Card Check: Destroying Jobs and Economic Growth

By March 8, 2009Economy, Labor Unions

From the HR Policy Association, “Employee Free Choice Act Will Cost US Economy 600,000 Jobs in 2010“:

Increased Unemployment and Stifled Job Growth Will Claim Millions More in Decades to Come

WASHINGTON, March 5 /PRNewswire-USNewswire/ — Empirical data shows that organized Labor’s effort to pass the Employee Free Choice Act (EFCA) comes with a terrible cost to jobs and the economy, according to a detailed study released today by noted economist Dr. Anne Layne-Farrar.

According to the study, An Empirical Assessment of the Employee Free Choice Act: The Economic Implications, every 3 percentage points gained in union membership through card checks and mandatory arbitration will result in a 1 percentage point rise in the unemployment rate the following year.

Dr. Layne-Farrar concludes “The costs [of EFCA] should be carefully weighed against any purported benefits of passing the Act, all of which appears to benefit some groups at the expense of others. There is no coherent theoretical argument that explains how the higher costs, greater legal uncertainty, and expanded government intervention entailed in EFCA would improve overall social welfare.”

The report finds conclusively that the unionization of 1.5 million existing jobs under EFCA in year one would lead to the loss of 600,000 jobs by the following year. Job losses directly attributed to the passage of the Employee Free Choice Act would be equal to the entire population of Boston, MA.

Conclusively? The effect could be 600,000 lost jobs, 500,000 or 700,000, or 416,912, for all we know. The key observation is Layne-Farrar’s comment: “There is no coherent theoretical argument that explains how the higher costs, greater legal uncertainty, and expanded government intervention entailed in EFCA would improve overall social welfare.”

But then, one shouldn’t expect coherent arguments from labor advocates on Tuesday when the Senate HELP Committee holds a hearing, “Rebuilding Economic Security: Empowering Workers to Restore the Middle Class.” The second panel of witnesses is made up entirely of workers who will, no doubt, tell stories of frustration, disappointment and unfair treatment. We’d guess their anecdotes will lead the news coverage.

Layne-Farrar does testify on the first panel. Her full report is here.

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