The Economic Consequences of Card Check

By March 9, 2007Labor Unions

Time for another roundup of commentary on card-check, the legislation that would replace secret-ballot elections in the workplace with a process fraught with employee intimidation. Columnists warn that coercive unionization could stall economic growth.

Polymathic Pejman Yousefzadeh, an Illinois lawyer, provides a quick run-down on all that is wrong with H.R. 800, the invertedly named Employee Free Choice Act. Important observation:

Unions don’t like to admit it, but there are some good reasons for workers to say no to enterprising organizers. One Federal Reserve study found that “a winning certification election has, on average, about the same effect on investment as would a 30 percentage point increase in the corporate tax.”

Economist Jerry Bower touches on the same economic point in this piece, “The Freedom to Lose Your Right to a Secret Ballot Act — How to destroy shareholder value in one easy lesson.” The charts make the case: Unionized sectors of the economy, such as the telecom industry, lag the S&P 500.

Larry Kudlow also divines serious trouble for the stockmarket from labor’s political muscle-flexing.

If big labor has its way on card check and ending the secret ballot, along with unionizing TSA screeners, it sets up an anti-competitive dynamic that would roll back private sector productivity, diminish economic growth and profits, and push government spending higher.

The Shanghai flu briefly infected the stock market, but my friend Jerry Bowyer is right, and I wrote in the WSJ op-ed last week that all this labor saber rattling has also contributed to the stock market slowdown.

Returning to the procedural issues in the debate — minor things like confidentiality, intimidation and democracy — the bloggers at Kreitzman Mortensen & Borden absolutely demolish this week’s shallow New York Times editorial endorsing card-check. (We whacked at the editorial in this post.) We should have linked to KM&B’s Union-Free Employer blog earlier; it’s a valuable resource.

Finally, to give the other side just a little bit of coverage, we note that the People’s Weekly World rhapsodizes over labor’s excitement at House passage of H.R. 800. The PWW’s weekly roundup reports:

LAS VEGAS — The main focus of this week’s AFL-CIO Executive Council meeting was moving forward from the March 1 passage of HR 800, the Employee Free Choice Act, in the U.S. House of Representatives, federation President John Sweeney told reporters here.

But it was hard to ignore the impact on labor’s agenda of what Sweeney called “a turning point victory.” A tidal wave of confidence and enthusiasm engendered by that 241-185 vote engulfed every point on the meeting’s agenda. One by one, the issues of organizing, politics, health care, the Iraq war, global solidarity and trade rose to the surface, steeped in a new boldness and fighting spirit.

Well, what do you know. The Popular Front rises again.

Join the discussion One Comment

  • Jordan Barab says:

    OK, so the stock market fall is blamed on EFCA. So what’s next Carter? Can we expect boils and locusts?