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OpenMarket: Labor and Employment

  • SEIU Support for Minimum Wage Hikes Based on Self-Interest

    April 13, 2015 10:17 AM

    Why is the Service Employees International Union funneling $15 million into the Fight for 15 campaign when the average private-sector union member makes $22 an hour and only 1 percent of the American workforce earns the minimum wage?

    Union rhetoric would tell you that they support wage hikes as a means to preserve the middle class and to lift low-wage workers out of poverty.

    However, what many do not realize is that unions’ self-interest is the primary motivation for their support of wage hikes, not altruism or concern for the well-being of low-wage workers.

  • The $7 Billion Slowdown

    February 12, 2015 11:12 AM

    The ongoing logjam at ports on the West Coast could cost American retailers around $7 billion this year, according to the consultancy Kurt Salmon. That’s a lot of money, and huge disruption to the nation’s economy. Of course, it’s impossible to prevent disruptions, including large ones, from ever happening. The problem is that this one was not only easily foreseen, but preventable.

    The recent shutdown, and continuing backlog, has followed a similar pattern as past West Coast port shutdowns. That’s because labor at the ports functions as a cartel that can disrupt commercial shipping easily.

    Shippers must negotiate with the union as a group, through a trade group called the Pacific Maritime Association (PMA). The union, International Longshore and Warehouse Union (ILWU), represents dockworkers at ports all down the West Coast. (Unionized port workers on the East and Gulf coasts are represented by the International Longshoremen’s Association.)

    Like railroads and airlines, maritime shipping is a network industry vital to commerce. However, while labor relations at railroads and airlines are covered under the Railway Labor Act (RLA), which was designed to avoid major disruptions to commerce, ports are covered by the National Labor Relations Act (NLRA), which enables disruptions that the RLA doesn’t allow.

    “Railroad crews cannot decide to stop working on the tracks, and airline crews cannot withhold fuel from planes,” explains Diana Furchtgott-Roth of the Manhattan Institute. “But [port] workers can simply not show up for shifts in Los Angeles and Oakland in order to hold out for higher wages.”

    A clear solution would be for Congress to shift jurisdiction of ports from the NLRA to the RLA, much as it extended the RLA’s jurisdiction to airlines in 1936, 10 years after the original Act’s 1926 passage.

    American Action Forum President Douglas Holtz-Eakin explains:

    A cornerstone of the RLA is that its purpose, as stated in the statute, is to “avoid any interruption of commerce” while providing for “the prompt and orderly settlement of all disputes” that arise in labor matters. Labor contracts under the RLA do not expire. Instead, they become “amendable” and remain in force until a new agreement is reached.

    If negotiations are not productive, then federal mediation is required before either unions or employers can engage in “self help” like slowdowns, strikes or lockouts. The National Mediation Board, which oversees the process, says that 99% of all of its mediation cases since 1980 have been handled without interruption.

  • Congress Takes First Shot at NLRB Ambush Election Rule

    February 10, 2015 9:56 AM

    Congress established the National Labor Relations Board as a body made up of neutral arbiters to represent the public in labor disputes. Under the Obama administration, the Board has strayed from its required impartiality to issue rules and decisions that outright favor labor unions over workers and employers.

    An example of the Board unfairly administering national labor policy to advance the interests of labor unions is the implementation of its “ambush election” rule. 

    Specifically, the amendments to union election procedures significantly favor unions by limiting debate and time workers have to learn about the pros and cons of union representation. It does so by shortening the time frame between the filing of a petition and the date on which the election is conducted to as little as 11 days from a median of 38 days.

    Another component of the rule, which inappropriately benefits special interests and jeopardizes worker privacy, compels employers to hand over employees’ private information—cell phone, email address, and work schedule—to union organizers. 

    As I note in the Competitive Enterprise Institute’s agenda for Congress, “Government should not have the power to force employers to disclose workers’ contact information to a special-interest group for any cause. That [ambush election] rule would almost certainly expose workers—who would not have the choice of opting out of union organizers’ obtaining their information—to harassment, intimidation, and much higher risk of identity theft.”

  • Study: Cutting Unemployment Benefits Boosted Hiring

    February 2, 2015 7:49 AM

    President Obama’s policies reduced employment and slowed America’s economic recovery by discouraging people from working. The Congressional Budget Office says Obamacare will shrink employment by around two million workers, which is not surprising, since it punishes some people for earning more money by suddenly taking away thousands of dollars in healthcare tax credits.

    Another example is unemployment benefits, whose excessive duration under the Obama administration retarded economic growth until 2014, when benefits were finally cut back to normal levels over Obama’s objections. A recently-released National Bureau of Economic Research study finds that cutting unemployment benefits caused the lion’s share of America’s job growth in 2014.

