Democrats have long been the party that punishes success — Senate Democrats are advocating for the “Buffett Rule,” a millionaires’ tax, while a pillar of President Obama’s re-election campaign is that people making $250,000 should give the government more money. Conservatives correctly worry that prohibitive tax rates deter hard work by removing compensation incentives, effectively capping workers’ wages.
Unbeknownst to most people, explicit wage caps are already in place for nearly 8 million unionized, middle-class workers — nearly all union contracts set both a wage floor and ceiling. Looking to eliminate artificial wage caps, Sen. Marco Rubio (R-FL) and Rep. Todd Rokita (R-IN) introduced the RAISE Act, legislation which would keep in place the union-negotiated minimum wage but eliminate the maximum wage.
It is currently illegal for an employer to give a unionized employee a bonus, which is a shame, since unionized businesses often want to reward their hardest working employees. While a pat on the back is nice, more money is better. Businesses know the benefits of performance pay; linking worker compensation to both effort and output leads to a more satisfied workforce and can increase both wages and profits — everybody wins. Quantitatively, passing the RAISE Act or instituting merit pay would increase workers’ salaries by $2,700 to $4,500 a year, according to a recent Heritage Foundation study.
At a recent Education and Workforce hearing, the Hudson Institute’s chief economist, Dr. Tim Kane, explained that, “the legislation has no potential to hurt jobs or wages.” Dr. Kane then estimates that “the RAISE Act will generate an average raise of 10 percent to union workers in response to new productivity gains based on new incentives.”
Listening to the union response to the RAISE Act, you would think Congressional Republicans were proposing radical legislation that allows workers to decide whether or not they want to join a union — you know, crazy ideas that come from strange places like Wisconsin. While admitting that the RAISE Act would “allow employers to grant wage increases unilaterally to workers of their choosing,” Teamsters President James Hoffa comes to the conclusion that the legislation is part of a secret Republican plan to “end collective bargaining.”
SEIU President Mary Kay Henry warns that allowing employers to pay their workers more is “a federal attack on your rights at work.” So why are unions opposed to legislation that would allow 7.6 million middle-income workers to make more money?
As it stands now, unions have all the power — which is how they like it. If you get a raise, the union wants you to think it is because of their adept negotiating ability. Most union contracts award raises or bonuses on the premise of tenure or seniority, not merit pay. These one-size-fits-all contracts mean that individual effort and performance go unrewarded; the worker who takes a dozen smoke breaks earns just as much as the toiling employee who works hard and plays by the rules.
Seniority pay is not only inherently unfair, it discourages productivity and locks union workers into their current jobs — a worker who has committed years to slowly advancing up the union pay ladder is less likely to look for a new job.
Unfortunately in D.C., if unions oppose something, so do Democrats. When the Senate voted on the RAISE Act a few weeks ago, nearly every Senate Republican voted for the bill — zero Democrats did.
With Obama responsible for an anemic recovery, the least his party can do is allow workers to contract for higher wages.
Grover Norquist is president of Americans for Tax Reform and his Twitter handle is @GroverNorquist