10 augustus 2023

Profile US labour relations 2023

In 2012 a comparison was made of the institutional arrangements of the labour relations of the United States (US) and the Netherlands. A profile was established of how the interaction between employees, employers and government was organised. Topics such as the history of the labour relations, unionisation, actual issues at the time and strategy and agendas of the parties involved were addressed. In this article the subject will be revisited with a focus on what has happened the last ten years especially in the US labour relations.


Profile US labour relations 2023

Cees van Aanholt

1. Introduction

In a paper of the AWVN we compared the institutional arrangements of the labour relations in the US and the Netherlands[1]. One of the main questions was if there were any indications that US labour relations would develop in the direction of the Poldermodel as applied in the Netherlands?
It was concluded that this is not likely because the institutional arrangement of US labour relations do not accommodate a centralized governing of the social dialogue. In the US, the focus is on enterprise level. The employee is negotiating working conditions either individually or collectively when organized. The centre of gravity in labour relations lies primarily with the actors management and employees, on the shopfloor (decentral). In the Netherlands however the institutional arrangement enables employees, employers and government, if the situation requires, to vary its interaction and thereby the governing of the labour relations central and/or decentral (national, industrial sector or company).

In the paper of 2012 we also addressed among others two specific topics; the introduction of the Employee Free Choice Act (EFCA) and the further roll-out of Right to Work legislation (RTW) at State level.

Starting from 2007 several attempts were made to pass the EFCA through Congress. Even in the first two years of the Obama administration with a Democratic majority in the House of Representatives and Senate, Congress wasn’t able to pass the legislation. The EFCA was even for Democrats too labour friendly according to Andrew Timing[2]. What is it’s status now? What happened to this initiative?

We considered the status of the Right to Work (RTW) legislation. At that time this legislation was implemented in 23 states. Did the number of states increase as predicted ten years ago or did the number remain the same. What are the latest developments?

2. What happened to the EFCA initiative?

The EFCA represents a fundamental change in the institutional arrangement of US labour relations governing of the social dialogue. Between 2007 and 2016 several attempts were made to pass the EFCA through Congress to elevate it to federal law. None of them were successful. The idea of the EFCA initiative was to offer employees the possibility to organize themselves in companies by a majority sign-up mechanism (50% of the employees plus one) by signing a card or petition. Representatives of this majority can represent employees in negotiations with the employer on a number of subjects. As such it is an amendment to the National Labour Relations Act (NLRA also known as the Wagner Bill) [3]. With this amendment the so called Wagner model governing US labour relations would partly be abandoned resulting in a ‘shift of power ‘on the shopfloor (see inlay). Richard A Epstein states in his paper ‘The Case against the Employee Free Choice Act’, that ‘the EFCA is the most transformative piece of labour legislation to come before Congress since the enactment of the NLRA’ [4].

Employee Free Choice Act would have amended the National Labour Relations Act in three significant ways:
• section 2 would have eliminated the need for an additional ballot to require an employer recognize a union, if a majority of workers have already signed cards expressing their wish to have a union
• section 3 would have required that an employer begins negotiating with a union with a view to reaching a collective agreement within 90 days, and if not, the two sides will be referred to compulsory mediation, and if mediation fails, binding arbitration
• section 4 increases the penalties on employers who subject workers to detriment for being involved in a union.

Historical recap and the legislative process
In 1935 the NLRA passed Congress. It guarantees the right of private sector employees to organize into trade unions, engage in collective bargaining and generally provides that an employer is not obligated to recognize a labour organisation as its employees’ representatives unless it prevails in a secret ballot[5]. In other words a secret ballot is conditional to determine whether employees of a company allow a labour organisation to represent them in negotiations with their employer.

According to unions under the leadership of AFL-CIO and Change to Win (CtW)[6] this process deprived employees to have a free choice in their selection of their bargaining representative. To ‘improve’ the process the a first version of the EFCA was introduced in 2003.

February 14, 2007, the House of Representatives (HR) commission on Education and Labour voted in favour to report the bill [7]to the full HR and March 1, 2007, the HR passed the Bill. On March 30, 2007, Senator Ted Kennedy (D-MA), Chairman of the Senate Committee on Health, Employment, Labour, and Pensions, introduced the Senate version of the EFCA. An attempt of the Democrats to prevent an anticipated Republican filibuster [8] failed. So treatment of the law in the Senate was postponed to the next Congress, the 111th Congress.

In 2009 the Bill was once again brought to the US Senate, “To amend the National Labour Relations Act to establish an efficient system to enable employees to form, join, or assist labour organizations, to provide for mandatory injunctions for unfair labour practices during organizing efforts, and for other purposes”[9]. Efforts by different Democrats to secure a filibuster proof majority led to divisions among the Democrats. Some proposed adjustments were too harmful to the intentions of the original bill. Hence once again Democrats weren’t able to prevent Republicans to invoke a filibuster.

