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 Study Released Making Detailed Case Against the Radical Legislative
Proposal Known as the Employee Free Choice Act

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Washington, D.C., February 3, 2009 – Noted legal scholar Prof. Richard Epstein thoroughly debunks claims made by supporters of the radical legislative proposal known as the Employee Free Choice Act (EFCA) in a report released today by the Alliance to Save Main Street Jobs, a grassroots business organization whose membership includes the American Hotel & Lodging Association (AH&LA). 

Scheduled for publication by the Hoover Institution of Stanford University, The Case Against The Employee Free Choice Act enumerates the countless risks to job creation, small businesses, and overall economic growth that would result from this misguided legislation.

Prof. Epstein’s detailed study addresses the Employee Free Choice Act's three major provisions: 

  1. replacing secret ballot elections with a card check process, 
  2. compulsory binding arbitration for first-contracts, and 
  3. increased unfair labor practice sanctions applied exclusively to employers. 
Additionally, the report criticizes the justification supporters cite for EFCA and the long-term implications to small businesses, corporations, and overall economic growth should it become law.

Prof. Epstein summarizes the economic impact by suggesting that “the passage of EFCA will create huge dislocations in established ways of doing business that will in turn lead to large losses in productivity.”
 

Excerpts from The Case Against the Employee Free Choice Act, 

by Prof. Richard A. Epstein.
On the Real Impact to American Workers:

“In the end new job creation will swamp whatever distributional gains the EFCA promises for some select group of workers. Increased coercion never leads to increased productivity. EFCA will surely exert an overall negative effect on the wages and job opportunities of employees.” (Epstein p. 91)

“…the consequences of unionization for small firms should not be evaluated solely in terms of the number of workers who are unionized in each year.  Rather the key question is the extent to which unionization of small firms inhibits the potential for growth so that these firms do not realize their full economic potential.”  (Epstein, p. 40)

On the Decline of Unions in the Private Sector: 

“Some likely candidates for the observed decline include the expansion of free trade across national borders, more intensive global competition for employees, the reduced appeal of unions to younger workers, the entry of smaller decentralized firms, the rapid turnover of workers in a relatively open economy, the better wages and working conditions that nonunion employees can command in an open economy, the rise in government regulation that confers certain protections (i.e. against discrimination) that no longer are subjects of bargaining, ineffective union organizing, and the rigidity of the internal governance structure of unions themselves.   Most important perhaps is the fundamental switch in the political economy of the United States. The 1930s marked a corporatist period, in which monopoly unions shared power with regulated monopoly industries, shielded from competition by a powerful state.24 More recently, the economic environment has switched by allowing the free entry of smaller firms whose vitality and growth has gone a long way in undermining the old monopoly models, posing more challenges to established firms and their long?standing labor unions.  No account of the decline in unionization is complete without taking these changes in account, which defenders of EFCA blindly refuse to do.” (Epstein, p. 15)

On Replacing the Secret Ballot with Card Check:

“But in [the unions’] zeal to condemn the employer they never explain why it is necessary to leap to the card-check outcome without figuring out how to expedite or improve union elections within the current framework…Nor do EFCA supporters address the allegation that union organizers, or overzealous pro-union employees, are also capable of coercive behavior during a union election.” (Epstein, p. 30)

On Replacing First-Contract Collective Bargaining With Compulsory Binding Arbitration:

“This new innovation [interest arbitration] marks a complete departure from the current law which provides that once a union has been certified, both the union and the employer fall under an obligation to bargain in good faith.” (Epstein, p. 50)

“The prospect of arbitration could easily lead one side to hold out…if it thinks that the arbitration panel will come out its way.  Thus the likelihood of a voluntary agreement could easily go down under this system, which puts greater pressure on the still unknown arbitration process, as unions may have a strong incentive to hold out for a strike it rich settlement, especially if they think the decisive arbitrator is on their side.” (Epstein, p. 62)

On Employer Speech:

