I asked earlier this week why VW couldn't listen to its employees in Chattanooga without establishing a union.  I started to notice a routine statement included in every story on the recent anti-union vote to the effect that "labor experts" agree it would be illegal to set up a works council without a union.

Hmm.  Now why would that be?  Do we need some kind of Protestant Reformation to establish the right of workers to speak directly to management without the intercession of a union and the sacrifice of 2-1/2 hours a month to pay for union dues?

A lot may depend on the name.  According to the N.Y. Times, "A works council is a committee, common at German factories, in which white-collar and blue-collar workers elect representatives who establish policies on issues like work hours, vacations and standards for firing workers."  Taken this way, a "works council" is a body with the power to lay down the law for workers.  Federal labor law prevents the establishment of such a body if it is "controlled" by management:
Many American labor experts say it would be illegal under federal law for a company to establish a works council unless workers first voted to have a union represent them.  Without that, a works council might be viewed as an illegal company-dominated, company-created employee group.
Apparently, however, there is such a thing as an "American-style works council," which "could be consulted only on some limited matters rather than negotiate with management on working conditions."   A pro-management labor expert explains:
[A]s long as any workforce body only "consults" with management, they may meet U.S. labor law but if they "deal" -- or negotiate -- with management then that would not be allowed.  "The test is whether they are exchanging ideas and proposals with management.  If they refrain from that, you will have a committee with diluted power, but more likely will be accepted" under U.S. labor law, he said.
According to Truth Out,
Works councils were established in Germany through a 1920 law, specifically as an alternative to the workers’ councils that had sprung up in many factories after World War I.   Workers attempted to take direct democratic control of the plants through the workers’ councils, on their way to a revolution that would take over the government.  That uprising was thwarted. 
The works councils, then, were the German government’s attempt at pacifying militant workers.  There were mass demonstrations by workers who opposed the works councils law, charging it would hinder workers’ independent organization.  Forty-two were killed by police and a state of emergency was declared, but the law went into effect. 
The works councils were abolished by the Nazis but reinstated after World War II under the military government of the United States and its allies.
The Washington Post interviewed Sen. Bob Corker (R.-Tenn.), who is no fan of the UAW:
"Our concern is not with the works council and never has been, and Volkswagen knows that very well.  U.S. labor relations and German relations are very different.  There's some question as to how a works council can be set up in the U.S., and there are various opinions on both sides of the spectrum, one says you have to have a union, one says you don't.  But we in no way have been negative relative to the works council.  It's really been the fact that the UAW would be the implementing entity.  We've even told Volkswagen that, 'why don't you guys create your own union within the plant, if you feel like that is something that is necessary to fully implement this in a way you see fit.'  I will say that BMW has implemented its works council without the UAW." 
Note:  BMW embraces a co-determination model, but has not responded to a request for clarification about whether or not it has a works council at its U.S facilities, nor was Corker's staff able to confirm the nature of employee-management relations there.  "If they do have a works council, it's illegal," says Thomas Kochan, Co-Director of the MIT Sloan Institute for Work and Employment Research.  "You cannot have a company-sponsored union."
But according to a former NLRB member appointed by George H.W. Bush,
Volkswagen's Chattanooga employees can achieve all that a German-style labor board is set up to do without having to join a union. 
"Discussions over productivity, workplace safety, working conditions, we can have those discussions," said John Raudabaugh, who is now a labor law professor at Ave Maria School of Law in Naples, Fla. 
Raudabaugh, an NLRB member from 1990 to 1993 who later practiced in the Washington, D.C., office of the Nixon Peabody law firm, said VW employees and the company can "reach a win-win outcome without having to pay a third party" such as the United Auto Workers. 
However, a UAW official took issue with Raudabaugh, saying it is "universally recognized that you can't have a German-style effective works council system without a union to negotiate it." 
Gary Casteel, a UAW regional director in Lebanon, Tenn., said there is "no way under U.S. labor law" to set up such a labor board that could deal with substantive matters or have authority such as a union with the power to negotiate.  A works council, which could represent blue- and white-collar employees of a plant over issues such as hours or working conditions, is envisioned by the UAW in Chattanooga.  VW's Chattanooga plant could become the first auto factory in the U.S. to have such a German-style works council arrangement. 
Raudabaugh said the NLRB prohibits situations where employees and management engage in back and forth discussions to specifically reach a mutual agreement on wages and work conditions.  But, he said, companies don't need unions to talk to employees. 
"They can meet for free without paying a union," said Raudabaugh, who was appointed to the NLRB by former President George H.W. Bush.  "Employees should focus on using their money for their personal purposes."


E Hines said...

The UAW--Casteel--continues to weasel-word. There's no requirement that a "works council" be a German-style effective works council system in order to be a useful device for both management and employees.

What matters here are two things: it's useful for management and employees to communicate with each other, and unions are hell-bent on being the communicator. And with labor history being what it is, the unions' concern for the employees is a distant second to the unions' concern for union management and for union political aspirations.

But in this regard, unions are irrelevant. (And US labor law needs to be altered to allow more formal such councils to be established without union presence, but that's a different story.) At the defense contractor at which I used to work, management was constantly calling together random samples of us employees (none of us had any reason to doubt that the samples were random enough for the purpose; although we did start to joke about the frequency of the sampling beginning to interfere with our work) to see what we thought about this or that, or to find out what ideas we might be kicking around.

Organize us? The union, in our 700 employee company, might have gotten a dozen votes. Most of which would have been the result of mistakenly marking the ballot.

Eric Hines

Grim said...

That's funny. But of course it makes sense: there's no reason the monopolizing drive that Marx talks about shouldn't appear in labor unions as much as it does in evil capitalist businesses.

Nor does it surprise that the ossified labor union can be out-competed, as Schumpeter tells us.

E Hines said...

There was quite a bit of labor research done back when I was getting my Econ MA (I have no idea whether the research remains current or has been in any way contradicted) the showed that union-run companies a) had fewer employees than capitalist-run companies of the same type, b) had lower overall wage scales, c) made poorer quality products, and d) from all that were less competitive.

And, indeed, in the Tennessee VW plant, the bottom-rung employees were better paid than their UAW counterparts in Detroit.

The surprise to me is that the vote was so close. Although, given that the union had all the advantages in the campaign--by VW management (which included IG Metall) design--maybe not such a surprise.

Eric Hines

DL Sly said...

"Raudabaugh said the NLRB prohibits situations where employees and management engage in back and forth discussions to specifically reach a mutual agreement on wages and work conditions."

Say what!? How, in a sane world, did that regulation get passed? Employers and employees are forbidden from negotiating with each other? That makes about as much sense as putting an elevator in an outhouse.

Texan99 said...

It makes sense in the way that all government-protected monopolies make sense. As Grim noted, there's a constant temptation of anybody with a good thing going to seek ways to eliminate competition rather than winning the competition by providing better service for the price. That's been recognized as a danger in any free market by everyone from Adam Smith forward. All the would-be monopolist needs is a politician willing to be bought--or to be snookered by the usual explanations for why competition will be disruptive, inefficient, unfair, etc.

American voters fall for it all the time, which is why we have so many politicians who can get away with supporting laws that protect monopolies. There's a huge voter constituency that never will quite trust the free market, even if they consider themselves conservatives in many ways. Until that changes, unions will keep laws on the books protecting them from the free choices of the workers they are supposed to represent. Mandatory membership and dues are a license to print money, right up to the point where the union drives the employer clean out of business.