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The Spectacle Blog

The Binding Arbitration Bludgeon

By Philip Klein on 7.17.09 @ 6:02PM

News broke earlier that Senate Democrats, seeking to save the Orwellian-named "Employee Free Choice Act," have agreed to ditch the provision that would enable unions to rapidly expand their membership ranks by denying workers a right to a secret ballot on unionization. However, the new bill would preserve the other major element of the bill, which would force businesses that failed to reach a contract agreement with unions to accept terms imposed by a mediator. The Associated Press reports that unions are on board with the move. Many conservatives had predicted that if EFCA was in serious danger, Democrats would drop the controversial "card check" provision and settle for binding arbitration. But while the arbitraton provision has received less attention, it is no less damaging to the economy or workplace freedom.

Last week, the Wall Street Journal published an op-ed by Shikha Dalmia describing the nightmare Michigan got itself into when it passed a compulsory arbitration measure that saddled its cities with unsustainable compensation obligations to police and firefighters. "We now know that compulsory arbitration has been a failure," Detroit mayor Coleman Young declared in 1969.

But as Dalmia writes, it would have even more damaging consequences for the private sector:

In a dynamic economy, a business's survival depends upon its ability to constantly cut costs and innovate. But a company forced into binding arbitration will be frozen for two years (the duration of the initial contract) from making any changes to any aspect of its business that is covered by the contract. Literally every issue -- from its 401(k) contributions to its reliance on outside labor -- could potentially become subject to review by a government panel that has neither the company-specific knowledge nor the incentive to turn a profit.

Businesses are not the only losers in compulsory arbitration. Currently, any contract negotiated by union officials has to be ratified through a vote of rank-and-file members. Under compulsory arbitration, workers do not get this vote. In other words, EFCA will take away the right of workers to vote to form a union, and then binding arbitration will take away their right to vote on a contract.

View all comments (9) | Leave a comment

Hilary Smith| 7.17.09 @ 10:19PM

The card check legislation would not have gotten rid of the secret ballot as the employer class has claimed repeatedly. Employees would still have had the choice to hold a secret ballot. But it would have been their choice, not the choice of the employer. Too bad our politicians and many of our citizens have been taken in by the dirty lies being spread by the US Chamber of Commerce. Have you ever seen the employer class bend over backwards to protect the interests of workers? They're rallying against the card check legislation not to protect employees but to defend their own greedy self interest.

There's a reason why the decline of the labor movement has coincided with the decline of the middle class. The two go hand in hand.

Unions result in higher wages and better benefits. Employers don't want you to see it that way because they don't want to pay you higher wages or give you better benefits. Simple.

Check out France. Their standard of living is very good: they have great health care and plenty of time off. And big surprise, the country's unions are more powerful than the unions anywhere else. When the government threatens to make life difficult for the working-class, they go on strike, shut the society down for a few days or weeks and the government backs off. France is arguably the only country on Earth where the People are actually in control.

And, I'd like to preempt the Fox News disciples who will predictably encourage me to move to France by reminding them that by so encouraging me, they're actually committing an ad hominem fallacy. I'd probably faint if I heard a coherent argument for the neo-liberal position.

Adam| 7.18.09 @ 1:25AM

Wow, Hilary Smith -- you've obviously never lived in France. Because to everyone else in the world who actually looks at things like statistics, we see interesting tidbits like incredibly high youth unemployment (currently above 25%!) inflexible industries which are getting pantsed by their competitors in Germany and Eastern Europe (to say nothing of India and China), a debt-laden government with a fast-growing entitlement problem (same as here, I might add) and a workforce that riots whenever someone suggests that they work more than 35 hours per week. You can draw a straight line between their immensely powerful unions, particularly pubic sector unions, and everything I just described. And if you think their economic outlook over the next 2 decades is any sort of good at all, you are deluding yourself.

But you're right -- their quality of life is so great, what with the baguettes and all that. We should definitely try to be more like them.

Hilary Smith| 7.18.09 @ 3:27PM

Adam, you point to unemployment as a problem in France but then you turn around and berate their unions for insisting on a 35 hour work week. It sounds like they should be working even fewer hours. In any case, unemployment isn't the worst thing in the world when citizens still have food, shelter, medicine and education. In the US unemployment is a one-way ticket to hunger and homelessness. How is that preferable?

Adam| 7.18.09 @ 8:59PM

Generational recessions notwithstanding, unemployment in the US is generally a one-way ticket to a new job. One of the benefits of a vibrant economy is that certain businesses do poorly and lay off employees, and other business do well and hire them up. Widespread unionization is like taking the economy and putting it in a pile of wet tar. Nothing changes, nothing grows, nothing shrinks. For now. But then when you look back 10 years down the line, you find that new businesses aren't being started in Paris and Lyon, they're being started in Hamburg, Spain, and Poland. Slowly, more and more people are starting to lean on your vaunted "social programs", which are being funded with lower and lower tax revenue and running larger and larger deficits. One day you go to pass a budget, and you realize the money isn't there. It's happening in California right now, and when the world's appetite for sovereign debt dries up, it will happen in France, Italy, and eventually the United States. Such is life.

It's perfectly fine to believe that governments have an obligation to tax the daylights out of its population to provide for its less privileged. It's even perfectly fine to believe that unions are desirable, because they frequently (though not always) benefit its members in the short term. But the world is different than it used to be -- just like Barnes and Noble can't only carry hardcovers at $35 because people will just go to Amazon.com and buy the softcover for $12, auto unions can't insist on working for $75/hr in total compensation (give or take a buck or two) when non-union workers in other states are willing to do the same job for a Japanese company for $40. There are very real, very serious, and very unavoidable consequences to unionization, particularly when coupled with statutes that force employers to enter into undesirable pay agreements against their will (the non-binding arbitration that this was supposed to be about). Ignore them at your own peril.

PS: I forgot to mention this yesterday, but derisively referring to your hypothetical critics as "Fox News Disciples" is in fact the definition of an ad hominem attack.

Tenn Slim| 7.19.09 @ 10:13AM

"Have you ever seen the employer class bend over backwards to protect the interests of workers? They're rallying against the card check legislation not to protect employees but to defend their own greedy self interest."
Yep. I used to work for these folks, and the Unions, Non Union folks and Free Enterprise folks ALL got treated decently.
McDonald aircraft, Lockheed Martin, General Dynamics, Northrup, Grumman, and a host of other DOD oriented companies. Most, if not all, treat their folks decently, pay well, and offer a host of Bennies, the IAW, IBEW, CIO , AFL and the other unions never dreamed up.
end

Iowegian| 7.24.09 @ 3:07PM

IF you have desirable skills THEN the Big employers treat you decently. Otherwise they will work you till you're too sick to keep up then toss you out ontot he garbage heap. I've seen it from both sides.
Unions sometimes get power hungry, but how can it be good for working class folk if there's nothing keeping those "cut costs and innovate" businesses from sending all our good jobs overseas ?
I agree-Strong unions=strong middle class. If the folks in China could they'd probably be unionizing right Now.