Friends Like These

June 21, 2011

Greg Abbott, the Attorney General for the Texas people, is “outraged” that the National Labor Relations Board (NLRB) has decided a case against the Boeing Corporation, which has a maintenance operation in San Antonio that employs 1,700 people. He claims this is “a legally baseless attempt to interfere with private sector job creation” in right-to-work states like Texas. He has formed a coalition of Republican leaders to “fight the agency”. (Op-ed, San Antonio Express-News, June 17, 2011) What is he protecting us from and for what?
Outrage is a term that expresses moral condemnation for unjust gains. The NLRB decision that has so upset Abbott comes from a dispute between Boeing and the International Association of Machinists and Aerospace Workers in Seattle. The Board has found that Boeing discriminated against airline manufacturing workers for exercising their legal right to strike. This case has been widely commented on in the professional community of labor specialists: contrary to the anti-union legal brief that Abbott filed, there is virtually no question at all that Boeing is guilty of violating the law. Its executives gave a public interview in which they said that the company shifted production from Seattle to a new non-union facility in right-to-work South Carolina because employees went on strike.
Such labor disputes are arcane in contemporary America where the rate of union membership has collapsed to about 6%. So some explanation of what is at stake is needed. The first is the right to form a union. For 200 years, Americans have had the right to form a union to advance their interests at work, including the right to strike. 75 years ago the U.S. Congress put these rights into federal statute law in the National Labor Relations Act and it created the NLRB to make sure the law was carried out. One of the bedrock principles of the American legal tradition that underlies labor law is that individuals have freedom of association and that they cannot be punished for exercising this right. Of course, the typical employer does not want his employees to form a union because it challenges his undivided power; he thinks it is in his economic interest to fight the union. Texas and 20 other states passed so-called right-to-work laws in the 1940’s to help employers block the NLRA. The core provision of right-to-work is that no employee can be forced to pay dues as a condition of employment. Sound good to you? Who wants to pay dues? The purpose of union dues has been lost to history – it is certainly not explained to young people in Texas high school civics textbooks.

So here is the civics lesson. Employees who want to form a union pay dues to the union staff to negotiate and administer contracts that they sign with employers. The union services are not free. Thus, a law that says that no employee has to pay dues creates an untenable position for the union. Union members pay for union services, but non-union employees also get the services – coverage by the contract – but don’t have to pay for it. The union workers have to pay for the free-riders on the union’s work. This is an incentive for union workers to stop paying dues, too, and free-ride themselves. But if everyone free-rides, then there won’t be a union. Success for the employers! You may ask What about so-called minority unions: let the union only negotiate a contract for those who want to pay dues; don’t allow free-riders to get the benefits without paying. That also is illegal under right-to-work. Case closed. Right-to-work is one of the chief causes of the rock-bottom rate of unionization in Texas.
A corollary principle of the right to form a union is the right to strike to try to convince an employer to negotiate a good contract (not to destroy the company or “thwart its expansion plans”, as Abbott claims). A right to associate without the right to act is a very weak right. Similarly, employers have the right to lock-out employees if they won’t negotiate. But employers do not have the right to threaten workers with permanent loss of their jobs for exercising their rights to form a union and strike in furtherance of a lawful goal. This has been settled law for eight decades. The NLRA encourages a union and company to recognize each other’s legitimate rights and to negotiate precisely so they don’t try to destroy each other. However, at least since Reagan, union rights have been weakened to allow companies to ease out of contractual relations that they already have. This development is what makes Boeing’s action especially bizarre.
The legal doctrine that the NLRB is enforcing in the Boeing case is a weaker doctrine than what was enforced until the 1981. Before then, a union with a contract with an employer had a right to bargain over working conditions, including an employer’s plan to remove work from the workplace and shift it to other employees, who may be non-union. But in 1981, in the First National Maintenance Corporation case, the U.S. Supreme Court re-interpreted the statute to tilt the balance between labor and management decisively to management. The Court held that “an employer’s need for unencumbered decision-making in the conduct of its business” trumped the benefits of “bargaining over management decisions that have a substantial impact on the continued availability of employment”. A business decision “purely for economic reasons outweighs the incremental benefit that might be gained through the union’s participation in making that decision”. A company’s decision “to shut down part of its business … is not part of [the] terms and conditions of employment over which Congress has mandated bargaining”. The Court’s new doctrine that a business decision “purely for economic reasons” justified vacating the obligation to bargain created a gaping hole in the entire structure of fair dealing between unions and corporations. Employers rushed to move operations to non-union states, cancel defined benefit pensions, operate “double-breasted” union and non-union shops, cancel contracts, and undermine employee rights at work, all justified by purely economic reasons.

This is where Boeing managers made an egregious mistake. What the NLRB decided in the Boeing case was based on a much weaker provision of our law, namely the prohibition on acting to discriminate against lawful activities, such as striking. If Boeing executives had refrained from bullying in public and had simply made a business case for opening a new facility in South Carolina, there probably would not be a judgment against them.

What is still to be decided in this case is how to resolve the dispute. Our labor law prefers negotiated settlements and, in fact, for months before issuing his formal complaint against the company, the NLRB general counsel sought to get the parties to make a deal. But Boeing executives drank the Republicans’ anti-labor cool-aid and they apparently believe that their political party will bully the federal government to back down. Abbott has rushed to champion its tawdry cause.
What of Abbott’s other claim that the decision is a threat to job creation? Boeing is one of the two leaders in the world in the commercial and military aviation markets and it has been in close competition with the European Aeronautic Defence and Space Company (EADS), which makes the Airbus and other products. EADS is not a low-cost non-union competitor in a developing country. Texas’ and South Carolina’s right-to-work laws did not create aerospace jobs. These laws have been an incentive to move jobs from one part of the country to another. Right-to-work encourages employers to take the low road to competition by squeezing the compensation of their employees rather than the high road of producing a superior product or service. Texas is a rich state with a lot of poor people in part because Texas workers do not share in the value they create. This is the true outrage. With their rights to organize a union dis-incentivized — as the policy jargon would have it — Texas workers’ economic interests also are politically unrepresented in elections and the legislative process. 
Needless to say, one can oppose this or that union position; no one claims that unions and corporations always act wisely. But that is the point of a pragmatic approach based on mutual recognition and negotiations. Trying to destroy the right to have a union is ideological. And the practical consequences of doing so for our country are already known. Republican Party ideologues claim that unions interfere with business plans, which if left unfettered would lead to the best of all possible worlds. This claim is demonstrably false: for thirty years, as unions have been beaten back, blue-collar pay has stagnated. Inequality between median pay and corporate executive pay is near its historic high. Without strong unions to prevent run-away employers, jobs have been re-shuffled to non-union regions like Texas and abroad. Just during the G. W. Bush years, over 2 million manufacturing jobs were lost. Today, American employers have failed to create some 13 million jobs that we need for full employment, despite massive tax cuts for corporations and investors.
Abbott is beating his chest about the NLRB in defense of Texas workers. He is outraged that a union could file a complaint against a company for breaking the law and foiling the right-to-work strategy. Workers hold their employer accountable? Shocking! Please, don’t do us any more favors.