card check

Lincoln Remains Opposed to EFCA

by Ivan Osorio on May 11, 2009

in Economy, Labor

The possibility of parts of the so-called Employee Free Choice Act (EFCA), specifically EFCA’s binding arbitration provision, coming back into the political arena has focused public attention on how some centrist members of the Senate might vote on cloture if an EFCA-minus-card-check bill were to be introduced. EFCA’s card check provision, which would allow unions to circumvent secret ballots in organizing elections, was extremely controversial and proved unpopular.

Under EFCA’s binding arbitration provision, if a newly unionized company and the union cannot agree on a contract after 120 days, a federally appointed arbitrator can then step in and impose a contract. This provision is finally getting some public attention — including recently from George McGovern. While it would be ideal to see EFCA defeated in toto, the good news is that right now the centrist Senators who hold the balance of power on this issue are unlikely to support binding arbitration. The Hill‘s Michael O’Brien reports:

Sen. Blanche Lincoln (D-Ark.) indicated last week she does not favor the so-called “binding arbitration” part of the Employee Free Choice Act (EFCA) as currently written.

Lincoln joins two other centrist Democrats in opposition to the second key component of EFCA favored by organized labor, making it difficult for a final compromise of the bill including the provision to overcome a Senate filibuster. …

Sens. Arlen Specter (D-Pa.) and Ben Nelson (D-Neb.) have expressed their qualms about the arbitration section.

For more on EFCA, see here.

George McGovern on Binding Arbitration

by Ivan Osorio on May 7, 2009

in Economy, Employment, Labor

With Democrats just shy of the 60 votes they need to end a filibuster, the fate of the so-called Employee Free Choice Act remains in the balance in the Senate. While the current version of the bill seems unlikely to pass, EFCA supporters are likely to try alternative versions. One such option is EFCA without its controversial card check provision, which would allow unions to circumvent the secret ballot in organizing elections, and has been the bill’s most controversial provision to date.

However, EFCA-minus-card check would still be economically toxic. Specifically, its binding arbitration provision would put businesses at the mercy of the federal government. In today’s Wall Street Journal, former U.S. Senator and Democratic presidential candidate George McGovern, who recently has spoken out against EFCA’s card check provision, explains binding arbitration’s danger:

Currently, labor law maintains a careful balance between the rights of businesses, unions and individual employees. While bargaining power differs depending on individual circumstances, the rights of the parties are well balanced. When a union and a business enter negotiations, current law requires that both sides bargain “in good faith.”

In a contract negotiation, each party typically perceives the other as too demanding. But no one loses their right to contract willingly or suffers being forced to agree to anything. Employees can strike if they feel that they have been dealt with unfairly, but it is a costly option. Employers are free to reject labor demands they find to be too difficult to accept, but running a business without experienced employees is itself difficult. Both sides have an incentive to press their demands, but they also have compelling reasons not to press their demands too far. EFCA would disrupt that balance by enabling government-appointed lawyers to decide what they believe is fair or reasonable.

A federally appointed arbitrator cannot be expected to understand the nuances specific to each business dispute, the competitive market position of the business, or the plethora of other factors unique to each case. Yet fundamental decisions on wages and benefit costs, rules for promotions, or even rules for exiting an unprofitable line of business could fall to federal arbitrators under EFCA.

For more on EFCA, see here, here, and here.

Specter Switches, Says He’ll Still Oppose Card Check, Then What?

by Ivan Osorio on April 28, 2009

in Economy, Labor, Politics as Usual

There’s nothing worse for an economy than uncertainty. Today, Pennsylvania Senator Arlen Specter has thrown large swathes of America’s struggling economy into a guessing game, with his announcement that he plans to switch parties from Republican to Democrat.

While he has indicated that he would not switch his vote on cloture against the so-called Employee Free Choice Act (EFCA), he will likely be under pressure from his new fellow Democrats and organized labor to switch that vote, as The American Spectator‘s Phil Klein notes. However, Specter will also be under pressure from businesses in his state, and his stating now that he would maintain his opposition to EFCA could be intended to preempt pressure from his new pro-union allies.

Here’s hoping for the latter scenario. What Specter’s switch means for his other votes, however, is anyone’s guess.

For more on card check, see here.

“A good time to start liquidating”

by Ivan Osorio on April 14, 2009

in Economy, Labor

How damaging would the so-called Employee Free Choice Act be to businesses? Enough to force some healthy companies into bankruptcy. Specificaly, EFCA’s binding arbitration provision could lead to newly unionized companies being forced to assume unsupportable new pension liabilities. Thus explained Brett McMahon of the construction firm Miller & Long, speaking to bloggers at The Heritage Foundation today.

