senate,
Washington, DC 20510.

Hon. Michael Enzi,
Ranking Member,
Committee on Health, Education, Labor, & Pensions,
U.S. Senate,
Washington, DC 20510.
    Dear Chairman Kennedy and Ranking Member Enzi: The Employee Free 
Choice Act (EFCA), which will be considered during today's hearing, is 
perhaps the most imbalanced and ill-advised labor legislation in over 
30 years. This bill would destroy 60 years of precedent and balance 
that currently characterize the process by which employees decide 
whether to be represented by a union in their workplace. The U.S. 
Chamber of Commerce, the world's largest business federation 
representing more than 3 million members and organizations of every 
size, sector, and region, does not oppose unions or their 
representation of employees. However, the Chamber is committed to 
ensuring that the process for deciding whether they are recognized 
produces a legitimate expression of employee interest.
    Enactment of this legislation would deny employees their ability to 
vote on two of the most important issues they face with regard to their 
work lives: whether to have a union be their exclusive representative 
to their employer, and the terms of their employment as embodied in the 
contract that would be bargained collectively on their behalf. 
Accordingly, the Chamber unequivocally opposes EFCA, as passed by the 
House, and the version of it that is likely to be introduced in the 
Senate.
    Unions' desire for this bill is driven by the continued decline in 
their membership, currently at 7.4 percent of the private sector. The 
primary cause of this trend is not that unions are being denied the 
opportunity to make their case to employees, or that the current system 
is unfair, or rigged, but that the message unions have been trying to 
sell to employees is no longer relevant or compelling. But the answer 
to organized labor's recent failure to recruit more members lies in 
developing an agenda and message that is relevant and attractive to the 
modern workforce, not in subverting proven election procedures that 
protect an employee's right to vote for a union, in secret and free 
from coercion.
    However, in response to union claims that the current procedure is 
somehow flawed or rigged, it is worth emphasizing that unions still win 
more elections than they lose. The National Labor Relations Board 
(``NLRB'' or ``Board'') most recent election report summary shows that 
unions won 59.6 percent of all elections involving new organizing.\1\
---------------------------------------------------------------------------
    \1\ See NLRB Election Report; 6-Months Summary--April 2006 through 
September 2006 and Cases Closed September 2006, at p. 18.
---------------------------------------------------------------------------
    The signature provision of this bill would supplant the use of a 
private ballot, overseen by the NLRB, that is the current preferred 
method for determining whether a union will be recognized in a 
workplace, with an unsupervised process where a union would be 
recognized if union organizers can get more than 50 percent of the 
employees in a bargaining unit to sign authorization cards. While this 
provision is offensive, it is by no means the only objectionable 
provision of this bill. Equally egregious is the provision that 
mandates interest arbitration for a first contract if the parties have 
not come to an agreement after only 120 days. Finally, the section 
increasing penalties on employers, but not unions, is similarly without 
merit. The Chamber's objections to each of these provisions are laid 
out in more detail below.

     SECTION 2--DENYING EMPLOYEE CHOICE THROUGH CARD CHECK PROCESS

    Under current law, when 30 percent of the employees in a bargaining 
unit indicate their interest in having a union represent them, the 
Board administers the election by bringing portable voting booths, 
ballots and a ballot box to the workplace. The election process occurs 
outside the presence of any supervisors or managerial representatives 
of the employer. No campaigning of any kind may occur in the voting 
area. The only people who are allowed in the voting area are the NLRB 
agent, the employees who are voting, and certain designated employee 
observers.
    The ultimate question of union representation is determined by the 
majority of the number of valid votes cast. If a majority of votes are 
cast in favor of the union, the Board will certify the union as the 
exclusive bargaining representative of all employees in the collective 
bargaining unit. Once a union is certified by the Board, it becomes the 
exclusive representative of the entire unit of employees, regardless of 
whether they voted for the union. This means that even if an employee 
previously had an open and cordial relationship with his employer, that 
employee must now go through the union for many questions or requests 
they would otherwise have posed directly to the employer. The employer 
is obligated to bargain with the union in good faith with respect to 
all matters relating to wages, hours and working conditions of the 
bargaining unit employees.
    The secret ballot process allows all employees to express their 
position on whether to have a union. Under the card check process, only 
those who sign the card will be expressing their view. Employees who do 
not favor having a union will have no opportunity to indicate this, and 
may very well end up having a union imposed on them against their 
wishes. Indeed, it is well understood that some employees who sign 
authorization cards do so just to get the organizer to stop bothering 
them, or because they were asked to do so by a friend, and may actually 
intend to vote against having a union when they are in the privacy of 
the voting booth.\2\
---------------------------------------------------------------------------
    \2\ ``Workers sometimes sign union authorization cards not because 
they intend to vote for the union in the election but to avoid 
offending the person who asks them to sign, often a fellow worker, or 
simply to get the person off their back, since signing commits the 
worker to nothing (except that if enough workers sign, the employer may 
decide to recognize the union without an election).'' NLRB v. Village 
IX, Inc., 723 F.2d 1360, 1371 (7th Cir. 1983).
---------------------------------------------------------------------------
    The card check process moves the decision about whether to have a 
union from the protection of the NLRB supervised election area and 
voting booth, out into the unsupervised open arena. An employee would 
be exposed to all manner of contacts and potential intimidation, 
threats and coercion to secure their signature. Furthermore, unlike the 
election process, a card check campaign has no time limit--it can last 
indefinitely until the union gets the number of signatures it needs to 
get over 50 percent. This replaces a process with specific protections 
and rules for both sides with one that entirely favors the union--not 
the employees--with no protections for either the employer or 
employees.
    EFCA would mandate that if the union is able to present signatures 
from more than 50 percent of the employees in the relevant bargaining 
unit, the Board will certify the union as the representative of that 
unit. While technically this does not repeal the provisions of the 
National Labor Relations Act providing for a secret ballot election, it 
completely obviates any reason why such an election would be held. The 
union will always seek to obtain enough signatures to claim more than 
50 percent, at which point it will be recognized without an election.
    The benefits and protections of a secret ballot election process 
have even been recognized by Rep. George Miller in a letter to Mexican 
labor authorities in August, 2001:

          [W]e are writing to encourage you to use the secret ballot in 
        all union recognition elections.
          We understand that the secret ballot is allowed for, but not 
        required, by Mexican labor law. However, we feel that the 
        secret ballot is absolutely necessary in order to ensure that 
        workers are not intimidated into voting for a union they might 
        not otherwise choose.
          We respect Mexico as an important neighbor and trading 
        partner, and we feel that the increased use of the secret 
        ballot in union recognition elections will help bring real 
        democracy to the Mexican workplace. (emphasis added)

    The letter was co-signed by 15 other members of the House, 
including then Rep. Bernie Sanders, who is now a Senator and a member 
of the Health Education, Labor, and Pensions Committee. These members 
all believed that the only way to accurately ascertain the true wishes 
of employees on the question of union representation was to conduct a 
secret ballot election.
    The right to vote in private has been a cornerstone of the Nation's 
political democracy for exactly the same reason it underpins workplace 
democracy--too much rides on the outcome to allow voters/employees to 
be vulnerable to coercion or intimidation. Exposing employees to such 
tactics has a corrosive effect on the credibility of the process and 
creates the very real possibility of a fraudulent outcome if a majority 
of employees do not support a union.

