Now and then one is struck by the antediluvian quality of labour relations in the US. The confrontational rhetoric and negative-sum bargaining of some US unions, warmly endorsed by progressive intellectuals and the New York Times, is straight from the Arthur Scargill handbook. You remember Arthur Scargill.
What makes this so jarring is that in most ways, the US is the quintessentially modern economy: hyper-competitive, perpetually restless, moving the frontier of innovation and productivity ever onward. But here and there are pockets of class-war backwardness that come straight from pre-Thatcher British industrial relations circa 1970.
Strangest of all is that the Obama administration apparently sees this as a strength on which to build. If officials have their way, “Winning the Future” – Mr Obama’s theme of the moment – will include a larger role for labour policies that looked out of date in Britain 40 years ago.
In two weeks, an administrative law judge is scheduled to hear a complaint by the National Labor Relations Board, an arm of the federal government, against Boeing. The aircraft manufacturer has hired workers and invested $1bn in a new factory in South Carolina: it planned to start production of its Dreamliner jet there in July. The NLRB’s acting general counsel says the investment is an act of illegal retaliation against the machinists’ union, and wants the work moved to unionised plants in the state of Washington.
“It may be a difficult case to prove but the complaint …is a welcome effort to defend workers’ right to collective bargaining,” said the New York Times last month. The South Carolinians who expected to work in the new plant may take a different view. Actually, whichever way you look at it, the case is nonsense on stilts. A cynic would suspect a plot by Republican infiltrators to discredit the NLRB, undermine responsible unions and expose Mr Obama and his mid-20th century prejudices to ridicule.
South Carolina is one of more than 20 so-called right-to-work states, where employers and unions are forbidden to negotiate contracts that force workers to join a union. (The law in such states varies but is similar to Britain’s after closed shops were outlawed.) Boeing’s home state of Washington is not among them and the company’s production there has been subject to strikes. A stoppage in 2008 lasted two months, cost the company some $2bn and had customers for Boeing aircraft up in arms. The following year, Boeing announced it was building the new factory in South Carolina. No jobs will be lost in Washington, it says: concerned about continuity of production, it has merely chosen to expand elsewhere.
Surely, you might think, the company is within its rights to do that. In fact, it is – and the NLRB is not challenging that right. Boeing can put new plants where it likes. It can put new plants in right-to-work states and cite lower labour costs as the reason. What it cannot safely do, apparently, is utter the word “union” or “strike”. That is what the company did. The NLRB complaint finds this coercive and unlawful.
If absurdist comedy is to your taste, the board’s fact sheet on the case is worth reading. “The Board has repeatedly held that an employer violates [the National Labor Relations Act of 1935] by threatening that employees will lose their jobs if they join a strike, or by predicting a loss of business and jobs because of unionisation or strike disruptions without any factual basis. In contrast, the Board has found that employers may lawfully relate concerns raised by customers. They may also reference the possibility that unionisation, including strikes, might harm relationships with consumers, as opposed to predicting ‘unavoidable consequences’ [emphasis in original].”
Got that? Employers may “reference the possibility” that strikes will harm the business. But if they declare that this will happen – if they judge it to be unavoidable, and dare to say so – they have broken the law. You may wish to reference the possibility that, if the NLRB is interpreting it correctly, the law in this instance is an ass.
Enlightened unions can be good for business. Through cooperation and consultation, they can raise productivity as well as wages. But you do not need laws restricting intra-US flows of capital to get this outcome. Union-shop states can compete with right-to-work states and prosper. The same goes for countries. Protectionist policies will only be needed if unions use their power to drive costs (through wages, stoppages and restrictions of managerial flexibility) uncompetitively high. Inefficiency plus protectionism is not a formula for winning the future but at least it would have internal consistency.
Meantime, if the NLRB complaint against Boeing succeeds, US business can draw some lessons. First, make no public statement about location of investment without clearing it with lawyers. Second, affirm the value of unions and, especially, of strikes. (“When our factories were shut down last year, we learned a lot about ourselves and our customers and came back stronger. We look forward to the next stoppage.”) Third, if you are a start-up looking for a home, do like many others and choose a right-to-work state. Otherwise, later expansion may expose you to federal harassment and demands for redress.
More columns at www.ft.com/clivecrook
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