Critical Sociology 25,1

REVIEW ESSAY

THE REMARKABLE REHABILITATION OF COMPANY UNIONISM IN RECENT

INDUSTRIAL RELATIONS LITERATURE*

Bruce Nissen

Abstract

In recent years industrial relations scholars have begun to reassess the historicalexperience in the United States with employer-dominated employee organizations.Arguing that such organizations are necessary for U.S. businesses to be competi-tive in international business, some scholars are attempting to rehabilitate such“company unions”. This paper examines the arguments of Bruce Kaufman, a promi-nent academic proponent of company unions, and concludes that the case is notmade. Theoretical, methodological, and empirical problems are apparent in theargument. The article concludes by assessing the relationship between unions andcorporations, and between classes in this country, and notes the failure of certainindustrial relations scholars to understand the realities of those power relationships.

Introduction

In the past decade there has been considerable discussion amongindustrial relations scholars, practitioners, and politicians about the suit-ability of the Wagner Act as a legal framework for this nation’s indus-trial relations policy. Many nd the Wagner Act no longer adequate.Unions argue that the right of workers to freely associate and formunions for the purpose of collective bargaining is not protected in anera of strident and widespread employer intimidation and retaliationagainst workers attempting to exercise this right supposedly guaranteedby the Wagner Act. (See, Friedman, Hurd, Oswald, and Seeber, 1994).

Others nd the Wagner Act dysfunctional for businesses, arguing thatsection 8(a)2 (the ban on company-dominated labor organizations) coup-led with section 2(5) (which de nes labor organizations quite broadly)prevent employers from dealing with and involving their employees inthe manner required by today’s technological and internationally com-petitive economy. This latter perspective has considerable support inconservative political circles. In the 105th Congress (1997), the Republi-can majority in both houses passed the Teamwork for Employers and

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Managers (TEAM) Act (Senate bill S.295; House Resolution 634). Afterpassage, President Clinton vetoed the bill, which has not subsequentlybeen brought up. Milder attempts to amend section 8(a)(2), coupled withother measures to curb employer e Ú orts to prevent unionization, have beenproposed by less conservative observers, including the report of theCommission on the Future of Worker-Management Relations (also knownas the “Dunlop Commission”) appointed by President Clinton. (See, Com-mission of the Future of Worker-Management Relations, 1994; Hoglerand Grenier, 1992; Estreicher, 1994a; Estreicher, 1994b; LeRoy, 1999).

Outside of the traditionally anti-union employer and conservativepolitical circles, most analysts in the past have taken it for granted thatthe traditional company unions were not legitimate representatives ofworkers in their dealings with management. Rather, they are seen asunion-avoidance devices whose domination by employers made them at best paternalistic and dependency-inducing mechanisms and at worstvicious organizations providing anti-union shock troops in an employer’swar against independent worker representation via a union and collec-tive bargaining.

However, a recent trend to rehabilitate the reputation of companyunions as they manifested themselves in the early 20th Century hasemerged. This trend accompanies the decline in unionization rates inthe country, as well as the academic decline of industrial relations (IR)as a discipline that is being eclipsed by the newer eld of “HumanResource Management (HRM). The chief proponent of a positive assess-ment of company unions is Bruce Kaufman, a prominent industrial rela-tions scholar and economist at Georgia State University. Because Kaufmanis the leading proponent of this trend, this essay will concentrate solelyon his work as the way to criticize the entire trend. Kaufman’s posi-tion will be presented and critiqued in the following sections of thispaper; a concluding section will summarize the critique and note thatthe same case can be made against all such literature espousing a returnto company unionism.

Kaufman’s Brief for Company Unionism

For a number of years Bruce Kaufman has been fascinated with non-union forms of employee representation. In particular, he has paid agreat deal of attention to experiences with company unions in the earlypart of the 20th Century, and his conclusions are positive about thatexperience. Following a review of the history of company unions in thiscountry, Kaufman writes:

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My conclusion is that the employee representation plans (i.e., companyunions—BN) that emerged and proliferated in American industry in the1915–1935 period were, on net, a constructive, positive development forimproved industrial relations. (Kaufman, 1999a: 26)

Kaufman argues that both employers and employees bene ted fromcompany unions. Indeed, he argues that even organized labor wouldhave bene ted if the Wagner Act had not legally abolished companyunions in 1935. (Kaufman 1997: 179)

How is this remarkable conclusion arrived at? Kaufman wishes toadd company unions to the list of approved worker formations. Reducedto its simplest form, his argument proceeds as follows:

