Employee Rights and Employment Policy Journal

Toward a New Employer-Worker Compact

By
Gary Chartier

Abstract

Employers and workers alike could benefit if the legal and regulatory regime that currently governs their relationships were significantly transformed. Each group would bear significant costs, but the result could be a net improvement in American economic life.

On the model I elaborate here, unions would perform a much narrower range of functions than they do at present. An array of other, more specialized, entities would take over responsibility for these functions—including negotiating and interpreting contracts and participating in corporate governance—from unions. Unions would be limited to the tasks of building community among workers, fostering cross-firm links, and serving as public advocates for workers. Employers would gain the freedom to negotiate about a variety of issues currently resolved by law and regulation, seeking flexible, tailored solutions to their problems, provided they negotiated with workers as a group. Employers would enhance performance and reduce conflict with workers by accepting participatory management and ownership schemes. Workers would give up some means of fostering job security in return for guarantees of fairness and due process. Corporations and unions alike would stop spending money on election campaigns, and would accept limits on their ability to spend stockholders’ and members’ money on lobbying efforts, and corruption-reducing “clean money” campaigns would become the norm. And corporations and unions alike would take less responsibility for traditional benefits, accepting the cost reductions effected by the sharing of responsibility for benefits as compensation for the loss of influence attendant on the loss of control over these benefits.

I label this model a “compact” because it is intended to emerge from a genuine bargain between owners and workers. Workers and employers could effect some terms of this bargain simply by agreeing to particular contract terms or agreeing to negotiate in particular ways. Much of the compact, however, could be brought into being only through national legislation. Existing laws related to labor relations, corporate governance, and campaign finance would need to be changed so to make some of the compact’s provisions legal. In addition, legal changes would be needed to establish uniform standards and a level playing field; even when some changes might be made voluntarily by some unions or employers, others might not be prepared to go along.

In Part II of the Article, I explain why collective bargaining is appropriate and necessary, but why it does not need to be conducted by unions and why it might make sense to separate the collective bargaining function from the other functions unions perform. Then, I outline an alternative, non-union collective bargaining mechanism, a workforce negotiating team. In Part III, I outline and defend a set of arrangements designed to foster greater participation by workers in firm decision-making: enterprise committees, work teams, open-book management techniques, and worker stock ownership and board membership. In Part IV, I indicate why, given the operation of negotiating teams and other mechanisms for worker participation, some protections currently afforded by legislation could be determined in a more market-friendly manner. In Part VI, I suggest that capital and labor opt for new rules regarding termination, and consider abandoning strict work rules and seniority norms, which would be less necessary under the compact. In Part VI, I focus on an area of particular concern to many critics of unions and corporations—their roles in elections. I suggest that union and corporate donations to campaigns be banned in their entirety, that unions be permitted to promote policy and electoral outcomes only using completely voluntary dues (under the compact, there would be no compulsory union dues, of course), but that, in return, both sides ought to agree to support public funding of federal and state election campaigns. In Part VII, I argue that corporations should leave the health-care business and that unions and corporations alike should leave the pension business. In Part VIII, I examine the trade-offs I have proposed and argue for the compact as a package with the potential to offer a bargain of value to both sides.