Say No to EFCA in 2010

by Ivan Osorio on December 29, 2009

in Economy, Features, Labor, Regulation, Zeitgeist

The first calendar year of the Obama administration draws to a close with organized labor not achieving its top legislative priority: the horribly misnamed Employee Free Choice Act (EFCA). Given the amount of palm-greasing that was required to get reluctant moderate Democratic senators to vote to end debate on Obamacare, it’s unlikely that those same moderate Democrats — especially Arkansas’ Blanche Lincoln — would be eager to expose themselves even more to the criticism that they are shifting to their party’s left.

That doesn’t mean that union-supported Democrats are going to stop trying. We should expect to see “compromise” proposals that replace EFCA’s most controversial provision, the “card check” provision that would effectively do away with secret balloting in union representation elections, with some form of “expedited” election process, or possibly take out card check and leave the rest of the bill intact.

Any such “compromise” would still be economically costly. No EFCA supporters have even entertained the possibility of shedding the bill’s binding arbitration provision, which would impose contracts on newly unionized companies. It would do so by enjoining a federally appointed arbitrator to impose a contract if the company’s management and the union have been unable to reach an agreement after 120 days. This would encourage the union to press for maximal demands, in the knowledge that they are very likely to get nothing worse than management’s final offer.

Worse, binding arbitration could impose huge liabilities on a newly unionized companies without the management having a say. One particularly dangerous liability would be the obligation to pay into dangerously underfunded union pension funds. EFCA would allow unions to keep these funds going — for a time — by corralling in new workers into them. Like all such Ponzi schemes, this is bound to crash some day. Keeping it going longer and with more workers would only make the future losses worse — and endanger more workers’ retirements.

This is the point EFCA opponents need to drive home in 2010.

For more on EFCA, see here.

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