(1) In the World War I period and after, a new human resource man-agement paradigm evolved in certain medium to large size rms. The newparadigm had four prongs: (a) scienti c management of the workforce; (b)a focus on human relations and the motivations of employees; (c) welfarebene ts, such as pensions and medical care; and (d) (sometimes) a non-union employee representation plan (NERP), or company union.(2) Some NERPS were set up for merely short-term objectives: unionavoidance, governmental coercion during World War I, and the like. Butin the 1920s, even after the threat of unionization or government man-date had receded, the most progressive employers maintained their NERP,demonstrating that their main motivation was not union avoidance butrather mutual gain.(3) Unions were not a viable or attractive option for many workers in thisperiod. The “demand of employees for trade unionism” was small, and avariety of problems like racism, corruption, craft exclusionism, cronyismand autocracy, and poor leadership made unions unappealing and unwork-able for most employees in NERPs.(4) But NERPs were relevant and appealing; they delivered substantialbene ts to the employees as well as to the employers. Despite limitations,some grievances were addressed, and social welfare bene ts were provided.(5) NERPs were only driven from the American scene because of extra-ordinary circumstances: the Great Depression of the 1930s and legal mea-sures to encourage collective bargaining and to ban company unions (theNIRA and the NLRA).(6) This ban on company unions was a mistaken reaction to short termevents, for it prohibited “a signal step in the evolution of managementthought away from a ‘commodity’ model of labor and toward a morehumane, strategic, and participative model.” (Kaufman 1999a: 26)

Kaufman is well aware that company unions often had a less attrac-tive appearance, and that most scholars are less positive. He writes,

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This positive conclusion is not meant to be an apologia for companyunions, as the historical record is equally clear that the performance ofNERPs in many cases fell far short of the hopes of their most ardentadmirers and promoters. It is also equally clear that many employers estab-lished NERPs with either the explicit or implicit goal of remaining union-free and that during the early years of the new deal (1933–1935) manyhundreds of plans were hastily established for precisely this purpose.(Kaufman 1999a: 26)

Despite these admissions, he believes the overall balance is a positiveone when company unions are weighed in the historical balance. Theyshould be allowed as supplements to independent unions.

Relying on the argument that the needs of employers in the mod-ern economy require employee representation in the governance of theworkplace, Kaufman therefore concludes that labor law changes areneeded to end the NLRA ban on company dominated employee orga-nizations (i.e., company unions). Failure to legalize these historically pos-itive formations will otherwise lead to loss of competitiveness in theinternational economy (Kaufman, 1999a: 9; Kaufman 1999b: 743).

Evaluation of the Rehabilitation Attempt

Most of the steps in the reasoning given above can be evaluated crit-ically and found wanting, in this author’s opinion. However, the largestproblem lies with something not stated: the alleged need for company unionsis based on a distortion of the options actually available to employers with the pre-sent labor law. As long as employer-dominated organizations do not man-age employee self-governance regarding working conditions, they arelegal, even with no changes in the National Labor Relations Act (NLRA).Employee involvement of many types is allowed, and an “all-or-nothing”(union voice or no voice) situation for employee voice is not the law ofthe land and never was.

Beyond this fundamental misrepresentation of the current state ofU.S. labor law, how well grounded is Kaufman’s brief for companyunions? There is no disputing certain historical facts that Kaufman usesas the basis for his argument. It is true that some company unions werelonger-lived organizations which lasted from the 1910’s until the 1930sand that these organizations were most often connected to “progres-sive” companies practicing “welfare capitalism” in the 1920s. It is alsotrue that the craft unions were increasingly ill-suited for the changingeconomy and workforce of the 1920s and 1930s. Further, the employ-ees of the limited number of companies with company unions in the

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1920s tended to be better o Ú in general than were most employees ofthe time, since they worked for larger companies with personnel depart-ments and “progressive” personnel policies.

These facts have been generally acknowledged for quite some time;as early as 1982 Daniel Nelson demonstrated that company unions fellinto three types: (1) those adopted as a “fad”, (2) those adopted forunion-avoidance or because of government pressure to do so; and (3)those adopted as part of a more professional approach to labor rela-tions (i.e., as part of “welfare capitalism”) (Nelson, 1982: 336–339). Thisthird category is the one Kaufman concentrates on, and it is upon thesecases that he makes his brief for company unions.

To begin with the most obvious problem with Kaufman’s case forcompany unions, Kaufman ignores or writes o Ú the majority of casesof company unionism while concentrating solely on the most favorablecases (which constitute the exception to the rule). As all available guresdemonstrate, the vast majority of company unions were set up for union-avoidance purposes. As Irving Bernstein notes in the pre-1930s period,

Su Ý ce it to say here that most of the rms that introduced plans werespurred to do so by fear of trade unionism rather than by devotion tocompany unionism. This is quite evident from the statistics of the NationalIndustrial Conference Board: the Board found 490 rms that establishedplans during the turbulent years 1919–24 and only 73 that did so in thecalm period 1924–28. Many, in fact, were set up to counter an organiz-ing drive or a strike. (Bernstein: 157)

And for the 1930s, no one disputes that the literally hundreds of plansset up in the 1933–35 period were virtually all designed for the mainpurpose of union avoidance.