Alan Grayson (D-F) made in 2016 another attempt to introduce the bill. Apparently this new attempt failed, but there is no information available on the what, how and the result of his effort.

An alternative route
On many occasions, Obama speaks out as a supporter of the ‘Card Bill’ as the EFCA was framed. In 2007, at that time still member of the Senate, he states in a motion to proceed with the proposed version: “I support this bill because in order to restore a sense of shared prosperity and security, we need to help working Americans exercise their right to organize under a fair and free process and bargain for their fair share of the wealth our country creates”[10]. As described the Obama administration wasn’t able in its ‘first two years ‘with a full house’ to pass this legislation through Congress. Labour and the Obama administration aiming at improving the position of labour, missed the opportunity to strengthen the position of employees on company level. As already indicated by Andrew Timing, ‘even for Democrats the proposed legislation was too labour friendly’. During the discussions among the Democrats in the Senate in 2009 some of these Democratic Senators were following different agendas triggered by other concerns and/or political opinions. Like Blanche Lincoln (D-Ark) “Right now, my No. 1 priority is strengthening our economy and putting 90,000 jobless Arkansans back to work”, [11] Tom Carper (D-Del) claimed that using the card check method is not a reliable indicator of an employee’s wishes, and that a secret ballot election is the fairest method of gauging whether employees truly want to be represented by a union [12]. Or opponents argued, among other things, that collective bargaining over the past 60 years provided a framework which has been relatively stable on matters of to which both management and labour has been able to adapt. Furthermore a number of business groups was able to organize a strong lobby to influence members of the Senate to stop the passage of this bill. The targeted free choice of employees in their selection of their bargaining representative and the subsequent ‘shift of power’ on the shopfloor failed to materialise.

The failure to realize a successful change in the institutional arrangements governing labour relations through law making via Congress forced the Obama administration to find an alternative route for its plans. Hence new regulations were initiated by the Department of Labour (DOL) and the National Labour Relations Board (NLRB).

The most recent effort to adjust the power balance on the shopfloor is the Protecting Right to Organize initiative.

3. Protecting Right to Organize (PRO Act)

The PRO Act, also known as the Richard L.Trumka PRO Act[13], would amend the NRLA of 1935, the Labour Management Relations Act (LMRA) of 1947, and the Labour-Management Reporting and Disclosure Act (also known as the Landrum-Griffin Act) of 1959.

The LMRA better known as the Taft–Hartley Act, is a United States federal law that restricts the activities and power of labour unions.

Where the NLRA protects employees’ rights from unfair practices by both employers or unions, the Landrum–Griffin Act protects employees’ rights in case of illegal behaviour of union officials like misuse of union funds or other specific crimes. Three well-known offenders at the time were the Teamsters, the Bakery and Confection Workers and the Laundry Workers Union. The McClellan committee investigated assumed ties between unions and organized crime and concluded a law was needed to put internal union affairs on a more honest and democratic basis.

The PRO Act restores the right of workers to freely and fairly form a union and bargain together for changes in the workplace, states the AFL-CIO on its homepage [14]. What will actually change if the PRO Act has passes Congress? Depending on the number of amendments submitted, the PRO Act could imply a number of ways in which it could change the game for employers and organized labour.

To name a few: many workers would be considered employees rather than independent contractors; employers would face steep fees for firing workers for trying to unionize; state right-to-work laws (see chapter 5) would be overridden; employers would no longer be able to hold mandatory ‘captive audience’ meetings with employees to discourage the choice of representation; and employers would not be able to require employees to waive their right to collective or class action litigation. [15].

Furthermore it revises the definitions of employee, supervisor, and employer to broaden the scope of individuals covered by the fair labour standards; permits labour organizations to encourage participation of union members in strikes initiated by employees represented by a different labour organization (i.e., secondary strikes); and prohibits employers from bringing claims against unions that conduct such secondary strikes.[16]

The PRO Act faced bitter opposition from the U.S. Chamber of Commerce — which argued that it would damage the economy and destabilize the workplace. Despite the tedious process prescribed in the PRO Act, its goal is to take away the secret ballot from workers and make it easier for unions to organize workplaces over possible objections of some of the employees [17]. Others argue that a “card check system “is in violation with the Convention 87 of the International Labour Organization (ILO): ‘Freedom of Association and Protection of the Right to Organise’ [18]. This is actually 1 of the 14 ILO Conventions ratified by the US of a total of 189 ILO Conventions.

