Tsukasa Buddha
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Ahem... This is a completely new thread, never done before, nope, especially not by me...
This Act has been under a smear campaign as of late, so I want to give the evidential, reality based side.
The first issue is that of the card check system. This can be used to replace the secret ballot. Now, many are saying that this will lead to union rigging, and that it is undemocratic. However, evidence says otherwise:
Okay, so now we have a "he said, she said" type of situation. Let's get some real world data in here.
Now, many make a facade of cynicism by saying that Democrats are doing this because they've been bought by unions. However:
Now, we can all recognize the poor quality of the middle class. The median income since 2000 has actually fallen by $2,000. Health care, pensions, and many other benefits are hard to come by. Income inequality has gone through the roof, while the working class has had no gains from all the economic growth. So how will unions help?
Now, that is all well and good. But what about the negative effects? After all, we all know unions make companies go out of business, increase unemployment, protect lazy workers, etc. However, these claims are based on certain theoretical models. What does the real world have to say?
Oh, doubt you this source?
Now, the media has recently been reporting on a study released that said that the EFCA would create unemployment. However:
Now, you may ask why I hate rational economic thought. Well, I don't. I believe that it is in accordance with skeptical thought that we rely on real world data as opposed to randomly picking our favorite models.
And I'll be damned if I give a summary. If you want to disagree, by God you will have to read this entire thing!
This Act has been under a smear campaign as of late, so I want to give the evidential, reality based side.
The first issue is that of the card check system. This can be used to replace the secret ballot. Now, many are saying that this will lead to union rigging, and that it is undemocratic. However, evidence says otherwise:
Linky.Union officials say they do not dislike the secret ballot, but rather the lengthy, expensive, adversarial campaign before the vote in which companies often fire union supporters and use videos, large meetings and one-on-one sessions to pressure employees to vote against unionizing.
“Their focus is maintaining their right to wage an aggressive campaign against the union,” said Mr. Samuel of the A.F.L.-C.I.O. “That’s what we’re trying to protect workers from.”
Okay, so now we have a "he said, she said" type of situation. Let's get some real world data in here.
Linky.A September 2000 study by Kate Bronfenbrenner, the director of labor education research at Cornell University, examined more than 400 NLRB certification election campaigns in manufacturing plants between January 1, 1998, and December 31, 1999, and found that 25 percent of employers fired at least one worker for union activity and that 51 percent of employers told employees that their plant might close if workers unionized. In a December 2005 study of organizing campaigns in Chicago, Chirag Mehta and Nik Theodore of the Center for Urban Economic Development at the University of Illinois at Chicago wrote: "Aided by a weak labor law system that fails to protect workers' rights under the law, employers manipulate the current process of establishing union representation in a manner that undemocratically gives them the power to significantly influence the outcome of union representation elections. ... The findings of this report suggest that unions were unable to maintain worker support throughout the course of representation campaigns because employer interference eroded that support." Also, a January 2007 report by the Center for Economic and Policy Research explained how the current election process allows employers to exert pressure on workers:The National Labor Relations Act (NLRA) makes it illegal for employers to fire workers involved in union-organizing campaigns. The penalties associated with "discriminatory discharges" under the NLRA, however, are small: back pay for illegally fired workers minus [emphasis in the original] any earnings that workers had after they were fired. Given these small penalties for illegal firings, the NLRA, in practice, has given employers a powerful anti-union strategy: fire one or more prominent pro-union employees --typically workers involved in organizing the union -- with the hope of disrupting the internal workings of the union's campaign, while intimidating the rest of the potential bargaining unit in advance of the National Labor Relations Board (NLRB)-supervised representation election.Moreover, in claiming that "usiness groups" say that the EFCA would result in "union intimidation," while claiming only that "unions contend that the current system leads to unfair pressure from employers before elections," the Post ignored the fact that the NLRB reported that it issued far more complaints of unfair labor practices against employers than against unions in recent years. In its 2007 annual report, the NLRB reported that it received "22,331 charges alleging that employers or labor organizations committed unfair labor practices prohibited by the statute [National Labor Relations Act], which adversely affected employees." According to NLRB protocol, "the great majority of the newly filed cases are resolved in NLRB's national network of field offices by dismissals, withdrawals, agreements, and settlements." Those cases that could not be resolved in this manner resulted in the NLRB issuing 1,099 formal complaints, "88.4 percent were against employers and 10.6 percent against unions." In 2006, "88.1 percent were against employers and 10.7 percent against unions."
