Card Check: Robert Reich Defends It By Not Talking About It

By March 12, 2009Economy, Labor Unions

An excellent example of the intellectual bankruptcy of the pro-Employee Free Choice Act camp is this Marketplace commentary from Robert Reich, former Secretary of Labor, “Time to enact Employee Free Choice Act.”

The sum of Reich’s argument: It’s good to be in the middle class, unions help put people in the middle class, and business treats unions badly.

No mention of the “card check” provisions undermining an employee’s ability to chose freely whether to join a union or not. No mention of binding arbitration, in which a government official would set an employee’s wages and benefits for two years, with no recourse for the employer or employee.

The ONLY mention Reich makes of the actual provisions of the legislation: “The most important feature of the Employee Free Choice Act toughens penalties against companies that violate their workers’ rights.”

And for that reason, “The sooner it’s enacted, the better — for American workers and for the American economy.”

Conscious evasion and boilerplate anti-business rhetoric from someone who supposedly provides an intellectual foundation for organized labor. Embarrassing.

UPDATE (11:45 a.m.): Acknowledging that a Wall Street Journal op-ed allows more detailed arguments than does a brief radio commentary, it’s still worth comparing the intellectual quality of Reich’s commentary with this piece by former Department of Labor solicitor Eugene Scalia, “Secret Ballots Are Free Choice“:

Unions and their supporters in Congress claim that when employees vote on whether to unionize, the elections are tainted by employer intimidation. They’re wrong. And worse than their diagnosis is their cure: Since elections are being abused, they argue, let’s eliminate them. That’s the goal of the Employee Free Choice Act (EFCA), which was introduced in the House and Senate on Tuesday.

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  • Robert Reich’s commentary also shows a fundamental misunderstanding of basic economics. Yes, union workers get paid more than non-union workers, generally speaking. But at what cost?

    Anything that costs more means there’s less of it than if it were cheaper because as the cost rises less people can afford it, and demand lessens at higher and higher price points. If you want to increase the supply of something then you lower the cost. In this case, jobs become more expensive when unions get in the mix. This may seem good for those workers who have union jobs, but what about the workers who have no jobs? If a company has X dollars, they may want to hire 5 employees with that money, but can only afford to hire 4. Perhaps they would hire 5 if the market were allowed to set the price, but since unions artificially inflate the price of the employee above the market level, that means one guy is out of a job.

    Because the company has only 4 employees where it would otherwise have 5, its output/productivity is 4/5 of what it would otherwise be (all other things being equal). If the company produced 100 widgets per month with 5 employees, it can only produce 80 widgets with 4. However, the cost has not gone down, which means the company has to charge the same amount for those 80 widgets as it would for the 100 widgets. In other words, consumers end up paying more for products than they would have to otherwise.

    This means companies with unionized workers are less competitive, since competitors that aren’t unionized can produce the same product at a lower cost, and can therefore afford to lower the cost of their product and put the unionized company out of business. Case in point, the US auto industry.

    In the long run, nobody wins. Consumers pay higher prices. Not as many people are put to work. And in the end, the unionized company goes out of business and all the unionized employees lose their jobs. The only benefits are temporary and short-term in that employees get paid more–for a while–and unions get their dues paid–for a while.

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