Buffett Opposes Card Check, but Don’t Forget Binding Arbitration

Rumors of the so-called Employee Free Choice Act (EFCA) being introduced in the current Congress have come and gone — and will come again. Yet the Washington rumor mill being so active on this shows just how big an issue this is. For the unions, it is their number one priority, since they see it as a tool to reverse decades of membership decline. For the business community, it would impose yet another dead-weight cost in the middle of a severe economic slowdown.

EFCA would replace secret ballot union elections with a process known as card check, in which union organizers ask employees to sign union cards out in the open, exposing employees to the kind of high-pressure tactics secret ballots are designed to avoid. Public opposition began to turn against EFCA as this became known among the public. Now Senator Claire McCaskill (D-Mo.) says that Senate Democrats may not have the votes to break a Republican-led filibuster. And former Senator George McGovern has been joined by another prominent Democrat in his opposition to card check, Warren Buffett, who has President Obama’s ear (as the anger in a Center for American Progress response would indicate).

That protecting secret ballots should be popular is no surprise. But that’s not all there is to this bill. As former Labor Department officials Loren Smith and Vincent Vernuccio note, card check isn’t the only noxious element of EFCA. Binding arbitration, which has not received nearly as much attention, would essentially empower federally appointed arbitrators to impose a contract on any newly unionized business.

Once a business is unionized, management and the union have to come to terms on a contract for the unionized workers. This can take months or years as the two parties hammer out their differences.

Under EFCA’s proposed binding arbitration provision, the government would step in after 90 days and “work with” the two parties. All that is needed is one party to “request” the process. After another 30 days, the government would assign the case to an arbitrator (the rules for which would be written by the Obama administration) who would impose wage and benefit terms for the company for the next two years.

Arbitrators generally take a split the baby approach and try to come to a middle ground between the two parties. This means the union can make outrageous demands then stonewall an employer knowing they may not get everything in arbitration but they can, with the help of the government, force the employer into concessions that may not be economically feasible for the company. An example would be a new car company — instead of a regular negation process a union could make outrageous demands and wait for an arbitrator to decide the terms of a contract. Understandably the arbitrator would not want to reinvent the wheel so he would look to other existing contracts in the industry. Soon this company would be shackled with the same type of crippling contract as the Big Three and the UAW.

So, Smith and Vernuccio (correctly) warn, EFCA opponents need to be vigilant of efforts to break up the bill’s component parts into separate bills, which could then pass much more quietly than the highly controversial EFCA.

For more on card check, see here and here.