The RAISE Act Debate Shows the Desperation of Unions & Their Allies

20 Jun, 2012 by Dustin Siggins

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In recent weeks unions have been making major national news. First it was the failed Wisconsin recall. Next it was micro-unions, which have D.C.-based business interests very concerned about gerrymandering within individual businesses that could end up causing many businesses, including retail and grocery stores, a great deal of financial harm. Most recently, though, it is the Rewarding Achievement and Incentivizing Successful Employees (RAISE) Act, introduced in the Senate, that has caused a great deal of back-and-forth among varied interests this month. Below are four prominent opinions expressed in recent days and weeks.

Yesterday, Florida Republican Senator and RAISE Act sponsor Marco Rubio wrote a blog post for National Review’s main blog, The Corner, promoting the benefits of the RAISE Act, which would allow union employers to encourage better results through pay incentives — essentially eliminating current caps in union bargaining agreements. The legislation is expected to be voted on today.

I contacted Senator Rubio’s office to ask about the post to ask the following questions:

Under what constitutional basis was the Supreme Court case the Senator referenced in his post (NLRB vs. C & C Plywood Corp. (1967)) decided?
Will the RAISE Act be in conflict with the SCOTUS decision? If so, what could be the ramifications of the Act with regards to the original decision?

A Rubio aide responded in a phone call:

The legal basis for the determination in NLRB v. C&C Plywood Corp., which is being used as the case that determined that premiums or bonuses could not be paid to employees based on their merit was that doing so violated the National Labor Relations Act.: The NLRA established that workers had a constitutional right to engage in collective action for mutual aid and protection and that includes the right for unions to choose to collectively bargain for favorable contract terms with their employer. The Supreme Court in this case found that under the facts, what the employer did was violate the terms of collective bargaining agreement because they made this change in wage levels for particular “groups” of employees after the collective bargaining agreement was entered into.
The RAISE Act will not run afoul of Supreme Court precedent. The case cited above dealt with a clause in the contract that said the employer could provide pay increases to “specific employees” but what the employer did was promise to pay a higher “wage level,” not a “bonus,” to particular “groups” of employees, in that particular case it was “glue spreader crews.” This was done so following the collective bargaining agreement entered into by the union and the employer. This is used today as the rational for why employers are prohibited from giving any union employee a bonus for a job well done. To that end, our bill only affects future contracts; it will not supersede anyone’s contract rights.

I was first made aware of this issue by Heritage Foundation Senior Labor Fellow James Sherk. Sherk informed me that he was writing a paper on the RAISE Act. In the paper, he wrote the following:

Should Congress pass the RAISE Act, the average union member’s salary could rise between $2,700 and $4,500 a year. The RAISE Act would restore union members’ freedom to earn individual merit-based raises — a freedom that federal labor law currently denies. With many American families struggling financially in the aftermath of the recession, Congress should lift the seniority ceiling on workers’ wages.

I called Sherk to ask him about this section of the paper, since we are in tough economic times and thus potential pay increases may simply not be available due to a lack of available monies. He responded with the following:

The increased pay comes from the productivity that the employees’ increased efforts produces, so the company can pay higher wages because it also has higher profits. The beauty of performance pay is that it’s not a zero-sum game. Companies can lead employees to be more productive via performance pay, so both parties are better off.

One opponent of the RAISE Act has been Senator Dick Durbin (D-IL), a long-time union supporter. I contacted the Senator’s office for this post to ask his press staff why the Senator said the following on the Senate floor (via a non-official transcript on June 05, 2012):

[Senator Rubio’s] BILL IS A VERY BAD IDEA. IT IS CALLED “THE RAISE ACT,” AND JUST SIMPLY STATED, IT INNOCENTLY SAYS AN EMPLOYER WHO IS PARTY TO A COLLECTIVE BARGAINING AGREEMENT WITH A UNION WOULD BE ALLOWED TO GIVE A UNILATERAL PAY RAISE TO SELECTED EMPLOYEES OF THAT EMPLOYER’S CHOICE. WELL, WHO’S AGAINST A PAY RAISE? UNTIL YOU TAKE A CLOSER LOOK AT IT AND WHAT IT ALLOWS THE MANAGERS AND EMPLOYERS TO DO IS TO PICK AND CHOOSE AMONG EMPLOYEES FOR THESE PAY RAISES AND, SADLY, WITHOUT ANY BASIS: OTHER THAN THEIR PERSONAL DECISION. I’M AFRAID I KNOW WHERE THAT LEADS. IT LEADS, UNFORTUNATELY, TO THE SAME KIND OF WAGE DISCRIMINATION WE SEE TODAY BETWEEN MEN AND WOMEN. MAY LEAD TO NEPOTISM. IT MAY LEAD TO KIND OF FAVORABLE TREATMENT FOR SOME EMPLOYEES FOR REASONS THAT MIGHT HAVE NOTHING TO DO WITH THE WORKPLACE. THIS SOUNDS SO INNOCENT BUT IT’S NOT. UNDER CURRENT LAW, UNIONS AND EMPLOYERS CAN AGREE TO LINK PAY INCREASES AND BONUSES TO PERFORMANCE AND THAT’S THE WAY IT SHOULD BE. IN FACT, MANY COLLECTIVE BARGAINING AGREEMENTS ALREADY PROVIDE FOR: MERIT-BASED PAY INCREASES.

I contacted the Senator’s office regarding the following questions, but at press time had not received an answer to two e-mails and a phone call:

I understand Senator Durbin strongly opposed the RAISE Act on the Senate floor earlier this month, for reasons including nepotism. Given that raises, bonus incentives, etc. are given every day by employers across the country for work-related performance, what evidence leads the Senator to believe nepotism and non-performance bonuses and pay incentives will be provided at the expense of union employees?
Does the Senator believe that non-union employers should be allowed to provide performance-based pay for individuals on respective work forces?

Finally, the International Brotherhood of Teamsters sent out a letter on June 7 accusing the RAISE Act of being yet another attack on collective bargaining. The letter made a series of other accusations. I left two voice messages with the Teamsters press office to ask several clarifying questions, but never received a response. The questions I planned to ask are below.

Upon what empirical data does the Teamsters base its accusations of nepotism?
How will increasing the ceiling for wages lead to “a road to lower wages for middle-class families?”
Senator Rubio’s office informs me that contracts will not be allowed to be broken in the RAISE Act, which is consistent with NLRB vs. C & C Plywood Corp. (1967). What is the basis for this concern?

All in all, the debate over the RAISE Act appears to be yet another stage in the fight over employee/employer rights and unions grasping at straws to maintain what was once a solid grip on the American private-sector worker. This Act seems to be pretty straightforward in providing what should be a common-sense right of employers to provide incentive to workers for better results for the company, and the right of employees to be rewarded for quality performance. Unless opponents can provide a better response than “employers will be free to give employees more money for accomplishing duties better,” I think the Teamsters, Senator Durbin, and others are going to find themselves on the other side of yet another decision by the public that, given the economic harm they cause, American unions are simply not worth supporting.

[Originally published at the American Spectator blog.]