[Senate Hearing 111-702]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 111-702
 
REBUILDING ECONOMIC SECURITY: EMPOWERING WORKERS TO RESTORE THE MIDDLE 
                                 CLASS 

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

                                HEARING

                                 OF THE

                    COMMITTEE ON HEALTH, EDUCATION,
                          LABOR, AND PENSIONS

                          UNITED STATES SENATE

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                                   ON

EXAMINING REBUILDING ECONOMIC SECURITY, FOCUSING ON EMPOWERING WORKERS 
                      TO RESTORE THE MIDDLE CLASS

                               __________

                             MARCH 10, 2009

                               __________

 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                    JOHN McCAIN, Arizona
BERNARD SANDERS (I), Vermont               ORRIN G. HATCH, Utah
SHERROD BROWN, Ohio                        LISA MURKOWSKI, Alaska
ROBERT P. CASEY, JR., Pennsylvania         TOM COBURN, M.D., Oklahoma
KAY R. HAGAN, North Carolina               PAT ROBERTS, Kansas
JEFF MERKLEY, Oregon
                                       

           J. Michael Myers, Staff Director and Chief Counsel

     Frank Macchiarola, Republican Staff Director and Chief Counsel

                                  (ii)



















                            C O N T E N T S

                               __________

                               STATEMENTS

                        TUESDAY, MARCH 10, 2009

                                                                   Page
Harkin, Hon. Tom, a U.S. Senator from the State of Iowa, opening 
  statement......................................................     1
Isakson, Hon. Johnny, a U.S. Senator from the State of Georgia, 
  opening statement..............................................     4
Sanders, Hon. Bernard, a U.S. Senator from the State of Vermont..     5
Alexander, Hon. Lamar, a U.S. Senator from the State of Tennessee     6
Casey, Hon. Robert P., a U.S. Senator from the State of 
  Pennsylvania...................................................     7
Merkley, Hon. Jeff, a U.S. Senator from the State of Oregon......     8
Brown, Hon. Sherrod, a U.S. Senator from the State of Ohio.......     9
Voos, Paula, Ph.D., Chair, Department of Labor Studies and 
  Employment Relations, Rutgers University, New Brunswick, NJ....    11
    Prepared statement...........................................    12
Henderson, Wade, President and CEO, Leadership Conference on 
  Civil Rights, Washington, DC...................................    16
    Prepared statement...........................................    18
Wallis, Rev. Jim, President and Executive Director, Sojourners, 
  Washington, DC.................................................    23
    Prepared statement...........................................    25
Layne-Farrar, Anne, Ph.D., Director, LECG Consulting, Chicago, IL    27
    Prepared statement...........................................    29
Murray, Hon. Patty, a U.S. Senator from the State of Washington..    36
    Prepared statement...........................................    38
Hagan, Hon. Kay R., a U.S. Senator from the State of North 
  Carolina.......................................................    44
Kelly, Deborah, Worker, Anchorage, AK............................    48
    Prepared statement...........................................    50
Badillo, Kelly, Worker, Jersey, City, NJ.........................    51
Harrison, Sharon, Worker, Lebanon, VA............................    53
Getts, Larry, Worker, Albion, IN.................................    54
    Prepared statement...........................................    56

                          ADDITIONAL MATERIAL

Statements, articles, publications, letters, etc.:
    Senator Kennedy..............................................    65
    Senator Enzi.................................................    67
    Response to Questions of Senator Kennedy by Paula Voos, Ph.D.    71
    Response to Questions of Senator Kennedy by Anne Layne-
      Farrar, Ph.D...............................................    72
    Response to Questions of Senator Enzi by Wade Henderson......    76
    Richard A. Epstein, letter...................................    77

                                 (iii)

  


REBUILDING ECONOMIC SECURITY: EMPOWERING WORKERS TO RESTORE THE MIDDLE 
                                 CLASS

                              ----------                              


                        TUESDAY, MARCH 10, 2009

                                       U.S. Senate,
       Committee on Health, Education, Labor, and Pensions,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:10 a.m. in 
Room SD-106, Dirksen Senate Office Building, Hon. Tom Harkin, 
presiding.
    Present: Senators Harkin, Murray, Sanders, Brown, Casey, 
Hagan, Merkley, Isakson, Alexander, and Roberts.

                  Opening Statement of Senator Harkin

    Senator Harkin. The Senate Committee on Health, Education, 
Labor, and Pensions will please come to order.
    First of all, I want to thank you all for joining me here 
today for this very critically important meeting. I know we 
don't have enough room for everyone here, but I understand we 
have an overflow room someplace else, in which it's being piped 
in.
    No doubt we are in the midst of an economic crisis of 
historic proportions. Unfortunately, we're seeing that the 
labor and economic policies of the recent past were an abysmal 
failure on all counts. As I've said many times in the recent 
past, we've been trying to feed the birds by giving more oats 
to the horse. If you don't understand that, ask somebody who 
lives in the country; they'll tell you what that means.
    [Laughter.]
    Anyway, it just hasn't worked.
    In a speech in 1965, the Reverend Martin Luther King, Jr., 
said,

          ``The labor movement was the principal force that 
        transformed misery and despair into hope and progress. 
        Out of its bold struggles, economic and social reform 
        gave birth to unemployment insurance, old-age pensions, 
        government relief for the destitute, and, above all, 
        new wage levels that meant not mere survival, but a 
        tolerable life. The captains of industry did not lead 
        this transformation; they resisted it until they were 
        overcome. When, in the' 30s, the wave of union 
        organization crested over the Nation, it carried to 
        secure shores not only itself, but the whole society.''

    During the Great Depression, President Roosevelt and 
Congress realized that the way to get the economy moving again 
was to give real people real buying power. In 1935 we passed 
the Social Security Act, it was signed into law, and the 
National Labor Relations Act, the Wagner Act. In 1938, the Fair 
Labor Standards Act was signed into law, providing, for the 
first time, for minimum wage. These reforms really changed the 
course of American history, to create a situation where workers 
on an assembly line could afford to buy the products they were 
manufacturing, and ushered in a long era of economic prosperity 
that even FDR probably could not have foreseen. They did it, 
not by giving people handouts, but by giving workers a voice, a 
chance to earn a living through hard work.
    The National Labor Relations Act built upon previous laws, 
not just allow workers to organize, but prohibits employer 
interference in that right. It provided a real, solid framework 
for workers to organize and bargain collectively rather than to 
beg individually.
    Well, that's what this hearing is about. How do we craft a 
recovery that includes real workers in the recovery? How do we 
make sure everyone can participate in our economy? Well, I 
believe one way is to make sure that work pays. It's time that 
we asked ourselves, the country, how we think we can compete 
globally. If we think we can somehow have cheaper labor costs 
than the developing world, we'd better think again. We win, as 
an economy, by having the smartest, best-trained, most talented 
workforce in the world, and ensuring that workers get a fair 
share of productivity gains. This is what I mean, right here. 
If you look at what's happened in the past, if you look, back 
here, from the 1940s to the 1960s, where we had peak union 
membership, wages and productivity went up together. When union 
membership started to decline, productivity kept going up and 
real wages started going down. That's what's been happening 
since the mid-1960s. How do workers get a better share of the 
productivity gains that they themselves are producing?
    Well, I'm saying that unions can help us get there. They 
ensure better----
    [Applause.]
    Senator Harkin [continuing]. Productive workplaces.
    Senator Alexander. Mr. Chairman, I would like to ask that 
we not have disruptions during the testimony today.
    Senator Harkin. Well, I'll let people express themselves as 
they will. I'm chairing this hearing, and they can express 
themselves as they will.
    [Applause.]
    Senator Alexander. Mr. Chairman, I think that is entirely 
out of order. Mr. Chairman, that's entirely out of order for a 
Senate hearing.
    Senator Harkin. I'll finish my statement.
    Unions ensure better and more productive workplaces, they 
provide worker training, they will help us to rebuild our 
middle class in the United States. Historically, as we've been 
more unionized, more Americans have had a better standard of 
living.
    Here's a chart put together by the Economic Policy 
Institute that shows that unionization rates have, if anything, 
a positive effect on global competitiveness. What this chart 
basically shows--it's kind of busy, but it shows that the 
export-oriented countries that are producing things for export 
are the countries that are most heavily unionized. Yet, here's 
the United States, down here, with our current accounts 
balances, one of the worst in the world, and one of the lowest 
rates of unionization. So, don't tell me that unionization does 
away with competitiveness. Germany, Denmark, New Zealand, 
Sweden, Finland, Austria, Belgium, Canada, Japan, they're all 
doing quite well, and they have high rates of unionization.
    We're going to hear from a number of witnesses today, and 
we'll hear from the Reverend Jim Wallis, who will testify that 
from 1995 to 2005, CEO pay has gone up five times faster than 
that of the average worker. In 2004, the average CEO made 431 
times that of an average worker. Adjusted for inflation, 
average worker payroll rose 8 percent from 1995 to 2005, but 
median CEO pay rose about 150 percent over the same period. In 
my home State of Iowa, real median household income fell by 3.4 
percent over that period, from $48,142 to $46,500.
    Concentrating so much power in the hands of so few has 
never been sustainable. It's also a matter of freedom of 
association. I believe that a person should be able to join a 
union the same way they join any other organization in this 
country. If 51 out of 100 workers sign a card to join a union, 
then management should bargain with those workers.
    [Applause.]
    In addition, 30 percent of the time, even after workers 
jump through all the hoops and vote in a union, they never get 
a contract out of it. You know, it's getting to the point in 
this country where the only places they get to have a union are 
places where management says it's OK to have a union there, in 
which case they probably don't even need one. It's a ridiculous 
Catch 22. We have to do something to make sure that, once 
workers are organized, they have the ability to get a first 
contract.
    When 60 percent of workers want to join a union, but only 7 
percent belong to one, something is broken. When the average 
CEO makes 400 times what an average worker makes, something's 
broken. When ordinary workers lose their pensions, but 
executives get gold-plated deferred compensation arrangements, 
something's broken.
    From 2000 to 2007, the income of the median working-age 
household fell $2,000, despite the fact that productivity 
increased 4.7 percent, as that chart I showed indicated. People 
are working harder, they're getting less.
    Unions have been responsible for almost every major 
improvement in the standard of living in this country's 
history, from the 40-hour work week to the minimum wage to the 
Family Medical Leave Act, health insurance, pensions, OSHA, 
MSHA, the Equal Pay Act, Social Security. If you want to know 
what created the middle class in America, just look at unions. 
Unions created the middle class in America.
    [Applause.]
    Well, I think we're going to have to get just as ambitious 
in the coming years, to get people back to work, get them in 
good jobs; and if they want to form unions, they ought to have 
the right and the freedom to do so.
    Well, today we'll hear from a labor economist, a 
representative of the faith community, a civil rights leader, 
and several real workers who can tell us, in their own words, 
how to restore prosperity in this great Nation. I know the fear 
that people here in this room and throughout the country feel 
in the face of this economic downturn, but it doesn't have to 
be that way. In the Great Depression, that's when we made the 
biggest gains, in terms of getting workers organized and 
unionized so we could lay the groundwork for solid economic 
recovery. We will not have solid economic recovery in this 
country unless and until workers get a fair share of the 
productivity gains in our industries.
    With that, I will turn to our Ranking Member, Senator John 
Isakson.

                      Statement of Senator Isakson

    Senator Isakson. Well, thank you very much, Senator Harkin, 
for calling this meeting. On behalf of all of us on the 
committee, we send our best wishes to Chairman Kennedy on his 
continued recovery from his illness.
    You know, Mr. Chairman, I was listening to your speech, 
and--as I oftentimes do as a businessman--I think about what 
makes America really great and what has made America really 
great. It's a lot of different things, working together. It's 
the American worker, it's the American entrepreneur, and it's 
the captain of industry, as well, the risk-taker, the worker, 
the manager. Unfortunately, so many times, labor-management 
issues become adversarial at their base and we don't talk to 
each other, we talk at each other.
    Today, we ask ourselves an important question. How can we 
empower workers to achieve their economic goals? What can we do 
in Washington to make sure the worker in Dublin, GA, or 
Dubuque, IA, has a bright future and reaches their goals?
    Apparently, support for this legislation is based in a fear 
that, left to their own devices, a worker will not cast a smart 
vote in the secrecy of their own ballot. Instead, they want to 
impose a system whereby union organizations could show up at a 
worker's house, obtain a signature on 51 percent of the cards 
issued--establish a union, and the other 49 percent who you 
wanted all to have a say, wouldn't even ever get to have the 
say, because the 51 percent threshold would have been passed. 
In a secret ballot, they all would have cast their vote, and 
the majority would win, but everybody would have had their say.
    This is just the beginning of problems that you have to 
look at and study. Ninety days after the union bosses have 
obtained the required 51 percent of signatures, a process 
called ``mandatory interest arbitration'' will commence. Now, 
what that means is, under the process, a Washington bureaucrat 
will arrive at the newly organized business, proceed to write 
the rules under which the business will operate for the next 2 
years. How this bureaucrat has the expertise to devise wage 
systems, working conditions, vacation policies, pension 
arrangements, and healthcare benefits for a business about 
which he or she may know nothing at all--moreover, both sides 
would have no choice but to accept the bureaucrat's ruling, no 
matter how removed from reality it may be. The employer would 
not appeal the decision, and the worker would not have the 
opportunity to vote on whether or not to ratify the new 
contract.
    As we will hear today, Canadians have already suffered 
under the damage that a card-check system can inflict on the 
economy. Dr. Layne-Farrar will report that the increased 
unionization under those systems consistently resulted in 
higher unemployment. Her study concludes that the enactment of 
card check and a resultant increase in forced organization of 3 
percentage points will increase the unemployment rate by at 
least 1 full percentage point and will cost the country 
approximately 600,000 jobs per year.
    There are many areas where we may agree, and there are many 
areas where we may disagree, but we must all understand this is 
the greatest country on the face of this Earth because of the 
worker, the entrepreneur, and the risk-taker. As Warren Buffett 
said recently, ``I think the secret ballot is a pretty 
important thing in this country, and I'm against card check, to 
make it clear to anyone that wants to know.'' Like Mr. Buffett, 
I simply cannot support even a watered-down version of this 
attempt to deprive American workers of a right to cast their 
ballot in secret. The decision as to whether or not to join a 
union is an important one and should always be available to the 
worker, as it has been since the 1930s. And this is precisely 
why the law provides for a secret ballot election, which is the 
framework and the hallmark and the underlying strength of the 
government of the United States of America.
    Senator Harkin. Thank you very much, Senator Isakson.
    I will yield to Senator Sanders for a brief opening 
statement.
    Senator Sanders.

                      Statement of Senator Sanders

    Senator Sanders. I will be very brief, Senator Harkin.
    The reality, today, is that the middle class of this 
country is shrinking rapidly, poverty is increasing. Over the 
last 7 years, 6 million more Americans have entered the ranks 
of the poor, and the gap between the very, very rich and 
everybody else has not only grown wider, but it is wider than 
in any country in the industrialized world, with the top one-
tenth of 1 percent earning more income than the bottom 50 
percent, and the top 1 percent owning more wealth than the 
bottom 90 percent. What we have seen--and this is even before 
the disaster on Wall Street caused by the greed and 
recklessness and probably illegal behavior of a handful of Wall 
Street titans, and even before that--is a situation in which 
the wealthiest people in this country have never had it so 
good, while the vast majority of the people suffered, as 
Senator Harkin indicated, a significant decline in their 
standard of living.
    What we are combating today on Wall Street and so many 
other sectors of our society is a culture of greed. Some people 
give you all kinds of reasons why they're opposed to this 
legislation; in my view, the real reason is that big business 
does not want to make sure that workers earn a decent wage. 
That's the bottom line.
    [Applause.]
    What we have seen for the last 8 years is the CEOs get huge 
bonuses, workers get thrown out of their jobs, their jobs go to 
China, and they've got nothing to say about it. What we have 
seen is CEOs do phenomenally well, workers lose their 
healthcare, their pensions are ripped away from them, and they 
have no power to fight back.
    [Applause.]
    The challenge that we face today, especially in the midst 
of the severe recession that we're in--the challenge that we 
face is, How do we rebuild the middle class? How do we make 
sure that people do not have to work the longest hours--how 
many people even know--how many of you know that in the United 
States today, our people work the longest hours of any people 
in the industrialized world? We're working longer and longer 
hours, our people are stressed out, husbands barely see their 
wives because they're both working. This is not what a great 
country is supposed to be. We can do a little bit better than 
that.
    [Applause.]
    Let me just join with Senator Harkin in saying I strongly 
support this legislation so we can give working people a fair 
shot at a decent life.
    Thank you, Senator.
    Senator Harkin. Thank you, Senator Sanders.
    [Applause.]
    Senator Alexander.

                     Statement of Senator Alexander

    Senator Alexander. Thank you, Mr. Chairman.
    In the mountains of east Tennessee, where I grew up, most 
of the mountain people fought with the union--with Abraham 
Lincoln, during the Civil War. If you went into the town and 
asked the sheriff whether it was a Confederate town or a Union 
town, the sheriff would tell you Confederate, because he was 
picked by the bosses. But, if you had a secret ballot vote, 80 
percent would vote with Abraham Lincoln. That's what a secret 
ballot does for little people.
    In the U.S. Senate, we elect our leaders by secret ballot. 
I know that, because I once wrote 27 thank you notes for 24 
votes. Not everyone wants to say exactly how they're going to 
vote. They might feel some pressure. In this committee, we use 
a secret ballot. In my view, this legislation that we're 
considering today is the most radical piece of legislation 
before the Congress. It's called the Employee Free Choice Act. 
It ought to be called the Employee No Choice Act, because it 
takes away the secret ballot, it forces----
    Senator Harkin. Excuse me, Senator.
    As I said, I will permit expressions from clapping and 
stuff. I will not permit any hissing or booing or foot-stomping 
or throwing of things like that. OK? I mean, there are limits 
as to what people can express here. So, I don't want to hear 
any booing or hissing or anything like that. Thank you.
    Please proceed.
    Senator Alexander. I thank the Chairman.
    It takes away the employees' right to a secret ballot and 
replaces it with forced arbitration. The question I would 
have--and I will look forward to the testimony--but, why are we 
having this hearing? I mean, what are the priorities right now 
before us? I thought we were having the summit on healthcare. 
We didn't have time to ask questions about the education bill 
that was just passed. Why aren't we talking about nationalizing 
the student loan program? Why aren't we talking about making 
Pell Grants an entitlement? All of these are going through the 
Congress, all of these are the President's priorities; yet, in 
the first early weeks we're talking about taking away the 
employees' right to a secret ballot.
    Today, on the Senate floor, we're throwing 1,700 low-income 
kids out of the schools of the District of Columbia who are 
there on a voucher program. Why aren't we having a hearing 
about that, or about the stem cell policy that's being changed, 
or about deregulation of higher education? Those are just the 
issues that we could be discussing before this committee.
    We've got banks, we've got auto companies teetering on the 
brink of insolvency, housing is stuck, regulations need to be 
written, and the first priority, apparently, of the Democratic 
majority is to talk about taking away the secret ballot of 
union workers and employees and to talk about forcing 
arbitration. I think that has a lot to say about saying one 
thing and doing another thing.
    My final comment would be that if we're looking for ways to 
be bipartisan in this town, which this committee is usually 
very good at, we start by looking at the 80-percent of issues 
that we can agree on, and we work those out, and not the 20 
percent we disagree on. This is clearly the most divisive issue 
before the Senate, and it will split us right down the middle 
and slow everything else important down that we ought to be 
working on if we continue with it.
    Thank you.
    Senator Harkin. Thank you, Senator Alexander.
    Senator Casey.

                       Statement of Senator Casey

    Senator Casey. Mr. Chairman, thank you for calling the 
hearing. I want to reiterate what was said earlier; we're 
grateful for Senator Kennedy's leadership. He leads when he's 
here, and he leads even when he's not physically here, and 
we're grateful for that leadership over a generation. Thank you 
for calling the hearing.
    I think it's, in my judgment, entirely appropriate that we 
meet here today to talk about, not only this legislation, the 
Employee Free Choice Act, but what the American family is 
living through--the trauma of this recession. This is a hearing 
to explore the economy, to explore jobs and how we create jobs, 
how we create some kind of economic security for families that 
don't have it. One of the best ways to ensure economic security 
for the American family is to be a member of a union, in my 
judgment.
    We have a lot to debate, and we will, but we also have to 
put some basic facts on the table. When it comes to this 
legislation, the other side has done a very good job over the 
last couple of months making their arguments; I'll give them 
credit for political skill. What they haven't told the American 
people is what happens here.
    This is very simple. This legislation, the Employee Free 
Choice Act, gives workers two different ways to choose whether 
they want a union: through an election process or through 
majority sign-up. There is a choice for the worker in the 
workplace. I come from Pennsylvania. We've had a lot of tough 
years, watching people be trampled by corporate power, going 
back to the beginning of the last century. Unfortunately, we 
still have some remnants of those problems.
    I know in Pennsylvania, for example, we had a problem with 
healthcare workers, where they would try to form a union, and 
the employer would bring in one of those paid white-shoe law 
firms or union intimidation firms to intimidate people from 
forming a union. I've seen this up close. OK? We don't want 
that to happen in the rest of the country, but, unfortunately, 
it is. This legislation is one way to make sure that we help 
workers.
    This is a process. Far from the arguments we've heard over 
the last couple of weeks and months, this act doesn't abolish a 
secret ballot election process. That process is still 
available, it would still be available. The bill simply enables 
workers to also form a union through majority sign-up if they 
prefer that method. Again, we have a choice. I'll read it 
again. The choice is an election or majority sign-up. That's 
the choice that's presented. We know from our history----
    [Applause.]
    Senator Casey [continuing]. We know from our history, when 
people collectively organize and bargain for their rights and 
benefits, that isn't just good for that worker and his or her 
family, and that group of workers, it's good for the American 
economy.
    One of the reasons why we've had a strong middle class, 
which has been the envy of the world over a long period of 
time, even though it's taken some hits lately--the middle class 
has had a couple of hammer blows applied to it--but, one of the 
reasons why we've had such a strong middle class, since World 
War II, is because we've had organizing and unions that helped 
build the middle class. That's what this is about.
    One final thought here. I believe this issue of allowing 
people to organize and to bargain for their rights and their 
benefits isn't just a labor issue or an economic issue; I 
believe this is an issue of fundamental justice. This country 
was best, and is always best, when we appeal to our sense of 
justice. We've done that in the past. We don't always do it, 
but we know we've done it in the past, and will continue to do 
it.
    I'm reminded by what St. Augustine said, a long, long time 
ago. He said, ``Without justice, what are kingdoms but great 
bands of robbers?'' If we don't have economic justice in this 
country--and one of the ways to get there is to have strong 
unions for our workers, for our families, and for our economy--
and if we don't support that basic principle, we will be a 
country of a great band of robbers, and that is not in the 
interest of justice.
    [Applause.]
    Senator Harkin. Senator Merkley.

                      Statement of Senator Merkley

    Senator Merkley. Thank you very much, Mr. Chair. Thank you 
for holding this hearing.
    The question was raised, Why are we holding this hearing? I 
think we're holding this hearing because this is one of the 
most fundamental issues that faces our Nation; that is, How do 
we make America work for working Americans?
    Now, I will just say that I don't think America has been 
working for working Americans very well. We've seen enormous 
losses over the last 30 years, with working families getting 
the short end of the stick, time after time after time, while 
productivity has grown enormously, America's workers have not 
shared in that productivity. It's time for that to change. We 
see families working hard that are on the very edge, they are 
one job decision away from collapse, one increase in their 
mortgage payment away from financial destruction, one 
healthcare issue away from financial disaster.
    It is our challenge, as a U.S. Senate and as a committee of 
this U.S. Senate, to address this question of, How do we 
rebuild the middle class in this Nation? Before us, we're 
addressing one of the issues of, How do workers get a fair 
chance to organize in order to share in the productivity, the 
spectacular productivity, of this Nation?
    I will just note that fairness is not equal to a secret 
ballot. If only one side of an issue has the ability to present 
their case, then a secret ballot is not a fair outcome, or is 
not a fair process. It's important that both sides of an issue 
have a chance, and that is not possible in the workplace today. 
We're going to explore why that is and how that can be changed 
and how we can join the great number, the great majority, of 
industrialized nations in giving their workers a fair chance to 
organization so that they can share in the richness of their 
own Nation.
    Thank you.
    [Applause.]
    Senator Harkin. And last, Senator Brown.

                       Statement of Senator Brown

    Senator Brown. Thank you, Mr. Chairman. I will be brief. 
I'm sorry for arriving late, I was at a veterans hearing with 
General Shinseki, talking about veterans benefits for mostly 
working class veterans who have served this country and haven't 
been rewarded by the VA with education and healthcare benefits 
the way that they should.
    I come to this hearing in understanding that the--I don't 
want to see us, 50 years from now, look back and say, ``What 
happened to America's middle class, in the first part of the 
21st century, while the House and Senate stood by and did 
little?''
    [Applause.]
    If you look back since World War II and you chart economic 
growth, if you chart the profits of American corporations since 
World War II, if you chart productivity since World War II, you 
will see--between World War II and the beginning of the Bush 
administration--mostly that productivity and wage growth kept 
up; if workers were more productive, if they made more money 
for the boss, if they helped their company be profitable, the 
workers shared in the wealth they create. That's really what 
the American dream is about--that workers who are productive 
and create wealth for their employer share in the wealth they 
create. It really is as simple as that. That's why America has 
historically--particularly the last half-century, the last 
century--why America has had such a strong middle class, 
because workers do share in the wealth they create. Without a 
union, without representation, it makes it much, much harder 
for workers to share in the wealth that they create. That's the 
lesson for the last 50 years, at least, of American political 
history.
    Let me close with this brief illustration. I wear, in my 
lapel, a pin given to me about 10 years ago at a workers' 
Memorial Day rally. It's a depiction of a canary in a bird 
cage. The mineworkers, 100 years ago, used to take a canary 
down in the mines. If the canary died from lack of oxygen or 
toxic gas, the mineworker knew he had to get out of the mine 
immediately. He had no union strong enough to protect him 100 
years ago, and he had no government that cared enough to 
protect him 100 years ago.
    In those days, a child born in the United States of America 
at the end of the 20th century, around the year 1900 had a life 
expectancy of 46 or 47 or 48 years. Today, we live 30 years 
longer, not because of heart transplants and high-tech 
medicine, although that lengthens the lives of some Americans, 
for sure, many of us--but, we live 30 years longer because of 
what--the union movement, because of progressives, because of 
the women's movement and civil rights and children--advocates 
for children have done--Medicare, Medicaid, Social Security, 
safe drinking water laws, prohibition on child labor, minimum 
wage, workers compensation--all the protections for workers and 
for the middle class that government has done. Government 
didn't do those things out of the kindness, by and large, of 
our hearts; government did those things because people 
advocated in their church basement, gym, and in the civil 
rights movement, and in labor halls and--those advocates, 
ethnic groups, and neighborhoods that fought for Medicare and 
Social Security and safe drinking water and clean air laws and 
workers compensation and minimum wage, and all of the things 
that brought this country forward.
    That's what this is all about; it's moving this country 
forward, it's giving people the opportunity to join a union if 
they so want. Poll after poll shows well over a majority of 
Americans wish they could join a union if they had the 
opportunity. We know that will help to close the gap between 
the very rich getting richer and richer and richer, and the 
middle class shrinking the way that it has in our country in 
the last 10 years. That's got to stop. We need a different 
direction.
    [Applause.]
    Senator Harkin. Thank you, Senator Brown.
    Well, thank you all very much.
    Now we'll turn to our two panels. I will introduce each, 
then we'll just go down the line.
    Paula Voos is a professor in the School of Management and 
Labor Relations at Rutgers University in New Jersey, former 
director of the Industrial Relations Research Institute at the 
University of Wisconsin. Professor Voos received a Ph.D. in 
economics from Harvard in 1982. She's author of numerous 
scholarly articles on U.S. labor markets and labor unions. 
She's also past president of the Labor and Employment Relations 
Association, and was appointed by President Clinton to the 
Commission on the Future of Worker Management Relations in 
1993-1994.
    Mr. Wade Henderson is president and CEO of the Nation's 
premier civil and human rights coalition, the Leadership 
Conference on Civil Rights, and counselor to the Leadership 
Conference on Civil Rights Education Fund. Born and raised here 
in Washington, DC, Mr. Henderson attended Howard University, 
received his law degree from Rutgers University School of Law, 
began his career with the Washington Office of the American 
Civil Liberties Union, was later hired to head the NAACP's 
Washington Bureau. Mr. Henderson is the Joseph L. Rauh 
professor of public interest at the University of the District 
of Columbia.
    Reverend Jim Wallis is a best-selling author, theologian, 
speaker, activist, preacher, and international commentator on 
religion and public life, faith, and politics. He is the 
founder and chief executive officer of Sojourners, where he 
also serves as editor-in-chief of Sojourners magazine. He has 
taught at Harvard's Divinity School and the Kennedy School of 
Government. Reverend Wallis attended Michigan State University 
and Trinity Evangelical Divinity School in Illinois.
    Dr. Layne-Farrar is an economist and director of LECG 
Consulting in Chicago, IL. Dr. Layne-Farrar holds a B.A. in 
economics from Indiana University and a masters and Ph.D. in 
economics from the University of Chicago.
    Thank you all for being here today, for your long work in 
this area. Each of your statements will be made a part of the 
record in their entirety, and I would ask if you would just sum 
up your statements and your points within 5 minutes, 7 
minutes--somewhere between 5 and 10 minutes. We'll be a little 
loose on that. Say, several minutes. I would certainly 
appreciate it. We'll just go in the order in which I just 
announced, so we'll start with you, Dr. Voos.

