Sunday, February 8, 2015

Say What? Employee Empowerment Zones?

Illinois’ new Republican governor, Bruce Rauner, gave his first State of the State address this week, which included the following:

We must also empower voters to decide for themselves whether they want their communities to become employee empowerment zones. These zones will give employees the freedom to choose whether or not they want to join a union. Local communities – local voters – deserve this option so that they can compete with other states and other nations for new businesses and new investment. Employee empowerment zones will increase jobs for residents, increase economic activity for local businesses and generate more tax dollars for local governments.

Say what? Employee Empowerment Zones? For starters, call these what they are: local right-to-work zones. "Right-to-work" is a dubious term in its own right, but it's been widely-used for decades. Right-to-work is the belief that individuals should be able to work without having to join a labor union or pay union dues. The issue of right-to-work is an intense point of conflict between supporters and opponents of labor unions and collective bargaining. U.S. labor law allows private sector unions to negotiate contracts which contain union shop or agency shop clauses requiring all employees to pay union dues as a condition of continued employment. Right-to-work advocates label this compulsory unionism and argue that it violates individual freedoms by depriving workers of their right-to-work, that is, the right to freely choose whether or not to become a union member and pay union dues.

Unions argue that right-to-work is a misleading term used to weaken unions. Since labor law requires unions to represent all employees – members and nonmembers alike, unions argue that it is unfair to allow free-riders to benefit from union representation without sharing the costs by paying dues. Majority rule is also a basic feature of democratic institutions and any dues paying requirements are subject to majority approval.

While federal labor law does not forbid union shop and agency shop clauses, it allows individual states to pass laws prohibiting these clauses (section 14(b) of the Taft-Hartley Act). Such laws are called right-to-work laws and a state that has passed such a law is called a right-to-work state. Almost half of the states are now right-to-work states, primarily in the southern, Great Plains, and Rocky Mountains states (Michigan being a curious exception).

Also, while federal law does not prohibit union shop clauses, the U.S. Supreme Court has determined that paying dues is sufficient – no one can be forced to become a union member even in states without right-to-work laws. The Supreme Court has further ruled that nonmembers can choose to only pay agency fees: money that funds collective bargaining and other representational activities like processing grievances. Nonmembers have the right to object to being charged for activities such as lobbying or helping political candidates. Under federal law, unions have a legal “duty of fair representation” so they cannot discriminate against nonmembers when negotiating contracts and processing grievances, but nonmembers can be excluded from internal union matters such as contract ratification votes and union officer elections.

Right-to-work states often have lower wage levels, on average, than non-right-to-work states. Depending on the time period used as the comparison, they also have higher employment growth rates, or not. Whether these differences are caused by the right-to-work laws or instead reflect other factors such as negative attitudes towards unions is a controversial question with no well-accepted answer. So to claim definitively that right-to-work zones "will increase jobs for residents, increase economic activity for local businesses and generate more tax dollars for local governments" is a stretch.

And even if this claim is correct, what kind of jobs will be created? Stagnant middle class incomes, rising inequality, unpredictable work schedules, lack of basic benefits, and the like have been well-documented. How does further weakening labor market institutions that champion workers empower employees? Finally, it should be pointed out that union shop and agency shop clauses are not imposed by some centralized government or union authority. Rather, they are negotiated into collective bargaining agreements by those "on the ground" doing the bargaining. So wherever they exist, the employer and a majority of the employees agree to their inclusion in some earlier bargaining round. That's empowerment. And if  the current employees want to remove the clause from their contract, they can vote on it via a majority-wins NLRB withdrawal of union shop authority election. That's empowerment.

Three years ago I concluded a blog post by saying that "The bottom line is that debates over the cleverly-named "right-to-work" issue simply serve to further divide us in these already divisive times....Our energy and our resources would be better spent directly tackling the serious issues that we face as a society." Making up silly new names, like "employee empowerment zones," is not the progress that I had hoped to see.

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