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DOMESTIC POLICY

Jobs and Labor


L abor law in America has remained largely unchanged since the
1950s. However, the country’s economy, labor market, and labor–
management relations have changed significantly. This has created a
Notes

number of workplace-related issues that policymakers must work toward


resolving.
Union organizers are pushing for the implementation of the Employee
Free Choice Act, which would put an end to secret ballot union orga-
nizing elections. EFCA would not only ineffectively replace collective
bargaining with mandatory arbitration, but further hurt the economy.
Current union practices must be revisited and revised in order to be fair
to both workers and their employers, promoting both personal free-
doms and economic growth. Union employees work under wage caps.
By lifting the cap on over 8 million workers, their productivity could be
rewarded and the economy benefit.
The current emphasis on health care reform has led workers to ques-
tion the benefits provided to them. Without careful labor reform compa-
nies will be forced to spend more on benefits and less on wages because
of employer mandates for health insurance. Employers must be able to
operate flexibly in hiring, bargaining, and in wage and benefit packages
in order to take prudent financial risks and expand production.
Many high-tech employers are alarmed by the allotment of a meager
65,000 H-1B visas each year for foreign workers in specialty occupa-
tions, with an additional 20,000 for individuals with a master’s degree
or higher. The ability of employers to hire skilled individuals from other
countries allows for a better-rounded workforce that helps to boost
America’s competitiveness. The hiring of highly skilled foreign workers
allows American companies to expand in America instead of relocat-
ing abroad. Research shows that companies that hire highly skilled H-1B
workers also create more jobs for American workers. Raising the H-1B
cap will increase American competitiveness and create more jobs in
America.

55
Recommendations Notes

1. Promote true free choice in the workplace. The Employee Free


Choice Act would replace secret ballot elections with publicly signed union
cards. Furthermore, EFCA would end collective bargaining by legislating
mandatory arbitration that would allow an outsider to decide all wages and
working conditions for two years. EFCA would lead to fewer investments
and jobs and to unworkable contracts.

Employees Who Would Lose Their Right to a Secret Ballot by EFCA


Percent of All Employees in Each State
WA
65.8% VT NH
MT 67% 68.3% ME
ND 67.6%
60.7% 61.8%
OR
66.3% MN
ID 69.5% WI
64.2% SD NY MA 71.4%
WY 64.6% 72.3% 68.2%
MI RI 72.3%
61.5% 71.7%
IA PA CT 69%
NV NE 72.9%
73.6% 65.8% 69.2% OH
UT IL 71.1% NJ 68.5%
IN
69.7% CO 71.9% 72.1%
CA WV DE 71.2%
66.7% KS 68.5% VA
64.9% MO KY 65.6% MD 61.4%
66.9% 70.4% 68.7%
NC DC 58.5%
AZ OK TN 69.9% 69.3%
NM AR SC
68% 65.9% 67.4%
60.2% 71.5% Key
MS
66.5% AL GA 50% to 64.9%
70.2% 70.4%
TX 65% to 69.9%
69.9% LA 70% to 80%
AK 69%
59.5% FL U.S. Total:
72.1% 105,267,194
HI 64.6% (68.8%)

Source: Heritage Foundation calculations using data from the December 2006 to November 2007 Current Population Survey, conducted by the
Bureau of Labor Statistics. Workers covered by the Employee Free Choice Act are those subject to the National Labor Relations Act (NLRA).
Consequently, any worker who reported working for the government, for railways, for airlines, in agriculture, or as a self-employed person is not
covered by the Act. Since the NLRA does not cover supervisors, managers were also excluded from EFCA coverage. Union members were not
considered covered by EFCA since they already belong to unions and Congress rejected amendments to the bill to extend card-check procedures
to workers leaving unions, not those joining.