Thus, even if all of the alleged bene ts of company unions in a smallminority of company unions were genuine, the historically more impor-tant role played by such organizations was in battling against indepen-dent employee representation. Kaufman focuses on the exceptions andignores the majority of cases.

Furthermore, the attempt to separate anti-union purposes from morebenign motives of “mutual gains” relies on evidence that does not entirelysupport the conclusion that anti-union animus was absent in the 1920s.Kaufman argues that:

If NERPs were largely anti-union avoidance devices, it is reasonable topredict that during the course of the 1920s when the labor movement was in marked decline that many employers would let their representa-tion plans lapse and few new ones would be established. The facts are

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just the opposite, however. As previously noted, the number of NERPsand employees covered by representation plans was higher in 1929 thanten years earlier. (Kaufman 1999a: 17–18)

Two points need to be made here. First, the numbers are less clear-cut than depicted. As the quote from Bernstein above demonstrates, thecompany union movement peaked in the mid-1920s. Following that timeperiod, the number of new plans and the number of dropouts werepretty close to each other for a few years, and then the total numberof surviving plans began to drop. The number of workers covered con-tinued to grow throughout the 1920s, re ecting the shift toward large-scale employers—well over half of workers covered worked for companieswith over 15,000 employees. But by 1928, more companies were dis-continuing plans than were instituting new ones—41 opted out; 14started anew. By 1932, only seven began plans while 86 disbandedthem. The number of workers covered also dropped from a 1928 highof 1.55 million to 1.26 million by 1932. (Nelson, 1982: 338) Interestwaned as the union threat receded in the 1920s, albeit with a suitabletime lag. It is also important to note that the union “threat” neverentirely subsided: throughout the 1920s more workers were covered bycollective bargaining and independent unions than were in non-unionemployee representation plans. (Montgomery, 1987: 437–438)

Second, one cannot automatically rule out anti-union animus as amotive simply because of the absence of the immediate threat of union-ization. That is much too simplistic a view. Today the banking andrestaurant industries are surely industries relatively immune to union-ization in the United States if there are any. Yet, the American BankersAssociation (ABA) and the National Restaurant Association (NRA) areever alert—running seminars and encouraging union prevention pro-grams and “positive” employee relations to both improve morale/pro-ductivity and avoid the threat of unions. There is also a long traditionof companies such as IBM oÚ ering bene ts like those unions wouldhave won in order to keep workers from seeking union representation.

The mixed motive has been very common throughout the history ofthe 20th Century; “mutual gains” were not so easily separated in reallife from union avoidance. Historical scholarship on company unionsshows mixed company motives repeatedly, with anti-union motivationprominently mixed in with other objectives (Gilpin, 1992; Halpern, 1992;Halpern, 1997).

The same is true today. Many contemporary “union busters” of theclearest sort deny that they have an anti-union animus. They claim only

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to be interested in “positive” employee relations where “third party”unions are made redundant by the “mutual gains.” These are the sameconsultants who routinely counsel and run divisive and vicious “unionbusting” campaigns for companies whenever an organizing drive mate-rializes.

In a later article for which he interviewed company managers abouttheir motivations for setting up employee representation plans in the1990s, Kaufman himself is forced to admit that every single one of themhad an anti-union motive:

It is true that no manager I interviewed expressed even a neutral attitudetoward union organization and that most were explicitly committed tomaintaining a union-free status. Thus, there is no pretense that EIP (em-ployee involvement program—BN) is not a part if a union avoidance strat-egy, as the companies’ entire human resource program is, in part, craftedwith this goal in mind. (Kaufman, 1999: 780)

This directly contradicts his earlier denial that such programs grew froman anti-union animus, but he proceeds to explain that this anti-unionanimus is generally good because it leads to socially bene cial results:companies treat their workers better through these programs.

Most company unions in the 1920s almost certainly had a long-term“anti-union inoculation” goal alongside “positive employee relations”objectives. Motivation is impossible to prove, of course, and pronounce-ments are likely to be too self-serving to be totally reliable evidence(although Kaufman got contemporary managers to be at least some-what truthful about their intentions). But the long sweep of Americancompanies’ antipathy to unions makes the anti-union interpretation ofthe historical experience by far the most plausible.

Even the many bene ts attributed to company unions are more sus-pect than they are depicted. Because the longer-lived company unionsin the 1910s–1930s were in the “progressive” welfare capitalist rms,one might be tempted to attribute the worker gains of the time to thecompany unions. But it is generally agreed that company unions in thisperiod had virtually nothing to do with wages, and frequently they werethe recipients merely reacting to, or working out with managementarrangements implementing the new bene ts given to employees by far-sighted managers seeking loyalty.

