Employee Free Choice Act: Labor vs. Business

As unionizing law, would EFCA help workers or hurt U.S. competitiveness? Home Depot co-founder Bernie Marcus and lawmaker George Miller offer different views

The Employee Free Choice Act (EFCA) (BusinessWeek.com, 8/28/08) would make it easier for workers to unionize in the U.S., and is causing a stir as the Presidential election approaches. The bill would allow workers to skip the lengthy process of a National Labor Relations Board election and unionize if a simple majority sign authorization cards, a process called "card check." If Democrats win more congressional seats and the White House, most observers say, the legislation is likely to pass.

That's why, as Nov. 4 approaches, business groups such as the U.S. Chamber of Commerce are battling labor groups and their supporters through lobbying and public-relations campaigns. Labor supporters argue the bill would help unions reverse their decades-long decline. Business leaders say such a dramatic change would harm companies and kill jobs. Here, Home Depot (HD) co-founder Bernie Marcus and U.S. Representative George Miller (D-Calif.), a co-author of the proposed law and chairman of the House Education & Labor Committee, present their differing views on the legislation.

By Bernard Marcus

Most CEOs in America are unaware of a planned hostile takeover of their human resources. And yet it's right under their noses. The takeover idea is simple—labor unions and their supporters in Congress want to change federal labor laws to virtually guarantee that every company, large or small, becomes unionized.

The act, deceptively named the Employee Free Choice Act, eviscerates traditional democratic principles by effectively taking away an employee's right to vote by secret ballot in union elections. Worse, EFCA would give unions the option to have federal arbitrators write the terms of a binding contract, setting wages, benefits, hours, work rules, and all other terms of employment if negotiations between the employer and union fail. And this contract has the force of law for two years.

I'm not opposed to unions, but I am opposed to this act because it will make American companies uncompetitive in the global marketplace and ultimately send jobs offshore. I'm also opposed to the dishonesty of some EFCA supporters who claim that worker coercion by employers in union elections is "the norm." No data published by the National Labor Relations Board support this wild accusation. In fact, NLRB data prove the opposite. It is troubling that some in the media and perhaps in Congress continue to rely upon discredited studies. Their readers and constituents deserve better.

CEOs in the Dark

Also troubling is the lack of awareness by many in business about the act. You would think that any legislation giving a federal arbitrator who has never managed a business the power to say how a business will be run would get the attention of chief executives. Speaking to approximately 100 executives this summer, I raised the issue of this hostile takeover by organized labor that would place millions of currently nonunion employees under restrictive union work rules. When I asked CEOs if they had heard of this attack on principles that form the bedrock of our democracy—secret ballots in elections—only 7 out of 100 raised their hands. And yet, this plan has the potential to redraw the political and economic landscape of America.

CEOs, and for that matter all Americans, need to know how this legislation would jeopardize our system of free enterprise. In most union organization drives under current law, union organizers convince 60%-70% of the targeted employees to sign union authorization cards. These cards are used to trigger an election. Even unions acknowledge that many of these signatures are given to "get the union off my back." So the organizers give themselves a cushion of votes before the government-supervised election. This cushion often disappears when employees vote by secret ballot. In fact, unions lost more than 4,000 government-supervised elections over the last several years.

The proposed changes to federal labor law would eliminate the secret-ballot election if the union gets 50% plus 1 of the employees to sign authorization cards. The cards become the votes. Game, set, match. What about those 4,000 lost elections? All of those employees who voted "No" would have become union members under the proposed law. This would generate billions of new dues dollars that will translate into unprecedented political power for labor unions.

Obama Supports the Plan

Business leaders can't afford to sit on the sidelines on this issue. If the Democrats have a good November, the act could become law early next year. Senator Barack Obama (D-Ill.), an original co-sponsor of the Act, has said, "We will pass the Employee Free Choice Act. It's not a matter of if—it's a matter of when. We may have to wait for the next President to sign it, but we will get this thing done." Those who support the act claim that it will "protect workers." This doesn't pass the smell test. Former Senator George McGovern, a champion of organized labor, has seen through the false rhetoric of the bill's sponsors, commenting that the act "runs counter to ideals that were once at the core of the labor movement. Instead of providing a voice for the unheard, [it] risks silencing those who would speak."

Considering the enormous financial threat the Employee Free Choice Act poses for many companies, directors as well as top management have a responsibility to address this issue proactively—before disaster strikes. EFCA is bad for employees and for business. More important, it's bad for America because it destroys one of the hallmarks of our democracy—secret ballots in elections. Voting by secret ballot is ingrained in the fabric of America and has made our nation a beacon of democracy. I cannot understand why so many in Congress would so easily rip secret ballots from our national fabric.

