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OpenMarket: Labor and Employment

  • Why Is Employee Involvement an Unfair Labor Practice?

    April 28, 2016 3:16 PM

    U.S. labor law is largely based on the false narrative of an inequality of bargaining power between employees and employers. The theory goes that an employer will extort an employee down to their reservation wage, or lowest acceptable wage that is better than being unemployed.

    Tyler Cowen and Alex Tabarrok, both professors at George Mason University, dispel this myth. As they explain, “[B]uyers compete against other buyers (and sellers compete against other sellers). Firms buy labor and they are competing primarily not against workers but against other firms. Firms versus Firms! Now that is a real battle!”

    Meaning when companies are trying to determine what compensation to pay an employee, they are not thinking about shaking down an employee, but how much another company may pay the employee. Interestingly, the data show it is more likely that an employee leaves a company than an employer breaks off the relationship (see data here on quits vs. layoffs).

    Even still, labor unions and Democrats commonly argue workers need stronger voice in how a company is run. Yet, there is an obvious reason why employees are not given much of a say in company matters. The only voice an employee can have under American labor law is from a union. Other kinds of “employee involvement,” sometimes referred to as a “company union” or simply a formal system that gives employees input on how the company runs, have been illegal for decades. This is just another flaw in the outdated, 80-year-old National Labor Relations Act.

  • A Diverse Collection of Stakeholders Oppose the DOL's Overtime Rule, Really

    April 25, 2016 10:43 AM

    The Huffington Post recently ran a piece entitled, “Who Opposes Overtime Pay Increase, Really?” The author, Harlan Green, publisher at, says, “That’s a no-brainer—Republicans, of course.”

    Well, yes. Republicans do oppose the Department of Labor’s ill-conceived overtime rule that would dramatically increase the amount of salaried employees eligible for overtime pay. But as I wrote in the Washington Times, Democrats have their reservations about the rule too:

    None of these problems worried cheerleaders in Congress — until they realized the new overtime salary threshold may apply to them. A recent Bloomberg BNA report found that House Democrats, some whom signed the letter of support to Mr. Obama, may have a hard time implementing the new overtime rules regarding their own staff.

    “I don’t see how we could pay overtime” for the “17 or 18 people that each of us is allowed to have — that’s problematic for me,” declared Rep. Alcee Hastings, Florida Democrat.

    Just like private-sector employers, if government imposes costs, public sector employers have to make it up somewhere else. Former Virginia Democratic Rep. Jim Moran, who is now a lobbyist, states that Congressional offices “don’t have any surplus funding in their MRA [Members’ Representational Allowance] account, but the funding is flexible, so what they would have to do is reduce the size of their staff” or cut back on constituent services.

    Politicians are far from the only stakeholders concerned about the economic impact of the proposed overtime rule.

  • Give Job Seekers a Break: Get Government Out of the Licensing Business

    April 22, 2016 1:35 PM

    Public policy easing union organizing is not an economic cure-all, and really wouldn’t help at all—no matter how many times union-backed politicians say so (see my post from yesterday).

    But there are steps that government can take to liberalize labor markets that would spur economic growth, one reform that even President Obama is on board with: ease occupational licensing requirements.

    Just recently, the Bureau of Labor Statistics released new data on occupational licensing. To no one’s surprise, job holders with a certificate or license earned more. This reason is most likely two-fold and does not take away from detractors’ arguments that rigorous licensing requirements should be loosened as to make labor markets more dynamic.  

    According to BLS data, in 2015, of people 25 and older with a license or certificate, nearly 40 percent also had a college degree. So, one reason why workers with a license earn more is because they are in high paying professions that require high levels of education like “health care practitioners and technical occupations” (72.2 held a license) or “legal occupations” (63.6 held a license).

  • Labor Department's "Persuader Rule" Gives Unfair Advantage to Unions

    April 22, 2016 10:50 AM

    The Department of Labor’s “persuader rule,” which is set to go into effect on Monday, April 25, will give unions a new tool to use against employers who try to push back against union organizing campaigns. The rule will eviscerate any confidentiality between a business and labor relations consultants the business might hire for advice on how to counter union organizing efforts.

    The rule would mostly affect medium-sized businesses that are just large enough to be targeted for unionization and too small to have in-house counsel. It also would encourage some large law firms to get out of the business of labor relations advising.

    Specifically, the rule expands reporting requirements under the Labor-Management Reporting and Disclosure Act (LMRDA) to encompass virtually all of a business’ interactions with labor consultants. As attorney Jonathan Sokolowski explains:

    [T]he current LMRDA carves out a key exception to its reporting requirements for relationships which are restricted to the provision of “advice” to the employer. Significantly, the “advice” exemption has long been interpreted to mean that, in the absence of direct contact with employees, labor relations consultants and attorneys could provide employers with unreportable advice, including much of the advice regularly provided to employers throughout the union organizing and bargaining processes.


  • Easing Union Organizing Won't Fix the Economy

    April 21, 2016 3:59 PM

    Most progressive policy makers view labor unions as the panacea that would address the problem of stagnate wages and disappearing middle class.

    A proposal to increase union ranks has been offered up for years. Rep. Alan Grayson (D-Fla.) is the latest sponsor of the Orwellian-named “Employee Free Choice Act of 2016.”

    Although the exact text of the legislation is not yet available on Thomas, Grayson describes the bill in a recent statement. It is fairly identical to past bills. Card-check union elections would replace secret ballot elections, harsher penalties against employers that commit unfair labor practices, and require binding arbitration when a company and union cannot come to terms on a first contract. (See here and here on the shortcomings of such legislation, namely reduces worker choice and further degrades freedom of contract.)

