Best of the Week
Most Popular
1. Crude Oil and Water: How Climate Change is Threatening our Two Most Precious Commodities - Richard_Mills
2.The Potential $54 Trillion Cost Of The Fed's Planned Interest Rate Increases - Dan_Amerman
3.Best Cash ISA Savings for Rising UK Interest Rates and High Inflation - March 2018 - Nadeem_Walayat
4.Fed Interest Hikes, US Dollar, and Gold - Zeal_LLC
5.What Happens Next after February’s Stock Market Selloff - Troy_Bombardia
6.The 'Beast from the East' UK Extreme Snow Weather - Sheffield Day 2 - N_Walayat
7.Currencies Will Be ‘Flushed Down the Toilet’ Triggering a ‘Mad Rush into Gold’ - MoneyMetals
8.Significant Decline In Stocks On The Cards! -Enda_Glynn
9.Land Rover Discovery Sport Extreme Driving "Beast from the East" Snow Weather Test - N_Walayat
10.SILVER Large Specualtors Net Short Position 15 Year Anniversary - Clive_Maund
Last 7 days
Bitcoin Price Trend Forecast, Paypal FUD Fake Cryptocurrency Warning - 17th Mar 18
Strong Earnings Growth is Bullish for Stocks - 17th Mar 18
The War on the Post Office - 17th Mar 18
GDX Gold Mining Stocks Fundamentals - 16th Mar 18
Nationalism, Not the Russians, got Trump Elected - 16th Mar 18
Has Bitcoin Bought It? - 16th Mar 18
Crude Oil Price – Who Wants the Triangle? - 16th Mar 18
PayPal Cease Trading Crypto Currency Bitcoin Warning Email Sophisticated Fake Scam? - 16th Mar 18
EUR/USD – Something Old, Something New and… Something Blue - 16th Mar 18
DasCoin: A 5-Minute Guide to How It Works - 15th Mar 18
Stock Market Downward Pressure Mounting - 15th Mar 18
The Stock Market Trend is Your Friend ’til the Very End - 15th Mar 18
6 Easy Ways to Get What Women Want, for Less! - 15th Mar 18
This Isn’t Your Grandfather’s (1960s) Inflation Scare - 15th Mar 18
Eye Opening Stock Market Index, Volatility, Charts and Predictions - 15th Mar 18
Gold Cup At Cheltenham – Gold Is For Winners, Not For Gamblers - 15th Mar 18
Upcoming Turnaround in Gold - 14th Mar 18
Will the Stock Market Make Another Correction this Year? - 14th Mar 18
4 Ways To Writing An Interesting Education Research Paper - 14th Mar 18
China Toward Sustainable Economic Growth - 14th Mar 18
Stock Market Direction Is No Longer Important - 14th Mar 18
Trade Tariffs Defeat Globalists and Return Prosperity - 14th Mar 18
Stock Market Crash is Underway and Cannot be Stopped! - 14th Mar 18
Are Energy Sector Stocks Bottoming? - 14th Mar 18
Nasdaq Stocks Soars to New Record High After Strong Job Reports - 14th Mar 18
Bitcoin BTCUSD Elliott Wave View Calling for Rally toward $15,000 - 13th Mar 18
Hungary’s Gold Repatriation Adds To Growing Protest Against US Dollar Hegemony - 13th Mar 18
Record Low Volatility in Precious Metals and What it Means - 13th Mar 18
Tips for Writing and Assembling the Classification Essay - 13th Mar 18
Gerald Celente "If Rates go up too High, the Economy goes Down, End of Story" - 13th Mar 18
Stock Market Selloff Showed Gold Can Reduce Portfolio Risk  - 13th Mar 18
Silver Does it Again! Severe Consequences - 12th Mar 18
Has the Stock Market Rally Run Out of Steam? - 12th Mar 18
S&P 500 at 2,800 Again, Stock Market Breakout or Fakeout? - 12th Mar 18
The No.1 Energy Stock To Buy Right Now - 12th Mar 18
What Happens Next When Stock Market Investor Sentiment is Neutral - 12th Mar 18
Economic Pressures To Driving Gold and Silver Prices Higher Long-Term - 12th Mar 18
Labour Sheffield City Councils Secret Plan to Fell 50% of Street Trees Exposed! - 12th Mar 18
Stock Market Uptrend Resuming? - 11th Mar 18
Bond Market Interest Rate Yields Are Rising Again… Stocks Are on Thin Ice - 11th Mar 18
Death of Europe's Greenest City, Police State Sheffield Labour Council to Fell 50% of Street Trees - 11th Mar 18
Do All Bull Stocks Markets Need to Have a Bearish Divergence? - 11th Mar 18
An Inflation Indicator to Watch, Part 3 - 11th Mar 18
Online Stock Trading Tips - Tips about Online Trading & Day Trading - 11th Mar 18
NDX makes a new high. What does that mean? - 10th Mar 18
Blue Chip Companies on Track for $800 billion Buyback Record in 2018 - 10th Mar 18
Cheap Gold Stocks Basing - 10th Mar 18
An Introduction to Online Forex Trading - 10th Mar 18

