Return to Common Sense
November 16, 2016
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.
- Work is viewed in a broader perspective, including much more than just a job.
o Employment is merely one part (albeit an important part) of your broader work during your life on earth.
o It includes teaching your children, volunteering, working on your house or yard, spending time with a community organization, serving your church, becoming an informed citizen, or working on your mind and soul by studying and praying.
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.
- Federal employees receive substantially higher total compensation than comparable private-sector employees.
o The largest difference is that federal employees receive two separate retirement benefits worth between 15% and 18% of their salaries.
o Over 99% of federal employees receive “performance-based” pay increases.
o Most federal employees receive at least 20 vacation days, 13 sick days, and 10 federal holidays for a total of43 days of paid time off per year.
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 In 1958. New York City mayor Robert F. Wagner Jr. issued an executive order that permitted municipal employees to be represented by unions for collective bargaining.
o In 1959, Wisconsin became the first state to allow its public employees to unionize, and other states followed suit.
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 Government was once considered exempt from unionization.
§ The professional Civil Service was corrupted to reward members of politically favored groups.
§ Executive Order 10988 in 1962 (“little Wagner act”) allowed unionization of the federal work force.
§ When you legally protect public unions, it sets up a client relationship among the civil servants, their unions, and the politicians that guarantees corruption.
§ Government workers cannot use their time to promote one political party over another (federal ruling on Cook County, Chicago).
§ Public sector unions have become one of the biggest sources of political donations, primarily to Democrat candidates.
§ It's undeniable that these programs increased the cost, lowered the qualifications, and made the Civil Service more responsive to the politicians
o In 2015, 28% of all federal workers (20.2 million )are public-sector union workers, including:
§ Service Employees International Union (SEIU) has 1.9 million members.
§ American Federation of State, County, and Municipal Employees (AFSCME) has 1.6 million members.
§ National Education Association (NEA) has 3.0 million members.
§ American Federation of Teachers (AFT) has 1.6 million members.
§ Other municipal public sector unions amount to about 12 million members.
§ Over 95% of political contributions from union employees has gone to Democrats.
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 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.
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.
2006 value of
- 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.
- 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.
Short Term, Decrease government control and interference in employment practices.
Eliminate Job Corps residential job training program ($1.7B).
Eliminate Welfare Innovation and Opportunity Act Job Training Program ($3.4B).
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 ($5.2 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).
o 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 $8.1B annually).
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“And Away They Go” by Bruce Stokes dated March 26, 2004 published by National Journal.
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Debate Tainted by Myths, Misconceptions” by Radley
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Earns Minimum Wage – Single Parents or Suburban Teenagers” by
Rea S. Hederman Jr. and James Sherk
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by James Sherk dated
the Pain: Let States Opt Out of a Minimum Wage Hike” by James Sherk dated
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in a Global Economy” by Daniel Ikenson
Leisure Mobility: Americans Work Less and Have More Leisure Time Than Ever
Before” by James Sherk dated
Are World’s Most Productive Workers, UN Report Finds” dated
“Joel Kotkin Debunks the Myth of Deindustrialization”
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“Why It Is Time to Reform Compensation for Federal Employees” by Rachel Gresler and James Sherk dated July 27, 2016 published by The Heritage Foundation at http://www.heritage.org/research/reports/2016/07/why-it-is-time-to-reform-compensation-for-federal-employees .
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