During the recent debate on the farm bill, the Senate voted down an amendment that would allow unionized employers to give workers raises based on merit. The amendment, called the Rewarding Achievement and Incentivizing Successful Employees Act, eliminates the federally mandated ceiling on the union wages for nearly 8 million workers.
Currently, union workers' wages are set by collective bargaining agreements made between a union and an employer. These agreements create not only a floor for wages, but also a ceiling. Pay increases are based on seniority, not merit. In other words, unionized employees can only see an increase in their salary through seniority, no matter how productive or hard-working they are. The RAISE Act would allow employers to give individual workers pay increases without going through a union.
Despite the potential benefits to union members, unions have put up fierce resistance to the proposal. Teamsters President James Hoffa railed against the bill in a recent letter to senators, in which he advised them to "oppose the RAISE Act (S. 3221) which seeks to allow employers to grant wage increases unilaterally to workers of their choosing." Hoffa's position boils down to preventing employers from having the ability to give individual raises to union workers for outstanding performance.
The Service Employees International Union called the RAISE Act "another attempt to undermine the rights of workers to bargain collectively -- and that's not fair."
The SEIU's description is a complete mischaracterization. Under the RAISE Act, employers still could not pay higher wages to nonunion workers to deter union organizing, and federal law would still prohibit employers from discriminating against union members.
What is really at stake is union power. On the most basic level, union bosses hope their workers perceive the union -- not their individual talents -- as the surest way to advancement. An individual raise above the union wage threatens to undermine this union narrative, which is already getting harder to sustain, as the inflexible and adversarial nature of the union wage scale no longer suits the American economy.
As James Sherk and Ryan O'Donnell of the Heritage Foundation note, the American workforce has become more fluid over the last 30 years as workers perform more dynamic and unpredictable tasks. One-size-fits-all union contracts are obsolete, inefficient and unfair. A union-mandated wage ceiling provides a powerful disincentive for individuals to work hard and innovate in the workplace.
Rep. Todd Rokita, R-Ind., the sponsor of the RAISE Act in the House, wrote, "The ban on individual raises destroys morale and discourages honest hard work. If it doesn't make any difference whether you bust your tail to do a good job or lazily scrape by to meet your basic job requirements, then where's the incentive to try harder?"
Moreover, the RAISE Act makes no one worse off. On average, performance-based pay increases worker salaries by $2,700 to $4,500 a year, according to a recent Heritage Foundation study.
The debate over the RAISE Act demonstrates that union interests and worker interests are not the same. Union bosses like Hoffa fear that rewards for individual workers could loosen their control over the rank and file, undermining the antiquated system of strict work rules and pay scales upon which unions thrive. Unions rightly observe that their defense of this perverse wage ceiling protects their interests. What they don't mention is that it hurts the workers who would excel if given the chance.
Michael Giles is a research associate at the Competitive Enterprise Institute. F. Vincent Vernuccio is labor policy counsel at CEI.