  STATEMENT OF PAULA VOOS, Ph.D., CHAIR, DEPARTMENT OF LABOR 
   STUDIES AND EMPLOYMENT RELATIONS, RUTGERS UNIVERSITY, NEW 
                         BRUNSWICK, NJ

    Ms. Voos. Thank you for the opportunity to appear before 
the committee.
    You are engaged in examining one of the most important 
problems in the United States, the issue of how to rebuild our 
middle class. I begin my written testimony by summarizing some 
of the things I have learned as an economist over the years 
about what unions do, based on numerous empirical studies by 
other economists.
    I'd like to jump right to the heart of the matter which 
concerns our current economic crisis and our current economic 
situation. You can look at various periods--and, in your 
opening statements, I can see that you're all aware of the fact 
that income has been growing much more unequaled in the United 
States for a long period of time. For example, if you look at 
the period between 1989 and the present--Dr. Larry Mischel has 
found that, if you look at all the income growth in that 
period, more than half of it went to the top 1 percent of the 
Nation, and more than one-third of it went to the top one-tenth 
of 1 percent. The CEOs, hedge-fund managers, Wall Street 
executives, and other extremely wealthy individuals had the 
money to engage in substantial speculation that created a 
bubble economy, speculation in real estate, speculation in new 
financial instruments, speculation in stocks, speculation that 
was part of the creation of our current crisis.
    The other side, of course, was the middle and lower-middle 
classes, which failed to share in the growth of their 
productivity, failed to have the money to buy the goods that we 
can create; and hence, often took credit cards to pay for 
groceries at the end of the month, or took mortgages with low 
teaser rates, because that's how they can make the payments. 
Inequality of income distribution definitely created this 
crisis, in part; and solving that problem is really an 
important matter for the Nation.
    Some say that we should not be raising wages or giving 
people the opportunity to exercise their rights to join a union 
because we are in an economic crisis. I would say, no, 
actually, that's a very important way that we can rebuild 
purchasing power and get out of this problem and lay the way 
for a sound economy in the future so that we don't build 
another bubble economy based simply on cheap credit.
    What about international competitiveness? Well, as was 
mentioned, in fact, most of our major competitors have strong 
unions, much higher levels of unions than we do, and many of 
those nations compete very well. The United States can never 
compete against China by low wages. How can we ever do that? I 
think we have agreement on both sides of the aisle, everyone 
knows that we can't ever be cheaper than China. We have to be 
more innovative, have higher productivity, have higher quality.
    Can unions contribute to that? Yes, they can. Economists 
have found that, not only do unions equalize income 
distribution, in part, make things more equal, they actually 
contribute to higher productivity. Why is that? Well, because 
higher wages stimulate more capital investment, higher wages 
have more investment in training, employees are less likely to 
quit, they retain their skills, and, in fact, union workers are 
very productive. There's no evidence that unions destroy firms. 
Union businesses are no more likely to go out of business than 
any other firm, according to all studies. Union jobs are good 
jobs, and unions care about their firms; they often are willing 
to talk to the firm and be sure that the contracts save jobs of 
the employees involved when there are difficulties.
    I think that the United States can be competitive, our 
businesses can be competitive, and unions will take that into 
account. Most centrally, Americans have the right to form or 
join a union if they so desire. To do that, we need to have a 
way that that can happen without a lot of conflict, because 
economists have also found that it's in those situations of 
high labor-management conflict where unions do not increase 
productivity, but where there may be problems. With a less 
conflictual way of forming a union, I would say that is a 
really central issue for this committee, because that is how we 
can be competitive and raise wages again.
    Thank you.
    [Applause.]
    [The prepared statement of Dr. Voos follows:]
               Prepared Statement of Paula B. Voos, Ph.D.
    Thank you for the invitation to speak today. I am pleased to have 
the opportunity to consider the role unions can play in rebuilding the 
American middle class, a matter of utmost importance not only for 
ending the current economic downturn, but also for our Nation in the 
longer term. As an economist, I have been studying the role unions play 
in our economy for some time and in 1993-1994, I had the opportunity to 
serve on the Dunlop Commission in its consideration of how labor law 
should be modernized to serve the ``Future of Worker Management 
Relations in the United States.''
    There is now a substantial body of research evidence on the 
economic impact of U.S. unions. Unions typically:

     Raise the wages of the employees they represent;
     Increase the fringe benefits of those same employees, 
usually by a greater extent than they increase wages;
     Reduce income inequality within the represented firm, by 
reducing differentials between low-paid and high-paid employees, men 
and women, various racial/ethnic groups, younger and older employees, 
and so forth;
     Increase pay of nonunion workers in occupations and 
industries with substantial union presence as nonunion employers move 
closer to union standards;
     Reduce income inequality in the wider society by reducing 
inequality not only within and between represented firms, but also 
across entire industries as nonunion employers increase compensation to 
discourage unionization, all of which strengthens the middle class 
(Card, Lemieux, and Riddell, 2007).
     Reduce employee turnover by lessening the number of quits 
(voluntary separations); and
     Thus increase the retention of skilled employees, 
enhancing human capital and productivity in both the firm and the 
economy as a whole; (See Freeman and Medoff, 1984; Bennett and Kaufman, 
2007).
    Furthermore:

     Because they suffer less turnover, unionized employers 
have greater incentives for employee training and for high-skill, high 
commitment human resource policies, rather than low-skill, high-
turnover or other ``low road'' approaches to human resources. Reduced 
turnover avoids costs to employers but also lessens society's costs 
associated with unemployment, such as Food Stamps, uncompensated care 
and other social programs.
     Union-represented employees have been found to be more 
productive, on average. This is probably both due to the fact they have 
more work experience and due to greater employer investments in them 
and in physical capital (see Doucouliagos and Laroche 2003 for an 
overview of 73 statistically independent studies);
     The nature of the labor-management relationship is crucial 
in this regard: good union-management relationships are ones that 
foster high workforce productivity, but workplaces characterized by 
labor strife and worker resentment--whether union or non-union--do not 
(Belman, 1992).
     Union employees typically cannot be disciplined or 
discharged without a reason, termed ``just cause.'' This assurance of 
fair treatment is one reason union employees have greater ``voice'' 
than non-union employees and typically are more willing to make 
suggestions or speak up to improve business operations.

    The most important reason to improve the ability of employees to 
organize into unions is that such membership is a fundamental right in 
democratic societies, related to freedom of association and the right 
of all human beings to band together to improve their lives. For that 
reason alone, I would urge you to pass legislation to make real in the 
United States once again the promise of the National Labor Relations 
Act. Section 1 of that Act puts Federal law behind ``the practice and 
procedure of collective bargaining and . . . the exercise by workers of 
the full freedom of association, self-organization, and designation of 
representatives of their own choosing.'' (NLRA Sec. 1).
    Nonetheless, some may be concerned with the economic consequences 
of increased unionization at this moment in time. They should be 
assured that the economic consequences would be positive. There are two 
main reasons:

     First, greater union membership would help the United 
States recover from the current economic downturn and help prevent 
future economic crises.
     And second, greater union membership would help the United 
States make the transition to competing internationally on the basis of 
high productivity, high quality, and innovation, rather than on the 
basis of low wage labor or long hours--a race to the bottom that we can 
never win against nations like China.

    Let me explain.
                the economic crisis and the middle class
    The growth of income inequality in the United States and the 
related decline of the middle class are critical factors in the current 
economic crisis: the collapse in the housing market, the crisis of 
inadequate capital in the Nation's banking institutions, the decline in 
the stock market, the free-fall in consumer spending, declining 
employment and other aspects of the recession that are worsening daily.
    In the early part of this decade, stagnating incomes for the bottom 
80 percent of American families led many people to go into excessive 
debt to meet ordinary needs such as adequate housing--particularly in 
parts of the country like California in which housing prices and rents 
had soared. Many took on inappropriate subprime mortgages because low 
``teaser rates'' made them able to afford monthly payments. All this 
was common in an era in which wages and salaries were failing to rise 
even though productivity was rising steadily and profits were good.
    Meanwhile, at the top of the income distribution, there was an 
explosion of speculation as the wealthy put their money into multiple 
homes, hedge funds, securities, and new financial instruments, like 
bonds securitized by mortgages. This other aspect of inequality of 
incomes in the United States--excessive compensation for CEOs, Wall 
Street executives, hedge fund managers, and other wealthy individuals--
contributed to the bubble that inevitably burst, precipitating the 
current recession.
    In fact, 59 percent of all the income growth since 1989 accrued to 
the upper 1 percent of households and about 36 percent accrued to the 
upper tenth of that upper 1 percent (Mishel, et al., 2008). The shift 
of income to the upper 1 percent since 1979 (their income share rising 
from 10 percent to 22.9 percent) represents an additional $1 trillion 
of income for that group. This type of unbalanced income growth has 
greatly contributed to our current economic misfortunes.
    Increased union organization would tend to shift the income 
distribution in favor of the middle class, enhancing the purchasing 
power of this key group of the Nation's consumers and allowing them to 
once again afford to buy automobiles, homes with 30-year fixed rate 
mortgages, and all the other goods and services important to American 
life. Unionization of low-wage service workers similarly would increase 
purchasing power and help revive the economy. Putting more dollars into 
the pockets of working families stimulates the American economy--both 
in the short term and in the long run--because they spend such a high 
proportion of those dollars here.
    It is no accident that the prosperity and consumer boom of the 
1950s--a period of unprecedented middle class expansion, broad business 
growth, increased home ownership, rising consumer spending, and the 
shared expectation that a college education was within the reach of 
everyone and that the lives of our children would be better than our 
own--followed the greatest sustained expansion of unionization in 
American history.
    The notion that greater unionization is harmful to an economic 
recovery is misguided. Unions, as institutions, and the members that 
form them are economically rational and do not pursue demands that 
force firms out of business. There are several studies that show that 
firms that become unionized (see the review of studies in DiNardo and 
Lee, 2004) are no more likely to fail than are firms that remain 
nonunion. If anything, unions are more important in a recession. As was 
stated in a statement signed by 40 prominent economists and released on 
February 25, ``The current recession will further weaken the ability of 
workers to bargain individually. More than ever, workers will need to 
act together.''
    Economic recovery and future economic stability depend on a middle 
class once again having sufficient purchasing power to sustain the 
economy; we must not rebuild another bubble economy. Greater 
unionization can contribute to that goal because wages and benefits for 
ordinary workers will rise and income inequality in the economy as a 
whole will be reduced. In short, unions help foster the broad middle 
class that is essential to our Nation's economic strength.
            the long-run impact on american competitiveness
    A crucial question is whether in an increasingly global economy, 
U.S. economic competitiveness would be hurt by an increase in union 
representation. Contrary to the conventional wisdom, there is little 
reason to fear in this regard.
    First, most parts of the world, including all of the high-end 
economies with which we compete, have much higher levels of 
unionization than we do. Those high-end economies also pay higher 
benefits to their blue-collar workers. Of the 20 richest countries 
tracked by the U.S. Bureau of Labor Statistics, the United States ranks 
17th in hourly pay for production workers in manufacturing. This group 
of trading partners accounts for almost half of total U.S. trade flows 
(Bivens, 2009). The key difference in competitiveness is not 
unionization; it is that we burden our businesses, especially our 
largest corporations, with the high cost of health insurance, whose 
cost is spread across society in other high-end economies, and the 
disadvantage of an overvalued currency. In fact, high rates of 
unionization are associated with smaller trade deficits, a good measure 
of international competitiveness (Bivens, 2009).
    Second, low labor costs are never going to be a reliable basis for 
U.S. competitiveness in a global economy--rather, the United States 
needs to compete on the basis of innovation, high value-added, high 
quality, and high productivity. Unionization tends to promote the shift 
to these latter bases of competition by foreclosing the low-wage 
alternative.
    Unions increase productivity through a variety of channels. They 
reduce turnover and, hence, firm-specific skills are retained. One 
benefit is that turnover costs are lowered for employers. Moreover, the 
lower turnover makes it economically rational for employers to provide 
more training to union-represented employees, increasing employee 
skills and productivity further. In addition, since unions increase 
compensation, firms are incentivized to invest in new technology (which 
tends to be labor-saving), increasing productivity. Unionized employers 
also tend to shift to higher value-added goods and services in their 
product mix. And in sectors in which there are union-supported 
apprenticeship programs, employers can take advantage of this source of 
highly-skilled labor.
    Research on this topic indicates that there is substantial 
variation in the ``union productivity effect.'' The effect is much 
larger where there is a good relationship between labor and management, 
whereas in high-conflict situations, there is little likelihood that 
unions enhance productivity (Belman 1992). Strikes, of course, are 
particularly deleterious. Hence it is important that public policy not 
only makes it possible for workers to organize should they so desire, 
but also that the Federal Government provides a path to unionization 
that reduces conflict and gets the labor management relationship off to 
a good start.
    In fact, this was part of the reasoning behind the National Labor 
Relations Act when it was passed in 1935. Section 1 of that Act, quoted 
earlier, speaks about the need to protect commerce ``from injury, 
impairment, or interruption . . . by encouraging practices fundamental 
to the friendly adjustment of industrial disputes arising out of 
differences as to wages, hours, or other working conditions, and by 
restoring equality of bargaining power between employees and 
employers.'' The idea in 1935 was that if employers were legally 
required to recognize and bargain with their employees' chosen 
representatives, recognition strikes would be unnecessary and 
contentious disputes over wage and working conditions would be 
channeled into the collective bargaining process, to the benefit of 
all.
    Unfortunately, because of a series of changes in the interpretation 
of the law over time, employers are now able to insist that before 
collective bargaining can commence, employees must prove their support 
for their chosen bargaining representative through an election process 
that is so conflict-laden that it fails to fulfill the purpose of 
getting collective bargaining relationships off to a constructive 
beginning. The waiting period prior to an NLRB representation election 
creates a period of counterproductive labor-management strife that 
increases workplace tension and undoubtedly hurts workplace 
productivity. Even when employees win the right to representation 
through an election, they are often unable to negotiate a first 
contract. This occurs because the strike is the dispute resolution 
procedure when the parties are unable to agree on a contract. American 
workers often don't want to strike, and yet they often cannot get a 
first contract without a successful strike. The entire representation 
election process is still extremely conflict-laden and is ripe for 
reform. The proposed Employee Free Choice Act is one option that shows 
particular promise to lessen labor-management conflict during the 
unionization stage.
    In short, we can be competitive while allowing American employees 
to exercise their rights to form a union. To do so, we need a way for 
workers who want union representation to organize in a less conflict-
laden way and to initiate a constructive labor-management relationship.
                       what about small business?
    Another issue is whether small business would be particularly 
disadvantaged if employees who wanted union representation had an 
easier way of organizing than the current NLRB process. There are 
several reasons to doubt that would be the case.
    For one reason, small employers often have a different employment 
atmosphere than that which exists in large bureaucratic organizations; 
it may well be that employees in small firms have little demand for 
union representation. Interestingly, rates of union representation in 
small employers are currently lower than those in larger organizations 
in the United States, even though unions are in fact more likely to win 
representation elections in small than in large units. This means many 
small business owners should not be overly concerned about possible 
changes in the law governing union organizing.
    At the same time, individuals who work in small business should 
have the same rights to freedom of association and union representation 
as anyone else. If the employees of a small employer do form a union, 
what then?
    Actually, there can be substantial benefits to small business from 
union representation. When an industry is characterized by many small 
employers, each firm can benefit from area-wide unionization that 
standardizes compensation across competing firms, stabilizing the 
industry. The union provides a pool of well-trained labor that becomes 
attached to the industry. Moreover, the union often serves important 
functions in training and benefit-provision for the entire set of 
employer signatories to a union contract. Furthermore, unions recognize 
the need to preserve and enhance the competitiveness of unionized 
employers. Unions organizing small businesses in the service sector 
often defer negotiated wage increases until the majority of competing 
employers are also unionized, and give newly unionized firms several 
years to catch up to union contract levels. Contrary to popular 
opinion, unions, like businesses, also act in an economic rational 
manner.
    In short, while I doubt that a new process of union formation would 
cause an explosion of union representation in small firms, if some 
small business sectors were to be organized because their employees are 
frustrated with current conditions and seek change, that could provide 
positive benefits for small businesses and their employees.
                               conclusion
    For all these reasons, I urge you to enact changes in our Nation's 
labor law that would make it easier for workers to organize, should 
they so desire, to obtain an initial agreement, and to build a 
successful working relationship with their employer, free of 
unnecessary labor-management conflict.
    The restoration of a strong middle class is indispensable to the 
restoration of the American economy. Unions are an essential part of 
rebuilding that middle class.
                               References
Bivens, Josh. 2009. Squandering the Blue-Collar Advantage, EPI Briefing 
    Paper #229, Economic Policy Institute, Washington, DC. February 12, 
    2009. Available at http://epi.3cdn.net/
    66692b04c9f900c12f_jhm6ivvay.pdf.
Belman, Dale. 1992. ``Unions, the Quality of Labor Relations and Firm 
    Performance,'' in Larry Mishel and Paula B. Voos, eds., Unions and 
    Economic Competitiveness. New York: N.E. Sharpe.
Bennett, James T. and Bruce E. Kaufman, eds. 2007. What Do Unions Do? A 
    Twenty-Year Perspective. New Brunswick, NJ, Transaction Publishers.
Card, David, Thomas Lemieux, and W. Craig Riddell, ``Unions and Wage 
    Inequality,'' in Bennett and Kaufman, op. cit., 2007.
``DiNardo, John and David Lee. 2004 ``Economic Impacts of New 
    Unionization On Private Sector Employers: 1984-2001'', Quarterly 
    Journal of Economics, 119 (November).
Doucouliagos, Chris (Hristos) and Patric Laroche. 2003. What Do Unions 
    Do to Productivity? A Meta-Analysis.'' Industrial Relations, 42 
    (October): 650-91.
Freeman, Richard B. and James L. Medoff. 1984. What Do Unions Do? New 
    York, Basic Books.
Mishel, et al. The State of Working America 2008/09, Economic Policy 
    Institute Series, Cornell University Press, 2008.

    Senator Harkin. Thank you very much, Dr. Voos.
    Mr. Henderson.

  STATEMENT OF WADE HENDERSON, PRESIDENT AND CEO, LEADERSHIP 
           CONFERENCE ON CIVIL RIGHTS, WASHINGTON, DC

    Mr. Henderson. Senator Harkin, Ranking Member Isakson, and 
members of the committee, I'm honored to be here, and I want to 
thank you for the opportunity today to express the strong 
support of the Leadership Conference's over 200-member 
organizations for the restoration of American workers' right to 
organize and to explain why a strong labor movement is critical 
to the continuing advancement of civil rights in our Nation.
    The 2008 presidential election was a watershed moment in 
the evolution of American democracy. Regardless of one's 
partisan affiliation, the election of the first African-
American President represents a validation of our Nation's long 
struggle to resolve the challenges of racial discrimination, 
ethnic and gender bias, and the structural inequality that 
makes a mockery of the concept of equal opportunity and makes 
attaining the American dream impossible for many individuals.
    While we should all be proud of these milestones, our quest 
for equality under law and for meaningful economic opportunity 
for all Americans is far from an end. For many individuals, 
particularly those on the lower rungs of our economic ladder, 
equal opportunity remains an elusive goal.
    Now, as I will discuss today, many employers' relentless 
attack on the right to organize in our Nation has made it more 
difficult for all workers, and most specifically for African-
Americans, Latinos, Asian Americans, and women, to achieve the 
economic opportunity which is the foundation of the American 
dream.
    Now, why is the Leadership Conference on Civil Rights 
supporting the Employee Free Choice Act? Well, the right of 
workers to organize has long been a bedrock principle of our 
Nation's civil and human rights movement. It was such an 
accepted principle that First Lady Eleanor Roosevelt helped 
include the right of workers to organize in the Universal 
Declaration of Human Rights in 1948. Dr. Martin Luther King, 
Jr., and Leadership Conference co-founder and African-American 
union leader A. Philip Randolph, both recognized that it was 
not racial segregation and prejudice alone, but the joint 
effects of racial discrimination and economic privation that 
denied real opportunity to African-Americans and other 
marginalized workers.
    Unions offer the most surefire path to addressing this deep 
inequality. This is why Dr. King highlighted their struggle and 
marched with striking sanitation workers in Memphis, TN, during 
the final days of his life.
    Now, in the early and mid-20th century, unions forged 
America's middle class by organizing previously disenfranchised 
European immigrants. In later decades, unions turned their 
focus to promoting opportunities for women and racial minority 
workers. In the 1960s, for example, Walter Reuther and his UAW 
championed antidiscrimination laws. By the way, it was the same 
UAW that provided the organized manpower and financial support 
that was essential to the success of the 1963 March on 
Washington.
    Even with these efforts, however, over time it became clear 
that antidiscrimination laws were insufficient to help all 
women and racial minorities achieve better standards of living. 
Strong unions could have provided an important corollary to 
antidiscrimination laws. The assault on the right to organize 
in the decades since the 1960s prevented unions from being a 
more powerful force for economic opportunity.
    Now, data shows the profound impact unions can have on 
reducing income inequality. In 2006, median earnings for women 
in unions were 31 percent higher for nonunion women, 36 percent 
greater for unionized African-Americans, 8 percent for Asian 
Americans, and 46 percent for Latinos. Union members are also 
far more likely to have strong safety standards, healthcare 
benefits, retirement benefits, sick leave and other paid time 
off. These benefits give our poorest workers the stability and 
resources they need to forge better lives for themselves and 
their families, and they provide a toehold on the ladder of 
economic opportunity leading to solid middle-class lives.
    Unions also protect workers from arbitrary treatment at 
work by negotiating transparent procedures for wage rates and 
job assignments, by pursuing grievances for discrimination. 
This is especially important, given the weak workplace 
protections under both State and Federal law. For LGBT workers, 
who today do not even enjoy basic protection from 
discrimination and Federal law, unions may be the only 
protection against mistreatment based on their sexual 
orientation or gender identity.
    Because many employers were successful in exploiting 
loopholes in our labor laws so as to deny the right to 
organize, women and minority workers still struggle. In the 
current economic downturn, they are at risk of losing 
significant ground. Unions can help preserve the economic 
status of women and minorities by minimizing layoffs and pay 
cuts and by establishing safety nets.
    Moreover, the notion that pro-worker measures are bad for 
the economy is misguided. Economic security for workers will 
increase consumer demand. Better wages and benefits make 
workers more content and more productive. Improved wages and 
benefits lead to more stable households, where children receive 
the benefits of a better education and enter the labor market 
as better workers.
    Now, the Employee Free Choice Act promises to restore the 
right to organize in our Nation. Employees have made a mockery 
of the secret ballot by using tactics of delay and intimidation 
available under the current system, but this bill does not 
eliminate the secret ballot.
    Now, Dr. King's effort to achieve economic opportunity for 
the disenfranchised remains the unfinished business of America. 
Restoring the fairness to the process by which workers choose a 
union is one of the most important--first of all, it's a 
fundamental civil and human right, and it is one of the most 
important steps we can take as a nation to advance economic 
opportunity for all Americans.
    Thank you very much.
    [Applause.]
    [The prepared statement of Mr. Henderson follows:]
                 Prepared Statement of Wade Henderson*
    Senator Harkin, Ranking Member Enzi, and members of the Senate 
Committee on Health, Education, Labor, and Pensions, I am Wade 
Henderson, President and CEO of the Leadership Conference on Civil 
Rights (LCCR). I am also honored to serve as the Joseph L. Rauh, Jr. 
Professor of Public Interest Law at the University of the District of 
Columbia. I appreciate the opportunity to speak before you today to 
express LCCR's strong support for the restoration of American workers' 
right to organize, and to explain why a strong labor movement is 
critical to the continuing advancement of civil rights in our 
Nation.\1\
---------------------------------------------------------------------------
    * Mr. Henderson's addendum to this statement may be found at http:/
/www.civilrights.org/publications/voices-2009/efca-report-web-
final.pdf.
    \1\ In connection with this testimony, I am also submitting a pre-
release version of a forthcoming report by LCCR, entitled Let All 
Voices Be Heard: Restoring the Right of Workers to Form Unions--A 
National Priority and Civil Rights Imperative. The report, which was 
originally released in 2007 and has been updated to reflect recent 
data, includes an in-depth explanation of why protecting the right to 
form a union is critical to the advancement of civil rights. This 
report may be found at www.civilrights.org/publications/voices-2009/
efca-report-web-final.pdf.
---------------------------------------------------------------------------
    LCCR is the Nation's oldest and most diverse coalition of civil 
rights organizations. Founded in 1950 by A. Philip Randolph of the 
Brotherhood of Sleeping Car Porters, Roy Wilkins of the NAACP, and 
Arnold Aronson of the National Jewish Community Relations Council, a 
core mission of LCCR is to further the goal of economic opportunity and 
workplace dignity through legislative advocacy and public education. 
LCCR consists of approximately 200 national organizations representing 
persons of color, women, children, organized labor, persons with 
disabilities, the elderly, the LGBT community, and major religious 
groups. I am privileged to represent the civil and human rights 
community in submitting testimony for the record to the committee--and 
I want to express my strong gratitude to you for today's hearing and 
also for your support over the years for the rights of women and 
minorities in America's workforce.
       a declining labor movement hurts the cause of civil rights
    Over the past four decades, employers have, with increasing 
aggressiveness, sought to keep unions out of the American workplace. By 
exploiting weaknesses in our labor laws that allow businesses to coerce 
workers with virtual impunity, employers have made a mockery of the 
right to form a union. As a result, workers have endured rising income 
inequality and diminished rights and dignity in the workplace.
    Today I would like to focus on the particularly strong negative 
impact the decline of our labor movement and our inadequate labor laws 
have on women and minorities in the workplace. LCCR co-founder A. 
Philip Randolph, the longtime leader of the African-American Sleeping 
Car Porters union, embodied the idea that a broad pro-worker agenda, 
with a strong labor movement as its cornerstone, was essential to 
promoting racial equality in our Nation. Following in Randolph's 
footsteps, Dr. Martin Luther King, Jr., when he marched in support of 
striking Memphis sanitation workers, recognized that it was not racial 
prejudice alone, but the joint effects of racial discrimination and 
economic privation that denied economic opportunity to poor African-
American workers.
    As King realized, unions hold forth the promise of bringing us 
closer to a society where all Americans enjoy economic opportunity. 
Unions markedly improve wages and benefits for those trapped at the 
bottom of the economic ladder, who disproportionately are women and 
minorities. They also make workplaces fairer and more humane through 
the enforcement of contract provisions addressing issues like sick 
leave and workplace safety--measures which help all workers but are of 
particular benefit to women and minorities.
    Moreover, one of the twentieth century's great champions of civil 
and human rights in our Nation, Eleanor Roosevelt, recognized that the 
right to organize was instrumental to securing human rights 
domestically and globally. Roosevelt led the efforts to draft the 1948 
Universal Declaration of Human Rights, which laid the foundation for 
international human rights standards. The Declaration states that 
``[e]veryone has the right to form and to join trade unions for the 
protection of his interests.'' \2\
---------------------------------------------------------------------------
    \2\ Universal Declaration of Human Rights, at http://www.udhr.org/
UDHR/default.htm.
---------------------------------------------------------------------------
    Women and minorities need unions now more than ever. The current 
economic downturn is a particularly strong threat to low-wage workers. 
Indeed, whatever modest economic gains women and minority workers have 
garnered in recent decades may be wiped out if they are unable to push 
back against wage and benefit cuts and to fight for better job 
security.
    The Employee Free Choice Act, a bill to be introduced soon in the 
111th Congress, presents the best opportunity in a generation to 
restore workers' right to unionize. If we do not bring fairness back to 
the process by which workers form a union, we will lose perhaps our 
best chance to preserve recent economic gains for women and minorities, 
and to give them a better path to economic prosperity for themselves 
and their children.
 labor's proven record of improving working conditions for the poorest 
                            american workers
    To fully understand the positive effect unions can have on our 
poorest workers, one only has to look at labor's accomplishments in the 
twentieth century. Organized labor has a proven track record of 
bestowing economic security and upward mobility on Americans previously 
condemned to the economic margins of our society.
    Beginning in the 1930s, after decades of focusing mainly on skilled 
workers, at the urging of John L. Lewis of the Mine Workers union, 
labor took on the task of organizing unskilled industrial workers. 
These factory workers were largely recent immigrants from eastern and 
southern Europe, and themselves were victims of stigma and prejudice 
based on differences in language and custom.
    These early twentieth century immigrants, despite being isolated by 
their lack of workplace skills and cultural barriers, were catapulted 
into the economic mainstream by labor unions. The result of these union 
organizing efforts was the birth of a broad and stable American middle 
class in the 1940s and 1950s.
        labor's unfinished task: economic opportunity for women 
                          and minority workers
    However, African-Americans received fewer economic benefits from 
the mid-twentieth century union upsurge. This was due to a wide range 
of factors. African-Americans were frequently assigned by employers to 
the most difficult, worst-paying jobs. Although many unions attempted 
to defy workplace racial hierarchies, others acquiesced and focused 
primarily on organizing white workers, while either neglecting African-
Americans or relegating them to the worst job classifications. Notably, 
the United Auto Workers (UAW) stood bravely athwart some of its own 
members in demanding equal treatment of African-American workers within 
Detroit's auto plants.\3\
---------------------------------------------------------------------------
    \3\ See Robert H. Zieger, American Workers, American Unions (2d 
ed., Johns Hopkins Press 1994).
---------------------------------------------------------------------------
    Later decades brought about the dawning of a new day in the 
relationship of unions to African-American workers. Unions became much 
more strongly focused on organizing and promoting opportunities for 
African-American workers. In the 1960s, Walter Reuther and his UAW 
championed antidiscrimination laws, by funding the March on Washington 
of 1963 and by lobbying for the Civil Rights Act of 1964. Ironically, 
while unions helped pass laws to break down barriers to opportunity for 
America's African-American workers, the decline of the labor movement 
in the coming decades would eventually deal a great blow to the poorest 
workers who were not rescued by antidiscrimination laws. While 
antidiscrimination laws were a necessary measure, they were not 
sufficient to address the deep inequality, rooted in both race and 
poverty, which inheres in poor neighborhoods from which our most 
vulnerable workers cannot escape without access to greater financial 
resources.
    Similarly, newer entrants to the workforce have failed to benefit 
from the tide of unionization in the mid-twentieth century. Women were 
at much lower levels of workforce participation during this time. 
Similarly, large-scale Latino and Asian-American immigration occurred 
in later decades. But today, women, African-Americans, Latinos, Asian 
Americans, as well as LGBT Americans, all suffer from inequality in the 
workplace. All of these groups (other than LGBT Americans) are 
protected by title VII, but disparities in income and working standards 
have persisted in spite of antidiscrimination protection. (LGBT 
Americans, meanwhile, must cope with a complete absence of Federal 
workplace protection.)
    Women are burdened by stereotypes and societal expectations that 
force them into lower-paying jobs with fewer benefits, and often impose 
on them the primary obligation for family care, making it harder for 
them to sustain the same income trajectories as men. Women today make 
about 78 cents for every dollar earned by their male counterparts.\4\
---------------------------------------------------------------------------
    \4\ U.S. Census Bureau 2007 Current Population Survey, Aug. 2008.
---------------------------------------------------------------------------
    Many Latinos and Asian Americans, unlike the early-twentieth 
century immigrants, have arrived at a time when anti-union attacks have 
weakened the movement to the point where it is not able to raise these 
newest arrivals into the ranks of the middle class. Indeed, these 
immigrant groups today are often forced to take the most difficult and 
unsafe jobs for the lowest wages, such as dangerous construction jobs.
                      the difference a union makes
    The labor movement today is strongly committed to organizing women 
and minorities. A re-invigorated labor movement offers the most sure-
fire path to fulfilling the promise of economic opportunity in American 
society for all these groups. The data shows the profound impact unions 
have on income inequality. In 2006, median earnings for women in unions 
was 31 percent higher than for non-union women; 36 percent greater for 
unionized African-Americans; 8 percent more for Asian Americans; and 46 
percent more for Latinos.\5\
---------------------------------------------------------------------------
    \5\ House of Representatives, Committee on Education and Labor, 
Report on the Employee Free Choice Act of 2007, at http://
frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=110_cong_
reports&docid=f:hr023.110.pdf. Even when adjusted for experience, 
education, region, industry, occupation and marital status, the wage 
premiums remain large: 10.5 percent for women, 20.3 percent for 
African-Americans, 21.9 percent for Latinos and 16.7 percent for Asian 
Americans. Economic Policy Institute, State of Working America 2006/
2007, at http://www.stateof
workingamerica.org/tabfig/03/SWA06_Table3.34.jpg.
---------------------------------------------------------------------------
    Union members are also far more likely to have health care 
benefits, and to have a greater share of health care benefits paid for 
by their employers.\6\ They are also more likely to receive sick leave 
and other types of paid time off. For many minority workers, already 
living from paycheck to paycheck, illness can be devastating 
financially, and union-negotiated benefits provide an important safety 
net. These benefits also help ensure that women workers with 
significant family-care responsibilities do not have to trade career 
advancement in order to care for their families. Unions also monitor 
and enforce contractual safety standards to ensure that no worker is 
unreasonably exposed to danger in the workplace--something especially 
beneficial to immigrant workers in highly dangerous fields. Further, 
union members are more likely to have retirement benefits.
---------------------------------------------------------------------------
    \6\ Lawrence Mishel and Matthew Walters, How unions help all 
workers, Aug. 2003 (EPI Briefing Paper #143), at http://www.epi.org/
page/-/old/briefingpapers/143/bp143.pdf.
---------------------------------------------------------------------------
    These wage and benefit premiums can help give the poorest workers 
the stability and access to resources they need to forge better lives 
for themselves and to greatly expand their children's opportunities.
    Often forgotten in the discussion about the value of unions in our 
society is the role they play in bringing dignity and fairness to the 
workplace. Apart from the fact that they give workers themselves a 
fairer share of the prosperity they help create, unions protect workers 
from arbitrary and unfair treatment at work. Indeed, unions can help 
stamp out discrimination. Union contracts provide transparent and 
uniform procedures for pay levels, job assignments, and promotions, 
making it difficult for employers to get away with race and gender 
discrimination. Moreover, union grievance procedures allow workers to 
seek redress for unfair treatment. In many cases, discriminatory 
actions--which might be difficult to prove in a courtroom under 
antidiscrimination laws--can be resolved through the grievance process, 
resulting in a far more just workplace. Also, while not a substitute 
for the right to sue, the grievance process can sometimes be a simpler 
and more streamlined approach for workers who do not want the time and 
expense of litigation.
    For LGBT workers, who today enjoy no Federal legal protection, 
unions may be the only protection against mistreatment based on their 
sexual orientation or gender identity. Unions can also help negotiate 
for equal benefits for LGBT workers, including same-sex partner health 
care coverage.
    Finally, today, unions remain catalysts for new laws to improve the 
workplace, just as they once contributed to the passage of the Civil 
Rights Act of 1964. Most recently, unions stood side-by-side with civil 
rights groups in support of the Lilly Ledbetter Fair Pay Act, which was 
signed by President Obama this January and restored workers' ability to 
pursue pay discrimination claims.
 unions' effectiveness has been sapped by weaknesses in our labor laws
    In spite of the benefits strong unions bring to women and 
minorities, we have failed to revise and strengthen our labor laws to 
deal with the changing circumstances that have dramatically weakened 
the labor movement. Employers routinely push the boundaries of our laws 
by delaying elections, coercing their workers to oppose unions, 
retaliating against union supporters, and refusing to agree to first 
contracts. Even when they overstep the law's boundaries, penalties are 
weak--nothing more than a slap on the wrist--so employers routinely 
decide they would rather risk the law's meager penalties in order to 
keep a union away.
    In addition to aggressive employer resistance to the right to 
organize, the changing characteristics of the American workplace have 
also made it extremely difficult to organize women and minorities. Not 
only has our workforce shifted from manufacturing to low-skill service-
sector jobs, but women and minority workers are most likely to be 
concentrated within these service jobs. Unlike manufacturing, the 
service industry presents unique obstacles to union organizing. The 
kind of shop-floor solidarity that often occurs in factories where 
workers toil side by side is less likely to take root. In contrast to 
large factories with many workers at a single site, smaller service 
industry locations, like retail stores or restaurants, require enormous 
investments by unions just to unionize a handful of workers. Without a 
change in our laws, it is difficult to imagine how unions will be able 
to organize widely in the service sector.
    As a result of these factors, the decline of America's unions has 
reached a crisis point. One out of every three workers in the private 
sector was a union member in the late 1950s, a time when America 
enjoyed a growing middle class. Today, fewer than 1 in 12 workers in 
the private sector are union members.\7\ Unions, more than ever before, 
stand ready to organize fields with large concentrations of minority 
workers. However, weaknesses in our labor laws and an all-out attack by 
the business community on labor unions have prevented unions from being 
a far greater force for economic opportunity than they might otherwise 
be.
---------------------------------------------------------------------------
    \7\ Barry T. Hirsch and Jeffrey M. Hirsch, Remarks for Allied 
Social Science Association Meetings: The Rise and Fall of Private 
Sector Unionism: What Comes Next?, Dec. 2005.
---------------------------------------------------------------------------
    For these reasons, the Employee Free Choice Act is one of the most 
significant pieces of civil rights legislation in many years. This bill 
will prevent employers from using the many unfair tactics currently at 
their disposal to frustrate the desire of their workers to join unions. 
The Employee Free Choice Act will, among other things, provide for 
union representation as soon as a majority of workers express their 
desire to be represented, rather than allowing employers to use tactics 
of delay and intimidation during the lengthy NLRB election process to 
coerce workers into rejecting a union. The bill will also enhance 
penalties for anti-union retaliation and will prevent employers from 
dragging their feet on first contract negotiations, a tactic frequently 
used to erode confidence and support for the union.
  unions can help protect vulnerable workers and improve the economy 
                       during economic downturns
    The women and minority workers who can least afford pay and benefit 
cuts or layoffs will be the most adversely affected by the current 
economic downturn. Notably, while the jobless rate last month was a 
very high 7.3 percent for white Americans, it was far worse for 
African-Americans (13.4 percent), and Latinos (10.9 percent).\8\ Large 
numbers of women and minority workers, who lack personal savings and 
other resources to weather the crisis, will face enormous economic 
setbacks that will threaten their families' livelihood.
---------------------------------------------------------------------------
    \8\ Bureau of Labor Statistics, Employment Situation Summary, Feb. 
2009, at http://www.bls.gov/news.release/empsit.nr0.ht
---------------------------------------------------------------------------
    Unions provide a buffer in difficult economic times. They help 
preserve economic benefits and maintain job security. Moreover, unions 
do so in a manner that is sensitive to the needs of business. It is 
certainly not in the interest of unions to see the companies their 
members work for go out of business. Thus, unions may work out 
arrangements where hardship is shared among workers, so that layoffs 
are avoided. Or they can ensure that, when wage and benefit cuts are 
required, those cuts occur in a way that preserves the items that 
workers need the most, and that employers don't use bad economic news 
as an excuse to unnecessarily slash worker payroll.
    The notion that pro-worker measures are somehow bad for the economy 
and should be avoided during difficult economic times is misguided. 
There are many ways unions help the economy, and I now list but a few 
of them. Economic security for workers will increase consumer demand, 
which in turn will spur economic recovery. Better wages and benefits, 
along with the ability to speak out at work about one's workplace 
concerns, make workers more content and therefore more productive. 
Improved wages and benefits will lead to more stable households where 
children receive the benefit of a good education, and will enter the 
labor market as better workers. Union-negotiated benefits like sick 
leave will allow workers to stay home and recover rather than go to 
work day-in and day-out in a debilitated state, or expose colleagues to 
illness.
    The current foreclosure crisis gives us a very timely example of 
how pro-worker policies can help the economy. The current economic 
downturn was precipitated in good part by the foreclosure crisis in 
which many home purchasers could not afford to continue payments on 
their homes. Many of these home purchasers were minority workers who 
were steered into subprime loans, whose unforgiving terms made it 
impossible for them to keep up their payments. If more workers were in 
unions, far more would have had the resources to continue payments on 
their mortgages--and many would have had the credit rating and 
financial acumen that would have prevented them from being steered into 
subprime loans in the first place.
    Unions are most certainly not a drag on the economy: they protect 
our most vulnerable workers and make our economy stronger. Our economy 
sustained remarkable growth over the many decades when unions 
represented large segments of the American workforce. This is because 
unions fostered happier, more productive workers, and helped sustain 
consumer demand. I reiterate that, in times of economic downturn, civil 
rights gains are very much at risk as the souring economy takes the 
greatest toll on women and minority workers. Unions can play a critical 
role in preventing such a setback for the civil rights movement.
                               conclusion
    As Martin Luther King said when he addressed the striking Memphis 
sanitation workers, ``Memphis Negroes are almost entirely a working 
people. Our needs are identical with labor's needs--decent wages, fair 
working conditions, livable housing, old age security, health and 
welfare measures, conditions in which families can grow, have education 
for their children and respect in the community.'' \9\ King's words 
haunt us today as many women and minorities toiling at low-wage jobs 
still have little chance of achieving these very aspirations. The 
Employee Free Choice Act will restore fairness to the process by which 
workers choose a union. It is one of the most important steps we as a 
nation can take to address the remaining hurdles we face on our path to 
becoming a society where all our people enjoy the opportunity to 
succeed and to expand our children's horizons.
---------------------------------------------------------------------------
    \9\ Peter Dreier, Why He Was in Memphis, American Prospect Online, 
Feb. 15, 2007, at http://www.prospect.org/cs/
articles?article=why_he_was_in_memphis.
---------------------------------------------------------------------------
    Thank you for inviting me to address the committee. I look forward 
to your questions.

