BuckeyeBlog

To go along with my article this week, here is a much more in-depth look at the damage to workers caused by unions:

Labor unions get more respect than they deserve. They are nothing other than labor cartels. Like all cartels, their success depends on the extent to which they can cut off their trading partners—employers, workers, and the customers of employers—from alternatives. Notwithstanding that the National Labor Relations Act (NLRA) helps private-sector unions capture their victims, over time those unions lose market share because of the process of creative escape….

Exclusive representation precludes employers from dealing directly with employees about wages and other terms of employment. Employers are forbidden to reward individual workers for meritorious performance without union permission. Unions are loath to grant permission because they want workers to think that they, rather than individual productivity, are the source of wage gains. Thus, highly capable workers often want nothing to do with unions. Exclusive representation also prohibits individual workers from speaking directly with employers about any job-related issues without union permission. Individual workers have no voice. Only certified unions may speak.

The full article is well worth the time it takes to read it.

In his Sunday column, George Will writes about a study by Byran O’Keefe and Dr. Richard Vedder (an Ohio University professor and scholar with the Buckeye Institute) that illustrates how the Supreme Court’s expansion of the concept of “disparate impact” affected higher education. In 1971 the Supreme Court expanded the 1964 Civil Rights Act to outlaw any employment qualification tests that may have a “disparate impact” on minority groups, regardless of whether these tests were actually discriminatory.

Mr. O’Keefe and Dr. Vedder illustrate how this led to more employers requiring college degrees for employees. As Will puts it:

This is, of course, just one reason college attendance increased from 5.8 million in 1970 to 17.5 million in 2005. But it probably had a, well, disparate impact by making employment more difficult for minorities. O’Keefe and Vedder write:

“Qualified minorities who performed well on an intelligence or aptitude test and would have been offered a job directly 30 or 40 years ago are now compelled to attend a college or university for four years and incur significant costs. For some young people from poorer families, those costs are out of reach.”

Indeed, by turning college degrees into indispensable credentials for many of society’s better jobs, this series of events increased demand for degrees and, O’Keefe and Vedder say, contributed to “an environment of aggressive tuition increases.” Furthermore they reasonably wonder whether this supposed civil rights victory, which erected barriers between high school graduates and high-paying jobs, has exacerbated the widening income disparities between high school and college graduates.

Griggs and its consequences are timely reminders of the Law of Unintended Consequences, which is increasingly pertinent as America’s regulatory state becomes increasingly determined to fine-tune our complex society. That law holds that the consequences of government actions often are different than, and even contrary to, the intended consequences.

Unions and their allies in Congress have been pushing legislation for the past few years that would undermine a variety of worker and business owner protections currently in the law. The so-called “Employee Free Choice Act” would actually undermine employee free choice by making it much harder for workers to vote by secret ballot in unionizing votes (anyone see the potential for abuse there?).  It would also impose mandatory arbitration on workers and employers in the event of an impasse during contract negotiations. The only things that have stopped it from passing this year were President Bush’s opposition and the Republican miniority in the Senate. Next year Bush is gone and there are far fewer GOP Senators. It’s quite possible this legislation will become law.

University of Chicago law professor Richard Epstein discusses the problems with the law in the Wall Street Journal:

The National Labor Relations Act strips employers of basic common law rights, including the right to refuse to deal with the union. It imposes on employers (and unions) a duty to bargain in good faith toward a contract. But this duty does not force agreement. Either side is free to walk away from any deal it does not like. Unions can strike, and firms can lock out workers. Today’s law, accordingly, restricts arbitration to interpreting existing agreements, not to making agreements from whole cloth.

The EFCA takes away the employer’s right to walk. Now the successful union, backed by direct government power — i.e., mandatory arbitration — can force itself on the firm. Yet the proposed law does not let any court block the deal or ensure that the mandated terms offer a reasonable return on its invested capital. (Even modern rent control statutes require that much.)