2. Allow merit-based pay/individual raises. Union employees are paid for


“time served” instead of “hard work.” The “seniority ceiling” prevents work-
ers from maximizing their full potential due to a lack of incentive. The RAISE
Act would lead to an increase in productivity allowing workers to make
between $2,600 and $4,300 more a year in performance-pay bonuses and
merit raises. Federal law caps the wages of 8 million American workers. The

56 Issues 2010 • The Candidate’s Briefing Book


RAISE Act would allow struggling American families to get ahead without Notes
destroying the wage floor or creating anti-union discrimination.

3. Expand and improve the H-1B visa program. Preventing employers


from hiring highly skilled individuals will only delay the economic recovery.
Instead, Congress should return the cap to the 2001 quota of 195,000 visas
a year, create a more flexible program, make interoperable databases to
minimize fraudulent cases, and increase oversight to make sure employers
conform to program rules.

4. Use scientific, accurate calculations. The Davis–Bacon Act was cre-


ated to ensure that the purchasing power of the federal government did
not lead to a decrease in construction wages. However the GAO has found
that the Davis–Bacon wage determination process is badly flawed, using an
unscientific methodology and data with 100 percent error rates. In some cit-
ies wage rates on federal construction projects are double the local market’s
wages while in others they are set to the minimum wage. Nationwide, Davis–
Bacon rates average 22 percent above actual market wages, costing taxpay-
ers $9 billion a year. This needlessly wastes tax dollars. The Bureau of Labor
Statistics specializes in estimating wage rates accurately. Congress should
require the Department of Labor to calculate Davis–Bacon federal wage
rates using scientifically valid data collected by the Bureau of Labor Statistics

Facts and Figures

n Economic research shows that the average worker’s earnings rise 6


percent to 10 percent when the pay is performance based.

n The Davis–Bacon Act discourages hiring minorities in an industry that


is capable of employing the largest number of minorities.

n Unionized companies cut investment spending by 15-25 percent and


create fewer jobs than non-union companies.

Additional Resources
“American Workers Deserve a RAISE: Lifting the Pay Cap for 8 Million Employees,” Heritage
Foundation Fact Sheet No. 30, June 4, 2009, at http://www.heritage.org/Press/FactSheet/
fs0030.cfm

James Sherk and Diem Nguyen, “Restricting H-1B Visas Is Bad for Business and
the Economy,” Heritage Foundation WebMemo No. 2440, May 13, 2009, at
http://www.heritage.org/Research/HomelandSecurity/wm2440.cfm

domestic policy • Jobs and Labor 57


Notes
James Sherk, “Extension of the Davis-Bacon Act: The Heritage Foundation 2009
Labor Boot Camp,” Heritage Foundation WebMemo No. 2209, January 15, 2009, at
http://www.heritage.org/Research/Labor/wm2209.cfm

James Sherk, “Ban on the Permanent Replacement of Strikers: The Heritage Foundation
2009 Labor Boot Camp,” Heritage Foundation WebMemo No. 2207, January 15, 2009, at
http://www.heritage.org/Research/Labor/wm2207.cfm

James Sherk and Ryan O’Donnell “RAISE Act Lifts Pay Cap on 8 Million American Workers,”
Heritage Foundation Backgrounder No. 2270, June 4, 2009, at http://www.heritage.org/
Research/Labor/bg2270.cfm

“Employee ‘NO’ Choice Act: Increasing the Federal Government’s Role, Again,” Heritage
Foundation Fact Sheet #14, March 10, 2009, at http://www.heritage.org/Press/FactSheet/
fs0014.cfm

James Sherk, “Employee Free Choice Act (EFCA): The Heritage Foundation 2009
Labor Boot Camp,” Heritage Foundation WebMemo No. 2210, January 15, 2009, at
http://www.heritage.org/Research/Labor/wm2210.cfm

Heritage Experts

James Sherk Elaine Chao Alison Acosta Karen A.


Fraser Campbell, Ph.D.

58 Issues 2010 • The Candidate’s Briefing Book