Labor Union Membership Decline Continues

As reported by the Bureau of Labor Statistics, the decline in labor union membership continued in 2010. That extends a long and, yes, positive trend in the economy.

Overall labor union membership fell from 12.3% in 2009 to 11.9% in 2010. That compares to 20.1% in 1983.

Even more striking is the tiny portion of the private sector that are now union members. That level dropped from 7.2% in 2009 to a mere 6.9% in 2010. Back in 1983, 16.5% of private sector workers were union members.

Why is this declining union trend positive? In the end, the objective of labor unions is to maximize compensation while minimizing work and work effort. The resulting obstructionist work rules and artificially jacked up compensation -- particularly problematic as performance and pay are decoupled -- obviously are bad for productivity and competitiveness.

We've seen over time that heavily unionized industries suffer from excessive costs and an inability to make the adjustments necessary to stay competitive in the marketplace.

A smaller unionized workforce means a more dynamic, comeptitive and entrepreneurial work force.

Raymond J. Keating

Chief Economist

Card Check and the U.S. Constitution

The Employee Free Choice Act – or card check bill – clearly is an unfair sop to labor union bosses.

But is it unconstitutional?

In the March 30 Wall Street Journal, David B. Rivkin Jr. and Lee A. Casey make the case in an op-ed titled “Why Card Check Is Unconstitutional.”

The entire piece warrants reading. But two points are worth noting here:

• The Supreme Court has interpreted the First Amendment's guarantee of freedom of speech, along with the Fifth and 14th Amendment due process clauses, to protect a variety of expressive and associational rights. The right to speak and associate anonymously is among those rights. Indeed, anonymous speech has a long and honored tradition in American politics. Much of the political agitation leading up to the American Revolution was necessarily anonymous in order to avoid British sedition charges. And three of the Constitution's Framers -- James Madison, Alexander Hamilton and John Jay -- wrote the Federalist Papers supporting its ratification under the anonymous pen name "Publius."

• There can be little doubt that the act of voting on important issues is a form of symbolic speech, residing at the very core of the interests protected by the Constitution. The secret ballot has not only been adopted in federal and state elections, it is recognized as a fundamental human right in a number of international instruments. This includes the U.N. Covenant on Civil and Political Rights, to which the United States is a party, that requires secret ballot voting as "guaranteeing the free expression of the will of the electors."

The card check bill clearly would be bad economics, grossly unfair to workers, punitive to businesses, and according to Rivkin and Casey, in violation of the Constitution.

Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council

Labor Union Membership

With key, early actions taken by the Obama administration lining up with the agenda of labor unions, one might get the impression that unions mattered, or were on the rise, in our economy. 

Actually, for decades, it has been the exact opposite. And the data released on January 28 by the U.S. Bureau of Labor Statistics provide a powerful reminder of the diminished role unions play in our economy. 

Consider the following:

• Union members accounted for 12.4 percent of all wage and salary workers in the U.S. in 2008. That compared to 12.1 percent in 2007, but to 20.1 percent in 1983, and according to www.unionstats.com, 24.1 percent in 1979.

• As for the private sector, labor union members made up 7.6 percent of wage and salary workers, compared to 7.5 percent in 2007. But in 1983, it was 16.5 percent, and in 1973, it was 24.2 percent, according to www.unionstats.com.

• Finally, in the public sector, union members made up 36.8 percent of workers in 2008, versus 35.9 percent in 2007. Once more, according to www.unionstats.com, labor union membership has ranged between 34 percent and 38 percent since the late 1970s.

So, labor union membership is anything but a growth industry. Instead, it has been steadily dwindling. At best, the latest data might indicate some leveling off of unionization, but certainly no resurgence.

Raymond J. Keating

Chief Economist

Small Business & Entrepreneurship Council

Business Beware, and Get Active!

The Wall Street Journal reported the following today:

The Service Employees International Union has set aside $10 million -- and could spend as much as $50 million -- for a campaign this year to push for legislation championed by the organization, including an economic-recovery package, a revamped health-care system and a controversial union-organizing bill.

This should concern every business owner in the nation.

Given the recent massive expansion of government in our economy, and that even more misguided interference is being pledged (and pushed by unions like the SEIU), entrepreneurs need to make their voices heard with their elected officials now more than ever before.

If you think that government is the path to economic prosperity, then sit back and do nothing. But if you rightly fear that government is to blame for most of the current mess and will only make matters worse if current plans for more spending, taxing and regulating become reality, then get active!

By the way, joining SBE Council is a good and necessary step.

Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council

Poor Labor Unions?

Poor Ron Gettelfinger. The president of the United Auto Workers union held a press conference on Friday, December 12. Not only did he discuss the state of the auto company bailouts, but he complained about all those nasty people on the “right wing” who have demonized labor unions.

After all, Gettelfinger indicated that the only way employees can have a say in their workplace is through labor unions. For good measure, he signaled his preferences for government industrial policy and protectionism on the trade front.

Of course, Gettelfinger’s job is to defend his union. But talk about being completely disconnected from economic reality.

Labor unions are in decline in this nation not because of some “right wing” cabal or conspiracy, but because unions make businesses less competitive and restrict the opportunities of employees. In a dynamic, fast-paced, global economy, labor unions raise costs, and restrain innovation. That’s not good for business, workers or our economy in general.