Market Oracle FREE Newsletter

Urgent Stock Market Message

Big Business Fights Against Unionisation, Employee Free Choice Act

Politics / US Politics Mar 20, 2009 - 04:18 AM GMT

By: Mike_Whitney

Politics Best Financial Markets Analysis ArticleBig business has launched a no-holds-barred propaganda blitz against the Employee Free Choice Act. Their goal is to scare people into believing that if the bill passes it will trigger higher unemployment and a deeper recession. According to opponents, there's even the threat of creeping socialism. The truth, of course, is far less dramatic. The Employee Free Choice Act or so called "card check" simply makes it easier for unions to organize. Here's a short summary of the bill posted on the Change To Win web site:

1--Majority Rules, Not the Boss:

Currently, a majority of workers can sign up for a union, but the company can veto that decision and demand an election. This allows the company to fire or harass workers, and threaten that it will close the workplace, in order to coerce workers into voting against a union. Under EFCA, if a majority of employees sign cards indicating they want a union, the company has to recognize the union, as long as it is certified by the National Labor Relations Board (NLRB). (Change To Win supports EFCA)

That's it. All that's needed for union certification is for a majority of workers to sign cards. No one is coerced into doing anything they don't want to do; it's completely voluntary. There's nothing in the process that will have any material effect on the economy and, despite all the fearmongering, union goons will not force people to sing L'Internationale at baseball games or make them wear funny-looking blue jumpsuits to work. It's just a better way to organize, which is why the Chamber of Commerce and other far-right organizations are in a lather.

True, there are provisions that deal with contract negotiations and bargaining in good faith, but those are just added to discourage management from dragging its feet on contracts. (which is a typical strategy) The bill also gives the government the power to settle disputes on wages and benefits through binding arbitration, which is about as good as it gets.And, yes, there are penalties for firing workers for engaging union activity, but most people think these are both fair and reasonable.

Naturally, the boardroom bullyboys are worried that more of the profits will trickle down to workers instead of being transferred to off-shore bank accounts in the Caribbean. Too bad; the corporate mucky-mucks will just have to scrape by with a little less.

The lies and disinformation about the EFCA have been so extreme, they border on ridiculous. These guys are playing for keeps and it shows. The Wall Street Journal has run five anti-EFCA articles this week alone, each one more vicious than the last. It will take a superhuman effort to get this bill passed. It all depends on how much pressure the unions can bring to bear on Congress. If they get sidetracked or bogged down, they'll lose, for sure. They must stay focused.

In the last few weeks, the rhetoric has gotten more and more incendiary. Here's a typical anti-EFCA posting in the Kansas City Star by Larry Marsh :

"The United States Congress is considering, in effect, denying workers the right to a secret ballot in union certification voting under the so-called Employee Free Choice Act (EFCA)...This is no doubt good news to Mr. Mugabe in Zimbabwe and General Than Shwe in Myanmar.

Vladimir Putin in Russia will be glad to know that the United States Congress does not consider the secret ballot to be essential to democracy.

The Chinese government will now have a way to get foreigners to stop meddling in its affairs. With "open" "free-choice" voting, it can become a western-style "democracy."

It is a shameful day in America when the United States Congress even considers legislation to take away a worker's right to the secret ballot.

If we let the secret ballot go by the wayside, what will be next -- the Free Speech Choice Act (FSCA)?"

"Mugabe, General Than Shwe, Putin?"

