Daily Archives: July 14, 2009

EFCA’s Binding Arbitration: Putting Workers on the Path to Serfdom

The Wall Street Journal published an op-ed on the moronically-monikered Employee Free Choice Act which was penned by Reason Magazine’s Shikha Dalmia. Amongst Ms. Dalmia’s several points on why binding arbitration is bad public policy, there are several worth noting:

This process is supposed to install a contract expeditiously. But a review of 29 arbitration cases in 2005 and 2006 by the Michigan-based Mackinac Center for Public Policy found that the average time involved in a case was almost 15 months — not the four-and-a-half months that the law prescribed, defeating its whole purpose. Moreover, because an arbitration board doesn’t have to live with the consequences of its decision, it has no reason to come up with a workable solution — just one that is politically expedient.

Compulsory arbitration also nudged other Michigan cities, including the working-class towns of Hamtramck and Highland Park, into bankruptcy. In 1999 an arbitration panel awarded Hamtramck police officers $2.1 million in pay raises and back pay, pushing it into state receivership. Under receivership, which is only used in extreme situations, the state government takes over the city’s finances and appoints its own manager to run the city. Hamtramck was ultimately forced to impose a combination of service cuts and tax increases, all of which accelerated the exodus of its residents. Highland Park, wishing to avoid similar arbitration, gave its public safety officers raises it couldn’t really afford and was also forced into receivership.

Michigan’s experience is hardly unique. Former Massachusetts Gov. Michael Dukakis also tried to limit public-sector compulsory arbitration during his first term. In 1977, Mr. Dukakis argued that compulsory arbitration “has removed legitimate management prerogatives in the area of staff assignments, (and) transfers from the control of municipal officials at a time when they are under severe pressure to improve their management and make savings.” Mr. Dukakis failed to stop compulsory arbitration, but two years later Massachusetts voters approved a ballot initiative that effectively scrapped it.

Should EFCA pass, the costs of compulsory arbitration in the private sector will dwarf those in the public sector. That’s because businesses, unlike government, can’t just bill taxpayers to pay off unions. They have to compete. [Emphasis added.]

One point that Ms. Dalmia did not point out, however, is the fact that binding arbitration also puts workers onto the path to serfdom:

Under the oxymoronically-named Employee Free Choice Act, once binding arbitration kicks in, if employees had been tricked into unionization (under EFCA’s no-vote unionization provision) and the government imposes its contract on the employer and employees, employees..:

1) CANNOT vote to ratify or reject the government contract

2) CANNOT modify the government contract

3) CANNOT kick the union out (for two years)

4) and, perhaps most importantly, CANNOT strike in protest.

Note: A strike is the collective withholding of labor and, if workers cannot withhold their labor, then they effectively become economic serfs.

Employees will be voiceless, powerless and left with two options: Either keep their mouths shut and accept it, or quit as individuals.

Under this Hobson’s Choice, many companies will likely lose their best and brightest employees, as individual workers realize the loss of their personal freedoms. That is, until the government outlaws the practice of resigning employment too.

As a post script, on the Reason website, one of the commenters gave the following analogy:

The binding arbitration provision only applies to the first contract where the union is most vulnerable to bad faith tactics by the employer.

That’s like saying the new “Freedom to Rape” law you’re advocating only allows men to rape freely ONCE, since that first time is the time when women put up the toughest fight. [“In bad faith.”]


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Filed under binding arbitration, EFCA, Employee Free Choice Act