Investors and the Employee Free Choice Act Daniel Pedrotty Director, AFLCIO Office of Investment NAS

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Investors and the Employee Free Choice
ActDaniel PedrottyDirector, AFL-CIO Office of
InvestmentNASP 20th Annual Pension Financial
Services ConferenceJune 11, 2009Atlanta, Georgia
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Presidential Support

• President Barack Obama told AFL-CIO union
  leaders Tuesday that the Employee Free Choice Act
  will pass, signaling his full backing for
  legislation that makes union organizing easier.
• President Tells Unions Organizing Act Will
  Pass
• Wall Street Journal, March 4, 2009

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Economic Crisis

• 2008 exposed enormous weaknesses in our economy
  and our financial markets
• Bursting of housing bubble upcoming problems in
  commercial real estate debt.
• Securitization of mortgages spreads effects
  globally.
• Viral effect of credit default swaps in spreading
  effects to all types of financial intermediaries.
• Freeze in credit markets.
• 40 drop in stock market capitalization.
• Snowballing of a synchronized global financial
  and economic crisis.

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High Productivity Has Not Led to Improved
Paychecks
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Golden Age

• From 1947-1973
• This is the most prosperous period in US history.
• The countrys economic output grew at an average
  annual rate of 3.8, nearly tripling in size.
• Productivity grew 2.9 per year.
• The rate of profit for nonfarm business averaged
  nearly 14 per year

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Shared Prosperity in the Golden Age

• Median family income grew 2.8 per year, more
  than doubling from 1947-1973

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The New Gilded Age

• From 1974 on
• GDP grew at 2.9 per year, down from 3.8
  (1947-73).
• Productivity growth slowed from 2.9 to 1.9
• Growing inequality replaces widely shared growth.

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Growing Inequality in the New Gilded Age
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Family Incomes Did Poorly in the 2000s
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The New Gilded Age

• Weekly earnings fell 6.5 during this same period.

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The New Gilded Age

• Workers less likely to have health care or
  pensions
• Only 56 of private sector workers get health
  insurance, down from 70.5 in 1981.
• Only 45 of private sector workers get any kind
  of pension (20 DB), down from 50 (40 DB).

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Top Heavy
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Top Heavy
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CEOs made on average 27 times as much as a
typical worker in 1973, but they made 275 times
as much in 2007.
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Growing Household Debt
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The Stock Bubble
Price
Earnings
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The Housing Bubble
Home Prices
Building Costs
Population
Interest Rates
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High Productivity Has Not Led to Improved
Paychecks
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Union density cut in half in 30 years
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Leading Voices Call For Change
Changes in the institutions that have shaped the
labor market over the past few decades may also
have been associated with some increase in wage
inequality, , the available research suggests
that it can explain between 10 percent and 20
percent of the rise in wage inequality among men
during the 1970s and 1980s. Federal Reserve
Chairman Ben S. Bernanke, February 6, 2007
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Leading Voices Call For Change
No More Economic False Choices By ROBERT E.
RUBIN and JARED BERNSTEIN Though productivity
grew by around 20 percent from 2000 to 2007, the
real income of middle-class, working-age
households has actually fallen 2,000, down 3
percent. One factor behind this outcome is
the severely diminished bargaining power of many
workers, and here the decline in union membership
has played a key role. A true market economy
should have true labor markets in which labor and
business negotiate as peers. workers should be
allowed to choose to be unionized or not.
Published November 3, 2008
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• Workers Want Unions
• The proportion of workers who want unions has
  risen substantially over the last 10 years, and a
  majority of nonunion workers in 2005 would vote
  for union representation if they could.
• Richard Freeman, Harvard University
• DO WORKERS STILL WANT UNIONS? MORE THAN EVER,
  February 2007

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Obstacles to Uniting

• 91 of employers force employees to attend
  one-on-one anti-union meetings with their
  supervisors
• 82 hire consultants that specialize in running
  sophisticated campaigns to intimidate workers.
• 57 openly threaten to close a worksite.
• 47 threaten to cut wages and benefits.
• 34 of employers illegally fire workers who
  support forming a union.

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So much for secret ballot elections

• Even when workers are successful in meeting the
  threshold for calling for an NLRB-supervised
  election, employer opposition has been successful
  in thwarting 40 of elections from ever taking
  place.

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Not free and fair elections
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No incentive to obey the law
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Employee Free Choice Act

• Allows workers to unite when a majority sign a
  recognition card, restoring original intent of
  NLRA.
• Allows workers not employers - to call for an
  election by ballot.
• Mandates arbitration for first contract after 120
  days.
• Of unions certified by NLRB elections, only 38
  are able to negotiate first contracts after one
  year and only 56 after two years.

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Anti-EFCA Arguments You May Have Heard

• Takes away secret ballot from workers
• FALSE workers retain right to choose secret
  ballot election bosses must respect workers
  choice either way.
• Unions will intimidate workers
• FALSE major academic study found no union
  intimidation from majority sign up in 4 states
  over a six year period.
• Research shows less complaints of intimidation by
  both bosses and unions in majority sign-up vs.
  in-person elections.

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Is Now The Time? YES!

• Opponents argue now is not the time to raise
  wages, since businesses are hurting
• Theyre Wrong In a downturn, workers cant help
  their employers by earning less, only by spending
  more
• If workers across economy accept a pay cut, they
  must cut spending. This leads to further falls in
  sales (a negative surprise), and renewed demand
  for pay cuts. BUT, if wages rise, sales will rise
  (a positive surprise), paving the way for further
  growth.

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Especially in Times of Crisis, Unions are a Big
Part of the Solution.