    According to that January 2015 working paper, cuts in unemployment insurance caused “nearly all” of 2014’s employment growth, as illustrated by “the abrupt reversal in the relative employment growth trend of high benefit states and border counties in December 2013, right at the time when the benefit durations were cut.”

  • Tossing Free Trinkets—Obama’s Mandatory Paid Leave Proposal

    January 20, 2015 8:51 PM

    Standing high at the rostrum in the House of Representatives during his State of the Union speech, President Obama acts like he’s throwing free trinkets off a tall Mardi Gras parade float. The problem is that the shiny doubloons he throws are not free but rather surreptitiously billed to taxpayers. And so it is with the President’s proposal to mandate paid leave.

    On January 14, 2015, on a blog post on the business networking site LinkedIn, Senior Obama adviser Valerie Jarrett unveiled the President’s “Healthy Families Act.” She said she strategically targeted LinkedIn as “the world's largest online audience of professionals” for the announcement, because, Jarrett claimed, “These are the policies that will attract the best new talent. They are the policies that will make the employees you hire more productive—and encourage them to stay longer.”

    Jarrett announced that, “the President will sign a Presidential Memorandum that will ensure federal employees have access to at least 6 weeks of paid sick leave when a new child arrives…” The Guardian reports that this is part of a strategy “by the White House to kick-start legislative efforts…” President Obama is expected to challenge Congress to apply the same six weeks of paid sick leave to its own staff.

    Financially, the biggest part of the President’s proposal is $2 billion of federal tax dollars to be appropriated to states for establishing paid leave mandates. The President is looking at a total of $1 million in existing funds for grants to states and municipalities to conduct feasibility studies for paid-leave mandates.

  • Free to Prosper: Top Priorities for the 114th Congress

    January 14, 2015 9:29 AM

    With the start of the 114th Congress comes a fresh opportunity to address the challenges created by a broken government. To kick off this new congressional session, the Competitive Enterprise Institute (CEI) recommends numerous reform proposals to strengthen the U.S. economy, increase transparency, and foster fair and open competition instead of favoring special interests.

    CEI’s top policy proposals center on substantive regulatory reforms needed to improve America’s economic health. In 2014 alone, 3,541 new regulations hit the books, and the burden is constantly growing. If federal regulations were a country, their cost would amount to the world’s 10th largest economy.  

    In addition to reining in burdensome regulations, CEI recommends that Congress continue to conduct fundamental oversight to protect Americans from executive overreach. Over the last six years, federal agencies have sought to usurp power from the legislative branch. Congress has a responsibility to demand honesty and accountability from our leaders and defend the rule of law.

  • 20 States Raise Minimum Wage: Happy New Year?

    January 6, 2015 3:30 PM

    The minimum wage is one of the most popular policies for fighting poverty, and proposed increases to it usually poll very well. The $7.25 per hour federal minimum wage hasn’t increased since 2009, so now many states are enacting their own minimum wage hikes. Twenty states are inaugurating 2015 with new increases.

    Danielle Paquette’s recent Washington Post opinion piece, “20 states just raised the minimum wage. It wasn’t enough,” rounds up many of those increases, which range from Florida’s 12-cent hourly hike to as much as $1.25 per hour. Already, the New Year increases are “fattening the wallets of about 3.1 million Americans,” Paquette argues. A similar December 31 New York Times opinion piece by Rachel Abrams carries the headline, “States’ Minimum Wages Rise, Helping Millions of Workers.”

    That sounds about right, as far as it goes. Roughly 2 to 3 percent of U.S. workers earn the minimum wage. With a late 2014 labor force of 156 million people, 3.1 million fatter wallets is in the right ballpark. Yet, these minimum wage increases will not help reduce poverty. Why? The reason is tradeoffs.

    Paquette and Abrams only tell half the story. Millions of workers are getting a raise, but those raises come at a cost. Other workers directly pay for those raises through reduced hours, firings, benefit cuts, and other harms. Those workers and would-be workers have few defenders. My colleague Iain Murray and I recently compiled some of the many costs to these neglected souls:

  • Democrats vs. Government Unions

    December 29, 2014 2:22 PM

    If late House Speaker Tip O’Neill’s famous saying that all politics is local has a corollary, it may be that politics is at its most substantive at the local level. While the people’s elected representatives in Congress—many from safe districts—trade ideological barbs, state and local elected officials often have to deal in the language of dollars and cents, as they weigh policy decisions that directly affect their constituents.

    That in turn creates different conflicts than those found on Capitol Hill. And nowhere is that more visible than in the growing conflict between state and local Democratic elected officials trying to put their governments’ finances in order. As the Manhattan Institute’s Daniel DiSalvo explains:

    Public sector unions create a genuine political conundrum for Democrats. On the one hand, they are genuinely powerful, and Democrats rely on their money and manpower during elections. Teachers unions, AFSCME, and SEIU are among the biggest donors to Democratic candidates and are organizationally braided into the party apparatus. However, public employee unions drive up government costs and depress productivity, weakening the state’s capacity to assist the poor and middle class.

