We’ve discussed how labor may be shifting its focus towards binding arbitration amidst talk about compromise on EFCA. The Wall Street Journal ran an editorial focusing on the problems with binding arbitration, or as the paper called it, “federal wage setting.”
The Journal discussed how binding arbitration would upend the incentives for unions to bargain in good faith and keep their demands within reason. Armed with the knowledge that any impasse would go to a federal arbitrator who, as the Journal put it, “naturally would be subject to political, er, incentives,” unions would be “inclined to ask for the moon, knowing they will do well” in the arbitration process.
Under binding arbitration , the process would go through the Federal Mediation and Conciliation Service, an agency that the Journal points out has a director appointed by the President. The future of both employers and employees are placed in the hands of a federal bureaucrat with little knowledge or familiarity of the company’s operations.
The Journal notes that binding arbitration will “strip workers of valuable rights,” depriving them of the right to vote on a contract. This, in turn, also reduces accountability for union leaders.
And the Journal advances an argument that hasn’t been made as often as it should: binding arbitration would make it more difficult for workers to get rid of a union. The law limits how soon workers can petition to decertify a union. Workers can petition against a union if they have gone a year without a contract. But with binding arbitration, workers would be able to only kick out their union “at the end of the government-imposed contract,” which would be decided at the whim of a federal bureaucrat.