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Lane Kenworthy looks at the data and is skeptical of the ability of EFCA to reduce income inequality:
I’m not optimistic. An increase in unionization would very likely help middle and low-end households to capture a larger share of economic growth. But even if EFCA is passed by Congress, I don’t expect a dramatic surge in union membership.... How then are unions in other countries able to secure greater wage gains, and thus less inequality, than their American counterparts? The key is “extension” practices: by agreement between union and employer confederations (most nations) or due to government mandate (France), union-management wage settlements apply to many firms and workers that aren’t unionized. The following chart shows that in a number of countries the share of the workforce whose wages are determined by collective bargaining is much larger than the share of workers who are union members.I'd make two points: One, if EFCA is passed, there may not be a dramatic increase in union membership, but there will be a significant one, given the current ability of workers to gain the necessary support for a union through majority sign-up and the very high failure rate of first-contract negotiations, both of which would presumably be affected positively by the legislation. (As I reported last week, negotiations surrounding the bill are on-going and it's a little harder to extrapolate now what the bill will contain). Two is that even without the extension practices Kenworthy describes, growing union density will lead to some increase the average pay and benefits of a larger share of the labor market, leading to similar increase at non-union firms seeking to compete with union firms while avoiding organizing of their own, in an informal version of extension practices. But, as in most policy debates, advocates have a tendency to exaggerate the positive effects of their chosen course of action; we should keep in mind that while EFCA is a good idea, it's not a silver bullet.Kenworthy also notes that "the ability of workers to bargain with management collectively rather than individually is, in my view, an important element of a just society." Even though the debate over Employee Free Choice is based around economic argument, the right of workers to organize is a right, albeit one that has been unevenly recognized in the United States. Even as we're talking about union density and income inequality, first principles shouldn't be forgotten.
-- Tim Fernholz
