WASHINGTON-A $35 million Job Corps Center commissioned by the Department of Labor will be going up soon in Manchester, N.H., but don't expect everybody in the state to be happy. Only unionized construction workers will be allowed on the site, according to restrictions the federal agency imposed on the project.
Sen. Judd Gregg, R-N.H., protested, saying that because very few construction workers are unionized in the state, local firms would not be able to meet the requirements for the bid, which further requires that the contractor has done three projects under the same rules. Of the 37 contractors listed as interested in the project, five are New Hampshire businesses. (Bidding begins Nov. 5.)
"In a time of economic hardship, it is simply absurd to discriminate against local contractors and construction workers for the benefit of national labor unions," Gregg objected in a statement.
The Manchester Job Corps Center requirement is an example of what critics say is a larger trend: Unable to keep union membership from a long-term decline, big labor is counting on a friendly administration and Congress to make workplace changes in its favor. And this is bad news for many of the independent business owners who drive economic growth.
The New Hampshire dispute flows from an executive order President Barack Obama issued soon after he took office to encourage federal agencies to award contracts higher than $25 million to firms working under project labor agreements (PLAs). PLAs essentially require unionized contractors, excluding 84 percent of construction firms. The president's order said PLAs keep labor disputes from interrupting construction.
Awarding contracts to unionized businesses means much of one of the hardest-hit sectors of the economy, construction, isn't benefiting a lot from the steadier flow of federal projects or government stimulus efforts-$111 billion of the stimulus is designated for public infrastructure projects. Construction businesses were some of the first to feel the economy's free fall but haven't been the first to recover. Nationally, the unemployment rate in construction is at 16.5 percent, compared to the overall unemployment rate of 9.8 percent.
Bethesda-based Miller & Long Concrete Construction pours, forms, places, and finishes concrete. One of the largest concrete subcontractors in the country, it opened its doors in 1947 and employed 3,300 at its peak in early 2008. Now it employs 1,100. Vice president Brett McMahon asserts that unionization would force the company, already operating on razor-thin profit margins, to shut its doors.
"We're quite serious about that," he told me. "The risks are too great. It would wipe out everything we've built over 62 years." In the past some have attempted to unionize the business, but McMahon said management has a "cozy, constant" relationship with employees. "We take very good care of our folks."
"If other people got organized, and we didn't, we'd be all the more competitive. But the government will change the rules again to favor the organized companies," he said with resignation. "They've shown a wanton willingness to do that."
Businesses like Miller & Long fear unionization because it raises one of their primary costs, labor. Unions typically require better wages and benefits, often including contributions to union pension funds. Workers siphon dues from their paychecks, which go to unions' leadership and political efforts unless workers request otherwise.
"It's not unusual for unions to make concessions to save companies," counters Stewart Acuff, assistant to the president of the AFL-CIO, the largest union organization in the country. But overall union membership has dropped in recent decades to 12.4 percent of American workers from 20 percent in 1983, as manufacturing has moved abroad. In 2008, however, unions grew by 450,000 members, though mostly in the public sector.
Labor groups spent around $450 million on the 2008 election, almost exclusively for pro-union Democrats, and to great success. A Democratic Congress could help expand union rolls through the "card check" provision in the Employee Free Choice Act (EFCA), which removes the secret ballot in union elections. That provision has hit a bump in the Senate, however, and may not appear in a final version of the labor reform bill, which Obama has promised to help pass.
As it stands now, EFCA allows the government to inject itself into certain labor disputes further through binding interest arbitration-a remedy where a government arbitrator oversees talks and imposes a contract at the end, to which employers must agree because the talks are "binding"-a puzzling arrangement to employers because they are the only ones in the talks who must meet a bottom line.
Rian Wathen, a former union organizer who now works with employers to campaign against unions, said unions will have the incentive to "ask for the moon."
According to McMahon, Miller & Long would have to assume $50 million to $70 million in liability on its books to guard against risks of binding interest arbitration. "The only business decision you have at that point is to close," he said. "Our financing would disappear, rightfully."
McMahon finds it hard to believe that the government could find a solution that neither management nor the union could arrive at on its own. "If there was some magic man out there who could write a contract for our employees that made us more profitable and efficient, I'm pretty sure I would have hired him already. That's what we do," he said.
Labor advocates argue that the arbitration is necessary because employers often don't negotiate in "good faith," allowing the negotiating hourglass to run out before either side reaches an agreement.