The one area where some company unions helped employees was inproviding an outlet for the expression of grievances, generally over work-ing conditions issues. Of course, the disposition of resulting grievancesdepended entirely on the good will of higher management rather than

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any countervailing power, as would be the case with a independentunion. But nevertheless, the shift from arbitrary authority by a foremanto a more “professional” set of personnel managers and policies couldindeed be a real advance for the workers.

These bene ts for the employees were no diÚ erent in kind than thoseavailable from any set of paternalistic policies by a “progressive” com-pany management. And the truth is that, absent some form of inde-pendent power against an employer, the bene ts tend to be ephemeraland in most cases relatively meaningless. Speaking of company unionsin the 1920s, David Brody notes:

The vaunted employee-representation plans, for example, were too trans-parently management’s creatures to gain much standing in the shop. Atthe end of the decade, employee representation covered 1.5 million work-ers, over 80 per cent of them in some forty companies employing over5,000 people. Despite the resources and professional help available to suchlarge rms, employee representation rarely, if ever, developed much mean-ing. (Brody: 60)

Case studies (Gilpin, 1992; Jacoby, 1989; Nelson, 1982) tend to showthat some of the best of company unions inspired from the workerseverything from indi Ú erence to mild support without great enthusiasm.In the end, most employees saw company unions as one more man-agement program that might or might not be of some use.

Beyond ignoring counter-evidence from a majority of cases and over-stating the bene ts of these paternalistic devices, the case for companyunionism also relies on some less than compelling arguments. Kaufmanargues that management domination is not a problem:

Also largely specious is the charge that NERPs are fatally awed becausethey are management ‘dominated’. Of course they are management dom-inated, but so is every other human resource program and activity of anonunion company (e.g., the compensation system, the dispute resolutionsystem) but no one proposes that these also be banned. (Kaufman 1999a: 26)

This argument fails to distinguish the question of employee representationor governance from other issues of the employment relationship. It cer-tainly is true that in a nonunion company, the employment-at-will doc-trine makes the workplace a dictatorship of the employer unless anemployee has greater than usual bargaining power through extraordi-nary skills or an extremely tight labor market. In a typical nonunioncompany there is no employee representation of a structured type; employ-ees are left to their own individual courage or insider access to raise

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issues and complaints. Fearing retribution, workers tend not to speakout under such circumstances, and “exit” replaces “voice” as the onlymeans of dealing with problems (Freeman and Medo Ú , 1984).

Company unions are an attempt to provide “voice” to at least a por-tion of a workforce with no leverage or power to back up that voice. In a com-pany union, it will be a selectively-solicited and selectively-listened-tovoice that may or may not be heeded. Such a form of “representation”cannot be a legitimate form if judged by principles of democracy orself-governance. Of course, one can choose to ignore such principles inan analysis of the workplace, as Kaufman and many other industrialrelations scholars tend to do. Instead, market concepts such as “demandfor union services” which view the worker as a consumer rather thana citizen replace any concepts of governance such as are used in polit-ical discourse.

To use a political analogy to illustrate, suppose that a critic lamentedthat money has subverted our democratic political system by essentially“buying” the political process and its outcomes. Therefore this criticcalls for campaign nance reform. The analogy to Kaufman’s argumentwould be the reply, “All other aspects of our commercial society aredominated by money, and so your lament is specious. Nobody proposesabolishing retail and wholesale business transactions which are clearlydictated by money, so therefore dictation by money in the sphere ofpolitical representation is also legitimate.” The ultimate conclusion tosuch a line of reasoning would be that the buying and selling of votesis perfectly legitimate; since money dominates elsewhere in the society,why not in the area of governance also?

The charge of management domination is not that easily disposedof. If, by its very nature, worker representation can only be legitimateif it is independent and is backed up by some form of power, companyunions lack legitimacy. This is a point that Patricia Green eld andRobert Pleasure have recently made (Green eld and Pleasure, 1993:173–181).

Minor arguments are also marshaled in favor of company unions,such as an “appeal to authority”. Kaufman quotes industrial relationsexperts such as William Leiserson, John R. Commons, and others abouthow impressed they were by company unions in the 1920s. Beyond theinherent weaknesses of all “appeal to authority” arguments, these appealsare particularly weak. As Kaufman himself notes, Leiserson by the mid-1930s was strongly arguing for the Wagner Act, including the ban oncompany unions. Why should the later position of this particular author-ity, re ecting more experience and thought, be dismissed in favor of

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the earlier one? Yet the earlier opinions are given the weight of author-ity, rather than the later ones.

