McKinnon: All Arbitration Is Not Created Equal

A guest column today, exclusive to On Call, from former Bush advisor Mark McKinnon, who writes about the perils of arbitration.

All Arbitration Is Not Created Equal

By Mark McKinnon

Despite the fact that the Employee 'Forced' Choice Act (EFCA) has been shown to cause a significant rise in unemployment, the pro-EFCA forces (i.e. labor bosses) are still hard at work to attempt to show how this legislation would "benefit" society. Unfortunately, their arguments are reliant upon half truths and outright falsehoods.

One of the most egregious provisions in EFCA is called binding interest arbitration. This would allow the federal government to mandate contracts on businesses of any size without the consent or support of the employee or employer. Government arbitrators with no expertise about the business or industry would make decisions about wages, benefits, and workplace conditions.

Forced arbitration has not received as much attention as the elimination of the secret ballot, another egregious provision in the bill, yet it may be the most destructive element within the legislation. It would drive up costs and force businesses to close their doors.

Union bosses are attempting to equate the binding interest arbitration provision with other types of arbitration, such as arbitration used in privately resolving disputes. These two types of arbitration are not created equal and comparing the two is intellectually dishonest.

When arbitration is used in resolving disputes the arbitrator serves as a judge, interpreting existing contracts that parties have previously agreed to.

EFCA hands the final decision of any business contract to a government arbitrator, who would draft and finalize the contract rather than simply interpret the provisions agreed upon by both parties. Instead of serving as a judge, the Employee 'Forced' Choice Act makes the arbitrator a dictator of sorts, imposing his will on the parties without their consent.

This is the key difference - under EFCA, government arbitrators would dictate and set the terms of a contract despite what either side wants. In regular arbitration, the arbitrator serves as an interpreter of a contract agreed upon by both parties.

That is a huge difference to say the least.

The Employee 'Forced' Choice Act mandates that the arbitrator writes the contract, which would come about if the employer and union cannot agree on the terms of a contract in just over 90 days. The contract would be binding for two years with no opportunity to appeal or reverse the decision, even if the terms of the contract are more than the business can meet.

Mandatory, binding arbitration violates worker rights as it is possible employees could end up in a union that they did not get to vote on and have to follow the terms of a contract that they did not get to vote on.

EFCA would also seriously cripple, if not wipe out, America's small businesses if the federal government is allowed to have this role.

So why is it that the pro-EFCA camp is trying to force this legislation upon the American public?

The answer is pretty straightforward: follow the money.

A new report released by the Workforce Fairness Institute (WFI) reveals that enactment of the 'Forced' Choice Act would fuel a significant increase in labor union spending on political activity.

EFCA's passage could add at least $1.7 billion (in 2009 dollars) in additional political spending by labor unions over a 10-year period based on a union projection of increases in total membership and the resulting union dues generated from that increase going to political activity.

This increase in political spending on the part of union bosses would represent a relatively small percentage of the overall expansion of at least $35 billion in total union revenue that EFCA would produce over a 10-year period if implemented.

It is clear why the labor bosses are desperate to enact the Employee 'Forced' Choice Act and they will do anything to make that happen, even level arguments that are less than honest.

All arbitration is not created equal and there are serious ramifications if EFCA's binding interest arbitration provision is passed into law.

Congress cannot allow EFCA to be forced onto America's workers and businesses. It's anti-democratic legislation that would devastate America's job producers, small businesses.

The only ones who stand to gain if the Employee 'Forced' Choice Act is passed are the union leaders, while businesses and workers would suffer.

Mark McKinnon is a representative of the Workforce Fairness Institute and was an advisor to President Bush.