Status legislative process
The PRO Act bill passed on March 9, 2021 the HR but like the EFCA bill in 2009 a number of Democratic Representatives were for various reasons voting against the bill. Even so very recently, March 2023, Senators Cory Booker and Bob Menendez (both D-N.J.) introduced the PRO Act in the Senate. Booker stated “… (I) am proud to once again join my colleagues in introducing this legislation that would help workers unionize and negotiate fair wages, safe workplaces, and good benefits. We must work towards rebuilding a fair and inclusive economy that works for everyone.”[19]. In 2009 the EFCA initiative stranded in the Senate and did not become federal law. Will the proponents anno 2023 be able to mobilize a majority in the Senate to pass the bill. The ratio Democrats vs. Republicans is 50/50 with a Democratic chair (Kamala Harris) with a decisive voice. Or is once again, just like in 2009, Timing’s analysis applicable that even for Democrats the proposed legislation is too labour friendly.

4. Right to Work (RTW)

Among other things the NLRA provided that a company could lawfully agree to be a closed shop, a union shop, an agency shop or an open shop. Simply put: In a closed shop situation all employees are members of a union. In an union shop the employer can hire non-union employees, but these new employees agree to become an union member. In an agency shop employees have to contribute to the union for representation, but do not have to become member. Finally an open shop employees cannot be forced to join an union or pay for representation.

These RTW state laws ban companies from demanding that their employees pay union dues or fees as a condition of employment [20].Where applicable it is prohibited for employers and unions to force employees who are not members of a union to pay for union representation. In fact at state level it is stipulated that of the four variants only the open shop is allowed. Even if employers and union would like to opt for one of the other options state law prohibits this.

A number of issues in relation to RTW states are subject of long-term research. Among others (1) Economic performance of companies in a RTW state in relation to companies in non-RTW states. (2) Is there a tendency of business to relocate to a RTW state? (3) RTW states and the impact on wages. (4) Effect of RTW states on union density.

Biased shopping in the results of research done on the above mentioned questions just leads to mounting different positions by all parties involved. E.g. the AFL-CIO claims on its’ homepage worker’s pay tends to drop 3.1 percent when RTW laws are passed [21]. In contrary the Chambers of Commerce claims RTW laws directly affect economic performance through their impact on business location decisions, especially in heavily unionized industries such as manufacturing. Other things, businesses are more likely to locate in states with RTW laws. There is also evidence that RTW laws have a direct, positive effect on employment, output and personal income[22]. The 2022 data communicated by the BLS show however that non-unionised employees tend to earn 85% of the earnings unionised employees.

Anyway, it is clear when the PRO Act has passed the Senate it will in general have a huge impact on labour relations in the US and especially in RTW states. For one, state RTW laws would be overridden.

In 2012 the RTW legislation was implemented in 23 states. This number increased to 28 [23].

5. Other developments

According to the Chamber of Commerce, the US is confronted with a labour shortage. Several reports and analysts conclude that there is a quantitative and a qualitative friction in the labour market. The overall open jobs is 9.9 million and the number unemployed workers is 5.9 million [24]. Next to increasing the supply of workers on the labour market the workforce should be skilled and trained for the jobs of tomorrow. The business federation calls upon Congress to address the issue. To ensure a competitive workforce in the future policies should come in place to secure better childcare and introduce rational immigration policy. These initiatives should be accompanied by policies which ensure those looking for work have the skills and training for the jobs businesses need to fill[25].

Furthermore companies need to increase their to agility to maintain their compatibility. To accommodate a sound cashflow they are looking for a flexible workforce. So we see a shift towards temporary and independent work arrangement; freelance and work on demand (gig economy).

This development and a number of other developments are challenging the labour movements’ relevance. Global competition and deregulation in traditional unionized industries. Demographic change and short term deployment of employees. Ageing and fast-changing composition of the employees on the shopfloor leads to a lack of engagement among employees making it difficult for unions to develop relationships with employees and to unite them for collective action.

President Biden’s executive order, “Ensuring the Future is Made in America by All of America’s Workers” (14005), is a government initiative to strengthen the use of federal procurement to support American manufacturing. “Made in America” policies are designed to increase reliance on domestic supply chains and ultimately reduce the need to spend taxpayer dollars on foreign-made goods [26]. US government should, whenever possible, procure goods, products, materials, and services from sources that will help American businesses compete in strategic industries and help America’s workers thrive [27].

6. Reflection and conclusion

In 2012 we stated that labour relations become visible in institutional arrangements such as consultation forms, organizations and rules. We encounter these structures at various levels: nationally, by industry and within the company. There are parties in labour relations: mainly employers and employees and the government as a third party [28].

The interaction between the players in the labour relations is according to J.E. Wigboldus, aimed at certain outcomes such as fair working conditions, good working conditions or social security, but also a smoothly functioning labour market, maximum innovative capacity and optimal costs for labour .

In the US employers and employees are looking at government in its role as auction master to set rules. In recent years especially rules on how employees can organize have been a hot issue. See the perils around the EFCA and the PRO act.