Kaufman also relies upon comparisons with Canada to argue forcompany unions. Unlike the United States, Canada does not ban com-pany unions. (See, Taras, 1994; Taras, 1997; Kaufman and Taras, 1999;Taras, forthcoming) Since Canada has a bigger and more powerful labormovement than the one in the United States, he argues that companyunions are not really a danger to organized labor. But the argument isquite weak: company unions are a non-issue in Canada precisely becausethey are so insigni cant there. Strong protections of the right to orga-nize independently into a genuine union in that country make unionsa more viable option, and company unions in Canada tend to eithernot get o Ú the ground, or to aÝ liate over time with genuine unions.The counterfeit item has little importance or appeal when the genuinearticle is actually available, and real unions have far outdistanced com-pany unions in the competition for worker loyalty in Canada becausea real choice is available, unlike in the United States.

But Kaufman nds company unions not to be a threat to unions; heeven claims that organized labor would be better o Ú if the NLRA banon company unions were repealed. If the Wagner Act had never bannedcompany unions, he argues,

. . . I also have to believe that, on net, the membership and power of orga-nized labor would be stronger today. Those companies that have the man-agement expertise to run a successful NERP are seldom going to be union-ized anyway, while NERPs in companies that have ine Ú ectual, greedy, orshort-sighted managements will prove to be one of the union organizer’sbest friends. (Kaufman 1997: 179)

The above passage has both dubious claims and a faulty form of rea-soning. First, the claim that expert managements can remain union-freeanyway may well be true today; it certainly appeared to be true in the1920s also. However, times of anti-union triumphalism in America’spast have never been permanent; union immunity today does not guar-antee it in the future. Polls show that roughly one third of all workersnot represented by a union desire one, and 82% of those desiring aunion believe that a majority of the workers at their work site sharethe same desire. (Freeman and Rogers, 1999: 68–69) Large number ofnon-union workers desire union representation, and a simple switch toa “card check” method of ratifying union preference would make many“immune” companies suddenly quite vulnerable to union penetration.

Companies in the United States maintain their union-free status mainly

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through a labor law stacked against workers seeking independent unionrepresentation and at considerable cost by investing hundreds of mil-lions of dollars in a professional union avoidance industry. (Bronfenbrenner,1994; Gross, 1995; Comstock and Fox, 1994; Dickens, 1983; Freemanand Medo Ú , 1984; Weiler, 1990; Hurd and Uehlein, 1994) Certainlythe extreme diÝ culty workers have in exercising their right to form andjoin unions does not justify yet one more tool to help the companyremain nonunion.

The second point, that company unions are sometimes “the unionorganizer’s best friends” has some merit, but not enough to justify theconclusion. It is true that genuine unionists took over some companyunions from within. But, as any student of labor history in the 1930scan readily attest, the main role of company unions in the 1933–1935period was to aid management in ghting genuine unions to the bitterend. That is hardly being a “best friend” to the union organizer.

One need not necessarily overplay the eÚectiveness of company unionsas union-avoidance mechanisms in the context of the early 1930s. Themad rush toward real unions overwhelmed most of them. But that doesnot mean they would be, or are, totally ine Ú ective union-avoidancemechanisms in less turbulent times. Certainly the claim that companyunions would actually aid genuine independent unions requires a greatdeal of evidence, given the vast amount of historical evidence to thecontrary.

Finally, the form of argument being used here is of an “either-or”variety that oversimpli es enormously. Is it really true that a companyunion is either a union organizer’s best friend, or it exists at a companytotally immune to unionization? A large number of situations, perhapsmost, t neither description.

As an anti-union device, longer-term company unions could be some-what problematic for companies. They could be quite expensive (Nelson:352–353; Jacoby: 38), and if they survived a long time they have a ten-dency to evolve into or aÝ liate with genuine, independent unions. Theseobservations of course don’t apply to the short-lived company-domi-nated or company-assisted organizations whose main purpose is to com-bat unionization, i.e., to the majority of company unions that have beenset up in this country.

But it is true that main tool of employers against unions is not com-pany unions, but rather coercive actions creating fear and the desire toavoid con ict within the workforce (see, Cohen and Hurd, 1998; Cohen,1997; Nissen, 1998). Firing or discriminating against open union sup-porters during a union organizing drive is routine at the present time,

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and there is well over a 90% chance that workers in the private sec-tor attempting to form a union will face an organized “union busting”campaign. Under such circumstances, the call for the legalization ofcompany unions would only add to the obstacles for workers attempt-ing to create an independent form of representation, i.e., a union(Clawson and Clawson, 1999).

