Workers Need Opportunities More Than a Summit

CEI's Labor Expert, Trey Kovacs, discusses the pitfalls of President Obama's labor summit geared towards promoting union's interests rather than those of workers.

On October 7, President Obama will host a “Summit on Worker Voice” to promote collective bargaining and the benefits of unionization. The event purportedly seeks to bring all stakeholders—workers, employers and unions—together to discuss how to improve the workplace. But until this week the White House had kept the attendees under wraps. Unsurprisingly, the speakers skew toward unionization, while associations that represent employers were not invited.

Private-sector workers are free to form an organization to represent their interests, but the Obama administration believes that’s not enough. Instead, the administration is developing policies that would foist unwanted union representation on workers and disrupt business arrangements that grow the economy and create jobs.

Unions have had difficulty keeping up with the changing economy, as more and more workers move away from traditional employment and toward more flexible work arrangements that are not amenable to unionization, such as independent contracting and temporary employment.
Unions have found it difficult to gain new members, as workers move from one employer to another and increasingly telecommute or partake in other flexible work arrangements.

Instead, unions need big targets to organize. Because of this, unions often opt to browbeat businesses into letting them organize their workforces, instead of working to gain employee support. But why should this be the president’s business?

Dwindling union membership shouldn’t concern this administration—or future ones—as long as workers are choosing to forgo unionization freely. In Coach & Equipment Sales Corp; 228 NLRB 441 the National Labor Relations Board, the federal agency that enforces private-sector labor law, asserted that “Collective bargaining is potentially hazardous for employees and. … As a result of such negotiations, employees might possibly wind up with less benefits after unionization than before.”

A Competitive Enterprise Institute study that examined the impact of collective bargaining on wages shows, “over a period of 50 years, the cumulative reduction in worker wages would be about 15 percent.”

While obtaining union representation may prove beneficial to some, it is not right for everyone. As seen in a recent Gallup poll, unionized employees are less satisfied than nonunion workers in the following categories: workplace physical safety conditions, recognition for a job well done, flexibility of hours and job security. A workplace being unionized does not mean workers are more satisfied or better off. Law and regulation should reflect that reality.

Workers should ultimately have the choice on their own representation and what kinds of work arrangements are appropriate for them. It is not the role of government to either encourage or discourage unionization. Unfortunately that is what the current administration is doing.

In April, the National Labor Relations Board finalized its “ambush election” rule, which threatens worker privacy, by forcing employers to give out workers’ telephone and email addresses without allowing employees to opt out of having their information handed over to union organizers.

The rule also shortens the time workers have to contemplate the decision of union representation—a decision that can determine employee pay and working conditions. Such decisions should not be made quickly and certainly not without thorough debate.

Another way the NLRB is trying to make it easier for unions to organize is through its new joint employer standard, which will have an adverse impact on job creation. In its recent decision in Browning-Ferris Industries, the NLRB ruled that companies may be held liable for labor violations committed by other employers they contract with—contractors, franchisors and temporary staffing agencies—even if they may not have direct control over that company.

The decision could have dire consequences. By increasing liability, large businesses may bring back in-house functions they used to outsource, as well as move toward direct operation of stores and away from franchising. This will inevitably disrupt many kinds of beneficial business relationships that have been a bright spot for U.S. job growth.

Franchising enables small entrepreneurs to launch their own businesses, providing them the benefit of an established brand name, marketing, and tried business methods. Franchises employ millions of workers and account for 10 percent of new jobs in 2013 and 2014. The temporary workforce is also growing, hitting an all-time high of over 2 percent of the total private-sector workforce in 2014. The NLRB decision will hinder growth in these sectors. It will also stifle innovation and reduce flexible work arrangements, making it much harder for entrepreneurs to start new businesses.

For the 21st century worker, government has become a major obstacle to overcome. It is time for government to step aside and remove harmful regulations. Let entrepreneurs create jobs and provide workers the opportunity to accept employment relationships that work for them. Government should respect those workers who have used their voice by declining union representation.

Originally published at The Hill.