Labor Gains

Reforming employment law

Michael McMenamin from the February 1995 issue

(Page 2 of 3)

Reform #1: Abolish the Davis-Bacon Act. Unlike the minimum wage, Davis-Bacon has racism at its ugly little heart. It was conceived in 1931 in response to an Alabama contractor winning the bid for a veterans' hospital in Long Island using black labor who had been shut out of New York's lily-white construction trade unions. Aided by southern Democrats denouncing "cheap colored labor," Herbert Hoover, his generation's George Bush, signed the law in March 1931, turning his back on the black voters who had supported his party since Reconstruction.

Davis-Bacon and its progeny require that any construction project that receives federal funds must be paid the local "prevailing wage," which generations of Department of Labor bureaucrats have interpreted to mean the prevailing union wage in a given area, even if the percentage of union workers is only 50 percent. Gene Methvin, Washington editor of Reader's Digest, reports in a recent article that the federal government could save more than $3 billion in construction costs in the next few years by repealing Davis-Bacon. In Philadelphia, for example, electricians are paid nearly $38 an hour on federal projects, while private contractors pay slightly less than $16 an hour. In Oakland, California, carpenters receive $28 an hour on federal projects versus $15 an hour on private projects.

Methvin quotes Thomas Henry Massaro, a third-generation union mason and former housing director in Newark and Philadelphia: "We could rehabilitate three or four times as many houses for the same money and put many more people to work if we just rid ourselves of Davis-Bacon."

Art Pearson, an African-American electrical and general contractor in Tacoma, Washington, says, "I could put two or three people to work for every Davis-Bacon wage employee." Paul King, head of UBM Inc., the largest minority-owned construction business in Illinois, also urges outright repeal of the law: "The black private sector could be the catalyst for real change."

Finally, Methvin quotes John Cruse, an African-American contractor in Boston, who no longer bids on low-income federal housing work because local union practices allow him to employ only one apprentice for every five journeymen: "That prohibits us from training our neediest inner city youth....[H]ow can we talk about reducing unemployment, crime, and drugs and moving people off welfare and not give those living in the inner city the opportunity to work in their own community?"

Remember these voices. Don't settle for half a loaf. Ignore the bill by Senator Larry Craig (R-Idaho) to raise the exemption on Davis-Bacon projects from its current minimum of $2,000 to $500,000. Listen to Art Pearson, Paul King, John Cruse, and other successful African-American businessmen, and repeal Davis-Bacon outright.

Reform #2: Eliminate the National Labor Relations Board's restrictions on employee-involvement committees in the workplace. The second reform is also aimed at entrenched union privileges, and like the first reform, will empower individual employees and, quite possibly, improve productivity. How? Eliminate Section 8(a)(2) of the National Labor Relations Act. Section 8(a)(2) makes it illegal for a company to "dominate or interfere" with any "labor organization" or contribute financial or other support to it. It was intended, back in the 1930s, to prohibit the formation of company unions. It has long since outlived any usefulness it once had.

The main problem with Section 8(a)(2) today is that the members of the NLRB appointed by George Bush and the guy who succeeded him, are using Section 8(a)(2) in both unforeseen and unintended ways. Specifically, those who favor an adversarial model for labor relations--and here I include trade unions, all current NLRB members, and most Democrats--are using Section 8(a)(2) as their weapon of choice to discourage and inhibit the formation of employee-involvement/employee-participation committees designed to improve productivity and enhance product quality.

The purpose of the employee-involvement movement is to give all employees at all levels of a company a greater voice in improving company operations. Companies do this to make themselves more competitive, but major beneficiaries also include the employees themselves who, because of this organizational restructuring, find greater fulfillment in their jobs and greater control over the content of their jobs.

In a series of recent decisions commencing in the early 1990s with Electromation and duPont, the NLRB has vetoed the use of such employee-involvement structures. It does this by broadly defining "labor organization" as being any employee structure created by companies to seek greater employee input into job functions and productivity. After all, the employee performing a particular job function is in the best position, if his opinions are listened to, to offer advice on how to improve performance. Any input like this invariably involves "working conditions," which makes any company-initiated employee structure that deals with this a "labor organization" unlawfully "dominated" under Section 8(a)(2).

Apologists for the NLRB have claimed that Electromation and duPont are atypical and do not undercut the employee-involvement movement. In Electromation, employee-involvement committees were challenged in the context of a union organization campaign, while duPont involved health and safety committees created without the consent of an existing union. The fact is, however, that the NLRB and its union supporters are trying, in Electromation and its progeny, to perpetuate an adversarial relationship in the workplace. The politically correct response to their denials is, "They're lying through their teeth."

Anything that empowers individual employees is a setback for organized labor and, by definition, the employees of the NLRB, whose jobs depend upon the continued existence of organized labor. Yet the decline of organized labor continues unabated from its high point of 35 percent of the private workforce in 1951 to barely 10 percent today. If present trends continue, it will be closer to 5 percent by the year 2000, a 20th-century low.

As with Davis-Bacon, don't "clarify" or "modernize" this law by legislatively repealing Electromation. That is the intent of legislation introduced by Sen. Nancy Kassebaum (R-Kan.) and Rep. Steve Gunderson (R-Wis.). Their legislation is well meaning and certainly pro-employee-involvement. But it is a product of minority thinking--compromise and accommodation. Think like a majority, and simply eliminate Section 8(a)(2) and all the case law construing it.

Any workplace structure, employer created or not, that empowers individual employees ought not to be impeded. If a company's support for genuine labor organizations is considered a real problem today, pass a new law. In fact, treat company support for labor unions like campaign contributions: Require companies to file public disclosure forms on a quarterly basis regarding financial and other assistance to unions and deliver copies to all employees. After all, just because lobbyists make campaign contributions to politicians doesn't mean they own them. Upon reflection, maybe that isn't the best analogy. Still, you get the picture: Eliminate 8(a)(2). You can waste time in 1996 holding hearings on whether company-dominated unions are still a problem requiring federal legislation today.

Reform #3: Require all employment disputes involving federal law to be handled by neutral third-party arbitration under the Federal Arbitration Act.