EFCA supporters have tried to sell the legislation’s binding arbitration provision as a guarantee of first contract. In fact, it’s a recipe for a government-imposed contract. Under this provision, the company and the newly certified union have 90 days to negotiate a contract. If they have not reached a contract after that time, they must negotiate for another 30 days, at the end of which period a federally appointed arbitrator may step in and impose a contract. This creates incentives for the union negotiators to stall, and thus get a lot of what they want through arbitration.

McMahon describes this 120-day period as “a good time to start liquidating,” since newly unionized companies would then be required to enter into union pension funds, most of which are supposed to back multi-employer defined-benefit plans. “The problem’s they have no money,” said McMahon. “They were losing money hand over fist for a long time,” for various reasons, some of them demographic.

Employers who wish to back out of such plans must pay a withdrawal fee, because, unlike single employer private pension funds, multi-employer funds are insured primarily by the participating employers, not the Pension Benefit Guaranty Corporation (PBGC). This is an especially bad deal for workers, who could face huge losses when their pension funds default. Unlike single employer plans, which the PBGC insures for up to $54,000 per worker per year, the PBGC can only pay out to a miserly $12,870 per year.

For the company, it means millions (in some cases billions) in new liabilities, which must be stated under FASB 157 mark-to-market valuation rules, which as my colleague John Berlau has noted, force companies to overstate liabilities by making them price assets at what are essentially liquidation prices. Thus, otherwise healthy companies can suddenly find themselves burdened with pension obligations they cannot support. To illustrate how bad these could get, McMahon cited the example of United Parcel Service, for which the least expensive option was to pay $6.1 billion to get out of the Teamsters’ Central States pension fund.

I asked McMahon to comment on the reason so many union pension are underfunded: shareholder activism. He cited the example of the California Public Employee Retirement System (CalPERS), which, as a result of eschewing investments in politically incorrect industries, such as tobacco, has suffered opportunity losses of 17 to 18 percent. (I also referred the group to a study by Diana Furchtgott-Roth of the Hudson Institute for background on this topic.)

McMahon rightly characterized this kind of activism as a dereliction of fiduciary duty by pension fund administrators. “Their duties are fiduciary. Their duties are to the people who put their money in their trust,” he said. “They don’t act properly” by making investment decisions based on political criteria, rather than on which investments can provide the best returns. Shareholder activists often seek to promote a broad leftist ideological agenda, often in concert with other left-liberal constituencies (as a Politico article cited at the briefing today illustrates).

For more on EFCA, see here.

Lincoln To Vote No on Card Check

by Ivan Osorio on April 6, 2009

in Economy, Labor

Arkansas Democratic Senator Blanche Lincoln announced today that she will oppose the so-called Employee Free Choice Act, also known as teh “card check” bill. With Pennsylvania Republican Arlen Specter announcing his opposition last week, pro-EFCA forces’ chances to muster 60 votes to break a Republican-led filibuster look increasingly slim — for this Congress.

We can now expect organized labor to sink millions (from member dues, of course) into Senate races in 2010.

For more on card check, see here.

Barack Obama v. Warren Buffett on the Economy

by Richard Morrison on March 18, 2009

in Video, Zeitgeist

[youtube:http://www.youtube.com/watch?v=kc21pz5lpzE 285 234]

With news coverage like this…

by Ivan Osorio on March 17, 2009

in Economy, Labor

…does organized labor need a PR operation? In today’s Politico, Jeanne Cummings repeats — without qualification — the half-truth that supporters of the so-called Employee Free Choice Act (EFCA) have been peddling recently: that EFCA would give workers the choice of whether to organize through a secret ballot election or through a card check procedure, in which employees sign union cards out in the open, usually at the urging of union organizers.

The legislation doesn’t prohibit the traditional process of elections and secret ballots. If a majority of workers want to proceed that way, they still could.

Cummings leaves out an important detail: if the union lets them.

EFCA imposes no time limit on the period during which union organizers may collect signatures on cards and no limit on how and where they may do so. Organizers can go back to try to get workers to sign again and again, and wherever they can — including at workers’ homes.

As a result, unions will have zero incentive to turn in cards until they get the requisite 50 percent-plus-one of employees to sign, which requires the National Labor Relations Board to certify the union as exclusive employee bargaining agent.