Linky.Does this mean that Americans no longer want to join unions? Not according to the most recent polls. A Peter Hart poll conducted in December 2006 reports that 58% of non-managerial working Americans indicated they would join a union if they could, a record number (Peter D. Hart Research Associates 2007).1The yawning gap between the robust demand to join unions and the anemic membership numbers reflects the fact that, for many Americans, joining a union has become a risk rather than a right. In 2005, over 31,000 people—one worker every 17 minutes—were disciplined or even fired for union activity, according to the National Labor Relations Board (NLRB) annual report, resulting in a big chill on labor's numbers and a "democracy deficit" for the entire society. 2
Linky.The problem is that the election process overseen by the National Labor Relations Board has become drawn out and acrimonious, with management campaigning fiercely to deter unionization, sometimes to the extent of violating labor laws. Union sympathizers are routinely threatened or even fired, and they have little effective recourse under the law. Even when workers overcome this pressure and vote for a union, they are unable to obtain contracts one-third of the time due to management resistance.
To remedy this situation, the Congress is considering the Employee Free Choice Act. This act would accomplish three things: It would give workers the choice of using majority sign-up—a simple, established procedure in which workers sign cards to indicate their support for a union – or staging an NLRB election; it triples damages for employers who fire union supporters or break other labor laws; and it creates a process to ensure that newly unionized employees have a fair shot at obtaining a first contract by calling for arbitration after 120 days of unsuccessful bargaining.
Linky.Getting back to card check: there's one thing Mickey Kaus and I both agree on, and it's this: as he says, "This [i.e., card check] is a much more significant issue than the manufactured debate over a gas tax holiday." Indeed, card check would modify labor law in this country in a significant way: it would require an employer to recognize a union if a majority of employees at the workplace sign cards saying they want a union. Under the current process, under which union elections are overseen by the NLRB, the deck is heavily stacked in favor of management.
Why? For one thing, management has a virtually unlimited right to subject employees to anti-union propaganda. And though it's illegal to fire workers for trying to organize a union, in practice it happens all the time, because employers are rarely held legally accountable. Even when they are, penalties are weak, because literally all the employer has to do is pay back the employee's lost wages, minus whatever she's earned in the interim. From a cost/benefit standpoint, firing an employee who's trying to start a union makes a lot of sense, from management's point of view.
Card check would be an entirely salutary thing for this country, and I hope it passes. It would make it significantly easier to form a union, and that would be a very good thing indeed. Labor law in this country is a disgrace to the human race. Indeed, I think we'd be better off if we just tore up Wagner, Taft-Hartley, and the rest and start all over again.
Linky.The paper finds that pro-union workers were fired in 26 percent of union election campaigns over the period 2001-2007 (most recent available data). The 26 percent rate is up from about 16 percent in the last half of the 1990s. The share of elections in 2001-2007 with an illegal firing was almost as high as the historical peak for such activity --31 percent during the period 1981-1985.
Linky.The paper finds that firings of pro-union workers involved in union election campaigns are approaching the peak reached during the 1980s of 1 in 42. The current probability of a pro-union worker being fired – a 1 in 53 chance – is far greater than the rate at the end of the 1990s, when it was only 1 in 87. The paper also finds that the number of successful union elections have significantly declined, partly as a result of the increase in illegal firings. If only ten percent of pro-union workers are active campaign organizers, almost 1 in 5 union activists were fired illegally in 2005.