            SECTION 3--IMPOSING UNION-DRIVEN FIRST CONTRACTS

    Not only will EFCA deny employees an opportunity to vote on whether 
they are represented by a union, it could then deny them the 
opportunity to have any say in the contract under which they will have 
to work.
    This section would also destroy the foundational principle of labor 
law that the parties are to negotiate out their differences, and the 
government should not decide who wins or impose its version of a 
``reasonable'' agreement. If the parties are unable to agree on a first 
contract after 120 days, including only 30 days working with the 
Federal Mediation and Conciliation Service, then the matter would be 
referred to an arbitrator who would decide the terms of the first 
contract and the employer and employees would be bound to it for 2 
years. This creates a strong incentive for the union to stretch out the 
bargaining process to push the matter to binding arbitration where they 
can expect to ``win'' more than the employer is willing or able to 
provide.
    The Chamber does not believe that a government arbitrator will have 
the ability or knowledge of the employer's operations so that he or she 
can realistically tell an employer how to run its workplace, from 
setting wages, benefits, and pension contributions to other terms and 
conditions of employment--from the most significant to the most 
trivial. This grant of authority to the government under private sector 
labor law is unprecedented.
    Further, this process involves absolutely no employee involvement 
or opportunity to express approval or disapproval. Normally, a contract 
would be submitted to employees for a ratification vote, but employees 
under the system envisioned by this bill would be entirely shut out--
completely at the discretion of the union which frequently promises 
wages and benefits during the organizing campaign which the employer 
can not provide to induce signatures on the authorization cards. When 
these promises are then made part of the bargaining process, the 
arbitrator may well, under this new provision, simply impose them as 
part of the contract, notwithstanding their unreasonableness, or the 
impact they can have on the company's ability to remain competitive. 
Putting aside the obvious adverse impact on the employer, employees 
will be severely disadvantaged if their jobs are jeopardized or lost 
due to an overloaded union contract now mandated by a government-
imposed referee.

             SECTION 4--PENALIZING EMPLOYERS BUT NOT UNIONS

    This section would mandate that any charges brought against an 
employer for discharging or discriminating against an employee while 
the employee was seeking union representation, or during the period 
after a union is recognized, and a first contract is signed, be 
elevated to the highest priority for investigation. It would also award 
three times the amount of any back pay lost to the employee as 
liquidated damages. Employers may also be subject to civil penalties of 
up to $20,000 for any willful or repeated unfair labor practices 
committed while employees are seeking union representation or after a 
union has been recognized and a first contract has been signed.
    These increased penalties and scrutiny are structured as if the 
process for seeking union representation would be the same as currently 
practiced under Section 9 of the National Labor Relations Act (29 
U.S.C. 159) i.e. that the process for seeking union recognition will be 
open and public, such as it is when an election has been scheduled. 
However, under a card check campaign, the process is much less 
structured and obvious--union organizers approach employees outside the 
workplace and the process can go on as long as the union wishes until 
it gets a majority. Under this process, an employer, such as a small 
business, might not even know that this process is under way until the 
union presents the required amount of signed authorization cards. The 
employer might take a disciplinary action against an employee, for a 
legitimate reason, without even knowing that the employee is supporting 
unionization, thus triggering the provisions of this section even 
though the employer had no knowledge of the union activities at all.
    This section also increases penalties only for employers who are 
found to be involved in coercion with no increases for unions found to 
have coerced employees. Under the card check process, union coercion of 
employees to produce signatures is expected to be rampant, yet there 
are no increased penalties applying to unions. Employees deserve 
protection from all sources of coercion and intimidation, and assuming 
that employers are the only source of this overlooks the realities of 
this process.

                               CONCLUSION

    The EFCA would undermine fundamental rights and privileges 
currently enjoyed by employees, and protections designed to ensure a 
fair process so that both sides can have faith that the outcome is a 
truthful representation of employee desires on whether to have a union 
in their workplace. The bill would impose unreasonable contracts on 
employers, forcing terms and work conditions which could eliminate 
their flexibility and ability to be competitive in an unrelenting 
global marketplace. Finally, the bill creates an entirely one-sided 
enhanced penalty structure without acknowledging the very real 
potential union coercion and intimidating behavior that impacts 
vulnerable workers.
            Sincerely,
                                         Randel K. Johnson,
          Vice President, Labor, Immigration and Employee Benefits.
                                 ______
                                 
                   National Restaurant Association,
                                            March 26, 2007.
Hon. Edward M. Kennedy, 
Chairman,
U.S. Senate,
Health, Education, Labor, and Pensions Committee,
Washington, DC. 20510.

Hon. Michael B. Enzi, 
Ranking Member,
U.S. Senate,
Health, Education, Labor, and Pensions Committee,
Washington, DC. 20510.
    Dear Chairman Kennedy and Ranking Member Enzi: As one of the 
Nation's largest private sector employers providing jobs to 12.8 
million individuals, we are writing in opposition to the so-called 
``Employee Free Choice Act.'' We strongly believe that it is completely 
inappropriate to deny a worker's fundamental right to a private ballot 
election for purposes of determining union representation.
    The restaurant industry is proud to be a dynamic industry where our 
workers frequently move up to management and ownership. In fact, 8 out 
of 10 salaried employees started as hourly employees. We believe it is 
highly important to defend our workers and their rights to privacy if 
they ever have to choose whether to join a union.
    A worker's decision whether or not to participate in a union is an 
important one. We believe this is a decision that is best made in 
private, so that workers are protected from coercion and influence from 
both union representatives, employers or both. The sanctity of private 
ballot voting is a cornerstone of our democracy. If EFCA were approved, 
this fundamental right of workers would be taken away for purposes of 
determining union representation.
    Our opposition to this legislation is based upon our concerns for 
the process EFCA proposes. If it only takes a simple majority of signed 
authorization cards to determine if a workplace is unionized, it is 
quite possible that many workers with concerns for unionizing will be 
shut out of the process. The card-check process also provides no 
opportunity for the employer to provide their perspective. We believe 
the existing federally supervised NLRB election process is a more fair 
and balanced approach.
    In addition to our concerns with the undemocratic card-check 
process, we also have serious concerns with the binding arbitration 
requirements and increased employer penalties that are included in the 
bill. These provisions would also have a significant negative impact on 
restaurants and other small businesses.
    We urge the committee to oppose the so-called ``Employee Free 
Choice Act.''
            Thank you,
                                             Peter Kilgore,
                      Acting President and Chief Executive Officer.

