In a recent decision, the National Labor Relations Board (NLRB) ruled that contract workers who unionize can negotiate with both the parent company and their direct employer. This forces the parent company to be “responsible for workers they haven’t hired and conditions over which they have no control.” The NLRB’s radical stance upends the long standing law that to be joint employers, “companies had to exercise direct and immediate control over workers,”
The NLRB is authorized to conduct labor elections and to prosecute instances of unfair labor practices. But its recent actions reveal that NLRB is obsessed with increasing union membership in the short term regardless of the long term damage caused to others. By declaring a parent company, such as McDonalds, to be a joint employer along with each small independent franchisee, the NLRB makes each retail store an avenue for big unions to efficiently attack the parent company.
When an aggressive giant such as the Service Employees International Union (SEIU) dictates terms of employment to a McDonalds franchisee, economic insanity blooms. The franchisee will need to hire high-priced labor attorneys. Painful union-affiliated burdens will emerge, including higher wages and benefits, complex record-keeping overheads, business losses during work stoppages, and sudden workflow inflexibilities typical of union-shop job descriptions (e.g., is the fry-chef permitted to assemble a sandwich?). The NLRB is indifferent to the cost of doing business, even when union-related cost increases make US workers less competitive against foreign workers, or less economically attractive than mechanization.
The NLRB’s union-obsession was on ugly display when it opposed letting Boeing staff a South Carolina airline manufacturing plant. Boeing’s unionized workforce in Washington State had a record of chronic work stoppages that jeopardized sales and increased costs. In contrast, the South Carolina employees were expected to have the skills, high productivity and work ethic that Boeing needed. Since South Carolina workers were not forced to become unionized employees, hiring them was an affront to the NLRB’s policy of all-union, everywhere, all-of-the-time.
To ignite the attack against South Carolina workers, the International Association of Machinists and Aerospace Workers told NLRB to file suit against Boeing on grounds that it violated federal labor law by opening a new aircraft production plant. NLRB complied with union instructions. After “striking a deal with Boeing to raise wages and expand jet production in Washington,” the union told NLRB to drop the suit. Again, NLRB followed orders. The NLRB has proven to be a union-compliant drone, willing to attack anyone, even American workers.
In August 2015, there were 14.8 million self-employed workers in the US. Self-employed workers are seldom unionized. Some of these self-employed sell their own services or wares at a retail level (e.g., as a self-employed plumber or operator of a roadside farm stand). Others sell their services to an intermediary, such as caterer, a medical radiology team, the operator of a drywall crew, or a manufacturing labor supplier. In turn, those intermediaries are usually under contract to a parent firm such as a hotel, a hospital, a homebuilder or parts-maker, respectively.
Under the NLRB’s ruling, as soon as the intermediaries’ employees unionize, the intermediary and parent firm become joint employers.
As a joint employer, each parent firm suddenly inherits responsibility for the costs, inflexibilities, and administrative burdens that it hired intermediaries to avoid. If the contract between intermediary and parent firm is kept in place, both will eventually face the 39% higher wage and benefits of unionized employees.
Cost differentials such as these pushed American employee jobs into the hands of offshore employers. The NLRB ruling triggers a new round of pushing American jobs offshore. This time the jobs lost will be those of the self-employed.
When the NLRB forces a union into private sector firm, it increases the cost of retaining employees. That advantages mechanization and the use of robots for jobs that were once the sole province of humans. No one expects human’s high wage and benefit costs will induce companies to replace workers with robots, one-for-one. Instead technology will allow re-engineering of production in ways that leave a few jobs needing good judgement to humans and a lot of jobs that call for strength, precision and endurance to robots.
American workers will lose jobs to offshore rivals and to robots – now at an accelerated pace due to NLRB’s bias.