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Small business owners say the mandatory arbitration in the Employee Free Choice Act is even more damaging than card check itself.

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Card Check Bill Includes Another Economy Killer

Small business owners say the mandatory arbitration in the Employee Free Choice Act is even more damaging than card check itself.

With the reintroduction of the astonishingly misnamed Employee Free Choice Act (EFCA) this week, a lot of attention is rightly focused on the outrageous card check provisions that would remove secret ballot protections for union organizing elections. Less noticed but possibly even worse for the U.S. economy is that EFCA also takes the “bargaining” out of collective bargaining by empowering a federal bureaucrat to set contract terms for wages, benefits, and working conditions without so much as a vote of the workers. Calling that “free choice” would be funny if it weren’t deadly serious for our already-reeling national economy.

The current National Labor Relations Act attempts to strike a balance between the workers’ desire for collective bargaining and the employer’s right to actually bargain and come to mutually acceptable terms. Once a union has been certified, the employer is obligated to negotiate in good faith. The National Labor Relations Board has powers to encourage employers to meet the good faith obligation (including the ability to order back pay), and the union has the option of calling a strike to increase its leverage. Once a deal is done, the workers vote on whether or not to accept the contract.

Under EFCA, the bargaining process could still occur, but the union would have an enormous incentive to stall and force the process to go to binding arbitration. In theory, the arbitrators should be even-handed, but there is nothing in the past of President Obama or Labor Secretary Hilda Solis to suggest that the arbitrators wouldn’t be politically motivated. Such arbitrators would be likely to impose terms, including forced union dues, that advance the interests of the union bosses (who provide the legwork and funding for the left) rather than the interests of workers, who depend on economically viable companies for jobs. Absurdly, this co-called “free choice” bill would not even allow workers to vote on the arbitrator-imposed contract, and there would be no way to exit the contract or to decertify the union for two years.

Several small business owners have told me that while card check gets most of the attention, mandatory arbitration is an even worse economic killer in EFCA. In a card check campaign, the employer still has some voice during the negotiation of a collective bargaining agreement. Employers may be able to negotiate agreements with unions that their businesses can live with. In a regime of contracts imposed by left-leaning government arbitrators, by contrast, workers have little say and employers have none at all. In an already fragile economy, that could be the public policy weapon of mass destruction that sends us spiraling further downward.

Economists at UCLA have found that the biggest policy errors of the 1930s were centralized regulation, consolidation of industry, and dramatically enhanced union power. These changes prevented the economy from being flexible enough to adapt to new economic conditions, rationalize operations, and develop innovations to put the economy back on a sound footing.

The bailouts are already taking us toward central economic planning, with a panel overseeing the auto industry, unprecedented federal control of the banking system and financial markets, and a freshly-passed trillion dollar so-called stimulus that will substitute political judgment for market freedom throughout the economy.

Empowering government bureaucrats to impose sweetheart contracts for union bosses without meaningful input from employers or approval from workers is a recipe for politicizing all that’s left of the U.S. economy. This will force costly contracts of the sort that crippled the auto, steel, and airline industries on other sectors. In turn, more industries will look for taxpayer bailouts that also bring more government control.

Such consolidation of economic power in the political sector would do serious, lasting damage to America’s recovery effort, our economic growth and perhaps even the existence of our free market system. The binding-arbitration power grab in EFCA must be stopped.

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Written By

Mr. Kerpen is policy director for Americans for Prosperity. His website is PhilKerpen.com.

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