The NAM’s labor policy guy was on Capitol Hill yesterday, checking on the status of the Employee Free Choice Act. Senate staffers expressed puzzlement over the New York Times story on Page One, “Democrats Drop Key Part of Bill to Assist Unions,” which reported that Senate Democrats were willing to eliminate the “card check” provisions from draft legislation. There was nothing new in the story, they observed, and yet it was getting big play. As our labor person described it, that article could have been written anytime within the last month, but the placement on Page One above the fold was the Times’ way of saying it was an important development.

Whence the strange news judgement? It could be as simple as the Times having to hold another story editors originally had scheduled, so they had to find an article to fill the Page One hole. Or someone in the Senate was really flacking the story hard. Or a labor official and NYT source, irked at the surrendering of a top union goal, pushed the storyline. Or the reporter had reported the story, thought it was pretty good, and sold it to his editors.

Happens all the time.

Still, no matter how not new the story was, the article illustrates how the NYT continues to set the news agenda for the rest of the country:

• Allentown Morning Call, “‘Card check’ left out of new labor bill“
• Denver Post, “Law bill rewrite in works.”
• Examiner, “Card check compromise still weighted in favor of labor, critics charge “

Could we please not call it a “compromise?” Pro-labor Democrats agreeing with other pro-labor Democrats is not a compromise, it’s the determination of political strategy. Any bill that keeps binding arbitration is a union bill unacceptable to business.

Here’s a theory, admittedly paranoid and probably giving labor too much credit: The NYT story represents a two-part jujitsu strategy by labor. Labor claims outrage at this “compromise,” but the removal of card check prompts business to emphasize how toxic the binding arbitration provisions are. THEN, labor agrees to drop binding arbitration too, leaving business sputtering about how the remaining legislation is still bad but struggling to articulate why. With business politically neutered, the Senate passes a bill with ambush elections, a gag on employer involvement in the election process, and increased penalties. Unions still wind up with a new ability to intimidate employees into joining unions and an election process slanted toward labor.

We wouldn’t call that compromise, either.

We choose the “still in flux but spinning” option. From Sam Stein, who’s hooked in to the labor chatter, at the left-liberal Huffington Post:

The compromise legislation, as described to the Huffington Post, will contain several major labor priorities including requiring shorter time periods for a union election and containing some form of binding arbitration to prevent employers from dragging out a contract negotiation process. The measures, according to AFL-CIO spokesman Eddie Vale, will let workers choose to join a union without intimidation, ensure that those who join a union get a first contract, and institute meaningful penalties for violations of labor law.

“No matter what, this is still HUGE labor law reform,” emailed one union official.

“There is no official or final deal, negotiations are still ongoing,” said another union hand. “We’re going to pass a bill that is the biggest reform of labor law since the Wagner Act.”

Isn’t it funny how the prospects for the Employee Free Choice Act started getting all this attention just as health care and Waxman-Markey faltered because of their monstrous costs, monstrous government expansions and monstrous monstrousness? It’s as if Congressional leadership and the White House — the President met with union leaders Monday — decided that, “Well, we better give at least one important constituency something that will quiet their grumble sniping.”

But talk about monstrous. Two words: Binding arbitration. Having a government-appointed arbitrator impose non-negotiated terms on employers and employees for two years is simply an invitation to economic ruin. Companies that got a bad deal would fold. The dynamic marketplace would freeze into failure.

More from Daniel Griswold at Cato, “‘Employee Free Choice Act’ Still Bad News”:

What remains of the bill is still bad news. It would reduce the typical union-organizing election from two months to as short as five days. This is a provision that could only be favored by the side that wants workers to be deprived of the information and the time they need to make an informed decision.  And it would force employers to accept the decision of a government arbitration panel even if the resulting union contract would threaten the company’s survival.

Finally, we just love that union hand invoking the Wagner Act as a wonderful achievement to replicate.  Following passage of the Wagner Act in 1935, America experienced the Depression of 1937 and unemployment jumped back up to 19 percent. That’s a model we should emulate?

Happened again up the June 30th Washington Post interview with Labor Secretary Hilda Solis, part of the paper’s “Voices of Power,” series. The headline, “Solis Hopes to ‘Level the Playing Field’ for Unions.” The conversation seems relevant today since a score of union leaders are headed to the White House to meet with the President on health care. Will we get more of this kind of confusion?

Romano: Doesn’t the Employee Free Choice Act in fact take power away from the employer [and] give that power to the union organizers?

Solis: I don’t think that it takes away power from businesses.

Two words: Binding arbitration.

By definition, arbitration takes power away from the parties involved in the negotiations, but especially from the business side. Employers no longer decide the wages, benefits and workplace conditions; they are all determined by the third-party, ostensibly disinterested arbitrator.

Secretary Solis: “I don’t think that it takes power away from businesses.”

You would think an Obama Cabinet member would avoid bushwah.