    Senator Harkin. Thank you. Thank you, Mr. Henderson.
    Now we turn to Reverend Jim Wallis.

   STATEMENT OF REVEREND JIM WALLIS, PRESIDENT AND EXECUTIVE 
              DIRECTOR, SOJOURNERS, WASHINGTON, DC

    Rev. Wallis. Thank you, Senators. I want to add my voice to 
those who miss Senator Kennedy here today. I'm one who has 
admired his moral courage, for many years, in addressing issues 
of economic justice, and I do feel, as you said, his spirit 
with us today. Good to see you in the chair, Senator Harkin. 
Good to see a lot of you.
    I think this is a fairness issue. And fairness is a 
religious issue. I suspect that's why I'm here today. Let me 
start with the fundamental principles, which are that the 
system, I would argue, of employee-employer relationships is 
fundamentally lopsided. I would hope we could agree to that on 
both sides of the aisle. There's a need to level the playing 
field, to redress a great imbalance, to restore more balance. 
When a system is in such fundamental imbalance, I think it is 
our obligation, on both sides of the aisle, to remedy that.
    The Catholic bishops issued a pastoral letter on Catholic 
social teaching and the U.S. economy 23 years ago. Now, I'm not 
a Catholic, I'm an evangelical, but I'm an evangelical convert 
to Catholic social teaching.
    [Laughter.]
    Which I often find to be very wise. The letter said this,

          ``Our faith calls us to measure this economy, not by 
        what it produces, but also by how it touches human life 
        and whether it protects or undermines the dignity of 
        the human person. Economic decisions have human 
        consequences and moral content; they help or hurt 
        people, they strengthen or weaken family life, they 
        advance or diminish the quality of justice in our 
        land.''

    Then the bishops go on to say this about our topic here 
today,

          ``The way power is distributed in a free market 
        economy frequently gives employers greater bargaining 
        power than employees in the negotiation of labor 
        contracts. The Church fully supports the right of 
        workers to form unions or other associations to secure 
        their rights to fair wages and good working 
        conditions.''

    The words of Pope John Paul II, the Pope says,

          ``The experience of history teaches that 
        organizations of this type are an indispensable element 
        of social life, especially in modern industrial 
        societies. No one may deny the right to organize 
        without attacking human dignity itself.''

    Now, we either believe those things or we don't. Those are 
principles to be paid attention to.
    The right to organize is at the heart of this issue, the 
Employee Free Choice Act, and that's why this hearing is about, 
I think, fundamentally moral issues. How do we level the 
playing field? How do we give workers a collective voice in the 
wages, benefits, and conditions of their employment? How do we 
ensure human dignity? If the system has been abusive--I think 
the facts show it has been--how do we correct the abuses?
    The right to organize has been steadily eroded over the 
last number of years. Too often, organizers have been fired, 
workers have been threatened, and employers flatly have refused 
to negotiate contracts. There are facts not really in dispute. 
So, they can't be ignored, in my view. How must they be 
addressed?
    As a result of these facts, only 12.4 percent of U.S. 
workers are union members, when, only 25 years earlier, in 
1983, it was 20.1 percent. Now, this is either, in our point of 
view, a good thing or a bad thing. If it's a good thing, we 
have no problem. If it's a bad thing, it's a problem we have to 
fix, very simply.
    The Employee Free Choice Act assures that if the majority 
of workers want a union, they will have one; it compels 
employers to negotiate in good faith; it strengthens penalties 
for violating workers' rights--all things that have been done 
in the past several years.
    Mohandas Gandhi once warned of what he called the ``Seven 
Deadly Social Sins.'' One of them was wealth without work. 
Another was commerce without morality. Those two social sins 
are now diagnostic of why we are in this mess that we're in.
    Rather than a society in an economic system building on the 
solid rock of productive work, we have built on the sand of 
speculation in mortgages and other financial instruments. As 
has been said by my colleagues, too many people at the top of 
the pyramid have gotten too wealthy without enough productive 
work. It is simply a fact that we have now seen rapid and 
massive increases in American inequality. Again, this, for me, 
is not just an economic issue, this is a religious issue.
    When I hear that the top 1 percent of households now 
receive 70 times as much in average after-tax income as the 
bottom one-fifth--1 percent, one-fifth--and 21 times more than 
the middle one-fifth, or that CEO pay has gone from, 1965, of 
being 24 times more than a worker's pay to, now in 2004, 431 
times the worker's pay, I will say that is not just an economic 
issue, that is a sin of biblical proportions.
    [Applause.]
    Now, I know that biblical archeology isn't a hot topic in 
Senate hearings, but I have learned something from the biblical 
archeologists. When they dig down in the ruins of ancient 
Israel, they find periods of time when the relics and artifacts 
show a shared prosperity--not a sameness, but no big mansions 
and no small shacks. They were sharing the fruits of their 
labor. During those times, there were no prophets--no Amos, 
Isaiah, Micah, Jeremiah--none, no prophets. When they dig down 
in other periods, like the 8th century B.C., and find 
tremendous gaps and chasms in the relics that they dig up, 
that's when the prophets rise up to thunder the justice and 
judgment of God. Religiously, inequality is bad for human 
beings and society.
    It's no wonder that we have collapsed. We have not listened 
to the canary, Senator Brown. The canary always chokes when the 
atmosphere is toxic. It's been toxic. We haven't listened to 
the poor, and now we're all choking.
    The studies show unionization raises the wages of typical 
low-wage workers significantly, and the studies show 
unionization is a critical tool in the fight against poverty. 
That's why I'm here.
    [Applause.]
    Unions don't just help individual workers, they make a more 
productive workforce, good wages and benefits; that helps the 
entire economy. It contributes to something that we call, in 
the faith community, ``the common good.'' It leads to more 
people with health insurance. That's a good thing. It 
strengthens the tax base of local communities. That's a good 
thing. It allows families to buy their own homes and send their 
kids to college. These are, for us, good things.
    The churches are more and more united against poverty 
across our political and theological differences. Faith 
communities in all of your States have signed up to make 
poverty a fundamental religious and moral issue. In all your 
constituencies, church leaders will be asking how this bill 
impacts on the fight against poverty. If they decide that it 
does, you'll hear from the faith community in all of your 
States and in all your constituencies.
    There is a growing consensus among us that, when one in 
eight families are living below the poverty line, when one of 
every five children are poor in the richest country in the 
world, that tests both our faith and our civic values. When 9 
million more people are about to plunge into the quicksand of 
poverty due to this recession and economic crisis, this becomes 
even more urgent.
    I would say, no matter what our initial thoughts are on 
this bill, we have an obligation to address the facts. 
Inequality is growing. That's a bad thing. Unionization is 
declining. That's a bad thing. The system is being abused. 
That's a bad thing. How do we fix the system? How do we make 
sure that we attend to the common good? The Employee Free 
Choice Act represents one critical way to promote the dignity 
of work and, I would say, to protect the common good.
    Thank you very much.
    [Applause.]
    [The prepared statement of Reverend Wallis follows:]
                 Prepared Statement of Rev. Jim Wallis
    The U.S. Catholic Bishops issued a pastoral letter on Catholic 
social teaching and the U.S. economy 23 years ago. While I am not a 
Catholic, I frequently refer to the wisdom of Catholic social teaching. 
That letter began by saying:

          ``Our faith calls us to measure this economy, not by what it 
        produces but also by how it touches human life and whether it 
        protects or undermines the dignity of the human person. 
        Economic decisions have human consequences and moral content; 
        they help or hurt people, strengthen or weaken family life, 
        advance or diminish the quality of justice in our land.''\1\
---------------------------------------------------------------------------
    \1\ Economic Justice for All, National Conference of Catholic 
Bishops, November 1986, p. v.

---------------------------------------------------------------------------
    With that foundation, the Bishops went on to observe that:

          ``The way power is distributed in a free market economy 
        frequently gives employers greater bargaining power than 
        employees in the negotiation of labor contracts. . . . The 
        Church fully supports the right of workers to form unions or 
        other associations to secure their rights to fair wages and 
        working conditions. . . . In the words of Pope John Paul II, 
        `The experience of history teaches that organizations of this 
        type are an indispensable element of social life, especially in 
        modern industrial societies.' . . . No one may deny the right 
        to organize without attacking human dignity itself.''\2\
---------------------------------------------------------------------------
    \2\ Economic Justice for All, p. 53.

    That ``right to organize'' is what is at stake with the Employee 
Free Choice Act (EFCA), and it is why EFCA is fundamentally a moral 
issue. It is a way to level the playing field, to give workers a 
collective voice in the wages, benefits, and conditions of their 
employment. It is a way to ensure their basic human dignity.
    It is a right that has been steadily eroded over the last number of 
years. Far too often, organizers have been fired, workers threatened, 
and employers flatly refusing to negotiate contracts. As a result, only 
12.4 percent of U.S. workers are union members; when only 25 years 
earlier, in 1983, it was 20.1 percent.\3\
---------------------------------------------------------------------------
    \3\ Union Members Summary, Bureau of Labor Statistics, January 28, 
2009, http://www.bls.gov/news.release/union2.nro.htm.
---------------------------------------------------------------------------
    EFCA assures that if the majority of workers want a union, they 
will have one. It compels employers to negotiate in good faith. It 
strengthens penalties for violating worker's rights. All things that 
have been repeatedly undermined in recent years. It is time to again 
affirm worker's right to organize, and provide legal mechanisms to 
ensure that right.
    And, given the right to organize, union workers produce economic 
benefits for the rest of society.
    Mohandas Gandhi once warned of the seven deadly social sins. One of 
those was, ``wealth without work.'' That has increasingly been the 
story of our economy in recent years. Rather than a society and an 
economic system built on the solid rock of productive work, we have 
built on the sand of speculation in mortgages and other financial 
instruments. Too many people at the top of the pyramid have gotten far 
too wealthy without productive work.
    That resulted in a rapid and massive increase in American 
inequality. In 2005, before the current economic collapse, the top 1 
percent of households received 70 times as much in average after-tax 
income as the bottom one-fifth of households, and more than 21 times 
that of the middle one-fifth of households.\4\
---------------------------------------------------------------------------
    \4\ Income Inequality Hits Record Levels, New Cbo Data Show, Center 
on Budget and Policy Priorities, December 14, 2007, http://
www.cbpp.org/12-14-07inc.htm.
---------------------------------------------------------------------------
    The inequality is even starker in terms of CEOs and workers. ``In 
1965, U.S. CEOs at major companies made 24 times a worker's pay-by 
2004, CEOs earned 431 times the pay of an average worker. From 1995 to 
2005, average CEO pay increased five times faster than that of average 
workers. While CEO pay continues to increase at rates far exceeding 
inflation, wages for the vast majority of American workers have failed 
to keep up with rising prices. In fact, real wages for the 90 percent 
of Americans who earn under $92,000 a year have actually fallen since 
2001.'' \5\
---------------------------------------------------------------------------
    \5\ Executive Compensation vs. Workers, Democratic Staff of the 
Financial Services Committee, October 24, 2006, http://
financialservices.house.gov/ExecCompvsWorkers.html.
---------------------------------------------------------------------------
    It is now not surprising that the economy has collapsed. We need to 
return to an economy that is driven by work. An economy where better 
wages and benefits can help lift low-income workers out of poverty, and 
sustain them in the middle class. A recent study showed that 
``unionization raises the wages of the typical low-wage worker (one in 
the 10th percentile) by 20.6 percent, compared to 13.7 percent for the 
typical worker (one in the 50th percentile), and 6.1 percent for the 
typical high-wage worker (one in the 90th percentile).'' \6\ Therefore 
unionization is a critical tool in the fight against poverty.
---------------------------------------------------------------------------
    \6\ The Union Wage Advantage for Low-Wage Workers, John Schmitt, 
Center for Economic and Policy Research, May 2008, http://www.cepr.net/
index.php/publications/reports/the-union-wage-advantage-for-low-wage-
workers/.
---------------------------------------------------------------------------
    Unions don't only help the individual worker. A productive 
workforce with good wages and benefits helps the entire economy by 
contributing to the common good. It leads to more people with health 
insurance, strengthens the tax base of local communities, allows 
families to buy their own homes and send their kids to college.
    Increasingly the church is uniting against poverty across political 
and theological differences. This growing consensus emerging across the 
faith community recognizes that one in eight families living below the 
poverty line tests our faith and civic values. An estimated 9 million 
additional Americans could fall into the quicksand of poverty due to 
the current recession and economic crisis. The Employee Free Choice Act 
represents a critical way to promote the dignity of work and promote 
the common good.

    Senator Harkin. Thank you. Thank you. Thank you, Reverend 
Wallis.
    Now we'll close with Dr. Layne-Farrar.
    Dr. Farrar.

       STATEMENT OF ANNE LAYNE-FARRAR, Ph.D., DIRECTOR, 
                  LECG CONSULTING, CHICAGO, IL

    Ms. Layne-Farrar. First I'd like to thank the committee for 
having me here today.
    My study presents an empirical assessment of how the first 
two provisions of the Employee Free Choice Act can be expected 
to affect important economic outcomes in the United States. In 
particular, the analysis quantifies the likely impact of card 
checks and mandatory contract arbitration on the U.S. 
unemployment rate and employment rate.
    The study finds that if EFCA were passed today, then, for 
every 3 percentage points EFCA raised union membership this 
year, we could expect the unemployment rate to increase by 
roughly 1 percentage point in the following year. For example, 
if EFCA produces the kinds of results that some of its 
proponents have suggested, then it will increase union 
membership by roughly 5 to 10 percentage points within a year 
of passing. According to the calculations in my study, this 
would result in an increase in the unemployment rate of around 
1.5 to 3 percentage points. These are sizable effects for the 
U.S. economy.
    To put the impact into perspective, consider this January's 
labor force of around 153 million people with an unemployment 
rate of 7.6 percent. From this base, a 1.5 to 3 percentage 
point increase in the unemployment rate would mean a new higher 
rate of 9.1 to 10.6 percent, and would translate into roughly 
1\1/2\ to 3\1/2\ million jobs lost by January 2010, not 
counting any other job losses due to the current recession or 
other factors.
    The study also estimates EFCA's likely impact on the 
employment rate. The employment rate is measured as the ratio 
of people employed to the total population. Because some people 
do not count themselves as part of the labor force, such as 
those who are retired or stay-at-home parents, the unemployment 
rate and the employment rate are not mirror images of one 
another. It can, therefore, be important to look at both 
measures to get a broader picture of the economy.
    My study finds that if EFCA were to increase union 
membership by the amounts its proponents predict--that is, by 
the 5 to 10 percentage points within a year of passing--then we 
can expect the employment rate to fall by roughly 1 to 2 
percentage points in the following year. Again, to put these 
figures into perspective, if we start from January's labor 
statistics, my estimates predict that U.S. employment would 
drop by \1/2\ to 2\1/2\ million jobs by 2010. Again, not 
counting any losses due to the recession or other factors.
    Let me explain briefly how I arrive at these figures. With 
most legislative proposals, it can be quite difficult to 
predict the consequences ahead of time, and especially to 
quantify them. With EFCA, however, we have the benefit of 
observing the experience in Canada, a country very close to the 
United States in both culture and industrial composition. The 
one key difference between the two nations is that in Canada, 
for most industries, unionization rules are set at the 
provincial level and not at the Federal level. Canada, 
therefore, offers a natural experiment for studying the effects 
of the changes proposed in EFCA. By looking at what actually 
happened in Canada over a 22-year time span, when provinces 
switched between card-check rules and secret ballots and 
several provinces introduced mandatory contract arbitration, 
then we can obtain a reliable prediction of what would happen 
in the United States, were EFCA to pass.
    Moreover, my study is consistent with the broader empirical 
academic literature. In particular, other statistical studies 
have found that higher unemployment is associated with higher 
rates of unionization. As proponents of EFCA point out, unions 
tend to increase their members' wages and benefits. We cannot 
stop the analysis at that point.
    Consider, for example, a newly unionized firm in an 
industry that is earning above-competitive levels; for example, 
a monopoly or an oligopoly. In this case, higher labor costs 
may simply just reduce firm earnings so that labor and 
management share in the profits. I believe this is the scenario 
that proponents of EFCA have in mind. This scenario is not a 
good description for many, if not most, industries in the 
United States today. When firms face competition, especially at 
a global level, and are earning no more than a competitive 
return on their investments, then increased labor costs that 
come with unions cannot simply come out of profits. In this 
common setting, just as with any person or entity operating 
under a budget, firms facing higher labor costs will need to 
make adjustments elsewhere to compensate.
    One likely reaction is that firms will use less union labor 
as its cost increases. This is a straightforward economic 
matter. As prices go up, quantity demanded tends to go down. 
Union firms can reduce their head counts by not filling open 
positions, by failing to replace workers that leave or retire, 
or nonunion firms may gain larger shares in the marketplace.
    Firms may also need to raise prices to consumers to 
compensate for their higher costs of production. In turn, 
consumers that face higher prices can be expected to react, as 
well. Consumers may either reduce their purchases--as things 
become more expensive, they simply buy less; or, they may turn 
to cheaper alternatives and substitutes, particularly those 
offered by firms that do not face increased labor costs.
    To the extent that consumers reduce their purchases of U.S. 
goods, we can expect that effect to re-inforce the unemployment 
effects that I was discussing earlier. Firms will cut back in 
the face of shrinking sales.
    To conclude, I believe that the quantitative analysis in my 
study fits well within the empirical economics literature and 
makes sense within the broader context of economic incentives. 
In considering whether to pass EFCA, I would urge that both the 
potential benefits and the costs be considered. A bill that 
touches so many aspects of the economy is likely to have far-
reaching implications, and my analysis suggests that the costs 
could very well outweigh the benefits.
    Thank you very much.
    [The prepared statement of Dr. Layne-Farrar follows:]
             Prepared Statement of Anne Layne-Farrar, Ph.D.
    Thank you for the opportunity to present the findings of my 
empirical analysis of the Employee Free Choice Act. In this statement, 
I will summarize the findings presented in detail in my study entitled 
``An Empirical Assessment of the Employee Free Choice Act: The Economic 
Implications'' (referred to hereinafter as ``Economic 
Implications'').\1\
---------------------------------------------------------------------------
    \1\ A copy of the study for your reference may be found at 
www.donotletevanbayhkilljobs.com/resources/study-anne-layne-farrar.pdf.
---------------------------------------------------------------------------
    Before turning to the empirical findings in ``Economic 
Implications'', consider first the provisions contained in Employee 
Free Choice Act (EFCA). Renowned law and economics scholar, Professor 
Richard A. Epstein,\2\ describes in detail the two primary provisions 
of EFCA in his manuscript entitled ``The Case Against the Employee Free 
Choice Act,'' which is due to be published soon by the Hoover 
Institution of Stanford University. Specifically, Epstein explains the 
majority sign-up, or ``card check'' provision in EFCA as follows:
---------------------------------------------------------------------------
    \2\ Richard A. Epstein is the James Parker Hall Distinguished 
Professor of Law, The University of Chicago; the Peter and Kirsten 
Bedford Senior Fellow, The Hoover Institution, and a visiting professor 
at New York University Law School.

          The first proposal would allow either party the option to 
        substitute a card-check system for the current electoral 
        system. To be sure, the EFCA leaves in place the present NLRA 
        provisions that allow unions to proceed by filing a 
        representation petition supported by 30 percent or more of 
        employees in an appropriate bargaining unit and then holding 
        elections. Nonetheless, it seems clear that in virtually all 
        cases the card check will displace the secret ballot. As a 
        matter of current practice, virtually all major unions choose 
        to file representation petitions only after they have 
        accumulated signed authorization cards from well over 50 
        percent of unit members. They need that cushion because they 
        know from experience that worker defections will take place 
        during the course of any election campaign in which management 
        can present its own case of the tradeoffs, costs and 
        disadvantages of representation. It follows therefore that no 
        rational union would risk the election if they have in their 
        possession authorization cards from just over 50 percent of the 
        members of the unit they seek to represent. As a practical 
        matter however, the EFCA would wholly displace union elections 
        with the new ``card check'' procedure. No union is likely to 
        file for an election with over 30 but under 50 percent of 
        signed authorization cards in the hopes of improving its 
        position during a campaign. The conversion to the card check 
---------------------------------------------------------------------------
        system is likely to prove well-nigh complete.

    In regards to the second major provision of EFCA, Epstein writes:

          EFCA's second major provision would introduce a system of 
        compulsory interest arbitration that leads to a first 
        ``contract'' of 2 years duration. The term contract is put in 
        quotation marks because an actual agreement that obtains the 
        assent of both parties is not required during the initial 
        period in question. This mandatory first contract, moreover, is 
        not limited to wage matters, but must cover all the issues that 
        are typically hammered out by agreement under the current 
        system.

    Although Epstein does not quantify his findings as I have done in 
my own study of EFCA, based on his analysis he concludes that:

          The legislative adoption of these provisions taken together, 
        would radically alter the balance of power between management 
        and labor. Its impact would extend to virtually all businesses, 
        except for some small businesses that fall below the 
        ``interstate commerce'' thresholds that the NLRB applies in 
        exercise of its own jurisdiction. Even those exemptions have 
        little relevance to any new firm that hopes to grow over time. 
        The bottom line therefore is that the passage of the EFCA will 
        create huge dislocations in established ways of doing business 
        that will in turn lead to large losses in productivity.

    My findings in ``Economic Implications'' are consistent with 
Professor Epstein's conclusion. ``Economic Implications'' presents an 
empirical assessment of how the two primary provisions of ECFA can be 
expected to affect important economic outcomes in the United States. 
The study finds that while card checks could be expected to increase 
union membership as hoped by EFCA proponents, EFCA is unlikely to 
achieve its primary goal of improving social welfare, which should take 
into account possible consequences not only for union members but for 
all individuals. In particular, the statistical analysis quantifies the 
likely impact of card checks and mandatory contract arbitration on the 
U.S. unemployment and employment rates.
    In terms of U.S. unemployment, the quantitative analysis in 
``Economic Implications'' predicts that if EFCA were passed today, then 
for every 3 percentage points that EFCA raised in union membership this 
year, we could expect unemployment to increase by roughly 1 percentage 
point by the following year. Thus, if EFCA were to produce the kinds of 
results that some of its proponents have claimed, it could be expected 
to increase union membership by 5-10 percentage points within a year of 
passing.\3\ According to the calculations in the study, then this would 
result in an increase in the U.S. unemployment rate of around 1.5 to 3 
percentage points.
---------------------------------------------------------------------------
    \3\ For example, Sheldon Friedman, research coordinator for the 
AFL-CIO, stated that EFCA ``could spur an increase in U.S. union 
density of nearly 5 percentage points and perhaps much more.'' (See 
Sheldon Friedman, The Limits of NLRB Certification and its 
Alternatives, Labor and Employment Relations Association: Proceedings 
of the 58th Annual Meeting 2006, at 190. Available at http://
www.press.uillinois.edu/journals/lera/proceedings2006/friedman.html.) 
Carter and Lotke, in a 2007 paper, estimated that EFCA would increase 
union density by approximately 10 percent. (See Alex Carter and Eric 
Lotke, The Employee Free Choice Act Impact on Health Care and Pension 
Benefits, Institute for America's Future, April 2007. Available at 
http://www.ourfuture.org/files/z_historic/EFCA/
UnitedStatesofAmerica.pdf.)
---------------------------------------------------------------------------
    These are sizable effects for the U.S. economy. To put the 
potential impact into context, consider this January's labor force of 
153 million people, with an unemployment rate of 7.6 percent. From this 
base, a 1.5 to 3 percentage point increase in the unemployment rate 
would mean a new higher rate of 9.1 percent to 10.6 percent, which 
translates into 1.5 to 3.5 million jobs lost by January 2010, not 
counting any other job losses due to other factors including the 
current recession.
    ``Economic Implications'' also presents estimates of EFCA's likely 
impact on the employment rate. The employment rate is measured as the 
ratio of employed people to the total population. Because some people 
do not count themselves in the labor force--such as those persons who 
are retired or are stay-at-home parents, for example--the unemployment 
rate and employment rate can differ from one another. It can therefore 
be instructive to consider both rates to obtain a more complete picture 
of the likely impact on the economy.
    The statistical analysis in ``Economic Implications'' suggests that 
if EFCA were to increase union membership by the amounts its proponents 
predict, that is by 5 to 10 percentage points within a year of 
enactment, then we can expect the employment rate to fall by around 0.9 
to 2.3 percentage points in the following year. Again, to put these 
figures into perspective, start from January's labor statistics. From 
this base, U.S. employment would drop by 550,000 to 2.6 million jobs by 
2010, not counting any losses due to the recession or other factors.
    It is quite difficult to predict the economic consequences of most 
legislative proposals before they are enacted, let alone to quantify 
them as I have done in the above figures. However, with EFCA we have 
the benefit of observing the experience in Canada, which has 
experimented with both secret ballot elections and card checks. Canada 
is very close in both culture and industrial composition to the United 
States, as the table below demonstrates.