                                                  John Gay,
       Senior Vice President, Government Affairs and Public Policy.

                                 ______
                                 
          Independent Electrical Contractors (IEC),
                                     Alexandria, VA. 22302,
                                                    March 26, 2007.
Hon. Edward Kennedy,
Chairman,
Committee on Health, Education, Labor, and Pensions,
U.S. Senate,
Washington, DC. 20510.
    Dear Chairman Kennedy: I am writing on behalf of the Independent 
Electrical Contractors, Inc. (IEC) in opposition to the Employee Free 
Choice Act (EFCA). IEC is a trade association representing 2,700 merit 
shop electrical and systems contractors across the United States, two-
thirds of which are small businesses that employ 10 or fewer 
individuals.
    The Employee Free Choice Act (EFCA) would eliminate union 
organizing elections and replace them with a card check system that 
would force an employer to recognize a union when half of his or her 
employees sign union authorization cards.
    IEC contractors choose to make their living based on the merit shop 
business philosophy, and their employees have made the same choice. 
With a card check system, however, a union could approach individual 
employees and pressure them to sign an authorization card. This kind of 
coercive organizing method does a disservice to both the employer and 
the employee. If the union is confident that the employees want to be 
organized, then they should not have a problem with a private ballot 
election conducted by the National Labor Relations Board.
    Furthermore, the EFCA contains a provision that mandates 
compulsory, binding arbitration as part of the collective bargaining 
process. This misguided language would have a government official 
making labor contract decisions that are binding upon both parties. 
This would mean that the small business owner would have no real voice 
in his own business nor would the union employees be provided with the 
opportunity to vote on their new contract.
    This legislation runs counter to the ideals of free enterprise and 
democracy. These values have made America the great Nation that it is 
today, and that is why IEC opposes the Employee Free Choice Act.
            Sincerely,
                                               Brian Worth,
                                Vice President, Government Affairs.
                                 ______
                                 
International Foodservice Distributors Association 
                                            (IFDA),
                                            March 26, 2007.
Hon. Edward M. Kennedy,
Chairman,
U.S. Senate,
Committee on Health, Education, Labor, and Pensions,
Washington, DC. 20510.

Hon. Michael B. Enzi,
Ranking Member,
U.S. Senate,
Committee on Health, Education, Labor, and Pensions,
Washington, DC. 20510.
    Dear Chairman Kennedy and Ranking Member Enzi: On behalf of the 
members of the International Foodservice Distributors Association 
(IFDA), I am writing to express our opposition to the so-called 
Employee Free Choice Act or ``card-check'' legislation. IFDA believes 
this bill would be a dramatic, negative change to the American 
workplace and would deprive workers of the fundamental American right 
of a secret ballot election to determine union representation.
    The Employee Free Choice Act would replace the privacy of election 
booths with the very public ``card check recognition'' process where 
employees make their choice for or against the union by signing 
authorization cards in front of union organizers and co-workers that 
support union representation. Employees have no protection in such a 
process and often sign cards for a variety of reasons such as not to 
anger coworkers. If card check recognition were to be required, 
employees would lose the freedom to decide their own future--free of 
intimidation or coercion--one of the most important protections they 
are granted under the National Labor Relations Act (NLRA).
    The Employee Free Choice Act also contains a provision that 
mandates compulsory, binding arbitration on the employer and the 
employees as part of the collective bargaining process. This misguided 
language would have a third-party government official making labor 
contract decisions within 120 days of recognition that are binding upon 
both parties. The owner of a foodservice distribution company would 
have no real voice in their own business nor would the union employees 
be provided with the opportunity to vote on their new contract.
    Denying workers the protection they are provided by secure and 
private voting is simply undemocratic. I urge you not to support the 
Employee Free Choice Act.
    Sincerely,
                                            Jonathan Eisen,
                       Senior Vice President, Government Relations.
                                 ______
                                 
       National Association of Manufacturers (NAM),
                                            March 26, 2007.
Hon. Edward Kennedy,
Chairman,
Committee on Health, Education, Labor, and Pensions,
Washington, DC. 20510.

Hon. Michael Enzi,
Ranking Member,
Committee on Health, Education, Labor, and Pensions,
Washington, DC. 20510.
    Dear Chairman Kennedy and Ranking Member Enzi: On behalf of the 
National Association of Manufacturers (NAM), the Nation's largest 
industrial trade association representing small and large manufacturers 
in every industrial sector and in all 50 States, I write in strong 
opposition to H.R. 800, the so-called ``Employee Free Choice Act'' (or 
EFCA). This legislation, which recently passed the House, effectively 
changes more than 70 years of precedent. Manufacturers of all sizes and 
in every sector have serious concerns with this legislation, 
particularly how it will restrict employees' freedom to choose whether 
union representation is right for themselves and their families.
    The EFCA would allow union organizers to bypass the federally 
supervised election process entirely, and require a majority of signed 
authorization cards to achieve certification. Employees who do not sign 
a card, or are not even approached to sign such a card, will be without 
a ``free choice.'' NLRB case law is full of examples where the use of 
card checks have been challenged on coercion, misrepresentation, 
forgery, fraud, peer pressure and promised benefits. Expansion of this 
practice would only further intimidate and threaten the freedoms of 
American workers.
    Additionally, this bill departs from more than seven decades of 
precedent established by the National Labor Relations Act (NLRA) of 
1935. It imposes contract terms on private employers and their 
employees through a process of compulsory, binding arbitration. 
Essentially, government arbiters will establish wages and terms between 
the two parties. In these instances, the employees will be unable to 
vote or ratify the contract. This provision completely rewrites the 
NLRA and overturns what Congress intended in 1935, when it stated that 
the obligation to bargain collectively ``does not compel either party 
to agree to a proposal or require the making of a concession.'' 
Imposing contract terms through compulsory arbitration is an 
unconstitutional infringement on the right of private employers to 
freedom of contract.
    The NAM strongly opposes legislation that not only interferes with 
the democratic process, but also forces private enterprise to agree to 
contract terms or face government intervention and, ultimately, wages 
and benefit terms that are established by the government.
    Should you have any questions regarding this matter, please feel 
free to contact me or the NAM's Jason Straczewski at (202) 637-3129 or 
[email protected].
            Sincerely,
                                               John Engler.
                                 ______
                                 
