New Bargaining Power for Organized Labor?

Two items caught my eye of late, mostly because they seem to intimate new bargaining power for organized labor. Yes, I know, it hardly seems plausible when automotive workers are currently being challenged to accept lower benefits in order to keep their employers afloat.

In "Organized labor 'thrilled' with Obama's pick for labor secretary" (December 18, 2008), CNN.com reports that Representative Hilda Solis, if confirmed, would be considered a "voice for people who work." Hailing from California, this Democrat lawmaker is the "daughter of two immigrant workers and union members."

In "The Employee No Choice Act" (CEO Magazine, November/December 2008), law professor Richard Epstein writes that a new political regime in the United States will force a "major sea change in labor relations law." This notable University of Chicago free marketeer opines that interest arbitration, a key component of this proposed legislation, empowers an arbitration panel to "dictate a 'first contract' lasting two years that will govern all aspects of the employment relationship." Wages, work conditions, job security and outsourcing are a few of the items that can be decided by those outside of any particular corporation.

Epstein offers that unionization could become a foregone conclusion, with employers having little or no sway over the final outcome, once an initiative to organize commences. In stark contrast, he writes that arbitrators "are empowered to flesh out all the book-length terms of that first key contract, terms never put to a vote." He adds that workers who sign cards to authorize the creation of a union will not be permitted to withdraw them if they change their view later on. Epstein further adds that this legislation, if approved, would be "tantamount to giving a new union a powerful claim on firm assets."

If Epstein is right, how will shareholders, plan participants and union members co-exist peacefully, if at all? Many questions arise, a few of which are shown below:

• Will shareholders' economic interests in an ongoing concern become inferior to those of union members and, if so, how will that reveal itself in share price?
• How will union members deal with conflicts that arise from wearing multiple hats as might be the case if a Taft-Hartley plan owns stock issued by contributing employers?
• In the event of a bankruptcy filing, who gets what and when? Will union members rank pari passu or superior to everyone else?
• How will a multinational firm fare if its U.S. operations fall under the auspices of the Employer Free Choice Act but offshore units are unaffected by similar rules?

This next year will be an interesting one for sure but not likely to be one in which everyone sits on the same side of the table.

Note: For an opposing perspective about the Employee Free Choice Act, click to visit a site sponsored by AFL-CIO.

Comments

[Steven Hansen:]

whenever the playing field is not level, untenable outcomes result. it believe organized labor's target will be the service industry whose jobs cannot be exported. hello walmart. hello mcdonalds.

2008 Dec 22 05:12 AM

[flipdog1:]

NOTE!
A strong Union is associated with every failed or failing institution in the USA.
I give you :Education,Autos,Truck... in Particular),Health Care,Steel,Shipbuildin... a start.

2008 Dec 22 08:32 AM

[allan skye:]

Increased unionisation in the service industries etc is a perfect rerun of the 30s in the aftermath of the 29crash the new deal 25% unemployed the other 75% employed by the state or heavily unionised.Fine for the 75%of workers not so good for the 25% of workers unemployed and the other poor folk.This illustrates the main problem with democracy which is that 51% can enslave ,imprison,abuse or kill the other 49% perfectly legally and respectably.Democracy must be tempered with a constitution or strong second unelected chamber or suchlike otherwise(religion perhaps) it can become a repressive institution especially in times like these when the state exagerated boom turns to bust

2008 Dec 22 01:15 PM