Does Marsh really think he can change hearts and minds with type of claptrap?Public relations is a means of shaping opinion through perception management, not hitting people over the head with a sledgehammer. Apparently, the desperation is so overpowering that discretion has been abandoned altogether. And it's easy to see why.According to a new survey, more than half of Americans have already made up their minds on the issue. They like the idea of making it easier to join unions. Here's the story from Gallup:

"A new Gallup Poll finds just over half of Americans, 53%, favoring a new law that would make it easier for labor unions to organize workers; 39% oppose it. This is a key issue at stake with the Employee Free Choice Act now being considered in Congress.

The poll reveals sharply differing reactions to the issue within the general public according to political orientation. Most Democrats (70%) say they would favor a law that facilitates union organizing, while a majority of Republicans (60%) say they would oppose it. Independents lean in favor of such a law, 52% vs. 41%.

Previous Gallup polling has shown that Americans are fundamentally sympathetic to labor unions, and these underlying attitudes are no doubt reflected in their general support for legislation characterized as making it easier for workers to unionize. For example, Gallup's annual polling on workplace issues, conducted each August, has found consistently high approval of labor unions in recent years, including a 59% approval rating last summer. The current level of support for a new law facilitating more union membership -- 53% in favor -- is only slightly less favorable to unions. (Majority Receptive to Law Making Union Organizing Easier, Lydia Saad, Gallup)

There it is in black and white. The public hasn't been hoodwinked by big business's saturation campaign. The majority still supports unions and think it should be easier to join. In fact, there would probably be even greater support if they knew how much money was being spent to torpedo the EFCA. According to Cleveland Indy Media Center:

"Powerful Corporate Front Groups... are carrying out one of the biggest Anti-Union Busting campaigns in history, hoping to wrench public opinion in their direction and spread misinformation about the Employee Free Choice Act...Several anti-union Corporate Front Groups plan to collectively spend almost $100 million in the next year against the bill and those who support it. The breakdown is as follows (from the National Journal):

Chamber of Commerce: $20-30 million

Coalition for a Democratic Workplace: $30 million

Employee Freedom Action Committee: $30 million

Freedom's Watch: $30 million (from one anti-union contributor)

Center for Union Facts: unknown, but in the millions(

And this, from the Wall Street Journal:

"Pro-business organizations have spent millions on ads in key states in the past year. The Center for Union Facts ran $20 million in ads in 2008 against the bill." (Unionizing Fight Focuses on Three States", Kris Maher, Wall Street Journal)

The most zealous opponent of the EFCA has been Murdock's Wall Street Journal. The WSJ's biggest fear is that Obama might heed the call of his progressive constituents and lead the country in the direction of what the Journal derisively calls "The European Model", which features higher wages, protection against pay discrimination, and better health benefits.

Again, the Wall Street Journal:

"In Euro-terms, a "social market economy" offers state-provided health care, generous unemployment benefits, long holidays, various job protections and a prominent role for unions. Sounds good, you might say. But consider that the Europeans have spent the past two decades struggling to wean themselves off entitlements that are a huge drain on the overall economy. These welfare states leech off the productive parts of the economy through onerous taxes, debt and regulations.

Everyone ends up paying. Consider just one measure: the tax wedge, the share of labor costs that never reaches an employee's wallet but goes straight to state coffers. In Belgium, Germany and France, the tax wedge is around 50%; in America, it was 30% in 2007. (See the nearby table.) Not coincidentally, salaries and job opportunities are better here, especially for the least-skilled. The Obama budget, universal health care and now the union-revival effort known as the Employee Free Choice Act would steer America toward the Continent. That's good for the unions, but not for the public good.....The 2009 debate over Big Labor's agenda is about whether we want to continue to be a dynamic, entrepreneurial nation, or slip into unionized decline." (Labor's European model, Wall Street Journal)

What nonsense.Anyone who's spent time in Europe knows that workers are a zillion-times better off than their American counterparts. Who wouldn't want 6 weeks paid vacation per year and a secure retirement? Or should we assume that the free market loonies who oppose EFCA would rather stay true to the principles of "scorched earth" capitalism and accept less pay, crappier benefits and zero health care, just so the Bernie Madoffs in the luxury suites can indulge their girlfriends with a few more baubles from Tiffanys?

The anti-EFCA coalition has tried a number of strategies,but has yet to settle on any one course of action.Sen. John Thune blurted out one of the talking points earlier in the week in an interview with the Washington Post. Thune said,"In a time when we have an economy that's already struggling, we can't put more burdensome regulations on employers. This is a job killer for our economy when we really don't need it."

