Obama Administration Changes 76-Year-Old Unionization Law: Impact on Transport ETFs

Includes: FAA, IYT
by: Tom Lydon

The Obama administration Monday changed a 76-year-old rule on union elections, which will directly impact the transportation industry and possibly its ETFs. Whether that’s a positive or negative impact, however, remains to be seen.

Sam Hananel for the Associated Press reports that the new rule would recognize a union if a simple majority of workers who cast ballots approve organizing.

The old rule required a majority of the entire work force to favor unionizing. That meant workers choosing not to vote at all were effectively counted as “no” votes. Ultimately, airlines that fought the change, saying it will lead to more labor disputes that could disrupt commerce and increase delays in an industry already reeling from recession, higher fuel costs and stepped-up security measures.

The Air Transport Association, which represents most major airlines, is expected to file a lawsuit challenging the new rule. Proponents of the change say the old rule ran contrary to democratic standards, where the outcome of an election is determined by the majority of those who vote.

So far, transportation ETFs are taking the news well. Both Claymore/NYSE Arca Airline (NYSEARCA:FAA) and iShares Dow Jones Transportation Average (NYSEARCA:IYT) rose more than 5% yesterday and are up slightly today. Long-term, the situation should be monitored for any adverse impact.

  • Claymore/NYSE Arca Airline (FAA)

  • iShares Dow Jones Transportation Average (IYT)

Disclosure: None

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