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Monday, August 14, 2017

Good Reasons Not to Unionize

Congratulations to the Nissan workers who were alert to these and other perils of unionism.

In a representation election held August 3-4, the workers at the Nissan plant in Canton, Mississippi voted 2,244 – 1,307 to remain union-free. The United Auto Workers (UAW) union immediately filed unfair labor practices charges against Nissan with the National Labor Relations Board (NLRB).  Specifically, the UAW accused Nissan of coercion and intimidation.

Unions Make Excuses

In 1983 union market share in the private-sector was 16.5%. It has fallen ever since. It was 6.4% in 2016. Union-free workers have consistently revealed their preferences to remain union-free. Unions cannot tolerate such rejection by workers. They assert that it cannot be true that informed workers would reject union.  They say that workers vote to be union-free only because they have been tricked by coercive employers to vote against unionization. Employers, it seems, create a false consciousness among poor, fragile, uninformed workers.  Thus, employer speech during certification election campaigns must be carefully regulated to create pristine conditions for the vote.

Employer Free Speech

Section 8(c) of the National Labor Relations Act (NLRA), as amended in 1947, supposedly protects employer free speech during election campaigns. It reads:

The expressing of any views, argument, or opinion, or the dissemination thereof … shall not constitute or be evidence of an unfair labor practice … if such expression contains no threat of reprisal or force or promise of benefit.

As is always the case when Congress uses ambiguous language in a statute, it is left to bureaucrats to make up their own interpretations. In a 1948 case (General Shoe Corp) the NLRB declared that, to avoid charges of making threats of reprisal, employers must see to it that election campaigns be conducted under “laboratory conditions.” What does that mean?

Well, as developed in subsequent cases, it means that employer speech (but not union speech) has to be cool, rational, and fact-based so that workers wouldn’t be frightened into voting the wrong way. This creates a sandbox within which bureaucrats are free to make it up as they play along.

If, for example, an employer said that a union victory would result in a plant shutdown she would be guilty of making a threat of reprisal. Unless, that is, with a tip of the hat to angels on a pin, such a shutdown would beyond the employer’s control.

Moreover, an employer who visits a worker’s home to discuss the election makes a threat of reprisal. A union representative who does the same is doing God’s work. These poor workers cannot distinguish between sense and nonsense from employers, but they sure can do so from union representatives. Or is it that the NLRB believes union representatives never espouse nonsense?

How about the “promise of benefit” clause in Section 8(c)? Well, no one should be surprised that to the NLRB that means that employers cannot promise any benefits to any worker (such as increased job security) for voting anti-union, but unions can hyperventilate about all the benefits they will provide workers if they vote pro-union.

Some Reasons to be Union-Free

Notwithstanding the the view of workers as befuddled by employer coercion and intimidation, there are excellent reasons for workers to choose to be union free.  Most workers know this; but employers do no harm when, during election campaigns, they remind workers of the following:

The NLRA is based on the assumption that workers need top-down protection. Union-free enterprises offer more job security than their union-impaired counterparts because the latter are too sclerotic to adapt quickly to frequently changing global market conditions. As a result, private-sector unions no longer have the ability to raise worker compensation above that received by union-free workers.

Union-impaired firms find it harder to attract investors than union-free firms do. Unless severely union-impaired firms – e g. General Motors — receive “investments” from taxpayers through politician-imposed bailouts, they shrink or perish. They do not grow.

Workers’ pay ultimately is determined by worker productivity. Since there is less investment in union-impaired firms, workers there enjoy less opportunity for productivity growth than their union-free counterparts. In severely union-impaired firms worker productivity not only fails to grow, it declines.

In union-impaired firms pay is based more on job classifications and seniority than productivity. Deployment and redeployment of workers within firms is another major determinant of worker productivity. Union-defined demarcations of work and who may do that work are anchors on productivity.

Union-free workers are free to excel, while union-impaired workers are chained to a contract. A union contract wage is a ceiling as well as a floor. Moreover, unions promote adversarial relationships between workers and employers, while union-free employers are free to enlist workers as partners in building durable and growing value.

Finally, when unions rule, individual workers have no voice. Only the unions are permitted to speak. Unwanted unions are third parties that come between employees and their employers. Unions in effect become owners of the labor of any workers who, without their consent, must accept union representation.

Congratulations to the Nissan workers who were alert to these and other perils of unionism.

In Conclusion

Sadly, all of the NLRA is based on the assumption that workers need top-down protection. Thus the UAW and the NLRB will soon parse every bit of Nissan’s management campaign speech to find examples of coercion and reprisals. They need an excuse for the election outcome that belies the myth that unions protect workers. They will not succeed. When it comes to evaluating the pros and cons of unionization, workers are more like golf balls than snowflakes. They are durable, resilient, and resistant to attempts by hackers to control what they do and where they go.

  • Charles Baird is a professor of economics emeritus at California State University at East Bay.

    He specializes in the law and economics of labor relations, a subject on which he has published several articles in refereed journals and numerous shorter pieces with FEE.