Big Labor Uses Wage Laws to Boost Numbers

Study finds union carve outs in many minimum wage hikes


Unions may be pushing for President Obama’s massive minimum wage hike, but many seek special carveouts from existing wage laws, according to a new study.

The Chamber of Commerce analyzed dozens of minimum wage laws in cities across the country and found that many of the statutes exempt unionized employees from the requirement. Unions exploit these exemptions in order to make union labor more competitive with non-union shops.

"Some local ordinances in particular include an exemption for employers that enter into a collective bargaining agreement with a union," the report says. "This ‘escape clause’ is often designed to encourage unionization by making a labor union the potential ‘low-cost’ alternative to new wage mandates, and it raises serious questions about whom these minimum wage laws are actually intended to benefit."

When San Francisco adopted a $10.55 minimum wage in 2013, union employers were able to escape the large hike in labor costs. The unionized shops were granted the ability to remain below that market rate in perpetuity, while other companies had to adopt the new wage over the course of several years.

"Unionized employers with collective bargaining agreements that waive the provisions were also exempted from the minimum wage law, although, unlike the other carve-outs, that exemption did not expire and remains in effect today," the report says.

Seattle, which passed one of the nation’s largest minimum wages at $15 per hour, provides the most recent example of legislative rewards for Big Labor. The statute forces franchises and chain restaurant employers to adopt steep wage hikes, while other small businesses will implement the wage at a slower pace.

Unions have long sought to organize large employers, such as McDonalds, and the wage law helps bring them closer to that goal by making unionization look more attractive. The International Franchise Association is suing the city to strike down the double standard.

The exemptions are not the only way that unions benefit from wage hikes. Many union contracts use the minimum wage as a baseline for setting pay. Those workers will receive automatic pay bumps if President Obama passes his proposed $10.10 wage, which the non-partisan Congressional Budget Office estimates will eliminate up to 1 million jobs.

Many of the minimum wage campaigns across the country benefit from union assistance. The existence of the exemptions demonstrates that they are acting out of self interest, rather than concern for the working class, according to the Chamber report.

"Many advocates for a higher minimum wage portray it as a means of improving the lives of workers, putting more money into the economy, and increasing growth. So, it is surprising that some minimum wage ordinances include an exemption that potentially undermines all three goals," the report says. "This contradiction, however, is not without its own logic — at least from the union perspective. Organizing from the bottom up (i.e., convincing workers of the merits of membership) has proven difficult for unions. Therefore, they have solicited the coercive power of government to help them organize from the top down."

The report will be released Friday.