            Table 1.--Full-Time Employment by Industry, 2007
------------------------------------------------------------------------
                                          United
                                          States     Canada    Absolute
                                           [In        [In     Difference
                                         percent]   percent]
------------------------------------------------------------------------
Services:                                    81.8       76.3         5.5
  Trade...............................       15.2       15.9         0.7
  Transportation and warehousing......        3.3        4.9         1.6
  Financial activities and leasing....        6.1        6.3         0.2
  Professional, scientific and                5.8        6.7         0.9
   technical..........................
  Business, building and other support        7.4        4.2         3.2
  Educational services................        2.1        7.0         4.9
  Health care and social assistance...       11.0       10.9         0.1
  Information, culture and recreation.        3.5        4.6         1.1
  Accommodation and food services.....        7.2        6.3         0.9
  Public admin. and Gov. enterprises..       15.5        5.1        10.4
  Other services......................        4.6        4.3         0.3
Manufacturing.........................       10.5       12.1         1.6
Construction..........................        5.8        6.7         0.9
Agriculture, Forestry, Fishing,               1.9        4.8         2.9
 Mining, Utilities....................
------------------------------------------------------------------------

    With the exception of public administration and government 
enterprises, Canada and the United States exhibit a very similar 
composition of labor. Public administration and government enterprises, 
accounting for 15.5 percent in the United States and 5.1 percent in 
Canada, include homeland security expenditures in the United States, 
which rose dramatically in the wake of 9-11, and is the likely driver 
of the one meaningful discrepancy.
    The other key difference between the United States and Canada is a 
beneficial one that can be used in statistical analysis. For most 
industries in Canada, union organizational rules are set at the 
provincial level, not at the Federal level, as they are in the United 
States. Throughout the early 1970s, all Canadian provinces employed 
systems of card checks. Starting in 1976, however, several Canadian 
provinces began to experiment with regimes that required unions to win 
secret ballot elections, as is commonly practiced today in the United 
States. The new union rules coincided with provincial elections and 
were driven largely by changes in the political party in power in a 
given province rather than by economic factors. British Columbia alone 
changed its union certification procedure three times in the period 
1976-2008: beginning with card checks from 1976-1984, moving to 
mandatory elections in 1984-1993, then back to card checks from 1993-
2001, and finally settling on a private ballot voting system in 2001. 
As of 2006, half of the Canadian provinces rely on mandatory voting 
regimes, accounting for roughly 68 percent of the Canadian labor force, 
while the remaining half of the provinces covering 32 percent of the 
labor force continue to rely on card check systems. During this same 
time period, many of the provinces also introduced mandatory first 
contract arbitration. Thus, a number of Canadian provinces have 
experimented with the very changes to union organizing that are 
proposed in EFCA.
    As a result of the provincial level changes made over time, Canada 
offers a natural experiment for studying and quantifying the effects of 
the changes proposed in EFCA. By assessing the actual experience in 
Canada over a 22-year time span as unionization rules changed in a 
number of provinces, the regression analysis in ``Economic 
Implications'' provides a reliable prediction of what would likely 
happen in the United States if EFCA were to become law. The regressions 
that provide those predictions were tested extensively, both with 
different estimation procedures (i.e., Ordinary Least Squares, Fixed 
Effects, and Random Effects) and with different model specifications 
(i.e., changing the variables included in the data set). The estimates 
are remarkably stable and consistently statically significant across 
the different estimations and specifications.
    In addition to being robust, the results presented in ``Economic 
Implications'' are also consistent with the broader empirical academic 
literature. In particular, other statistical studies have found that 
higher unemployment is associated with higher rates of unionization.
    These effects also make sense within a larger framework of economic 
theory. As the proponents of EFCA have pointed out, unions typically 
increase their members' wages and benefits. As union labor becomes more 
expensive for firms, it is natural that these firms will make changes 
in their production, just as they would for any other increase in 
costs.
    First consider firms with market power. If a firm in a newly 
unionized industry is earning a supra-competitive level of profits, as 
typically would be the case with a monopoly or an oligopoly firm, then 
the firm may pay for the higher labor costs stemming from unionization 
out of company profits, without jeopardizing its return on investment. 
In this case, labor and management will share the profits. This appears 
to be the scenario that EFCA proponents have in mind.
    However, because most U.S. firms face competition from both home 
and across the globe, and are earning no more than a competitive return 
on their investments, then any increased labor costs that may come with 
passage of legislation such as EFCA cannot be paid for by reducing 
profits; doing so would likely lead to those firms failing to earn an 
adequate return on their investments. Instead, in a competitive 
setting, firms facing higher labor costs will need to make adjustments 
elsewhere to compensate, just as any entity operating under a budget.
    Firms facing higher costs have several options. One is to reduce 
the use of the now more expensive input. Thus, firms will likely use 
less union labor as its cost increases. This effect is not to be 
confused with the illegal firing of union employees. Rather, it is a 
straight forward matter of economics: as prices go up, demand tends to 
go down. Thus, firms may choose not to fill empty positions, not to 
replace workers resigning or retiring, and/or not to create new 
positions or expand production.
    Another alternative is to raise prices. In competitive markets, 
well established economic theory dictates that price (P) equals 
marginal cost (MC). Wages are clearly a marginal cost. Thus, as 
marginal production costs go up because union labor is more expensive, 
firms in competitive industries will likely raise prices to consumers. 
Higher consumer prices would bring other consequences. Most 
importantly, consumers can be expected to react to the higher prices, 
just as the firms did before them. While union members may be earning 
higher wages, price increases would act to erode union members' pay 
increases. Moreover, non-union workers are unlikely to be earning 
higher wages. When faced with higher prices for the goods and services 
they purchase, many consumers may simply buy less. Goods and services 
are more expensive, so to stay within their budget constraints 
consumers may reduce their overall buying. Or, consumers may choose to 
buy cheaper alternatives offered by firms that do not face increased 
labor costs, in particular international firms.
    To the extent that consumers reduce their purchases of U.S. goods, 
that reduction will likely re-inforce any unemployment effects. Non-
union firms, particularly international firms, will likely gain larger 
shares in the marketplace at the expense of domestic firms facing 
higher union labor costs. In the face of shrinking sales, domestic 
firms can be expected to make further cuts in their headcounts, again 
increasing unemployment and reducing job creation.
    In light of my quantitative analysis and how it fits within the 
broader context of economic incentives, the costs entailed in the 
provisions of EFCA appear to be substantial. In considering whether to 
pass EFCA, I would urge that Congress's analysis not stop with 
potential benefits to some workers in the form of higher wages and 
increased benefits promised by unions. As with all legislation, but 
especially for such an important area as labor relations and 
management, it is essential that both the potential benefits and costs 
be considered. A bill that touches so many aspects of the economy is 
sure to have far-reaching repercussions. There is no coherent 
theoretical argument that explains how higher costs, greater legal 
uncertainty and expanded government intervention entailed in EFCA would 
improve social welfare for all workers. The analysis presented in 
``Economic Implications'' suggests that the costs of passing the 
Employee Free Choice Act could very well outweigh the benefits.

    Senator Harkin. Thank you very much, Dr. Layne-Farrar.
    And now we'll open for a first round of questions with 5 
minutes each.
    Dr. Voos, you said something that got my attention, among 
other things. You said, ``A less conflict-driven manner of 
forming unions is desirable.'' What was that? ``A less 
conflict-driven manner.''
    Ms. Voos. Yes. The current process of forming unions 
through the National Labor Relations Board, supervised 
elections, is one that is very time-consuming and often has 
high costs, in terms of the workplace. An extensive campaign is 
typical. Workers are called in one-on-one to speak to 
supervisors about their beliefs. There are speeches by 
management in which employees hear about why it's a bad idea to 
form a union. It's a very conflictual process and a very 
lengthy process, and it tends to get the labor-management 
relationship off to a rocky start in those situations in which 
employees do go ahead and vote in a majority for 
representation.
    In fact, in a very recent study in the last issue in the 
Industrial and Labor Relations Review, it was reported that, of 
all the workers who start this process by filing for an 
election, only one in seven situations result in a contract 
after 1 year. It's really a mine field. And that's important, 
because economists have found that, where unions and management 
have a good relationship, they do get major productivity gains. 
That's partly because labor and management need to work 
together and need to be constructive. Where they don't have a 
good relationship, that's not the result. Our current process 
is extremely conflict-laden, and that's something that I 
believe of the Employee Free Choice Act, because it promises a 
much speedier process, because studies of voluntary 
recognitions under majority sign-up agreements that we have in 
the United States, both in the public and the private sector, 
have found that it leads to a much more constructive 
relationship.
    Senator Harkin. Well, I think that's very profound, I 
think, the fact that we have to look at a less-conflict-driven 
manner.
    I guess the one thing that just keeps coming to my mind all 
the time--and I ask this of the panel--is, Why do so many CEOs, 
managers, owners object so strongly to their workers belonging 
to a union? I've been many places where management, CEOs, don't 
dislike the people that work for them, workers don't dislike 
the people that run the company. Why is it that they're so 
opposed to people joining a union and bargaining with them 
collectively? What's behind all this? I have a hard time 
grappling with this, why so many CEOs and managers are so 
opposed to workers forming a union. I know a lot of these 
people, I don't know why they're so opposed to it. What do you 
think? Why are they so opposed?
    Ms. Voos. Well, Senator, I also have trouble answering that 
question. My father actually was a small businessman who dealt 
with a union that his father, my grandfather, voluntarily 
recognized, and he never had any problems at all. I don't know 
if it's--how much it's ideological, how much it is a matter of 
fear-mongering by associations that want to sell their anti-
union services to employers by thinking that somehow this is 
Armageddon and we're going to have terrible consequences.
    It seems ludicrous to me.
    Senator Harkin. Which, as we know, is over a $300-million-
a-year business right now.
    Mr. Henderson, why is this?
    Mr. Henderson. Well, Senator, I think you've asked a 
central question. Let me begin by saying I do not assume that 
most employers have personal hostility toward their workers.
    Senator Harkin. Right.
    Mr. Henderson. Certainly, nor do I assume workers view 
their employers with hostility.
    In companies that we have studied at the Leadership 
Conference in examining the implications of this bill, we have 
often seen bottom-line financial considerations coming into 
play that distort the employer-employee relationship in ways 
that work to the disadvantage of unprotected workers.
    I'll give you an example. Senator Alexander mentioned the 
importance of the secret ballot, and he cited a small community 
in his own State in which Abraham Lincoln, during the Civil 
War, would have gotten support. I don't doubt that, by any 
means. I look at a company like FedEx, and I look at FedEx 
Ground. They are two companies with a very different business 
model. FedEx has workers who are full-time employees. FedEx 
Ground characterizes workers who do similar functions as 
independent contractors; and thus, circumvent the full effect 
of civil rights laws and employment protections. FedEx Ground 
has been, in fact, cited by the Internal Revenue Service for 
mischaracterizing workers at FedEx Ground, and, in fact, 
denying them the protections that the law affords.
    With the availability of the Employee Free Choice Act, the 
ability of workers to assert their rights in meaningful ways 
would be allowed. It strengthens anti-retaliation efforts that 
are not available now under the law.
    To respond to Senator Harkin's question, I think there are 
ample examples, in fact, that one can draw on, that doesn't 
require one to assume mal-motive on the part of employers or 
workers, but financial considerations come into play that 
distort the worker-employer relationship in ways that work to 
the disadvantage of unprotected workers. I think FedEx, for 
example, is a perfect example of that problem.
    Senator Harkin. My time is up. I want to continue, with 
Reverend Wallis and Dr. Layne-Farrar, with that same question 
of, Why do you think there's this opposition? I'll get to it in 
my next round.
    Senator Isakson.
    Senator Isakson. Well, Senator Harkin, in part, Mr. 
Henderson, for whom I have the greatest of respect, just 
answered your question about why companies fear these things. 
No, with all due respect, sir, I ran a company with 200 
employees and 800 independent contractors, and it is not 
correct that independent contractors are not protected by the 
laws of the United States of America for discrimination, age 
discrimination, race discrimination, employment 
discrimination--all kinds of--it's just categorically an untrue 
statement.
    People who take the risk to run a business and invest their 
capital or invest debt that they've actually borrowed, put 
their name on the line, have many decisions to make under the 
laws of the United States of America on the nature of their 
business. One of them is whether they're an employee-employer 
or an independent contractor. There are many things that happen 
in the United States of America, and many people who have great 
lives, who would not be able to have them, were it not for the 
independent-contractor status. And so, we're talking about 
choice. That is a choice, sir.
    I'm not lecturing you, please--I apologize. But, he asked 
the question. I think it's fair for somebody to give you an 
exact reason why. Don't make an absolute statement about 
something that skews the understanding of the issue. That was 
my only point on that. I'll let you respond, because I was rude 
to jump on you.
    Mr. Henderson. No, no, you weren't rude at all, Senator, 
and I appreciate the opportunity to respond.
    I think, if you look at the example that I cited, the 
example, as between FedEx and FedEx Ground, I didn't cite that 
FedEx Ground had, in fact, violated the existing law for 
improperly characterizing its employees as independent 
contractors; that was the Internal Revenue Service. They, in 
fact, cited the company for mischaracterizing individuals who 
perform the same functions as full-time employees as 
independent contractors. Now, certainly I would agree that 
independent contractor status is a respected status under the 
law that provides some protections for individuals who hold 
that status legitimately. When the status is used to 
mischaracterize workers who, in fact, engage in the same full-
time employment responsibilities as fully protected workers, 
then there is a mischaracterization and an improper use of that 
protection under the law. That's really what I'm citing, sir.
    Senator Isakson. Well, as one who was visited by the IRS 
over my independent contractors, I can say that IRS vigilantly, 
as they should, audits independent contractor operations under 
their 10-point test to make sure those people who are operating 
as independent contractors are not ordered as an employee would 
do--or operate as an employee would do, under an employee-
employer relationship.
    And, second, it's to the benefit--every time you convert 
somebody from an independent contractor to an employee, then 
you've got withholding on FICA and all the other things that go 
into the system. The government is right to advocate that way, 
but our laws are right to allow the choice of those 
entrepreneurs, based on the nature of the business that they're 
in. The other thing is, I don't think anybody is more or less 
subject to laws against discrimination, whether they're an 
employee or whether they're an independent contractor.
    Mr. Henderson. You admit, sir, that there is a difficulty 
and an imbalance between employers and employees and their 
ability to assert their rights in meaningful ways. If, in fact, 
employees had a level playing field that provided them a full 
panoply of protection under Title VII of the Civil Rights Act, 
or under our labor laws, you may, in fact, be correct in 
characterizing the way in which employees and independent 
contractors would function in the real world. Because, sir, you 
were a businessman, I'm sure you can cite ample examples in 
which employers have used and misused characterization of 
independent contractors to assert rights which have--or, 
rather, protections which, in fact, are illegitimate under 
existing law. That's, I think, what the Federal courts, in 
addition to the Internal Revenue Service, have found with the 
operation of FedEx Ground. I simply cite that as one example, 
sir, not to indict an entire community.
    Senator Isakson. Therein, you make my case. You cannot 
indict entrepreneurs, businesses and owners, because it is the 
competition amongst them that drives compensation for workers. 
Sometimes some of the remarks today have done exactly that, and 
I think that's both unfair and I think it's unjust.
    My last question, to Dr. Voos, What's the definition of 
``real wages''?
    Ms. Voos. Real wages are wages that have been corrected for 
inflation, and usually the Consumer Price Index is used to make 
that correction.
    Senator Isakson. It's the wage compensation to the worker. 
Is that correct?
    Ms. Voos. It is the wage, in terms of what that money will 
buy. It's used to compare wages over time.
    Senator Isakson. OK. When you see disparities between 
productivity and wages, is it not true that part of the 
difference in that is a combination of two things--first, since 
1974 the growth in benefits paid over and above wages, which 
are not reflected in the definition of real wage, and, second, 
the advent of the computer, in terms of productivity of 
American industry?
    Ms. Voos. You're asking two things, so let me----
    Senator Isakson. OK.
    Ms. Voos [continuing]. Address them separately.
    You are correct that total compensation includes not only 
wages, in terms of money payments, but also the value of fringe 
benefits and the increasing cost of health insurance, in 
particular, can be factored in, or could be factored in. It is 
not, in some time series. Even when that is added in, total 
compensation has not kept up with increases--in real terms, 
with increases in productivity.
    There are various sources of the increases in productivity. 
I think you mentioned computers; that is one source.
    Senator Isakson. Thank you. I'm sorry, I went over, Mr. 
Chairman.
    Senator Harkin. No, that's all right. Thank you very much, 
Senator.
    Senator Murray.

                      Statement of Senator Murray

    Senator Murray. Mr. Chairman, thank you very much for 
holding this really important hearing to talk about the 
importance of a strong middle class in rebuilding this economy. 
I want to thank all the witnesses who are here with us today.
    I think we all know that we're facing a very serious 
economic challenge, more than we've seen in decades. Last week 
we learned that we lost more than 4 million jobs since the 
recession began in late 2007, and those numbers are reaching 
alarming levels. We have a lot of middle-class families out 
there who are just struggling to get by and wondering how 
they're going to keep their home and send their kids to school. 
Businesses are cutting back, closing their doors. We're just 
seeing this vicious economic cycle right now, and I don't think 
we're going to recover until we have the money and the 
confidence to start spending again. I'm very glad we're holding 
this hearing.
    Now, I think it's important that we find a balance to make 
sure that our middle-class families can continue to share in 
the long-term prosperity of this country. There's been a debate 
recently about the burden of employee pay and benefits on U.S. 
manufacturing and other industry, and how it affects 
competitiveness in the market. This recession has obviously 
impacted those industries quite hard, but the top percentage of 
earners benefited disproportionately more than the workers who 
helped create the Nation's wealth. I think it's important to 
note that in 1965, U.S. CEOs in major companies earned 24 times 
more than the typical worker, and that number surged to 275 
times more in 2007.
    I wonder, Dr. Voos, maybe if you could start by saying what 
role, if any, does a living family wage for American workers 
play in this current economic downturn.
    Ms. Voos. Thank you for asking that question. It is 
extremely important that we restore purchasing power, the 
capacity of people to buy. That's, of course, what our stimulus 
bill did to try to get the economy going again, because 
business will invest when they know that they will be able to 
sell what they produce, the goods and services that they 
produce. Of course, the middle class needs to be assured that 
it will have that purchasing power. In fact, that's one of the 
sources of our problems, and that's one of the macroeconomic 
reasons why it is so important to raise wages in this country.
    Senator Murray. OK. While I have you, Dr. Voos, I came in 
at the end of the comments, but I would like you to respond to 
Dr. Layne-Farrar's claim that for every 3 percentage points of 
the Employee Free Choice Act union membership a year, 
unemployment could be expected to increase by roughly 1 
percentage point the following year. If you could respond and 
tell me if you think that's accurate.
    Ms. Voos. I believe that's implausible, for a number of 
reasons. There have been numerous studies, some of them by very 
reputed organizations. For example, the OECD, in its employment 
outlook in 2006, looked at this very issue of whether having 
higher unionization led to higher unemployment across a variety 
of industrial nations, and they found no relationship 
whatsoever. Professor Richard Freeman has looked at this 
question using U.S. data rather than Canadian data, and his 
study has many similarities to her study, except, of course, it 
has 50 States rather than a small number of provinces. It, 
similarly, controls for State effects rather than provincial 
effects. It found a small or no effect, no significant effects 
across States in terms of unemployment.
    I don't really know the details of her study well enough to 
really understand why she found such a very large effect in 
Canada in this time period, but I find it just implausible, in 
terms of its size; that is, it is a huge effect, in terms of 
what we would expect, given the economic things she was talking 
about, you know, things like, well, where you have higher 
wages, business invests more, so you have a slightly smaller 
number of workers. Yes, that's true, but then the business also 
becomes more competitive, and it allows employers to save jobs, 
often, when that takes into effect. I don't know the details of 
her study.
    I do notice that she did not use direct evidence on card 
check. In fact, if you look at footnote No. 53, you'll notice 
that she does not use data on whether or not they had first-
contract arbitration or whether or not there had--one method of 
unionization or another--because she was not able to use that 
data; she used, really, the rate of unionization in the 
province in the previous year. I don't see that this is a 
direct test of the Employee Free Choice Act and its provisions.
    Senator Murray. I appreciate that.
    My time is up,
    [The prepared statement of Senator Murray follows:]

                  Prepared Statement of Senator Murray

    Thank you, Mr. Chairman, for calling this important hearing 
to discuss the importance of a strong middle class in 
rebuilding our economy. Thank you, too, to the witness for 
being here today. &
    Our Nation is facing an unprecedented economic challenge. 
Last week, we learned that our economy has shed more than 4 
million jobs since the recession began in late 2007. The 
unemployment rate continues to rise, and the number of people 
filing for unemployment insurance each week has reached 
alarming levels.&
    Many working families are struggling to hang on to their 
middle class status, paying their mortgages, putting food on 
the table, or keeping the lights on. Many other workers, 
primarily low-skill and vulnerable workers, don't think they 
have any opportunity to access the middle class. Everyone is 
afraid and cutting back on their spending and creating more 
economic distress as cars go unsold and retail goods stay on 
the shelves.
    Employers in every industry are facing the tough decisions 
about whether they can keep their doors open. Others question 
whether they can find the confidence to not only hold on but to 
create jobs and improve their business when the economic 
upswing inevitably occurs.&
    Rebuilding our economy is a big job. We recognize that it 
will take some time for the additional funding Congress 
provided under the American Recovery and Reintegration Act to 
maintain jobs and to create new ones in emerging and viable 
industries. As we restore and grow jobs, we can improve 
consumer confidence to spend for the future. It will take all 
of us to make it happen.&
    To be successful, our labor market should respond to the 
needs of both workers and business. Unfortunately, many workers 
haven't reaped their fair share of the prosperity they help 
create in the workplaces of America for some time.&
    While corporate profits grew and the gap between the have 
and the have not's widened, working families struggled to hang 
onto the middle class. The middle class has been shrinking, 
with families headed by workers with post-secondary education 
and credentials having a better chance of staying in. Those 
families headed by high school graduates or dropouts likely 
will fall further behind. (Uhalde and Strohl, ``America in the 
Global Economy'', 2006.)
    The recent and rapid elimination of jobs linked to business 
decisions to reduce production or services, make more use of 
technology, or to outsource work have increased uncertainty for 
workers and employers alike. &
    Today, more than ever, we need public policies that support 
economic growth and practices in an environment of shared 
responsibility and prosperity. These policies encourage more 
and better use of skilled workers and lead to a robust middle 
class. Unions are one of the most effective tools workers have 
for accessing and staying in the middle class.
    Unions provide workers with a collective voice to advocate 
with their employer. They empower their members to access 
better benefits and provide a better life for themselves and 
their families.&
    Their efforts extend beyond just their members. Union 
presence helps non-member workers in their industry by creating 
competitive benefits and better workplaces.
    Union wages, at almost 30 percent more than non-union 
wages, can provide financial stability; they can help rebuild 
the confidence of workers and families to spend money and rally 
the Nation's economy.
    Progressive employment policies such as the minimum wage, 
the 8-hour work day, the 40-hour work week, employer-provided 
health care, and pension plans emerged from the labor movement 
and have become the standard in today's workplace.&
    Unfortunately, in too many of today's workplaces, workers 
who try to exercise their legal rights to join a union are 
blocked by an unbalanced system that can trap them in 
unacceptable working conditions.&
    Some unscrupulous employers silence employees who try to 
join a union to better their economic situation for their 
families, and that's not fair.&
    I've heard concerns from both camps about this situation, 
and about the bill under consideration by Congress, the 
Employee Free Choice Act. While I respect these differing 
views, I think it's clear that current process is unbalanced 
and doesn't give workers a fair shot at choosing to form a 
union and how to go about doing so.&
    It's time to change the way we look at this issue. It's 
time that our economy, and this process, worked for everyone 
again. We can't afford to pit workers and employer against one 
another. To rebuild, we need everyone and every tool at hand. 
This includes unions.
    I look forward to hearing from our witnesses about the 
shared benefit unions have on our economy and our communities.

