Other Ensuring Opportunity For All Topics:

Labor



The Issue


The economy, labor market, and labor–management relations have changed dramatically since the 1930s. Federal labor laws have not. The government needs to bring labor policy into the 21st century to address the challenges that today’s workers face.

American labor law was written for an industrial economy in which employees’ unique skills and abilities mattered little on the assembly line. The law assumed that workers’ individual needs could be met entirely through collective representation. It also assumed that workers had little need for flexible schedules. In today’s knowledge economy, these assumptions no longer hold. Technology has made it much easier for Americans to work for themselves.

The government has responded by trying to shoehorn workers into rules designed for a different economy. New National Labor Relations Board (NLRB) rules aim to foist unions on workers by destroying the franchise business model. Government agencies have tried to shut down innovative “new economy” jobs that allow Americans to work for themselves. Government should help workers adapt to a changing workforce instead of trying to keep the economy frozen in the past.


Recommendations


Permit Employees and Employers to Institute Voluntary Compensatory Time Programs. Antiquated labor laws block flexible and innovative scheduling options desired by both employees and employers. Workers also want—and need—flexible schedules to help balance their work and family lives. They want to be able to take time off to be with their families as needed, and make up those hours later. The Fair Labor Standards Act (FLSA) often prohibits this, and should be updated to allow the flexibility that workers today desire.

Clarify that Checking Email or Voicemail or Similar Activities Before Commuting to Work Do Not Start the Workday and Do Not Require Employers to Pay Workers While They Commute to Work. The FLSA requires employers to pay time-and-a-half overtime for work beyond a 40-hour workweek with exemptions for salaried professional employees. Criteria for determining whether an employee classifies as exempt are confusing and out of date. Figuring out when the workday begins can also be challenging. Are convenience store managers exempt employees? Does checking email and voicemail before leaving for work start the clock? Courts in different states have come to different conclusions about these issues.

Repeal the NLRB Actions on Ambush Elections, Micro-Unions, Secret-Ballot Decertification Votes, and Joint Employer Standards. Impossibly short notification periods for unionization elections prevent employers from providing adequate representation of alternatives to union claims.

Require Unions to Stand for Re-Election Regularly, so Workers Can Hold Them Accountable for Their Representation. The vast majority of unions today were not chosen by the workers they represent, and current rules make it nearly impossible for workers to unburden themselves from ineffective and costly union representation. Requiring unions to submit to regular, secret-ballot re-certification elections will help ensure that workers get the representation they deserve.

Reinstate the Union-Transparency Requirements for Union Executive Compensation, Union Trust Funds, Government Union Locals, and for Potential Conflicts of Interest that the Obama Administration Rescinded. Access to financial data is critical for workers’ ability to judge the efficiency of their union representation.

Legalize Employee-Involvement Programs. The National Labor Relations Act (NLRA) was written for the industrial economy of the 1930s, and Congress has not seriously amended it since 1947. Many provisions of the NLRA hurt modern workers. While Section 8(a)(2) was intended to prohibit “company unions,” for instance, its language also prohibits employers’ employee-involvement (EI) programs, work councils, and labor-management work groups. Surveys show that 60 percent of workers prefer such programs to more government regulations or labor unions, but the law forbids such cooperative labor–management discussions. Instead, it requires workers to either choose an outside union or have no formal workplace representation at all. This hurts workers who do not want a union but would like formal channels through which to communicate with their employers. Recently, Volkswagen employees in Chattanooga, Tennessee, voted against United Auto Workers representation. This prevented them from having a works council that both they and the company wanted. Congress should permit EI programs and work councils without requiring that an outside union run them.

Allow Union Members to Receive Raises. Today’s workers also expect to be rewarded for their individual contributions. However, the NLRA prevents unionized companies from paying union members more than their contract calls for without negotiating with the union. For example, the Giant Eagle grocery store in Edinboro, Pennsylvania, gave two dozen junior employees raises for good performance. Their union filed a grievance, arguing that this violated their seniority system. The arbitrator agreed and forced Giant Eagle to rescind the raises. Under the law, union contracts set not only a wage floor, but also a wage ceiling. Without this restriction, many unionized businesses would offer performance pay to encourage greater productivity. Greater productivity raises workers’ earnings and corporate profits: Both labor and management come out ahead. Congress should allow unionized companies to pay workers more than their union rate.

Protect Employee Rights with Mandatory Secret Ballots. The interests of unions sometimes conflict with the interests of the workers they seek to represent. Unions want to collect dues from as many workers as they can—whether those workers want union representation or not. Businesses can legally recognize a union on the basis of publicly signed union cards without a secret-ballot election. This is known as “card-check” recognition. Card check tells union organizers which workers support them and which do not. They return again and again to the homes of workers who have not signed and press them to change their minds. This makes it much harder for workers to say “no.” The government should require a secret-ballot vote before unions can represent workers. The government should also give workers more say in how unions spend their dues. Unions frequently spend heavily on political activism with little regard for their members’ views. Several states have passed “paycheck protection” laws requiring unions to get their members’ permission before spending their dues on political activism. Union political spending subsequently dropped dramatically. Given the choice, most union members did not want their money spent on politics. Congress should pass a national paycheck-protection law requiring unions to get their members’ permission before using their dues for political purposes.

