The NLRB’s Power Grab

National Review Online

Saturday, August 29, 2015

Why should a union representing workers who are not employees of McDonald’s be empowered to squeeze concessions out of McDonald’s? Why did Willie Sutton rob banks?

In a party-line decision, the Democrat-dominated National Labor Relations Board has decided that employees of contractors can be treated as employees of other companies when . . . well, when it is convenient for Democratic constituencies that they be so treated. The underlying case involved an operator of recycling centers, Browning-Ferris Industries of California, which uses subcontractors to staff some of its facilities. Firms have many reasons for using subcontracted labor, one of which is avoiding entanglement with the NLRB. Tut-tut, say the feds.

But in the more relevant cases, contracting is built into the business model, as it is with franchise restaurants and similar businesses, which are what this case really is about. Most people who work for McDonald’s do not actually work for McDonald’s Corporation, which operates only a small number of the burger joints bearing its name. The overwhelming majority of McDonald’s restaurants are franchises, independent businesses ranging from one-shop outfits to very large operations, the owners of which pay a fee to McDonald’s for the use of its name, business model, and supply chain. Your local fry-guy was not hired by McDonald’s, cannot be fired by McDonald’s, is not paid by McDonald’s, and is not supervised by McDonald’s. His terms of employment are not set by McDonald’s but by his employer, the franchise operator. He is not an employee of McDonald’s in any meaningful sense, but the Democrats on the NLRB are not interested in sense — they are interested in power.

Union membership, particularly in the private sector, has been declining for decades. There are fewer than 8 million private-sector workers in unions, according to the Bureau of Labor Statistics. By way of comparison, there already are more than 2 million American workers employed in the so-called gig economy, working mainly as private contractors and individual entrepreneurs through firms such as Uber and AirBnB. It is very likely that within a few years there will be more Lyft drivers than Teamsters.

The political fallout of declining union membership presents a mortal threat to the Left’s operating coalition. It’s not just because of the money-laundering that converts union dues into Democratic campaign contributions, though that’s not nothing; rather, it is that if fewer firms and economic sectors are under political discipline, then the value of being the party of government declines. When fewer firms are covered by, say, NLRB rules, then the political premium attached to being the rule-maker is diminished. Thus, the Left is scrambling to keep unionized firms under the federal thumb — consider the NLRB’s improper attack on Boeing — while laboring to open up new avenues of union membership. Illinois insisted that privately employed home-health-care workers were “public employees” required to pay dues to the SEIU simply because their clients were Medicare recipients, a risible claim rightly thrown out by the Supreme Court (5–4, of course; liberal jurists are liberals first, jurists second if at all).

The NLRB’s ruling empowers the federal government to designate companies as “joint employers” on the flimsiest of grounds. For example, a corporation that requires all its franchisee owners to use the same scheduling software could be considered a joint employer for that reason alone.

The NLRB and labor activists say that this ruling is necessary because in recent decades practices such as subcontracting and franchising have allowed many businesses to insulate themselves from direct NLRB oversight. This is true, and in many cases the avoidance of federal micromanagement almost certainly was an animating force. If the NLRB expects that businesses will sit still after this ruling, it is engaged in self-delusion: One of the few reliable effects of centralized regulation is that businesses will invest, and sometimes invest heavily, in regulation avoidance.

There is probably no set of sustainable economic arrangements that will allow a single-parent fast-food employee to raise two children in the same comfort and security that might be provided by, say, a couple of married professionals. But the employees are incidental: This is about enabling labor activists to exercise power over large businesses that are, for the moment, largely beyond their grasp. Congress, happily, has the power to set aside this implausible overreach, which is exactly what it should do.