Therefore, while EFCA may not explicitly prohibit secret ballot organizing elections, it makes secret ballots a dead letter through the legal organizing regime it sets up. Under EFCA, the choice of whether to hold an election will rest with union organizers alone, who always prefer card check.

On the other hand, Cummings is correct to note that EFCA opponents, seeing the bil losing support, should not celebrate yet. She also presents a good summary description of the debate, and how it has shifted. This isn’t over by a long shot.

The Socialism that Dare not Speak its Name

by Ivan Osorio on March 13, 2009 · 2 comments

in Economy, Labor, Personal Liberty, Zeitgeist

“Socialism” is dead, according to Matthew Dallek, writing in the Politico. I put the term in quotes, because what Dallek defines as socialism is so very narrow, that most gradients of socialistic policies are bound to escape his definition.

Even amid the current economic emergency, there is no viable Socialist Party in the United States, nor is there a serious socialist movement, as there was when Socialist candidate Eugene V. Debs won nearly 1 million votes in both the 1912 and 1920 presidential elections and when Socialists won more than 1,000 state and local elected offices nationwide a century ago. Most socialists and communists were expelled from America’s labor unions during the early Cold War.

Moreover, millions of voters under 35 have no direct experience with socialism as adults. Thus, it’s hard for them to see how socialism poses any kind of a threat to democratic capitalism. In their adult lifetimes, the Berlin Wall was a historic site, and détente lacked all meaning in foreign affairs. But the pseudo-controversy about Obama’s allegedly socialistic tendencies is particularly surreal because even CPAC heroes William F. Buckley Jr. and Ronald Reagan muted, and mostly abandoned, the liberal-as-socialist trope in the early-to-mid-’60s.

Dallek seems fairly passionate over what is essentially a semantic point, one which he seems to argue is crucial for Republicans to understand if they are to regain political viability. Call me a stickler for words, but policies that would nationalize entire industries — from airport screening to health care — or socialize risk — from corporate bailouts to subsidized insurance — are socialistic by any sensible definition. You don’t need to embrace an ideology in toto to move in the direction of its vision of society.

Furthermore, you don’t need to define an ideology by its most vicious manifestation to recognize elements of it when they appear. There are other strands of socialism beside Soviet-style communism.

Ultimately, Dallek’s argument seems to rest on the notion that if you just don’t label somethign as “socialist,” then it isn’t.

Which would be great comfort to Teamsters President James Hoffa, who, in the Detroit News, offers an unusual definition of democracy.

Sen. Robert Wagner of New York sponsored the law in 1935 that bears his name. The Wagner Act recognized the right of workers to form unions. Wagner understood that the difference between despotism and democracy is not the secret ballot, but whether workers have the right to bargain collectively.

Not free elections, not a free press, not private property, but the ability to form and join unions. By that definition, PRI-era Mexico and Peron-era Argentina would qualify as exemplars of democracy. I’ll give Hoffa the benefit of the doubt as to whether he’s making a sloppy omission here, but taking his statement at face value, such a definition of democracy rests on redistribution as a core value and is therefore socialistic, at least in part.

In his article, Hoffa argues in favor of the Employee Free Choice Act (EFCA), which, contrary to his protestations, would make secret ballot elections in union organizing a dead letter. Also part of EFCA is a provision that carries a socialistic trait: loss of control over one’s private property.

As former National Labor Relations Board members Peter Hurtgen and John Irving note in The Wall Street Journal, EFCA’s binding arbitration provision would empower a federally appointed arbitrating panel to impose a contract if a newly organized company and the union are unable to reach a contract after 120 days to an enormous extent.

An arbitration panel’s power to dictate terms is virtually limitless. Such panels could impose uncompetitive wage rates and unworkable work rules. Arbitrators could also impose mandatory union dues and discharge for failure to pay.

Arbitration panels are by definition a stranger to the work place. Yet real, private agreements are products of the needs, desires, capabilities and resources of the negotiating parties who are anything but.

In effect, this would mean that a business owner would lose an enormous amount of control over an important area of his own business, which would erode his right to dispose of his property, at least to some extent.

This may all seem over the top to some, but I don’t see any need to mince words, and neither did F.A. Hayek.

Fore more on EFCA, see here.

States Revolt against Card Check

by Ivan Osorio on March 13, 2009

in Economy, Labor

State legislators are unhappy about the prospect of the so-called Employee Free Choice Act (EFCA) being imposed on their constituents’  businesses. That was a central theme of a news teleconference today, featuring former Labor Secretary Elaine Chao and Senator John Thune (R-S.D.), hosted by the Alliance for Worker Freedom. The bill would allow unions to circumvent secret ballot elections in organizing campaigns.