This sounds reasonable, but in fact, Thune's got it all wrong. As Sen. Tom Harkin points out in the same article:

"In 1935, we passed the Wagner Act that promoted unionization and allowed unions to flourish, and at the time we were at around 20 percent unemployment. So tell me again why we can't do this in a recession?...This is the time to do it. This is exactly the time we should be insisting on a fairer playing field for people to organize themselves."

Andrew Stern, president of the Service Employees International Union adds this:

"The truth is that Franklin Roosevelt passed those laws (The Wagner Act) under similar circumstances, and from 1945 to 1974, we had an era where workers' wages and productivity was joined together...It was probably the most tested economic stimulus of any public policy that has worked for us."(Alec MacGillis, Washington Post, Labor Union Bill Raises Broader Capitalism Issues)

Stern makes a good point. The reason the economy is contracting so violently, is that for the last decade, growth in the US has depended almost exclusively on debt-fueled consumer spending and Wall Street alchemy. When the credit bubble finally burst in late 2006, the over-leveraged financial institutions were forced reduce their debts quickly which drove down prices on all asset classes and sent unemployment into the stratosphere. This never would have happened if workers wages had kept pace with production. Any downturn would have meant a short period of retrenchment, rather than a precipitous decline from the unwinding of massive leverage. The surest path to sustainable growth is a well paid workforce. That, and that alone, is the secret for maintaining strong consumer demand and, thus, financial stability. Unions are an essential part of that mix because they create internal demand for goods and services through the efficient distribution of capital. If workers cannot afford the things they make, then the economy becomes increasingly dependent on exports, which means that it is more vulnerable to fluctuations in foreign markets.

Here's a passage from Henry C.K. Liu's "The Global Economy in Transition" that sheds a little light on this topic:

"The theory of rising wages asserts that employers should understand that rising wages are the only venue of assuring strong demand for their products, supported by the theory of technology-driven productivity increases, and the broad-based ownership of securities to spread wealth. The historical data show that the largest average increases in purchasing power have taken place at recession times when employers and bankers tried their best to keep wages down, but the stickiness of wages made wage deflation slower that price deflation, as in the 1920-22 depression. The result was that when full employment returned in 1923, US workers had higher purchasing power than they had in 1920. But average manufacturing worker's yearly income decreased by $55 between 1923 and 1928, a miner's income by $187. Falling wages amid prosperity was a major structural cause, albeit little noticed, of the 1929 crash. If wages had been higher, equity prices would not have risen as much, thus dampening the speculative fever. Wealth effects from the speculative boom made low wages tolerable and caused a corresponding rise in debt without altering prudential debt to equity ratios. But when the speculative bubble burst, debt-equity ratios skyrocketed and there were insufficient wage levels to sustain consumption. Similar conditions appear to be facing the US economy now.

After the 1929 crash, the economic downward spiral was caused mainly by falling wages. Despite all promises of maintaining production, goods could not be sold as fast as they were produced because of a collapse of income due to layoffs and wage reductions. Globalization in the past two decades temporarily kept US purchasing power increasing despite a slow growth of domestic wages. This resulted from still lower wages in the emerging markets. Now the world is awash with overcapacity in relations to low demand caused by insufficient wage levels.("The Global Economy in Transition", Henry C.K. Liu)

Unions have steadily lost ground since the 1950s when they represented 32 percent of the total workforce in the US. Today, union membership has dwindled to less than 8 percent, which is too small to have any real impact on policy. Even if we ignore the appalling lack of political power or the growing wealth gap, which is greater than any time since the Gilded Age, the same fundamental problem still arises: How does one sustain aggregate demand if wages stay stagnant? The answer is; it can't be done, which is why labor must have a bigger place at the table to level the playingfield. The only way to build a strong, stable economy, and avoid the boom and bust cycles brought on by speculative bubbles, is by empowering workers and making sure they are fairly compensated for their labor. The Employee Free Choice Act is an important first step in that direction.

By Mike Whitney


Mike is a well respected freelance writer living in Washington state, interested in politics and economics from a libertarian perspective.

Mike Whitney Archive

© 2005-2018 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


20 Mar 09, 07:51

The EFCA is Marxist evil

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules