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Monday, October 10, 2011

Hilda Solis, Secretary of Unions

What's she have in common with Lenin?

Lenin argued that communism is so obviously virtuous that any worker who resists it must be a victim of “false consciousness.” He cannot think straight because his oppressors have muddled his brain.

Hilda Solis, Obama’s secretary of unions – oops, labor – thinks a bit like Lenin. She thinks labor unions are so obviously virtuous that any worker who votes against unionization does so only because evil labor relations consultants have conspired with the worker’s malevolent employer to muddle the worker’s brain.

Public comments on Solis’s proposed rule to impede labor relations consultants who advise employers on how legally to avoid unionization ended on September 21. Despite an overwhelming preponderance of comments against the proposed rule, Solis seems intent on proceeding.

The 1959 Landrum-Griffin Act was enacted to try to clean up union corruption like that portrayed in the 1954 film On The Waterfront. The principal malefactor in the film was union boss and thug Johnny Friendly who ran his union for his own benefit at the expense of rank-and-file members. The Act specifies a bill of rights for rank-and-file union members, and it imposes reporting requirements on both unions and employers.

Unions must report how they use the union dues they extract from workers and fees taken from nonmember employees. Elaine Chao,  George W. Bush’s secretary of labor, forced unions to give details of their expenditures. Secretary Solis rescinded those requirements and now permits unions to lump their expenditures into broad categories designed to keep the rank-and-file, well, muddled.

Reporting Requirements

Under Landrum-Griffin employers must report their expenditures on labor relations consultants and others who “persuade employees to exercise or not to exercise” their right to unionize. The Act specifically exempts those (like attorneys and public relations firms) who give “advice” to employers on how to handle labor relations.

Until the Obama administration took power, persuaders were understood to be people hired by employers to have face-to-face encounters with workers to convince them to vote against unionization.

Secretary Solis wants to shrink the definition of “advisor.” She proposes that only those who give  “an oral or written recommendation regarding a decision or course of action” be considered advisors. The  Department of Labor document that outlines the rule change explains:

The current “advice” standard … treats as advice not only the situation in which a lawyer or consultant reviews drafts of persuasive material at the employer’s request to determine whether the statements in the material are permissible under the National Labor Relations Act, but also covers a lawyer or consultant’s preparation of persuasive material to be disseminated or distributed to employees. . . . [I]n the Department’s view, the latter example appears to be quintessential persuader activity – one that has an object to persuade employees. (27)

So a lawyer or a consultant who helps an employer to compose a pamphlet that argues against unionization is a persuader who must report detailed financial information to the Department of Unions. Any persuader who fails to file accurate information would be guilty of a crime. Solis has boasted that she is looking forward to making the first persuader do a “perp walk.”

Crushing Costs

I think Solis has at least two goals in mind. I suspect she hopes the imposition of financial costs and criminal penalties on persuaders will shrink the supply of those who are willing to help employers resist unionization. It is likely she also hopes to provide unions with a hit list of those who continue to do so. Think of it as Johnny Friendly’s revenge.

There are many good reasons why workers should say no to unionization. Here are two: Because they are better able to adjust to constantly changing market conditions, union-free firms provide workers more job security than union-impaired firms do. And sclerotic union-impaired firms inevitably decline and shed workers.

When union dues and lost wages during strikes are taken into account, union-impaired firms do not pay workers any more (and they frequently pay less) than union-free firms do.

Employers should be free to seek whatever help is necessary in their attempts to make a legitimate case against unionization. Far from being captured in false consciousness, employees are smart enough to evaluate the merits of the arguments presented by both sides.

  • 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.