The Employee Free Choice Act (EFCA), organized labor's keylegislative priority for the new Obama administration and theDemocratic Congress, appears to be losing steam in the Senate,where 60 votes are needed to move the legislation past a likelyRepublican filibuster. Sen. Arlen Specter (R-Pa.) and Sen. DianeFeinstein (D-Calif.) both withdrew their support last week, eachciting in some degree one of the measure's opponents' majorarguments, that making unionization easier could lead to morebusiness failures and job losses.


But a new study by labor economist John DiNardo of theUniversity of Michigan, released by the Economic Policy Institute(EPI), suggests Specter and Feinstein needn't worry: The data donot support the notion that unionization increases the risk ofbusiness failure. DiNardo's study cites a pair of surveys ofsimilar enterprises where workers either narrowly won union votesby 51% or narrowly lost by 49%. The surveys, which cover the periodfrom 1961 to 2004, found there was “zero correlation” between acompany's being unionized and the likelihood of its going bust.


“I don't think business leaders or people like Sen. Specter arecrazy,” DiNardo says. “Many of them probably honestly do believethat having a union increases the likelihood of business failure,but the evidence is just not there. In fact, wages don't alwayseven go up when a company is unionized.”


While the EPI study, titled “Still Open for Business:Unionization Has No Causal Effect on Firm Closures,” is empirical,DiNardo also notes that anecdotally, the period of the mostdramatic union organizing was the 1930s, when the Great Depressionhad many firms teetering on the edge of insolvency. The period ofAmerican global economic dominance, from the 1950s to the 1970s,also coincided with a high degree of unionization in the privatesector, he says.

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