Labor Pains

When thinking about the National Labor Relations Board under President Obama, most observers recall the 2014 decision in NLRB v. Noel Canning, in which the U.S. Supreme Court unanimously ruled that Obama’s kangaroo-court “recess appointments”—made when the Senate was not actually in recess—were invalid.

Noel Canning was a huge setback for the administration, requiring the NLRB to reconsider 700 decisions rendered during the period in which it lacked a legitimate quorum.

Few have noticed, however, that the Board has not altered its course since that defeat. President Obama managed to win Senate confirmation of enough replacements for his invalidated appointments to regain a quorum, and the reconstituted NLRB, with a Democratic advantage, has revisited and approved many of the bogus decisions issued by its defective predecessor.

Why such dogged determination? Because this venerable administrative agency, established in 1935 to enforce one of the keystones of New Deal legislation, the National Labor Relations Act, presides over a steadily shrinking sector of workers. The Democratic Party is scrambling to preserve an endangered species: the private sector union.

The statistics on the decline of organized labor in private industry are astounding. The portion of the private sector workforce belonging to labor unions has plummeted from a peak of around 35 percent in the mid-1950s to less than seven percent in 2015—the lowest percentage since the National Labor Relations Act was passed. That is, Big Labor’s market share has declined to less than 20 percent of what it was at its zenith.

The shrinkage is so profound that unionized workers in the private sector have practically become irrelevant outside of a few core industries and a handful of states. The overall rate of union membership in the American workforce (private and public sectors combined) was around 11 percent in 2015, down considerably from what it had been (20.1 percent) in 2003.

On the other hand, the petering out of the labor union as we knew it has been accompanied by the steady increase in organizing local, state, county, and federal government employees into unions. Just over 35 percent of government workers are unionized, and that is more than five times the percentage of the non-government workforce that is unionized, which is 6.7 percent. An incredible 41.3 percent of the employees of all local governments across the United States belong to a union (a subject for a future post)!

Despite the vastly greater size of the private sector workforce, as of last year, almost as many government employees belong to a union (7.2 million) as do private sector employees (7.5 million). In 2009, there were actually more union members working for some level of government than had jobs in the private sector.

Of course for the NLRB, this represents a crisis, because the National Labor Relations Act (NLRA) only covers the private sector. Almost half of all union members in America fall outside the Board’s jurisdiction (which was expanded in 1974 to include non-profit hospitals). A key constituency of the Democratic Party is on the ropes.

Why is this? Organized labor’s stunning freefall in recent decades has many causes, including the reduced role of manufacturing in the U.S. economy, globalization, the rise of technology, an increasingly educated workforce, the availability of illegal immigrant labor, a mobile workforce that places less value on seniority rights, state and federal labor laws that have lessened the importance of union-negotiated job security, and competition by right-to-work states.

Ultimately, unionization is a matter of employee choice. Fewer and fewer workers in the private sector wish to be represented by a union. Union leaders find it more difficult to win certification elections (or even to rally enough support among employees to compel an election), and increasingly face the once-unimaginable prospect of being voted out through decertification. The public no longer has much tolerance for strikes; workers resist paying dues that will be used for political purposes; and many private companies offer wages and benefits competitive with those negotiated by unions (without the attendant bureaucracy, cronyism, or corruption).

So what is the NLRB’s response to its looming obsolescence? As is true of all creatures of the administrative state, its instinct is to preserve its power and influence by changing the rules. The Board cannot unilaterally revise the NLRA, a federal statute that has endured for over eight decades with scant modification. (The only significant amendments have been the Taft-Hartley Act in 1947 and the Landrum-Griffin Act in 1959.) It can, however, alter its regulations implementing the NLRA, and its decisional case law interpreting the NLRA. It is busy doing both.