Now, many make a facade of cynicism by saying that Democrats are doing this because they've been bought by unions. However:
Linky.Politico's Glenn Thrush touts a Center for Responsive Politics report that "the main Democratic sponsors of the Employee Free Choice Act ... both collected over $1.7 million in union contributions over the last two decades."
But Thrush left this out, from the same CRP report:Business PACs not only gave nearly five times more in campaign contributions than labor PACs did in the last election cycle ($365.1 million versus $77.9 million, including contributions to leadership PACs) they are backed by the U.S. Chamber of Commerce, which spent $144.4 million on lobbying efforts in the 2007-2008 election cycle, or more than $400,000 for every day Congress was in session. By contrast, the entire labor sector spent less than $84 million on lobbying efforts during those two years.
Now, we can all recognize the poor quality of the middle class. The median income since 2000 has actually fallen by $2,000. Health care, pensions, and many other benefits are hard to come by. Income inequality has gone through the roof, while the working class has had no gains from all the economic growth. So how will unions help?
Linky.Why is this recession so deep, and what can be done to reverse it?
Hint: Go back about 50 years, when America's middle class was expanding and the economy was soaring. Paychecks were big enough to allow us to buy all the goods and services we produced. It was a virtuous circle. Good pay meant more purchases, and more purchases meant more jobs.
At the center of this virtuous circle were unions. In 1955, more than a third of working Americans belonged to one. Unions gave them the bargaining leverage they needed to get the paychecks that kept the economy going. So many Americans were unionized that wage agreements spilled over to nonunionized workplaces as well. Employers knew they had to match union wages to compete for workers and to recruit the best ones.
Fast forward to a new century. Now, fewer than 8% of private-sector workers are unionized. Corporate opponents argue that Americans no longer want unions. But public opinion surveys, such as a comprehensive poll that Peter D. Hart Research Associates conducted in 2006, suggest that a majority of workers would like to have a union to bargain for better wages, benefits and working conditions. So there must be some other reason for this dramatic decline. But put that question aside for a moment. One point is clear: Smaller numbers of unionized workers mean less bargaining power, and less bargaining power results in lower wages.
It's no wonder middle-class incomes were dropping even before the recession. As our economy grew between 2001 and the start of 2007, most Americans didn't share in the prosperity. By the time the recession began last year, according to an Economic Policy Institute study, the median income of households headed by those under age 65 was below what it was in 2000.Typical families kept buying only by going into debt. This was possible as long as the housing bubble expanded. Home-equity loans and refinancing made up for declining paychecks.
Linky.• Unions raise wages of unionized workers by roughly 20% and raise compensation, including both wages and benefits, by about 28%.
• Unions reduce wage inequality because they raise wages more for low- and middle-wage workers than for higher-wage workers, more for blue-collar than for white-collar workers, and more for workers who do not have a college degree.
• Strong unions set a pay standard that nonunion employers follow. For example, a high school graduate whose workplace is not unionized but whose industry is 25% unionized is paid 5% more than similar workers in less unionized industries.
• The impact of unions on total nonunion wages is almost as large as the impact on total union wages.
• The most sweeping advantage for unionized workers is in fringe benefits. Unionized workers are more likely than their nonunionized counterparts to receive paid leave, are approximately 18% to 28% more likely to have employer-provided health insurance, and are 23% to 54% more likely to be in employer-provided pension plans.
• Unionized workers receive more generous health benefits than nonunionized workers. They also pay 18% lower health care deductibles and a smaller share of the costs for family coverage. In retirement, unionized workers are 24% more likely to be covered by health insurance paid for by their employer.
• Unionized workers receive better pension plans. Not only are they more likely to have a guaranteed benefit in retirement, their employers contribute 28% more toward pensions.
• Unionized workers receive 26% more vacation time and 14% more total paid leave (vacations and holidays).
