- The Foundry: Conservative Policy News from The Heritage Foundation - http://blog.heritage.org -

American Workers Deserve a RAISE

Posted By Rory Cooper On June 4, 2009 @ 2:45 pm In Economics | Comments Disabled

LIFTING THE PAY CAP ON 8 MILLION WORKERS

Unions Cap Their Member’s Pay

  • Setting a Wage Ceiling: Currently union contracts set both a wage floor and a wage ceiling. Unionized employers may not give productive workers pay raises [1] outside the collectively bargained contract.
  • Seniority-Based Pay: Unions usually demand that employers reward workers for “time served [1]” rather than “hard work.” No matter how good an employee does his job, he cannot earn higher wages than what his union contract specifies.
  • Holding Back American Productivity: This “seniority ceiling [1]” keeps union members from reaching their full potential, since there is no incentive for outstanding performance nor ability to move up the ladder.

The RAISE Act

  • Lifting the Ceiling: The RAISE Act [1] (Rewarding Achievement and Incentivizing Successful Employees) would allow employers to pay individual workers more, but not less, than the union contract specifies.
  • Providing Incentives: The RAISE Act [1] would provide workers with the incentive to increase productivity. If passed, the typical union member would increase his productivity and earn between $2,600 and $4,300 more a year in performance-pay bonuses and merit raises.
  • Restoring Freedom in the Workplace: Current federal law caps the wages of 8 million American workers. The RAISE Act [1] would restore the inherent American right to earn individual raises through individual efforts to millions of union members.
  • Merit-Based Pay Works: Economic research shows that the average worker’s earnings rise 6 to 10% [1] when the pay is performance based. This is an average figure—industrious and enterprising workers will earn larger raises while lazy employees earn less.
  • The Time for Change Is Now: With millions of American families struggling to get ahead financially in the recession, Congress should lift the ceiling on workers’ pay immediately. This is the right kind of stimulus that will add billions of dollars to the economy and improve business earnings through increased productivity.

Why Would Anyone Oppose Higher Wages?

  • Direct Dealing: Bonuses to hard-working employees have been fought successfully by unions wishing to maintain control over their members’ income. It constitutes illegal “direct dealing,” which collective bargaining law forbids.
  • The RAISE Act [1] Does Not Eliminate the Wage Floor: Unions were originally established to protect workers from making too little money, not too much. The RAISE Act would still allow union contracts to set the minimum that workers can earn.
  • Still Prevents Anti-Union Discrimination: Employers could not selectively give raises to anti-union workers to undermine the union, consistent with current federal law. Under the RAISE Act, it would remain illegal to discriminate against workers on the basis of union membership.
  • President Obama Agrees: When criticizing AIG, President Obama said [1]: “We believe in the free market, we believe in capitalism, we believe in people getting rich, but we believe in people getting rich based on performance and what they add in terms of value and the products and services they create.”

Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2009/06/04/american-workers-deserve-a-raise/

URLs in this post:

[1] Unionized employers may not give productive workers pay raises: http://www.heritage.org/Research/Labor/bg2270.cfm

Copyright © 2011 The Heritage Foundation. All rights reserved.