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Thursday, October 28, 2010

Richard Freeman: Labor Law is Broken

The National Labor Relations Act is broken, something that has likely contributed to stagnant earnings and the rise in income inequality:

Labor Law Is Broken, Economist Says, by Steven Greenhouse, NY Times: In a new paper, Richard B. Freeman, a labor economist at Harvard, said he had some “harsh and impolitic” news for the National Labor Relations Act on its 75th anniversary. He declared that the law “has become an anachronism irrelevant for most workers and firms.” ...
Mr. Freeman ... wrote that the act was passed to replace the costly unionization fights of yesteryear – often involving strikes, lockouts, violent confrontations — with “a ‘laboratory conditions’ elections process for ascertaining workers’ attitudes toward union representation that would be free from employer pressures or dishonest statements by employers or unions.” He said unionization elections in the private-sector “have turned into massive employer campaigns against unions.”
That, he wrote, is a major reason the percentage of private-sector workers in unions has fallen to 7 percent, down from nearly 40 percent in the 1950s.
He argued that the penalties in the National Labor Relations Act were weak and “have failed to deter firms from illegal actions to prevent unionization.” ... “Far from a laboratory conditions experiment in democracy,” he wrote, “the N.L.R.B. process turned into the same costly fight between unions and firms that union organizing was before the act, albeit in a different venue with different weapons.” ...
Professor Freeman said it was hardly surprising that the percentage of public-sector workers in unions was five times as high as the percentage of private-sector workers. One big reason for this, he wrote, is that private-sector employers “have sizable monetary incentives to oppose unionism,” and the penalties that N.L.R.B. “has at its disposal are too limited to offset these incentives.” He noted that government officials, unlike corporate officials,... “...have little to gain and much to lose from fighting unions.” ...
Professor Freeman wrote that “the failure of the N.L.R.A. process to meet the needs of workers and firms moved the U.S. close to the union-free world that many opponents of trade unions have long desired.”
He suggested that if unions were stronger, the United States might not have the highest income inequality in the developed world or stagnant real earnings for all but the highest paid. He also said that if unions were stronger, a liberal coalition “would presumably have greater countervailing power” to Wall Street and have helped push through stronger financial reforms.
In conclusion, Professor Freeman had four recommendations. He called for strengthening the penalties against illegal actions by management and unions, recommending penalties against individual managers or union leaders who break the law. Second, he said labor laws should be amended to protect supervisors from being fired or punished if they want to remain neutral...
Third, he called for early voting at neutral venues instead of having unionization elections held at the work site on a single day. ... He said this “should reduce intimidation or pressure from management or union activists...
Lastly, Professor Freeman recommends an idea that union leaders hate — allowing employers to set up employee committees that address not just productivity, but also issues that deal with workers’ well-being, like hours or pace of work. ... He said that a similar system in Canada works well. ... But unions oppose this idea, asserting that it could lead to management-dominated committees and could convince many workers that they do not need a union.

People often blame gloabalization and technical change for the decline in unions, but that is far from the complete story.

    Posted by on Thursday, October 28, 2010 at 12:33 PM in Economics, Unemployment | Permalink  Comments (38)


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