Kaufman counters this by arguing that the appropriate policy wouldbe legalization of company unions combined with measures to “preventundue employer manipulation and coercion of employee decision mak-ing”. (Kaufman 1997: 179) How is this to be accomplished? Throughpublic policies promoting full employment and “to further strengthenthe NLRA where necessary (e.g., stronger nancial penalties on employ-ers for unfair labor practices) in order to protect employee free choicein matters of representation.” (Kaufman 1999a: 27)

This position, which Kaufman has clari ed in a later article, is avariation on the “trade-o Ú ” proposals put forward by the DunlopCommission and numerous other writers: trade o Ú an employer gain(legalization of company unions) for a union gain (easier union orga-nizing). (See, Hogler and Grenier, 1992; Estreicher, 1994a; Estreicher,1994b) The Dunlop Commission chose to retain Section 8(a)(2) but to“clarify” it to allow the existence of non-union employee participationprograms that discuss “terms of conditions of work or compensationwhere such discussion is incidental to the broad purposes of these pro-grams”. (Commission on the Future of Worker-Management Relations,1994: 8)

In exchange for this, the Commission recommends that union attemptsto organize and win a rst contract be aided through expedited unionrepresentation elections (typically held within two weeks), stronger injunc-tive power to the NLRB to remedy discriminatory actions by the employerwhich intimidate the workforce, dispute resolution programs which wouldhelp achieve a rst contract (possibly including binding arbitration todecide the terms of a rst contract), and minor changes to ease theability of unions to contact employees during union representation drives.

Both the union and employer community rejected the Commission’srecommendations. Unions rejected the modi cation of Section 8(a)(2),which they saw as a legal loophole creating ever more space for com-pany unions to creep back into the American scene. Employer repre-sentatives rejected any modi cations that would make union organizingeasier. In the present political climate it appears that virtually any “trade-o Ú ” proposal is impractical, as demonstrated by this response to thecommission report. The only half of the trade-o Ú with a possibility of

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passage in today’s political climate is the pro-corporate side: the legal-ization of company unions, which would have been accomplished in1997 by the Republican-sponsored TEAM Act but for a veto by PresidentClinton.

The desirability of any trade-o Ú depends heavily on the speci cs ofhow employer manipulation and coercion of employee decision-makingregarding unionization would be curbed. The Dunlop Commission’s rec-ommendations fail to deliver the minimum prerequisites for protectingthe ostensible right of employees to choose freely in a representationelection. The International Confederation of Free Trade Unions hasstrongly criticized the United States in this regard. Their recent reportbears quotation at some length:

In the private sector, the law does not protect workers when the employeris determined to destroy or prevent union representation . . . Employersreceive legal protection for extensive interference in the decision of work-ers as to whether or not they wish to have union representation. Thisincludes active campaigning by employers among employees against unionrepresentation as well as participating in campaigns to eliminate unionrepresentation (“decerti cation”). In addition, penalties for breaking thelaw are so limited and ineÚ ective that there is a high level of corporatelawlessness in respect to labour law. At least one in 10 union supporterscampaigning to form a union is illegally red. In nine out of 10 unionrepresentation elections employers use mandatory closed-door (“captiveaudience”) meetings conducted on their own property during work to cam-paign aggressively against collective bargaining and trade unions. Supervisorsnot eligible to be represented by the trade union may have to participatein a vicious and intimidating campaign against the union . . .

Except in rare circumstances, trade union representatives are denied accessto the employer’s property to meet employees during non-working time.During organising campaigns, there may be threats of arrest against unionrepresentatives and their expulsion from the employer’s property, denyingworkers the opportunity to consider freely the advantages of union repre-sentation. (International Confederation of Free Trade Unions, 1999: 3–4)

Given these realities, the Dunlop Commission’s remedies to counteremployer anti-union behavior appear to be half measures. Only a “card-check” procedure, whereby a union is automatically certi ed once itobtains signed cards indicating union support from a majority of employ-ees, would allow the employees to make a choice not coerced by theemployer. Failing that, the union would at minimum have to be given“equal time” in captive audience meetings to speak to the employeesin response to captive audience meetings featuring anti-union diatribes.

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Lacking measures as strong as this, the original intent of the WagnerAct—to encourage and support the uncoerced right of workers to choosefor or against a union and collective bargaining—cannot be realized.Lacking strong measures of this nature, the labor movement rejected atrade-oÚ based on half measures.