    Senator Harkin. Thank you very much.
    Senator Alexander.
    Senator Alexander. Thank you, Mr. Chairman.
    Thanks, to the witnesses, for your testimony, for being 
here today.
    On a couple of occasions, a couple have said that employees 
would still have a secret ballot. Some would and some wouldn't. 
I mean, if there were 100 employees, and 51 decided that they 
wanted to organize by signing a card, and 49 didn't, those 49 
wouldn't have had an opportunity to have a secret ballot in the 
union election. I think it's more accurate to call this the 
Employee No Choice Act, because those employees would not have 
a secret ballot. This act also would impose mandatory binding 
arbitration when employers and unions don't come to an 
agreement on the first contract within 90 days.
    We've heard about studies and disputes about them. Let me 
offer a real-life example. Dr. Farrar, let me ask you if you 
would comment in terms of your study, if you think it has any 
relevance.
    All of us are concerned about plants that make cars and 
trucks in the United States today. We have some teetering on 
bankruptcy who are based in Detroit. I was Governor of 
Tennessee in the 1980s when Nissan came to Tennessee with its 
manufacturing plant. It hired Ford executives from Detroit to 
run it, and it hired Tennesseans to work at it. There might 
have been a handful of Japanese among several thousand 
employees. A few years later, when General Motors was deciding 
where to put it's Saturn plant, I suggested to the president, 
Roger Smith, ``Why don't you put your plant right next to your 
Japanese competitor and tell your union and your management, 
`if they can do it, you can do it'.''
    We have a right-to-work State, so most of the talk here 
today has been that everything would just be great if we had 
more unions. In our State, we believe that that's the 
employee's choice, and it might be better for some, and it 
might not be better for others. That's their choice.
    We've now had a number of years of history since the late 
1980s with those two plants, 40 miles apart. No. 1, everyone is 
a UAW; that's Saturn--and at the Nissan plant the employees 
have decided not to organize. The Saturn plant's never made a 
profit, unfortunately. The Saturn I now drive is made in Kansas 
City, not at the Saturn plant; they make Chevrolets there. And 
General Motors is teetering on bankruptcy. Forty miles away is 
the Nissan plant, which a number of times has been named the 
most productive and efficient plant in North America. Those two 
plants, together, have drawn to our State thousands of jobs, in 
our right-to-work State. One-third of our manufacturing jobs 
are now auto jobs.
    Based upon that history, what do you think the impact of 
the passage of this act would be on the automotive industry in 
Tennessee?
    Let me add one more fact, if I may. During the 1980s, our 
State, which was the third-poorest State in America, became the 
fastest-growing State in family incomes, which was our goal--
not to have low incomes, but to have higher incomes. The way we 
did that was by allowing employees to have that sort of choice. 
We had it, side by side. What do you think would happen to that 
environment, that source of middle-class incomes, if this law 
were to pass?
    Ms. Layne-Farrar. I would be concerned that that kind of 
choice would be taken away by passing EFCA, because, thinking 
about the incentives of union organizers, if they are able to 
collect a majority through a secret card-check process, there 
would be very little incentive, then, to risk that outcome--the 
positive outcome of gaining a union by holding election. It 
seems to me that choice would, in fact, be reduced and that 
that would be detrimental.
    I think the comparison that you make between the two plants 
is an important one, because management--at least in my view, 
it's not about anti-union or holding workers down, but it's 
about a more cooperative relationship. My concern with secret 
card-check collection is that that reduces the amount of 
communication between the two sides. There would be less talk; 
it would be more a one-sided process. As we heard, I believe, 
in the beginning statements, if only one side is able to 
present its case, that is not fair. With a secret card-check 
collection, where there isn't a dialogue between the union 
organizers and the management, there would be less 
communication, and therefore, a more acrimonious environment, 
less fairness than--and certainly less choice for the workers 
who do not want to be represented by a worker, but would rather 
work for--would rather have a choice there, and perhaps work 
for a more productive, more profitable, more commercially 
successful firm, as Nissan has been in your State.
    Senator Alexander. Thank you.
    Thank you, Mr. Chairman.
    Senator Harkin. Thank you, Senator Alexander.
    Senator Sanders.
    Senator Sanders. Thank you, Mr. Chairman.
    Reverend Wallis, I'm going to direct my questions to the 
economist. I wanted to thank you very much for the statement 
that you made. I share with you the belief that growing 
inequality in this country is not just an economic issue, it is 
a moral issue. We have to deal with the reality that we have 
some people on top who have incredible wealth, but, in the last 
few years, we've seen a growth of billionaires, and, at the 
same time, we have the highest rate of childhood poverty of any 
major country on Earth. This is a moral issue that we have got 
to deal with, and I applaud you very much for making the 
statement that you have made.
    Let me go to Dr. Voos and ask her this. We have heard the 
statement today that the legislation that we are debating is a 
``radical act.'' Isn't it true that dozens of countries around 
this planet, including major countries, major industrialized 
countries, like Canada, Denmark, Finland, France, Germany, 
Ireland, Japan, Spain, Switzerland, Sweden, and many, many 
others--United Kingdom--have laws on the books which make it 
much easier than in the case of the United States for workers 
who want to join a union? Is this, in fact, a radical act, or 
is it bringing us a little bit closer to what many of our 
industrial competitors, in fact, have on the books for law?
    Ms. Voos. Senator Sanders, you are correct that it is 
often, in other nations, easier to join a union or to form a 
union, and that there is often less employer opposition to that 
then the United States.
    It's also not a radical act, in terms of American history. 
Before 1947, it was very common for employees to join a union, 
and then to have the NLRB notice that a majority had indeed 
joined. You can join a church in this country, you can pull out 
your credit card and join an organization to represent your 
interests, you can join many things.
    Senator Sanders. In other words, we've done it before, 
other countries around the world are doing it, and, really, 
this is not some kind of new and radical concept.
    Ms. Voos. May I add one thing?
    Senator Sanders. Yes, please.
    Ms. Voos. I work for the State of New Jersey. The State of 
New Jersey and many other States have recently said that this 
is a good way to have organizing in the public sector, and they 
have found that it works very well.
    Similarly, interest arbitration has been widely used in the 
public sector.
    Senator Sanders. Let me jump in and ask Mr. Henderson a 
question.
    Mr. Henderson, today if an employee is engaged in union-
organizing efforts, that employee has a one-in-five chance of 
getting fired. Today, half of all employers threaten to close 
or relocate their business if workers elect to form a union. 
Today, when workers become interested in forming unions, 91 
percent of private-sector employers force employees to attend 
closed-door meetings or to hear anti-union propaganda, 80 
percent require supervisors to attend training sessions on 
attacking unions. We heard earlier about the huge amount of 
money that these anti-union consultants and lawyers are making. 
How will EFCA move to change that unfair situation?
    Mr. Henderson. Senator Sanders, as you correctly note, this 
imbalance between employers and workers, and the tactics that 
can be used by employers--not all of whom use these tactics, 
but certainly many do, in an attempt to avoid the formation of 
unions--tells us that something more than the existing regime, 
which has been under-enforced both by the National Labor 
Relations Board and the combination of ineffective civil rights 
laws regarding workplace protection, require some additional 
element to try to level the playing field. When employers use 
retaliatory efforts either to preempt the formation of unions 
by literally firing employees who are attempting to assert what 
we believe should be a fundamental civil and human right, it 
cries out for some kind of effort by Congress to address the 
issue without, obviously, disrupting the economy in a way that 
would work to the detriment of all workers.
    No one is suggesting here that we impose burdens on 
employers that would make them inherently unproductive. 
Obviously, that's not in the interest of workers, and, as you 
correctly cited, other countries have shown that you can have a 
compatible system that respects workers, respects their 
protection, and nonetheless, still provides an opportunity for 
economic growth. That's, I think, what we need now.
    It's especially problematic for workers who have 
historically been marginalized, because, as America has moved 
toward becoming a more perfect union, we have adopted 
protections in the workplace that have helped to protect 
African-Americans, women, Latinos and others. That, we think 
here, is an important step. The anti-retaliation provisions of 
the Employee Free Choice Act are a significant step in the 
right direction. Providing a complementary system to the 
existing NLRB mechanisms for determining a union is, in our 
view, a reasonable, modest approach to trying to level the 
playing field.
    Senator Sanders. Thank you very much.
    Thank you, Mr. Chairman.
    Senator Harkin. Senator Casey.
    Senator Casey. Thank you, Mr. Chairman. I appreciate you 
presiding over this hearing. It's an important hearing for the 
country and for the economy.
    I wanted to make one point before I address our panel about 
the act and about some of the ways that the act has been 
represented, or the impacts of the act has been represented, in 
the argument.
    About this question of secret ballot. Sounds really good, 
doesn't it? Really American? When we think of a secret ballot, 
we think of a democratic process.
    Here's the claim. The claim is, secret ballot elections are 
democratic and should be the only way employees can choose a 
union. Right? That's the charge. What doesn't get said--and we 
have to keep saying, and we're going to keep saying it over and 
over again, until people hear it, and sometimes you have to say 
it a hundred times--this act does not abolish the secret ballot 
election process. That process is still available. The bill 
gives workers--not employers, workers--the choice whether to 
use the National Labor Relations Board election process--that's 
one choice--or majority sign-up.
    Now, let's talk about the election process. When we use the 
word ``election'' in America, it has all kinds of connotations, 
because it's part of our history. It may sound democratic when 
used in this context. An NLRB election is nothing like the 
public elections that we're used to in America. So, these terms 
are very important.
    The big difference between the way we elect people in 
America and this kind of election is that one side has all the 
power. Let's think about it logically. Who do you think has the 
power in this relationship? There's only one side that controls 
the workers' paychecks, controls their livelihood, has 
unlimited access to workers, and finally, has the potential--
and sometimes the potential becomes the reality--not in every 
case--but the potential to intimidate and coerce workers with 
impunity. That one side is the employer. That's what this 
legislation seeks to do, to restore some of that balance to 
that equation.
    Let me move on to questions. First of all, we want to thank 
the entire panel for being here today and for your testimony. 
We have limited--I've got about a little more than 2 minutes.
    Doctor, I wanted to have you very briefly, if you could, 
review or summarize again what's set forth in your testimony, 
which is the long-run impact on American competitiveness. 
Because we keep hearing this line that somehow an increase in 
the ability of workers to organize and form a union is somehow 
anticompetitive or bad for business or bad for fill-in-the-
blank. I wanted to have you address that again.
    Ms. Voos. Thank you for the opportunity.
    There's this general idea that somehow we can be 
competitive if we have lower wages. Actually, that's not the 
basis for American competitiveness in this global economy. 
We're never going to be a low-wage economy. We have wages that 
are actually lower already than many other industrialized 
economies--17th, according to the Bureau of Labor Statistics. 
There are 16, mostly Western European but other advanced, 
economies that have higher wages for their manufacturing 
workers than we have. Yet, we're less competitive than they 
are. They're economies that also have much higher rates of 
unionization and much more equal income distributions than 
ours.
    How can we be competitive? Well, we can be competitive with 
high productivity, high quality, high innovation. In fact, we 
have high productivity; we're second, internationally, in terms 
of productivity, according to our government.
    Unions can increase productivity, but they have been found 
to do so best when they work together with management. That's 
why it's so important that labor and management not start out 
by fighting, not by having a big, long campaign, which often 
gets very hostile and difficult, over whether or not a union's 
going to be there, but, rather, start out with the notion that, 
``OK, if the workers want it, fine. Hey, we're going to 
negotiate an agreement. If we don't come to an agreement and 
really we are encouraging labor and management to come to an 
agreement--if we don't, then there's some other process.'' We 
don't have to have a strike to get the first contract, we have 
another process, one we've used in the public sector in the 
United States for a long time, one that does not involve 
government bureaucrats, one that involves private arbitrators 
selected by the parties, with management helping doing the 
selection so you get someone independent and fair to set that 
contract for a period of time. Right? I think that possibility 
would really bring labor and management to an agreement, get 
everything off to a better start, and make us more competitive.
    Senator Casey. Thank you. I'm over time. I just want to 
read one sentence, with your indulgence, Mr. Chairman, in Mr. 
Henderson's testimony.

          ``In 2006, median earnings for women in unions was 31 
        percent higher than for nonunion women, 36 percent 
        greater for unionized African-Americans, 8 percent more 
        for Asian Americans, and 46 percent more for Latinos.''

    I appreciate you putting that in your testimony. I wish I 
could spend more time asking you about it.
    Thank you.
    Senator Harkin. Thank you, Senator Casey.
    Senator Hagan.

                       Statement of Senator Hagan

    Senator Hagan. Thank you, Mr. Chairman, for holding this 
hearing. I want to thank all the witnesses for, certainly, 
taking your time to be here today. I know that the Employee 
Free Choice Act is one of the most hotly debated issues facing 
Congress today, and I really appreciate the fact that you're 
spending your time here to help flesh out some of these very 
important issues.
    I think a lot of the questions have been asked, but I did 
want to ask Dr. Voos--one of the things I hear from people who 
are concerned about the Employee Free Choice Act is that the 
increased unionization will cause some businesses to shut their 
doors. Does it necessarily mean a cost increase for businesses 
if their employees form a union? How frequent is that, that the 
formation of a union would be the catalyst for a business to 
perhaps cease their operations?
    Ms. Voos. There have been economists who have studied this 
very question, and they have found very few businesses close. 
There's no higher rate of business failure among unionized 
firms than among nonunion firms.
    I think this concern is often expressed by small business 
persons, and I understand that, and I do, in my paper, address 
the situation of small business.
    What we find with small business is that often the employer 
community can benefit when a union organizes in the area and 
organizes the various small businesses, because it can provide 
a source of training, it can provide an institution for 
providing health insurance, pensions, and other benefits. It 
can stabilize competition. What's really important there is 
that if the unionization happens, it happens across a number of 
firms so that it's not just one firm and so that the entire 
community gradually changes and raises its standards.
    Unions typically do not come in and negotiate huge 
contracts right away. That's a misconception that's common. 
They commonly come in and work with the business to raise 
standards slowly over time, because they're concerned that the 
business survive and provide jobs for the employees.
    Senator Hagan. You addressed this to Senator Casey's 
question somewhat, but is it possible that increased 
productivity and decreased turnover could balance out increased 
cost of paying salaries and wages?
    Ms. Voos. Yes, Senator, that is correct. Most economists 
have found that there is lower turnover and lower turnover cost 
and higher productivity, on average, with union employees. It 
definitely counteracts part of the cost entries. Probably not 
in entirety.
    Senator Hagan. Mr. Henderson, following up on Senator 
Casey's last statement when he read that sentence, you've 
testified about the difference that union membership creates 
for female workers. I note that the Center for Economic and 
Policy Research study from last December 2008 showed some 
similar findings. Why do you think that the union membership is 
beneficial to women, in particular?
    Mr. Henderson. Well, I actually think union membership, 
Senator--and thanks for the question--is really beneficial to 
all workers, not simply women or workers of color. Essentially, 
it provides a counterbalance to the imbalance that exists 
between employers and workers, where employers have many of the 
advantages and opportunities that can collectively result in 
intimidating workers to deny them the right, the ability, to 
assert what should be a fundamental right.
    Certainly, women have had to literally fight their way into 
the workforce in meaningful ways. They've done so through their 
own tenacity, but also, obviously, with the existence of laws, 
that have been enacted over the last 40 to 50 years, that have 
helped to provide a more equal playing field. Yet, even with 
those laws on the books, we still find a fundamental imbalance 
between workers--women workers and other workers. Women earn 
substantially less than male workers--in many instances, even 
doing the same job.
    This Congress recently passed a bill that restored the 
right of a worker who faced discrimination in the workplace. It 
was named after Lilly Ledbetter, the great employee of the 
Goodyear Tire and Rubber Company. Her story is emblematic of 
how women struggle to assert their rights in the workplace, and 
why they need the kinds of protections that the Employee Free 
Choice Act would provide.
    Senator Hagan. It is certainly one of my goals that someday 
we will not have to talk about disparities in women's pay, and 
that there won't be any. I think that, with this economic 
recession that we're in right now, it is imperative that we do 
what we can to help the middle class in this country.
    Thank you, Mr. Chairman.
    Senator Harkin. Thank you, Senator Hagan.
    Senator Merkley.
    Senator Merkley. Thank you, Mr. Chair. I appreciated the 
chart that you presented at the beginning of your comments that 
showed the great divergence in terms of rising worker salaries 
versus productivity, and how productivity has increased 
dramatically during a period in which workers' compensation has 
been flat.
    How important is this act in helping to restore a 
connection between workers' compensation and productivity in 
our national economy?
    Dr. Voos, I'd invite you to answer, and anyone else who 
would like to comment.
    Ms. Voos. The title of this hearing is about empowering the 
middle class. When people form together into a labor 
organization, they are able to sit down and discuss their wages 
and their benefits with their employer. Where they're not 
getting a fair share of the value that they produce, they're 
able to get a different deal, as they are together, because, as 
one of my other colleagues stated, that levels the playing 
field. The individual worker can very rarely have the same kind 
of weight in those negotiations as a group of employees can. 
So, I would agree that that will help narrow the gap.
    Rev. Wallis. I'd like to respond to that, as well, and 
perhaps by answering Senator Harkin's earlier issue about why 
people resist this.
    My father worked for Detroit Edison in Detroit. All of the 
people in our neighborhood were veterans of World War II. They 
all came home and got FHA houses, three-bedroom houses. We all 
lived in the same neighborhood. My father was on the management 
side at Edison. He was in management, not labor. In fact, he 
often was given the job of negotiating the contracts because my 
father was good at producing the cooperative relationship 
that's been talked about here. He was very good at that. In 
fact, both sides liked him at the table because he was 
cooperative. He used to talk to me about this as a kid. He 
didn't always agree with everything the union asked for, but he 
would have been incensed at the idea that his CEO should make 
431 times what his average worker made, because those workers 
were in our church. He was also a lay pastor, my dad. We found 
a way to work together. We were all middle class. We were upper 
middle class. But, we all found a way to work together.
    The issue here is--Senator Casey talks about--we're all for 
free elections and secret ballots. The issue is, Is there a 
problem? Is there imbalance? Is there abuse? Is what's going 
on, on the ground, fair? It's not enough to just say, ``Well, 
we all favor secret ballots.'' Yes. What's happening on the 
ground, and what is the result? Do we have a problem here? If 
we do, how are we going to solve it? This act is trying to 
redress imbalances, correct abuses, make things more fair.
    Now, we're not going to get back to the way things were in 
my childhood in Detroit, where every kid's dad I knew had a 
job, that job was enough to pay for a family. One job. They had 
health insurance. We had an FHA house. If you wanted a job in 
your dad's company, you got to have it--at Ford, GM, or 
Chrysler, or Edison. Those days are past. How can the 
principles, though, of that cooperation be brought forward now?
    If we think things are going well and there isn't a 
problem, we can hide behind words like ``secret ballot'' and 
``free election.'' If things aren't going well and the result 
is 431 times the pay of average workers, I would say, I think 
those CEOs ought to be embarrassed, quite frankly, and the 
American people are turning against that kind of inequality. 
That is the big change in the political climate.
    [Applause.]
    Senator Merkley. Thank you very much, Reverend. You 
mentioned issues of imbalance. One of the things that has 
really struck me is the statistic over how often those who 
are--the workers who are advocating for formation of unions are 
fired. That certainly does not create a level playing field for 
preparation, if you will, for an election. How does it come to 
be that the NLRB, the National Labor Relations Board, has 
failed to protect workers who are advocating for workers' 
rights?
    Anybody like to tackle that?
    Mr. Henderson. I mean, Senator, I think you put your finger 
on a very difficult issue. I'm not a laborer expert, and I 
can't honestly tell you why the NLRB has not been more 
effective in asserting or protecting, rather, the rights of 
workers, but I will say this, if you look at the figures that 
Senator Casey, rather, Senator Sanders cited about the kinds of 
abuses that occur, the retaliation that exists--you talk to 
real workers in jobs who say, simply by trying to assert the 
right to organize, which is a fundamental right, they are 
fired, what effect does that have on workers who come behind 
them who need the jobs that are being provided now by 
employers, and who are serving at sufferance under a system 
that obviously is broken? For whatever reason, the evidence 
would suggest that there is a tremendous problem that requires 
attention. Now, I hope that the NLRB will be the focus of 
additional review and analysis. I think, in the interim, the 
evidence itself suggests that the problem is of sufficient 
magnitude that something needs to be done to try to level that 
playing field.
    Senator Merkley. Thank you.
    I'll just close with this comment, which is, as I traveled 
throughout Oregon last year, everywhere I went workers were 
frustrated that they were not getting a chance to participate 
fully in the American dream. They asked me to come here and 
advocate to change that, to make this Nation work for working 
Americans again. I think this is an incredibly important bill 
before us to make that happen.
    Thank you.
    [Applause.]
    Senator Harkin. Well, thank you all very much. I thank this 
panel. We'll bring up the second panel. Again, it just seems 
that we've got to get, as you said, Reverend Wallis, something 
where we just have more cooperation, let's lower the thermostat 
on this a little bit. You know, when I read in the paper that 
the head of the Chamber of Commerce, Mr. Donohue, called this 
``Armageddon,''--this isn't Armageddon, this is a continuing 
dialogue about what kind of country we're going to have and how 
we're going to reach more cooperative agreements. Let's lower 
the thermostats, the temperature, a little bit on this. 
Reasonable people, I believe, can come together on this and 
figure out ways of doing this that will protect the rights of 
management, but also protect the rights of labor.
    I think you put your finger on it. Balance. We need to get 
the balance back. I don't think we need to use inflammatory 
type of language that this is some kind of battle of the ages, 
and if one side wins something, the other side loses. I don't 
think this is a zero-sum game whatsoever.
    I thank this panel very much. Let's bring up the next 
panel.
    Thank you.
    [Applause.]
    Senator Harkin. Deborah Kelly, Kelly Badillo, Sharon 
Harrison, Larry Getts. I will introduce them while they're 
coming up.
    Deborah Kelly is a lineman's apprentice in Anchorage, AK, a 
member of the International Brotherhood of Electrical Workers. 
Ms. Kelly braves the intense weather conditions and rough 
terrain of Alaska to install and maintain the power lines that 
keep Anchorage area businesses and households running. Ms. 
Kelly credits the expert training and safety rules provided by 
her union with her ability to do a difficult job safely and 
professionally.
    Kelly Badillo, a member of SEIU Local 32BJ, is an elevator 
operator at the Bank of New York Mellon in Manhattan, working 
for Contractor American Building Maintenance. Kelly, a 
Manhattan native born in 1961, grew up in Jersey City, attended 
St. Mary's Grammar School and Ferris High School. After 
spending time in Florida, Kelly moved back to New Jersey in the 
early 1980s to take a job at the World Trade Center and work 
alongside his father. Kelly was in the lobby of the World Trade 
Center when the first plane hit on 9/11, but was able to get 
out alive, unlike 2,750 others. He credits the strong 
partnership of his union, 32BJ, and his employer, the American 
Building Maintenance, in helping him get through the months 
that followed. ABM and 32BJ worked together to provide the 
displaced workers with grief counseling, financial and health 
assistance, and positions at other facilities, within months. A 
proud union member since 1982, he currently serves as a shop 
steward and lives with his wife in Jersey City with two grown 
daughters.
    Sharon Harrison has worked for AT&T Mobility since 2003. 
She, her husband, and daughter, live in Pounding Mill, VA, a 
small community in the southwestern corner of the State. Ms. 
Harrison was a member of the union bargaining team that just 
completed negotiations for a new contract covering 20,000 
Mobility workers.
    Mr. Larry Getts is an employee of the Dana Corporation in 
Albion, IN.
    Welcome. Your statements will all be made a part of the 
record in their entirety. I'd ask if you could sum it up in 5, 
6, or 7 minutes. Ms. Kelly, we'll start with you. Welcome. 
Please proceed.

       STATEMENT OF DEBORAH KELLY, WORKER, ANCHORAGE, AK

    Ms. Kelly. Mr. Chairman, members of the committee, thank 
you for the opportunity to testify today on behalf of the 9 
million working men and women of the AFL-CIO.
    I'm proud to be a member of the International Brotherhood 
of Electrical Workers. I'm a lineman apprentice currently 
working for the Chugach Electric Association. We work hard to 
provide power to Alaska's largest city.
    I decided to join the IBEW in high school. What interested 
me most was the idea of working in a trade, working with my 
hands, and working to build and create. This interest, coupled 
with the possibility of a lifelong career that includes health 
insurance, a living wage, and the promise of a pension when it 
comes time to retire, tipped the scales away from a traditional 
college path.
    I graduated high school after 3 years, magna cum laude. My 
parents pushed me to pursue a more typical path. My older 
sister had gone to Cal Tech at age 16, and earned an 
engineering degree. She went on to work at NASA for several 
years. While I was proud of what she had accomplished, I had 
already decided this was not for me.
    I applied for the IBEW apprenticeship program the day after 
I turned 18. I fell in love with the challenges of physical 
work and constant exposure to all types of weather conditions.
    The first job I had as an apprentice in the power line 
program was working 7 days a week, 12 hours a day, sometimes 
more, building a section of transmission line between Anchorage 
and the nearby hydroelectric plant. The line stretched across 
the mountainside, and the rough terrain presented many 
additional challenges to what was already heavy and difficult 
work.
    Building a transmission line required heavy equipment, 
rigging, lifting, and high-tension operations, where any 
misstep could be fatal. Thanks to my detailed classroom 
training and the supervision of highly trained and experienced 
journeymen, we pulled off these operations safely and 
professionally.
    My experiences on the job led me to become a member of my 
union's safety committee. This allows me the opportunity to 
give back, influence on-the-job safety, and increase my 
coworkers' awareness. We're all proud of the skilled work we do 
under extreme conditions.
    Being the only woman in the line trade initially presented 
its challenges. There was resistance from some employers and a 
few linemen. None of these issues affected my employment or my 
ability to do my job, and for this I am in debt to my union. 
There is always a shop steward or union representative 
available in case of a major problem. Most importantly, I know 
I'm never alone. My union provides a safety net to help ensure 
that I get equal training experience and meaningful--not just 
on paper--equal opportunity for employment.
    I have also benefited greatly from the union-based 
healthcare plan. Shortly after I turned 18, I was diagnosed 
with thyroid cancer. I was not yet covered by union insurance 
and had to rely on my parent's private insurance plan. 
Unfortunately, their plan was more tilted toward catastrophic 
coverage. For my necessary surgery, there were large co-pays. 
I'm grateful that my parents were able and willing to support 
me financially through the procedure. Since then, though, I've 
had follow up testing and monitoring, an expense I could not 
afford if I didn't have the excellent union-provided 
healthcare.
    My union healthcare, for which I was eligible after 4 
months of work, covers these follow up tests, which is 
something most insurance would not have covered, as a pre-
existing condition. Without this insurance, I'd be in debt. The 
yearly tests alone can cost over $5,000, of which my insurance 
covers most of the cost. Also, due to the seasonal nature of 
construction line work, a traditional employer-based system 
would not have worked.
    Thanks to my union, I have a solid career, with a future. I 
know I can work hard, earn a decent paycheck, and I don't have 
to worry about an unexpected illness leaving me destitute. I 
know I will always receive equal pay and equitable treatment 
from my employers. I know that my pension means that I will not 
work late into old age to survive, if all else fails. I know I 
will work with the most highly trained people in the industry, 
and I will come home safe every night. Because of all these 
things, I am grateful for the opportunity to be a union member.
    Thank you, again, for allowing me to be here today.
    [Applause.]
    [The prepared statement of Ms. Kelly follows:]
                  Prepared Statement of Deborah Kelly
    Mr. Chairman, members of the committee, thank you for the 
opportunity to testify today on behalf of the 9 million working men and 
women of the AFL-CIO on the important issues facing us every day.
    I'm proud to be a member of the International Brotherhood of 
Electrical Workers (IBEW). I'm an apprentice lineperson for the Chugach 
Electric Association. We work hard every day to provide power to the 
Anchorage, AK area.
    I made my decision to join the IBEW early in high school. I thought 
about the traditional options available: a variety of college degrees, 
resulting in various careers. What intrigued me most was the idea of 
working in a trade, working with my hands, and working to build and 
create. This interest, coupled with the possibility of a lifelong 
career that included health insurance, a living wage, and the promise 
of a pension when it came time to retire, tipped the scales away from 
the traditional college path. While in high school, I took a 
construction electricity class that solidified my focus in the 
electrical trades. Then, it was on to the tougher stuff: I had to work 
on convincing my parents that this was the right future for me. I 
graduated high school after 3 years, magna cum laude. Though I had 
already told my parents about my plans, and the advantages of a skilled 
trade, they were still a hard sell. They pushed me to pursue a more 
typical path like my older sister. She'd gone to Cal Tech at age 16 and 
earned an engineering degree. She went on to work at NASA for several 
years. While I was proud of what she had accomplished, I'd already 
decided that was not for me.
    To me, the options looked like this: years of school, a mountain of 
debt, and an unknown direction; against the choice of challenging work, 
decent pay, and an occupation that would be rewarding to me.
    I applied for the IBEW communications apprenticeship the day after 
I turned 18, when I finally met the age requirement. I was accepted and 
worked on construction projects installing data cabling and fiber optic 
systems. I then worked for the local telephone company on a line crew, 
maintaining the overhead and underground cables that provide phone and 
data service to the majority of Anchorage. I fell in love with the 
challenges of the physical work and constant exposure to all types of 
weather conditions. After seeing what the high voltage power linemen 
did through the apprenticeship school, and getting a sense of the 
nature of their work by observing them on the job, I applied to that 
apprenticeship program.
    The first job I had as an apprentice in the power line program was 
working 7 days a week, 12 (sometimes more) hours a day building a high 
voltage transmission line section between Anchorage and a nearby 
hydroelectric plant. The line stretched across a mountainside, and the 
rough terrain presented many additional challenges to what was already 
heavy and difficult work.
    By this time, I had already gone through the first segment of 
lineman training: 7 weeks of school where we learned a great deal about 
staying safe, through classroom instruction on the specific hazards of 
line work, and through extensive hands-on work outside, working under 
supervision of the instructor. Building the transmission line required 
heavy equipment, rigging, lifting, and high tension operations, where 
any misstep could be fatal. Thanks to my detailed classroom training 
and the supervision of highly trained and experienced journeymen, we 
pulled off these operations safely and professionally.
    My experiences on the job led me to become a member of my union's 
safety committee. This allows me the opportunity to give back, 
influence on-the-job safety, and increase my coworkers' awareness. 
We're all proud of the skilled work we do under extreme conditions.
    Since my first major project, I have worked a variety of jobs 
encompassing the scope of my trade. I've worked building electrical 
substations; putting in underground duct systems, including setting 
vaults, pulling and terminating cable; performing utility maintenance 
work, whether it be a routine upgrade, or a power outage caused by 
storm; and other construction jobs.
    I am forever grateful that I had an equal opportunity to join the 
trade and be a member of my union. Because of this, I had the chance to 
prove to my coworkers that I am worth my weight, and I can be an asset 
to my crew and to the industry.
    Being the only woman in the line trade initially presented its 
challenges. There was resistance from some employers and a few linemen. 
None of these issues affected my employment or my ability to do my job. 
For this I am in debt to my union. The Joint Apprenticeship Training 
Committee makes sure every apprentice has a positive experience and the 
opportunity to work and learn without unfair hindrance. Most 
importantly, I know I'm never alone--my union provides a safety net to 
help ensure that I get an equal training experience and meaningful (not 
just on paper) equal opportunity for employment.
    I have also benefited greatly from the union-based health care 
plan. Shortly after I turned 18, I was diagnosed with thyroid cancer. I 
was not yet covered by union insurance, and had to rely on my parents' 
private insurance plan. Unfortunately, their plan was more tilted 
towards catastrophic coverage. For my necessary surgery there were 
large co-pays. I am grateful that my parents were able and willing to 
support me financially through the procedure. Since then, I have had 
extensive follow up testing and monitoring, an expense I could not 
afford if I didn't have the excellent union provided health care. My 
union health care--for which I was eligible after 4 months of 
apprenticeship--even helps cover these follow-up thyroid tests, which 
is something most insurers wouldn't have covered as a pre-existing 
condition. Without this insurance, I'd be in a lot more debt (the 
yearly tests alone can cost $5,000, of which my insurance covers most 
of the cost).
    Thanks to my union, I have a solid career with a future. I know I 
can work hard, earn a decent paycheck, and I don't have to worry about 
an unexpected illness leaving me destitute. I know I will always 
receive equal pay and equitable treatment from my employers. I know 
that my pension means I will not have to work late into old age to 
survive, if all else fails. I know I will work with the most highly 
trained people in the industry and I will come home safe every night. 
Because of all these things, I am grateful for the opportunity to be a 
union member.
    Thank you again for the opportunity to be here today.

    Senator Harkin. Mr. Badillo.

      STATEMENT OF KELLY BADILLO, WORKER, JERSEY CITY, NJ

    Mr. Badillo. Good morning. Good morning, Senator.
    Thank you for allowing me to tell my story. My name is 
Kelly Badillo, and I have been an SEIU 32BJ member for more 
than 28 years.
    My family is a union family. I remember going to the 
strikes and walking the picket lines when I was 10 years old. 
My brother and I joined my father in the union and worked 
alongside him at the World Trade Center.
    My union has always been there for me, my wife, and my two 
beautiful daughters. I am here to tell you my union supported 
me and my coworkers after the terrorist attacks on 9/11.
    That morning, I was in the lobby of the North Tower, 
waiting to relieve a coworker from the elevator I operated, 
when the plane hit. The noise and the trembling was so loud, I 
thought that someone was filming a movie. Then a woman ran into 
the building on fire. I realized that something horrible was 
happening. As we rushed to put the fire out, chaos broke out. 
People were running everywhere, trying to escape the building, 
but outside there was debris falling everywhere.
    I didn't really know what was happening until the fire 
department arrived and we evacuated. I walked about a block 
away before I turned around and saw what was happening. I 
remember speaking to a police officer, looking up at the 
building, realizing that my brother worked on the 76th floor. I 
was trying to get back into the building when the second plane 
hit the South Tower. Everyone started running, getting as far 
as we could before they came down.
    After the buildings fell, I remember hearing the silence, 
and all I remember feeling was the dust. I was covered up to my 
knees in debris, and unable to see anything. Luckily, I had a 
flashlight that I carried with me on the job. I was afraid to 
walk down the street, because of holes on the ground caused by 
falling debris, so I stayed still.
    Eventually, I saw a couple of my fellow 32BJ coworkers walk 
down the street toward me. One, Eddie, told me his mother-in-
law lived on Cherry Street, and once we got there, we could be 
safe. As soon as we got there, I called my wife to let her know 
I was OK, and was relieved to learn my brother was alive, 
thanks to an especially tough commute that made him late to 
work that morning. My wife told me to go near her office, where 
they were sending out ferries to New Jersey, where we lived. I 
remember being on the ferry, looking back at Manhattan, and 
that's when it hit me I no longer had a job.
    Two-thousand, seven hundred and fifty people lost their 
lives, including forty-seven SEIU members. Many more thousands 
lost their jobs. More than 1,232 BJ members--cleaners, security 
officers, building maintenance, window-washers, and elevator 
operators, like me--were suddenly trying to live on 
unemployment.
    A week later, I got a call from my union. They asked me to 
come over to the union hall and meet with my employer, American 
Building Maintenance. There were more than 800 other members 
there when I arrived. Working together, my union and my 
employer agreed to $130 per week as supplemental unemployment, 
continued health insurance for us and our families, we kept our 
pensions, and the Green Cross was in our unit hall every day to 
help us deal with our loss and psychological effects of 9/11.
    In January 2002, they called us back. This time they had 
found a way to get us back to work. They created a priority 
hiring list so when positions in other buildings came open, we 
would get those jobs. Through an early retirement plan, they 
helped us open additional spots, as well. 32BJ was able to work 
side by side with ABM to find work for people like me. I went 
to work at the Bank of New York Mellon the next month as an 
elevator operator.
    My story is a rare one, because of certain circumstances 
involved, but my story exemplifies that businesses and unions 
can work together for the benefit of hardworking Americans like 
me.
    My daughters are grown and have jobs of their own, but I 
can only hope they can enjoy a strong voice in the workplace, 
like I have had. In today's economy, it helps to know that 
working together with my union and my employer will make sure 
the whole team gets through it. It takes leadership to sit down 
and work together, but everyone has it in them.
    Thank you for your time. God bless you, and God bless your 
work.
    [Applause.]
    Senator Harkin. We'll turn to Ms. Harrison.

