The Card Check War

The war is now intensifying over the Employee Free Choice Act, or card check bill, that would make it far easier to unionize a workplace. It is a war over how businesses and our economy function. Passage would mean a mighty blow to U.S. competitiveness, economic growth and job creation.

The card check bill would allow a workplace to be unionized if a majority of employees merely check and sign a card that they want to be unionized. No secret ballot election would be needed. Workers would lose the fundamental right to cast a private vote, and labor unions would be emboldened to strong-arm individuals for signatures.

In addition, once unionized, if a contract agreement is not reached within a certain period of time, then government appointees would impose compensation and work policies on businesses.

This is a pro-big-labor, pro-big-government, anti-worker, anti-small business bill.

What’s the outlook? Given the declared support of President Obama and Democratic congressional leaders, along with the enormous influence big labor has within Democratic Party politics, is this a done deal?

Thankfully, the answer is no. But entrepreneurs and their employees need to make clear their opposition to this anti-worker, anti-jobs, anti-small business measure.

An article in the Wall Street Journal on March 10 noted that perhaps as many as six U.S. senators who formerly supported the card check bill might be wavering, highlighting by name Senators Blanche Lincoln (D-AR), Mark Pryor (D-AR), Mary Landrieu (D-LA), and Arlen Specter (R-PA).

Of course, though, big labor is exerting big pressure. A March 11 Wall Street Journal editorial noted how labor leaders are pushing to silence lobbying efforts against their agenda by firms receiving taxpayer dollars. But, of course, it’s okay for unions to receive taxpayer dollars and continue lobbying. The Journal sums things up nicely:

Labor chiefs are desperate to pass their easy-organizing agenda this year, because they know liberal majorities on Capitol Hill won't last. They also know they haven't been able to organize workers with a level playing field, so they want to rewrite the rules so their organizers can see which individual workers are voting no and apply peer and other pressure. Most workers can see how unions have contributed to the destruction of Detroit, U.S. steel makers and so many other industries. That's why unions need government-sanctioned coercion to prevail both against business and with workers.

Absolutely on the mark!

Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council

"Card Check:" Let a Million Little GMs Flourish?

As more workers and small business owners learn the details of unionization through "card check" -- that is, turn-key union organizing that denies workers their private (secret) ballot, while locking small businesses into government-arbitrated, two-year binding contracts if they can't reach an agreement with the union, once organized -- the more engaged they wish to become in opposing legislation that will advance the "card check" model when the new Congress convenes in January 2009. Such legislation passed the House in March 2007, but did not obtain the 60-vote margin it needed in the Senate to advance to the President's desk. President-elect Barack Obama says he will sign a bill if it reaches his desk.

Surveys have shown that American workers are strongly opposed to eviscerating the right to a secret ballot in the workplace. A Coalition for a Democratic Workplace (CDW) survey found that even a significant majority of union households (69 percent) oppose this type of organizing scheme.

Workers like the current system where employees privately vote in a federally supervised ballot election. For all practical purposes, this option would no longer exist under "card check." Under this approach, a union would be recognized once they receive a simple majority of signatures on authorization cards. Obviously, such a system is ripe for all kinds of shenanigans and abuse. "Card check" would expose workers to intimidation and coercion, and the process gives no voice to employees who were not offered an authorization card.

So what does this all have to do with GM, or the Big Three as the case may be? Well, hopefully Members of Congress -- as they look to advance "card check" legislation in the upcoming session -- will take what they have learned from U.S. automaker woes, and connect the economic dots on how run-a-way unionization through "card check" would impact the viability of U.S. firms -- both large and small.

The public and Congress have been absorbing the details regarding how U.S. automakers got into such dire financial straits. The more that is learned, the more skepticism there is in U.S.-automaker ability to get back on a competitive, sustainable track. Certainly, the management and boards of the "Big Three" deserve some blame for the state of these companies. The media, Congress, industry observers and consumers have certainly picked apart their shortcomings.

But to ignore the fact that managers and executives have limited operational flexibility in regard to meaningfully being able to manage human capital, trim labor costs and transform benefits packages, all because restrictive and expensive union contracts prevent them from doing so, misses a key part of the problem. Obviously, innovation and competitiveness suffer if not enough resources and time are dedicated to creative product development, or building lean and modern practices into operations.

On December 3, prior to the day that U.S. automakers were scheduled for a second round of congressional hearings, the United Auto Workers (UAW) finally made some concessions to help executives plead their case on Capitol Hill. But will these concessions be substantial enough to make a real difference for U.S. automaker survivability and competitiveness? While the UAW has said it may make more concessions down the road, for now they only agreed to "suspend" and "delay" specific contract items. Nary a word about new, permanent concessions, which suggests (at least to me) that the unions still don't understand that their wage and benefit packages need to be drastically restructured in order for their companies to compete against their more lean and innovative competitors.

UAW workers currently make nearly triple the earnings of the average private sector worker ($75.00 an hour in wages and benefits). Autoworkers in U.S.-based Japanese plants earn between $42.00 and $48.00 per hour in wages and benefits. In fact, the gold-plated health plans of the UAW add $1,200 to the cost of each vehicle, while the same costs add $215 per car of Japanese competitors (U.S.-based).

It seems that Congress should be experiencing a collective "aha" moment here as they examine and probe the fine details that underlie the automakers' woes. Indeed, if big U.S. companies can be rendered uncompetitive and financially strapped due to the inflexibility and high costs of labor union contracts, what would happen to small and mid-size firms if faced with similar restrictions?

Certainly, if currently non-unionized firms became quickly unionized through "card check" and were then forced to the bargaining table by government, to be met by government arbitrators (if they could not reach agreement with union representatives about contract terms within 6 months) who would "help" parties reach a binding agreement that would lock employers into specific costs (salary terms, health and benefits packages, hiring and workplace conditions, etc.) for two years....would we not have an economic debacle on our hands? Would even more firms go running to Congress for financial relief?

The more realistic scenario is that untold numbers of businesses would simply shut their doors. If the entrepreneur loses financial and management control of the business in this extraordinarily difficult economic period (on top of an incredibly competitive global economy), why bother with it all?

I fear, however, that most members of Congress -- especially in the U.S. House -- will not get it. Many of those members of Congress who supported "card check" legislation the last go around, will probably vote for it again. They will simply choose to ignore the facts out of loyalty to labor union leaders.

The best shot that small businesses and their employees have for defeating this misguided and backward measure is in the U.S. Senate. Labor union bosses will need 60 votes to hand a "card check" bill to President-elect Obama, and entrepreneurs are blessed with the fact that more reasonable minds on both sides of the political aisle reside on the Senate side.

I want GM and U.S. automakers to survive. I drive a GM Vibe, and my family has a long history of buying U.S.-made trucks, minivans, and other vehicles. Like millions of American consumers, we have been loyal to the U.S. automakers and their workforce. But now they -- the labor unions -- must give back, and much more than what they are currently "conceding."

The bigger picture is this -- the U.S. cannot afford to become a nation of mini-GMs. "Card check" legislation is organized labor's last big hope of enacting an artificial means to pump up their declining union membership through radical government intervention. But it would be a horrible mistake if Congress and President-elect Obama strip employees of their right to privately decide whether they believe union representation is in their best economic interest. It would be an economic tragedy if entrepreneurs and their workforce were stripped of their operational and innovative capacity to quickly respond to changes in the marketplace, which restrictive union contracts would prevent them from doing.

I really do hope Members of Congress, and President-elect Obama are learning from this sad, yet very timely and enlightening, lesson.

Karen Kerrigan
President & CEO