Kaufman, however, nds the proposals of the Dunlop Commissionto be too slanted in favor of the labor movement. Instead he carvesout a middle ground between that of the Dunlop Commission (whichhe nd to be too pro-labor) and the TEAM Act (which he nds to betoo pro- employer). He proposes amending NLRA Section 2(5) to de ne“labor organizations” narrowly so the Section 8(a)(2) prohibition ondominated labor organizations does not apply to company unions oremployee organizations which do not engage in collective bargaining.In exchange, he proposes larger nes for employer unfair labor prac-tices, speeding up union elections to an average of four weeks after oneis requested, mandatory arbitration of a rst contract if one is notreached within a year, and a ban on establishing a company union aftera union organizing drive has begun. (Kaufman, 1999b: 800–801)

In general, these measures to protect workers’ rights are even weakerthan those proposed by the Dunlop Commission, while his legalizationof company unions is more complete. Kaufman explicitly rejects theunion card check procedure because he feels it gives coercive power tounions, since they would know which employees supported them andwhich did not. (Kaufman 1999b: 799)

This position is taken with no evidence presented of widespread (orany) such union coercion; it also displays an amazing ignorance of thee Ú orts of most unions to “win over” anti-union workers after a unionelection victory. Unlike employers, unions generally have few coercivemechanisms over the workforce. On the whole, they cannot re work-ers or reassign them to inferior jobs. Relying on membership support,unions generally attempt to broaden their base of support, not alienatemore of it. This unawareness of the actual practices, and the actualpower relationship between union and management, is characteristic ofindustrial relations scholars who advocate for company unions. (Clawsonand Clawson, 1999)

Ultimately the diÚ erence between those, like Kaufman, who evalu-ate company unions positively and those, like this author, who evalu-ate them negatively probably hinges on di Ú ering evaluations of thedegree to which employers dominate the workplace absent legal prohi-bitions. Many industrial relations scholars would be much less naiveabout the power relations at the workplace if they were to experience

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the massive “union busting” campaigns which are almost automatic inthe private sector today. Employee choice is more ction than fact, aslong as this type of behavior is sanctioned.

Summary and Conclusions

This essay argues that Kaufman’s case for company unions rests on aseries of faulty premises and the use of dubious reasoning and selectivereading of the evidence. Nine problems with his argument have beennoted; they can be broken down into the theoretical, the methodolog-ical, and the empirical. The theoretical and methodological issues arethe most important; the listing below moves from the major issues tothe most minor:

Theoretical

1. The issue of governance is con ated with other matters, leading toarguments that paternalism and top-down governance are desirable,as long as it is “good” paternalism. (Monarchy has equal status withdemocracy, as long as the king is a benevolent one who provides forthe welfare of the subjects.)

Methodological

2. The majority of cases of company unions are ignored or written o Úas irrelevant, while the most positive exceptions to the rule are focusedupon, leading to a distorted picture which does not re ect the over-all reality of such institutions.

3. The “mixed motive” for, or “dual use” of, company unions is deniedby employing a simplistic “either-or” type of reasoning which reducescompany motivation to either anti- union animus or “mutual gains”;denying the former, Kaufman concludes the latter is the motivatingfactor.

4. Simplistic “either-or” reasoning asserts that either companies are com-pletely immune to union organizing or else company unions wouldaid union organizing in non-immune companies. Most situations fallinto neither of these two “either-or” categories.

5. Appeals are made to authority (although only selectively, to thosepersons and times when favorable assessment of company unionswere made). In general, appeals to authority are weak forms of argu-mentation.

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Empirical

6. Anti-union motivation for creating company unions is rst denied,and later justi ed as only of the “good” anti-union type that leadsto improved employee welfare, despite an historical record refutingboth the denial and the exclusively benign interpretation.

7. The bene ts historically derived from company unions are vastlyoverstated. Furthermore, most of the bene ts cited were not neces-sarily derived from the company unions, but were largely availableto employees of paternalistic “welfare capitalist” enterprises that chosenot to exercise the company union option.

8. Canada is used as a counter-example without noting the major con-textual diÚ erences between the two countries; to the extent diÚ erencesare noted, those Canadian policies most strongly ensuring workers’right to union organization (like card-check) are opposed.

9. Due to a misreading of the behavior of unions and of the union-management power relationship, inadequate measures to protect theright to unionize are o Ú ered as a “trade o Ú ” for the legalization ofcompany unions.

Beyond these speci c criticisms, problems for the position advocat-ing for company unions grow out of the larger social context withinwhich the question is placed. Kaufman and other advocates of com-pany unions make two ground oor mistakes. First, they argue that theabsence of company unions (by whatever name they choose to call them)means that American businesses are so constricted that they cannot beinternationally competitive. Evidence for this frequently stated positionis virtually non-existent. For example, does Canada’s condoning of com-pany unions really give it a competitive edge over U.S.-based businesses?Neither Kaufman nor anyone else has conducted a study showing thisto be true, and it is somewhat diÝ cult to believe that anyone takes seri-ously the position that major competitive diÚ erences result.

Research in general has shown that employee involvement in deci-sion-making can, under certain circumstances, result in improved pro-ductivity and quality. But none of this research shows that the specic types ofemployee involvement—company unions—being championed have any such importanteÚects. They argument that “competitiveness requires it” is simply repeatedas a mantra so frequently that it is simply assumed in the literatureapproving of a reversion to employer dominated organizations dealingwith wages and working conditions.

