(CNSNews.com) – A national cable television ad campaign to garner support for the Employee Free Choice Act (EFCA), also known as the card-check bill, is drawing fire from a top labor-market economist who challenges the ads’ claims.
 
The ads were launched last week as part of Big Labor’s renewed effort to push the bill, which would make it easier for unions to organize workplaces without a secret ballot vote.
 
“We are redoubling our efforts to show how the Employee Free Choice Act will rebuild the economy and restore workers’ rights,” said Kimberly Freeman, acting executive director of American Rights at Work, the group sponsoring the ads. “We will not let our leaders forget that a majority of the public is counting on them to pass this critical legislation this year.”
 
The commercials suggest that passage of EFCA would result in workers who choose to join a union getting better pay and benefits.
 
One of the ads -- “Fabric of America” -- says: “It’s an idea that makes America strong. It’s a fair day’s pay for a hard day’s work. It’s health insurance when you’re sick or injured. It’s job security to provide for your family. It’s the fabric of a sound economy. It built the middle class. And it’s what the Employee Free Choice Act is all about: Letting workers choose to join a union to earn better pay and benefits. The Employee Free Choice Act. It's time our economy worked for everyone again.”
 
But Diana Furchtgott-Roth, a former chief economist for the U.S. Labor Department and chief of staff at the President’s Council of Economic Advisers, says the ads’ claim that EFCA would lead to more economic security is “absolutely a falsehood.”
 
“(T)hat’s a myth that has to be brought out in the open and we have to make it very clear that that’s not correct,” she said.
 
Furchtgott-Roth, who directs the Center for Employment Policy at the nonprofit Hudson Institute, has just published a major study comparing union-sponsored pension funds with private pension plans.
 
She said expanding union membership under car check would benefit unions, but would work to the detriment of the newly unionized workers – who would be paying in money to pension funds to cover current expenditures, not stashing away money for their own pensions.
 
“They’re (unions) trying to get workers to join these plans because the more younger workers that join, the better funded the (union pension plans) will be, because they (new union members) make contributions without payouts for many years,” Furchtgott-Roth said.
 
She added: “But (unions) are just taking that money and paying it out to the current retirees. That’s very sad that they’re making that claim.”
 
Although unions attract new recruits by promising retirement stability, Furchtgott-Roth said union pension plans are actually faring poorly in comparison with non-union pension funds.
 
“Data for 2006, the latest full year of data available, show that union-negotiated pension plans fare consistently worse than their non-union counterparts,” Furchtgott-Roth said.
 
According to the Hudson Institute report, non-union pensions were 97-percent-funded on average, compared to just 86-percent funding for large union or “collectively bargained” plans (those with more than 100 participants).
 
The 2006 Pension Protection Act says pensions that are less than 80-percent-funded are considered “endangered.” More than 40 percent of union plans were in that category in 2006, the most recent year of full data, while only 14 percent on non-union plans were endangered in the same year, the report said.
 
The law labels pensions that are less than 65 percent funded as being in “critical” condition. While just 1 percent of private pensions were in critical condition in 2006, more than 10 times as many large union pensions were considered “critical” (13 percent) in 2006, Furchtgott-Roth pointed out.
 
Small union plans also fared worse than small private plans. Just 25 percent were fully funded in 2006 versus 61 percent of small private plans.
 
On a conference call with reporters last week, Furchtgott-Roth said union pensions, in the wake of a deep recession in stock indexes, are faring even more poorly today.
 
“If these plans were in trouble in 2006, they’re in even more trouble now,” she said. “The imbalances that were in 2006 have even been exaggerated now…so I think it’s a matter of just not enough attention being paid to this issue by the different negotiators.”
 
Pension plans for officers and staff at the actual union chapters, however, enjoyed much better funding than “rank and file” employees that were merely members of the unions. A representative sample of the pensions of the officers shows they enjoyed funds that were nearly as flush as the private ones, with 93 percent of them fully funded in 2006.
 
Particularly worrisome from a pension perspective, Furchtgott-Roth said, is the mandatory arbitration provision of the EFCA proposal that would force unions and employers that cannot come to agreements into binding arbitration to determine things like pay, vacation and benefits. Again, workers could lose out on the deal.
 
“The arbitrators, at least as the bill was drafted, would have the power to force newly unionized firms into under-funded pensions,” she said.
 
Liz Cattaneo, communications director for American Rights at Work, the union-backed think tank sponsoring the ads, told CNSNews.com in an e-mail that she was not surprised by Furchtgott-Roth’s comment on the ads, claiming they were ideologically based.
 
“Many highly respected economists, including Obama’s chief economic adviser and two Nobel laureates, agree that increasing wages and benefits is good for the economy as a whole,” Cattaneo said.
 
“In fact, hundreds of economists concluded that the Employee Free Choice Act is a critically important step in rebuilding our economy. Further, a February 2009 report by the Center for American Progress Action Fund found that with a modest increase in unionization, new union workers would earn an estimated $49 billion more in wages and salaries per year.”
 
Furchtgott-Roth, meanwhile, said her data was particularly timely because debate of the Employee Free Choice Act will be taken up again soon in Congress.
 
“I think that what’s really important is the issue of what is being told to non-unionized workers now to encourage them to join unions, and saying that they’re going to have better pensions, more secure retirement if they join a union, just isn’t true,” she said.