The Union Label

University of Chicago Professor of Law Richard Epstein, in an article posted yesterday, warns of the economic disaster that will befall from the looming passage of the so-called “Employer Free Choice Act”. The bill, which would negate the requirement for employee elections to force union representation on businesses in many circumstances, is strongly supported by Senator Obama. Right-to-work states, your days are numbered.

As unions are in the spotlight for fabulous corruption, even on the very liberal pages of the New York Times we must face the threat of more and ever more onerous legal measures being applied to the process of approving union representation. Epstein explains in his article that the proposed act-

* It eliminates the need for a union to win an actual election to become the workers' representive. Instead, gaining a simple majority of the targeted work force - in the form of signatures on cards - would make the union the official bargaining agent for all workers, including those who had no knowledge of the union's activities.

* Worse still, the act lets a government-created arbitration panel impose the first two-year contract over the employer's objections if the two sides don't reach agreement within 130 days after union certification.

Epstein continues by explaining the issues that would face a business, especially a new one, if the company were confronted by such a union assault. Once the union has control of the contract situation competitive adaptations on the part of the company are effectively foreclosed. This can be seen in the Times article on corruption in pension practices by retirees of the Long Island Rail Road.
Union contracts also inflate operating costs through arcane work rules, some dating back to the 1920s, which pad employee paychecks, boosting pension and disability payments in turn.
Later the Times article discusses how problems can continue and even mount in spite of management efforts to deal effectively with them.
But many problems are beyond her (L.I.R.R. president, Ms. Helena Williams) control. Without the political support needed to weather a strike, management has been unwilling to press for the removal of costly work rules, according to former management and union officials. The railroad also has no authority to intervene in federal disability cases
The "federal cases" reference stems from the fact that railroad disability payments are made through a taxpayer-supported federal agency called the Railroad Retirement Board.

But, really, how much different can union rules be? How would they create an unreasonable competitive disadvantage for businesses? Let's consult the Times article for one gem-

Assigned to the railyard that night, (Long Island Rail Road engineer Edward) Koerber was instead sent to passenger service. Under union rules, this change entitled him to an extra day’s pay. Over the next few hours, he ended up operating both an electric engine and a diesel engine. These dual duties earned him a second day’s pay.

Around 2 a.m., Mr. Koerber took an engine in for maintenance. With that came another day’s pay.

These three contract violations resulted in penalty payments that totaled $718. He also earned, among other things, $157 for a few hours of overtime and $15 for not getting to eat during his normal lunch break. The L.I.R.R. was supposed to pay him $247 for his work that day. Instead, he ended up with $1,177.
Are all unions as bad as this? Of course not. The majority of them are a positive influence for their workers and can contribute to overall competitiveness. The point is that once one is this bad the company must die to correct the problems the union creates. Therein is the real reason union representation has been steadily falling since the 1930s. Though unions are not inherently bad, when they lose track of the fact the businesses to which they represent labor live and compete in an international marketplace they can contribute to those companies becoming uncompetitive in their markets. As they lose market share so do the unions dependent on them for jobs.

Creating an artifice like the Employer Free Choice Act will not solve labor's problems. It may well exacerbate the economic crisis we find ourselves in today by making would-be entrepreneurs think twice about starting a business at all. If as, Joe Biden tells us, the central issue today is a three-letter word called "jobs" voters need to look hard at who is better positioned to encourage would-be employers to create them.

Ask yourself, will the Employer Free Choice Act, or its supporters, do that for us?

Posted by Lee Emmerich Jamison at October 22, 2008 10:54 AM
Comment #267881

I retired from the railroad after 36 years of service and the agreements you speak of were in effect long before I was employed. Most all railroad contracts are not settled until 2 or 3 years past their expiration date. Railroad workers have a no-strike clause, because of national security, and a strict set of rules must be followed before a union can strike.

Back to the contract agreements: as I said, these union benefits of pay have been in effect for a long time. I will say first, that these pay benefits are slowly being removed from the contracts. Over the years, employees have given away certain pay and benefits in trade for guaranteed jobs and other perks. The changes do not affect current employees, at the time of signing contracts. They only affect new employees. Most of the benefits you speak of will slowly disappear as the baby-boomers retire.

Since it takes so long to negotiate a contract, it normally falls to an arbitration panel and sometimes a presidential board to make the final decision on the contract.

It is interesting to note, that presidential boards of democrat presidents imposed some of our worst contracts on us.

I was union, but I have never been pro-union, and I agree with you, the Employer Free Choice Act, will hurt more than help.