One study (Fairris, 1995) claims to show that the 1920s companyunions enhanced shop oor productivity, but the evidence is less thancompelling. The author simply shows that companies with company

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unions were more productive than their counterparts, but all that isdemonstrated is a correlation, not causation. Given the fact that virtu-ally all company unions existed in larger companies practicing “welfarecapitalism”, the correlation is hardly surprising, and proves nothingabout the independent e Ú ect of company unions. Perhaps realizing this,the author continuously refers to evidence as “suggestive” of produc-tivity-enhancing e Ú ects. The results are not convincing. Even if theywere, the magnitude of the correlated productivity increases is rathersmall, certainly not of a magnitude indicating a “necessity” of this insti-tution for international competitiveness.

Beyond that one study, the evidence is virtually non-existent. JamesR. Rundle has demonstrated that the political campaign to repeal NLRASection 8(a)(2) is basically all politics and no scienti c evidence. (Rundle,1994) Rundle shows that Section 8(a)(2) has had virtually no impact ongood-faith experimentation with employee involvement. He lists relevantcases and demonstrates that employee involvement is allowed as longas employee representation on working conditions is not being done byan employer-dominated organization. The options are many; an “all-or-nothing” (union voice or no voice) situation for employee voice isnot the law of the land and never was.

Even management spokespersons and attorneys realize that the alleged“chilling” e Ú ect of the ban on company unions is basically hype. In1993, prominent management attorney and former NLRB chairmanEdward B. Miller called the problem a “myth”, and continued:

While I represent management, I do not kid myself. If section 8(a)(2) were to be repealed, I have no doubt that in not too many months oryears sham company unions would again recur. (Daily Labor Report, 1993)

Ironically, even Kaufman himself has discovered that the allegedharmful e Ú ects of Section 8(a)(2) are far less than he claimed in mak-ing his initial call for repeal. In his most recent research, he contactedrepresentatives of managements that were running employee involve-ment programs (EIPs), and found them relatively unconcerned:

Both groups were unanimous in their opinion that Electromation (recentNLRB decision banning an EIP as a company union—BN) initially casta signi cant chill on EIP programs but, over approximately the last fouryears, these fears have eased considerably if not completely . . . managers,attorneys, and consultants interviewed for this study believed that therestrictions contained in the NLRA on “company unions” are having aless adverse impact on legitimate EIP programs than was initially fearedafter the Electromation decision came down in 1992. (Kaufman 1999b:776–777)

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It is not clear that Kaufman realizes how often his later research under-cuts the very premises he used to construct his initial case for companyunions.

But the larger issue, and the second ground oor mistake made byKaufman and other advocates of company unions is fundamental. Theunderlying perspective of the pro-company union literature is that thepower relationship between classes in this country is so equalized thatlittle needs to be done to redress an imbalance. Workers without unionsare seen as powerful players who exercise considerable autonomy andfreedom from the power of massive corporations. Kaufman and UCLABusiness Professor David Lewin recently argued in a paper presenta-tion at a conference that workers in the 1990s hardly need legal pro-tection of the right to organize and form unions, since they had becomeso educated, well resourced, and powerful compared to their situationin 1935 when the NLRA was passed.

Given the realities facing workers in the 1980s and 1990s, the implicitperspective on class power contained in such views appears exceedinglynaive. In the past two decades U.S. workers have experienced massivetransfers of wealth upward to the most wealthy, rapidly growing eco-nomic inequalities, growing use of contingent workers and eroding jobsecurity, major attacks on the few institutions in the United States whichare working class-based (such as unions), and a steady loss of politicalrepresentation.

Industrial relations scholars who can reconcile these facts with anincrease in working class power are highly unlikely to see the negativeconsequences of legalizing company unions. But the legalization of com-pany unions would only further the decline of unions and of power forworkers. To this observer, the overriding fact of life in most private sec-tor employment situations in the United States today is a massive powermismatch between corporations and their workers. Until that is changed,former United Steelworkers President Lynn Williams’ response toKaufman’s case for company unions seems appropriate:

The cards are now so stacked against workers in exercising their right toorganize. Employers are permitted (both within and outside the law) oppor-tunities to harass, intimidate, and interfere. What possible reason can therebe to permit them the use of yet another instrument, the legalization ofcompany unions, by which to deny workers access to free collective bar-gaining? (Williams: 183)

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Notes

* A much shorter version of this paper was originally delivered to the 1999 SouthernLabor Studies Conference, September 30, 1999 in Atlanta, Georgia. The author wishesto thank Heidi Gottfried of Wayne State University for a thorough reading and excep-tionally good suggestions for revision of an earlier draft of this paper.

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