                        National Retail Federation,
                                            March 26, 2007.
Hon. Edward Kennedy,
Chairman,
Committee on Health, Education, Labor, and Pensions,
U.S. Senate,
Washington, DC. 20510.
    Dear Chairman Kennedy: On behalf of the National Retail Federation, 
I am writing in opposition to the misnamed ``Employee Free Choice Act 
(EFCA),'' legislation that would take away workers' right to secret 
ballots in union elections.
    This measure would require the National Labor Relations Board to 
certify a union if presented with signed authorization cards from a 
majority of employees the union is seeking to organize, eliminating the 
long-standing National Labor Relations Act requirement for secret 
ballots in union elections. The EFCA also includes other equally 
onerous provisions such as compulsory arbitration of first contracts 
and enhanced penalties.
    The Senate Health, Education, Labor, and Pensions Committee is 
holding a hearing on EFCA this week. As American workers find out more 
about the surprising details included in the bill, they understand how 
EFCA will take away their rights in workplaces around the country. A 
recent national poll found that 89 percent of voters, when asked to 
make a choice whether a worker's vote to organize a union should remain 
private or be public information, said the vote should remain private. 
The changes to Federal labor law proposed in H.R. 800 are too important 
for the committee to rush to judgment. Therefore, we urge the committee 
to hold additional hearings on this measure so that the American people 
can learn more about this misguided legislation.
    For over 60 years, the choice about whether a union will serve as 
the bargaining representative of a group of employees has been made by 
employees voting in a private, federally supervised secret-ballot 
election. The secret-ballot election is the fairest way to guarantee 
the rights of employees to freely choose whether or not to be 
represented by a union. It allows for a private, confidential vote by 
employees, based on the principles of the American system of democracy.
    The National Retail Federation strongly urges you to oppose EFCA.
            Sincerely,
                                           Robert J. Green,
                                                    Vice President,
                                  Government and Political Affairs.
                                 ______
                                 
        Retail Industry Leaders Association (RILA),
                                            March 26, 2007.
Hon. Edward M. Kennedy,
Chairman,
Committee on Health, Education, Labor, and Pensions,
U.S. Senate,
Washington, DC. 20510.

Hon. Michael B. Enzi,
Ranking Member,
Committee on Health, Education, Labor, and Pensions,
U.S. Senate,
Washington, DC. 20510.
    Dear Chairman Kennedy and Ranking Member Enzi: I am writing on 
behalf of the Retail Industry Leaders Association (RILA) to express our 
opposition to the so-called ``Employee Free Choice Act,'' as 
fundamentally incompatible with protecting the interests of workers to 
choose whether to have a union in private, free of coercion.
    The Retail Industry Leaders Association promotes consumer choice 
and economic freedom through public policy and industry operational 
excellence. Our members include the largest and fastest growing 
companies in the retail industry--retailers, product manufacturers, and 
service suppliers--which together account for more than $1.5 trillion 
in annual sales. RILA members provide millions of jobs and operate more 
than 100,000 stores, manufacturing facilities and distribution centers 
domestically and abroad.
    We believe the only way to guarantee worker protection from 
coercion and intimidation is through the continued use of a federally 
supervised private ballot election so that personal decisions about 
whether to join a union remain private. Citizens from both union and 
non-union households overwhelmingly oppose the bill's assault on 
individual rights. Polling by the Coalition for a Democratic Workplace 
reveals that:

     87 percent of voters agree that ``every worker should 
continue to have the right to a federally supervised secret ballot 
election when deciding whether to organize a union'';
     Four out of five voters specifically oppose this 
legislation;
     89 percent of voters believe organizing votes should 
remain confidential and not be made public; and
     80 percent of union households oppose the so-called 
``Employee Free Choice Act.''

    Additionally, this legislation departs from over seven decades of 
precedent established by the National Labor Relations Act. It imposes 
contract terms on private employers through a process of compulsory, 
binding arbitration. Government arbiters will establish wages and terms 
between the two parties, leaving employees out of the process since 
they will not be provided with the opportunity to vote on the new 
contract. Imposing contract terms through compulsory arbitration is an 
unconstitutional infringement on the right of private employers and 
employees to freedom of contract.
    RILA joins a majority of Americans who oppose the ``Employee Free 
Choice Act,'' which not only interferes with the democratic process, 
but it also forces private enterprise to agree to contract terms or 
face government intervention and, ultimately, wages and benefit terms 
that are established by the government.
            Sincerely,
                                         Sandra L. Kennedy,
                                                         President.
                                 ______
                                 
                    Congressional Research Service,
                                Washington, DC. 20540-7000,
                                                     March 5, 2007.
                               Memorandum
To:  Senate Committee on Health, Education, Labor, and Pensions
Attention: Kyle Hicks

From:  Jon O. Shimabukuro, Legislative Attorney, American Law Division

Subject:  Employee Free Choice Act of 2007

    This memorandum responds to your question concerning H.R. 800, the 
Employee Free Choice Act of 2007 (``EFCA'').\1\ The EFCA would amend 
the National Labor Relations Act (``NLRA'') to require the National 
Labor Relations Board (``the Board'') to certify an individual or labor 
organization as the exclusive representative of a bargaining unit if 
the Board finds that a majority of employees in an appropriate unit has 
signed valid authorizations designating the individual or labor 
organization as its bargaining representative. You asked whether the 
EFCA would still permit a secret ballot election to select an exclusive 
representative if the majority of employees who signed valid 
authorizations specifically requested such an election.
---------------------------------------------------------------------------
    \1\ H.R. 800, 110th Cong., 1st Sess. (2007). For additional 
information on the Employee Free Choice Act, see CRS Rept. RS21887, The 
Employee Free Choice Act, by Jon O. Shimabukuro.
---------------------------------------------------------------------------
    Section 2 of the EFCA would add the following paragraph to section 
9(c) of the NLRA:

        (6) Notwithstanding any other provision of this section, 
        whenever a petition shall have been filed by an employee or 
        group of employees or any individual or labor organization 
        acting in their behalf alleging that a majority of employees in 
        a unit appropriate for the purposes of collective bargaining 
        wish to be represented by an individual or labor organization 
        for such purposes, the Board shall investigate the petition. If 
        the Board finds that a majority of the employees in a unit 
        appropriate for bargaining has signed valid authorizations 
        designating the individual or labor organization specified in 
        the petition as their bargaining representative and that no 
        other individual or labor organization is currently certified 
        or recognized as the exclusive representative of any of the 
        employees in the unit, the Board shall not direct an election 
        but shall certify the individual or labor organization as the 
        representative described in subsection (a).

