[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
Available via the World Wide Web: http://www.gpoaccess.gov/congress/
senate
----------
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Washington, DC 20402-0001
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
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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.
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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\
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\2\ Universal Declaration of Human Rights, at http://www.udhr.org/
UDHR/default.htm.
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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\
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\3\ See Robert H. Zieger, American Workers, American Unions (2d
ed., Johns Hopkins Press 1994).
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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\
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\4\ U.S. Census Bureau 2007 Current Population Survey, Aug. 2008.
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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\
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\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.
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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.
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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/.
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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\
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\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\
---------------------------------------------------------------------------
\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.
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\9\ Richard B. Freeman & James L. Medoff, What Do Unions Do? (Basic
Books 1984).
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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.
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\10\ Matt Vidal & David Kusnet, Organizing Prosperity: Union
Effects on Job Quality, Community Betterment, and Industry Standards,
23 (EPI Books 2009).
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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.
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\11\ Id. at 2.
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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.
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\12\ See, MGM Grand, 329 NLRB 464 (1999).
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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.]