Volkswagen Group of America’s plant in Chattanooga, Tenn., has experienced something unusual: a union welcomed by management but faced with resistance from some workers. A combination of outdated labor laws and union intransigence has created this oddity.
German law requires “works councils” in which management and labor groups meet to collaboratively sort out workplace issues. Consequently, there is a works council at every Volkswagen plant – except the one in Chattanooga. Now, under pressure from IG Metall, the German union, Volkswagen AG’s headquarters has decided it wants a works council in the U.S., too.
But there’s a hitch. U.S. labor laws prohibit companies from discussing working conditions with employee representatives – unless they belong to outside unions. In the 1930s, Congress feared businesses would create bogus “company unions” to keep union organizers at bay, so it banned “management-dominated” labor organizations.
Few businesses feel the need to ward off organizing drives with company unions. Even without them, private-sector union membership has fallen to below 7 percent. While many companies want their employees’ input in workplace decision-making, they can’t create works councils unless they also want all-out collective bargaining.
Most companies won’t risk the downsides of unionizing to get an employee-involvement program. The pressure from IG Metall has made Volkswagen the exception. The United Auto Workers wants to unionize the Chattanooga plant and create a legal works council. Volkswagen’s senior management has welcomed this overture with open arms.
A group of rank-and-file Volkswagen workers in Tennessee has been less enthusiastic. They are aware that almost every job lost in the auto industry over the past three decades has been a union job. With rare exceptions, nonunion auto plants have avoided mass layoffs, while unionized facilities have downsized again and again. Hopping on that bandwagon holds little appeal.
The UAW says it has majority support for union representation based on publicly signed cards. But some workers at the Chattanooga plant claim the UAW misled them about what signing the cards meant, and several have filed charges with the National Labor Relations Board.
While unionizing Volkswagen would obviously benefit the UAW, it is less clear how it would benefit the workers. They already make slightly more than UAW pay scales in Detroit. If the union used its power as a cartel to raise wages too much, it would make Volkswagen’s cars less competitive and put their jobs at risk.
The union swears that it has changed, and that its works council will improve productivity. But workers would have to take the UAW’s word for it. The law won’t stop the union from negotiating a broader collective-bargaining agreement.
Congress should reform U.S. labor laws to allow employee participation. Why should the government prevent companies from giving their workers a voice on the job? •
James Sherk is the senior policy analyst in labor economics at the Heritage Foundation. Distributed by Bloomberg View.