A United Middle-Class. Eeek!

The SEIU has a brilliant new video skewering corporate executives and lobbyists pathetically trying to stoke panic around the Employee Free Choice Act [1], which will simply give employees the power to decide how to approach the question of unionization: be it ballot election or petition.

All the hysteria attempts to tar EFCA as deeply destructive to the American economy. But as the Workplace Prof Blog noted [2] following a recent Wall Street Journal article: "What I find striking is that most of the economists quoted are pretty measured and speak only about some general effects[.]"

Further, Ezra Klein astutely observed that strengthening workers [3] with the help of EFCA would not alter how much the American grows, but how we grow:

...the last great leap forward for unions was during World War II, and the last great expansion of the American middle class followed in its aftermath. In contrast, the most recent expansions -- which have largely occurred in the absence of unions -- have benefited America's rich.

Unions do not change economic growth, or at least there's little convincing evidence that they do. The countries with the world's highest growth rates -- the Nordic economies -- also have some of the world's highest rates of unionization. Denmark, Sweden, and Finland all approach 80 percent. Rather, unions change the distribution of economic growth. They direct more of it to the middle class and less of it to the executive class. The past few years have been an economy driven by the executive class. The question is whether that's what we want the next expansion to look like, also.

The 40 economists, including three Nobel Laureates, organized by the Economic Policy Institute to formally endorse EFCA [4] explained in further detail:

...from 2000 to 2007, the income of the median working-age household fell by $2,000 – an unprecedented decline. In that time, virtually all of the nation’s economic growth went to a small number of wealthy Americans. An important reason for the shift from broadly-shared prosperity to growing inequality is the erosion of workers’ ability to form unions and bargain collectively...

...A rising tide lifts all boats only when labor and management bargain on relatively equal terms. In recent decades, most bargaining power has resided with management. The current recession will further weaken the ability of workers to bargain individually. More than ever, workers will need to act together.

The Employee Free Choice Act is not a panacea, but it would restore some balance to our labor markets.

Amidst the boardroom-fueled hysteria, where is the evidence that healthy unions actually harm national economies? As Matthew Yglesias pointed out [5], the "Index of Economic Freedom" published by the conservative institutions Heritage Foundation and Wall Street Journal, the nine other countries besides America in the top 10 (we're #6) all have higher rates of unionization than us.

When workers can bargain for fair wages in exchange for their labor and fortify their place in a robust middle-class, it does mean that the massive profits CEOs have been taking -- without strengthening the overall economy -- will be trimmed.

That may make corporate lobbyists suffer from hysteria, but not the rest of the nation.