    The use of the word ``shall'' in the last sentence of the proposed 
paragraph seems to indicate that an election would be unavailable once 
the Board concludes that a majority of the employees in an appropriate 
unit has signed valid authorizations designating an individual or labor 
organization as its bargaining representative. In general, the word 
``shall'' is considered to be imperative or mandatory.\2\ Unlike the 
word ``may'' which is given a permissive meaning that suggests the use 
of discretion, the word ``shall,'' in the absence of evidence of 
contrary legislative intent, is inconsistent with the idea of 
discretion.\3\
---------------------------------------------------------------------------
    \2\ See 82 C.J.S. Statutes Sec. 368 (1999). See also 1A Sutherland 
Statutes and Statutory Construction Sec. 25:4 (Norman J. Singer ed., 
2002) (``Unless the context otherwise indicates the use of the word 
``shall'' . . . indicates a mandatory intent.'').
    \3\ 82 C.J.S. Statutes, supra note 2.
---------------------------------------------------------------------------
    The legislative history of the EFCA supports the notion that the 
word ``shall'' should be viewed as imperative. House Report 110-23, 
which accompanies the EFCA, states firmly: ``Indeed, if a majority sign 
and submit valid authorization cards to the NLRB, notwithstanding any 
other provision in the NLRA, the NLRB must certify their union.'' \4\ 
The use of the word ``must'' by the House Committee on Education and 
Labor appears to confirm that certification by the NLRB would seem to 
always follow the submission of valid authorizations by a majority of 
employees in an appropriate unit.
---------------------------------------------------------------------------
    \4\ H.R. Rep. No. 110-23, at 26 (2007).
---------------------------------------------------------------------------
                                 ______
                                 

       Response to Questions of Senator Hatch and Senator Coburn 
                          by Peter J. Hurtgen

                       QUESTIONS OF SENATOR HATCH

    Question 1. Because the first contract imposed by the Federal 
Government through compulsory arbitration is ``binding'' on the 
parties, the employees who are subject to the government's imposed 
wages, benefits, and other terms and conditions of employment will have 
no right to a ratification vote to approve or reject the contract as 
they would under current law if the contract were freely negotiated 
without government interference. In other words, it doesn't matter what 
the employees think or want, once the Federal Government has spoken and 
the contract is binding for 2 years like it or not.
    Is that correct?
    Answer 1. Yes.

    Question 2. Because the government-imposed contract is binding on 
the parties, the employees will not be allowed to strike to enforce 
their contract demands if the parties reached impasse as they are under 
current law if the contract were freely negotiated. Also, of course, 
the employees would not be permitted to strike for the duration of the 
contract.
    Is that correct?
    Answer 2. It is unclear whether they could strike to enforce 
demands. It is clear that they could not strike for the duration of the 
contract to achieve changes in benefits, wages, or working conditions; 
or for any other reason if the contract contains a no-strike clause.

    Question 3. Since the government-imposed contract would be binding 
for 2 years, under the ``contract bar'' doctrine neither the employer 
nor the employees would be permitted to challenge the union's 
continuing majority status through an NRLB-
supervised secret ballot decertification or deauthorization election 
for the term of the contract. That's an additional 2-year denial of the 
right of workers to a secret ballot election to express their views on 
the union.
    Is that correct?
    Answer 3. Yes.

    Question 4. Now I want to ask you a few questions about the effect 
of compulsory binding interest arbitration on the national labor policy 
of free collective bargaining.
    First, I want to establish the difference between ``interest 
arbitration'' and ``grievance arbitration.''
    Answer 4. Yes, they are fundamentally different.

    Question 5. Is it correct that: In ``grievance arbitration'' the 
answers to the dispute are to be found within the ``four corners'' of 
the pre-existing contract . . . the arbitrator's job is interpreting 
and applying what the parties have agreed to.
    ``Interest arbitration,'' on the other hand, is an arbitrator's 
judgment, imposed on the parties in the absence of a contract, as to 
what in his opinion the parties should have agreed to, or would have 
agreed to, absent arbitration. So, such determinations imposed on the 
parties will be affected by the arbitrator's own economic or social 
theories, often without the benefit or understanding of practical, 
competitive economic forces. It is for that reason that most employers 
shudder at the thought of an outside government arbitrator with the 
power of the company's economic life and death in the balance.
    Answer 5. Yes.

    Question 6. Do you agree that Elkouri & Elkouri, ``How Arbitration 
Works'' (6th Ed, 2006) published by the ABA section of labor and 
employment law is regarded as one of the premier basic texts on 
arbitration?
    Answer 6. Yes.

    Question 7. Quoting from that text, I ask whether you agree or 
disagree with the following statements about compulsory binding 
interest arbitration:

          ``Broadly stated, that: (1) it is incompatible with free 
        collective bargaining, (2) it will not produce satisfactory 
        solutions to disputes, (3) it may involve great enforcement 
        problems, and (4) it will have damaging effects on the economic 
        structure.'' (p. 21).
    Answer 7. Yes.

    Question 8. ``Compulsory arbitration is a dictatorial and imitative 
process rather than a democratic and creative one.'' Id.
    Answer 8. Yes.

    Question 9. ``Compulsory arbitration means governmental--
politically influenced--determination of wages and will inevitably lead 
to governmental regulation of prices, production, and profits; it 
threatens not only free collective bargaining, but also the free market 
and enterprise system.'' Id at 22.
    Answer 9. Yes.

    Question 10. In fact, common sense and experience teach some of the 
practical flaws in compulsory arbitration:

          ``Each party will be reluctant to offer compromises in 
        bargaining for fear that they may prejudice its position in 
        arbitration. Elimination of the strike from collective 
        bargaining will eliminate the strongest incentive the parties 
        may have to reach agreement. One or both of the parties may 
        make only a pretense at bargaining in the belief that more 
        desirable terms may be obtained through the arbitration that is 
        assured if bargaining fails. Because compulsory arbitration 
        will be used to resolve unknown future disputes, both sides may 
        list many demands and drop few in bargaining, believing that 
        little will be lost if some of the `chaff ' is denied by an 
        arbitrator (who the party may believe would then be more 
        inclined to favor that party on major issues in order to appear 
        fair).'' Id at 21.
    Answer 10. Yes.

