‘Unionized Firms Offer Performance-Based Pay Less Than Half as Often’ as Union-Free Businesses
Back in 1973, musician Paul Simon admonished us to remember that “one man’s ceiling is another man’s floor.” This is true not just with regard to apartment buildings, but also with regard to Big Labor-negotiated wage scales. Graphic: nme.com
Most Americans who aren’t close observers of labor-management relations assume that, whatever other faults they may have, union officials can at least be counted upon to fight consistently for higher pay and benefits for employees.
Unfortunately, this assumption is naive and incorrect. As James Sherk of the Heritage Foundation observes in a commentary published on Friday (see the link above), the National Labor Relations Act (NLRA) and other laws patterned after it actually empower union bosses not just to block employers from paying employees less than union scale, but also to prevent firms from paying employees above union scale. In other words, a union contract typically establishes a wage scale that is simultaneously a ceiling and a floor for different workers, depending on their levels of skill and dedication.
Today roughly half of union-free private-sector firms offer “performance pay to encourage productivity, which raises both profits and wages,” Sherk points out. The average worker “earns 6-10 percent more when companies implement performance pay, but businesses’ profits also rise.”
Nevertheless, Big Labor resists performance pay whenever it’s feasible, because union officials want every worker to be dependent exclusively, or nearly exclusively, on the union for securing better pay and benefits. Only about one-fifth of unionized firms have performance-pay plans. As Sherk writes, “unionized firms offer performance-based pay less than half as often” as union-free businesses.
Sherk reports that this past week Sen. Marco Rubio (R-Fla.) and Rep. Todd Rokita (R-Ind.) introduced in Congress legislation that would at last enable unionized employers to offer especially talented and/or assiduous employees above-union scale compensation without first getting union officials’ permission. The National Right to Work Committee, the National Institute for Labor Relations Research’s lobbying affiliate, supports this measure, known as the Rewarding Achievement and Incentivizing Successful Employees (RAISE) Act. The Committee is seeking to build support for it on Capitol Hill.
Of course, opposing and often blocking pay raises for superior unionized employees is only one of an array of ways in which Big Labor, armed with monopoly-bargaining privileges, can and often does hurt workers economically. The problem the RAISE Act seeks to address is far from the only reason Congress should pass federal Right to Work legislation prohibiting the collection of forced union dues and fees from workers who personally don’t want a union. But the fact that union bosses often do wield their monopoly-bargaining power to stop companies “from paying hard workers more” underscores just how profoundly needed federal forced-dues repeal is.