The Case Against Employee Free Choice ACT by Richard A. Epstein

Author:Richard A. Epstein [Epstein, Richard A.]
Language: eng
Format: epub
Tags: Labor & Industrial Relations, Political Science
ISBN: 9780817949433
Google: MKq5Md6eg3IC
Goodreads: 18507979
Publisher: Hoover Press
Published: 2009-01-01T00:00:00+00:00

What Counts as Successful Arbitrations?

In order for any relationship to remain stable, it must leave each party better off than it would have been in the absence of the agreement. That condition can be satisfied, albeit with difficulty, in voluntary agreements between the two sides, for neither management nor labor will agree to any contract that leaves it worse off than it would have been with a lockout or a strike. But there is no guarantee that any complex arbitrator-imposed terms and restrictions under EFCA will meet this condition. Remember, the dispute here is not limited to salaries and benefits, but necessarily spills over to all terms that are part of a standard collective bargaining agreement. Many of these are not easy to monetize, such as work rules, promotions, demotions, reassignments, layoffs, grievances, and the like. Each of these provisions is hard to value, and it is easy for an arbitrator to underestimate the level of dislocation that a particular restriction will have on the competitive mettle of the firm.

The problem is even more difficult than it first appears for two reasons. The first relates to a single arbitral award: the many close interconnections between the various aspects of the employment relationship could impose unexpected burdens on the management of the firm. The problem is equally acute for small businesses and large ones. Two years is an eternity for any firm shackled with a labor agreement that makes it impossible to respond quickly to new dangers or opportunities. The implicit static model behind EFCA is at least a generation behind the times. The second relates to the prospect of multiple arbitral awards on behalf of different bargaining units in the same firm; there may be inconsistencies between the awards, or the cumulative burdens could easily escape the detection of the separate arbitration panels as they move along parallel tracks.

EFCA proponents insist these points are overstated because of the common use of these arrangements in the public sector, where neither strikes nor lockouts are allowed. But there are significant differences between public and private settings. Most public unions—teachers, police, firefighters, sanitation workers, and so on—work for a given public employer with a fixed internal structure that faces no direct competition from any other firm. There is, therefore, a certain forgiveness in the setting of terms because the government unit has the opportunity to make up any losses from contracts through increased taxes. In addition, contract renewals and extensions are typically negotiated off past agreements, which have already proved viable.

Viable, however, is far from optimal. With public employment, many of the terms are dictated by statute or regulation, which could easily be ill-suited for many bargaining units. Unfortunately, the parties have no opportunity to revise the basic agreement to counter any inefficiencies that arise. The basic contract structure lives on long after the efficient modes of production have shifted. The continuation in service may prevent disruptions, but it conceals the rapid deterioration that interest arbitration fosters by entrenching older modes of doing business in the face of new technology.

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