The Employee Free Choice Act (EFCA), a likely hot button for the Obama administration, would fundamentally alter the balance of power in the U.S. labor market and impose enormous costs on workers. Ironically, as America moves to fundamentally change the way unions are certified, other countries, like Canada, are moving away from these very same laws because they just don’t work. Washington must heed the lessons of our northern neighbor.
The EFCA includes two prominent changes. The first, card check, would eliminate the requirement for secret ballot voting to confirm a union as the sole representative of workers. Currently, 30 percent of workers need to show support by signing union cards, followed by a secret ballot election overseen by the National Labor Relations Board (NLRB). The proposed law would allow unions to be automatically certified when 50 percent plus one of workers sign union cards.
The second provision is the imposition of a first-contract requirement on newly unionized firms. If the employer and union cannot agree to a first contract, the government will impose one through binding arbitration. This would constitute an enormous expansion of the role of the state in private economic negotiations. The incentives of such a change are clear: unions have a gigantic incentive to make uneconomic and unrealistic demands.
Canada, America’s northern neighbor, provides vivid illustrations of why such laws should not be enacted. It has used similar laws extensively and is moving aggressively and purposefully away from them because they inhibited investment and job creation. In Canada’s most populous province, Ontario, as well as British Columbia, union-friendly governments eliminated secret ballot voting and introduced card check certification. The negative consequences quickly became clear in terms of reduced investment, higher unemployment and less job creation.
Both provinces, after electing more market- friendly governments, moved to reinstate secret-ballot voting. That helped to reverse the economic losses and restore a sense of balance in union-employer relations.
Americans should also consider the more recent experience of Saskatchewan, birthplace of Canada’s communist party, its socialist, union-dominated New Democratic Party, and a stronghold for government monopoly health care.
Saskatchewan implemented card check, with negative results similar to those in Ontario and British Columbia. The recently elected government, which is not exactly an ardent promoter of free markets, made one of its first acts to eliminate card check in order to restore balance and democracy in union certification.
American politicians frequently call for imitation of Canadian laws, but Canada’s reversal of card check has not become part of the debate. It should, because given the current economic weakness there is probably no worse time to implement labor laws that Canada has reversed.
As a U.S. senator, president-elect Obama was an avid supporter of the grossly misnamed EFCA, and as a candidate he vowed that it would become law. It remains unclear how much room the Obama administration has to delay implementing the bill. The Democrats now control the White House and both houses of Congress with increased majorities, and there are a number of vulnerable Republicans in the Senate that may mitigate their limited ability to delay legislation through filibuster. And if Hilda Solis is confirmed as the secretary of labor, the Democrats will have run out of excuses for not enacting one of the most radical changes to labor laws since the mid- 1930s.
As President Obama and the new Congress strive to restore confidence and prosperity to the economy, they should consider certification. Radical measures such as card check may please unions, which represent about 7.5 percent of American workers in the private sector. Such measures, however, are not a prescription for what ails the economy and would impose serious costs on all workers. Indeed, as the Canadian lessons show, any state or nation that adopts such policies will suffer economically from lower job creation and investment.
Jason Clemens is the director of research at the Pacific Research Institute in San Francisco (www.pacificresearch.org) and previously spent over 10 years in Canada at the Fraser Institute.