I am not sure about railroad retirement being supported by taxpayers. This is the first time I ever heard this. I do know that railroad retirement is solvent for many years (75) even if no one else contributed. Our share of money paid into RR was very high (about 15 to 16% of our earnings) and the railroads had to match our contributions. RR is actually in a “Locked Box” and many times the democrats have tried to access the funds. The last time it happened was by the JFK administration and the dems. IOU’s were never paid back. It is one of the greatest fears among railroaders that they will try again to raid our retirement.

The problem with unions is the money, it breeds corruption. Once union bosses get in control, they cannot be removed and they will appoint their successors. So it is a never-ending problem. They take union dues and support whoever they want for elections and the rank and file has no say.

If unions are forced on companies with forced contracts, the companies will leave. Foreign auto factories have opened in rural OH and KY and they do not want unions and they offer good pay and benefits to keep the unions out. If you combine a simple majority with having union bosses standing over your shoulder to read your vote (intimidation) it can only lead to disaster.

Posted by: o at October 22, 2008 11:56 AM
Comment #267887

Like political parties and corporations, unions are only as good as their leadership, and as capable as the education level of their constituents permit them to be.

Unions can be a very positive force, but, only if regulated against excesses, just as corporations and political parties need to be regulated against excesses.

The inherent flaw that permits the excesses to rule, is the lack of interest, involvement, and education of the general public which abdicates its responsibility to hold those in power of their corporations, their unions, and their political parties accountable.

Unions, Corporations, and Political Parties require that the common voters remove leadership routinely at the first signs of impropriety. We may be evolving in that direction, but, there are few signs of it, yet.

Posted by: David R. Remer at October 22, 2008 12:10 PM
Comment #267906

O, Thank you for your hard work and service with the Railroads, I admire your noble hard efforts and Respect you and still say getting the big bulk of freight and folks from point A to Z on land is cheaper and more efficient By Rail than by Car or plane or Truck. we need to invest in our Railroad infrastructure.

Posted by: Rodney Brown at October 22, 2008 2:43 PM
Comment #267908


The need to cycle leadership through and out of positions of power is clear. I agree wholeheartedly with you there.


It is my understanding that the Railroad Retirement Board is, technically, taxpayer-supported, but the taxes are drawn from the railroad industry itself and its employees. I suspect that, had it been less narrowly defined, it would have been easier to raid the funds than it has proven to be so far.

The pity about situations like that at the L.I.R.R. is that the funds being depleted by this scam are taken from fellow railroaders.

Posted by: Lee Jamison at October 22, 2008 2:44 PM
Comment #267934

Peculiar silence here.

I’d love to think it was because I’d just hit a rhetorical home run and single-handedly guaranteed Republicans a win in the election based on the threat of this issue alone.

I suspect, though, it is because people have never heard of either side of the issue brought up here and they don’t know (or haven’t been told on the D.KOS) what to think.

Posted by: Lee Jamison at October 22, 2008 5:38 PM
Comment #267946

I’m not sure what to think. I think unions can be good, just like I think corps can be good, just like government can be good. The problem is it can. IMO everything needs balance.

At the same time I argued that it shouldn’t matter if someone sees if you say yes or no. I personally think you should be willing fight for what you believe in. I think that is kind of what being an American is. But then again, I also believe in helping others that are too weak to defend themselves. Shrugs.

Posted by: kudos at October 22, 2008 7:46 PM
Comment #267951
At the same time I argued that it shouldn’t matter if someone sees if you say yes or no.

This violates the need for secret ballots to keep a democracy truly free. Why, I then ask, aren’t are elections of public officials an open ballot where you have to say your name and the person you vote for publicly?

One wonders if anyone has ever heard of a right to privacy before…

The funny thing is, as I wrote earlier this year, a group of senators that sent a letter to a Mexican province because they were wanting to enact a similar law. They made it very clear that they needed to allow secret ballot elections for a union to ensure no coersion was used to enact the union. Most of those senators are cosponsors of the same bill here in the US.

Posted by: Rhinehold at October 22, 2008 7:58 PM
Comment #267967


I forgot to mention, when railroad contracts are settled, the contracts are between the crafts and the carrier. The carriers being all class A railroads. Sometimes the crafts form an alliance to negotiate with the carrier and sometimes each craft negotiates individually. I worked for a certain (un-named) large railroad, but that railroad had no more say than any other railroad when negotiating. Each craft normally received similar contracts, but not always.

It is fairly easy to get an early disability retirement from the railroad. Much easier than SS. The funds do come from other working railroaders but RR retirement is in such good shape financially that it doesn’t affect anything. The pay benefits that you spoke of are in no way connected to RR retirement, they come straight from the company.

