This ad will close in

Labor Pains

One of the first big battles of the Obama era won't be over Iraq or the economy but rather an obscure measure that helps unions organize. It couldn't come at a worse time.

With the inauguration of President Barack Obama, you might be forgiven for thinking that the campaign is over. But in Washington, a barrage of political ads still crowd the airwaves. One, sponsored by a conservative outfit named Americans for Job Security, features grainy and menacing footage of leading Democrats like Nancy Pelosi and Chuck Schumer. A narrator intones, "Democratic leaders want to deny workers the right to a secret ballot in union-organizing elections. Maybe it's a payoff to the union bosses."

Another, sponsored by American Rights at Work, a pro-labor group, shows a surprised office worker meeting with his supervisor, who gleefully informs him, "We're giving you health benefits, a pension, and a nice big raise." Alas, the worker wakes up. "If you think this is going to happen by itself, you're dreaming," the narrator says.

The ads set the stage for what will most likely be the first major confrontation between the Obama administration and business-and it could get ugly. At stake is the Employee Free Choice Act, which would make it much easier for unions to organize. The bill is a top priority of the labor movement, and since labor helped get Obama elected, it expects the bill to become a top priority for him too.

Obama has been cheered by many in the business community for appointing moderates like Tim Geithner to Treasury and Larry Summers to the National Economic Council. The new president, notably, hasn't brought many labor-affiliated economists and activists onto his economic team. But what is about to play out in Washington will no doubt be an early reminder that despite Obama's good intentions and promises of a kumbaya era of coming together, he won't be able to sidestep the classic conflict between business and labor.

The U.S. Chamber of Commerce is calling the coming war over the bill "Armageddon." Such corporate titans as former General Electric head Jack Welch, outgoing Wal-Mart C.E.O. Lee Scott, and Home Depot co-founder Bernie Marcus are denouncing it. At the World Business Forum, Welch was apoplectic: "If business leaders are not aware of this terrible piece of legislation, they should be. It would hurt us dramatically in our ability to be competitive globally." Political veteran Mark McKinnon, a former media adviser to George W. Bush, says he's "never seen business this fired up."

On the other side, Andy Stern, president of the Service Employees International Union, tells me the legislation "is essential for workers to be able to share in the wealth of their employers." Stern matters, and he will continue to matter during the Obama administration. With 2 million members, the S.E.I.U. is the largest and fastest-growing union in North America, and its endorsement of Obama gave the first-term senator's campaign a big lift during the Democratic primaries in 2008.

There is no question that Obama favors the bill; he was one of its many co-sponsors in the Senate. But now he has to make a choice. If Obama wants the law, he can get it passed, but he'll have to fight for it-and spend valuable political capital early in his term-when he has other priorities, like pushing health-care reform, clean-energy efforts, and an economic-stimulus measure. In 2007, the E.F.C.A. was passed by the House but was filibustered in the Senate and did not pass. This time, though Democrats enjoy a larger majority in the Senate, some in the caucus-especially new senators from conservative states, like Mark Begich of Alaska-might not stand up against a Republican filibuster.

Transition officials were divided on how aggressively and quickly Obama should move on the bill, but sources close to the campaign tell me he will push ahead. I've often been a critic of unions, but on this issue, I support them and think Obama is right to move forward.

The central argument in favor of the bill is that it puts workers on a more level playing field when it comes to organizing unions. Right now, under federal law, a union can be certified to represent workers in two ways. The first is if a majority of workers sign cards saying they favor joining a union. The second is if, in a secret-ballot election, a majority of workers vote to organize. Under current law, an employer can demand a secret-ballot election even if a majority of workers sign cards. Under the E.F.C.A.-also known as "card-check" legislation-employers wouldn't be able to demand an election. They would have to recognize the union after the cards were signed. Thus, the bill would take the choice out of management's hands and give it to the workers. If workers wanted a secret-ballot election, they could have one. If they wanted to just go with card check, they could do that.

Passing the card-check bill will surely help unions be certified more easily. But boosting union membership won't be a slam dunk. Corporations, which have had the upper hand in keeping unions out of their shops, will still have many tools at their disposal to thwart them. They can hold meetings on company time advising against union membership and launch full-scale campaigns to prevent workers from joining.

If card check becomes law, it won't restore unions to their glory days-today only 7.5 percent of workers in the private sector belong to unions, less than half the number 25 years ago-but it might arrest the decline, which isn't bad for business in the long run. No less of an authority than Ben Bernanke has said that the drop in union membership explains a good 10 to 20 percent of the increase in income inequality in the United States. If businesses want people to be able to afford their products, union membership itself serves as an economic-stimulus package-a surefire way to put more money into workers' pockets.

In the end, no one knows what the exact effects of card check would be. Union membership would surely rise, but the economic dislocation could be minimal. Most of the job losses in the United States fall disproportionately in industries with unions. If the bill becomes law, it will certainly lead to a flurry of organizing, but it won't be easy for labor to hold on to even its meager 7.5 percent of jobs.

God knows it's easy to bash unions. The American auto industry is on its knees in no small part because of legacy costs brought on by the demands of the United Auto Workers, which agreed in December to a package of givebacks. But being anti-union is as boneheaded as being anti-corporation-a knee-jerk reaction when nuance is required.

After all, unions are found not only in dying industries but in growth industries like aerospace, energy, and entertainment.

Private equity giants, already struggling during the economic crisis, will face further challenges should the E.F.C.A. pass. When private equity firms bought such businesses as Toys R Us, Hilton Hotels, Dunkin' Donuts, and Hertz, they surely didn't plan on having to face substantial unionization drives, but shortsightedness has been in no short supply in boardrooms around the country. While the Private Equity Council, the Washington lobby for the big private equity firms, hasn't taken a position on the E.F.C.A., individual members have. The Carlyle Group has been in a big fight with the S.E.I.U., which is trying to organize workers at HCR ManorCare, a company with nearly 60,000 employees in 32 states running more than 500 long-term-care facilities. Carlyle closed its $6.3 billion purchase of the company in December after overcoming concerns from regulators and efforts by the S.E.I.U. to delay the sale. There's no reason workers should have to get the short end of the stick just to save the private equity guys from being inconvenienced.

The legislation doesn't apply to small businesses, so the corner grocery probably won't face an organizing drive. And as for larger companies, it's worth noting that many corporations have chosen not to fight card check and have honored union expansion without calling for elections, which are often bitterly fought. These include Harley-Davidson, Aetna, and AT&T. Some Republicans have recognized this. Indeed, a Republican, George Pataki of New York, became the first governor of either party to sign a card-check bill, hailing it later as "an important step toward eliminating unnecessary hurdles while also ensuring fairness.' Sounds right to me.

Visit Portfolio.com for the latest business news and opinion, executive profiles and careers. Portfolio.com© 2007 Condé Nast Inc. All rights reserved.

Loading the player ...

The One Excuse You Should Never Give Your Employees

Ads by Google

0 Comments. Post Yours.