U.S. Senate and House Introduce Employee Free Choice Act

Layne-Farrar: EFCA Unlikely to Improve Social Welfare

Dr. Anne Layne-Farrar of the global advisory consulting firm LECG conducted a study, An Empirical Assessment of the Employee Free Choice Act: The Economic Implications, to assess the arguments presented  for passing EFCA. According to Layne-Farrar, the findings suggest that passing EFCA significantly would increase the unemployment rate and decrease job creation.

Layne-Farrar projected that if EFCA passed today and resulted in a 3-percent increase in unionization from today's rate of 12 percent to 15 percent, unemployment a year from now would rise by 1.5 million. And if EFCA raised private sector union membership by between 5 and 10 percentage points, she estimated the unemployment rate would increase by 2.3 to 5.4 million in the following year.

"Proponents of EFCA argue that the Act will reverse the downward trend in union membership and thus bolster worker wages and overall social welfare. While I concur that union membership is likely to increase, especially as a result of a switch to card checks from the current system of secret ballot elections, I find that EFCA is unlikely to achieve its primary goal of improving overall social welfare," she wrote. "Any potential increase in some union-represented employee wages and benefits would be offset by other likely effects, including a reduction in jobs overall and an increase in the unemployment rate."

Both President Barack Obama and Vice President Joe Biden, meanwhile, consider the Employee Free Choice Act a critical part in building an economy that works for everyone again. In separate recent speeches, they expressed that this legislation is a priority and that Congress must pass it.