As Chamber Lobbies, Its Paid Expert Says: No Unions, No Minimum Wage Law Needed

This week, the Chamber of Commerce launches its most forceful lobbying effort yet to kill the Employee Free Choice Act and to end talk of compromise on Capitol Hill.

The Chamber is donning the masquerade of championing workers’ rights by railing over the myth that the bill would take away the secret ballot — it actually just gives workers the choice of whether to select a union through majority sign-up or “card check.” The business coalition, also working through such front groups as the Alliance to Save Main Street Jobs, promotes bogus claims that it would cost the economy jobs.

But now the real truth behind the hostility of the Chamber of Commerce and other major business groups to unions has been revealed by one its most admired experts, prolific University of Chicago libertarian law professor Richard Epstein, whose Big Business-funded research has been touted as the definitive critique of the Employee Free Choice Act.

His arguments against the arbitration provision of the legislation that aims to end employer stalling in bargaining has also persuaded such iconoclastic liberal bloggers as Slate’s Mickey Kaus ( full disclosure: he’s a former editor of mine whom I admire although I don’t always agree with him).

Yet in a new In These Times article, “Shilling on the Corporate Dollar,” Epstein confirmed to me his earlier writings that the country would be better off without labor unions, labor protection laws or the minimum wage law. “I’m unrepenant,” he says, while also conceding that his corporate funders asked him to omit some of his earlier arguments against labor laws as potentially political damaging.

They had good reason to be worried that his radical views could discredit their claims that these corporate leaders somehow care about protecting workers’ rights. One of his harshest critics, David Brody, a professor emeritus of labor history at Berkeley, observes, “I’m amazed the business side is using him. He thinks collective bargaining itself is a bad thing, while they claim to be defending the sanctity of the secret ballot.”

At the heart of much of Eptstein’s current theoretical attacks on the bill is his longstanding libertarian view of employer and employee relations as achieving a perfect balance because of market forces. That makes him the labor market equivalent of Candide’s Dr. Pangloss: if employers could just be left alone, all things work for the best in this best of all possible worlds. If there were no minimum wage laws, for instance, Epstein told me, “Wages would go up because productivity gains would offset any short-term losses [to workers].” And Epstein’s ivory-tower “at will” world view is still on display in his new Hoover Institution paper: “To be sure, some firms do not have enlightened managers. But in a competitive market, the firm that does not do right by its employees will not attract or retain the most productive workers.”

But while this and other anti-union assertions may sound reasonable to a tenured professor like Epstein, it simply doesn’t take into account the real world of employment — and the justifiable fear of being fired. For instance, David Madland, a labor expert at the Center for American Progress Action Fund, notes, “What really discredits his arguments is his claim that employer intimidation isn’t a significant cause of union decline.”

Most strikingly, he doesn’t even think there ought to be workforce regulations or minimum wage laws, even for sweatshops here or abroad. As my article points out:

In the past Epstein, an extreme libertarian, has attacked minimum wage and unemployment benefits, denouncing such New Deal legislation as unconstitutional “takings” that violate the Fifth Amendment. That is no surprise. Epstein has argued that, historically, sweatshop conditions can only be ameliorated by market forces, not by laws or unions. He told In These Times: “The level of wages will be determined by the intersection of supply and demand…the escape from that system is not driven by unions, which cannot increase productivity.”

The In These Times article further debunks the statistical sophistry of the business-funded economist Anne Layne-Farrar whose claim that the bill would cost at least 600,000 jobs in its first year has gained wide currency. No doubt Chamber of Commerce lobbyists and members are citing this week that statistic and her authoritative-seeming report. But by interviewing top economists, including John DiNardo of the University of Michigan, I was able to deconstructed her oft-touted use of “regression analysis” she uses to make the claim that rising unionization rates cause unemployment:

Layne-Farrar massages the data using a complex “regression analysis” to connect the dots between card check, higher unionization rates and more unemployment, putting the loss at between 600,000 and 2.6 million new American jobs in the first year.