Seven state legislatures have passed resolutions opposing EFCA — Alabama, Mississippi, Oklahoma, South Carolina, Georgia, and Washington — and eight have had resolutions introduced — Idaho, Kansas, Missouri, Nebraska, Nevada, Pennsylvania, Texas, and Alaska — with possibly more to come.

As Grover Norquist, president of American for Tax Reform, noted, these resolutions, by forcing a vote on the EFCA issue, put legislators on the record, which allows voters to better know where they stand on this.

Former Secretary Chao pointed out the stakes in this fight. “This is the most heated and passionate issue for organized labor,” she said. One reason for that is that, unlike during the last Congress, EFCA faces no threat of a presidential veto. Therefore, she noted, moderate Democrats could vote for EFCA during the last Congress and thus keep their union supporters happy without any fear of the bill’s real-world consequences, but they don’t have it so easy this time, as they’re firing “with real bullets.”

For more on card check, see here and here.

Economists Give Obama Failing Grade; New Bailouts Demanded As Obama Breaks Promises

by Hans Bader on March 12, 2009 · 2 comments

in Bailout Watch, Economy, Employment, Labor, Politics as Usual, Precaution & Risk, Regulation, Sanctimony, Stimulus to Nowhere

Obama gets a failing grade from economists. “U.S. President Barack Obama and Treasury Secretary Timothy Geithner received failing grades for their efforts to revive the economy from participants in the latest Wall Street Journal forecasting survey.”

Not content with the $8 trillion the Obama Administration has already committed for bailouts, pork, and welfare, Treasury Secretary Geithner, who was confirmed by the Senate despite cheating on his taxes, wants to spend $100 billion on IMF loans to bail out struggling nations in Eastern Europe and elsewhere — even though many European “officials doubt the wisdom of falling deeply into debt to create jobs and halt the plunge in consumer demand, as the United States is doing.”

Wal-Mart’s stock rating has been downgraded due to the possible passage of card-check legislation supported by Obama, which could lead to “diminished workforce flexibility” and pay based on “seniority” rather than merit, as a result of compulsory arbitration provisions contained in the bill. (The bill could also lead to intimidation of workers). The stock market has also fallen this year as investors have become disenchanted with the Administration.

The Federal Government may face increasing calls to bail out state governments, which have run up trillions of dollars in unfunded, and incredibly generous, pension liabilities to state employees in contracts negotiated with their unions using deliberately-deceptive accounting.

Obama broke his campaign promise to curb earmarks by signing a bloated, $410 billion appropriations bill that contained 8,500 earmarks totaling $7.7 billion. It also broke his campaign promise of a “net spending cut.”

Obama broke seven campaign promises dealing with transparency and clean government in signing the economy-shrinking, $800 billion stimulus package, much of whose contents were secret until shortly before Congress voted on it, and whose 1400 pages went unread by most Congressmen who voted on it.

Earlier, Obama repeatedly broke his promises not to sign bills without first giving the public five days to comment. “Too often bills are rushed through Congress and to the president before the public has the opportunity to review them,” Obama’s campaign Web site stated. “As president, Obama will not sign any nonemergency bill without giving the American public an opportunity to review and comment on the White House Web site for five days.”

But Obama has repeatedly signed laws without providing such notice, such as the Ledbetter Fair Pay Act, his very first law, which he signed less than 2 days after it was passed by the House, with no opportunity for comment. Moreover, in signing the Ledbetter law, Obama made false claims about both the facts of the Supreme Court case that the Ledbetter law overturned, and what the Supreme Court actually held in that case.

The Washington Post‘s David Ignatius, finally losing patience with Obama, criticizes the Administration’s focus on anything but fixing the economy’s underlying ills, calling its economic policies a “phony war” characterized by economic “mismanagement.” “Economist David Smick had it right in The Post this week when he said the administration had a three-pronged strategy: delay, delay and delay. The administration announces a rescue package but doesn’t deliver details; it promises budget discipline but saves the hard decisions for later,” while stacking the Obama “administration with politicians and former government officials,” who lack “experience managing large organizations in crisis.”

Like us, Michael Barone says that the Treasury Department and Fed Chairman Ben Bernanke, through their arbitrary, “ad hoc” approach to the financial crisis (such as their unpredictable and inconsistent decisions about which companies to bail out), have exacerbated the current financial crisis by leaving “players in the financial markets full of uncertainty and fear.”

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