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House Considers RAISE-ing Workers' Wages

Posted By James Sherk On July 27, 2012 @ 12:07 pm In Economics | Comments Disabled

The RAISE Act would rewrite the National Labor Relations Act to make union rates only a minimum wage. If employers wanted to, they could always pay hard-working union members more. Unions would lose the power to turn down raises on workers’ behalf.

The House Education and Workforce Committee held a hearing [1] on Indiana Representative Todd Rokita’s (R) Rewarding Achievement and Incentivizing Successful Employees (RAISE) Act. [2]

Not many workers reject raises. Sometimes, however, their unions do. They do this because their institutional interests differ from those of the workers they represent. While unions happily negotiate group raises, most resist letting employees earn individually higher performance pay.

Collective bargaining presupposes that workers can negotiate higher pay together as a group. That’s why union members will pay hundreds of dollars annually in dues. But if the wage that the union negotiated is $15 per hour and an employee gets a performance-based raise to $20 per hour, then why is he paying union dues? Is it the union contract or his own hard work that’s helping him get ahead?

Most unions would rather avoid such questions. So in collective bargaining, they usually reject performance pay proposals. They prefer—to quote SEIU President [3] Mary Kay Henry—“contracts that create a uniform, fair process for granting wage increases.” That means everyone gets the same amount no matter how hard they work. Unions rarely let a worker whom they consider a “boss’s pet [4]” earn more.

This does not improve productivity in union shops. Businesses increasingly use performance pay to reward and motivate their workers. It means they have to pay more—wages rise by an average of 6–10 percent [5] under performance pay—but employees work harder when they get rewarded for it. Higher productivity means higher profits along with the higher pay. Performance pay is win-win for both employers and employees.

That is why half of non-union businesses offer performance pay. However, only one in five union [6] shops does the same.

Unions apoplectically warn [3] that the RAISE Act is “a federal attack on your rights at work” because employers “would be allowed to ignore what they agreed to in collective bargaining agreements—and that’s not fair.” But, as Tim Kane—chief economist for the Hudson Institute—explained at the hearing [7], this bill would only help workers. Higher pay for higher productivity is obviously good. And as workers become more productive, employers will also hire more of them.

Higher pay, higher profits, and more jobs. Why should Congress give unions the power to reject that?


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URL to article: http://blog.heritage.org/2012/07/27/house-considers-raise-ing-workers-wages/

URLs in this post:

[1] held a hearing: http://edworkforce.house.gov/Calendar/EventSingle.aspx?EventID=303444

[2] Rewarding Achievement and Incentivizing Successful Employees (RAISE) Act.: http://www.govtrack.us/congress/bills/112/hr4385

[3] to quote SEIU President: http://www.seiu.org/2012/06/a-federal-attack-on-your-rights-at-work.php

[4] boss’s pet: http://0582.utu.org/UTU_Web/Default.aspx?PageID=4883

[5] rise by an average of 6–10 percent: http://www.heritage.org/research/reports/2012/06/raise-act-lifts-pay-cap-on-millions-of-american-workers#_ftn17

[6] only one in five union: http://www.heritage.org/research/reports/2012/06/raise-act-lifts-pay-cap-on-millions-of-american-workers#_ftn3

[7] explained at the hearing: http://edworkforce.house.gov/UploadedFiles/07.25.12_kane.pdf

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