    There’s the rub. Insofar as public unions secure for their members better pay, more generous benefits, and work rules shielding them from management discretion government doesn’t perform as well—and, consequently, neither do Democrats. Therefore, some Democrats are under pressure to take policy actions their union allies oppose. But taking such action puts them at odds with the most powerful and best-organized segment of their coalition.

    How does it happen that citizens of modest means suffer as public sector unions gain? A big part of the problem is that many states and cities have been providing more public services and promising to pay for them later by back-loading public employee compensation into retirement. And as the share of state and local budgets devoted to public employee pension and health benefits increases, the latter “crowds out” government spending on parks, education, public safety, and other services on which the poor and middle class rely. Democrats find themselves in the difficult position of defending governments that spend more but do less.

    This conflict has been brewing for some time, as my colleague Trey Kovacs and I outlined three years ago, and the rift between government unions and pragmatically-minded Democrats only keeps growing wider, as pension underfunding has grown worse.

    For more on pension reform, see “Best Practices for Reforming State Employee Pensions.”

  • NLRB Advances against McDonald’s

    December 23, 2014 12:21 PM

    By issuing complaints against McDonald’s on December 19, 2014, the National Labor Relations Board gave unions a boost and further riled business groups. On July 29, 2014, the National Labor Relations Board’s (NLRB’s) Office of the General Counsel had set the labor and employment world on fire by authorizing these complaints, which needed Friday’s Board approval to move forward.

    In essence, the Board itself has now preliminarily determined that the franchisor McDonald’s is a joint employer with McDonald’s franchisees and thus is liable for the actions of the franchisees, beyond just the opinion of the NLRB General Counsel.

    In a press call, the International Franchise Association joined the U.S. Chamber of Commerce, National Restaurant Association, and National Retail Federation to address last Friday’s issuance of complaints against McDonald’s.                      

    Robert Cresanti, Executive Vice President of Government Relations and Public Policy for the International Franchise Association explained that holding franchisors liable for the actions of their franchisees, as the NLRB General Counsel has proposed in an amicus brief, would move the franchise system toward large, corporate-owned outlets and away from independently owned operations.

    On the call, Cresanti pointed out two important, real-world impacts such a decision would entail: 1) Minorities would be disproportionately disadvantaged as minority ownership is notably higher among franchise businesses than non-franchise businesses, and 2) Job growth would be constrained as business resources are sapped and franchise expansion curtailed.

    Glenn Spencer, Vice President of the Workforce Freedom Initiative at the U.S. Chamber of Commerce, discussed how the direction of the NLRB leaves businesses with an uncertain standard for compliance.

    Angelo Amador, Vice President & Regulatory Counsel with National Restaurant Association, noted the breadth of the issue goes far beyond McDonald’s and even far beyond restaurants.

    David French, Senior Vice President of Government Relations for the National Retail Federation talked of the retail industry’s concern about the NLRB’s action today.

    Indeed, the NLRB General Counsel’s brief in the BFI case speaks directly to franchising, staffing/temp agencies, and contracting/subcontracting. All of these industries must be concerned with the NLRB’s march against McDonald’s.

  • New Minimum Wage Study: Tradeoffs Exist

    December 10, 2014 11:22 AM

    Many progressives strongly support minimum wage increases. This is troubling, because the effects those increases actually have on many poor people are regressive. Signaling your concern for the poor is different from actually helping the poor; feeling good about yourself is often different from actually doing good for others. At the very least, minimum wage supporters should acknowledge that the minimum wage has tradeoffs. It is not a free lunch.

    new study by UC-San Diego economists Jeffrey Clemens and Michael Wither on the minimum wage reaffirms the obvious. Some workers benefit from minimum wage increases, and this is a good thing. But it comes at a cost. Other workers lose their jobs:

    Over the late 2000s, the average effective minimum wage rose by nearly 30 percent across the United States. Our best estimate is that this period’s minimum wage increases reduced working-age adults’ employment-to-population ratio by 0.7 percentage point. This accounts for 14 percent of the total decline over the relevant time period.  [p.5]

    This finding is in line with what I’ve pointed out before, that the minimum wage has a reverse-Robin Hood effect. Some workers lose their entire income, which gets transferred instead to other workers fortunate enough to keep their jobs, and get raises besides. Income redistribution programs are supposed to flow from better-off people to worse-off people—not the other way around.

    If the goal is to lift as many people as possible out of poverty, minimum wage increases are simply not up to the task. The tradeoffs are too severe.

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