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.
