Last week, while addressing an AFL-CIO crowd, President Obama extolled the virtues of empowering union bosses as employees' exclusive representatives. But here is something he failed to mention while praising union monopoly bargaining: It often hurts America's most productive workers.
Union bosses almost always resist pay plans that take into account individual effort or ability. Consequently, union contracts routinely lower the earnings of the most productive front-line workers. And employees who work especially hard or are especially talented are not the only victims.
When businesses are unable to offer their front-line employees incentives for good performance, they often find fewer employees bother to perform well. Such firms become less competitive, and all employees suffer the consequences.
Under current federal labor law, unionized job providers can offer merit-based individual pay increases or bonuses only if union officials give their permission, or if federal authorities find bargaining between the employer and union officials has come to an "impasse."
With the exception of star-driven industries, like Hollywood movies and professional sports, union bosses have rejected virtually all requests by unionized employers to offer merit pay or bonuses. And employers risk costly strikes and legal trouble if they try to bargain to an impasse.
Consequently, unionized employers rarely try to reward employees on the basis of their individual performance, because they can expect only to suffer nasty repercussions.
One unionized enterprise that did try to reward its best employees without first obtaining union bosses' permission is the nonprofit Brooklyn Hospital Center in New York City. In 2009, a National Labor Relations Board bureaucrat ruled the BHC had violated federal law by asking supervisors to identify the top 10 percent of employees in their departments, and then providing those employees with $100 gift cards.
Even such modest incentives for good performance were not permissible, according to the NLRB bureaucrat, because the gift cards were furnished to employees "without prior notice to the union, and without affording the union an opportunity to bargain with respect to this conduct."
The bureaucrat ordered the BHC to "cease and desist" from "[u]nilaterally granting its employees a gift card or any other benefit without providing notice to the union and an opportunity to bargain."
This "wage ceiling" is one particularly outrageous way in which federal labor law harms workers by authorizing and promoting union monopoly bargaining power over pay, benefits and other working conditions. The best remedy is simply to revoke union officials' legal privilege to act as "exclusive" spokesmen for all of an enterprise's employees, including those who do not belong to the union.
Such legislation is unlikely right now, given the makeup of the Senate and the current occupant in the White House. But Congress could, as a first step, allow unionized employers to pay more than a union contract calls for without having to get union bosses' permission first. This would at least lessen the harmful impact of federally authorized monopoly bargaining.
The Rewarding Achievement and Incentivizing Successful Employees Act (H.R.4385, S.2371) would do exactly that.
If the RAISE Act became law, unionized employers would only have to establish that employees are receiving extra pay or bonuses based on their demonstrable accomplishments, and that all front-line employees have an opportunity to secure such rewards by meeting the same standards. Any fair-minded person would have to acknowledge the RAISE Act is significantly preferable to the status quo.
Mark Mix is president of the National Right to Work Committee.