One can trace the United Auto Workers's defeat in Chattanooga last month to a factory in Elkhart, Indiana.
Two decades ago, employees at Electromation Inc.’s Elkhart plant opposed plans to change their attendance bonuses. Surprised, Electromation formed joint worker-management “action committees” to solve workplace problems. The company committed to implementing committee solutions that did not cost too much. This gave workers a meaningful voice on the job while management fixed problems it didn’t know it had.
Everyone was happy—except the government. The National Labor Relations Board stepped in and disbanded the committees.
The National Labor Relations Act prohibits companies from “dominat[ing] or interfer[ing] with the formation or administration of any labor organization.” Congress wanted to prevent businesses from setting up fake “company unions” to fend off organizing drives. But that broad prohibition also proscribed Electromation’s action committees. In fact, it prohibits almost any formal employee voice on the job outside of collective bargaining with a union.
The law gives workers an all-or-nothing choice. If they want a formal voice with management, they need to unionize. Otherwise, they must remain silent. The government will shut down other non-union forms of employee representation.
This no longer makes sense. Employers have little reason to create fake unions today—few feel they need them to fend off organizing drives. Union membership has dropped below 7 percent in the private sector.
But many companies do want to hear their employees’ concerns. Rank-and-file workers know things that senior management does not. And businesses want to attract and retain quality employees. The entire “human resource” philosophy emphasizes the fact that workers are a company’s most valuable asset. Most employers want to keep their employees happy if they can. Employee participation programs can improve morale and working conditions.
This explains why Volkswagen’s management wanted employees at their Chattanooga plant to unionize. Volkswagen has work councils in all of its German factories. With work councils, employee representatives formally discuss concerns with management representatives. They enable companies to get input and consult their workers before making changes. German work councils often help plants to operate safely and productively.
Volkswagen has found its plants run better with work councils, so management wanted one in Chattanooga. Yet Volkswagen could not simply create one. As Electromation learned the hard way, that violates the NLRA. To form a works council, the workers first needed to unionize.
So Volkswagen’s management invited the UAW in. The company gave union organizers free run of the plant. Management held meetings—on the clock—for union representatives to make their pitch. The company did everything but roll out a red carpet for the UAW. Yet on election day, in the privacy of the voting booth, a majority of workers voted against unionizing.