September 15, 1998
Congress and the National Labor Relations Act
by
Charles W. Baird
Emeritus Professor of Economics and Former Director of the Smith Center
California State University, East Bay, CA 94542
In a market economy it makes little sense to distinguish between producers and consumers because most people are both. It also makes no sense, outside discredited Marxist theory, to distinguish between management and labor since both are employed by consumers to produce goods and services. Management and labor are complementary, not rivalrous, inputs in that production process.
Unfortunately, U.S. labor relations law is based on the mistaken ideas that management and labor are natural enemies; that labor has an inherent bargaining power disadvantage relative to management; and that only unions backed by government power, which eliminate competition among sellers of labor services, can redress that situation. The National Labor Relations Act, as amended, is based on ideas that might have seemed sensible in the 1930s but do not make any sense in today's information age. The present Congress has little time, and less will, to put things right. The new Congress that will be seated in January 1999 will have to shoulder the burden. The NLRA ought to be scrapped, or at least substantially amended so it reflects modern labor market realities and assures all workers, unionized or not, equal protection of the laws.
The Unions' Market Share
Unions represent a small and declining share of the American labor market. In 1997 only 9.8 percent of the private-sector workforce was unionized. That figure has been declining since 1953 when it was 36 percent; and, according to Leo Troy, by the year 2000 it will be no higher than 7 percent - exactly where it was in 1900. About half of union members now work for federal, state and local governments. In 1997, 37.2 percent of the government-sector workforce was unionized. Even that number has declined from its 1994 peak of 38.7 percent. Yet despite the decline of unions, the old regime that supports them is still in place.
Exclusive Representation and Union Security
Of the many changes to the NLRA that the 106th Congress should enact when it convenes in January 1999, two are the subject of this column: exclusive representation and union security. Exclusive representation, as provided for in Section 9(a) of the NLRA, mandates that if a majority of employees of a particular firm vote to be represented by a particular union, that union is the sole representative of all workers whether an individual worker voted for or against it or did not vote at all. Individual workers are not free to designate representatives of their own choosing. While workers should be free, on an individual basis, to hire a union to represent them, they should not be forced to do so by majority vote. Unions are not governments; they are private associations. For government to tell individual workers that they must allow a union that has majority support among workers to represent them, is for government to violate those workers' freedom of association.
Union security is the principle under which workers who are represented by exclusive bargaining agents are forced to join, or at least pay dues to, the union with monopoly bargaining privileges. In the 21 right-to-work states such coercive arrangements are forbidden under state law. (Section 14[b] of the NLRA gives states the right to pass such laws.) The union justification for union security is that some whom they represent would otherwise get union-generated benefits for free. But if exclusive representation were repealed, only a union's voluntary members could get benefits from the union because the union would represent only its voluntary members. The right-to-work issue would be moot. Forced unionism would, at long last, be replaced by voluntary unionism.
The NLRA serves the particular interests of unionized labor rather than the general interests of all labor, and it abrogates one of the most important privileges and immunities of U.S. citizens - the right of each individual worker to enter into hiring contracts with willing employers on terms that are mutually acceptable. Unfortunately no Court has had the courage to take up the issue since the 1930s. It is time for Congress to do so.
There are three options Congress might choose to remedy the current situation:
Eliminate exclusive representation. Ideally, the current restrictions on the freedom of workers to choose who, if anyone, represents them should be eliminated. The 1991 New Zealand Employment Contracts Act would be an excellent model to follow. That might require more courage than can be found in Congress. Thus, Congress might consider two weaker options.
Adopt a national right-to-work law. Under this option workers would still be forced to let certified unions represent them, but no worker would be forced to join, or pay dues to, a labor union. This is a poor second best to members-only bargaining.
Codify the US Supreme Court's decisions in NLRB v. General Motors (1963) and Communications Workers of America v. Beck (1988). This is a poor third-best to members-only bargaining.
In General Motors the Court declared that the only permissible form of compulsory union membership under the NLRA is the payment of union dues. No full membership in good standing can be compelled. Notwithstanding this decision, the National labor Relations Board still allows unions and employers in non-right-to-work states to include union security clauses in collective bargaining contracts that assert that workers must become and remain members of unions in good standing as a condition of continued employment. The NLRB permits what is clearly illegal. The Supreme Court will take up this issue in its 1998-99 term in Marquez v. Screen Actors Guild . But Supreme Court decisions do not enforce themselves. Congress must act.
In Beck the Court declared that the compulsory dues and fees collected by unions from workers they represent could not be used for purposes not directly related to collective bargaining, principally for political contributions. Many unions have effectively nullified Beck by creative bookkeeping. In 1996 the NLRB turned a blind eye to such deceit in its California Saw and Knife Works decision in which the Board accepted the union's own staff accountants' categorization of expenditures as the final word. It stated that under Beck dissenting workers had no right to an independent audit of the union's books. In this regard, Congress should incorporate, for private sector workers, the procedural and substantive protections that were granted to government workers who are forced dues payers in Chicago Teachers Union v. Hudson (1986). Among them is an indisputable right for dissenting government workers to independent audits in all cases involving disputes over union uses of forced dues and fees. The Supreme Court is likely soon to take up the issue of the applicability of Hudson to the private sector because of a conflict between two circuit courts of appeal. The DC Circuit, in Ferriso v. NLRB (1997), ruled that Hudson does apply, and the Seventh Circuit, in Machinists v. NLRB (1998), ruled that it does not. Again, court decisions do not enforce themselves. Congress must act.
The history of attempts to enforce Beck and related cases demonstrates how complicated the issues are and how expensive it is to litigate them. If Congress repealed exclusive representation all union security questions would be moot. If Congress passed a national right-to-work law, thus eliminating all forced dues, General Motors and Beck would be moot. Congress created these problems, and only Congress can eliminate them.
If Congress cannot summon the courage to pass a national right-to-work law, it could still settle all the disputes being litigated over the amounts of dues and fees that unions spend for non-collective-bargaining purposes by a simple amendment to the NLRA. Congress, at the very least, ought to stipulate that every worker who opts out of full membership in the union that represents him will have to pay, say, 35 percent of the dues and fees paid by full members. In the Beck case only 21 percent of dues and fees were used for collective bargaining purposes. In the 1991 Lehnert case, the figure was only 10 percent. In no case, in which the union's books were subject to independent audit, was the figure over 40 percent. The exact figure chosen by Congress would, of course, be arbitrary. Some workers would get excessive dues reductions, and others would get inadequate dues reductions. However, such a rule would save an enormous amount of legal costs for everyone involved.
I will have more suggestions for the 106th Congress in next month's column.