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In Keeping Down American Workers, Corporate Crime Pays

Crime may not pay for ordinary criminals, but companies avoid paying millions in wages and benefits by committing crimes against their workers.
 
 
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President Dwight D. Eisenhower once lambasted union busters, proclaiming, "Only a fool would try to deprive working men and women of the right to join the union of their choice." But the fools today are actually acting quite rationally. Facing trivial penalties, anti-union employers are increasingly breaking the law to keep their workers from organizing.

Fifty years ago, more than 30 percent of private-sector workers were organized. That share today is 8 percent. Globalization and the new, technology-driven economy have contributed to the decline, but advanced economies in Europe survive these same developments and still have union coverage rates of around 80 percent.

Much of the falloff in the United States is not due to the "new" economy or waning worker interest; it's instead the result of illegal intimidation by employers. Our recent analysis of cases brought before the National Labor Relations Board (NLRB), which oversees union-management relations in most of the private sector, shows that employers illegally fire as many as 1 in 5 union organizers.

Actions by the world's largest employer are a case in point. When butchers at Wal-Mart's Jacksonville, Texas, store joined the United Food and Commercial Workers International Union, Wal-Mart permanently closed its meat-cutting departments, switched to prepackaged meat and fired four of the union supporters.

Wal-Mart's not alone, as much of the business community hates unions. Unions fight for increased wages and benefits and for redistributing earnings from employers to workers. Corporate managers, on the other hand, try to maximize profits for shareholders and compensation packages for those at the top. Compelled by the threat of lower profits, many employers will do whatever it takes to avoid a union workplace.

Not infrequently, this means breaking the law. The National Labor Relations Act (NRLB) makes it illegal to intimidate or fire workers for union activity. Yet, according to our study of data from the NLRB, there has been a steep rise in illegal firings of pro-union workers in the last few years. Currently, 1 in 53 is dumped during an election campaign, more than 50 percent higher than the chance of being fired in the late 1990s.

Employers generally fire the workers who are leading the union organizing drives. If 10 percent of union supporters are actually organizers in their workplace, NLRB data show that about 1 in 5 is fired illegally for their activism.

Interestingly, union membership has actually increased in the public sector. Whereas the private sector -- the bulk of the U.S. economy -- has seen unionization fall by three-quarters over the last 50 years, public-sector union membership has tripled over the same period to about 36 percent. Persistent, illegal activity by employers in the private sector explains this disparity. Illegal firings exist in the public sector too, of course, but they are far less prevalent. Civil service protections that most private sector workers don't enjoy ensure that firings are more onerous for the government than they are for a business.

Union busters, or "fools" in Eisenhower's assessment, make a simple decision about costs and benefits. In a worst-case scenario, the cost of firing a union supporter includes legal proceedings and remuneration to the discharged employee. At a maximum, discharged employees will receive missed earnings minus any income they have earned in the meantime. The total award usually amounts to less than $4,000, a small price to pay to avoid sharing profits with employees through a union-negotiated contract.

More than half of nonsupervisory workers who aren't union members, want to be. The U.S. Senate voted last month to kill the Employee Free Choice Act, setting back another opportunity to increase fines and reduce the incentives for anti-union employers to break the law. Without those reforms, the current cost of illegal employer aggression ensures that crime really does pay.

Ben Zipperer is a researcher and John Schmitt is senior economist at the Center for Economic and Policy Research in Washington, D.C.

 
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