It's Official: Card Check Will Cost Jobs

In an exclusive interview with Pajamas Media, Dr. Layne-Farrar explained that her data comes from 22 years of Canadian experimentation with labor laws. A simple pattern emerged, when controlling for other factors: as card check rules were introduced, unionization went up and so did unemployment. When secret ballot rules were imposed, unionization went down and so did unemployment. While Canadian data was used, she explains that there is "remarkable similarity" between the two countries' economies.

She essentially establishes -- or confirms what others, including Obama adviser Larry Summers, have remarked upon -- that increased "union density" raises wages and benefits for those unionized workers. That, in turn, causes employers to adjust hiring. She says, "A lot of firms face global competition. If wages and benefit costs go up they need to make adjustments to compensate."

Dr. Layne-Farrar explains that such "adjustment" means that employers "may not fill positions or they may not expand and hire more workers." Alternatively, they may choose to increase prices. In that event, "Consumers may choose to buy less or buy cheaper goods." With reduced demand, employers have further incentive to cut back on hiring.

Do we have evidence for this phenomenon in the domestic car industry?  Dr.Layne-Farrar cautions that she would not attribute all of the woes of U.S. car companies to labor obligations. But she says, "You have to accept that higher labor costs and the impact of the inflexibility of job rules -- like the job bank which was not done away with until the bailout money came in" have contributed to their inability to compete against foreign owned companies that operate without such labor costs and work rules in the U.S.

Dr. Layne-Farrar makes a key observation: the supporters of EFCA themselves argue that the it will increase the wages and benefits for domestic workers. And if this is the case, whom do they think will pay the cost if not businesses and consumers? Only in a make-believe world with no competition can rising labor costs be absorbed without any impact on employers or consumers.

The implications of this study are sobering. Unemployment in the U.S. is heading, by some experts' estimation, toward ten percent. These calculations do not account for any additional impact of EFCA. If the study is accurate, and no less than Larry Summers has agreed with the premise, then those pushing for card check need to answer a fundamental question. Is it worth additional unemployment to deliver the card check prize to Big Labor?

And for an administration supposedly focused on job creation, the Obama team will need to explain why it is spending time and energy on a legislative item which adversely impacts jobs.