With fears of a double-dip recession growing, Americans are saving more and spending less. Economic uncertainty and stagnant wages are a bad combination for American families.
Image, for just a moment, the following situation:
You complete a very important project for your company, coming in on time and under budget. Your boss is ecstatic and the company’s profits are set to soar. In any economy, especially this one, that is great news. Here’s the catch, though; despite your contribution and your company’s renewed profitability, you are told you are not eligible to share in the financial windfall.
Such a scenario seems unreasonable and unlikely. But for more than 8 million union workers around the country, this is a harsh reality. What could possibly hold back such a stellar employee? The union!
Sounds implausible, doesn’t it? After all, union organizers and their defenders in the political class constantly tell us that unions exist to lift up middle class, blue collar workers. Union contracts do indeed set a floor on wages, meaning workers cannot be paid below a certain amount. But, they also set a ceiling on wages, meaning an individual worker cannot be paid above a certain amount.
Simply put, these union contracts make merit-based pay obsolete.
Unions have actually fought bonuses awarded to their own members. Amazingly, the National Labor Relations Board (NLRB) sided with the unions, not the workers. They claimed the bonuses constituted an illegal “direct dealing” with the workers, which was forbidden under collective bargaining law.
Why would unions, which are supposed to fight for their members, oppose merit-based rewards for them? Because it is about the union as a whole, not the individual worker.
The current system creates a perverse dynamic in which union members see the union as their true employer (and wage setter), not the company that actually employs them. As a result, hard workers are held back while less motivated workers are propped up. It runs contrary to the spirit and values that built America.
Fortunately, there is a legislative solution for those 8 million workers who are potentially being held back by their union. The Rewarding Achievement and Incentivizing Successful Employees (RAISE) Act would simply allow employers to pay individual union workers more than the union contract specifies.