Card Check: +/- 600,000

By June 9, 2009Labor Unions

Yesterday President Barack Obama announced at a Cabinet meeting that he plans to accelerate spending for the $787 billion stimulus plan to create or save 600,000 jobs over the next 100 days. However, it is a bit concerning the President has also previously expressed support for the jobs-killing Employee Free Choice Act that will destroy 600,000 jobs in the first year after enactment. One step forward, one step back.

A recent academic study by Dr. Layne-Ferrar shows that if union leaders’ expectations of increasing union membership by 1.5 million members in the year after EFCA passage are correct, 600,000 jobs will be lost.

It makes no sense that at the same that Congress and the Administration express a commitment to save and create jobs, they’ll pledge support for a bill that will kill just as many.

UPDATE (12:20 p.m.): More from The Truth About EFCA blog, “Card Check Cost: $1.75 Billion (or More!)

Join the discussion 3 Comments

  • JD says:

    Dr Layne_Farrar’s report has been cited in almost all of the anti-EFCA rhetoric describing the bill as a “jobs-killer, which is based on a surprisingly tiny sliver of data from just three Canadian provinces dating back 33 years.

    Not only have media sources failed to identify who’s backing the study — they’ve also been slow to look into Layne-Farrar’s claims and methodology, which are based entirely on decades-old data from a handful of Canadian provinces.

    Layne-Farrar builds her entire claim that the EFCA and resulting rise in union membership will lead to mass unemployment around one set of data — namely, “a panel dataset of Canadian provinces over the twenty-two year period 1976-1997” (page 20).

    Why Canada? Because, she says, their economy is roughly similar to the U.S. Canada is also unique in that labor laws differ between the country’s 10 provinces — some provinces use EFCA-like “card check” and others that don’t, and one can compare the results.

    But buried in page 20, Layne-Farrar herself admits that the data from which her entire argument is constructed isn’t so great after all:

    While the Canadian dataset is quite rich, it does have its limitations. For example, out of ten provinces that experienced changes in labor institutions (i.e., card check vs. mandatory voting) between 1976 and 1997, only three had enough variation in the card check rules themselves over time to allow for the reasonable estimation of any direct effects.

    So instead of comparing 10 provinces, the study is really based on the experience of just three: Alberta, British Columbia and Newfoundland, from which Layne-Farrar proceeds to extrapolate how many jobs will supposedly be lost in the U.S. if EFCA is to pass.

    But does even this small sampling of three Canadian provinces tell us much of anything about card check, unions and unemployment?

    Not really, given all the other factors that contribute to losing jobs. For example, in Newfoundland, one of Canada’s poorest provinces, unemployment has always been high — but that has more to do with the boom and bust of the oil and fishing industries in the coastal province than anything to do with card check.


    But Layne-Farrar doesn’t take any of these realities into account. And she ignores the most obvious evidence of all: If unions really were the cause of unemployment, why has Canadian unemployment risen in recent years — including 241,000 jobs lost in manufacturing along between 2001 and 2007 — even as union membership has declined?

    Even as a piece of business research-for-hire, Layne-Farrar’s study is shockingly weak — based on a thin set of old and irrelevant data that doesn’t even bear out her own conclusions.

    If businesses bankrolled Layne-Farrar in hopes that her research and testimony would be a silver bullet that could help stop the Employee Free Choice Act, they didn’t get their money’s worth.

    The blog posting is incorrect to assert that only data from 3 provinces is used. She notes that only three provinces have enough variation to look at the effect of switching the rules on card check. So, her solution is to look at the effect of union density across all 10 provinces on unemployment rates.

    In other words, her study does not examine the effect of the rule change directly, it can’t the data isn’t sufficient. Then, we can quibble about a lot of the methods and models, but we can set that aside and ask whether her models are fundamentally sound. Basically, when she asks how union density drives unemployment rates, her models necessarily make the assumption that unemployment rates don’t drive union density (that’s the way the math works). But, that’s clearly a fallacy. She tries some adjustments to get around this, but none are convincing. For example, she lags the union density so that she is asking whether union density from a year ago is related to unemployment today. I see what she’s trying to do, but it’s just not good enough–especially for a paper that draws such sweeping conclusions.

  • JD says:

    The study by Dr. Layne-Ferrar also states that 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. If Dr. Layne-Farrar’s theory is correct, then the huge drops in Unionized jobs seen over the last 30 years, should have resulted in a ZERO unemployment rate..

  • […] Shopfloor adds this thought on the job losses we mentioned: Yesterday President Barack Obama announced at a Cabinet meeting […]

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