Anne Layne-Farrar is a consultant at LEGC, an expert services and consulting firm. Layne-Farrar specializes in intellectual property and antitrust issues. In March 2009, Layne-Farrar released a report titled "An Empirical Assessment of the Employee Free Choice Act: The Economic Implications." The report's key claim is that the Employee Free Choice Act will increase unemployment by increasing union density. This finding's implausibility is apparent when the model is applied to the historic trends in the U.S. labor market. Additionally, independent studies contradict Layne-Farrar's conclusions. The report was funded by the Alliance to Save Main Street Jobs, an organization of leading opponents of the Employee Free Choice Act including the HR Policy Association and the U.S. Chamber of Commerce.

LAYNE-FARRAR'S CONCLUSIONS

Layne-Farrar Predicts Increased Unemployment as Union Density Increases. Layne-Farrar states, "In particular, my quantitative analysis indicates that passing EFCA would likely increase the US unemployment rate and decrease US job creation substantially. The precise effect on unemployment will depend on the degree to which EFCA increases union density, but for every 3 percentage points gained in union membership through card checks and mandatory arbitration, the following year's unemployment rate is predicted to increase by 1 percentage point and job creation is predicted to fall by around 1.5 million jobs."

FACTS CONTRADICT LAYNE-FARRAR'S FINDINGS

Numerous Countries Combine High Union Density And Low Unemployment Rates. The United Kingdom, Sweden, Denmark, Norway, the Netherlands, and Ireland are among the many advanced nations to enjoy high rates of union density alongside comparable or lower rates of unemployment.

Layne-Farrar's Model Would Project A 2008 Negative Unemployment Figure. From 1950-59, U.S. union density averaged 32.7% and the U.S. unemployment averaged 4.51%. In 2008, union density dropped to 12.4%. Layne-Farrar's model suggests that the more than 20% drop in union density between the two periods would correlate with a drop in unemployment of 6.8 percentage points, resulting in a current unemployment rate of -2.26%. The 2008 U.S. unemployment was 5.8%.

OBJECTIVE STUDIES FROM REPUTABLE SOURCES HAVE COME TO THE OPPOSITE CONCLUSIONS

OECD Employment Outlook: Union Density Impact on Unemployment "Statistically Insignificant." The 2006 Employment Outlook from the Organization for Economic Cooperation and Development (OECD) states, "By contrast, the impact of EPL and union density on unemployment are statistically insignificant. These findings are not inconsistent with recent theoretical developments that predict that: i) lay-off regulations tend to affect more the distribution of unemployment rather than its level; and ii) the bargaining power of unions has more to do with the way rents are distributed rather than the level of labour demand."

Top Harvard Labor Market Economist Richard B. Freeman: Change In Union Density "Has No Noticeable Effect On Economic Performance." In his 1988 paper in the European Economic Review, Professor Freeman concludes, "With the sole exception of non-agricultural employment, where density is estimated to raise employment, none of the estimated parameters are significant, implying that variation in union density around its mean within a state has non noticeable effect on economic performance."

Lawrence Mishel: Layne-Farrar Study "Crackpot Economics." Lawrence Mishel, president of the Economic Policy Institute, said the study amounted to "crackpot economics." "I don't find it credible at all," Mishel said. He said that using the study's logic, the US would have "negative unemployment" as a result of the decrease in union membership over the past 30 years. He said many other countries, including England, Switzerland, Denmark, and Norway, have higher unionization and lower unemployment than the United States.

OPPONENTS OF THE MIDDLE-CLASS INTERESTS FUNDED LAYNE-FARRAR STUDY

An Alliance Of Employee Free Choice Act Foes Funded The Layne-Farrar Report. The Alliance to Save Main Street Jobs, a group that included the U.S. Chamber of Commerce, the HR Policy Association, the Associated Builders and Contractors and the American Hotel and Lodging Association provided funding for the Layne-Farrar report.