Do union workers need a RAISE?
posted at 3:41 pm on April 18, 2012 by Tina Korbe
Actually, they just might. Indiana Republican Rep. Todd Rokita reintroduced the Rewarding Achievement and Incentivizing Successful Employees Act today. Introduced in the last Congress by Louisiana Republican Sen. David Vitter and California Republican Tom McClintock, the RAISE Act lifts the “seniority ceiling” on workers’ wages by allowing employers to pay individual workers more — but not less — than the union contract specifies.
Most people know that union contracts establish wage floors, but few realize they also establish wage ceilings. Those wage ceilings are harmful to productivity. Diligent workers receive the same raises as slackers — so what incentive do workers have to be diligent? Employers should at least have the freedom to reward workers for above-average performance when they see fit.
Plus, Heritage Foundation research indicates that the RAISE Act would provide the right kind of stimulus for a slow economy:
Economic research also shows that union members work just as hard to earn raises as nonunion workers when unions permit performance-based pay. Some 8.6 million workers are covered by collective bargaining agreements regulated by the National Labor Relations Act. If Congress passed the RAISE Act to amend the NLRA, many unionized employers would offer performance pay to inspire hard work. The workers at these companies would earn between $2,600 and $4,300 per year more than if Congress left the union wage ceiling in place.
These higher earnings would provide the right type of stimulus to get the economy moving. Workers would earn more money by creating wealth through their own hard work, adding tens of billions of dollars to the economy. Their greater productivity would also improve business earnings. Instead of fighting over how to redistribute wealth, the RAISE Act encourages employers and employees to work together to create more wealth and spark economic renewal.
This is the type of policy that President Obama called for when criticizing the executive bonuses paid by AIG: “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 that they create.” The RAISE Act enables enterprising workers to be rewarded for their own hard work.
Finally, what’s for the unions to not like? They do exist for the worker, right? Union bosses wouldn’t be all about their own power, would they? Wage ceilings contribute to the power of union bosses because they enable the bosses to take credit for any pay increases employees receive. Merit-based raises and spot bonuses remind employees that they earn their salaries, that their wages actually come from their job-creating employer and leave employees feeling a little less beholden to the union. Union opposition to an act like RAISE would be the most blatant expression of union leaders’ true priorities yet.