Why Stifle Employers from Offering Raises?

When observing the chaos that big union bosses have interleaved into the labor market, you instinctively think of the above-market wages that are forced upon employers (and taxpayers, in the case of public-sector unions) as a result of the monopolistic collective bargaining contracts.  However, what is even more deleterious is the limitation on paying individual workers more than their contract dictates.

Believe it or not, under current labor laws, employers cannot pay individual employees more than their union contracts stipulate.  Union contracts tend to reward seniority over merit and performance.  This is part of our broader problem with collective bargaining laws.  These laws disincentivize good performance on the job and reduce productivity.  The egregious labor laws block any merit-pay system – the foundation of our free market system.

Unfortunately, Big Labor has helped perpetuate this travesty because a merit-pay system would dissuade many rank-and-file members, especially those who are particularly talented, from remaining in the union system and paying dues.  What’s good for the individual and the economy at large is bad for Big Labor.  Not surprisingly, The National Labor Relations Board (NLRB) and the courts have consistently sided with the union bosses in striking down proposed merit-based salary increases from employers.

In order to restore our free market economy, Congressman Todd Rokita (R-IN) and Senator Marco Rubio have introduced the Rewarding Achievement and Incentivizing Successful Employees (RAISE) Act (S. 2371, HR 4385).  This bill reforms the collective bargaining process allowing employers to give merit-based increases in compensation, irrespective of any collective bargaining agreement in place.  This will change the current dynamic in which union bosses, not employers, decide how much the worker is paid.  Every worker would retain the minimum salary agreed upon in the collective bargaining contract, but would be entitled to raises and bonuses over and beyond that amount at the discretion of the employer.

The Senate bill has just 15 cosponsors and the House bill has 64.  There’s no reason for anyone to oppose this bill; it can only benefit union employees in the form of higher compensation.  The Senate might consider this bill as an amendment to the farm bill some time later this week or next week.  The House might want to consider it as a provision within the upcoming Labor Appropriations bill for FY 2013.

If you’re looking for a “Jobs bill,” you won’t find a better one than the RAISE Act.  Transforming the labor market of over 8 million workers from contrived union-pay to merit-pay will incentivize hard work and spawn an increase in productivity.   Please ask your members of the House and Senate if they are cosponsoring this slam dunk legislation.

Cross-posted from The Madison Project



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