The Employee Free Choice Act and Labor Unions

The US House of Representatives voted this past week to approve a measure known as the Employee Free Choice Act, which will possibly have a major impact on the way workers deal with their employers in the coming years and possibly reenergize one of the past bastions of the American job market: the Labor Union.

The Act, which still has to go through the Senate and already has drawn some ire from the President, would alter the way employees of a business would be able to organize themselves into labor unions. Currently, workers at a business conduct a card check, in which employees sign off on a card denoting their interest in unionizing and then hold a secret-ballot election to vote on unionizing without fear of intimidation. The new legislation allows for workers to bypass the secret ballot method, which could raise the level of union participation, but at the same time allow for more intimidation of holdouts - something that would be punished harshly by the new law.

The major impact of this legislation would be in the wages and benefits that workers would receive. Currently, non-union workers earn only about 3/4ths of the hourly wages of a union worker, and often do not get the same benefits or benefits at the same level that union workers do. As a result of this legislation, many businesses, particularly small ones, would be under pressure to raise the wages they pay their workers and invest in more benefits to match union demands, lest the workers decide to strike. The increase in wages could push employers to utilize less labor in return for the higher wages, which could raise unemployment levels should unionization boom as a result of the legislation. In addition, the amount of benefits and wages paid would shift the isoprofit curve of the employees to the right, and lower the profit of the businesses, creating less incentive to even remain in business.

Would a boom in unionizing have that adverse of an effect on the economy in the US, should this legislation be passed into law?