Unions play a pivotal role both in securing legislated labor protections and rights such as safety and health, overtime, and family/medical leave and in enforcing those rights on the job. Because unionized workers are more informed, they are more likely to benefit from social insurance programs such as unemployment insurance and workers compensation. Unions are thus an intermediary institution that provides a necessary complement to legislated benefits and protections.
Linky.Basically, if you think unions are a good thing, you should support card check. Unions do far more than just provide their employees with better pay, benefits, and working conditions. There's also strong evidence that they help reduce wage inequality in this country (again, see the chapter by Card et al. in this book for a literature review on the subject). Unions strongly support much legislation that helps workers and other non-rich folks, such as the minimum wage and universal health care.
Linky.Without unions, fewer workers get ahead. Union membership rewards workers for productivity gains they deserve, but do not always receive.
Today, CEOs rather than workers are rewarded for growth in the economy.
- Declining unionization rates mean that workers are less likely to receive good wages and be rewarded for their increases in productivity. In 1980, 25.7 percent of American workers were either members of a union or represented by a union at their workplace. By 2008, that portion declined to 13.7 percent.
- Throughout the 20th century, American workers have helped our economy grow by becoming more productive. Prior to the 1980s, productivity and workers' wages moved in tandem—as workers produced more per hour, they saw a commensurate increase in their earnings—but this link between economic growth and the well-being of the middle class has broken down.
- From 1980 to 2008, nationwide worker productivity grew by 75 percent, while workers' inflation-adjusted average wages increased by only 22.6 percent—meaning that workers were compensated for only a small share of their productivity gains. Higher union wages reward workers for a larger portion of their productivity gains.[9]
Greater unionization will lead to more money circulating in the economy, rather than stagnating in the bank accounts of rich CEOs.
- CEO pay has skyrocketed from 27 times more than the average American worker's wages in 1973 to 344 times higher today. Increased unionization will mean that workers rather than CEOs are rewarded for increases in labor productivity. By joining together in unions, workers can help counterbalance the power of CEOs.
When unions were stronger, the economy thrived.
- If union coverage rates were 5 percentage points higher—18.7 percent instead of 13.7 percent—and the union wage premium remained constant —unionized workers earn 11.3 percent ($2.26 dollars per hour) more than their non-union counterparts on average— new union workers nationally would earn an estimated $25.5 billion more in wages and salaries per year.
- Also, new research from the Economic Policy Institute estimates that if 5 million service workers joined unions, these workers would get a $7,000 annual raise on average and $34 billion in total new wages would flow into the economy. These working-class employees would be more likely than CEOs to spend their money during an economic downturn, who can afford to save during lean economic times.
- From 1947 to 1973, the period when unions were strongest and nearly one-third of workers were organized, nearly tripled in size, growing at an average of 3.8 percent annually. The strength of unions during this period meant workers were rewarded with increasing real wages, and greater American purchasing power produced more profit for U.S. companies, more investment, and increased labor productivity. In the years since 1973, U.S. economic output grew by an average of 2.9 percent annually, and since 2001, output has grown by an average of only 2.2 percent per year.
Now, that is all well and good. But what about the negative effects? After all, we all know unions make companies go out of business, increase unemployment, protect lazy workers, etc. However, these claims are based on certain theoretical models. What does the real world have to say?
Linky.Even if you didn't know what the economic literature says about this topic, if you stop to consider that the postwar era saw the record high union density in this country as well as unprecedented economic growth and productivity gains, it might give you pause. Indeed, Ezra made just this argument recently. But actually, there have been some good studies looking at the impact of unions on productivity. Overall, the empirical findings have been mixed. About as many studies show a positive impact on productivity as show a negative impact, and in any case the effects that are found tend to be small. Which is why, for example, economist Barry T. Hirsch, in a survey of the literature on this topic (it's in chapter 7 of this excellent book), recently wrote that "[t]he empirical evidence does not allow one to infer a precise estimate of the average union productivity effect, but my assessment of existing evidence is that the average union effect is very close to zero, and as likely to be somewhat negative as somewhat positive."