    Question 11. I have heard that this provision has not met with 
universal support among local unions. After all, it takes negotiations 
out of their hands. They will be assured a ``first contract,'' but on 
what terms?
    Proponents of the bill will point to the fact that first contracts 
sometimes take a long time to negotiate, and in some instances the 
parties bargain to ``impasse'' giving employers the right to implement 
their final terms and the union the right to strike to enforce their 
contract demands.
    But why is that? In your testimony, Mr. Hurtgen, you give several 
reasons why it is difficult for the parties to reach agreement on 
initial contracts. The employer is already offering competitive wages 
and benefits to employees, there is a lack of any historic track record 
between the parties, there may be inexperienced negotiators, or the 
union may have elevated employee's expectations beyond its ability to 
produce when it comes up against reality at the bargaining table.
    Answer 11. Yes.

    Question 12a. What happen to the labor law concept of ``impasse'' 
where the parties are simply unable to agree? Under H.R. 800, would you 
agree that the new definition of ``impasse'' will be ``90 days?'' That 
whenever negotiations reach 90 days, whether or not the parties are at 
impasse, the government steps in with mediation and then dictates the 
terms of a contract.
    Answer 12a. Yes.

    Question 12b. In your experience, is there any uniform timeframe at 
which point the parties reach ``impasse?''
    Answer 12b. No.

    Question 12c. Have you ever negotiated collective bargaining 
agreements, or been involved with such agreements at FMCS, where the 
parties were bargaining in completely good faith beyond 90 days, but 
had not reached ``impasse?''
    Answer 12c. Yes, many times.

    Question 13a. There is another extremely troubling aspect of the 
bill's compulsory ``interest'' arbitration provision.
    What is the scope of the government's authority to set wages, 
benefits, and other terms and conditions of employment through 
compulsory interest arbitration?
    Answer 13a. It is unclear and may raise constitutional issues.

    Question 13b. For example, I ask you, since nowhere does the bill 
clarify the issue, would the arbitrator have the authority to place an 
employer in a multiemployer pension plan? The union may be seeking 
that, and the employer may disagree (especially if the plan is under 
funded and ``at risk''). Could the arbitrator force the employer to 
agree?
    Answer 13b. Yes.

    Question 13c. Could the arbitrator place the employer in a 
multiemployer bargaining unit?
    Answer 13c. Probably not, because under current law the consent of 
all the parties is necessary to the formation of a multiemployer 
bargaining unit.

    Question 13d. Could the arbitrator impose the wages and benefits 
from other union contracts unrelated to the local economy?
    Answer 13d. Yes.

    Question 13e. Could an arbitrator mandate employer-provided health 
insurance coverage, even where the employer's competitors do not 
provide such benefits or provide lesser benefits or less costly plans?
    Answer 13e. Yes.

    Question 13f. What about contract provisions not to contract out, 
or subcontract work?
    Answer 13f. Yes.

    Question 13g. . . . or not to open a new facility without applying 
the terms of the union contract?
    Answer 13g. Probably not, if it is a non-mandatory subject of 
bargaining.

    Question 13h. Could an arbitrator mandate union neutrality and card 
check at all of the employers operations? What about union access to 
the employer's facilities?
    Answer 13h. Only if it is a mandatory subject of bargaining and 
under current law that is unclear.

    Question 13i. Is there anything, short of an illegal subject of 
bargaining, that a government arbitrator could not impose through 
compulsory interest arbitration? That would include not only all 
``mandatory subjects'' of bargaining, but all ``permissive subjects'' 
as well?
    Answer 13i. Probably could not impose on a non-mandatory subject of 
bargaining, but it is unclear from the proposed bill.

