Employment
Return to Common Sense
December 15, 2012
Section: Domestic
– Employment
“Increase union accountability
and effectiveness by requiring re-certification elections every five years to
ensure unions continue to meet member needs and unions continue to represent
their members.”
“Government's role
should be only to keep the playing field level, and to work hand in hand with
business on issues such as employment. But beyond this, to as great an extent
as possible, it should get the hell out of the way.”
Jesse Ventura.
Philosophy
(Background, Issues, Objectives):
Department
of Labor is a U.S. Cabinet level department responsible
for:
- Occupational safety.
- Wage and hour standards.
- Unemployment insurance benefits.
- Re-employment services.
- Some economic statistics.
Americans work more, enjoy their work
more, and are happier than any other country.
- General Social
Survey (GSS) found 89% of workers are very satisfied or satisfied with
their jobs.
o
No difference in satisfaction found between those
with above or below average incomes.
o
Two thirds of working people would continue to
work, even after having money to stop working.
- For most
Americans work is a rock-solid source of life happiness.
o
Happy people work more hours per week than unhappy
people.
o
Happy people work more in their free time as well.
o
People with more hours per week to relax outside
their jobs are not happier.
- 2002
International Social Survey Programme found US
happier than other 34 countries.
Organized labor was successful in the
1930s long after many workplace conditions were implemented already, based on
company best interests and employee retention.
·
Unions are essentially labor monopolies that
provide labor.
·
In 1911, Henry Ford implemented a shorter workday,
and the daily wage.
o
An eight hour day meant the plants could run three
shifts, 24 hours a day, speeding production and reducing costs.
o
In 1922, Ford shortened the workweek from the
industrial standard of 50 hours, including half a day on Saturday, to a
five-day, 40-hour week.
o
With overtime, Ford could run full shifts on the
weekend and keep his plants busy 24/7/365.
·
In 1913, Ford Motor Co. started an embryonic
employee health plan, with company clinics for on the job injuries, employees,
and their families.
·
The company health department also placed the many
handicapped workers Ford hired in suitable positions and in some cases
monitored their health.
·
DuPont had a gunpowder mill that faced difficulties
attracting and keeping workers, so employees were given life insurance, if they
were killed on the job.
·
DuPont also trained their employees to be very,
very safe, with “safety first”
becoming part of the DuPont corporate culture.
·
The Davis-Bacon Act requires
employers to pay the “prevailing”
local wage (union pay rate) on federally funded projects.
o
“Prevailing wages," as determined by the
federal government, were in error 100% of the time.
o
Davis-Bacon wage rates are on average 22%
higher than the standard wage rate in an area.
Union membership continues to decline,
except in the public sector, and is at an overall low.
- Private sector union membership continues to decline.
o
In 2011 6.9% of private sector workers are union
members.
o Corruption
(pension fund abuse) continues to plague union leadership.
o Unions
have begun to merge internationally as a way to increase membership and power.
o Public
“card check” agreements
are misrepresented and misused to recognize unions.
o Misuse
of member funds for political activism, instead of member support, is
undermining support.
- Right-To-Work laws were set by the Taft-Hartley Act of 1947
o
Right-To-Work laws allow private-sector workers to
opt out of joining unions.
o
24 states have passed right-to-work laws.
§
Right-to-work states were enacted by states on the
Great Plains and in the South.
§
Right-to-work states have the lowest U.S. unemployment
rates.
§
New Hampshire is the first New England states to
propose a right-to-work law.
§ Indiana and Michigan
are the latest to pass Right-To-Work laws.
§
The share of employment in the right-to-work states
has increased from 24% of employment in 1955 to about 3% in 2011.
§ When companies decided
to produce autos in the United States, they chose to locate in right-to-work
states, including Kentucky, Texas, Mississippi, and Alabama.
§ Foreign companies now
produce about 50% of autos manufactured in the United States, and this
production share will likely increase in coming years.
- In 2011, only one in 10
non-union workers want to organize.
o
Deregulation and free trade have made the economy
more competitive.
o
Unionized companies cannot pass higher labor
costs on to the consumers, since cheaper alternatives will underbid them.
o
Modern human resource management practices treat
employees as a valuable resource, resulting in high satisfaction.
o
Many employees and employers would like employee
involvement (EI) programs to discuss workplace issues.
o
60% of workers prefer EI programs to improve
working conditions over either government regulations or labor unions.
o
The time for unions may be over; they
have run their course and usefulness.