The law’s basic purpose was to allow private sector employees to organize into unions (if those employees so chose), to require employers to bargain in good faith with such unions over the terms and conditions of employment, and to grant employees the right to engage in (or to refrain from) “protected concerted activity,” such as strikes. Through the many changes of administration in the decades since 1935, the regulations and decisions of the NLRB have been surprisingly stable, forming over time an important doctrinal canon for both management and labor.

That is, until the Obama administration. Under Obama, the NLRB has undertaken what amounts to a wholesale rewriting of the rules, which has undermined the stability essential to maintaining predictability and consistency in the complex arena of labor relations.

To make it easier for unions to organize employees and win elections, the Board has revised its longstanding doctrine pertaining to employer rules that prohibit solicitation and distribution of written material by employees in the workplace. It has made employers’ internal e-mail systems available for employee communications promoting union representation and adopted controversial “expedited election” rules strengthening employers’ obligation to disclose information to the union and employees. It has cut substantially the time period in which employers can try to dissuade their employees from voting in favor of union representation. Lastly, the NLRB’s new rules limit employers’ right to an administrative hearing prior to a vote on whether to form a union. Such hearings are supposed to enable employers to challenge the “bargaining unit” designated by a union, leading to the derisive nickname “ambush elections” by the NLRB’s business opponents.

In several different ways, the Board has dramatically expanded the definition of the employment relationship under the NLRA.

Discarding 30 years of well-established precedents, it has expanded the “joint employer” doctrine to encompass separately owned companies sharing only a contractual relationship (such as franchisee-franchisor, temporary service provider-customer), thereby introducing chaos into widely used business arrangements.

Similarly, the Board has made it more difficult to qualify as an “independent contractor”—a common alternative to “employee” status in certain industries such as truck driving, delivery driving, ride-sharing, and many “new economy” jobs. This has created unnecessary risk and uncertainty while simultaneously negating the parties’ express intent.

And most recently, the NLRB overturned longstanding precedents to rule that graduate students serving as “teaching assistants” or “research assistants” at private colleges and universities are “employees” eligible to unionize and collectively bargain—a development likely to increase the cost and worsen the politicization of higher education.

All three of these changes represent brazen efforts to extend the reach of the NLRA to previously unregulated spheres.

The Board has also embarked on a campaign to grant greater legal rights for employees in non-unionized workplaces, by treating employer policies against employee gossip, abusive language, disclosure of confidential financial or compensation information, criticism of the employer’s business on social media, insubordination, and the like as infringements of employees’ “protected concerted activities” under the NLRA. Even non-union employees’ decision to walk off the job in protest—“Take this job and shove it”—has now been deemed to be protected, thus preventing an employer from terminating that person’s employment. Likewise, the Board has ruled that employees’ profanity-laced outbursts directed at employers are protected.

The NLRB has in other words installed itself as the national policeman for non-union employers’ personnel policies, and will punish companies with non-compliant policies for having engaged in “unfair labor practices.” The Board has actually issued “investigative subpoenas” to non-unionized employers demanding that they produce their employee handbooks! One potential motive for this gambit is to give union organizers a weapon to use against recalcitrant employers who resist unionization.

Other examples abound. Recall the NLRB’s politically charged case against the Boeing Company in 2011 for opening an aircraft manufacturing plant in a right-to-work state, South Carolina, which was aborted in the face of pressure from Congress.

Union officials and advocates are understandably delighted with the Obama NLRB. Virtually every federal agency has worked vigorously to increase its power and enlarge its jurisdiction under this administration, but the NLRB has earned the dubious distinction of a unanimous Supreme Court defeat and universal condemnation by the business community.

Will this onslaught of one-sided decisions and rule changes reverse organized labor’s private sector decline? Unlikely. We do not have the factory economy and overwhelmingly blue-collar workforce that we once had. Unions are losing market share in the private sector because they cannot win secret-ballot elections (which explains why organized labor wants to replace such elections with so-called “card checks”).

The truth is, economic changes since 1935 have made union representation less attractive for American workers. No amount of regulatory chicanery can alter that.