       STATEMENT OF SHARON HARRISON, WORKER, LEBANON, VA

    Ms. Harrison. Good morning, Mr. Chairman, members of the 
Senate Committee on Health, Education, Labor, and Pensions.
    I'm a customer service representative for AT&T Mobility and 
work at a call center in Lebanon, VA. I want to thank the 
members of this committee for giving me this opportunity to 
talk to you about the real benefits that union representation 
has brought to my coworkers, my company, and my community.
    My coworkers and I are members of the Communication Workers 
of America (CWA), and that has made a big difference in 
bringing and keeping quality jobs with quality benefits in our 
area. I'm also glad to have the opportunity to talk to you 
about majority sign-up, or card check, and exactly how it 
really works. Being able to have a union voice at AT&T 
Mobility, and knowing that our company respects us and 
considers us a real partner in the business, makes all the 
difference in our workplace.
    I've worked at AT&T Mobility since August 2003. We didn't 
always have a union, and we didn't always have management that 
respected workers' rights or wanted to work with us. In those 
days, before we had a union, favoritism was a big problem. 
Raises didn't depend upon your job performance but whether or 
not managers liked you. The same was true for job security. 
Even when someone was a top performer, he or she could be told, 
like I was, that, ``I can get rid of you at any time, for any 
reason, for anything.'' That all changed in 2005, when Cingular 
Wireless took over.
    Cingular had agreed with communication workers to remain 
neutral in an organizing campaign to let workers across the 
company make up their own minds and to recognize the union if a 
majority signed up and indicated that we wanted a union. 
Because of that agreement, we weren't afraid anymore that 
managers would retaliate against us for trying to organize a 
union. We were able to talk to our coworkers--before the call 
center opened, lunches, after shifts--about the benefits of a 
union. In fact, the head of Cingular at that time, Stan Sigman, 
came to our call center when we were signing up for union 
representation and made it clear that, under his management, 
there would be full respect for workers' rights.
    Mr. Chairman, more than a majority of workers signed up for 
CWA representation at the Lebanon Call Center. I can honestly 
say that all of us, the company and our community included, are 
better for it. For us workers, the benefits are real. We have 
better pay, better benefits, lower healthcare costs, a real 
grievance procedure, and we have fairness. We do have new 
opportunities for careers throughout the company, and we know 
we're providing the quality service that makes our company a 
leader in the wireless telecommunications industry. We know 
that AT&T Mobility respects us and respects our contributions 
to the company. We're in a real partnership now, one that 
started at the very top of the company and worked its way 
through every level.
    For AT&T Mobility, there are real benefits, as well, and I 
think that management would be the first one to tell you so. 
With union representation, there's now a framework to solve 
problems on the job. We didn't have that before.
    There's a way to address critical issues, like turnover, 
training, and new technology. There's a clear path to improving 
our jobs and our work, and that's important to AT&T Mobility, 
and it's very important to us.
    Having an employer like AT&T Mobility in my part of 
Virginia also is very important. We are at the very tip end of 
southwestern Virginia, and even in the good times, good jobs 
are very hard to come by. We need more quality jobs, like AT&T 
Mobility, that provide good jobs, good benefits, and the kind 
of jobs that enable you to support your family and be a 
contributing part of the community. In an industry where 
companies compete based on customer service, AT&T Mobility 
recognizes that a quality workforce gives it a real competitive 
edge, and we're going to do everything we can to keep it that 
way.
    Mr. Chairman, we're proud of AT&T Mobility and the work we 
do. We're proud that we do provide top-quality customer service 
and that AT&T Mobility is adding millions more customers every 
year. We want AT&T Mobility to continue to be successful, and 
we will do our very best to make it happen. We're very proud 
that we work for a company that respects us, listens to us, and 
considers us to be a real partner in the business.
    Now, that doesn't mean that we've always agreed with AT&T 
management. In fact, we just finished bargaining a new contract 
with AT&T Mobility that does cover 21,000 workers, including my 
call center. As a member of the bargaining committee, I can 
tell you firsthand that we do have a lot of differences with 
management, but because this company does respect workers' 
rights and respected our right to collective bargaining, we 
were able to work out a new contract that our workers will be 
voting on very soon.
    The Employee Free Choice Act is so important, because all 
workers deserve to have the same chance as I did to join a 
union if that's what they choose to do. I know firsthand what a 
big difference it makes when you don't have to be afraid to 
stand up for your rights anymore at work. I also know firsthand 
how bargaining rights can restore the quality jobs, the quality 
benefits that working families and our communities need today 
more than ever in these bad economic times.
    Thank you for this opportunity to talk to you today.
    [Applause.]
    Senator Harkin. Thank you very much, Ms. Harrison.
    Now, Mr. Getts, welcome to the committee. Please proceed.

          STATEMENT OF LARRY GETTS, WORKER, ALBION, IN

    Mr. Getts. OK. I'll try to keep my comments brief.
    I know other things are going on today.
    Mr. Chairman and members of the Senate Committee on Health, 
Education, Labor, and Pensions, thank you for the opportunity 
to speak to you today regarding my experience as an employee 
involved in the card-check organizing drive. I'd also like to 
let Senator Kennedy know that I'm glad to hear he's back, and 
my family continues to pray for his full, healthy recovery.
    First, I'd like to say that I believe that these card-check 
drives put the interests of the union and their officials ahead 
of those of the workers. While the bill has been officially 
named the Employee Free Choice Act by its proponents and 
organized labor and their allies in Congress, my own personal 
experience shows a more appropriate name might be the Worker 
Coercion Act.
    My story begins in October 2007, when Dana Corporation, the 
owner of our small distribution plant in Albion, IN, which 
packs and ships auto parts, informed us of their neutrality 
agreement with the UAW. This meant that the UAW could come in 
and organize us by means of a card-check drive without any 
interference from the company.
    We were going to get one side of the story, and it was 
going to be the UAW's.
    It was rough going for the first UAW official who came in 
to drive the organizing drive. He was 15 minutes late for his 
first meeting because he couldn't find the local town's library 
where the meeting was held. He cursed and used rough language, 
which didn't go over very well at all with the women, who are 
about 80 percent of our shop. I got the distinct impression 
that he felt this meeting was a mere formality, as the matter 
had already been decided, and my views and the views of my 
coworkers were almost irrelevant.
    Needless to say, this attempt failed, and the UAW changed 
their strategy and sent in a whole new crew to do the card-
check drive. At that point, it was clear that the UAW was going 
to do whatever was necessary to get the required number of 
signatures. The organizers put out propaganda, waited for us in 
our break areas, sat at our lunch tables, and waited for us 
when we went out to our vehicles at the end of the day. The 
entire time, they were constantly badgering us to sign their 
cards.
    One of the things UAW officials promised us was a paid 
weekend off between Christmas and New Year's if we would hurry 
up and get the required number of signatures signed. Another 
promise that they began negotiating for the contract as soon as 
they were in. One official even told me that we would get the 
same pay and benefits as the much larger Dana Corporation 
located in Fort Wayne, IN. Now, this didn't seem plausible, 
since this would mean our average pay would just about double, 
and also the fact that Dana was in the process of bankruptcy at 
the time.
    I refused to sign the card every time I was asked--my 
coworkers shared my sentiment--but, none of that mattered to 
the UAW, because the pressure did not let up. In fact, one day 
the official approached me again, claiming that over 50 percent 
of the plant had signed, so now I was going to have to sign, 
also, a card so I could get my information into the system.
    I signed the card because I thought I had to. I didn't 
learn, until later, Indiana is a closed State, where if the 
union is involved, you have to be part of that union to be 
employed there. I learned later that I should not have even 
been forced to sign the card then.
    In the end, the UAW did succeed, and they're organizing our 
plant through the card-check method, but I felt it was because 
of their confrontational tactics, not because the majority of 
our plant really wanted the representation. Immediately after 
the union was recognized, we started our decertification 
effort. The only reason we were able to fight back was because 
another Dana plant, in Ohio, had appealed the National Labor 
Relations Board after an aggressive organizing drive by the UAW 
there, and the NLRB decided that, in the future, workers should 
be allowed to seek decertification by secret ballot.
    Of course, the UAW responded to our effort by increasing 
the pressure, particularly as the decertification vote got 
closer. They even resorted to phone calls and home visits. 
Despite their intimidation, my coworkers and I voted to 
decertify the UAW by secret ballot election 45 days after their 
successful card-check drive. I believe the results of the 
secret ballot election show the true free choice of my 
coworkers regarding UAW representation. We didn't really want 
the representation that was forced on us through a card check, 
but we could only show this--our true desires through secret 
ballot election.
    At the end of the day, the voice of the worker needs to be 
considered. Union officials say they speak for the workers and 
that passage of this card-check bill is necessary to give 
workers free choice. In reality, they only want to make it 
easier for workers like us in Albion to join their unions to 
increase their membership numbers, their financial coffers, and 
their political power.
    That is why I hope that you will vote to defeat this 
misnamed Employee Free Choice Act. In fact, hopefully, I can 
encourage the Senators to, please, don't enact any 
legislation--in fact, I'm begging you--don't enact any 
legislation that in any way takes away American workers' right 
to free choice and free secret ballot election.
    Thank you.
    [The prepared statement of Mr. Getts follows:]
                   Prepared Statement of Larry Getts
    Mr. Chairman, members of the Senate Committee on Health, Education, 
Labor, and Pensions, thank you for the opportunity to speak to you 
today regarding my experience as an employee in a so-called ``Card 
Check'' organizing drive.
    Before I begin, I'd like to say that, as many workers have learned 
first hand, I believe ``Card Check'' organizing drives put the 
interests of union officials ahead of those of workers.
    While the bill has been officially named the ``Employee Free Choice 
Act'' by its proponents in Organized Labor and their allies in 
Congress, my own personal experience shows a more appropriate name 
would be the ``Worker Coercion Act.''
    My story begins in 2006, when I was hired to work in a small plant 
in Fort Wayne, IN, owned by Dana Corporation that packed and shipped 
auto parts.
    Of course, after taking the job at Dana Corporation, I had been 
told by other employees that there had never been any push to form a 
union in our plant in anyone's memory.
    All that changed in October 2007 when a number of meetings were 
called for all employees.
    At the second meeting, after I and my coworkers waited patiently 
for about 15 minutes, an official from the United Auto Workers (UAW) 
finally arrived.
    He spent several minutes explaining to us that he had cards for us 
to sign that would unionize our plant, and then spent a few more 
minutes explaining why he thought we should sign the cards.
    Of course, at that time, none of my coworkers knew that our 
company, Dana Corporation, had signed a so-called ``neutrality 
agreement,'' which meant that not only was the UAW given workers' 
personal information without our consent, but that we were only going 
to hear one side of the story throughout the organizing drive--the 
UAW's.
    Looking back on how that first meeting was handled, I believe the 
UAW official viewed the meeting as a simple formality--as if the matter 
had already been decided between the UAW and Dana Corporation, and that 
my views and the views of my coworkers were almost irrelevant.
    In fact, it was easy to see from the get-go that the UAW 
representative was hardly concerned at all with how he came off to our 
group and thought he could railroad us all into the union.
    The UAW official was even so bold as to curse constantly throughout 
the presentation, which appalled the elderly women who made up about 80 
percent of our plant.
    After this first attempt to organize our shop failed, the UAW 
changed tactics and sent in a whole new crew.
    At that point, it became clear to all of us that the UAW was going 
to do whatever was necessary to get the required number of signatures.
    Union organizers waited for us in the break room, sat with us at 
lunch whether we wanted them to or not, and walked us to our cars at 
the end of the day.
    The entire time they were constantly badgering us to sign the 
cards.
    One of the things the UAW officials would say is that they would 
start negotiating the moment the cards were signed.
    One official told me that our small shop would make the same as the 
workers in the other--much larger--Fort Wayne plant.
    Of course, to many of us, that didn't seem plausible because we 
were making $12 an hour, and in Fort Wayne they were making $21 an 
hour.
    I refused to sign the card every time they asked, and I know many 
others shared my sentiment.
    None of that mattered to the UAW, because the pressure did not let 
up.
    In fact, one day, an official approached me again claiming 50 
percent of the plant had signed--so now I was going to have to sign the 
card to ``get my information in the system.''
    I signed the card then because I thought I had to.
    I didn't learn until later that even then, I should not have been 
forced to sign the card.
    In the end, the UAW did succeed in organizing our plant, but I 
thought they succeeded only because of their confrontational tactics 
and not because the majority of our workers wanted UAW representation.
    Immediately after the union came in, I began a decertification 
effort.
    The only reason I was able to fight back was because other Dana 
Corporation employees in Ohio appealed to the National Labor Relations 
Board after facing aggression from the UAW, and the NLRB decided that 
workers should be allowed to seek decertification.
    Of course, the UAW responded to my effort by increasing the 
pressure, and even started visiting my coworkers at home.
    Despite their intimidation, my coworkers and I voted to decertify 
the UAW 45 days after the Card Check drive ended in a secret ballot 
election.
    I believe the results of the secret ballot election showed the true 
``free choice'' of my coworkers regarding UAW representation.
    We didn't want the UAW representation that was foisted on us 
through ``Card Check.''
    At the end of the day, the voice of the worker needs to be 
considered. Union officials say they speak for workers, and they say 
passage of the Card Check Bill is needed to ``give workers a free 
choice.''
    In reality, they only want the power to harass workers like me into 
joining their union, paying dues and increasing the union bosses' 
power.
    That's why I hope you'll vote to defeat the mis-named Employee Free 
Choice Act.

    Senator Harkin. Thank you very much, Mr. Getts.
    You know, it just seems that, listening to at least the 
first three of you, that you all have pretty decent 
relationships with your employer. Mr. Badillo, you talked about 
how your employer came to your aid and assistance and worked 
things out. Ms. Kelly, I don't know who your employer is, but 
you seem to have a decent relationship with your employer in 
Alaska; Ms. Harrison, with AT&T Mobility.
    I'm always kind of--I don't know if ``confused'' is the 
right word or not, but why is it that some companies have such 
decent, good relationships with their unions, and others don't?
    Rather than asking a question--it just reminded me of a 
story of a good friend of mine in Iowa, a guy by the name of 
Duane McAninch--I'll say it for the record--Duane McAninch. 
Now, I've known Duane and his family since we were kids. He was 
from really kind of a poor family. We all were in that small 
community. But, his dad had a Caterpillar, and his dad did 
Caterpillar work. Now, this was back in the forties, early 
fifties. He had one Caterpillar, a small little one. Then Duane 
went through high school. Actually, he was a little bit ahead 
of me, he was in my brother's class in high school. Then he 
decided to start moving earth himself.
    He grew and expanded, and, as you said, he borrowed money, 
went into debt, took chances. Today, Duane McAninch is the 
largest earth-moving contractor in the entire Midwest, one of 
the largest in the entire United States, employs thousands of 
people. He has more Caterpillars and earth-moving equipment 
than you can imagine. Big. I mean, this guy is really big and 
has done a lot of interesting things in the whole area of 
earth-moving, engineering-wise, and has advanced the art of 
that.
    Well, I tell you all that because, interestingly enough, to 
this day, and since the day he started out he'll only hire 
union labor.
    Now, I've talked to other contractors in Iowa that belong 
to different organizations. They come in, and they're always 
kind of going at me about, perhaps, my support for labor and my 
support for unions. I always wonder, ``How can Duane McAninch 
make it? He's bigger than all of you guys put together, and he 
made it with union labor.''
    I asked Duane about that once, and he said, ``Well, when I 
hire union labor, first of all, I know that, the first time 
they do the job, they'll do it right, because they're trained. 
That training--and then, they're responsible, and the union 
makes them responsible for what they do. I've just always had a 
very open and decent relationship with the shop stewards and 
union people'' that run all this big equipment for him. And he 
said, ``I've found the bottom line is, they're more productive. 
Therefore, my bottom line--I want to make money and I want to 
get bigger. I hire union labor because they make more money for 
me.''
    There are examples like this all around. I know conflict 
between labor and management goes back a long ways, and there 
were times when fights and stuff were common. My father was a 
coal miner. He quit mining in the coals by the time I was born, 
but I remember all of his stories about what happened to them 
in the coal mines when they tried to organize. We've had those 
conflicts. I would hope, in this day and age, that we would 
take a lesson from all of your employers, how you work together 
and how you are able to bargain collectively for your wages, 
hours, and conditions of employment.
    Mr. Getts, there's always going to be examples, I suppose, 
of instances where someone maybe doesn't do the right things, 
maybe skews things one way or the other. There's always going 
to be examples of that. I mean, we've got examples of that on 
the management side. You gave an example, perhaps, on the union 
side. I don't know all the details of it. Somehow those have 
got to be resolved in a more amicable manner, and again, still 
giving people the right to organize.
    I see the Employee Free Choice Act as, a balancing thing. I 
mean, right now, if I understand it correctly--and I can be 
corrected if I'm wrong--right now management can decide whether 
or not you have to have a secret ballot or have card check. 
Management can decide that. They can say, ``OK, I want to have 
a secret ballot,'' or, ``No, we'll have a card check.'' And 
some do. Some management does that. I've got examples of some 
who have said, ``Just use a card check. If you get 51 percent 
signed up, we'll recognize your union.'' Management can do 
that. They have the choice. Why shouldn't labor have that 
choice? Why should it just be on the one side? That's what I'm 
trying to think about. How do you get back to a balance on this 
so that not just one side has that power, but both sides have 
it?
    That's what I'm looking for, how you balance this thing and 
how--again, I say, how we can stop couching this in terms of 
Armageddon and worlds colliding and things like that, but just 
sit down and work these things out, respecting management's 
right to make business decisions on where to invest and how to 
grow. That's management's decision; they do all that. 
Respecting workers' rights to have a union, to bargain 
collectively, rather than each individual trying to work for 
himself or herself, and recognizing the union's right to 
bargain collectively for wages, hours, and conditions of 
employment.
    Well, that's it. I didn't have a question. I just gave my 
little talk.
    I recognize Senator Isakson.
    Senator Isakson. Thank you, Senator Harkin.
    Mr. Getts, you have a good relationship with your employer, 
don't you?
    Mr. Getts. Yes, I do.
    Senator Isakson. Because I think, when the Senator said 
``three out of four,'' think all four of----
    Mr. Getts. Yes. Yes.
    Senator Isakson. Yes, they all four did. I want to commend 
all four of you. It's tough to sit out there with a bunch of 
Ph.D.s and listen for an hour and a half and then come on 
stage, but you guys were terrific and your stories were 
terrific.
    Ms. Harrison, before--Cingular took over in 2005?
    Ms. Harrison. Yes.
    Senator Isakson. You went to work for AT&T in 2003?
    Ms. Harrison. OK, at that time, I was----
    Senator Isakson. Turn your microphone on.
    Ms. Harrison. I'm sorry. At that time, I went to work for 
AT&T Wireless.
    Senator Isakson. In 2003.
    Ms. Harrison. Yes.
    Senator Isakson. And they were not unionized?
    Ms. Harrison. They were a nonunion company at that time.
    Senator Isakson. In the 2 years prior to the Cingular 
takeover, did you try and have an election?
    Ms. Harrison. Yes, we did. Well, that didn't go over, 
there, because, actually the union was not even allowed on the 
grounds. But, no, that was tried in 2004.
    Senator Isakson. But, you tried to have an election.
    Ms. Harrison. Well, we tried to organize, and that, like I 
said, didn't happen. That wasn't allowed.
    Senator Isakson. Was that because there weren't enough 
people that wanted to do it, or was that because something 
somebody did egregious to keep it from happening?
    Ms. Harrison. Because AT&T Wireless wouldn't allow the 
union to come on the grounds to try to organize.
    Senator Isakson. OK, thank you.
    Ms. Kelly, you did great. How's your thyroid?
    Ms. Kelly. I don't have one anymore.
    [Laughter.]
    Senator Isakson. Well, how is the place where your thyroid 
used to be?
    [Laughter.]
    Ms. Kelly. It's doing pretty well.
    Senator Isakson. Well, you were terrific. You did a great 
job. Is that an electric cooperative that you work for in 
Alaska?
    Ms. Kelly. Yes. Right now I'm working for Chugach Electric 
Association. I've only been working for them for approximately 
2 months.
    Senator Isakson. Did the IBEW place you there when they got 
a contract?
    Ms. Kelly. Yes, they did. We have a referral system, 
similar to how the journeymen are referred to work. It's first-
come-first-serve for jobs as they come available.
    Senator Isakson. Mr. Badillo, the way I read your 
testimony, you work for a maintenance company that is a member 
of the union, but when you lost your job because the building 
was destroyed, they placed you at another building. Are you 
employed by the union and do they place you when the job 
opportunities come available?
    Mr. Badillo. Yes, Senator. The union placed me in another 
building with the company. The company is a subcontractor for 
the bank, so they placed me there.
    Senator Isakson. How competitive is that placement--that's 
in New York?
    Mr. Badillo. It's very competitive. It's--well, 
competitive?
    Senator Isakson. Are there multiple unions that do the 
maintenance placement, or is it--some maintenance companies are 
unionized and some aren't?
    Mr. Badillo. Well, some are and some aren't, but most of 
New York is all unionized, most of them. New Jersey is not all 
unionized. But, New York basically is all union.
    Senator Isakson. OK.
    Mr. Getts, you work for Dana Corporation?
    Mr. Getts. Yes, sir.
    Senator Isakson. What does Dana do?
    Mr. Getts. Dana Corporation is a manufacturing plant that 
makes drive-train products.
    Senator Isakson. They supply the auto industry?
    Mr. Getts. Correct.
    Senator Isakson. So, that's why you were dealing with UAW?
    Mr. Getts. Correct. They make axles and gears and pinions 
and just about everything.
    Senator Isakson. They got 51--50 percent plus 1 in cards.
    Mr. Getts. So they said, sir.
    Senator Isakson. So they said. And then came in to start to 
organize, and then the workers, yourself among others, 
challenged that and it was withdrawn. Is that correct?
    Mr. Getts. Correct.
    Senator Isakson. How did that happen? Did you do cards 
again, or did you have a secret ballot.
    Mr. Getts. No, sir, it was a secret ballot election after 
that.
    Senator Isakson. OK.
    Mr. Getts. We had a certain amount of time that we had to 
get enough signatures to do a decertification vote.
    Senator Isakson. The reason I wanted to make that point 
is--and referenced--I don't think that, by nature, businesses 
and their employees have inherent adversarial relationships 
across the board; I think what we've, in fact, learned in the 
testimony today is there are bad actors on both sides of the 
ledger. Both of them are in the minority.
    We must remember, when the secret ballot came about, it 
came about because organized labor wanted to make sure that the 
workers could express themselves outside of intimidation from 
the company, and the secret ballot protected that.
    Further, as you remember when we confirmed Ms. Solis, who I 
voted for, she and I differ on card check, but, even when she 
was in the Assembly in California and they passed a comp-time 
law to allow them to substitute comp time for overtime, in the 
legislation, she wrote in to an insistence that the workers had 
to vote in a secret ballot, even if that got negotiated, to 
show the power of the secret ballot to protect the worker, to 
see to it they are not unduly infringed.
    There are good arguments on that side, and I just wanted to 
thank Mr. Getts for his being here, Ms. Harrison, Mr. Badillo, 
Ms. Kelly. We appreciate all of you coming today, and thank you 
for your testimony.
    Senator Harkin. Well, thank you all very much. I don't have 
anything to add.
    You know, am I for a secret ballot? You bet I'm for secret 
ballots. Certain things have to be in place before the secret 
ballot is truly a free secret ballot, things like equal access 
to the workers, which doesn't happen. Management has a lot of 
access, unions don't. The freedom from coercion, and that can 
be on both sides. Finance. Who finances these, on both sides? 
And how much money is put into them? Timely implementation. 
There's a lot of different things that go into making sure that 
a secret ballot is truly a fair election.
    Imagine an election where the incumbent President or 
Governor or mayor, or whatever, could, No. 1, force voters to 
attend his campaign rallies. Management can do that. Threaten 
to fire his opponent's supporters or deny them raises. 
Management does that. Prevent the opponent from campaigning in 
the daytime. I mean, you can campaign at night, someplace out 
there, but not in the daytime, where the people are, where 
they're working. You can't do that. Then, if you win, then you 
can engage in numerous delays so that person can never take 
office. We've seen that happen, time and time again.
    So, yeah, if you can have a secret ballot, and you can 
balance those things out, that's fine.
    I come back to the same place where I was, though. Under 
the laws today, management can decide: secret ballot, card 
check. Well, if they can decide that, why shouldn't the workers 
have the same equal, balanced right: card check or secret 
ballot? I'm still going to try to find an answer to that 
question of what's wrong with that. Again, with protections to 
protect against coercion, to make sure everyone's informed. I 
mean, there's all these things, I think, that we're going to 
have to examine as this legislation comes through.
    Senator Isakson. I just wanted to add that if you--in 
listening--I've been thinking about what you've been saying up 
here; I've really been paying attention. Mr. Getts just gave 
you a good example of how the secret ballot protects the 
worker, because, in that particular case, they were using card 
check to organize, and, according to his testimony, there was 
some less-than-good behavior that got the cards, so they had 
the right to force a secret ballot.
    If a company decided, ``Well, we're going to do card 
check,'' and then they went and intimidated people to not sign 
it, but wanted to demonstrate they didn't want to unionize, 
then that worker can still call for that--the secret ballot is 
the ultimate protection for the worker, just like it protects 
the minority politically in the United States of America every 
4 years. We all get to go vote in secret. There is an inherent 
advantage to that.
    Senator Harkin. Well, yes, if we do away with the Electoral 
College.
    [Laughter.]
    We don't want to get started on that.
    Senator Isakson. I'm not going to debate that.
    Senator Harkin. Don't want to get started on that.
    Mr. Getts, just how many workers were in your plant at that 
time?
    Mr. Getts. We only have 31 in the plant. It was a very, 
very small plant.
    Senator Harkin. So, it's 31.
    Mr. Getts. Correct.
    Senator Harkin. As I understand it, the card check 
succeeded by just one or two votes?
    Mr. Getts. Correct.
    Senator Harkin. One vote. Then, the decertification won by 
two votes.
    Mr. Getts. Yes.
    Senator Harkin. Sounds like the U.S. Senate.
    [Laughter.]
    It was a very close call, both on the card check and on the 
decertification. My information told me that, between the card 
check and the decertification, a couple of people had left the 
plant, or something like that. Is that true? Two people?
    Mr. Getts. I'm not sure about that.
    Senator Harkin. Two people?
    Mr. Getts. Maybe two, yes.
    Senator Harkin. Two had left who had been in favor of the 
card check. That swung the election the other way. So, a very 
close call.
    Mr. Getts. Yes.
    Senator Harkin. A very, very close call. What's that thing 
in the law that close cases make bad law or something like 
that? I don't know.
    Senator Isakson. I'm not a lawyer.
    Senator Harkin. These are the kind of close things that are 
very hard to deal with, especially when you have a small plant 
like that, when you have 31 people like that. It's very tough.
    That's where we have to have protections, and protections 
both for the workers against coercion from the management, and 
protection so they don't get coerced by union organizers. 
That's where the National Labor Relations Board should come in 
and provide that kind of protection so that we truly can 
discern what the workers really want to do, one way or the 
other.
    Mr. Getts. Sir, if I could clarify, just one second. I am 
not anti-union. Right now I'm against their tactics. I work for 
a union. In fact, I was a union steward for two terms, but I 
was elected by secret ballot election. We had strike votes by 
secret ballot elections. We had contract negotiations that were 
voted on by secret ballot election. Getting rid of the secret 
ballot election is what I'm against.
    Senator Harkin. Well, again, what about on the management 
side? I mean, management could decide, right now, whether it's 
secret or whether they can have a card check. Are you against 
management having the right to be able to say that you could 
have a chard check?
    Mr. Getts. Yes, sir.
    Senator Harkin. You're against that, too?
    Mr. Getts. Yes, sir.
    Senator Harkin. Well, that's an interesting proposal.
    Mr. Getts. I'm against----
    Senator Isakson. The workers having the secret ballot is 
the protection against the company electing for card check and 
then using coercive techniques to force a majority to vote 
against it. So, it's the inherent insurance policy.
    Senator Harkin. Well----
    Senator Isakson. The secret ballot is.
    Senator Harkin [continuing]. If you have equal access and 
all that kind of stuff that protects, really, what that secret 
ballot is. That's what the problem is, in that, when you have 
union organizing, the management holds all the cards, 
basically, and the union organizers don't have many cards at 
all to play. And that's the problem. It's that huge imbalance. 
Because, like I say, whenever management speaks to labor, 
whenever--if there's an organizing drive, and management can 
talk to workers into the lunchroom or something like that, they 
ought to provide equal time to the union to do the same thing, 
same place. Make it fair. Give them all equal access.
    All of these tactics that are being used to delay and 
prolong things should be counteracted giving workers more of an 
ability to contest, rapidly, their firings.
    I've had examples, a friend of mine once in Iowa got fired 
for organizing. Now, he was a single man, he didn't have a wife 
and family, so he took it all the way up to the NLRB, he took 
it to court, finally won. He won a good chunk of money. Took 
him about 8 years, but he won. How many people can do that? He 
said, ``If I was married and had kids, I couldn't have done it. 
I'd have had to go off and get a job someplace.'' But, he won.
    If you could collapse that down and make it meaningful and 
make it real, yes, there's a lot of things like that, that 
would protect workers in a secret ballot situation. Those 
things don't exist today. That's what I'm looking for, how you 
put that balance in there.
    Thank you all very much. The committee will stand 
adjourned.
    [Additional material follows.]

                          ADDITIONAL MATERIAL

                 Prepared Statement of Senator Kennedy

    We face a severe economic crisis, the likes of which we 
have not seen since the Great Depression. The causes of this 
crisis are not a mystery. Year after year, we accepted an 
economy that sent stock prices soaring, but left ordinary 
working families behind. Our productivity grew, but workers 
never saw the benefits. Their paychecks stopped rising and, 
eventually, started falling. Their benefits began to disappear. 
Large numbers of families couldn't keep up with the rising cost 
of daily necessities.
    These unsustainable patterns brought on this economic 
crisis. The housing market collapsed, the stock market 
plummeted, and things went from bad to worse, and then to much, 
much worse. Working families who were already living on the 
edge of financial disaster have been hit hard, and they have 
nothing left to fall back on. Their faith in the American Dream 
has been replaced by fear for their family and their future.
    We've taken some much-needed actions to help get our 
country back on track. These near-term efforts to jump start 
the economy are essential, but they are only the first steps. 
We can't fully recover until we have restored real security for 
working families. Americans need to know that if they work 
hard, they can earn a fair wage to feed their families. They 
need to know that at the end of the day they'll get a paycheck, 
not a pink slip. They need to know that a lifetime of effort 
will bring a secure retirement and a better future for their 
children.
    It's time for a new economic agenda centered on security 
for working families and the vitality of the middle class. This 
new agenda begins with better treatment for American workers. 
The men and women who are the backbone of our economy are not 
highly overpaid CEOs with corporate jets and golden parachutes. 
They are the people who work in our factories, build our roads, 
teach our children, and care for the sick in our hospitals and 
nursing homes. They work hard every day to keep America strong, 
and they deserve a fair share of the benefits produced by their 
hard work.
    The best way to ensure that these hardworking men and women 
receive the fair treatment they deserve is by protecting their 
right to join a union. Unions were fundamental in building 
America's middle class, and they have a vital role today in 
restoring the American dream.
    First and foremost, unions help workers earn a fair day's 
pay for a fair day's work. Union wages are 30 percent higher 
than non-union wages. Eighty percent of union workers have 
health insurance, compared to only 49percent of non-union 
workers, and are four times more likely to have a secure, 
guaranteed pension.
    Equally important in these turbulent times, unions provide 
security and a promise of fair treatment. At a time when 
workers who lose their jobs can remain unemployed for a year or 
more, workers who are represented by a union have better job 
security, and the assurance of knowing they'll have a voice at 
the table when tough decisions are made.
    Unions don't just benefit individual workers and families--
they benefit our Nation as a whole. History shows that strong 
unions mean a strong economy for everyone. At the height of the 
union movement, from the 1940s to the 1960s, Americans 
benefited together as the economy grew. We lived in a nation of 
shared prosperity where the vast majority of Americans not only 
worked hard and expanded the economy, but reaped the benefits 
as well.
    The fundamental difference between then and now was that 
workers had a voice. They used that voice to make our country a 
better place.
    In recent years the voice of workers has too often been 
silenced. They still have a fundamental right to join a union, 
but the laws are so weak that this right is often meaningless. 
Too many workers who attempt to form a union are fired or 
intimidated. The few who get a union often never see the 
benefits of a union contract. Many employers break the law with 
impunity, because the penalties for violating workers' rights 
are laughably low.
    To restore fairness and security to working families and 
rebuild the foundations of our economy, we have to restore the 
voice of the American worker. Our people understand how 
important this voice can be, especially in difficult times. 
That's why more than half of all workers--nearly 60 million 
people--say they would join a union today if they could.
    Some companies share that view, and have allowed their 
workers to organize a union, without threats or dirty tricks. 
They have formed strong partnerships with their employees, and 
they have prospered. We will hear today from several of those 
employees whose lives were fundamentally changed as a result.
    These positive examples are all too rare--certainly not 
enough to level the playing field and guarantee workers a fair 
chance to join a union. Too many workers still face threats and 
intimidation when they try to do so. According to a recent 
study, workers are illegally fired in more than a quarter of 
all organizing campaigns.
    We need to deal with this major problem. We need to stop 
the lawbreaking anti-union tactics that have become alarmingly 
common, and provide genuine protection for this fundamental 
right of our workers.
    That's why we need the Employee Free Choice Act. This major 
legislation will ensure that American workers have real freedom 
to choose a union, without fear of threats or intimidation by 
employers. It will help them obtain the real, tangible benefits 
of union membership that will make a difference in their lives 
and the lives of their families.
    This economic crisis has been devastating, but all is not 
lost. As President Obama recently said, ``[w]e've experienced 
great trials before. With every test, each generation has found 
the capacity to not only endure, but to prosper--to discover 
great opportunity in the midst of great crisis.''
    We have one of those great opportunities today. By 
restoring fairness to the American workplace and strengthening 
the voice of workers, we can renew America as a land of 
opportunity--a land with good jobs and fair wages and other 
benefits that can support a family. We can revitalize the 
American middle class and restore the American dream.
    I urge all of my colleagues to support this important 
legislation, and to put our country and its working families 
back on the path to prosperity.

