May 9, 2011
By Marion Smith
A federal agency wants to dictate exactly where businesses can create jobs.
Last month, the National Labor Relations Board (NLRB) issued a complaint against Boeing’s decision to open a new aircraft plant in South Carolina. The agency charges that the manufacturer’s expansion plans constitute “retaliation” against unions, including the International Association of Machinists and Aerospace Workers Union. Here’s the back story.
For years, Seattle-based Boeing has dealt with burdensome labor policies and contentious unions in Washington state. It has endured multiple lengthy strikes since 1989 and lost several business opportunities as a result. The good news: Today, the demand for the company’s Dreamliner 787 is so great that Boeing needs to build a new plant to fill the additional orders.
But where? South Carolina’s business-friendly environment, significant tax incentives and right-to-work status led Boeing to build near Charleston, rather than Seattle.
Boeing has spent millions (by some estimates, nearly $2 billion) and already employed nearly 1,000 on the project. Now, the NLRB says Boeing must close the facility unless it also builds one in Washington, where employees can be forced to join unions.
South Carolina is one of 22 right-to-work states, where workers cannot be forced to join unions. The NLRB considers that lack of coercion a hostile climate for workers. Clearly, the NLRB wants to enhance union influence and punish businesses that choose right-to-work states.
The NLRB complaint undermines the right of employees and employers to choose where to do business within the United States. At issue are not only the economic consequences of overly restrictive labor policies, but the future of American federalism as envisioned by the Founding Founders.
South Carolina Gov. Nikki Haley correctly notes that if Boeing loses this fight, Americans lose, too. Should federal fiat overrule Boeing’s decision to vote with its feet within the U.S., more companies will vote with their feet to locations outside the U.S.
The NLRB is an independent federal agency tasked with investigating unfair labor practices. But since being packed with President Obama appointees, it has tilted in a decidedly pro-union direction. Former NLRB Chairman Peter Schaumber called the complaint against Boeing “unprecedented,” and Heritage Foundation legal scholar Hans von Spakovsky says it has no legal basis.
The ability of individuals and companies to move among the various states is an essential element of American federalism that (among other things) allows superior economic policies to prevail. America’s founders viewed competition among the states as a necessary good. In Federalist 51, James Madison noted that by pursuing at times “opposite and rival interests” the states would serve as a check not only on the federal government, but also on each other.
Alexander Hamilton extolled inter-state competition as a “fruitful source of contention” appropriate to the American spirit of enterprise which “left no occasion of displaying itself unimproved.” Throughout our history, this system has allowed assorted economic and welfare policies to play out - instructively - in various states. For example, when California’s expansive welfare policies and Progressive reforms eventually proved deadly to prosperity, other states learned from that imprudent experiment.
In attacking the ability of states to determine their own business climate, the NLRB’s ruling reveals an authoritarian turn in the left’s assault on economic freedom. We see a federal agency propping up failed state labor policies. That testifies to how far this country has wandered from its original understanding of enterprise, competition and federalism.
This NLRB complaint will be heard by an administrative law judge in June and can then be appealed. Eventually, it may be decided in federal court. Meantime, Congress should exercise its oversight powers to rein in the NLRB. And the Senate should reconsider the appointment of acting NLRB General Counsel Lafe Solomon, whose confirmation is pending.
Paralyzing regulation of business activity dampens the spirit of enterprise. To turn the tide, we must restore the essence of federalism and economic freedom which allows prosperity to flourish.
Marion Smith is a graduate fellow in the Heritage Foundations B. Kenneth Simon Center for American Studies.
First appeared in The Washington Times
First Principles Initiative of the Leadership for America Campaign
Visiting Fellow, B. Kenneth Simon Center for Principles and Politics
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