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EFCA: WILL THE SKY REALLY FALL?

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Ms. Layne-Farrar’s extensive literature review confirms what most people suspect, that card-check systems make it easier for people to unionize.  She points out that, “(t)he success of union recognition efforts decreased by almost 19% when British Columbia switched from card checks to mandatory voting and then increased by the same amount when the province switched back to card checks.” (p. 16) 

Her review also points out that, “The most immediate benefit workers can expect from joining a union is higher wages.”  Her sources predict an average wage differential of about 15% for new union members. (p. 9) 

Stand by: we will return to those numbers in a few minutes. 

Ms. Layne-Farrar explains the worldwide decline in union membership since the 1970s: “Successful union organizing requires an underlying desire by employees to belong to a union, and there is ample evidence that modern employees have an array of likes and dislikes that differ significantly from past generations such that workers have found it less attractive to join unions than they have in previous years.”  (p. 6)  

That makes sense.  But if that is true, then what is all the fuss about?  Merely making it easier to join a union will have no effect on membership if people perceive that the union has nothing to offer them in the first place. 

Which is it, one wonders?  Will union membership go up due to EFCA, thus further harming the economy?  Will it go down, because unions have lost their appeal?  Or will it stay about the same, as some people join because of EFCA while others leave because, notwithstanding the new law, the benefits of union membership are not worth the costs? 

Ms. Layne-Farrar is taking no chances.  She is ready to condemn the unions for further wrecking the economy if they are successful, and for losing their appeal if they are not successful.  If there is no change, well, they are still unions and that’s reason enough to criticize them. 

Summarizing her literature review, Ms. Layne-Farrar reports, “The overall picture painted by the extant literature, then, is a mixed one.”  But then she continues: “As a matter of basic economic theory, the studies in the literature therefore suggest, but in all likelihood underestimate, negative unintended consequences from passing EFCA.” (p. 15) 

Not so fast.  If the picture is a mixed one, then no conclusion is supported and it is a crass appeal to the Fallacy of Authority to suggest otherwise.  It amounts to saying, “Despite the contradictory nature of the studies and lack of conclusiveness in the literature, just take my word for it: this Bill will be bad for America.” 

Then she points out that, “The costs [of EFCA] should be carefully weighed against any purported benefits of passing the Act, all of which appear to benefit some groups at the expense of others.” (p. 15) 

Quite right.  The Employee Free Choice Act benefits workers.  That is the whole point of the Bill.  And if increased productivity does not fully offset the costs of the Bill, then the benefits to workers will have to come at the expense of employers.  So it is up to employers to see that productivity rises to offset any increase in costs.  But then, that is what good managers do. 

“The Canadian Experience” 

Ms. Layne-Farrar then turns to an analysis of “the Canadian Experience” with card check systems.  Here, she builds an econometric model of the effects of card check systems in Canada during the period 1976 - 1997, to see how Canada’s past experience might inform America’s present decision-making. 

Among her conclusions: for each 5% - 10% of the workforce that unionizes as a result of EFCA, the nation’s unemployment rate will increase by 1.5% - 3.0%.  In addition, the employment rate (defined as the ratio of employed people to the total population) will decline, -0.9% to -2.3%.  This means that if union membership increased 5% - 10%, the US would shed 550,000 to 2.6 million jobs by 2010, thanks just to EFCA.  What’s more, a GDP reduction of 0.14% could equate to a loss of $57 billion in national output. 

Specifically, she predicts that a 5% increase in union density next year (from 12.1% to 17.1% of the workforce) would increase unemployment by 1.49% - 1.77%.  That means between 2.28 million and 2.71 million more workers would lose their jobs – due just to EFCA. 

Ms. Layne-Farrar is clearly a talented investigator, but even her considerable research talents cannot save the analytic model from three fatal flaws.  First, the data set is 12 to 33 years old.  Despite the showing that the Canadian and US economies are similar, it is difficult to extend economic lessons from Canada circa 1976 (or even 1997) to the United States economy in 2009. 

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Rick Wise is an industrial psychologist and retired management consultant. For 15 years, he was managing director of ValueNet International, Inc. Before starting ValueNet, Rick was director, corporate training and, later, director, corporate (more...)
 
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For those unfamiliar with it, here is an overview ... by Richard Wise on Wednesday, Mar 18, 2009 at 9:08:31 AM
The Civil Rights legislation circa 1965 brought jo... by Jason Paz on Wednesday, Mar 18, 2009 at 10:43:04 AM
Thanks very much for this comment, Jason. That's ... by Richard Wise on Wednesday, Mar 18, 2009 at 2:27:12 PM
...for the excellent in-depth analysis. I apprecia... by Jennifer Hathaway on Wednesday, Mar 18, 2009 at 1:12:41 PM
Thank you for the kind words, Jennifer. I am not ... by Richard Wise on Wednesday, Mar 18, 2009 at 2:28:24 PM
During the Reagan era, Unions started becoming mor... by shirley reese on Wednesday, Mar 18, 2009 at 6:51:54 PM
Thanks very much for your comment, Shirley. I agr... by Richard Wise on Thursday, Mar 19, 2009 at 8:00:14 AM