    Question 14. Finally, in your testimony you suggest that compulsory 
interest arbitration can take weeks of hearings, and then lengthy 
periods for the arbitrator to draft a decision, and even then the 
process led to an imposed legislative body solution--not agreements. So 
I guess I have to ask, where is the time saving?
    Answer 14. There would not be any time saved.
                      questions of senator coburn
    Question 1. In both written and verbal testimony, Professor Estlund 
described various tactics and activities employers use to pressure 
workers into not supporting union organization. Are those activities 
already illegal and subject to enforcement by the NLRB?
    Answer 1. Many of the tactics described by Professor Estlund are 
illegal, they are subject to NLRB enforcement, and if charges are 
promptly filed with the NLRB, either by the union or by the impacted 
employees, the charges will be investigated immediately.
    Unfair labor practice charges filed by unions or employees during 
an initial organizing campaign are considered ``high impact'' cases by 
the NLRB. These cases are decided by the NLRB regional offices within 7 
weeks of filing of the charge. By the end of that time period, the case 
is either dismissed, or a complaint is issued setting the case for 
trial.
    The NLRB's General Counsel recently issued memoranda to all field 
staff encouraging the use of injunctive relief under Section 10(j) of 
the Act in initial organizing campaigns.\1\ Congress created Section 
10(j) relief as a means to preserve or restore the lawful status quo 
ante, so that the purposes of the act are not frustrated and the final 
order of the Board is not rendered meaningless by the passage of time. 
Congress recognized that an employer's illegal acts could, in some 
cases, permanently alter the situation and prevent the Board from 
effectively remedying the violations by its final order. NLRB field 
staff review all charges filed in initial organizing campaigns and 
considers whether they are appropriate for 10(j) relief.\2\ Even while 
the NLRB regional office considers 10(j) proceedings, every effort is 
made to seek an expedited administrative trial, between 28 days to 8 
weeks from the issuance of a complaint.\3\
---------------------------------------------------------------------------
    \1\ See General Counsel's Memorandum 07-01 Submission of 10(j) 
Cases, and General Counsel Memorandum 06-05 First Contract Bargaining 
Cases http://www.nirb.gov/research/memos/general_councel_memos.aspx.
    \2\ See NLRB Annual Reports for a discussion of cases involving 
injunctive relief litigation.
    \3\ See Operations Management Memorandum 06-60. See NLRB Annual 
Reports for discussion in injunctive relief litigation.
---------------------------------------------------------------------------
    Although Professor Estlund claims that there is no injunctive 
relief for employer unfair labor practices, the statute already 
provides for such injunctive relief, and the NLRB's General Counsel has 
emphasized the importance of identifying and pursuing such relief as 
early as possible in initial contract cases. And even while such relief 
is under administrative review, an expedited trial will be sought in 
order to remedy these cases as quickly as possible. While I agree with 
Professor Estlund's premise that unfair labor practices that occur 
during an organizing campaign must be remedied quickly, no statutory 
changes are needed where it is clear that NLRB field staff investigate 
and pursue unlawful activity in a most expeditious manner, seeking 
injunctive relief when appropriate.
    Professor Estlund asserts that employers opposed to unionization 
threaten employees with job loss or plant closure and employees fear 
discharge. As noted in my answer to question 3 below, an employer that 
threatens plant closure because of the union's organizing campaign will 
be found to have violated the law. Although Professor Estlund claims 
that employees cannot be assured that the law will protect them if they 
support the union, the key to securing a quick remedy of unfair labor 
practices is to promptly contact the NLRB. The NLRB will expeditiously 
investigate the charges, decide the merits of the case, and seek relief 
either through an expedited trial or through 10(j) proceedings.
    Professor Estlund also contends that even after an employer has 
violated the act, it takes years to secure a reinstatement remedy. This 
is not the case in a large majority of cases. The NLRB's records for 
fiscal year 2006 show that of the 37 percent of all cases that were 
found to have merit, 96.7 percent of them settled before a trial took 
place, a very high settlement rate. A small minority of cases require 
full litigation through the Federal appellate court level, and should 
that litigation be necessary, the remedial process is a long one. 
However, that is a tiny minority of the cases since most meritorious 
cases are settled before trial.\4\
---------------------------------------------------------------------------
    \4\ The number of cases pending at the NLRB's headquarters in D.C. 
has declined substantially over the years, demonstrating that less and 
less cases are appealed to the NLRB and then to the Federal appellate 
courts.
---------------------------------------------------------------------------
    Regarding backpay, Professor Estlund is correct that the statute is 
compensatory--a backpay award is intended to remedy the discharge by 
paying employee for lost earnings. While there are no punitive damages, 
and generally no fines are assessed against the employer, the Board 
does pursue tougher remedies for repeat offenders of the law. If an 
employer has violated the law previously, the NLRB will pursue formal 
settlements rather than informal settlements. A formal settlement is a 
written stipulation providing for, among other things, consent entry of 
a court judgment enforcing the Board's order. This gives the NLRB the 
ability to file contempt proceedings thereafter, which can be 
accompanied by fines for each violation. A formal settlement is 
appropriate where there is a history of unfair labor practices or there 
is a likelihood of recurrence or extension of current unfair labor 
practices.\5\
---------------------------------------------------------------------------
    \5\ Section 10164, Unfair Labor Practice Casehandling Manual. 
http://www.nlrb.gov/publications/manuals/
ulp_casehandling_manual_(l).aspx.
---------------------------------------------------------------------------
    Formal settlements are not the only means of taking action against 
recidivist employers. Civil contempt actions are taken by the NLRB 
where an employer is in contempt of a court-enforced Board order. 
Professor Estlund argues that ``many employers . . . have little to 
fear from labor law enforcement through a ponderous, delay-ridden legal 
system with meager remedial powers.'' With 96 percent of the cases 
settling at the regional level, within a few weeks after charges are 
filed, one cannot claim that the system is ridden with delays. And 
regarding allegedly ``meager remedial powers,'' the NLRB has pursued 
many avenues to ensure compliance with its orders. It has obtained 
assessment of fines, writs of body attachment, and protective 
restraining orders where there has been evidence that a particular 
employer has repeatedly and flagrantly violated the law.\6\ The NLRB's 
administrative process, in its current form, calls for formal 
settlements, consent court judgments, contempt proceedings and more 
serious penalties to deter recidivist offenders from engaging in 
egregious or repetitive acts of discrimination. No additional changes 
to the law are necessary.
---------------------------------------------------------------------------
    \6\ See NLRB Annual Report for FY 2005, page 73. http://
www.nlrb.gov/e-gov/e_reading 
_room/nlrb_annual_reports.aspx.
---------------------------------------------------------------------------
    Professor Estlund insinuates that employers should not be entitled 
to hold meetings with employees and express opposition to unionization. 
However, the law in its current form allows employers the right of free 
speech. Section 8(c) of the Act states:

          The expressing of any views, argument, or opinion, or the 
        dissemination thereof, whether in written, printed, graphic, or 
        visual form, shall not constitute or be evidence of an unfair 
        labor practice under any of the provisions of this Act 
        [subchapter], if such expression contains no threat of reprisal 
        or force or promise of benefit.

    An employer is permitted to express its opinion regarding 
unionization and even lawfully urge employees to vote against the 
union. It may not, however, cross the line into threatening employees 
with dire consequences if the union wins an election, as noted more 
fully in my response to question 3.

    Question 2a. Chairman Hurtgen, with your extensive experience in 
collective bargaining negotiations, do you think 120 days is an 
adequate period of time to establish a first contract? Why or why not?
    Answer 2a. Based on my experience, 120 days is not sufficient to 
negotiate an initial collective bargaining agreement. It is not even 
sufficient time in many cases for a mature collective bargaining 
relationship, considering the complexities of the workplace and the 
difficulty of the issues today. I do not believe that any time limit 
should be placed on initial contract negotiations, for the reasons set 
forth below.
    Today, even experienced and amicable labor-management relationships 
can take longer than 120 days to reach a successor agreement because of 
the complexities of the issues facing the workplace. Employers and 
labor unions regard the high costs of health care and pensions as 
extremely difficult to negotiate and as a result, many commence 
negotiations sometimes as early as 6 months prior to contract 
expiration.
    Certainly, in a new collective bargaining relationship, where the 
parties are negotiating their very first agreement, it can take even 
longer to address these complex issues. Negotiating contract language, 
for nascent collective bargaining relationships, is a time consuming 
process. Indeed, the NLRB has recognized that:

          ``Parties engaged in initial contract bargaining are likely 
        to need more time to conclude an agreement than parties who are 
        bargaining for a renewal contract. It is not unusual for it to 
        take place in an atmosphere of hard feelings left over from an 
        acrimonious organizing campaign and the individuals sitting at 
        the bargaining table may be inexperienced at collective 
        bargaining. In initial bargaining, unlike in renewal 
        negotiations, the parties have to establish basic bargaining 
        procedures and core terms and conditions of employment, which 
        may make negotiations more protracted than in renewal contract 
        bargaining.'' \7\
---------------------------------------------------------------------------
    \7\ Lee Lumber, 334 NLRB 399 (2001).

    Most labor and management representatives would agree that when 
parties are negotiating for an initial contract, there are difficulties 
often encountered in hammering out fundamental procedures, rights, wage 
scales, and benefit plans in the absence of previously established 
practices. For this reason, a statutory time limit for reaching a first 
contract is tantamount to setting up the process, and the parties' 
relationship, for failure.
    The NLRB and the courts of appeal have long applied a 1-year 
insulated period where a union has been newly certified following a 
Board-conducted election. It is called the ``certification year'' rule, 
and a newly certified union's status cannot be questioned for 1 year 
after certification. ``When a bargaining relationship has been 
initially established, it must be given a reasonable time to work and a 
fair chance to succeed'' before an employer can question the union's 
majority status, or before employees can move to decertify the union. 
See Lee Lumber, supra. The NLRB has also held that ``there are no rules 
concerning what constitutes a ``reasonable time'' to negotiate an 
agreement; each case must rest on its own particular facts. However, 
``a reasonable period of time'' does not depend on either the passage 
of time, or on the number of meetings between the parties.'' Id.
    In my view, newly established collective bargaining relationships 
must be given special attention, but not by statutorily mandating that 
they reach agreement in a specific time period. They must be given a 
reasonable period of time to meet, discuss the issues effecting that 
particular workplace, hammer out contract language, and build their 
relationship. To engage in such a complex process, yet restrict it to a 
120-time period sets up the parties for failure.

