Firedog Lake points out that Michael’s stores reports that the Employee Free Choice Act could hurt its business in the first quarter of 2010. The funny thing is what Michael Whitney has to say about the company’s claim:
Of course, this is nonsense. Passage of the Employee Free Choice Act won’t adversely impact the business of Michaels or any other retailer. It will help its employees earn more of the money they help the company make, but giving workers a free and fair choice won’t drive customers away.
I’m not sure what planet Mr. Whitney is on, but it certainly isn’t one where basic economics applies. Passage of the Employee Free Choice Act will kill retailers, restaurants and other low-margin businesses first, and not because employees will get lucrative deals. The ugly truth for unions is that they rarely win much for new members in a first contract (employees regularly lose money after accounting for dues and other trade-offs that occur in first contracts). Even if you hold wages and benefits steady, the dead-weight cost of unions (see Detroit) will more than overwhelm the weakest players. Unions don’t kill companies because of high wage and benefit levels (although from the perspective of the unemployed union member it hardly matters). Unions kill companies because they virtually compel inefficiency. That is why companies oppose EFCA.
