Tony Blair’s Real Legacy – Minimum Wage and Union Recognition

6-19-07, 9:49 am

On June 27th Tony Blair will stand down after a decade as Britain’s Prime Minister. Unfortunately for Mr. Blair, he is now far more likely to win popularity contests on this side of the Atlantic, and most Britons consider the Iraq War to be the outstanding legacy of his period in office. One can understand why the voters who put Blair into office feel disillusioned with his foreign policy adventures and his government’s mixed record on improving public services. But Blair’s critics should not dismiss the significant policy achievements of the past ten years, notably on two issues that are currently being debated in the United States – the national minimum wage and union recognition. Both of these flagship policies in Blair’s first administration where designed to create a new social contract, after eighteen years of conservative hostility to such a concept, and both have succeeded.

The 1998 National Minimum Wage Act created the Low Pay Commission, an independent body to advise the government on the minimum wage. The country’s first national minimum wage has lifted out of poverty tens of thousands of low-paid workers and – according to recent research by Professor David Metcalf of the London School of Economics – has had no detrimental impact on job creation. The UK minimum wage currently stands at about $11 per hour for adult workers, well above the $7.25 by 2009 currently being proposed by Congress.

The 2000 Employment Relations Act, meanwhile, established a “card check” system for trade union recognition. Over the past seven years, the law has enabled thousands of British workers to choose a union in an environment that is free from the employer intimidation that poisons organizing campaigns in the United States. A five-year study on the Future of Unions in Modern Britain conducted by researchers at the London School of Economics found that the ERA has helped move employers and unions beyond the aggressive industrial relations which characterized the Thatcher and Major years, producing concrete benefits for both groups and for employees in the process. (I had a peripheral involvement with this LSE group.)

The Senate will soon consider a bill that would establish a system of union recognition similar to the one that has operated successfully in the UK for the past seven years. The Employee Free Choice Act -- which was passed by the House on March 1st by a vote of 263-146 -- would impose greater penalties on employers who discriminate against union supporters, provide for mediation and arbitration when employers and unions fail to negotiate first contracts, and, most controversially, allow employees to form a union when over 50 percent sign union authorization cards. Employers claim that this card check provision, in particular, represents a blatant power grab by “Big Labor” that would expose employees to coercion by unscrupulous union organizers. But numerous academic studies have concluded exactly the opposite – i.e., that the principal problem with the existing system is coercion by employers, not coercion by union organizers.

So why are American employers so implacably opposed to the Employee Free Choice Act? One employer gave the game away at a recent meeting of the National Association of Wholesalers-Distributors. The basic problem, he explained, was that under card check recognition, employers have “no chance to retaliate.” And American employers do plenty of retaliating. The National Labor Relations Board Annual Report for 2005 cites 31,000 cases in which employers provided back pay for alleged violations of federally protected labor law rights. Nor is there any great mystery as to why American employers violate the National Labor Relations Act with such regularity -- they consider the law’s paltry sanctions a small price to pay to prevent unionization.

Tony Blair received a rapturous reception when he addressed Congress in July 2003. If American lawmakers truly admire Mr. Blair, they could do worse than copy his successful policies on the minimum wage and union recognition. A good next step towards creating a new social contract in the United States would be for the Senate to pass the Employee Free Choice Act.

--John Logan teaches in the Department of Management at the London School of Economics.