November 15, 1997
The Beck Issue
by
Charles W. Baird
Emeritus Professor of Economics and Former Director of the Smith Center
California State University, East Bay
Perhaps the best outcomes of all the brouhaha over campaign finance reform, are that long-overdue attention is being paid to the issue of the permissible uses of forced union dues and to the fact that US Supreme Court decisions do not enforce themselves.
In 1988, in Communications Workers of America v. Beck , the US Supreme Court ruled that no worker represented by a union under the terms of the National Labor Relations Act (NLRA) may be forced to pay union dues that are used for non-representational purposes. The Court said that the NLRA permits certified unions and employers to agree to force all represented workers to pay for the collective bargaining, contract administration and grievance settlement activities of unions, but it made the use of forced dues for such things as politics illegal.
The NLRA also provides that states may forbid the collection of forced dues for any purposes. Twenty-one states have enacted such right-to-work protections, but in the other states and the District of Columbia forced dues for representational activities are legal. The NLRA covers private sector workers except in the airline and railroad industries. The Railway Labor Act covers those workers, and in 1984 the Court gave Beck -type protections to them in the Ellis case. In the Abood (1977) and Hudson (1986) cases the court gave the same protections to state and local government employees. Federal employees cannot (yet?) be forced to pay union dues for any purpose.
So what is the problem? No worker can be forced to pay dues for political purposes, and it is perfectly legitimate for unions to use voluntary dues they receive from willing workers for politics or for any other legal purposes they wish.
As usual, the problem is in the details. How does a forced dues payer know how much of his dues are spent on politics and other impermissible purposes? In the Beck case the answer was 79 percent. But since Congress has never codified the Court's decision, the Labor Department and the National Labor Relations Board (NLRB) can handle each case in any way they want. For example, in a 1995 case the NLRB said that a worker who wants a refund of money spent for impermissible purposes had to accept the union's view of how big the refund would be. His only recourse would be to hire a lawyer and incur the huge costs of litigation.
Typically, a union will grant refunds of between ten and twenty percent without quarrel. In an October 1997 case, however, the union tried to get away with only a 4.64 percent refund. The evidence usually supports refunds of over 50 percent, but it is often more expensive to go through the litigation to get the larger refunds than they are worth. Thus, with the complicity of Congress and the President, unions are still able to use forced dues for politics. Supreme Court decisions do not enforce themselves.
In the 1996 congressional and presidential elections unions spent $35 million in attack ads against targeted Republican candidates, $70 million in ads supporting specific Democratic candidates, and $300 million in "in-kind" contributions such as union-staffed phone banks, precinct workers, and get-out-the-vote drives. Without prolonged and expensive litigation, there is no way of knowing how much of this came from forced dues.
The best solution, as usual, is the free-market. The NLRA should be amended to forbid the collection of forced dues from any worker for any purpose. Workers who, individually, choose to be represented by unions and pay union dues should be free to do so. Unions should be able to use those voluntary dues for any legal purposes they wish. If unions spend money in ways of which their members disapprove, they will lose membership. Workers should be able to exercise the exit option from unions, their representation activities, and their dues without litigation.
The NLRA does not permit workers, even in the 21 right-to-work states, individually to choose whether to be represented by unions. The issue is decided by majority vote among employees of a firm that a union is trying to unionize. This is called workplace democracy, but it is actually an improper extension of political decisionmaking rules into the private realm of human action. American Founders regarded majority rule to be the least burdensome way of making governmental decisions, but they sought to insulate private affairs from politics. They intended private affairs to be beyond the reach of government-imposed majority rule.
But, like so many laws adopted during the 1930s, the NLRA breached the wall of separation between government and private affairs. It made union representation a matter of forced submission to majority rule, and it compounded the breach by allowing unions selected by majority rule to collect forced dues. If it were not for forced representation there would be no forced dues, and if there were no forced dues the whole <I. Beck issue would be moot.
The Lott amendment to the McCain-Feingold campaign finance reform bill was labeled a "poison pill" by those opposed to putting any limits on political spending by unions. Yet, unions are the largest single PAC donors to Democratic members of Congress, especially in the House. That is why Richard Gephardt and most other House Democrats opposed President Clinton on the fast-track international trade issue. Any campaign reform that leaves the unions untouched is phony. McCain-Finegold without some control of union political activities is unilateral disarmament of Republicans.
In fact, the Lott amendment is a very feeble attempt to help workers secure their rights under the Beck decision. It still permits unions to collect forced dues for representational services. All it does is require unions to get annual written permission from their members before they can spend any dues money on politics. While this is an improvement over the status quo, it provides no way, short of litigation, for workers to discover how much of their dues money is used for politics. This problem could be ameliorated by allowing each union member to specify the exact dollar amount of his dues that could be used for politics, and limiting a union's political expenditures to the sum of those specific dollar amounts, but the Lott amendment doesn't go that far. Even if it did, the unions could dissemble about how they use the rest of their dues money.
There is no way to escape the fact that the problem is forced dues for any purpose. Unions are unique among private organizations. No other private club or association has been granted the legal right to impose a tax, with legally enforced penalties for noncompliance, on private citizens. A worker who refuses to pay forced union dues pays a very high penalty which is enforced by government - loss of his job. The Sierra Club, for example, would love to be able legally to enforce such penalties on people who do not pay Sierra Club dues. Fortunately, Congress has not (yet?) given it such a privilege.
It is well known that government regulations create intended and unintended consequences that the political class uses as excuses for more regulation. McCain-Feingold is an attempt to correct some of the problems that emerged from the 1974 Campaign Finance Law by regulating political free speech. Its whole thrust is wrong-headed. It should focus on forced political speech. With respect to unions, it should do that by abolishing all forced representation and all forced dues.