Let’s Kill All the Jobs

Tuesday, February 8, 2011

The news on employment last past week was regrettably familiar. There was a small increase of 36,000 workers after a somewhat more robust performance this past December. But that increase is not enough to keep pace with the population increase. Too many learned economists look for a macroeconomic fix for what is at root a dense network of microeconomic problems. Any initiatives designed to manipulate the money supply or the interest rates may well impact investments, savings, and growth. However, what really matters for labor markets is, well, employment policy.

Here is a simple proposition: Labor markets should, in principle, be allowed to run free, without the burden of state-mandated collective bargaining laws, antidiscrimination laws, family and medical leave protection, and minimum wages.

Illustration by Barbara Kelley

We are far from that ideal today, but the good news is that the Republican majority in the House will block any new legislation regulating the labor markets, such as the Employee Free Choice Act with its dangerous card-check and compulsory arbitration provisions. The bad news, however, is that unilateral actions by the executive branch, like executive orders, can still wreak havoc on labor markets—which is precisely what President Obama’s recent executive order will do.

These orders have the power of law until a new law passed by Congress overturns them. That task is more formidable than it sounds given the power of the president to veto new legislation, subject only to a congressional override. Until a change in administrations, these executive orders will be hard to undo. Even then, many executive orders last over many administrations.

A bit of history sets the stage for the current use of executive power. One of John F. Kennedy’s worst acts was issuing Executive Order 10988 in January 1962, which essentially allowed federal employees to unionize and bargain collectively with the federal government. To be sure, the order was hedged with limitations on the right of workers to strike. But that caveat did not matter. E.O. 10988 allowed unions to maintain, even boost, their overall membership, just as the unionization rates in the private sector were starting to fall. That executive order also set a regrettable precedent for similar actions at the state level, which brought about a massive upsurge in unionized teachers, police, firefighters, prison guards, and other state and municipal employees. Fifty years later a massive public-pension overhang is the grim legacy of Kennedy’s profligate action.

Unilateral executive orders can wreak havoc on labor markets.

President Obama has learned all too well from his predecessor. This past week he extended a set of limited collective bargaining rights to the 45,000 employees of the Transportation Security Administration (TSA). President Obama’s arguments mirror those Kennedy articulated in 1962, down to the claim that workers with union representation will have higher morale and more professional performance. Oh? What about the "high performance" in the Post Office and other government agencies?

Alternatively, we should ask why private employers have never grasped the "virtues" of unionized workforces. We should also note that there are other ways to boost morale and professional performance than through unionization. Government employers can get their workers involved in activities, for instance, by asking them to join with management in discussing common issues, which can be accomplished quite well, thank you, without involving unions. Effective communications are, of course, critical to the operation of any business. That is one good reason why no employer, public or private, should ever be forced to bargain with a union that stands between it and its workers.

One of the less debated but truly insidious provisions of the National Labor Relations Act is Section 8(a)(2), which treats the formation of a company union as an unfair labor practice. Organized labor recognized from the get-go that it is hard to organize any well-functioning workplace that has good communications between management and employees. The prohibition against company unions makes it harder for employers to preserve and develop these cooperative relationships. Any ad hoc committee that lets management and workers decide on a computer system may well count as an unfair labor practice, even in a nonunionized plant. The moment that an organization drive starts, the barriers to cooperation become even greater. The law now requires total separation of all such cooperative committees. And the forced separation between management and labor drives a wedge between the two, sapping mutual trust and making it more difficult to promote lower level workers up through the ranks.

The president’s executive order thus does nothing to improve the operations of TSA. Rather it is just a brazen effort to let unions recruit 45,000 new workers, whose dues can shore up the use of union clout on behalf of Democratic candidates and policies. For its part, the effectiveness of the TSA can only go down. No formal effort to preclude strikes or slowdowns will redeem this flawed program, as bitter campaigns by rival unions will only divide workers and distract them from their central job. Beyond that, ceding power to any union on matters of national security just makes no sense at all.

Labor markets should, in principle, be allowed to run free.

Republican senators are right to seek a legislative reversal of the president’s executive order. Even if their proposed legislation falls to the president’s veto, it should expose the president’s dangerous bid to placate unions after his failure to secure passage of the Employee Free Choice Act, with its twin vices of card-check and compulsory arbitration.

The president’s pro-union efforts do not stand alone. Right now Lafe E. Solomon, Acting General Counsel of the National Labor Relations Board and an Obama appointee, has announced an intensification in enforcement actions against employers who thwart labor organization drives. Soloman’s undertaking of course overlooks all the hardball tactics that unions use in organizational drives.

What makes these current developments so ill-advised is that they show the deep tension between the president’s abstract commitment to reduce unemployment and the concrete steps he has taken that in a real and tangible way badger the very employers who can drive those unemployment numbers down. The disconnect between what the president says and does is no more evident than in connection with his covert and ill-fated labor agenda. Until the president abandons or moderates his misguided pro-union policies, the near-jobless recovery will continue apace.