Plant Closings
O'Connell, Francis A.
Economists who have analyzed organized labor's crusade for plant closing legislation over the past fifteen-odd years generally agree that, in the words of Richard McKenzie of Clemson, it is a "bad...
...Such a disastrous outcome may not be the goal of our organized labor movement...
...The penalties if he is so judged, can be severe...
...In virtually all plant closings (apart from a case of a firm going completely out of business), however, the courts have held that the law compels employers to bargain over the effects of the decision, although once again, the employer does not necessarily have to agree to any union demand for severance pay, transfer rights, etc...
...you never know what the Labor Board, or federal courts, may order next...
...The agency or agencies created or expanded to implement it would, in effect, be deciding how much extortion a businessman would have to pay (and to whom) for the privilege of exercising his property rights...
...Moreover, it is incompatible with the traditional presumption that employers retain all of their management prerogatives (i.e., their common law rights to dispose of their property) except those that they bargain away or are compelled to yield by law...
...As the economic stagnation attendant upon such interventionism spread, all-out protectionism, and price and wage controls, would logically follow, and our society would slide slowly, ineluctably into some form of national socialism...
...Economists who have analyzed organized labor's crusade for plant closing legislation over the past fifteen-odd years generally agree that, in the words of Richard McKenzie of Clemson, it is a "bad idea whose time may have come...
...The next time some social democrat-type drones on about how the unions are a conservative bulwark of the capitalist order, it is useful to keep in mind what these paragons actually have in mind...
...His well-researched, timely study recounts the evolution and current status of workers' legal rights in shutdowns and contracting-out situations, as these rights have been discovered by the National Labor Relations Board (NLRB) and the federal courts in the National Labor Relations Act (NLRA...
...12.95 paper Howard Dickman THE AMERICAN SPECTATOR JANUARY 1988 47 not always be certain that his resistance to union demands will not later be judged a refusal to bargain in good faith...
...Responding to the arguments of union lawyers, the NLRB and the federal courts have stretched the rubbery clause to force employers to bargain, not only over the terms of employment themselves, but also over any decisions or actions which affect these terms, including the question of whether there will be any employment at all...
...But as union pay hikes have proyoked unemployment and plant relocations to areas where labor is cheaper and not bound by restrictive work rules, the unions' need for job security provisions has grown significantly faster than their ability to get them at the bargaining table...
...But its intentions don'treally matter here...
...and this is, of course, a principal reason the unions are lobbying for legislation...
...Here O'Connell tells us that the employer must bargain with the union about the decision if the reason is the costs of operating under the union contract itself, but not if there are other reasons, such as loss of market, obsolete plant, and so on...
...If the egregious record of the NLRB over the last fifty years is any guide, the agency or agencies would also quickly become unbearably politicized...
...O'Connell explains that two "unfair labor practice' provisions in the NLRA provided, and, if there is a change in the political winds, may still provide, unions, the NLRB, and the federal courts with the power they need to further interfere unjustifiably with property rights...
...tiated for the right to be consulted by employers over the decision to shut down, and a few even have "work preservation" clauses which guarantee employees the right to perform certain kinds of work for the life of the agreement...
...What does is the direction in which its legislative proposals would propel us...
...48 THE AMERICAN SPECTATOR JANUARY 1988...
...All other things being equal, therefore, employers have learned over the years that the safest course is often to agree to at least some union demands, however unreasonable...
...The law of plant closing under collective bargaining, O'Connell shows, is riddled with uncertainty...
...So far, the unions' power grab has been beaten back by the Reagan appointees to the NLRB, and the federal courts have also shown little sympathy...
...Plant closing legislation would become not only an economic but also a legal and administrative nightmare...
...Lion Seriously represents a continuation and indeed a culmination of this effort...
...but what is the reach of the phrase, "terms and conditions of employment...
...In fact, O'Connell reveals that the unions have for years been arguing for a far more ambitious doctrine...
...The second lesson is that, over time, the logic of plant closing legislation, like that of the other "industrial policy" measures that have been touted over the past few years, could eventually subject every investment or disinvestment decision to endless administrative delay, political manipulation, and legal second guessing...
...Its depth and gravity promise that it will have a life long after the Constitution's bicentennial celebration has ended...
...It is also an unfair labor practice for employers to refuse to bargain "in good faith" with unions over wages, hours, "and other terms and conditions of employment...
...T here are two lessons of general significance that emerge from O'Connell's specialized, though quite readable, monograph...
...The duty to bargain is not a duty to agree, to be sure...
...But an employer canPLANT CLOSINGS: WORKER RIGHTS, MANAGEMENT RIGHTS, AND THE LAW Francis A. O'Connell/Transaction Books/$19.95...
...The courts can force an employer to reopen a closed or relocated plant, rehire the terminated workers, and give them "back pay...
...Their conceit, which has been accepted by sympathizers on the staff of the NLRB (and the occasional board member), is that the union agreement itself is tantamount to a contract of employment, one that gives workers a property right in their jobs...
...The first is that a national plant closing law as envisioned by the unions and their congressional minions would inevitably waste more resources in a regulatory paper chase...
...rr he locus of controversy concerns 1 plant shutdowns, or the contracting-out of work to nonunion employees, where the employer's motive is principally one of economic costs, including labor costs...
...Some unions have successfully negoHoward Dickman is the author of Industrial Democracy in America and a senior editor at Reader's Digest...
...It is illegal for employers to terminate or otherwise "discriminate" against employees if the motive is to discourage union membership or activity...
...It flies in the face of labor relations practice, was not intended by Congress, and is not dictated by the logic of the law itself...
...Frank O'Connell informs us that it already has...
...O'Connell, who was a labor lawyer with forty years of experience in employment relations, shows us that this astonishing idea is completely unjustified...
...The law clearly compels employers to bargain over wages and hours...
...All of these propositions are provisional...
...Under this theory, it is employers who would have to bargain back fromunions the right to contract out work, to close plants, even in theory to terminate unneeded workers...
...If the shutdown is caused by both labor costs and other business considerations the employer may or may not have to bargain with the union over the decision, depending upon what the predominant factor is...
...So they have tried to get the government into the act...
...To state the issue this way—plainly—is to realize how high the stakes could become...
Vol. 21 • January 1988 • No. 1