An op-ed in today’s Wall Street Journal by Shikha Dalmia of the Reason Foundation, drawing on the work of the Mackinac Center for Public Policy on binding arbitration for public employees, “The ‘Free Choice’ Act and Binding Arbitration“:

In a dynamic economy, a business’s survival depends upon its ability to constantly cut costs and innovate. But a company forced into binding arbitration will be frozen for two years (the duration of the initial contract) from making any changes to any aspect of its business that is covered by the contract. Literally every issue — from its 401(k) contributions to its reliance on outside labor — could potentially become subject to review by a government panel that has neither the company-specific knowledge nor the incentive to turn a profit.

Businesses are not the only losers in compulsory arbitration. Currently, any contract negotiated by union officials has to be ratified through a vote of rank-and-file members. Under compulsory arbitration, workers do not get this vote. In other words, EFCA will take away the right of workers to vote to form a union, and then binding arbitration will take away their right to vote on a contract.

MIT’s Thomas A. Kochan  and Arnold Zack, past president of the National Academy of Arbitrators, have penned a piece in “Roll Call” this week attempting to justify Sec. 3 of the Employee Free Choice Act (EFCA). This is the provision of the bill that would allow for government arbitrators to impose the terms of the first labor contract on newly unionized private employers.

In this piece they claim:

If passed, the Employee Free Choice Act would assign a mediator by the Federal Mediation and Conciliation Service as soon as a new unit is certified to support the negotiations by offering the full range of mediation, education, and facilitation services helping the parties reach a voluntary agreement.

Not exactly. The EFCA dictates in Sec.3 that the NRLA would be modified to add: `(2) If after the expiration of the 90-day period beginning on the date on which bargaining is commenced, or such additional period as the parties may agree upon, the parties have failed to reach an agreement, either party may notify the Federal Mediation and Conciliation Service of the existence of a dispute and request mediation. Whenever such a request is received, it shall be the duty of the Service promptly to put itself in communication with the parties and to use its best efforts, by mediation and conciliation, to bring them to agreement.

… contrary to those who argue every case will go to arbitration, the presence of arbitration encourages and enhances the ability of the parties to reach voluntary agreements in negotiation and mediation — and incidentally does so without imposing on employees or employers the risks and costs of a strike to get a contract.

While it may be true that not every case will go to arbitration, the possibility of binding arbitration fundamentally changes the nature of collective bargaining. Under the EFCA one party can unilaterally request that the FMCS become engaged in the mediation and arbitration process would create an environment not conducive to mutual negotiations. Instead, both parties will have a greater tendency to position themselves for arbitration during collective bargaining.

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James Sherk at the Heritage Foundation responds to an attack from Media Matters for America against a Heritage video that explains why the Employee Free Choice Act’s binding arbitration provisions  are so bad. The post, “Fact Check: Media Matters Wrong on Card Check Facts,” notes several misrepresentations from Media Matters (yeah, bit surprise). More importantly, Sherk provides a good primer on the distinctions between public sector arbitration and EFCA’s imposed government arbitration. To wit:

Most public sector arbitration decisions decide disputes in renewing an existing contract – not in writing a new contract from scratch. Both parties have already settled fundamental issues such as the sort of seniority or promotion system that will be used, the job classifications for employees work, and the benefit types employees earn. The main issue in dispute is how much workers will earn, not how the department will be (re)structured. The arbitrators also have clear standards and guidelines they must use to make their decision.

This hardly work flawlessly. In many cases arbitrators make bad rulings that cities cannot afford. One arbitrator’s ruling nearly bankrupted Detroit in the late 1970s, forcing the city to lay off one fifth of the police force and igniting a crime spree. In other cases taxpayers must simply pay out because the government never goes bankrupt – it just raises taxes to cover higher costs.

EFCA, however, has none of the limited safeguards contained in public sector arbitration. Read the bill. It only applies to new contracts, before any issues like promotion procedures and work duties have been settled. The government arbitrator would impose those, without the benefit of a previous contract to look back on. And unlike public sector arbitration there are no standards for the arbitrator to use. None at all.

The upshot is that union negotiators would make extreme demands, hoping the government-mandated arbitrator splits the difference. Binding arbitration works against good-faith negotiating.

The Wall Street Journal (subscription) today reports, “Provision to Ease Unionization Likely to Drop Out of Bill.” The lead:

Senators are working on a compromise version of a labor-organizing bill that will likely drop a contentious card-signing provision in favor of a speedier union election process, according to people familiar with the talks.

And another key paragraph:

Compromise talks are being led by Sen. Tom Harkin (D., Iowa), the bill’s lead sponsor in the Senate. Kate Cyrul, a spokeswoman for Mr. Harkin, declined to comment on details of the compromise being discussed. But she said the senator “remains confident that we can address these issues without compromising the core provisions of the bill.”

Compromise talks with WHOM? Senator Kennedy? Bernie Sanders? The SEIU and AFL-CIO? The only other Senator mentioned in the story is Specter. The premise is faulty: Negotiations between two Democrats, the lead Senate sponsor of the bill (S. 560) and a past cosponsor of the bill, Senator Specter, hardly represent the makings of a compromise.