A by the Covid pandemic circumstances driven pro-labour political environment as seen in Biden’s ‘Made in America’ initiative offers opportunities for organized labour to restore its relevance. Then again it makes it more difficult for companies to keep labour costs down through offshoring, meanwhile a well-established modus operandi to assure their continuity.

Will changing federal law, as proposed in PRO Act, strengthen organized labour’s alleged merits for working people? The Chamber of Commerce speaking on behalf of employers stated in a letter to Congress, that the PRO Act would abolish any sense of balance between union rights and employer rights in labour organizing and negotiations by explicitly eliminating employers as a party in elections to determine if a union should represent that employer’s workforce [29]. For sure, passing this legislation will change the role of the unions and impact labour relations especially in RTW states.

The successive laws regulating labour relations are reflecting a power struggle. Which of the competing parties (employers and employees) benefits most of legislation to secure its autonomy to determine relations on the shopfloor. As long as legislation places employers in a more advantageous power position APP) they can best secure their interests. Conversely, legislation in force can put employees in an APP enabling them to secure their interests autonomously.

In essence the PRO act would create an APP for organised labour. It enables employees to autonomously determine whether they seek representation. According to employers peer pressure will have free reign if a card signing process would replace the secret ballot to determine if employees want labour representation. Furthermore the PRO act deprives employers of the opportunity to influence employees to vote against representation. In addition they argue that that a secret ballot enables employees to cast their preference without them having the fear of disclosure of their vote.

With a possible passing of the PRO act bill in the US Senate[30] there will be a shift of power in favour of organized labour. But will the bill pass the Senate where a Democratic majority could amend a number of labour laws which were for many decades the backbone of the institutional arrangement of the US labour relations? Recent history suggests otherwise.

[1] ‘Arbeidsverhoudingen in Nederlanden de Verenigde Staten. Een vergelijking’, Cees van Aanholt et al AWVN 2012
[2] Interview Professor Andrew Timing, National Labour College Washington (2011)
[3] The Wagner Act was named for Democratic U.S. Senator Robert F. Wagner, who sponsored the act. Wagner was a leading architect of the modern welfare state and also sponsored the Social Security Act
[4] The Case against the Employee Free Choice Act, Richard A. Epstein, p7, Hoover Press 2009
[5] Employee Free Choice Act Reintroduced in Congress: The Battle Begins, Philip B. Rosen 2007
[6] Change to Win is a federation of unions which spit from AFL-CIO in 2005
[7] A bill is proposed law presented to the legislature for deliberation and approval. Once a bill is passed by the legislature it becomes enacted into law
[8] The filibuster is a political procedure in which one or more members of a legislative body prolong debate on proposed legislation so as to delay or entirely prevent a final decision on the proposed legislation
[9] 111th Congress, S.560 was introduced in the Senate, March 10, 2009
[10] Employee Free Choice Act 2007 – Motion to proceed Congressional Record. GPO. 2007-06-26
[11] Politico, Unions swarm Hill, March 9, 2009
[12] Littler, EFCA support on (July 24, 1949 – August 5, 2021) downward spiral, April 3, 2009
[13] Richard L Trumka July 24, 1949 – August 5, 2021, president of the AFL-CIO until his death in 2021
[14] Homepage AFL-CIO, February 2021
[15] HR Dive, 10 ways the PRO Act could change the game for employers and organized labour, Emilie Shumway, editor, August 2, 2021
[16] Passed House Protecting the Right to Organize Act of 2021, Congressional Research Service (CRS), March 9 2021
[17] PRO Act’s stealth ‘card check’ option gives unions unfair advantage, Vincent Vernucci and Morgan Shields, The Hill, August 9 2019
[18] Implications of potential EFCA or PRO Act Legislation for US employers, Danny J. Kauffer c.s., BorderLasdnerGervais (BLG), February 9, 2021
[19] Cory Booker personal homepage, March 3, 2023
[20] Paycor publication, December 2, 2020
[21] AFL-CIO homepage, March 20 2023
[22] Homepage US Chambers of Commerce, Jeffrey A. Eisenach, Publication NERA Economic Consulting, 2018
[23] Jeffrey A. Eisenach, Publication NERA Economic Consulting, 2018
[24] American Work Data, March 2023
[25] Calling on Congress: Grow and Modernize Our Workforce Cheryl A. Oldman and Jenna Shrove, Homepage US Chamber of Commerce, December 13, 2022
[26] President Biden’s Made in All of America Executive Order, Ripley, Austin publication, February 2021
[27] Publication Information Technology vendor management office, 2021
[28] J.E. Wigboldus, Arbeidsverhoudingen en medezeggenschap, Kluwer, 2005
[29] U.S. Chamber Letter Opposing H.R. 20, The Protecting the Right to Organize (PRO) Act, March 8, 2023
[30] Next debate on the PRO act (S.567) in the Senate Committee on Health, Education, Labour and Pensions is planned in the fall 2023

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