The Brooklyn Hospital Center wanted to reward its best nurses, so it honored high-performing nurses with a breakfast and gave them $100 gift cards. Unfortunately, the nurses’ union did not approve. They filed charges with the National Labor Relations Board, and the board forbid the hospital from giving such bonuses again.
This ruling was unsurprising. The National Labor Relations Act requires unionized companies to bargain over all pay changes. Companies cannot pay individual employees less than the union rate, but they cannot pay them more than the union rate, either. The only surprise was that the Brooklyn Hospital Center thought it could legally pay bonuses.
Unions usually do not allow companies to reward individual performance. They prefer seniority systems and job classifications that apply to all workers. Such group compensation divorces pay from performance. Most union members get paid a fixed rate, no matter how hard they work. Their employer cannot legally pay them more.
It is one thing to argue for unions setting a pay floor. But why should unions set a maximum wage? If a worker can earn a raise through hard work, then he should get to keep it.
Fortunately, Representative Todd Rokita (R–IN) has introduced legislation removing this pay ceiling. The Rewarding Achievement and Incentivizing Successful Employees (RAISE) Act would allow union members to earn performance pay. Unions could not object to individual raises and bonuses, and paying more than the union rate would no longer be an unfair labor practice. The bill would prevent businesses from selectively giving raises to anti-union employees, but it would allow them to reward hard work.
Many union members would take advantage of this opportunity. Workers earn an average of 6 percent to 10 percent more after companies implement performance-pay systems. For the typical private-sector union member, this would mean a $2,700 to $4,600 raise. Companies pay these raises out of the higher profits that their employees’ greater productivity creates. Instead of labor and management battling over how to divide the economic pie, both sides work together to obtain a larger slice.
This conservative reform is common sense. The law should not prevent nurses at the Brooklyn Hospital Center—or any other workers—from working hard to get ahead.