The government can also make unionizing easier in subtler ways, without a vote from Congress. The National Labor Relations Board (NLRB), which oversees labor disputes and organizes all elections to form unions in workplaces, has latitude to interpret labor regulations. Seemingly boring and prosaic, the board's interpretations could have a serious impact on struggling businesses.
The five-member national board is currently hamstrung because it doesn't have a quorum of three-the Senate hasn't confirmed Obama's nominees. The board is supposed to be composed of two Democrats and two Republicans, and the president picks the chair. A Democratic Congress refused to allow President Bush to fill three empty seats on the board during the last year of his administration, leaving one Democrat and one Republican and an almost two-year deadlock on controversial cases.
One of Obama's nominees, Craig Becker, served as counsel for the Service Employees International Union, one of the country's largest and most aggressive unions. Becker wrote in a journal article in 1993, "Employers should be stripped of any legally cognizable interest in their employees' election of representatives."
The NLRB has more than two dozen regional boards, and their rulings on labor dispute cases have a rapid effect on businesses because they decide cases quickly. Once Obama's nominees are confirmed, the national board will probably overturn Bush administration decisions and set new precedents for the regional boards.
"We want the board to reverse all of the decisions the Bush board made to exclude people from unions," said the AFL-CIO's Acuff. The Bush board did make changes in favor of employers that even conservatives have criticized (see sidebar).
"They are able to effect change because many of the people they're dealing with don't really grasp . . . what the real working changes are," said Wathen, the former union organizer. "You have to have a depth of understanding."
Take the election process to form a union. Thirty percent of workers must sign cards in order for union organizers to petition the NLRB to set up an election where a majority vote would form a collective bargaining unit-a union. Then the union organizers and employers have about six weeks typically to campaign for or against the union.
Labor advocates are pushing for a shorter campaign period, as little as a week or two, what critics term "shotgun elections." A short campaign would give the union an advantage because employees are typically disgruntled with management if they want a vote in the first place. While organizing efforts could have been brewing for months, management has little chance to make its case in a week.
Interpreting another fuzzy statute, the board could place more restrictions on what employers say during that campaign period. Typically employers can describe how unions have been historically bad for businesses, but they can't indicate how it might affect their business-that unionization could result in layoffs, for example-because that could come across as a threat.
Democrats historically provide a better habitat for union influence to grow because labor has provided the most financial support to the party of any interest group. But managers like McMahon believe that unions more often than not are a ball and chain on businesses' success. And because many upcoming changes will be administrative, business owners can't phone their lawmakers to vote "no" on pro-union bills, but they could turn to the courts, and lawsuits, for remedy.
Despite business owners' worries about increased unionization, President Obama put forward his ethos in a Labor Day speech to a gathering of the AFL-CIO: "Whether we're in good economic times or bad economic times, labor's not the problem. Labor's part of the solution."
For 15 years, Rian Wathen knocked on doors, organizing unions in Terre Haute, Ind. But as he rose in the ranks of the UFCW Local 700, becoming the director of collective bargaining for the state, he didn't like what he saw.
"You find that the organization exists for the organization," he told me, saying that the union made deals with companies like cutting wages at one facility if they would be allowed to unionize another facility.
Now he advises employers on how to deal with attempts to organize in the workplace-and he doesn't go easy on them. "There's no such thing as good unions, just bad management," he tells them. An attempt to organize a union he said, is simply a message that employees don't trust their employers anymore: "The employer has to own up to that."
Unions aren't coming to a workplace out of charity, he tells employees. Both management and the union see the battle as a business decision, and only the employees see it as an emotional one. If he can convince employees to make the business decision, they usually vote down the union, he said, though there are cases where they choose a union.
"Some of these larger corporations falter in their employee relations, and they're going to get organized," he said. "That's fine if they're making an informed decision."
Big labor isn't the only big spender on politics; business groups like the U.S. Chamber of Commerce have also spent their millions lobbying for favor from politicians.
As the law stands, penalties for employers who fire workers attempting to organize are "remedial, not punitive," said James Sherk, labor expert at the Heritage Foundation. The Bush administration board rarely doled out injunctions on employers for firing employees, which would allow the National Labor Relations Board to intervene and reinstate employees.
"Penalties could be greater," said Sherk. The Bush board also shrunk the ranks of potential union members by defining "supervisors" as essentially anyone with decision-making power; supervisors cannot join unions. The Obama board could try to undo that definition.
"Neither side likes it when the other side has got its foot on its throat," said Rian Wathen.