Economic arguments against the EFCA don’t hold water.

Joseph Stiglitz, a Nobel laureate in economics, goes even further than his Columbia colleague in his dismissal of the projected EFCA woes imagined by business: "The likely impact on wages in the medium term is relatively small, and higher-wage workers are more productive, so the net impact on their costs is even smaller." It is about control, he says: "Obviously—myopically—[employers] would like more bargaining power. But that's short-sighted because unionized workers will perform better." Indeed, a recent study comparing UPS, the single largest employer of Teamsters, and FedEx, a harsh union-buster, found that UPS had performed much better financially, with a return on equity that rarely falls below 20 percent. (Of course, businesspeople are never placated by such arguments because they rightly figure that even though unionization can inspire workers to be productive, the anxiety of rampant job insecurity and dearth of good employment options can do the same.) And Harvard University economist Richard Freeman has found no relationship between unions and firm solvency; thus there is no reason to fear that EFCA will put anyone out of business.

But surely the most compelling question for Americans at this moment is, What effect will EFCA have on the broader economy? Its opponents say it will prolong the depression—if some employers have to pay workers more, they'll hire fewer people. Some unions counter that the bill should be seen as stimulus; when low-wage workers are in a position to bargain for higher wages, they'll have more money to spend. There's one problem with both scenarios: Organizing and bargaining for higher wages, even under a reformed system, will take a while. Stiglitz says EFCA will neither help nor hurt our present economy: "[T]he likely time for it to have an effect is too slow, so [EFCA] is not germane to the current situation."

However, even though it isn't stimulus, in the longer run, Stiglitz says, EFCA is "very important to a robust three-to-five year recovery." One of the major causes of the current global financial crisis has been a "lack of aggregate demand" over time, he explains. Too many people lack spending power. Stiglitz isn't alone in this opinion; plenty of other economists—including Berkeley's Harley Shaiken, who was on Obama's short list for labor secretary—agree on the big picture: If more Americans could join unions, they'd have more money to spend, and the economy would be healthier in the long run.

Of the organized opposition to EFCA—and the millions spent on advertising and lobbying—Stiglitz says: "I'm a little surprised at how adamant the business community has been. But they're afraid of a new social compact. They think it is the opening salvo in a new war. So it's really a form of class warfare."

Photo of AFL-CIO rally by Alex Wong/Getty Images.