- Public sector union membership is the only growing sector.
o
Public sector unions are a monopoly,
whose product, by law, can’t be refused.
§ There has been
considerable research on the effects of collective bargaining on wages, and
consensus estimates are that unions raise wages by about 10 to 15% above the
rate that would prevail in their absence.
o
In 1959, Wisconsin became the first state to allow
its public employees to unionize, and other states followed suit.
o
In 2011 37% of public-sector workers are union
members, including:
§
Service Employees International Union (SEIU).
§
American Federation of State, County, and Municipal
Employees (AFSCME).
§
American Federation of Government Employees (AFGE).
o
51% of all union members are in the public sector
– federal, state, or local.
o
Federal employment pay gap between public and
private sector employment is increasing at breakneck speed.
§
Public employees are earning an average $13.38 per
hour in benefits, while private sector workers earn only $7.98.
§
Government benefits rose
three times more than those in the private sector.
o
Public sector unions have become one
of the biggest sources of political donations, primarily to Democrat candidates.
o
Congress has exempted itself from laws
allowing staff to unionize.
- Government employees
don’t work as much as private employees.
o
During
a typical workweek, private-sector employees work about 41.4 hours, while
federal workers put in 38.7 hours, and state and local government employees
work 38.1 hours.
o
In
a calendar year, private-sector employees work the equivalent of 3.8 more 40-hour
workweeks than federal employees and 4.7 more weeks than state and local
government workers.
A professional civil service was created to deliver good
government through two salient characteristics: able bureaucrats are selected
by competitive examination, and tenure protects workers from political
interference in doing their jobs.
·
The U.S. Civil
Service was set up in 1871 and began professionalization with the 1883
Pendleton Civil Service Reform Act.
·
In the first half of the twentieth century, civil servants
commonly eschewed political activity and usually were paid less than
private-sector workers, though security and good pensions balanced that.
o
Such systems tended to minimize corruption, keep government
employment costs reasonable, and maintain stability.
·
Government was once considered exempt from unionization.
o
Executive Order 10988 in 1962 allowed
unionization of the federal work force.
o
The professional Civil Service was corrupted to reward members of
politically favored groups.
o
When you legally protect public unions, it sets up a client
relationship among the civil servants, their unions, and the politicians that
guarantees corruption.
o
It's undeniable that these programs increased the cost, lowered the
qualifications, and made the Civil Service more responsive to the politicians.
Right
to work generally refers to section 14b of the 1947 Taft-Hartley Act,
which allows states to bar union shop collective bargaining agreements in which
paying union dues is required for many jobs.
·
If unions were formed to protect workers from employer abuse,
right-to-work laws were created to protect taxpayers and workers from union
abuse.
·
In
non-right to work states, workers can be forced to join a union or pay dues as
a condition of employment.
·
22
states have adopted right to work laws since 1947, mostly in the South and
West.
·
Since
1970 the population of right to work states has more than doubled
·
Since
1970 the population of closed shop states has increased by only 25.7%.
·
Census
data show that 4.7 million Americans moved from closed shop states to right to
work states between April 1, 2000, and July 1, 2008.
·
Dues
go not only toward representational expense, but also toward lavish
compensation for union officials and political donations to causes and candidates
that individual union members individually might not support.
·
On
average, right to work states have fared better than their closed shop
neighbors.
States provide unemployment insurance (UI) benefits to
involuntarily unemployed workers.
- UI benefits typically replace 35–40%
of a worker’s weekly income.
- Normally, states provide UI benefits for up
to 26 weeks.
- Workers in states with high unemployment
rates may collect “extended benefits” (EB) for an additional
13 weeks for a total of 39 weeks.
- The federal government
and the states normally split the cost of these extended benefits.
- Congress has modified the UI program so
that workers in states with high unemployment now qualify for a maximum of
99 weeks of UI benefits.
- Unintended consequences of unemployment
insurance:
o
Extended
UI benefits cause some unemployed workers to take longer to find new work.
o
Extending
either the amount or the duration of UI benefits increases the length of time
that workers remain unemployed.
o
Roughly
one-third of workers receiving UI benefits find work immediately once their
benefits expire.
o
Workers’
skills deteriorate when they are unemployed, and by encouraging longer
unemployment, extended benefits will reduce workers’ wages.
- Chile has adopted
Personal Unemployment Savings Accounts.
o
Workers
fund accounts with paycheck deductions.
o
Unused
funds become available for withdrawal at retirement
Outsourcing is not a zero sum game.
- Investing in
inefficient industry elongates eventual demise.