...
Btw, in case you were wondering, the literature shows that unions don't cause firms to go out of business, either (see, again, chapter 7 in the above-mentioned book for a discussion of the literature on this topic). But unions are associated with lower profits, and those findings are fairly robust (again, see chapter 7 for the evidence of this). I suspect that's what really worries the anti-union folks, except it sounds better to get all concern-trolly about productivity. That makes it sound like you care about the economy as a whole, and not just the interests of the owners of capital.
Oh, doubt you this source?
Linky.Once again, Megan McArdle is revealing herself to be an ill-informed, intellectually dishonest hack. She takes issue with my post stating that unions do not cause lower productivity. In my post, I cited the economics literature: five papers that were published in peer-reviewed academic journals, plus a well-regarded book published by an academic press.
In her post, McArdle cites -- well, nothing. Zilch. Zero. Nada. Not one book or study. Not even a blog post or Wikipedia entry. Her argument is pure speculation and stands on nothing except her own Deep Thoughts, which as usual are hardly up to the task at hand.
Honest to God, the idea that unions do not cause lower productivity is not something I made up. I wouldn't be stupid enough to make that particular argument if there wasn't substantial evidence to back up that claim. The finding that unions do not cause lower productivity is a widely accepted consensus among labor economists. In the recently revised standard academic book about the economics of unions, What Do Unions Do?: A Twenty-Year Perspective, economist Barry T. Hirsch, who if anything is conservative-leaning and not especially enamored of unions, surveys the literature on unions and productivity. Here are some of the things he says:Surveys of the unions-productivity literature for the most part have concluded that union effects are highly variable but on average close to zero (p. 205).
The empirical evidence does not allow one to infer a precise estimate of the average union productivity effect, but my assessment of the existing evidence is that the average union effect is very close to zero, and as likely to be somewhat negative as somewhat positive (p. 210).
There exists no strong evidence that unions have a direct effect on productivity growth (p. 210).
Despite the contentiousness surrounding the effects on union productivity, the most comprehensive studies find little effect that can be deemed causal (p. 210).That's what the leading expert in the field says. Another economist quoted in the book, Richard Freeman, says he thinks the evidence overall shows a slightly positive effect on productivity, but I believe Hirsch is probably closer to the mark.
Linky.In 2006, the Organization of Economic Cooperation and Development (OECD) did an exhaustive analysis of the research on this topic and concluded that there was no link between unionization rates and unemployment. It is easy to find examples of countries with very high unionization rates and low levels of unemployment. For example Norway and Denmark have unionization rates near 80 percent. Before the current crisis their unemployment rate was under 3.0 percent.
Of course we don't have to go overseas to prove the case that unions don't lead to unemployment. If we go back 40 years, the unionization rate was over 30 percent. Presently, it is just over 12 percent. In the 60s, the unemployment rate fell as low as 3.0 percent and was below 5.0 percent for most of the decade.
It is possible for economists to produce studies that tie unions to unemployment just as industry funded studies have tied the minimum wage to unemployment, even though a large body of academic research shows the opposite. For this reason, the OECD has performed an extremely valuable service with its careful analysis of the data. Until someone can show cause to question this OECD analysis, there is no reason to accept the employer claims that the Employee Free Choice Act will cost jobs.
Now, the media has recently been reporting on a study released that said that the EFCA would create unemployment. However:
On screen, Fox only identified her as an "economist." Other news reports have noted her connection to LECG, but only to say the firm is "non-partisan." But Layne-Farrar and LECG are far from disinterested parties in the battle over the Employee Free Choice Act.