    It is unclear at best how the EFCA or any other similar legislation that simply gives greater privilege to unions would benefit the economy or workers at large. Further, is a disappearing middle class and stagnate wages really as big a problem as you read about?

  • Employment Lawsuits for Thee, But Not for Me

    April 18, 2016 12:55 PM

    The New York Times loves legislation that restricts employment-at-will, and it loves to increase penalties for employers who don’t hire and promote in ways favored by federal and state regulators (such as advocating legislation that imposes unlimited emotional-distress and punitive damages for alleged discrimination). But it itself appears to flout those very same federal employment laws. 

    For example, it uses racial quotas in hiring and promotions, even though it already has more minority representation than there is in the national qualified labor pool, judging from a recent Washington Post report.

    New York Times Chief Executive Mark Thompson defied this tradition yesterday in a presentation before a gathering of managers on the business and news sides of the newspaper. He identified three areas toward which diversity efforts must be channeled: recruitment, hiring and promotion. Supervisors who fail to meet upper management’s requirements in recruiting and hiring minority candidates or who fail to seek out minority candidates for promotions face some stern consequences: They’ll be either encouraged to leave or be fired.

  • California Court's Indefensible Defense of Dysfunctional Education Policies

    April 15, 2016 1:25 PM

    A California appeals court yesterday restored a series of education policies that harm students by making ineffective teachers extremely difficult to fire. The court overturned a lower court ruling, Vergara v. California, which had struck down teacher tenure, “last in, first out” personnel policies, and a complicated process to challenge dismissals.

    The plaintiffs have said they plan to appeal to the California Supreme Court. They should, given the stakes involved and the appeal court’s strange reasoning. Moreover, education reform activists in other states should continue pursue their own challenges as well. There is an ongoing case in New York State, and a challenge in Minnesota was filed this week.

  • NLRB Puts Stamp of Approval on Harassment in the Workplace

    April 14, 2016 1:19 PM

    Around 80 years ago, Congress created the National Labor Relations Board to bring stability to labor relations in the private sector. The current iteration of the Board is doing everything in its power to disrupt labor relations and create hostile workplaces.

    A variety of decisions by NLRB has dramatically expanded what is known as “protected concerted activity” to the point employers are unable to manage employees from engaging in defamation, intimation, and harassment.

    Protected concerted activity is defined by the NLRB as giving “employees the right to act together to try to improve their pay and working conditions.” Basically, it amounts to protecting union organizing activity.

    In 2004, the case Lutheran Heritage Village determined what employer policies interfere with employee right to engage in protected concerted activity:

    (1) employees would reasonably construe the language to prohibit Section 7 activity; (2) the rule was promulgated in response to Section 7 activity; or (3) the rule has been applied to restrict Section 7 activity.

    But a recent report by the U.S. Chamber of Commerce, “Theater of the Absurd: The NLRB Takes on the Employee Handbook,” questions whether the NLRB has “adopted a new definition of the word ‘reasonably.’”

    The report goes on, “The NLRB has gone to outlandish lengths to find commonsense workplace policies unlawful for violating Section 7 rights, even scouring employee handbooks to find purported violations in cases where the handbook has nothing to do with the underlying charge.”

  • Pay Gap Myths Spread Around Equal Pay Day

    April 14, 2016 12:40 PM

    In the lead up to Equal Pay Day this month, supporters of more federal pay regulations promoted myths about the pay gap between men and women.

    In "Time to Pass the Paycheck Fairness Act," Kathy Kelley falsely claimed on April 9 that "on average, Virginia women make 80 percent of a man’s wage in the same job." Kelley is the head of the Richmond chapter of the American Association of University Women (AAUW). 

    Her claim was untrue, because the 80 percent figure does not compare people working in the "same job." Instead, it compares all women and men in Virginia with "a full-time job," regardless of the job, as even backers of the proposed Paycheck Fairness Act have noted. Different jobs often have very different pay scales for reasons having nothing to do with sexism. On average, male workers have more years of work experience than female workers, who are more likely to leave the workforce to care for children. Moreover, even among full-time workers, males work longer hours, on average, and are more likely to work overtime.

  • Union Bosses Order Verizon Workers to Strike

    April 13, 2016 12:04 PM

    Today, union bosses ordered 36,000 Verizon workers on the east coast to strike. Nearly all of these employees, 99 percent, service the Verizon wireline networks, whether as customer service agents or technicians.

    The Communications Workers of America and the International Brotherhood of Electrical Workers represent the workers. For the past 10 months, the unions and Verizon have bargained over a contract and have failed to reach a new agreement.

    Unions want greater job security, more high-paying jobs, and better pension benefits. The problem with union demands is that more and more Americans are giving up their landlines and abandoning TV set-top boxes in favor of streaming video. So it is understandable that Verizon requires fewer workers to take customer calls and service wireline networks.

    Even still, Verizon is offering a pretty good deal for workers that are employed in a dying landline industry. Verizon proposed:

    • 6.5 percent wage increase over the term of the contract;
    • Access to quality and affordable healthcare benefits, which the company’s other 130,000 receive; and
    • Retirement benefits that include a 401(k) with a company match.

    This is a pretty good deal when the work that these 36,000 employees perform only amounts to 7 percent of Verizon’s operating income. Further, on average, the wireline employees already receive competitive compensation of $130,000 a year in wages and benefits.


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