Coase-Sandor Working Paper Series in Law and Economics

Document Type

Working Paper

Publication Date

2022

Abstract

American workers are not sharing in the robust growth of the economy. Traditionally, large numbers of workers sought to improve their lot by bargaining collectively through unions. But the strategy does not seem to be working for enough workers. Despite some renewed recent activity, private sector unionization rates remain below 10%, and the unions that are in place have struggled to perform well, either in avoiding scandals or in delivering significant returns to workers in the form of job security or wage growth. This Article proposes a radical fix to the problem of declining unions. Drawing inspiration from corporate governance and its success in delivering financial returns to shareholders, the Article proposes allowing pro-worker investors to offer workers cash upfront for the right to represent them. If an investor succeeds in persuading a majority of workers in a workplace, the investor would be certified as the exclusive bargaining representative for the workers, and would be entitled to a percentage of any wage gains it obtained for the workers through collective bargaining. The resulting market for union representation would deliver cash to workers upfront, allow investors to demonstrate their capacity for delivering concrete results to workers, and attract resources to the cause of improving workers’ conditions of employment. The proposal’s new methodological approach also provides a lens for a constructive reevaluation of the objectives and tactics of American labor law.


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