    Question 2b. To the best of your knowledge, historically, what is 
the average time period whereby a first contract is established?
    Answer 2b. In Lee Lumber, 332 NLRB 399 (2001), the Board relied on 
data from the Federal Mediation and Conciliation Service to determine 
the average length of time to achieve a first contract. According to 
the FMCS, the average length of time after certification for newly 
certified unions to reach initial contracts was 296 days in fiscal year 
1998, 313 days in fiscal year 1999, and 347 days in fiscal year 2000. 
This data has not been reproduced, to my knowledge, since 2000.
    I would caution, however, that much has transpired in the 7 years 
since that data was reported. The rapid rise of the global economy, the 
meteoric rise in the costs of employer-sponsored health care, legacy 
costs, and pension benefits has placed a significant burden on employer 
and union relationships. These factors only make initial contract 
negotiations more complicated and time consuming than it was a few 
short years ago.
    The FMCS keeps initial contract cases open for a 2-year period 
after the certification. If, within that 2-year period, a contract is 
reached, FMCS closes the case with an indication that an agreement was 
reached. If there was no contract reached after 2 years, the FMCS no 
longer tracks the progress of that case and administratively closes the 
case, noting that no agreement was reached as of the time of the 
closing.
    I recently filed a FOIA request seeking information regarding 
initial contracts. To date, the FMCS has not released certain 
information that would be helpful to securing better data on the 
average time to achieve a first contract. In order to provide more 
current information, FMCS could provide the basis for closing initial 
contract cases (i.e., whether a contract was reached or not). To date, 
the FMCS has not released that data. Having that information would 
allow me to better answer this question.

    Question 3. Please describe some of the restrictions employers face 
during a union organization drive of their employees.
    Answer 3. Section 8(a)(1) through Section 8(a)(5) of the National 
Labor Relations Act details unfair labor practices against employers. 
The National Labor Relations Board, and the courts of appeal, interpret 
the statute in greater detail through case law. The list below 
represents only some of the restrictions an employer faces during an 
organizing campaign. It is in no way an exhaustive list of all 
restrictions an employer may encounter. Employers cannot:

     Interrogate their employees about their support of a union 
organizing campaign;
     Question their employees as to whether they signed an 
authorization card in support of the union;
     Engage in surveillance to determine which employees are 
involved in union organizing drive;
     Change working conditions of their employees in 
retaliation for employees' support of a union campaign. Such 
prohibitions can include reducing employee's pay, or changing other 
benefits such as leave and attendance policies;
     Promise employees better pay or working conditions as an 
inducement to abandon a union organizing campaign or to discourage 
support of the union campaign;
     Make working conditions more onerous because employees 
were involved in a union organizing campaign;
     Suspend or discharge employees, or engage in any other 
adverse employment action because they were involved in a union 
organizing campaign;
     Threaten their employees with loss of jobs or benefits if 
they vote for a union or engage in a union organizing campaign;
     Threaten to close the plant if employees select a union to 
represent them; or
     Transfer, layoff, or otherwise punish employees because 
they engaged in a union campaign.
       Questions of Senator Hatch to Professor Cynthia L. Estlund
    Question 1. Professor Estlund, I noticed that you had very little 
to say in your testimony about compulsory, binding interest arbitration 
of first contracts. Is that because you have little direct experience 
at the bargaining table negotiating contracts? How many first contracts 
have you negotiated?

    Question 2. Are you aware that many union negotiators have resisted 
even voluntary interest arbitration to address protracted bargaining 
disputes, such as the recent west coast ports strike where the parties 
were at impasse at the bargaining table? We're informed that many local 
unions do not support the compulsory binding first contract interest 
arbitration provision in H.R. 800. Are you aware of that, as well?

    Question 3. Are you familiar with the Elkouri & Elkouri text 
entitled ``How Arbitration Works'' published by the American Bar 
Association's section on labor and employment law (6th Ed. 2006), and 
do you recognize it as an authoritative basic text on the subject?
    Then I want to get your reaction to the following statements from 
that text.
    Quoting from that text, I ask whether you agree or disagree with 
the following statements about compulsory binding interest arbitration:

          ``Broadly stated, that: (1) it is incompatible with free 
        collective bargaining, (2) it will not produce satisfactory 
        solutions to disputes, (3) it may involve great enforcement 
        problems, and (4) it will have damaging effects on the economic 
        structure.'' (p. 21).
          ``Compulsory arbitration is a dictatorial and imitative 
        process rather than a democratic and creative one.'' Id.
          ``Each party will be reluctant to offer compromises in 
        bargaining for fear that they may prejudice its position in 
        arbitration. Elimination of the strike from collective 
        bargaining will eliminate the strongest incentive the parties 
        may have to reach agreement. One or both of the parties may 
        make only a pretense at bargaining in the belief that more 
        desirable terms may be obtained through the arbitration that is 
        assured if bargaining fails. Because compulsory arbitration 
        will be used to resolve unknown future disputes, both sides may 
        list many demands and drop few in bargaining, believing that 
        little will be lost if some of the `chaff ' is denied by an 
        arbitrator (who the party may believe would then be more 
        inclined to favor that party on major issues in order to appear 
        fair).'' Id. at 21.

    Question 4. Professor, do you agree that under binding forced 
interest arbitration of first contracts, employees would lose their 
right to vote whether to ratify or approve the wages, benefits, and 
other terms and conditions of employment under which they will work as 
a result of the arbitrator's imposed 2-year contract.
    In other words, it doesn't matter what the employees think or want, 
once the Federal Government has spoken through a government-appointed 
arbitrator, and the contract is binding on those employees for 2 years 
whether they like it or not.

    Question 5. So I ask you, professor, where's the ``employee free 
choice'' in disenfranchising employees from voting to approve or reject 
the wages, terms, and other conditions they would be subject to for the 
first 2 years of a union contract?

    [Editor's Note: Responses to the above questions were not available 
at time of print.]

    [Whereupon, at 11:38 a.m., the hearing was adjourned.]

                                    

      
