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President Obama: Shareholders, Workers — Let Everyone Vote

By Edward Zelinsky

In recent remarks to the leadership of the AFL-CIO, President Obama and Vice President Biden affirmed their support of the Employee Free Choice Act. The Act is a priority of labor unions, a central element of the Democratic coalition. If enacted into law, the Act would effectively eliminate union recognition elections. Instead of secret ballot elections in which workers choose whether to belong to unions, the Act would amend federal law so that unions can achieve recognition based solely on public “card counts.”

Ironically, at the same time unions disfavor secret ballot elections in the workplace, many unions and their Democratic allies have aggressively advocated expanding the voting rights of corporate shareholders.

A similar paradox befalls the Republican Party. While the GOP has been stalwart in supporting workers’ right to vote in confidence on whether to join unions, the GOP has defended with equal fervor the efforts of corporate management to neuter shareholders’ voting rights. These efforts have been particularly troubling as corporate managers and quiescent directors have moved executive compensation packages into stratospheric levels and have denied shareholders the ability to vote their shares in protest.

No one has done a good job of explaining why workers should vote but not shareholders or vice versa. The underlying issue in both contexts is the same: the right of persons to vote confidentially on matters of importance to them. The secret ballot is the accepted method by which Americans exercise self-determination. Both as shareholders and as workers, Americans should enjoy a robust right to vote.

Just as President Obama’s endorsement of the Employee Free Choice Act highlights the issue of workers’ right to vote on unionization, the American Recovery and Reinvestment Act of 2009 (known to most Americans as “the stimulus bill”) underscores the question of shareholders’ voting rights. Under this Act, firms receiving federal funds from the Troubled Asset Relief Program must permit their shareholders to cast advisory votes on managerial compensation. But why just these firms? And why just advisory votes?

The limited voting provisions of the stimulus bill reflect the Obama Administration’s marked disinterest in giving shareholders the ability to vote on important matters, including questions of executive compensation.

Plausible arguments can be advanced both by those who would deprive workers of the right to vote on union representation and those who oppose shareholders’ right to vote on corporate policy. The procedures of the National Labor Relations Board, we are told, are so cumbersome that employers can delay union recognition elections inordinately and can create coercive environments when such elections are finally held. Shareholders, we are similarly told, often focus on short-term profits, rather than the long-term welfare of the corporation.

In the spirit of bi-partisanship advocated by President Obama, federal law should be amended to affirm the rights of Americans, both as workers and as shareholders, to vote. In the work place, unions seeking to represent workers should be required to obtain a majority vote by secret ballot of such workers. Similarly, important issues of corporate policy, most obviously the compensation packages of corporate managers, should be subject to binding shareholder votes by secret ballot.

While affirming the voting rights of workers and shareholders, Congress and the President should also address legitimate concerns raised by opponents of these voting rights. In response to the complaint that employers inappropriately delay votes on union organizing campaigns and create coercive environments, Congress should adopt administrable rules to prevent such delays and coercion and should appropriate the resources to enforce such rules effectively. In response to the complaint that shareholders ignore long-term corporate interests, Congress should similarly restrict voting rights to those shareholders who have owned their stock for a reasonable holding period and have thereby demonstrated a concern for the corporation’s long-term well-being.

With these protections in place, Democrats and Republicans alike should simultaneously affirm the rights of all Americans, both as workers and shareholders, to vote.

Mr. President: At the most basic level, the secret ballot is the American way.

Edward A. Zelinsky is the Morris and Annie Trachman Professor of Law at the Benjamin N. Cardozo School of Law of Yeshiva University. He is the author of The Origins of the Ownership Society: How The Defined Contribution Paradigm Changed America.

Recent Comments

  1. Andrew Strom

    You are conflating two separate issues. First, there is the question of whether shareholders and workers should have an opportunity to have their wishes honored on matters of importance to them. Second, is what the process should be for determining the wishes of the shareholders or voters. Traditionally, proxy contests have not been by secret ballot, and there is perhaps a good argument that secret ballots are preferable since some financial institutions might feel pressure from management regarding their votes, although for many shareholders, confidentiality is less important than having a vote. In the union representation contest, allowing workers to choose to unionize through majority sign-up (as the Employee Free Choice Act would do) would not deprive them of a vote on union representation, but it would mean that union organizers would know whether the worker voted for unionization. The employer lobby (which obviously could not care less about promoting democracy in the workplace) has seized upon the secret ballot issue because people are used to secret ballots for political elections, so it sounds sinister to promote a system which does not rely upon secret ballots. But, in the real world of union organizing, there are no secrets about how workers will vote. Workers already have to sign the same type of semi-public authorization card just to get an election, and supervisors are trained to keep tabs on workers’ preferences. Also, in order to have any chance of prevailing in a union election, it is vitally important that workers demonstrate public support for unionization by taking actions such as wearing buttons or signing public petitions. The reality is that in the average workplace, by the time a union election takes place everyone who cares already knows how virtually every worker will vote. So, the debate about supposedly “secret” ballots in the union election context is a phony debate that is simply a diversion from the real issue at stake in the Employee Free Choice Act, which is whether we ought to try to make it easier for workers to form unions. Given that fewer than 100,000 workers in the entire country get an opportunity to vote in an NLRB election each year, it is long overdue to consider an alternative that gives workers an opportunity to express their preferences regarding unionization with some assurance that those preferences will be honored.

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