Labor Pains: Because Being in a Union can be Painful

Should Sectoral Bargaining Come to the U.S.? New Report Says "No."

Sectoral bargaining is gaining support among top Democrats, including President Joe Biden, as a way to set wages, working conditions, and benefits for entire industries, often by union-controlled boards ─ even for those companies whose workers have rejected unionization. It’s also the latest policy being pushed by organized labor and its allies in academia and Congress.

But is it a good idea?

According to a new report from the Institute for the American Worker (I4AW), the answer is a resounding “no.” The Institute just released a comprehensive report on sectoral bargaining that outlines plenty of potential downsides to this system, which is already in play in Europe.

For one, it strips away wage competition — meaning it’s harder for employees to get higher wages. When a wage standard is set across an industry, employees can’t try to get a raise by switching from one employer to another. Employers also have no incentive to attract the best employees by outbidding their competition. It would also mean higher prices for consumers as a result of less competition.

Sectoral bargaining would also lead to less choice for workers. Many of the existing plans for sectoral bargaining call for unions representing just 10 percent of an industry. As a result, a minority of workers could select representation for everyone else. Sectoral bargaining could also hurt small businesses, since market share might determine how much of a say a company gets in negotiations with unions. This means larger companies would be calling the shots, while smaller businesses and their employees would have little say in negotiations.

But this system could have the most profound impact on gig workers. Unions would be able to set wages and benefits for all gig workers, regardless of platform. Freelancers, the majority of whom prefer the flexibility they have as an independent contractor rather than a full-time employee, could suddenly find their livelihood controlled by a union they didn’t even vote for. Of course, this would likely lead to bargaining requirements for unions and, as a result, massive amounts of dues money for organized labor.

Sectoral bargaining would “completely cut against the democratic grain of unionization in America.” For the sake of American workers, legislators should reject this system that would “enhance union power and finances at the expense of workers.”


Categories: Gig Workers