President-elect Obama’s choice for Secretary of Labor portends difficult times for Corporate America. His choice is Hilda Solis, a congressional representative from East L.A., who has consistently supported the interests of organized labor in the House of Representative. In fact, according to an analysis conducted by the AFL-CIO, Ms. Solis voted on behalf of the interests of organized labor 100% of the time.
As expected, she supports the misnamed Employee Free Choice Act, supports increasing the minimum wage, and is against privatizing jobs in the public sector. In addition, Ms. Solis is on the board of directors of American Rights at Work, a pro-union advocacy group.
During this recession, it is the right-to-work states that have done far better economically than states with large numbers of unionized workers. If organized labor succeeds in unionizing more and more workers, with the help of Ms. Solis, then one can expect the recession to grow deeper and last longer than would occur if union influence were to decrease.
In an editorial in today’s Wall Street Journal, Professor Richard Epstein, of the University of Chicago Law School, answers that question resoundingly in the affirmative.
He brilliantly makes the case that if the government makes the Employee Free Choice Act (EFCA) law, it will – in effect – give itself the right to deny free speech to employers. He has written that “there is simply no legitimate government interest in promoting unionization that justifies a clandestine organizing campaign which denies all speech rights to the unions’ adversaries.”
In addition, he writes that if a company does not like the terms presented by a union, the company normally has the right to walk away from the negotiations. Under the proposed EFCA, however, a union can “force itself” on the company. In such a situation, a union could conceivably demand that a company pay its workers more than the company can afford. It would wind up confiscating the company’s capital without compensating it for its removal. Professor Epstein writes that “by flatly denying the employer any option to walk away, mandatory arbitration under the EFCA runs smack into the taking clause [of the Constitution].”
If the Employee Free Choice Act becomes law, it could serve to end competitive capitalism as we have come to experience it. It could result in the demise of numerous companies. If the Detroit auto makers have been brought to their knees by the United Auto Workers operating under the rules of the 1935 National Labor Relations Act, just imagine what would happen if unions are granted the extraordinary powers under the EFCA to deny basic Constitutional rights to other companies?
It is generally understood that the extraordinary salaries and benefits afforded to UAW workers have been an instrumental force in causing the financial meltdown of the Big 3 auto companies.
A bailout of the auto companies, if successful in changing the economic landscape of those companies, must include a reasonable re-negotiation of the labor contracts for UAW workers.
If such a re-negotiation does not take place, the American auto industry will be as prominent as the American horse-and-buggy industry!
Americans will exclusively be driving Toyotas, Nissans, Hyundais, BMWs, Mercedes and other foreign brands made by non-union workers in right-to-work states, if the UAW refuses to let its workers have wages and benefits that are competitive with those that workers receive from foreign auto makers. If the UAW remains recalcitrant, Americans will not only be driving foreign cars, but U. S. soldiers will also be dependent on foreign based companies for their mobility in time of war. That, by itself, is a worrisome outcome.
The Detroit auto makers find themselves in economic trouble not only because they gauged the market for SUVs incorrectly, but also because they went along – too long! – with the demands made by the United Auto Workers.
Detroit auto workers are paid far more than auto workers for Toyota and Nissan. In addition, the corporate costs for the pensions and medical care for Detroit auto workers have put the Big Three farther down the road to insolvency.
Knowing the deleterious results of capitulating to union demands has not prevented other unions from making ruinous demands at a time when not only the auto industry, but also the entire country is precariously poised to face greater economic troubles than it is currently enduring.
In Chattanooga, Tennessee, for example, union leaders are demanding that hourly wages paid by Volkswagen be increased by 25%. Company officials say that the wage increases may result in a loss of jobs, the delay or cancellation of a new factory, and a diminution of tax revenues for the city and state.
The demand for increased wages has come from the Plumbers and Steamfitters leadership in Washington. D.C.
It is time for unions to contribute to the goals of a full economic recovery and not be a roadblock to national prosperity.