Marcus is co-founder of Home Depot, the world's largest home improvement retailer, launched in 1979. Marcus is currently chairman of the Marcus Foundation, a charity focusing on children's issues, medical research, and free enterprise.

By George Miller

When it comes to our economic priorities, there is nothing more important than ensuring a strong middle class. The middle class is the backbone of our economy and our democracy.

Unfortunately, in recent years, the middle-class life has become increasingly difficult to maintain. Workers' wages have stagnated as the cost of everything from milk to college tuition has skyrocketed. The staples of a middle-class life—a fair wage, access to health care, a sound retirement—are getting squeezed. The percentage of national income going to workers' wages is at its lowest level since 1929, while the percentage of our nation's wealth going to corporate profits is at its highest since the 1940s.

There is one way to turn these trends around: By giving workers the right to freely choose to join or form a union.

Union Organizers Threatened

Consider the numbers. Union workers' wages are 30% higher than nonunion workers'. Union workers are 62% more likely to have employer-provided health care and four times as likely to have a pension. These workers achieve better living standards by exercising their freedom of association and joining together to bargain for something better. Yet, while 57 million Americans say they would join a union tomorrow if they could, only 15.7 million have. The reason is simple: The current system for organizing a union is broken, undemocratic, and rife with intimidation.

A quarter of all employers in organizing drives illegally fire at least one worker for union activity. More than half of employers threaten to close the business if the union wins the election. And 92% of employers force employees to attend mandatory anti-union meetings during campaigns.

The Employee Free Choice Act would fix this broken system so workers can freely exercise their right to organize. It would do three things. First, it would allow workers to use a majority sign-up process to form their union, without their employer vetoing that choice. Second, it would increase penalties on employers who violate workers' rights. Third, it would ensure that, once workers form a union, collective bargaining leads to a first contract—not delay and more union busting.

Ballot Issue

Unfortunately, opponents of the Employee Free Choice Act are spreading vicious lies about the bill. These myths must be corrected. Their biggest whopper? That the bill would "eliminate the secret ballot."

Presumably, they are referring to the secret ballot at the end of the National Labor Relations Board election process. In that process, management has total access to workers and can browbeat them anytime, anywhere in the workplace. But pro-union workers can only distribute literature on break time in break rooms. And union organizers are almost invariably barred from ever setting foot on the employer's property.

If these advantages aren't enough, an employer can fire a pro-union worker to make its point, or threaten to close the business down if workers vote the wrong way, without facing more than a slap on the wrist. At the end of this process, the NLRB holds an election on the employer's premises.

This is not any democracy that most Americans would recognize as such. Yet this is the system that opponents of the Employee Free Choice Act want to preserve. Another process exists. If an employer allows it, as some major companies already do, workers can avoid the conflict-ridden NLRB process and form a union by signing cards, the same way you might form a civic association. When a majority has signed up, the employer recognizes the union.

Unfortunately, current law allows employers to veto the use of this freer majority sign-up process—and they do. The Employee Free Choice Act would simply take this veto power away from the employer and restore the democratic principle of free choice to the workplace.

Workers' Choice

The bill still provides for an NLRB election process, triggered when 30% of the workers petition for one—the same as current law. But a majority of workers could opt for the less divisive majority sign-up process. And instead of getting harassed, demoted, or fired, they would get a union. The bill would rightly leave that choice up to workers, not the employer.

Another myth is that the Employee Free Choice Act would encourage intimidation. Documented intimidation by unions during organizing campaigns is scant. Unlike employers, a union organizer can't fire you, cut your pay, or deny you a promotion. So it's not surprising that, in a study of a more than 60-year period, an employer group could only list 113 cases that they claim involved union deception or coercion in obtaining authorization-card signatures. Contrast that to a recent analysis that found that, if you're an employee actively trying to organize your co-workers, you have a 1-in-5 chance of getting fired by your employer for a legal activity.

The freedom of association is a fundamental human right and a key ingredient to a strong middle class. Current law does not adequately protect workers' freedom of association. The Employee Free Choice Act will change that, and give workers a chance to balance the scales a little bit their way, for a change.

Miller is chairman of the House Education & Labor Committee and the House Democratic Policy Committee. He is a leading advocate in Congress on education, labor, the economy, and the environment. He has represented the Seventh District of California in the East Bay of San Francisco since 1975.

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