The Unemployment Act


By Jack and Suzy Welch Are you at all concerned about American competitiveness in the future? —Srikanth Raghunathan, Irwin, Pa.

Yes. But not for the standard "the sky is falling" reasons, like the twin deficits, low-cost Chinese manufacturing, or intellectual property piracy. We believe those challenges will largely be ameliorated by market, political, and legal forces. No, we're as worried as can be that American competitiveness is about to be whacked by something no one seems to be talking about: the Employee Free Choice Act, which is currently weaving an insidious path through Congress toward becoming law. If it does, the long-thriving American economy will finally meet its match.

You didn't read wrong. We know it must sound strange to oppose legislation that promises something as motherhood-y as "free choice." But the title of this bill is pure propaganda. It won't encourage liberty or self-determination in the workplace; more likely it will introduce intimidation and coercion by labor organizers, who, after a long slide into near-oblivion, finally see a glorious new route to millions of dues-paying members. Their campaign could trigger a surge in unionization across U.S. industry—and in time, a reversion to the bloated economy that brought America to its knees in the late 1970s and early '80s and that today cripples much of European business. If you want to be reminded of what that looks like, drive through Pennsylvania's Lehigh Valley, as we did last weekend, and take a look at all the shuttered factories. Steel—like coal, autos, and so many other industries in the global economy—paid the inevitable price of unionization run amok.

MAKE NO MISTAKE. We don't unilaterally oppose unions. Indeed, if a company is habitually unfair or unreasonable, it deserves what it gets from organized labor. But the problem with unions is that they make a sport out of killing productivity even when companies are providing good wages, benefits, and working conditions. It is not uncommon in a union shop to shut down production rather than allow a nonunion worker to flip a switch. Only a union or millwright electrician can do that job! Come on. Companies today can't afford such petty bureaucracy or the other excesses unions so often lead to, such as two people for every job and a litigious approach to even the smallest matters. Yes, managers and employees will sometimes disagree. But in the global economy, they have to work through those differences not as adversaries but as partners.

The Employee Free Choice Act undermines that. Here's how. Currently, when labor organizers want to launch a unionization effort, they ask each worker to sign a card as a show of support. If 30% or more employees do so, a federally supervised election can be called and conducted with one of the most revered mechanisms in democracy, the secret ballot. Thus, employees can vote their conscience, without fear of retribution from either union leaders or management.

By contrast, under the Employee Free Choice Act, organizers could start a union if 50% of employees, plus one more worker, sign cards. That's right—no more secret ballot. Instead, employees would likely get a phone call with a pointed solicitation, or worse, a home visit from a small team of organizers. You can just imagine the scenario. The organizers sit around the kitchen table and make their case, likely with a lot of passion. Then they slide a card in front of the employee with a pen. Who would say no? Who could?

Now, union supporters will tell you that they won't intimidate employees for votes, and regardless, management intimidates all the time by threatening to fire employees who vote union. But the system as it exists has safeguards, including heavy fines against companies that misbehave and automatic new elections.

Still, the advance of the Employee Free Choice Act continues unabated. And so pretty soon, if enough business leaders and legislators don't stand up, it may well be: Hello again, unions. So long, American competitiveness. The change won't happen instantly. Companies will fight unions as if their lives depend on it, because they do. But given the logistics of the Employee Free Choice Act, any management campaign is hobbled. If you can't be at the kitchen table with the organizers and their hard stares, you probably can't win.

It's too bad. In fact, it's terrible. And ironic. First, because the ability to unionize already exists in America, thanks to the secret ballot. And second, because the Employee Free Choice Act ultimately only provides a free choice nobody would ever want: how to spend a government-issued unemployment check.

Jack and Suzy Welch look forward to answering your questions about business, company, or career challenges. Please e-mail them at thewelchway@BusinessWeek.com For their podcast discussion of this column, go to www.businessweek.com/search/podcasting.htm


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