- Manufacturing
globalization will result in lower process for commodities.
- Service
globalization will result in a lower overall cost of products and
services.
- Ultimately
globalization causes businesses to be more efficient, to grow, and to
create additional jobs.
- United States is a net importer of jobs, even of technology jobs.
o
In 2006 employment has declined near 12,000 jobs a
month in the manufacturing.
o
Employment has declined near 1,000 jobs a month in
construction.
o
Job gains have averaged 167,000 per month in the
service providing sector.
- All countries have seen a net loss of manufacturing jobs, but the
sector has recovered.
o
Between 2000 and 2003, number of workers in
manufacturing declined by 2.8 million.
§
Low skilled jobs have been automated, while higher
skilled jobs are in demand.
§
Skilled construction workers such as plumbers,
electricians, welders are in high demand.
o Overall
unemployment rate has shrunk to 4.5%.
o In
2006 manufacturing output and Return on Equity reached an all time high.
o In
2006 manufacturing revenue and profit reached an all time high.
o In
2006 value of
o
- McKinsey &
Co. study in 2003 showed return of $1.12 for every dollar of work sent overseas.
Minimum wage is ineffective as a poverty
tool, because of inefficient targeting of the poor.
- Comparable worth is a discredited idea to circumvent the free
market value of jobs.
- Minimum wage
jobs are normally entry level positions, and include jobs that earn tips.
- Relatively few
people earn the federal minimum wage (2.5% of hourly workers/1.5% total
workers).
- Increase in
minimum wage may reduce government benefits to workers who receive them.
- When the minimum
wage is raised, salaried and hourly workers also expect raises.
- Most people who
earn minimum wage are young and in school, or older workers who have left
school.
- Majority of
people work part time and rarely stay in minimum wage jobs for more than a
year.
- Raising minimum
wage will reduce number of available jobs.
Principles:
- Off-shoring
reaffirms the economic principle of comparative advantage – the
basis for free trade.
- Off-shoring is
the next step in the generally beneficial evolution of modern capitalism.
Incent unemployed to become employed.
Unions that outlive their usefulness
should de-certify to release their members from dues.
Recommendations:
Short
Term, Decrease government control and
interference in employment practices.
De-federalize the minimum wage:
- Let the free market set the appropriate wages for each job and
industry.
- Let states set
their own minimum wage, if needed.
Reform unemployment insurance:
- Limit duration
of unemployment benefits.
- Remove capability
for striking workers to receive unemployment, welfare, or food stamps.
- Disqualify
workers voluntarily on strike and seasonal workers.
Reform pension calculation to stop pension spiking
based on last two to three years earnings.
Increase union accountability:
- Require union recertification elections every five years.
- Allow company
unions (repeal section 8(a)2 of the NLRA).
- Require private
ballot elections to authorize unionization vs. authorization cards.
- Protect replacement
workers (employers have undisputed right to hire permanent replacement
workers for striking workers in economic strikes).
- Ensure federal employees operate under Right-to-Work rules.
o
Require Congress employees to conform to labor
organization policies.
- Create greater union financial transparency.
o
Union members must vote on use of union dues for
political activism.
o
Ensure continued full funding for the
Office of Labor Management Standards, the union watchdog agency.
Pass a National Right-to-Work Law.
Measure employment accurately:
- Job creation
(BLS Household and Payroll Surveys).
- Participation
rate (BLS Labor Force Participation)
- Unemployment
rate (BLS Local Area Unemployment Statistics).
Long
Term, Remove federal interference in private
sector employment.
Abolish the federal Department of Labor as not covered under enumerated powers ($209.3 billion annually).
- Terminate
Employment and Training Services ($4.8 billion annually).
- Terminate Job
Corps ($1.7 billion annually).
- Terminate Trade
Adjustment Assistance ($1.3 billion annually).
- Abolish the
regulatory activities of The Occupational Safety and Health administration
and The Wage and Hour Division.
Devolve Unemployment Insurance to the
states ($134.4 billion annually).
- Offer voluntary Personal Unemployment
Savings Accounts, funded by employees.
Repeal the National Labor Relations Act (NLRA) of 1935.
- Abolish the National Labor Relations Board (NLRB).
Repeal Executive Order 10988
authorization for federal work force unionization.
- Reduce the pay
of federal employees to market rates.
- Respect the
decisions of states that find government unionism counterproductive.
- End automatic
deduction of federal union dues.
Repeal the Davis-Bacon Act to allow market to set prevailing wage
rate (saves $9B annually).
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