Dolan Media Newswires
Long Island, N.Y. — Big labor is putting on the big push for the Employee Free Choice Act.
President Barack Obama is on board, as are most, but not all, Democrats in Congress.Â Even a few economists have signed on.
The Employee Free Choice Act – also known as the card check bill – is the holy grail of the labor movement. It would achieve three things labor unions favor.
First, it would jack up damages on employers for labor law violations, like wrongly firing union organizers. This also would make employers hesitant to fire union activists for legitimate economic or performance issues.
Second, the bill would take away workers’ rights to a secret ballot vote by allowing unionization if a majority of employees merely check and sign a card saying they want to organize.
Third, after a workplace is unionized, if an agreement is not reached within a certain period of time, businesses would face binding arbitration, with federal government appointees imposing contract terms for a period of two years.
The act is a radical effort to redo how business and our economy work.
Politicians who get substantial support from labor unions or do not understand basic economics might be forgiven for supporting the bill. But economists should know better.
There are a few basic truths about labor unions that economics teaches us. Labor unions are, in effect, legal cartels. They work to push wages and other forms of compensation above competitive levels by limiting the supply of workers and by utilizing the support of various laws and regulations.
By limiting the supply and raising the price of labor in the unionized field, unions raise costs for business owners and consumers, limit the number of jobs available to the unemployed and drive wages down for other workers who move into nonunion industries.
Perhaps Obama should read what his top economic adviser wrote. In an essay on unemployment in The Concise Encyclopedia of Economics, Lawrence Summers, director of the National Economic Council, noted: “Another cause of long-term unemployment is unionization. High union wages that exceed the competitive market rate are likely to cause job losses in the unionized sector of the economy. Also, those who lose high-wage union jobs are often reluctant to accept alternative low-wage employment.”
Plenty of real-world examples exist of labor unions helping to drive companies and entire industries out of business due to higher costs and lower productivity.
For the well being of workers, businesses and our economy, do we really want to make it far easier for labor unions to muscle their ways into more businesses and industries? The answer is no.
Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.