The decline in labor union membership has been breathtaking over the past 35 years. Consider that, according to Unionstats.com, labor union members as a share of private sector employment went from 24.2 percent in 1973 to 7.5 percent in 2007.

That’s not about businesses and conservatives keeping unions down. Instead, it’s about individuals not wanting to be union members. Apparently, people can have a say in their work and workplace without being a union member.

So, labor unions, as usual, are left going to the government to get what they want – whether that be a bailout or the imposition of assorted mandates and regulations on business.

Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council

Labor Unions, Small Business and the Election

In case you missed it, SBE Council was mentioned in an October 31 U.S. News & World Report story titled “Small Business Issues in the Ballot Box: the Employee Free Choice Act” by Matthew Bandyk.

Read the entire article, but I just wanted to highlight the following here:

One of the issues where the difference between Republicans and Democrats in this year's election is most stark is the Employee Free Choice Act. The bill contains several provisions that would make it easier for workers to form unions. It passed the House of Representatives on a highly partisan vote in February 2007 but was killed when all the Republicans in the Senate filibustered it, with almost all Senate Democrats supporting it—and the election could flip that balance. But one point on which members of both sides agree is that it is the most significant piece of labor legislation since the National Labor Relations Act of 1935.

Josh Goldstein, spokesman for the labor advocacy nonprofit American Rights at Work, which supports the bill, says, "It's pretty clear that it's one of the most significant reforms of our outdated labor laws." Supporters of the bill say that it is necessary to create a fairer process for forming a union. "It's time to adjust the playing field back to a level where both parties have equal voice," says Goldstein.

Glenn Spencer, executive director of the Workforce Freedom Initiative at the U.S. Chamber of Commerce, which has strongly opposed the bill, agrees on its significance. "It would be the biggest change since the 1930s," he says. But opponents of the bill argue that it would impose unfair and burdensome costs on businesses of all sizes.

Just how much do small-business owners need to be concerned about the Employee Free Choice Act? Some small-business advocacy groups have stressed its potential costliness. Raymond J. Keating, chief economist for the Small Business & Entrepreneurship Council, has said that "in the long run, both business owners and employees would suffer" if the bill was passed because it would "boost costs, restrain productivity," and make businesses "less competitive."

Let’s be clear, the Employee Free Choice Act would deny employees the right to cast a secret ballot, expose individuals to strong-arming tactics by labor unions, and raise costs for businesses. That’s the bottom line for small business and the economy.

Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council

A Privatizing Democrat

Do Democrats have to be in the pocket of labor unions? Do they have to oppose all efforts at privatization?

According to a local government official in New York, the answer is: NO!

In Suffolk County on Long Island, County Executive Steve Levy, a Democrat, has earned the reputation over the years as being frugal with taxpayer dollars. That’s pretty rare for either Democrats or Republicans in New York. Levy has proposed privatizing the county-owned nursing home, and faced opposition from both sides of the political aisle.

Note a few points Levy made in an August 31 letter to the editor in Newsday:

• “Suffolk County can provide the same service to its 238 nursing home patients and save taxpayers $15 million annually, but only if the legislature would allow for a local hospital to assume ownership. There is only one reason this proposal has been stalled - resistance from the union and the legislators who kowtow to them.”

• “In 1880, when the county opened an infirmary, there were no private facilities and no Medicaid. Today there are 43 private nursing homes in Suffolk, with more than 500 empty beds, that would aggressively compete for our Medicaid-eligible patients.”

• “All 44 county-owned nursing homes in New York lose money. They are so obsolete that the state is offering incentives to counties to privatize. Four have recently done so. Moreover, the state will not approve closure unless every patient is guaranteed continuity of care. A recent report concluded that even if a new manager was hired, all beds were filled, and 50 employees were laid off, our nursing home would still lose $10 million-plus annually, because the public sector employee contract is much more lucrative than the private sector's. This pattern has Suffolk on course to lose up to $50 million over the next three years ...”

Privatization looks like a no-brainer – unless you’re a politician pandering to labor unions.

Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council

Leading Liberal Opposes Card Check Bill

In a democracy, the private vote is almost sacred. Nonetheless, Democrats in Congress are doing the bidding of labor union leaders by pushing the so-called “Employee Free Choice Act” (EFCA). That legislation would eliminate the secret ballot in favor of a card check-off when it comes to the question of labor union representation in the workplace.

Perhaps these Democrats should read an August 8 Wall Street Journal opinion piece written by George McGovern, the Democratic Party’s presidential nominee in 1972 and a leading liberal for decades. Among the points made by McGovern are:

• “The key provision of EFCA is a change in the mechanism by which unions are formed and recognized. Instead of a private election with a secret ballot overseen by an impartial federal board, union organizers would simply need to gather signatures from more than 50% of the employees in a workplace or bargaining unit, a system known as ‘card-check.’ There are many documented cases where workers have been pressured, harassed, tricked and intimidated into signing cards that have led to mandatory payment of dues. Under EFCA, workers could lose the freedom to express their will in private, the right to make a decision without anyone peering over their shoulder, free from fear of reprisal.”

• “To my friends supporting EFCA I say this: We cannot be a party that strips working Americans of the right to a secret-ballot election. We are the party that has always defended the rights of the working class. To fail to ensure the right to vote free of intimidation and coercion from all sides would be a betrayal of what we have always championed.”

Makes one wonder who speaks for workers, and who speaks for labor union leaders.

Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council