“That’s bullshit,” says Canadian labor economist Charlotte Yates, now the Dean of Social Sciences at McMaster University in Hamilton, Ontario. “I don’t know of any credible economists who say [now] there is a direct correlation between unionization and the rise in unemployment.”

Even so, Layne-Farrar invokes her use of “regression analysis” as a sort of holy totem to ward off criticism of her work from other economists who cite what she says are “simplistic correlations.” These include studies showing that countries such as England, Denmark and Norway have higher unionization and lower unemployment rates than the United States. She says, “This is empirical analysis, not an opinion piece, with results based on publicly available data and using well-accepted econometric tools. You can’t rig these.”

John DiNardo, a labor economist at the University of Michigan and author of the textbook Econometrics retorts, “Just because she calls it ‘econometrics’ and ‘regression analysis’ doesn’t mean that it makes any sense.” While some earlier research had found a link between unionization and unemployment, more rigorous, recent research in Europe and the United States has found no connection between unionization and unemployment. In fact, Layne-Farrar’s study concocts a negative jobs impact from unionization that is 200 to 300 percent higher than even the most critical anti-union research.

No matter that her and Epstein’s findings are built on flimsy data and extremist views. This week, they’ll be no doubt marshalled to convince Senators to back away from the Employee Free Choice Act.

As The Hill reported:

According to a schedule obtained by The Hill, executives are visiting Sen. Dianne Feinstein (D-Calif.) [this] Wednesday as part of a lobbying push against the Employee Free Choice Act (EFCA), legislation that would make union organizing much easier if passed. Business leaders from 12 different states, organized by the U.S. Chamber of Commerce, are flying into Washington next week to lobby against the bill.

Feinstein has emerged as a key voice on the legislation. At first, her support for EFCA wavered since she is not a co-sponsor of the bill this Congress, unlike two years ago when she also voted for cloture on the bill. But now, Feinstein has floated a compromise for one of the bill’s provisions to help garner support from Senate centrists who are worried about angering the business community by voting for the bill…

Along with Feinstein, business leaders are also scheduled to meet with Sens. Evan Bayh (D-Ind.) and Tim Johnson (D-S.D.) — centrists who could decide the fate of EFCA. They both co-sponsored the bill last Congress but Bayh is not doing so this year.

Union officials have been somewhat open to changes in the bill but business groups have lobbied against any compromise, saying the legislation would hurt industry revenue by leading to more strikes and work stoppages. They have hammered Feinstein’s proposal [to allow mail-in ballots instead of majority sign-up or “card check”] because they believe it would still lead to intimidation of workers by union organizers.

Of course, the intimidation canard has been challenged by the most rigorous research on the issue, including a new study that found not a single incident of union intimidation in public sector jobs where majority sign-up is permitted.

Yet despite what solid research says, it’s not at all clear that conservative opponents of the legislation will let facts stand in their way. As I concluded in my piece on the two top anti-union scholars:

While Epstein’s more radical views are left off the table, his intellectual firepower adds to the impact of his arguments against EFCA. Both Epstein and Layne-Farrar see an idealized world waiting to be born where unions don’t exist, and where workers and businesses thrive without them.

The question remains, will Washington politicians still listen to business interests that use these researchers’ dubious claims to argue, as Epstein does: “Unions are a bad deal for most workers.”

About the Author: Art Levine is a contributing editor of The Washington Monthly who has also written for The American Prospect, Alternet, In These Times, Salon, The New Republic, The Atlantic and numerous other publications. He’s written investigative articles on unionbusting and other corporate abuses, and recently completed Cornell University’s Strategic Corporate Research summer program. He blogs regularly for Huffington Post, and co-hosts a weekly Blog Talk Radio show, “The D’Antoni and Levine Show,” every Thursday at 5:30 p.m. ET.

This article originally appeared in The Huffington Post on June 2, 2009. Reprinted with permission by the Author.

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Madeline Messa

Madeline Messa is a 3L at Syracuse University College of Law. She graduated from Penn State with a degree in journalism. With her legal research and writing for Workplace Fairness, she strives to equip people with the information they need to be their own best advocate.