                   Prepared Statement of Senator Enzi

    Good Morning. Thank you for chairing this hearing in the 
absence of Chairman Kennedy. The topics we will discuss here 
today are of enormous importance and will have a direct impact 
in the lives of many working Americans.
    Economic security is what most people have strived for 
since the dawn of mankind, and tremendous strides were made in 
the last century in large part due to technological innovation. 
The worldwide backsliding of the past year has harmed many and 
frightened all of us. Though we have Federal, State and 
community-based safety nets in place now, the title of this 
hearing asks the right question. How can we ``empower'' workers 
to achieve their goals? It is an answer I have been pursuing 
for years. One of the best answers I've found is job training 
and lifelong learning. One of the worst I have heard is card 
check. The data supports my conclusions.
    Increased education and training yields higher incomes, 
greater job satisfaction and greater economic mobility. Be it a 
Masters degree, an apprenticeship, or a long distance learning 
certificate, access to learning opportunities is a key part of 
becoming and remaining economically secure. In 1950, 80 percent 
of the jobs people held were categorized as unskilled. Today, 
over 80 percent of all jobs are categorized as skilled. The 
result is that in this decade 40 percent of the job growth will 
be in jobs requiring some post-
secondary education.
    Since I came to the Senate, one of my priorities has been 
improving the Nation's job training system that was created by 
the Workforce Investment Act through its reauthorization. This 
program helps American workers get the skills they need to 
better compete and obtain economic security in this globally 
competitive economy. The bipartisan bill that I negotiated 
along with many of my colleagues will start an estimated 
900,000 people a year on a better career path. It will focus on 
training for high growth, high wage, high demand jobs, better 
connect local training to local jobs, and allow communities to 
target resources to populations in highest need of services and 
training. Although it has twice passed the Senate and been 
unanimously approved by this committee, WIA is now 6 years 
overdue for reauthorization.
    Unfortunately, job training is not the subject of this 
hearing. In fact, HELP did not hold one full committee hearing 
on job training in the 2 years of the last Congress. Instead, 
the majority would like to focus on unionization as the answer 
to ``restore the middle class.'' Already in this Congress, we 
have witnessed how pet projects, pork and political paybacks 
that have little to do with economic recovery can be 
transformed and spun through some modern-day alchemy to be the 
answers to our current economic problems. Sadly, whoever made 
the cynical political calculation that the current economic 
crisis is simply too good an opportunity to pass up may have 
had it right. A few weeks ago it was items in the Stimulus 
legislation like $650 million for digital TV coupons, $600 
million for new cars for the Federal Government, $6 billion for 
colleges/universities--many which already have billion dollar 
endowments, $50 million in funding for the National Endowment 
of the Arts, and $44 million for repairs to U.S. Department of 
Agriculture headquarters that were all ``justified'' by the 
economic situation; today it is card check. My own view is that 
the American public is getting fed up with this kind of smoke 
and mirrors. They know a political payback when they see one, 
and trying to dress it up as part of the economic recovery, or 
something for the totally undefined ``middle class'' isn't 
fooling anyone any more. If by ``middle class'' you mean any 
one of the millions and millions of non-union hourly workers in 
this country whose most fundamental democratic rights in the 
workplace would be thrown in the trash under card check, I 
think a reality check is in order. This is not about the 
economy, this is not about restoring the middle class--this is 
all about giving a gift to labor bosses at the expense of both 
the economy and the middle class. The claim to non-union 
workers that: ``we want to help you by taking away your 
rights'' certainly gets high marks for audacity.
    The transparent motives behind this legislation are pretty 
clear when you consider that unions already win well over half 
of the secret ballot certification elections in which they 
participate. In fact, in the first half of last year, unions 
won 66.8 percent of NLRB conducted secret ballot elections--the 
highest win rate ever recorded. Yet proponents of this 
legislation claim that record high win rates are not enough. 
Instead, they not only want this Congress to weight the scales 
completely in favor of unions, and against individual workers, 
they want to throw out the scales entirely. The so-called 
Employee Free Choice Act would actually take away employees 
opportunity to vote on whether or not to unionize through a 
secret ballot election. It would also create an unworkable 
system of mandatory binding interest arbitration that would 
give government bureaucrats almost total control over 
individual workplaces.
    We've had a few debates over this anti-democratic proposal 
in the last Congress and my colleagues know how strongly I 
oppose the bill. This morning I will focus my remarks on the 
subject of the hearing. Will forced unionization restore the 
middle class and deliver economic security for all? The 
experience of our neighbor to the North shows us that no, it 
will not.
    In Canada, labor law is not federalized and several 
provinces have experimented with card check systems. One of 
today's witnesses, Dr. Anne Layne-Farrar, recently released an 
empirical study of Canada's experience under card check and 
binding interest arbitration. She found that the increased 
unionization that existed under those systems consistently 
resulted in higher unemployment. Her study found that for every 
3 percentage points gained in union membership through card 
checks the following year's unemployment rate will increase 1 
percentage point and job creation will fall by approx. 1.5 
million jobs. To extrapolate, if the prediction of one union 
boss is correct and card check resulted in a 3% increase in 
unionization, then unemployment a year from now would rise by 
1.5 million, to 10.4 million.
    What is actually happening behind this math is something 
we've seen illustrated quite starkly in Detroit, as well as 
here today. As past history demonstrates, labor unions have 
made some positive contributions, but all too often they have 
become more concerned with self preservation; and, 
consequently, resist common sense business improvements that 
could make their company competitive. Put yourselves in the 
shoes of the small business owner I once was--you have five 
employees and over the weekend, three sign cards. Two employees 
have no idea what happened but immediately you, the employer, 
have an obligation to negotiate a contract. You need to hire 
labor lawyers, you need to determine your business plan for the 
next 2 to 3 years and negotiate to accommodate that model--and 
heaven forbid you want to change that model over the 2-year 
period! If you are not able to reach a collective bargaining 
agreement with the union within 90 days, you will wind up in an 
arbitration controlled by an unknown Federal bureaucrat will 
impose a contract on your business. That contract will dictate 
the wages you must pay, the benefits you must provide, and the 
rules governing every single conceivable work rule, term and 
condition of employment. In the face of this total upheaval of 
your business, who wouldn't consider closing? Relocating? 
Retiring early or entering another field? When the workplace 
playing field is shifted to unfairly favor unions, companies 
falter, relocate and fail.
    In the scenario I just laid out, two employees did not sign 
a card. They had no say in what happened to their workplace and 
their salaries will now be docked for union dues. Even the 
three that did sign did not have any opportunity to hear their 
employer's side of the story, and any one of them could have 
been misled or pressured by the professional union organizer 
who was paid to get their signature, or even by a well-
intentioned but misinformed co-worker. Under a card check 
regime, many employees lose all say over their workplace for 
any one of these reasons. Someone who has been in these shoes 
is on the second panel of witnesses today--Mr. Larry Getts. Mr. 
Getts worked for a company that took a neutral position to 
organization attempts. They allowed the union to come into the 
breakroom every day and persuade employees to sign cards. Mr. 
Getts did not sign a card, but he knew that some of his 
coworkers had signed them against their true will. So he 
initiated a decertification of the union and, under a NLRB-run 
secret ballot election, a majority of employees voted against 
the union. I look forward to hearing more about his experience.
    There is no doubt that some of the witnesses we will hear 
from today have been greatly aided by their unions and I 
wholeheartedly support their right to organize as they have 
under the same law for 60+ years. There should also be no doubt 
that union intimidation does take place, and the card check 
system would increase the risk of this intimidation in order to 
create more dues-paying union members, willing or not. Many of 
those advocating the Employee Free Choice Act dismiss this 
intimidation as a red herring--it is not. Here are some 
examples:

     In 2004, physical threatening became so bad that 
the NLRB ordered a union to post a notice to members providing, 
in part: ``WE WILL NOT threaten employees of ValleyCrest if 
they do not sign authorization cards for the Laborers.''--
Valley Crest Landscape Development, Inc., 2004 WL 2138583 (NLRB 
Div. of Judges).
     In 2000 the SEIU was ordered to post a notice to 
those it was trying to organize saying ``WE WILL NOT restrain 
or coerce you by threatening that employees have no choice but 
to go with us, or by implying or stating that the efforts of 
employees to look into or explore the possibilities of 
representation by other labor organizations is not possible or 
permitted, or by offering to waive initiation fees if all 
employees sign authorization cards for it by a date certain, or 
by any like or related manner.''--Gulf Caribe Maritime, Inc., 
330 NLRB 766 (2000)--Union coercion in soliciting cards 
violated section 8(b)(1)(A).
     In 1996, after a pro-union employee threatened 
other employees with discharge if they did not sign union 
authorization cards and intimidated employees by telling them 
they were the only ones who had not signed cards, the SEIU was 
ordered to post a notice to members stating, in part: ``WE WILL 
NOT threaten employees employed by GMG Janitorial, Inc., with 
discharge or other reprisals if they do not sign . . . 
authorization cards.''--Service Employees (GMG Janitorial), 322 
NLRB 402 (1996)--Union coercion in soliciting cards violated 
section 8(b)(1)(A)
     In 1996, intimidation between two unions competing 
to represent the same workplace became so bad, that the signs 
the NLRB ordered posted tell the whole story:

         LWE WILL NOT threaten employees that those 
        employees who signed cards for Local 424 would have no 
        medical insurance and possibly no job.
         LWE WILL NOT threaten employees with physical 
        harm, by telling employees that we are ``into breaking 
        legs'' or ``we'll break your legs.''
         LWE WILL NOT threaten employees that we would 
        find out who signed cards for Local 424 and would ``get 
        even'' with employees.
         LWE WILL NOT threaten to sue employees if they 
        join, support, or assist Local 424.
         LWE WILL NOT threaten employees with 
        unspecified reprisals by stating that ``the Union has 
        their ways.''--Service Employees Local 144 (Sands Point 
        Nursing Home), 321 NLRB 399 (1996).

    In addition to threats of violence and retaliation, 
employees have faced deceit and peer pressure in card check 
organizing drives. For example, union organizers tell an 
employee that everyone has already signed a card [Roney Plaza 
Apartments v. NLRB, 597 F.2d 1046 (5th Cir. 1979)]. They have 
been told that signing a card would merely enable the union to 
keep in touch with the employees and that it did not mean that 
the employee wanted a union. [Bookland, Inc., 221 NLRB 35, 35-
36 (1975)].
    In the face of these facts, no Senator should dismiss the 
existence of union intimidation, just as none of us dismiss the 
power of the employers' position. This is precisely why the law 
provides for a secret ballot election--something that unions 
themselves advocated when the law was written. Union membership 
has fallen, but weighting the scales and essentially forcing 
unionization on employees and employers is not the answer for 
American workers or our economy.
     Response to Questions of Senator Kennedy by Paula Voos, Ph.D.
    Question 1. Many opponents of the Employee Free Choice Act argue 
that now is not the time to pass this legislation because American 
businesses cannot afford increased unionization during a severe 
economic recession. They point to the problems that some large 
manufacturers in our country are enduring. Do you agree that the 
Employee Free Choice Act would have a negative impact on our economy? 
Do you believe that unions are responsible for the problems in 
manufacturing?
    Answer 1. Let me take these questions in reverse order.
    The problems of American manufacturing: All over the world, 
manufacturers are having problems because of the downturn in demand for 
their products driven by the global recession. As I indicated in my 
original testimony, American manufacturers are having problems for two 
additional reasons.
    First, because the dollar serves in a special role as a reserve 
currency for the world, it rose in value when the economic crisis 
induced a ``flight to safety'' on the part of many private investors 
and governments. The high value of the dollar has some benefits for the 
United States but it also means that our manufactured products are 
artificially more expensive than the manufactured products of other 
nations. This has become a significant artificial drag on our 
manufacturing sector.
    Second, large American manufacturers are burdened by a health 
insurance system in which they are responsible for a significant 
portion of the costs of health insurance for their active employees, 
and sometimes also for their retirees. In other advanced industrial 
nations, these health insurance costs are spread more widely across the 
entire population through national health insurance systems. This is a 
significant disadvantage to our manufacturers.
    The problems of American manufacturers are not due to high rates of 
unionization. In fact, the unionization of U.S. manufacturers is lower 
than the rates of unionization in most other advanced industrial 
nations; and U.S. production worker wage rates are not high compared to 
wage rates in other advanced industrial nations either. It is silly to 
blame the problems of U.S. manufacturing on either unions or high 
worker wages.
    Impact of the Employee Free Choice Act on our Economy: As President 
Obama has explained, the challenge today is simultaneously to promote 
economic revival and to reshape our fundamental economic institutions 
so that we do not re-create another ``economic bubble'' based on cheap 
credit alone, but instead build a foundation for lasting economic 
prosperity. Insofar as the Employee Free Choice Act allows employees to 
gain union representation if they so desire, it is likely to result in 
a slow, but steady, increase in the percent union in the United States. 
In the short run, this will add to consumer purchasing power, which is 
beneficial in the context of recession. It may also add slightly to 
employer costs.
    However, the immediate economic effects of EFCA are likely to be 
small; it takes time to organize and bargain initial contracts. Unions 
are conscious of the business context of employer--they often take it 
into account, particularly in negotiating initial agreements. EFCA will 
not provide a huge immediate economic boost to our economy. On the 
other hand, it is also unlikely to have large immediate negative 
effects either.
    EFCA is better understood as something that will benefit the 
economy in the longer term, by rebuilding the middle class, as is 
discussed at length in my original testimony. In that regard, it is 
like the other attempts to reform our fundamental economic institutions 
at this moment in history.

    Question 2. There is growing recognition that business innovation 
will play an important role in reversing the current economic downturn. 
President Obama, for example, included substantial funding for new 
green industries in the stimulus bill to encourage such innovation. 
History also supports this view, as some of our most successfully 
innovative businesses--such as Burger King, FedEx, Microsoft, Wikipedia 
and G.E.--were started during recessions. What do you see as the role 
of unions in contributing to innovation in American business? How 
important is this role in light of the economic crisis?
    Answer 2. Innovation comes in two forms: the initiation of entirely 
new enterprises and innovation by existing businesses. New firms are 
born non-union in the United States and they may or may not be 
unionized after some period of time. Obviously, a major determinant of 
that is whether or not they treat their employees in a fashion that 
leads those employees to desire union representation. EFCA would have 
no effect, positive or negative, on innovation stemming from entirely 
new enterprises. It would encourage entrepreneurs to treat their 
employees well.
    Existing firms also engage in innovation in terms of products and 
processes. Those that have unionized employees are stimulated to invest 
in additional capital equipment and to experiment with new production 
processes in order to reduce labor costs. This type of change tends to 
be incremental but nonetheless it is a source of demand for innovative 
products in the capital goods market.
    Employees in organized firms are less likely to quit, giving union 
employers incentives to provide additional training and to utilize 
human resource management strategies that are sometimes termed ``high 
commitment'' approaches. These strategies provide employees with a 
means of being involved in decisionmaking in the enterprise and to 
contribute their ideas for gradual improvement (innovation).
    Again, however, I would not see large immediate effects from EFCA 
in the area of innovation during the current economic crisis; any 
effects in this area are likely to be ones that are longer term.

    Question 3. Workers represented by a union are almost twice as 
likely to have employer-sponsored health benefits and four times more 
likely to have secure, defined-benefit pension plans than their non-
union counterparts. Can you explain the role that secure health care 
and retirement benefits play in providing stability for the economy? 
What would be the impact on the economy if a higher percentage of 
workers had these benefits?
    Answer 3. This is an area in which increased unionization in the 
United States could have a large positive impact. All studies have 
found that organized employers are both more likely to provide benefits 
and to provide better quality benefits, particularly in the area of 
health insurance and pensions. Unions not only increase total 
compensation, but also unions increase benefits as a proportion of 
total compensation.
    High medical costs for individuals who either lack health insurance 
or have inadequate health insurance is a common trigger for bankruptcy 
in the United States. The consequence is that government ends up 
picking up many of the costs of such individuals' care after a medical 
bankruptcy. That care has sadly become more expensive because these 
individuals postponed care for financial reasons when their medical 
problems were more amenable to low-cost treatment. In this respect, 
union negotiation of health insurance and better quality insurance can 
provide a significant benefit to our economy.
    Pensions stabilize consumer purchasing power for retired 
individuals; defined benefit pensions, in particular, are an 
``automatic stabilizer'' in macro-economic terms. Unlike defined 
contribution pensions, they are not subject to the extreme ups and 
downs of the investment markets. The trend in the United States in the 
recent past has been negative for macro-economic stability, insofar as 
401K's have replaced defined benefit pensions, and fewer employees have 
any pension whatsoever. These trends have been, of course, partly due 
to decreased unionization and partly due to reduced bargaining power on 
the part of unions (itself in part reflecting reduced unionization). 
EFCA would help reverse both trends.
  Response to Questions of Senator Kennedy by Dr. Layne-Farrar, Ph.D.
    Question 1. In your study, you argue that giving more workers the 
right to choose a union would increase unemployment. As I'm sure you 
know, union density was highest in the United States between the mid-
1930s and the mid-1950s. During that time period, the unemployment rate 
averaged a relatively low 4.5 percent. Since those years, union density 
has fallen sharply--by at least 20 percentage points. Yet--while your 
model would predict we should be experiencing negative unemployment as 
a result of this change--we have not seen any noticeable decrease in 
our long-term average unemployment rate. This data, based on our 
country's own historical experience, runs directly contrary to the 
findings of your study. How do you explain this difference?
    Answer 1. I believe the primary difference lies in the realities of 
the economy, which were quite different in the 1930s through the 1950s 
than they are today. During that earlier time, there was no global 
economy in the sense that there is now. For example, Americans bought 
and drove American cars--there were no Asian imports. As a result, 
unionization efforts tended to affect whole industries and all of the 
relevant competitors, not just a subset of the firms relevant for 
American consumers. Moreover, and related to the lack of global 
competition, during the 1930s and 1940s, many of the key industries for 
the U.S. economy were characterized by oligopoly market structures. 
Again, the auto industry is a good example. The big three car makers 
represented all of the options available to American consumers. With 
limited competition, those firms were able to earn a supra-competitive 
return on their production investments--profits that could be shared 
with the workers who made the cars.
    In contrast, my analysis is based on data from a modern economy. In 
particular, my empirical analysis relies on Canadian data spanning 
1976-1997, a 22-year period during which Canadian provinces 
experimented with card check vs. secret ballot elections and mandatory 
first contract arbitration. Both of these facts--the modern time period 
and the legislative changes that were the driving force behind the ups 
and downs in the union density figures--make the dataset I employ far 
more relevant for an assessment of the impact of EFCA on the current 
U.S. economy than data from 60 to 80 years ago when the economy was 
quite different and when unionization rules were not changing. Today, 
many industries important for the U.S. economy are characterized by 
competition, often global competition. The high tech industries, for 
instance, that have been crucial for the so-called ``knowledge 
economy'' face competition from firms based in India and Ireland for 
software programming and from Asia for semiconductor manufacture. While 
many service industries do not have off-shoring options, they 
nonetheless face considerable international competition--just look at 
the numerous multinational hotel chains represented in Washington, DC 
to understand this point.
    In competitive markets, firms do not earn supra-competitive 
profits. Thus, if production costs increase because wages rise while 
worker productivity does not, it is not a simple matter of sharing 
``excess'' profits with workers. Rather, firms must find other means to 
maintain a competitive return on their investment or they will move 
that investment elsewhere. One of the options for maintaining a 
competitive return is to reduce overall labor costs by reducing 
headcounts--by failing to replace workers that retire or quit, or by 
scaling back expansion plans. This comports entirely with the 
fundamental economic theory: as the price of an input goes up, to the 
extent possible less of that input will be used in production.
    With an understanding of the economic realities behind for-profit 
company decisions and the constraints that such firms face in 
competitive markets it is easy to see how both widespread unionization 
could be beneficial in the 1930s through the 1950s, but also how 
unionization rules such as card check could lead to increased 
unemployment in many important industries today.

    Question 2. The Organisation for Economic Co-operation and 
Development--one of the world's largest and most reliable sources of 
economic data--did a comprehensive analysis of the determinants of 
unemployment in 2006. You cite an earlier OECD study in your report, 
but not this more recent study that reassessed the earlier findings and 
concludes that unionization does not cause higher unemployment. 
Specifically, the 2006 study concluded that ``the impact of . . . union 
density on unemployment [is] statistically insignificant.'' How do you 
reconcile your findings with theirs?
    Answer 2. OECD data is the basis for many studies, three of which I 
cite in my paper. Because OECD data covers so many disparate countries 
it is important to look closely at the variables used in each 
statistical analysis. The 2006 OECD study, in fact, highlights the 
difficulty of capturing any effects of unionization in such a diverse 
group as OECD countries. Specifically, the authors of the OECD 2006 
study caution that:

          ``Union density might poorly capture the actual bargaining 
        power of workers. Indeed, in some countries, the coverage of 
        collective agreements largely exceeds the number of trade union 
        members--this reflects, inter alia, legal procedures and 
        practices to extend collective contracts to unaffiliated 
        workers, including those employed in non-signatory firms.''

    As I explain in my paper,

          ``A far clearer picture emerges from the literature that 
        considers bargaining coverage--defined as the proportion of 
        workers covered by collective bargaining agreements--instead of 
        union density--the proportion of workers that actually belong 
        to a union.''

    Unlike the United States and Canada, in many other OECD countries, 
especially in Europe, union bargaining coverage is considerably higher 
than union density. Germany, for example, reported union membership of 
29 percent of all workers in 1994, but union coverage that same year 
was 92 percent. German workers, like most European workers, do not have 
to belong to a union in order to be bound by union contracts; it is 
enough that their employer or kind of work is covered by a local union.
    Given the considerable discrepancies of the two union variables, 
studies that include European countries are likely to find very 
different effects for union membership/density versus union coverage. 
This is, indeed, the case. For example, an OECD study published in 1997 
using data from 1980-1994 finds a positive but statistically 
insignificant relationship between union density and unemployment, but 
reports a highly statistically significant and positive relationship 
between bargaining coverage and unemployment rates.\1\ The 2006 OECD 
study, however, does not directly consider the effects of union 
coverage on unemployment, but instead focuses on union density because 
the coverage data was unavailable for the full time period studied. The 
lack of findings in the 2006 OECD study is therefore entirely 
consistent with, but in an important aspect less complete than, those 
presented in the 1997 OECD study.\2\
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    \1\ OECD, Employment Outlook 1997 at 76.
    \2\ The 2006 OECD study covered a longer time horizon for which 
union coverage statistics were not available. The narrower time horizon 
of the 1997 study allowed for more detailed and relevant variables to 
be included in the analysis.

    Question 3. On page 13 of your study, you discuss the existing 
peer-reviewed literature about the effects of unions on employment, and 
the range of conclusions that emerge from this literature. At one end, 
you cite Freeman (1988), which shows no statistically significant 
effect of unions on employment. At the other end of the spectrum, you 
cite Scarpetta (1996) and Nickell and Layard (1999), which show that a 
1 percentage point increase in unionization leads to a 0.10 to 0.13 
percentage point increase in the unemployment rate. Your study finds 
that a 1 percentage-point increase in union density would raise the 
unemployment rate by 0.33 percentage points, which is 2-3 times higher 
than your own reading of the high-end estimate in the literature. How 
do you explain the fact that your results are far out of the range of 
the existing peer-reviewed literature on the subject?
    Answer 3. While Freeman (1988) concludes that there is no 
statistically significant effect, he reports that ``there is a clear 
negative correlation between employment changes and real wage changes 
across the 19 OECD countries.'' \3\ As noted above, the lack of 
statistical significance in his analysis could be due to the use of 
data for OECD countries. The studies that come a decade later, in the 
late 1990s, do find statistically significant results. Scarpetta's 
primary finding is that a 1 percentage point increase in unionization 
leads to a 0.10 to 0.13 percentage point increase in the unemployment 
rate, but he also finds an effect as high as 0.33 for youth 
unemployment (see Table 2).
---------------------------------------------------------------------------
    \3\ Robert Freeman, Labour Market Institutions and Economic 
Performance, 3 Econ. Pol'y 64 (1988).

    The discrepancy between my findings and the overall results in 
Scarpetta (1996) and Nickell and Layard (1999) could stem from a number 
of factors. First, the various OECD-based studies analyze trends over 
time, which tend to show slow, although often steady, changes in 
unionization. In contrast, the Canadian data that I rely on is not 
capturing incremental trends over time but is instead capturing 
structural shifts resulting from changes in unionization rules. It 
seems reasonable to expect a larger effect for the sharper changes 
stemming from a switch between card checks and secret ballot elections 
than from an incremental time trend that involves no structural change.
    Second, the diversity of countries in the OECD-based studies is 
bound to be a factor. Different countries have different political and 
social institutions that will undoubtedly have an impact on employment, 
regardless of the unionization rules. That many factors can affect 
unemployment is one key reason why such relationships should be studied 
with regression analysis, rather than with simple comparisons. The 
institutional differences across countries also point to one of the 
benefits of studying Canadian data to gain an understanding of what 
would likely happen in the United States were EFCA to pass. The United 
States and Canada are not carbon copies of one another, but the 
countries do share a great many important features, as I explain in my 
paper. The United States has far less in common, however, with the 
European and Asian countries in the OECD data, as the discrepancies in 
union density as compared to union coverage attest.
    It is also important to bear in mind the consistent direction of 
the findings. There is consensus in the literature on the direction of 
the effect of unionization on unemployment, even if the studies differ 
in terms of statistical significance and the magnitude of the impact. 
In contrast, when there is truly no statistical relationship to be 
found in the data, multiple studies in the literature tend to report 
different signs for the estimates (positive and negative) in addition 
to different statistical significance and magnitudes. My analysis, 
which includes a great many robustness checks and variations in model 
specification, all of which yield consistent results, is in line with 
the overall finding in the literature of a negative relationship 
between unionization and employment. Finally, even if one believes the 
estimates that my analysis produces are overstated, cutting those 
estimates in half still indicates a sizable effect on unemployment.

    Question 4. It is also difficult to reconcile the results of your 
study with the experiences of other countries. As the chart below 
illustrates, many countries have far more workers covered by collective 
bargaining agreements than in the United States, but have comparable or 
lower levels of unemployment. How do you explain these differences?
------------------------------------------------------------------------
                                                             Collective
              Country                Unemployment Rate \4\   Bargaining
                                                            Coverage \5\
------------------------------------------------------------------------
United States .....................      4.6         14
Australia..........................              4.4                 80
Austria............................              3.8                 95
Denmark............................              3.8                 80
Ireland............................              4.6                 38
Netherlands........................              3.2                 80
New Zealand........................              3.6                 25
Norway.............................              2.6                 70
Switzerland........................              3.6                 40
------------------------------------------------------------------------

    Answer 4. As the table above illustrates, many countries exhibit a 
combination of relatively low unemployment with relatively high 
collective bargaining coverage. It is also true that many more 
countries exhibit a combination of relatively high unemployment with 
relatively high collective bargaining coverage, as the table below 
illustrates (based on identical sources to those used in the table 
above). Anecdotes in either direction are therefore easy to find. The 
important point to note is that attempting to draw a relationship from 
a simple comparison of these two figures is inappropriate. Many factors 
can potentially affect a country's unemployment rate, which means that 
regression analysis, controlling for as many of the relevant factors as 
the available data allows, is the most appropriate method for assessing 
the impact of changing unionization on unemployment.
---------------------------------------------------------------------------
    \4\ OECD Harmonized Unemployment Rates. Paris, 9 February 2009. 
http://www.oecd.org/dataoecd/32/24/42134775.pdf.
    \5\ Collective Bargaining Coverage/membership, Table 3.3. http://
www.oecd.org/document/62/0,3343,en_2649_33927_31935102_1_1_1_1,00.html.
------------------------------------------------------------------------
                                                             Collective
                                              Unemployment   Bargaining
                  Country                     Rate  (2007)  Coverage \7\
                                                  \6\          (2000)
------------------------------------------------------------------------
United States..............................
                                             4.6           14.0
Belgium....................................          7.5           92.5
Czech Republic.............................          5.3           27.5
Finland....................................          6.8           92.5
France.....................................          8.3           92.5
Germany....................................          8.4           68.0
Hungary....................................          7.3           32.5
Italy......................................          6.1           82.5
Poland.....................................          9.6           42.5
Slovak Republic............................         11.2           52.5
Spain......................................          8.3           82.5
Sweden.....................................          6.2           92.5
United Kingdom.............................          5.3           32.5
Canada.....................................          6.0           32.0
------------------------------------------------------------------------

    As a more general point, note that the changes in union density in 
the Canadian data that I employed for my study were not the slow and 
steady trends over time that have occurred within the United States 
over the last several decades, but were rather more sharp changes 
driven by modifications to the unionization rules. Changes in the 
political party in leadership within a given Canadian province lead to 
changes in unionization rules, which in turn affected union density and 
impacted unemployment. The nature of the Canadian dataset therefore 
captures the very dynamics that one would like to observe in order to 
predict the effects of passing EFCA in the United States. Abstracting 
from the circumstances underlying the data and attempting to apply the 
study's results to all countries and all time periods, regardless of 
the presence of structural changes in the unionization rules, is 
therefore inappropriate.
---------------------------------------------------------------------------
    \6\ OECD Harmonized Unemployment Rates. Paris, 9 February 2009, 
page 2. Data are for 2007. http://www.oecd.org/dataoecd/32/24/
42134775.pdf.
    \7\ Trade Union Members and Union Density, Table 3.4 http://
www.oecd.org/document/12/0,3343,en_2649_33927_31781132_1_1_1_1,00.html.
---------------------------------------------------------------------------
         Response to Question of Senator Enzi by Wade Henderson
    Question. As you know, the Employee Free Choice Act effectively 
eliminates use of the government-supervised, secret ballot as the means 
by which workers decide whether or not they wish to be represented by a 
labor union. Although proponents misleadingly claim that the 
legislation would still provide the option of a secret ballot, every 
objective expert that has reviewed the legislation has concluded that, 
if enacted, virtually all new union certifications would take place 
without employees being able to make their choice by a secret ballot 
vote. Indeed, many workers would be completely shut out of the process 
and have no voice at all.
    For decades, both you, and your organization, have led the fight 
for voting rights and been among the most effective voices in the 
struggle to protect individuals from disenfranchisement. Do you see any 
inconsistency in your support for EFCA, and your long support for 
guaranteeing and protecting voting rights?
    Answer. Answer was submitted in the letter below.
                                 ______
                                 
      Leadership Conference on Civil Rights (LCCR),
                                            April 17, 2009.
Hon. Michael B. Enzi, Ranking Member,
Committee on Health, Education, Labor, and Pensions,
U.S. Senate,
Washington, DC 20510.

