Tuesday, September 2, 2008

The Effects of EFCA Begin...

For more than two years, we have called the job-killing legislation which unions and their lackeys have dubbed the Employee Free Choice Act the Kill American Jobs Act--and with good reason: If enacted, EFCA (through its no-vote unionism and mandatory arbitration provisions) will cost many Americans their jobs.

Why? Here it is in a nutshell:

...And it really is this simple:

Unions cost companies more all the way around. While some of the costs are attributable to higher wage and benefits costs (in some cases), the hidden--and often more costly--costs of unionization come from the "administrative" costs attributable to unionization. These administrative costs include higher legal fees, loss of managerial time, overly burdensome work rules, adversarial relationships which result in lower productivity, and the like. These higher administrative costs can easily (and most often do) equate to double-digit costs to a company and, if that company is in any industry that has competition (which one doesn't?), the unionized company becomes less competitive. When a unionized company becomes less competitive, the company must find a way to become competitive again (e.g, outsourcing) or it either shrinks (and lays off its workers) or it goes out of business.

The Law of Unintended Consequences Strikes Again. Now, as union bosses spend $1 billion on the November election to have their political lackeys pass the hallucinogenically-named Employee Free Choice Act, employers have finally awoken and are taking notice. As a result, as we've known for a while now, some companies are not waiting for EFCA's deleterious effects to take hold, they are either altering (or planning to alter) their business models now.

Case in point: Last week, in a discussion with a client's HR manager in the Northeast, the HR manager mentioned that area businesses have already begun planning for EFCA to become law by outsourcing to their workforces to temporary agencies. Since these were primarily warehousing jobs, they do not necessarily lend themselves to outsourcing overseas. However, there are a plethora of companies that provide temporary workers who can easily pick and pack and who, while the per hour cost may be slightly higher, the agencies that employ these temp workers are not unionized.

While unions may cry foul at this approach, they had better get used to it once EFCA passes.

The fact is, the ideas behind EFCA (especially its binding arbitration provision) are not new. In 1994, President Clinton's Dunlop Commission (you can read an analysis of the commission report here) called for such changes to appease union complaints of a declining union movement and their failures in the private sector. However, EFCA (or whatever its predecessor bill might have been named) never came to fruition due to the Republicans' gaining control of Congress in the 1994 mid-term elections.

Twelve years later, on the evening of November 8, 2006, as the last blog entry we posted on Kulture's blog (before blogging exclusively here), we stated that the mid-term elections of 2006 had nothing to do with Iraq and everything to do with unions taking over Congress. Well, the union bosses have done it and on March 1, 2007, the unions got their puppets in the House of Representatives to pass EFCA. However, they knew it would never fly until they changed the make up in the Senate and the occupant in the White House.

Now, a mere two years later, union bosses are poised to complete their coup d'etat in 2008. Unfortunately, it is ordinary Americans that will suffer more under the effects of EFCA, as more and more companies look to shed themselves of the economic costs and risks associated unionization.

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