Especially if you retain the “core provisions of the bill,” which are designed to force unionization on employees and employers who do not want union representation.

• EFCA Report, “WSJ: Sen. Harkin Shopping EFCA Compromise; 21-Day Elections, More Mediation“
• Senator Specter’s March 24th floor statement outlining his objections to the Employee Free Choice Act.

UPDATE (11:25 a.m.): Much more detail in this New York Times story, “Lines Shift a Bit on a Senate Labor Bill.” Snap elections appears to be labor’s fall-back, i.e., depriving employers of an opportunity to make their case.

A refresher: Two types of arbitration are subject of policy discussions these days in Congress and on this blog.

• Binding arbitration: As proposed in the Employee Free Choice Act, binding arbitration would impose the equivalent of a two-contract — work rules, salaries, benefits — on businesses and unions if negotiations over first contract negotiations continue past 120 days. These terms would be mandated by a government-appointed, outside arbitrator.
• Pre-dispute arbitration: The common practice, including in many consumer contracts, that provide for non-judicial venues for resolving contract disputes. Business groups generally support this sort of arbitration, because it leads to quicker and less expensive outcomes by keeping the disputes out of the courtroom, away from attorneys whose seek to ring up billings, awards and settlements.

The American Association for Justice — the trial lawyers lobby — HATES pre-dispute arbitration, and has made killing it one of their lobbying priorities. Accordingly, Sen. Russell Feingold (D-WI) last week introduced S. 931, the Arbitration Fairness Act, a bill that bans predispute arbitration in business contracts with consumers. (Opening statement, text.) The legislation is the Senate companion to H.R. 1020 introduced by Rep. Hank Johnson (D-GA). (More rom the Green Bay Press-Gazette)

Just in time for the Senate bill, the American Association for Justice released a new opinion survey claiming that the public dislikes binding arbitration. The AAJ-led Fair Arbitration Now Coalition also held a news conference announcing the survey conducted by the Democratic polling outfit, Lake Research Partners, but it’s a laughable example of a survey that found what it set out to find. From the news release:

“The findings show clearly that Americans strongly oppose forced arbitration, and they see the Arbitration Fairness Act as a remedy. Not only is there real intensity to this view, but it traverses traditional partisan divides,” said Lake Research Partners President Celinda Lake. “Forced arbitration clauses – which are buried in the fine print of employment and consumer contracts – are another example of corporations taking advantage of ordinary Americans. The public supports the Arbitration Fairness Act because equal justice under the law is a core American value.”

Our emphasis.
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Sen. Russell Feingold (D-WI) last week introduced S. 931, the Arbitration Fairness Act, a bill that bans binding  (predispute) arbitration in business contracts with consumers. (Opening statement, text.) The bill came in with seven cosponsors.

Sen. Feingold and his cosponsors are also all sponsors of S. 560, the Employee Free Choice Act, a bill that mandates binding arbitration between business and outside unions that are trying to organize them.

The American Association for Justice, aka the trial lawyers’ trade association, has lobbied heavy to ban arbitration. Last week the AFL-CIO announced the AAJ’s support for the Employee Free Choice Act that mandates binding arbitration.

Mandate, ban, mandate, ban, mandate…The head spins.

Michael Barone in the Sunday D.C. Examiner, “Beware of mandatory arbitration in Card Check,” with an excellent one-paragraph summary of the potential consequences.

Arbitrators might very well impose terms and conditions similar to those in existing union-negotiated contracts. Those might include not only wages that would reduce a business’s profits, but also generous fringe benefits and thousands of pages of detailed work rules. Private employers might be forced into funding union pension plans with their massive long-term liabilities. Detailed work rules would mean adversarial negotiations between company foremen and union shop stewards over even the most minor changes in work procedures.

Jennifer Rubin at Commentary, “Where Is Card Check?,” contemplating possible new strategies by the anti-EFCA business forces if a Specter-endorsed “compromise” is proposed. First, bipartisan reform. Second…

The second is to go after the premise that any of this is needed at all. EFCA has been a solution in search of a problem, resting on the questionable notion that unions are losing “market share” not because of worldwide trends against unionization or because of younger worker’s lack of affinity for unions but because of nefarious actions by employers. This requires some sober discussion and fact-finding hearings, which may not be in the offing in a Democratic-controlled Congress where the hearings are likely to be stacked heavily in favor of pro-union witnesses. Nevertheless, business groups would be wise to start educating lawmakers and the public if they want to burst the myth that the solution to Big Labor’s woes is more federal legislation.

Mickey Kaus comments:

Part of the problem, of course, is that some anti-card-checkers (not me!) have pretended they don’t oppose greater union power–they just object to eliminating the secret ballot, etc.. But now it’s time for a debate on whether more (and more powerful) Wagner Act unions really are a good thing. If business can’t yet make the case that they aren’t–at a time when the unionized auto industry has collapsed under the weight of its own rules and the unionized urban public schools are flailing to reverse their contract-protected incompetence– when can they make it? ….

More from Kaus, “You Can Count on Specter!”