A quarterly magazine of urban affairs, published by the Manhattan Institute, edited by Brian C. Anderson.
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Here Come the Unions
Democrats prepare to follow Margaret Thatchers examplebut backward.
17 October 2008
If the Democratic Party wins a filibuster-proof Senate majority on Election Day, it likely will pass the Employee Free Choice Act. The EFCA is reminiscent of trade union legislation passed in Great Britain during Margaret Thatchers tenure as prime ministerexcept that it would work exactly in reverse. And its effects, too, would be exactly the reverse of the stunning economic growth over which Thatcher presided.
When Thatcher was elected in 1979, Britain had just endured a winter of discontenta season of strikes and trade union agitation so severe that the nation stood effectively paralyzed. Food supplies were interrupted, whole industries choked, and exports fell. We dont want to increase our trade with you, said the Soviet trade minister to his British counterpart. Youre always on strike. Rubbish piled up on the streets that winter; at one point, so did human corpses. This was what had become of a nation that was once the worlds greatest trading power.
For obvious reasons, Thatcher put reform of the trade union law at the top of her agenda. Among the key provisions of Britains 1980 Employment Act was a change in the way government would recognize unions. At the time, workers voted to join unionsor notin public, by voice vote. Dissenters suffered harassment and physical intimidation. Henceforth, Thatcher decided, new union membership agreements would require approval by means of a secret ballot in order to protect rank-and-file workers from bullying by union organizers. If allowed to vote secretly, she believed, ordinary workers would not vote for policies against their long-term interestssuch as pay raises so incommensurate with production as to render British businesses uncompetitive, or strikes so prolonged as to make even the Soviets unwilling to buy British goods.
Thatcher was right. As soon as the secret ballots were introduced, many workers began defying the trade union leadership and rejecting the unions ruinous policies. When she had taken power, Britain was the second-poorest nation in Europe. Her reforms led to the longest sustained period of British economic expansion of the postwar era. In the past decade, as a direct consequence of her augmentation of labor-market flexibilityin laymans terms, her smashing of the trade unionsthe Organisation for Economic Co-operation and Development has ranked Britain at the top in both output and inflation stabilization.
Today, the U.S.s misleadingly named Employee Free Choice Act would increase the power of Americas labor unions by eliminating the secret ballot. Under current law, a union can be certified by the National Labor Relations Board as the exclusive representative of employees in one of three ways: through a secret ballot, a signature drive, or whats known as a card check. Card-check certification means that the majority of an organizations employees have signed union authorization cards. Critically, however, an employer who suspects that union organizers are coercing his employees has the right to demand government-supervised secret-ballot elections. The EFCA would remove this right. If enough employees sign cards, the union will be certifiedno vote required. Obviously, its much easier to coerce, harass, and intimidate workers in the absence of secret ballots. Why else would unions be so keen to do away with them?
As if eradicating secret ballots werent bad enough, the EFCA contains a still more ominous provision: it vastly increases the role of government in settling labor disputes. The act stipulates that, if an employer and a union cannot agree on an initial contract within 90 days, either party may ask the Federal Mediation and Conciliation Service to intercede in the negotiations. If no deal is reached after 30 days of federal mediation, the feds will assign an arbitrator to work out an agreement. The arbitrators decision will be final and binding for two years. Workers will not get the chance to ratify the agreement, by secret ballot or otherwise.
In effect, the federal government will gain the power to dictate the terms of a contract and to set wages, benefits, hours, and work rules. Because negotiations for new contracts almost always take more than 120 days, this provision will ensure a significant expansion of government into the private sector. Its absurd to imagine that even the most well-meaning government arbitrator would be sufficiently familiar with the day-to-day operations of a company, or the industry in which it operates, to make contract decisions as wisely as the companys owners and employees would.
The long-term consequences of EFCA passage are perfectly predictable: some companies will go out of business or relocate overseas. Some of the workers whom the legislation is designed to protect will lose their jobs. Nor will it be easy to undo the law once its passed, since no one who acquires power gives it up easily. In Britain, during the 1984 miners strike, wresting power from the unions nearly led to civil war. Thatcher ultimately crushed the National Union of Mineworkers, but the human and economic costs of the strike were staggering, and the violence of the conflict stunned the British public.
Back in the early 1970s, Britain (like the rest of the industrialized world) was suffering from the effects of the 1973 oil price shock, with inflation reaching 27 percent in 1975. Britains labor leaders, noting that real wages were diminishing, concluded that the cause was insufficient union power and that the remedy lay in industrial action. They were wrong in both analysis and prescription, and perpetual strikes crippled an already faltering economy. Today, as it exhorts legislators to pass the Employee Free Choice Act, the AFL-CIO applies similar reasoning. Its no accident, its website declares, that the 25-year decline in workers wages in our country has paralleled a 25-year slide in the size of the Americas unions. Actually, its exactly that: an accident. Many explanations exist for the decline of real wages in certain sectors of the U.S. economy, but a decline in trade union membership isnt among them. The global economy and competition from rising industrial superpowers such as China and India would be a far more logical place to look.
Margaret Thatcher fought these battles not so long ago; you might think todays legislators would have learned from them. But as Thatcher herself once remarked, You may have to fight a battle more than once to win it.
Claire Berlinski is the author of There Is No Alternative: Why Margaret Thatcher Matters.