Harmonize Federal Worker Compensation with Private Compensation. The government should aim for pay parity between the private sector and the federal government. Federal pay differs wildly from market rates in both directions. Some high-performing federal workers earn less, and many other federal workers make more, than they would in the private sector. Federal employees also receive much more generous pension, health care, and paid leave benefits than private-sector workers. In total, federal employees average 15 percent to 30 percent higher compensation than comparable private-sector workers. Federal employees also enjoy job-security guarantees unheard of in the private sector. Congress should bring federal compensation in line with the private sector. The General Schedule should be scrapped and replaced with a performance pay system tied to market rates of pay. Congress should bring benefits in line with private-sector standards. In addition, Congress should make it easier to remove poorly performing federal employees.

Restrict Government Unions. The founders of the labor movement saw unions as a vehicle to protect workers from being exploited and to give workers a share of the profits they created. Consequently, they never proposed unionizing the government. The government earns no profits. Government unions organize against voters and taxpayers. Unions pressure the government to put their interests ahead of public interests. Not until the late 1950s did the union movement begin to argue that collective bargaining belonged in government. In most agencies, collective bargaining means less efficiency and higher costs. In national security agencies, it can cost lives. That is why Congress prohibits collective bargaining in the FBI, CIA, and Secret Service. However, the Obama Administration initiated collective bargaining at the Transportation Security Administration. Canada has a similar policy. In 2006, union protests in Toronto led to 250,000 passengers boarding their flights without being screened. National security must come first. Congress should end collective bargaining at all agencies in the Department of Homeland Security.

 

Facts and Figures


FACT: The Fair Labor Standards Act has abetted an explosion of litigation.

  • In 2000, plaintiffs filed 1,854 FLSA suits in federal court.
  • By 2010, that number had risen to 8,086 suits.
  • Modernizing the FLSA would prevent unnecessary litigation.

FACT: Unions hinder productivity-enhancing pay plans.

  • Union members are half as likely to earn performance pay as non-union workers, primarily because unions oppose allowing hard workers to earn more.
  • The president of a Teamsters division called performance-based raises the “bosses’ pet” provision.
  • In today’s modern economy, individual contributions are important and should be recognized accordingly.

FACT: Federal versus private pay comparisons are often misleading.

  • The federal government spends an average of $35,000 a year per employee on non-cash benefits.
  • This number is triple the average non-cash compensation of the average private-sector worker ($12,200 a year).
  • This enormous difference in benefits is partly responsible for the overcompensation of federal employees compared to their private-sector counterparts.

FACT: Federal employees can qualify for full pensions earlier than most private employees.

  • Federal employees receive both a defined benefit pension plan and a defined contribution pension plan.
  • Employees with enough tenure may retire with full pension benefits at 55 years to 57 years of age, depending on when they were born.

FACT: Federal employees receive more paid leave.

  • A federal employee with three years of experience receives four weeks of paid vacation, 10 federal holidays, and 13 days of paid sick leave.
  • A comparable private-sector worker earns an average of 10 fewer days of paid leave.

FACT: Union members object to using dues for politics.

  • Sixty percent of union members object to unions spending their dues on politics.
  • Two-thirds of union members say that unions should have to get permission before spending dues on politics.
  • Unions often do not have to receive permission to use members’ dues to advance political objectives.

FACT: The unionized workforce is now predominantly a government workforce.

  • A majority (51 percent) of union members now work in government.
  • More than twice as many union members work in the U.S. Postal Service as in the entire domestic auto industry.

FACT: Government unions are major political spenders.

  • Government unions accounted for three of the top five outside political spenders in recent midterm elections.

Selected Additional Resources


James Sherk, “Creating Opportunity in the Workplace,” Heritage Foundation Backgrounder No. 2962, December 16, 2014.

James Sherk, “Inflated Federal Pay: How Americans Are Overtaxed to Overpay the Civil Service,” Heritage Foundation Center for Data Analysis Report No. CDA10-05, July 7, 2010.

James Sherk, “Opportunity, Parity, Choice: A Labor Agenda for the 112th Congress,” Heritage Foundation Special Report No. 96, July 14, 2011.

James Sherk, “Proposed Union Rules Harm Workers and Job Creation,” Heritage Foundation Backgrounder No. 2584, July 20, 2011.

James Sherk, “Time to Restore Voter Control: End the Government–Union Monopoly,” Heritage Foundation Backgrounder No. 2522, February 25, 2011.

James Sherk and Lindsey M. Burke, “Automation and Technology Increase Living Standards,” Heritage Foundation Backgrounder No. 3016, July 20, 2015.

James Sherk and Ryan O’Donnell, “RAISE Act Lifts Pay Cap on Millions of American Workers,” Heritage Foundation Backgrounder No. 2270, June 19, 2012.