Railroaders fall under federal laws similar to airline crews, truckers, or bus drivers. It is called “hours of service”. We could only work a certain amount of time and then we had to have so many hours of rest. Many of the rules you spoke of, concerning extra days and hours of pay, are the result of the hours of service rules. The L.I.R.R. did not have to use the same crew or pay them the extra money, but it is easier and less expensive to use an existing working crew than it is to call another crew. The railroad I worked for was always more willing to double up the work and pay the extra money. So technically it is not a scam.

Railroaders do not pay into SS. We paid into a two-tier retirement fund and we collect a two-tier retirement. One tier was equal to what the normal person pays into SS and the other tier was a retirement fund, similar to an IRA. The carrier matches these funds. The only way I could see it as taxpayer-supported would be the fact that one tier is equal to SS. I know that these funds can be transferred to SS under certain conditions if the employee quits the RR before he is vested, which used to be 10 years, but now it is 5.

Posted by: Oldguy at October 22, 2008 9:57 PM
Comment #268005


What I was referring to as a scam was the issues specific to the L.I.R.R. disability situation. In this case huge numbers of workers are retiring at or near age 50 and then upwards of 90% of them are wrangling disability payments. This is a far higher percentage than found in the ranks of other railroads.

I know it’s a long one, but take a look at the Times article. This should be of special interest to you because the abuses directly affect the viability of your retirement programs.

Furthermore they represent a microcosm of the larger federal picture in which groups claiming to represent people create the illusion that they are benefitting their constituencies, all the while using that impression to consolidate power.

Posted by: Lee Jamison at October 23, 2008 8:39 AM
Comment #268050


You’re right; it is a very long article. RR retirement is a very complicated discussion. I hesitated to bring up some things because it would involve so much depth.

Commuter train contracts differ from freight train contracts in many ways. Only management on class A freight RR’s have company pensions as well as RR retirement, contract employees do not have company pensions. I worked on a freight rail system. From what I read, the LIRR had a company pension as well as RR retirement. In order to qualify for full RR retirement on a freight rail service, you must have at least 30 years service and be at least 60 years old. If you are injured to the point where you cannot continue to do your job, you have 2 choices, to apply for an occupational disability (to which the company has the option to re-train the employee for another job) or a full disability, which qualifies for retirement.

The problem with a full disability is the time in service clause: if an employee has only 20 years service, he is less than 60 years old, and he retires with full disability; when he reaches age 60, the full retirement drops to the qualifying 20 year pension. I knew many men who took a full disability, for various reasons, but normally they waited until they had the qualifying 30 years service.

Full disability from RR retirement is similar to SS disability retirement in that it also qualifies the recipient to Medicare.

It appears the employees are retiring from the LIRR with a qualifying 20-year full pension at 50 years of age and of course they would not normally begin to receive a RR pension until they are 60 years old. They would have to live on the LIRR pension and that is not enough. After they retired, they find a doctor who will qualify them for disability and it is at this point they apply for RR retirement disability. Which would not only qualify them for medicare, but also add thounsands more dollars to their income.

Since a private company (LIRR) pension is totally separate from RR retirement, the LIRR has no control over what the RR retirement board does. There is no doubt, there is a scam being committed, when the percentages are so high. Once a railroader retires from the railroad, there is no longer any connection with the railroad.

There is another factor that plays into the equation: rail workers are not under workers compensation. They are under the FELA (Federal Employees Liability Act). Which means, when a rail worker is injured, it is the responsibility of the railroad to prove the employee is not injured. Under workers comp, a value is set for each injury, but under FELA, damages must be paid by the railroad for injuries. For example, if an employee cut his finger and it requires stitches, up to $17,000.00 damages are paid. I saw this happen. The railroads would rather settle out of court, to prevent setting a precedent. A back injury could bring as much as half a million. The carriers have a history of encouraging the employees to retire with disability after a large settlement is paid out.

Railroads want to put their employees under workers comp, but that requires an act of congress. The railroads have a history of injuries due to the physical nature of the work, even though the companies and work are much safer today. I worked on the railroad when it was against company policy to wear hearing protection because they considered it unsafe. Twenty years later they required hearing protection because of the lawsuits for hearing loss. The railroads are all about safety today and they are trying to establish a low frequency of injuries to be able to take the stats to the congress and seek change in the liability.

Now to the answer of the problem: it is out of the control of the LIRRand they are not really out an money, because they are going to only pay a pension. The responsibility lies with the RR retirement board to screen the applicants for disability. The problem is that it is a government run operation and has the government ever run anything efficiently? This is the problem with the dems seeking a socialistic agenda. It creates larger government and this breeds corruption.

Posted by: Oldguy at October 23, 2008 11:56 AM
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