“The critics of employer speech sidestep these arguments.  Their chief objection to employer speech is not that it is illegal but that it is effective.”  (Epstein p. 25)

“… so long as illegal routes are not taken, no speech becomes coercive solely because it is effective.” (Epstein, p. 25)

“…the implicit union premise is that an employer behaves improperly during an election by making known its preferences, even when there is nothing illegal about the presentation of their views.” (Epstein, p. 25)

On Organized Labor:

“They do not act as sales representatives who offer firms goods and services that their customers are only too happy to buy. Rather, they engage in multiple front wars that involve litigation, resort to administrative harassment, boycotts, pickets and public denunciation to achieve their goals. The implicit claim in all this behavior—widely practiced but rarely acknowledged frankly—is this: you can be less worse with the union than in the throes of an open-ended organization campaign.  That strategy is no way to forge good relationships or increase productivity.” (Epstein, p. 103)

On the Relationship Between Workers and the Unions that Represent Them:

“The key point to remember is that there is, going forward, no identity of interest between the unions who profit from EFCA and the workers whose job opportunities are limited by its passage.  A far better strategy for helping worker interest is to opt for a more competitive labor environment at home.  In the end new job creation will swamp whatever distributional gains the EFCA promises for some select group of workers. Increased coercion never leads to increased productivity. EFCA will surely exert an overall negative effect on the wages and job opportunities of employees.” (Epstein p. 90)

On Opponents of EFCA:

“They do not believe that all employers are insensitive dolts, who would rather fire a worker than learn from what he or she has to say. They believe that sound management practices and forward looking workplace relationships can stave off unionization in any free and fair election.”  (Epstein, p. 103)

“[EFCA opponents] treat the decline of unionization in the private sector as stemming from the increased realization by workers that they are not on balance and in the long run made better off by unions, whose fortress mentality cripples workers’ prospects for advancement in today’s global economy.” (Epstein, p. 103)


Identified by Legal Affairs Magazine in 2005 as one of the top 20 legal thinkers in the nation, Prof. Epstein is the James Parker Hall Distinguished Service Professor at the University of Chicago, the Peter and Kirsten Bedford Senior Fellow at the Hoover Institution, and a visiting professor of law at New York University School of Law. 

“Professor Epstein’s study exposes the real story behind the grossly misnamed ‘Employee Free Choice Act.’   For the U.S. lodging industry, EFCA’s affect would be devastating,” said Marlene Colucci, AH&LA executive vice president of public policy.  “This bill does not help the economy create jobs.  This bill will only increase operating costs on lodging businesses, many of which depend on thin margins to stay profitable.  The conclusions found in this first study about this radical proposal should give Congress and the Administration a sharp pause before they consider making major changes to our nation’s labor laws.”

The Alliance to Save Main Street Jobs includes numerous trade associations such as the Retail Industry Leaders Association, the American Hotel & Lodging Association, the U.S. Chamber of Commerce, the Associated Builders and Contractors, and the Real Estate Roundtable. The Alliance, which funded Prof. Epstein’s study, is chaired by the HR Policy Association.

The full 127-page The Case Against The Employee Free Choice Act is available online and can be downloaded from www.hrpolicy.org/portal_efca.aspx.  The study and its executive summary are also available at www.ahla.com. 



Serving the hospitality industry for nearly a century, the American Hotel & Lodging Association (AH&LA) is the sole national association representing all sectors and stakeholders in the lodging industry, including individual hotel property members, hotel companies, student and faculty members, and industry suppliers. Headquartered in Washington, D.C., AH&LA provides members with national advocacy on Capitol Hill, public relations and image management, education, research and information, and other value-added services to provide bottom-line savings and ensure a positive business climate for the lodging industry. Partner state associations provide local representation and additional cost-saving benefits to members.  For more information, visit www.ahla.com.
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Contact:

Robert Baylor
rbaylor@ahla.com
 

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Also See: The Perfect Storm is Coming -- The Employee Free Choice Act - Unionization by Card Check / Marta Fernandez / November 2008
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