Re:  Written Question for the Record, Following Testimony at March 10 
Hearing, ``Rebuilding Economic Security: Empowering Workers to Restore 
the Middle Class''

    Dear Senator Enzi: Thank you for your question and for your 
gracious comment regarding the Leadership Conference on Civil Rights' 
work to protect individuals from voting disenfranchisement. You asked 
whether I saw any inconsistency between the Leadership Conference's 
support for the Employee Free Choice Act and our long support for 
guaranteeing and protecting voting rights in political elections. Let 
me begin by stating that, as many objective observers have noted, the 
Employee Free Choice Act does not eliminate the secret ballot, but 
merely provides workers the option to form unions through majority 
sign-up. When workers do choose majority sign-up as the means to 
express their desire to form a union, this process is perfectly 
consistent with the fundamental goal of the National Labor Relations 
Act (NLRA)--a goal that is echoed in international human rights 
standards as well--to protect workers' right to form a union.
    Under the tenets of our labor law, workers are entitled to freely 
exercise their choice of whether they wish to be represented by a 
union. In the context of union representation, an election has never 
been the exclusive method used by the National Labor Relations Board 
(NLRB) to ascertain whether workers choose to have union 
representation. In fact, the NLRB has always recognized the validity of 
majority sign-up as a means of determining the choice of workers. (At 
one time, employers were required to bargain with unions that showed 
majority status using majority sign-up; today an employer is allowed to 
veto the choice expressed by its workers through majority sign-up and 
insist on an election.) Moreover there are safeguards in our labor law 
to ensure that the process accurately reflects workers' free choice 
about unionization.
    The Leadership Conference supports making majority sign-up 
available to workers because the current NLRB election process is so 
deeply flawed that it denies many workers the ability to exercise free 
choice about union representation. There is ample documentation of the 
pervasiveness of extreme anti-union conduct by employers during 
organizing campaigns. Employers have constant access to workers and are 
able to use this access to campaign heavily against the union. 
Moreover, in addition to bombarding workers with anti-union messages at 
the workplace, employers sometimes cross the line and engage in 
unlawful tactics, such as firing pro-union workers or making unlawful 
threats against them. The remedies for this misconduct rarely restore a 
coercion-free environment for workers to express their choice at the 
ballot box regarding union representation.
    There is simply no way to compare the current NLRB election process 
to the process by which we elect government officials, because the NLRB 
process is ripe for abuses that do not occur in the context of 
political elections. Obviously, one candidate or political party does 
not command daily access to voters during which that party can inundate 
those voters with campaign propaganda. Political parties and candidates 
cannot affect the livelihood of voters by causing them to lose their 
jobs.
    While it may be true that under majority sign-up--unlike in 
political elections--some individuals do not get to cast a vote, the 
majority sign-up process does require that a majority of workers 
express their desire for union representation and thus ensures that the 
desire of a majority of workers is effectuated.
    Because majority sign-up is a long-standing means for workers to 
select a union that allows them to express that choice freely, and 
because of the proven weaknesses of the secret ballot process in the 
context of NLRB elections, majority sign-up is the best way to secure 
the right of workers to form a union. The selection of our political 
representatives is very different, and the right to cast a ballot is of 
unique significance in this context.
    Therefore, I see no inconsistency between the Leadership 
Conference's support for access to the ballot box in the political 
context and for majority sign-up in the context of selecting union 
representation. What is important to us is making sure that fundamental 
rights are protected. The Employee Free Choice Act protects the right 
to form a union and makes that right meaningful. Our support for the 
Employee Free Choice Act is thus not only consistent, but compelled.
            Sincerely,
                                            Wade Henderson,
                                                   President & CEO.
                                 ______
                                 
                                Richard A. Epstein,
                                         Chicago, IL 60615,
                                                    March 23, 2009.
Hon. Edward M. Kennedy, Chairman,
Committee on Health, Education, Labor, and Pensions,
644 Senate Dirksen Office Building,
Washington, DC 20510.

Hon. Michael B. Enzi, Ranking Member,
Committee on Health, Education, Labor, and Pensions,
835 Hart Senate Office Building,
Washington, DC 20510.

Re: The Employee Free Choice Act

    Dear Chairman Kennedy and Ranking Member Enzi: I write this letter 
on behalf of the Alliance to Save Main Street Jobs, which has funded my 
research for a monograph. My conclusions about EFCA are outlined in my 
monograph, The Case Against the Employee Free Choice Act, which will be 
published by the Hoover Institution of Stanford University very soon. 
In my book, I note that EFCA's effect on the overall economy and on the 
workplace would be clearly negative and that the legislation should not 
be passed in anything like its present form. I cannot here review all 
the arguments, and thus have provided you with a copy of my study. 
Allow me to state my conclusions as succinctly as possible.

     The decline in union representation in the private sector 
appears to be largely attributable to the major changes in the 
operation of the American and global economy over the past 50 years. 
The rise of free trade across national borders and the more rapid 
turnover of workers has led to a decline in unionization rates in the 
United States which parallels those which are experienced in other 
industrialized nations--despite the fact that these other nations 
operate under very different legal regimes.\1\ There have been no 
significant changes in legal rules or NLRB behavior that accounts for 
the shift. Nor is there any evidence of an increased incidence of 
illegal actions of employers that can account for the shift. The 
largest source of union decline is the massive attrition in ``old 
line'' unionized firms in such industries as automobiles and steel, 
whose rigid union contracts have made it difficult for firms to respond 
to changes in competitive conditions.
---------------------------------------------------------------------------
    \1\ Jelle Vissor, Union Membership Statistics in 24 Countries, 129 
Monthly Lab. Rev. 38 (January 2006).
---------------------------------------------------------------------------
     There is no theoretical explanation or empirical evidence 
which suggests that unions are able to increase productivity in the 
workplace. To be sure, unions are able to extract for their members in 
the short run a premium on wages in the neighborhood of 17 percent,\2\ 
but these gains are not sustainable in the face of competition from 
nonunion firms. To combat these nonunion firms, unions seek to hamper 
competition in the marketplace by encouraging, for example, local 
governments to impose zoning restrictions on the entry of nonunion 
firms, even in impoverished neighborhoods. In addition, the CEOs of 
unionized firms have no choice but to speak out in favor of unions, for 
one way for them to overcome their competitive disadvantage is to 
support the unionization of rival firms, even at the cost of higher 
prices and fewer choices in the relevant consumer markets.
---------------------------------------------------------------------------
    \2\ David G Blanchflower and Alex Bryson, ``What Effect Do Unions 
Have on Wages Now and Would Freeman and Medoff Be Surprised?'', Journal 
of Labor Research, Volt. XXV, No. 3, Summer 2004.
---------------------------------------------------------------------------
     EFCA will introduce massive uncertainty into labor 
relations if adopted in the present form. Secret card check campaigns 
can impose unions on both dissident employees and employers under 
circumstances in which neither is able to voice their position before 
the union is recognized. The removal of the secret ballot opens up the 
field to risks of coercion and misrepresentation, for which EFCA 
provides no remedy at all. Once unionized, firms unable to negotiate 
acceptable terms within the narrow window provided by EFCA will be 
required to enter into mandatory interest arbitration before an 
arbitral panel under rules that are nowhere set out in the act and 
which will be adopted by the head of the Federal Mediation and 
Conciliation Service, a political appointment, from whose decision EFCA 
allows no right to appeal. The short deadlines that are contemplated 
under the act and the inability of employers to have any clear say in 
the choice of arbitrators could result in ruinous contracts for which 
there is no relief except bankruptcy. The likely consequence of this 
draconian regime is to forestall the formation of new businesses that 
are such instrumental catalysts in job creation.

    In the course of my work, I have relied in part on a careful 
empirical study that Dr. Anne Layne-Farrar, a director at the Law and 
Economics Consulting Group, has prepared in order to determine the 
potential impact of EFCA's card check and compulsory arbitration scheme 
on overall levels of unemployment.\3\ Her conclusion under a variety of 
model specifications is that for every increase of 3 percentage points 
of union workers in the economy brought about by EFCA, we can expect to 
see about a 1 percentage point increase in unemployment. To put those 
numbers in perspective, the current workforce is about 150 million 
workers, so an increase in union representation of about 4.5 million 
workers would lead to a 1.5 million increase in unemployment levels.
---------------------------------------------------------------------------
    \3\ Anne Layne-Farrar, ``An Empirical Assessment of The Employee 
Free Choice Act: The Economic Implications'', available online at 
Social Science Research Network, http://ssrn.com/abstract=1353305.
---------------------------------------------------------------------------
    Recently, the supporters of EFCA have come forward with two 
documents that are designed to bolster the case for EFCA. The first is 
a short letter that was signed by 38 economists who urge Congress to 
pass EFCA in order to improve the operation of labor markets. The 
second is a recent study called ``Organizing Prosperity: Union Effects 
on Job Quality, Community Betterment, and Industry Standards,'' written 
by Dr. Matt Vidal, a recent graduate from the University of Wisconsin-
Madison, assisted by David Kusnet, a former speech writer in President 
Clinton's administration. Vidal did his research at the UCLA Institute 
on Labor and Employment, an organization with strong pro-union ties. 
The link that joins these two documents together is that both have been 
published under the aegis of the Economic Policy Institute, which has 
long championed labor causes.
    Both of these documents are deeply flawed. I begin with a detailed 
analysis of the short economist letter, before making some general 
observations about the Vidal/Kusnet study.
                       statement from economists
    The initial point in the economist letter is the claim that hourly 
compensation for American workers has stagnated while their 
productivity has soared. The claim, however, fails on two grounds. 
First, the letter offers no evidence whatsoever to support the 
proposition. Indeed the available evidence points in the opposite 
direction. Below is a graph that tracks the relationship between the 
two, based on Bureau of Labor Statistics and Bureau of Economic 
Analysis data, which shows the close correlation.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Second, the Economist Letter offers no explanation as to why any 
persistent gap between compensation and productivity should arise. The 
historical relationship between wages and productivity is consistent 
with general economic theory. Whenever wages rise more rapidly than 
productivity, it will lead to firm failure and thus be self-correcting. 
Whenever wages rise more slowly than firm productivity, new firms will 
enter the market to bid up wage levels to the point where wages and 
productivity are again in harmony.
    To be sure, unions do exert monopoly power when they organize 
workers to bargain under single representation. The effect of those 
negotiations, at least for the unions that succeed, is to raise the 
wages of their members, but that private increase for covered workers 
does not translate into wage increases for workers as a whole. The 
increase in union wages necessarily reduces the number of employees who 
work at these high pay levels. It also creates wage losses due to job 
interruptions such as strikes, slowdowns, and layoffs. In addition, 
some displaced workers would be forced into other occupations where 
wage levels are relatively lower. The additional entry into these 
nonunionized markets increases the supply of labor, which in turn 
lowers the wages for workers who were already in that market niche. The 
arrival of the new workers pushes the supply curve to the right, so 
that in equilibrium there are more workers at lower wages. It is an 
empirical matter as to the size of these various effects, but there can 
be no dispute about the existence of these forces. Unionization can 
only raise overall wage levels if it increases productivity. And if it 
did that, unions would be welcomed by all employers, which is clearly 
not the case today.
    In fact, unfettered unionization creates some social costs that are 
not borne by firms, but by the public at-large. The current labor 
relations require the heavy involvement of the NLRB, which is funded by 
taxpayer dollars. It imposes costs of firms and unions to comply with 
its complex strictures. These expenditures consume wealth, but they do 
not create it. These social costs facilitate unionization that can 
reduce productivity by imposing work rules that make a workforce less 
flexible than they would otherwise be in their absence. The detailed 
rigidity, for example, of the United Automobile Workers' labor 
contracts with Chrysler, Ford, and General Motors have played a large 
role in the downfall of these companies, which has imposed billions of 
dollars of social costs that are not taken into account as an incident 
of unionization in the economist letter.
    The second paragraph in the economist letter is likewise off the 
mark. The key statistic cited in the letter is, ``From 2000-2007, the 
income of the median working-age household fell by $2,000--an 
unprecedented decline.'' The sentence however, is crafted in a form to 
create the illusion that it bears some relationship to fortunes of 
workers, both in and out of organized labor. However, the statistics to 
which the letter refers are ``the median working-age household.'' The 
key word in this sentence is age. The economist letter does not refer 
to the wage levels in these households, for the $2,000 figure covers 
all households in that age group, including those in which there are no 
working individuals at all. To properly gauge the situation, however, 
it is best to look at systematic evidence that hones in on wages.

       Table 1.--Households by Number of Earners by Mean and Median Income, All Races:  2000 and 2007 \4\
----------------------------------------------------------------------------------------------------------------
                                                                          Median income          Mean income
                                                             No. in  -------------------------------------------
                 No. of earners and year                   thousands   Current      2007     Current      2007
                                                                       dollars    dollars    dollars    dollars
----------------------------------------------------------------------------------------------------------------
All Households:
  2007...................................................    116,783     50,233     50,233     67,609     67,609
  2000...................................................    108,209     41,990     50,557     57,135     68,792
  Difference.............................................  .........  .........       -324  .........  .........
No Earners:
  2007...................................................     24,541     17,492     17,492     25,700     25,700
  2000...................................................     21,755     15,231     18,339     21,652     26,070
  Difference.............................................  .........  .........       -847  .........  .........
One Earner:
  2007...................................................     43,318     40,710     40,710     55,752     55,752
  2000...................................................     37,857     33,619     40,478     46,506     55,995
  Difference.............................................  .........  .........       +232  .........  .........
Two Earners:
  2007...................................................     39,093     77,758     77,758     94,964     94,964
  2000...................................................     38,066     62,222     74,917     77,961     93,868
  Difference.............................................  .........  .........     +2,841  .........  .........
Three Earners:
  2007...................................................      7,352     95,026     95,026    110,065    110,065
  2000...................................................      7,758     75,854     91,331     89,295    107,514
  Difference.............................................  .........  .........     +3,695  .........  .........
Four Earners or More:
  2007...................................................      2,480    100,000    100,000    132,352    132,352
  2000...................................................      2,773     92,316    111,152    104,729    126,097
  Difference.............................................  .........  .........    -11,152  .........  .........
----------------------------------------------------------------------------------------------------------------

    At this point, it is clear that over the past 8 years there has 
been essentially no change in either medians or means. The $2,000 
decline referenced in the economist letter seems to relate solely to 
those households who are heads of household and under 65 years old.\5\ 
There is much that can be said about the source of that decline, but it 
cannot be attributed to the absence or presence of labor unions, except 
to the extent that strong unions reduce the number of job opportunities 
relative to those in a competitive market.
---------------------------------------------------------------------------
    \4\ Households as of March of the following year. Income in current 
and 2007 CPI-U-RS adjusted dollars. U.S. Census Bureau, Current 
Population Survey, Annual Social and Economic Supplements, available at 
http://www.census.gov/hhes/www/income/histinc/inchhtoc.html.
    \5\ See for the probable source of the quotation, Arloc Sherman, 
Robert Greenstein & Sharon Parrott, Poverty and Share of Americans 
Without Health Insurance Were Higher in 2007--and Median Income for 
Working-Age Households Was Lower--than at the Bottom of Last Recession, 
Center on Budget and Policy Priorities, http://www.cbpp.org/8-26-
08pov.htm.
---------------------------------------------------------------------------
    In addition, even if the entire $2,000 decline in median household 
income were attributable to change in real wages, it is still not 
possible to attribute it to any changes in the levels of unionization. 
During the 2000-2007 period referenced in the economist letter, the 
percentage of union workers in the economy was virtually constant at 
about 16 percent of the overall labor force. The only changes were the 
slight increase in public sector unions and the slight decline in 
private sector unions, to the point where in 2007 both were about equal 
in numbers at around 8 percent, whereas private unions were larger than 
public unions in the year 2000 by about 2 percentage points. There is 
nothing in those constant data that could explain the decline in median 
household income. What does matter, however, is the mix of union 
workers. The loss of jobs through attrition in the automotive, tire, 
steel and other old line industries did result in the loss of high paid 
union wages that were insupportable in the face of intense global 
competition. Those numbers should serve as a warning to anyone who 
thinks that observed union premiums in various industries can survive 
over time. To be sure, this is more likely to happen in service-
intensive industries that are more shielded from competition than it is 
in global markets in goods. The union market power comes at the price 
of high costs for services to consumers, who will either have to cut 
back on their own consumption or switch to less expensive alternatives, 
especially in times of economic privation.
    The next assertion in the economist letter states broadly that 
``virtually all the Nation's economic growth went to a small number of 
wealthy Americans.'' This proposition is wrong on both empirical and 
theoretical grounds. On the former, here is the census data on the 
distribution of income by wealth for 2000-2007.

 Table 2.--Share of Aggregate Income Received by Each Fifth, Top 5 Percent  and Middle 60 Percent of Households,
                                          All Races: 2000 and 2007 \6\
----------------------------------------------------------------------------------------------------------------
                                                                       Share of aggregate income
                                                      ----------------------------------------------------------
                   Year                     No.  [In                                                      Middle
                                           thousands]  Lowest  Second   Third  Fourth  Highest   Top 5      60
                                                        fifth   fifth   fifth   fifth   fifth   percent  percent
----------------------------------------------------------------------------------------------------------------
2007.....................................     116,783     3.4     8.7    14.8    23.4     49.7     21.2     46.9
2000.....................................     108,209     3.6     8.9    14.8    23.0     49.8     22.1     46.7
----------------------------------------------------------------------------------------------------------------

    The data on these census tables indicate no substantial change in 
the relative fortunes of any relevant group. The explanation for the 
relatively small rate of growth may implicate a wide range of socio-
economic factors from education levels to changes in regulatory 
policies in the education, health and business sector. There is no 
evidence whatsoever to support the general statement that the 
wealthiest are gaining at other workers' expense. What is true is that 
over the past 20 years or so, there have been larger gaps in income for 
graduates of universities relative to high school graduates and 
individuals without a high school diploma. Any explanation for these 
shifts is likely to implicate the rise of jobs in an information 
economy which gives far greater rewards to individuals with the ability 
to manipulate abstract concepts and symbols, both verbal and 
mathematical, and who have facility with technical tools and Internet 
skills that are so important in the modern economy.
---------------------------------------------------------------------------
    \6\ Supra note 4.
---------------------------------------------------------------------------
    At this point, the economist letter shifts to the empirical claim 
that workers wish to form unions to gain a ``fair share'' of the 
economy. The letter claims that this is borne out by empirical studies, 
none of which is mentioned. This empirical claim is incorrect as well. 
It is simply not true that workers receive only a small share of the 
wealth they create. In fact, the relatively stable trend in the share 
on national income going to workers (slightly up in the long run) has 
occurred as the rate of unionization has declined. Further, the 
argument that unions are needed to make sure that low-wage and middle-
class workers receive their ``fair share'' of the Nation's income that 
goes to workers does not hold up when one compares the recent income 
trends for full-time, year-round workers and the continuing decline in 
unionization. For example, since 1994 the three important income 
fairness measures for men who work full-time, year-round--the 90th 
percentile/10th percentile income ratio; the 50th percentile/10th 
percentile income ratio; and the Gini Index--have remained fairly 
stable as the unionization rate for men has fallen. To the extent that 
income shares of households have become more unequal since 1979, it has 
more to do with increasing returns to education, the change in the 
occupational mix of the economy, the increasing number of single-parent 
families, global and regional competition, and high levels of 
immigration, than declining unionization rates.
    The low rate of unionization in 2007, which resulted in only 60,000 
workers winning union status through election, has a clear implication 
that the economist letter does not acknowledge. Workers, when given the 
choice through secret ballot, on average vote more often not to join a 
union. The most telling figure in this regard is that unions have 
reduced the number of elections called from about 2,800 in 2000 to 
about 1,400 8 years later, with little if any increase in overall 
success rates. Instead, unions have often resorted to campaigns to 
force neutrality agreements from employers, by which they agree not to 
oppose unionization or to engage in demonstrations and other tactics 
that can make it difficult for the firm to operate in its normal 
manner. Yet none of these tactics are acknowledged, let alone discussed 
in the economist letter.
    The economist letter is also wrong on its factual assertion that 
union elections take too long. The data actually cuts the other way. 
General Counsel Ronald Meisburg of the NLRB made these findings in his 
2007 report of NLRB activity: ``Initial elections in union 
representation elections were conducted in a median of 39 days from the 
filing of the petition'' . . . ``93.9 percent of all initial 
representation elections were conducted within 56 days of the filing of 
the petition in fiscal year 2007, compared to 94.1 percent in fiscal 
year 2006, and above our target of 90 percent.'' \7\ The economist 
letter is correct that these elections are often marked by acrimony on 
both sides, given the enormous stakes. It would be wrong to attribute 
this breakdown in relations to one side or the other. The current 
framework encourages these struggles by conferring monopoly power on 
the union as the sole bargaining representative. It is surely incorrect 
to claim that ``union sympathizers are routinely threatened or even 
fired,'' for which the economist letter cites no data. The most common 
study typically cited for this proposition contains serious 
methodological mistakes that deprive it of any probative force.\8\ For 
its conclusion, the letter relies on the testimony of union organizers, 
and not on any independent data. It does not distinguish between legal 
and illegal employer campaign tactics, but condemns all employer 
tactics, even legal ones, simply because they are persuasive.
---------------------------------------------------------------------------
    \7\ Memorandum GC 08-01, December 5, 2007, Summary of Operations 
(Fiscal Year 2007), at 1. http://www.nlrb.gov/shared_files/GC Memo/
2008/GC08-01 Summary of Operations FY 07.pdf.
    \8\ Kate L. Bronfenbrenner, Employer Behavior in Certification 
Elections and First-Contract Campaigns: Implications for Labor Law 
Reform, in Restoring the Promise of American Labor Law 75 (Sheldon 
Friedman, et al., eds. 1994).
---------------------------------------------------------------------------
    Nor does the economist letter explain why any effort to fire union 
sympathizers makes sense from an employer's point of view. In addition 
to the legal remedies of reinstatement and back pay, any firing of 
these workers is likely to backfire on the firm as the key union 
organizers, who are often not employees of the firm, can use the 
dismissal to rally remaining workers.
    The description of EFCA is every bit as troublesome. There is 
nothing simple or established about card checks as devices that are 
imposed on employers without their knowledge. Nor is there any 
provision in the proposed statute that provides methods for the 
authentication of cards before neutral observers or to withdraw suspect 
cards before an election. The letter simply misstates the effect of the 
arbitration provision, which it claims ``creates a process to ensure 
that newly unionized employees have a fair shot at obtaining a first 
contract by calling for arbitration after 120 days of unsuccessful 
bargaining.'' EFCA does not give newly unionized works a ``fair shot at 
obtaining a first contract.'' The hint that an agreement might not be 
reached is false. EFCA imposes that contract as a matter of law by 
forcing employers and unions to accept a contract that is imposed by a 
panel of arbitrators chosen under unspecified procedures that will be 
designed by the head of the Federal Mediation and Conciliation Service. 
The arbitration in this instance is ``interest'' arbitration, not 
grievance arbitration. The arbitrator thus can impose all the terms of 
a complex collective bargaining agreement on any employer and group of 
workers. Yet the act gives the employer and those workers no right of 
appeal to any independent party that is outside the influence of the 
Secretary of Labor, a clear political position in the Cabinet.
    The economist letter makes the bald and unsupportable assertion 
that the coercive process entailed in EFCA will somehow reflect 
workers' preferences when many of them will have no say in the 
organization of the union and no say in the acceptance of any 
particular contract. Nor does it explain how this coercive procedure 
imposed on large and small firms alike could possibly improve 
relationships between a firm and its workers. The economist letter is 
right to say that a rising tide raises all boats, but they should have 
added that a falling tide lowers all boats. There is no evidence of any 
efficiency advantage that comes from the imposition of EFCA. The one 
clear and sober conclusion is that the Congress is asking for massive 
social dislocations in a time of economic turmoil by enacting an ill-
conceived statutory plan that contains no details of its 
implementation.
                         organizing prosperity
    The Vidal/Kusnet study takes a very different tack from the 
economist letter. It offers a set of vignettes about the success 
stories that it has identified in management-labor relationships. The 
letter contains no explicit discussion of any of the provisions of EFCA 
and thus has nothing to say about whether or how it will improve the 
overall situation in labor markets in the United States. Indeed one way 
to read the study is as an endorsement of the status quo on the grounds 
that it has facilitated the management-labor relationships that it 
describes in glowing terms.
    Nonetheless, I think that the study is defective in any larger 
effort to explain how or why labor unions improve the overall 
efficiency of the labor markets. First, the study does not attempt to 
answer the economic objections that relate to the social costs that are 
created by the legal monopoly created under the National Labor 
Relations Act. Indeed, the word ``monopoly'' appears nowhere in the 
study. This celebratory study does point to several ostensible 
advantages of unions, but offers no explanation as to why these 
features of labor markets are in fact desirable. For example, the 
authors cite the work of Richard Freeman and James Medoff \9\ to the 
effect that unions reduce firm turnover, but they offer no explanation 
as to why reduced turnover is a sign of efficiency in a plant, as 
opposed to stagnation in the workplace brought about by nonproductive 
union seniority systems.
---------------------------------------------------------------------------
    \9\ Richard B. Freeman & James L. Medoff, What Do Unions Do? (Basic 
Books 1984).
---------------------------------------------------------------------------
    At other points, the authors note that some mass merchants pay 
lower wages to its workers, but they do not note the explosive growth 
in the number of workers the firm has hired, the long-list of 
applicants whenever a new store opens, and the lower prices that 
consumers benefit from by shopping at these stores. Vidal and Kushnet's 
only concern is the competitive advantage that Wal-Mart had against 
``Albertsons, Kroger's, Ralph's, and Safeway's Vons and Pavilions.'' 
\10\ Yet the authors make little of their reference to ``the longest 
strike in the history of the [grocery] industry,'' which imposed costs 
on the striking workers, the nonstriking workers, and the customers and 
suppliers of the firm in question. The other vignettes studied all 
suffer from the same hopefulness that refuses to even consider the 
costs of unionization in addition to its benefits. There is no question 
that some unions have better relationships with their employers than do 
others. Those that work together successfully should be able to compete 
with nonunion firms if they are as efficient as Vidal and Kusnet 
insist--without the added club of EFCA.
---------------------------------------------------------------------------
    \10\ Matt Vidal & David Kusnet, Organizing Prosperity: Union 
Effects on Job Quality, Community Betterment, and Industry Standards, 
23 (EPI Books 2009).
---------------------------------------------------------------------------
    The inability of union firms to compete is further illustrated by 
Vidal and Kushnet's slanted account of union failures in both the meat 
packing and trucking industries. In the former, it is clear that Iowa 
Beef Packers did become a dominant firm, but the authors offer no 
evidence that it ``recreated the conditions exposed in The Jungle a 
century earlier.'' \11\ Likewise, it was clear that once the 
protectionist regulation under the Interstate Commerce Act broke down, 
unionized firms could not viably compete against more efficient 
providers. In both cases the expanded labor market did what would be 
expected: it reduced both wages to drivers and costs to consumers. 
Deregulation, however, does not explain which way the two effects net 
out. The study notes that average load per dispatch has dropped, but 
never asks, for example, whether the shift results from the ability of 
haulers to use smaller trucks more efficiently.
---------------------------------------------------------------------------
    \11\ Id. at 2.
---------------------------------------------------------------------------
    Similarly, Vidal and Kushnet's description of the titanic 
organization struggles in Las Vegas is far less rosy when the full 
account is given. Unfortunately, their study does not mention the 
picketing and other tactics that the union brought to bear on Las Vegas 
casinos, and its unwillingness to call for any election so that it 
could continue to turn the pressure on the firm.\12\ Nor did they 
mention that even with the neutrality agreement, the union was only 
able to command 52 percent of the workers on the card check, or that 
the wages paid prior to the unionization efforts were as high as those 
in nonunion establishments. It is easy to see how the union benefited 
from this drive, but much more difficult to see how the workers 
benefited.
---------------------------------------------------------------------------
    \12\ See, MGM Grand, 329 NLRB 464 (1999).
---------------------------------------------------------------------------
    The basic objection to this study is this: any full and fair 
analysis of the overall situation has to look at the dislocations and 
the failures as well as the successes. Yet there is no mention of the 
breakdown in relations that brought these major firms to an impasse 
with the large industrial unions, which lost membership through 
attrition. In all these cases, the unions took the position that they 
would never enter agreements that would bankrupt the firms on which 
their success depends. There is nonetheless a real conflict in the 
level of risk of bankruptcy that unions and employers are prepared to 
take. Think only of the work rule restrictions in the automobile 
industry and the job bank program that was terminated only recently 
after the need for public bailout money became imperative. These 
contract provisions had nothing whatsoever to do with increasing 
efficiency or productivity. The same is true of the two-tier labor 
contracts that existed in the automotive industry, which reflected the 
greater power of workers with seniority than those without it. This 
part of the story is not told in Vidal and Kushnet's study.
    Instead the entire effort is a transparent effort at argument 
through carefully selected anecdotes that support the optimistic 
conclusion about the social effects of unionization. There is no effort 
to get a random sample of workers or union campaigns to see whether the 
results hold across the board. It is a wholly improper social science 
technique to praise the ``accomplishments'' of organizing campaigns 
without looking at the associated costs. It is entirely misleading to 
operate as though workers always act in concert when in fact they are 
often deeply divided on the desirability of unions in their own 
workplaces. The overall effects of unionization on the economy cannot 
be understood through storytelling, but instead requires the use of 
systematic theory and evidence. The social case for a change in the law 
governing unions is not made by showing that some unions benefit their 
members some times. Even if they did in every case, the question would 
still remain whether those gains are offset by greater costs elsewhere. 
There is no reason to think that any overall improvement in wages or 
income could flow from the adoption of the Employee Free Choice Act, 
whose flawed institutional design mean that it cannot live up to the 
praise heaped upon it by its supporters.
            Sincerely yours,
                                        Richard A. Epstein.

    [Whereupon, at 12:50 p.m., the hearing was adjourned.]

                                   

      
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