As the press release that came out March 5 announcing Layne-Farrar's report admitted, "Funding for the Study was provided by the Alliance to Save Main Street Jobs." The release goes on to say the alliances chaired by HR Policy Association and includes the American Hotel and Lodging Association, the Associated Builders and Contractors, The International Council of Shopping Centers, the Real Estate Roundtable, the Retail Industry Leaders Association and the U.S. Chamber of Commerce.All are groups that have invested large amounts of money and effort towards defeating the Employee Free Choice Act; the U.S. Chamber of Commerce alone plans to spend $20-$30 million in opposition.
Linky.But back to the report's argument. Layne-Farrar builds her entire claim that the EFCA and resulting rise in union membership will lead to mass unemployment around one set of data -- namely, "a panel dataset of Canadian provinces over the twenty-two year period 1976-1997" (page 20).
Why Canada? Because, she says, their economy is roughly similar to the U.S. Canada is also unique in that labor laws differ between the country's 10 provinces -- some provinces use EFCA-like "card check" and others that don't, and one can compare the results.
But buried in page 20, Layne-Farrar herself admits that the data from which her entire argument is constructed isn't so great after all:While the Canadian dataset is quite rich, it does have its limitations. For example, out of ten provinces that experienced changes in labor institutions (i.e., card check vs. mandatory voting) between 1976 and 1997, only three had enough variation in the card check rules themselves over time to allow for the reasonable estimation of any direct effects.So instead of comparing 10 provinces, the study is really based on the experience of just three: Alberta, British Columbia and Newfoundland, from which Layne-Farrar proceeds to extrapolate how many jobs will supposedly be lost in the U.S. if EFCA is to pass.
But does even this small sampling of three Canadian provinces tell us much of anything about card check, unions and unemployment?
Not really, given all the other factors that contribute to losing jobs. For example, in Newfoundland, one of Canada's poorest provinces, unemployment has always been high -- but that has more to do with the boom and bust of the oil and fishing industries in the coastal province than anything to do with card check.
Blaming union laws for unemployment in Canada is especially futile given that they're constantly changing within the provinces themselves. Layne-Farrar (page 16) acknowledges that British Columbia changed its card check law "three times" in the period her research covers (1976-1997) -- a fact that would make it nearly impossible to find any long-term proof that card check alone caused jobs to be lost.
Linky.[SIZE=-1]OBJECTIVE STUDIES FROM REPUTABLE SOURCES HAVE COME TO THE OPPOSITE CONCLUSIONS
OECD Employment Outlook: Union Density Impact on Unemployment "Statistically Insignificant." The 2006 Employment Outlook from the Organization for Economic Cooperation and Development (OECD) states, "By contrast, the impact of EPL and union density on unemployment are statistically insignificant. These findings are not inconsistent with recent theoretical developments that predict that: i) lay-off regulations tend to affect more the distribution of unemployment rather than its level; and ii) the bargaining power of unions has more to do with the way rents are distributed rather than the level of labour demand."
Top Harvard Labor Market Economist Richard B. Freeman: Change In Union Density "Has No Noticeable Effect On Economic Performance." In his 1988 paper in the European Economic Review, Professor Freeman concludes, "With the sole exception of non-agricultural employment, where density is estimated to raise employment, none of the estimated parameters are significant, implying that variation in union density around its mean within a state has non noticeable effect on economic performance."
Lawrence Mishel: Layne-Farrar Study "Crackpot Economics." Lawrence Mishel, president of the Economic Policy Institute, said the study amounted to "crackpot economics." "I don't find it credible at all," Mishel said. He said that using the study's logic, the US would have "negative unemployment" as a result of the decrease in union membership over the past 30 years. He said many other countries, including England, Switzerland, Denmark, and Norway, have higher unionization and lower unemployment than the United States.
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Now, you may ask why I hate rational economic thought. Well, I don't. I believe that it is in accordance with skeptical thought that we rely on real world data as opposed to randomly picking our favorite models.
And I'll be damned if I give a summary. If you want to disagree, by God you will have to read this entire thing!
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