The government-chosen panel could well impose terms that might cripple the firm competitively. Consider that the takings clause surely prevents the government from forcing any person to buy real estate for twice its market value from a seller. That same principle applies to this labor law: No government should be able to force a firm to hire labor at $50 per hour when the company is not willing to pay half that much.

The Columbus Business First recently published The Small Business Owner’s Guide to the Presidential Election, in which one of the sections deals with labor issues. While the war on terror and recent financial crisis are getting the most attention from the media and voters, small business owners – who create most of the jobs in today’s economy – are also concerned about the impact an Obama administration would have on labor activities. Specifically, they are concerned about the Employee Free Choice Act, which passed the House but died in the U.S. Senate, that would permit workplace unionization without a private vote by workers. Obama supports the Act, while McCain voted against it last year. In this Buckeye Institute viewpoint, I outlined the dangers of this “card check” system, which would allow union bosses to intimidate workers into supporting unionization of workplaces, jeopardize workers’ rights, and put American businesses at further competitive disadvantage in the global marketplace.

The Business First article states:

Giovanni Coratalo, executive director of the U.S. Chamber of Commerce’s small and midmarket business councils, said he has heard more concerns from businesses about the Employee Free Choice Act than any other issue besides the economy. ‘Small businesses should be afraid of this,’ Coratolo said.”

Based on recent polls showing Obama with a significant lead in the presidential race, small businesses and their employees may find themselves worse off next year.

Much will be made of Strickland/Fisher “leadership” in convincing the SEIU to pull the sick leave mandate measure off the ballot.

The real reason SEIU pulled the measure is that the Sam’s Club demographic targeted for turnout motivation by it is now far too McCain-Palin friendly.  Can you image the kitchen table conversations in Reynoldsburg, Ohio?  “Honey, who would most likely share our values? A war hero and hockey mom, or, two Washington-loving, blowhard Senators? By the way, don’t forget to write your sister in Iraq and I’ll get Jimmie and Susy from soccer tonight…”  Even Keith Oberman could figure out how this choice will play out.

For the uninitiated, SIEU’s ponderous, anti-entreprenurial ballot proposal for a new paid absence benefit mandate on business would have further estranged Ohio’s limp economy from the dynamism of American free enterprise. It would have benefited no one but SEIU bosses and cost Ohioans jobs, income and prosperity.

Its demise is an early benefit to Ohio of the McCain-Palin ticket.

Once SEIU saw its plan backfiring, threatening to turn out voters intent on voting for real change in Washington, it had no choice but to pull the plug on the proposal.  SEIU was no more pushed into this than Marc Dann was pushed out by Strickland (remember, it took the GOP General Assembly raising the spectre of Inspector General engagement to pry Dann out of office — he wasn’t going anywhere until Husted and Harris played this card).

Contrary to the spin that will be put out, this was, and is, all about Democrat/Union political gaming.

Gongwer News Ohio reports in an email update today:

A coalition pushing a ballot initiative that would have provided seven days of paid sick leave for certain Ohio workers said Thursday it will remove the issue from the fall ballot.

Service Employees International Union District 1199 President Becky Williams said the Coalition for Healthy Families will ask to have the proposal taken off the ballot.

Ms. Williams said the decision “was not easy nor made lightly,” but was reached after “it became clear that a shrill and vitriolic ballot campaign marred by misinformation and disinformation would be impossible to avoid.”

Ohio’s economy has dodged a bullet.  As I wrote in the Wilmington News Journal in August,

The employees who work for companies affected by H.B. 536 will be hurt rather than helped, as their employers will be forced to respond to this bill by reducing wages and other benefits, in effect punishing responsible employees who currently manage to uphold the attendance agreements they have made with their employers.  Current PTO plans (paid time off) and vacation policies offered by employers will be reduced or eliminated, and telecommuting and work-at-home arrangements will have to be significantly altered.  Investors in Ohio businesses will likewise be hurt; the bill would require an administrative headache for Ohio businesses, which would be forced to complete costly and time-consuming compliance paperwork.  These costs will make investment in Ohio businesses an unattractive option, creating the incentive to invest resources in more business-friendly states and escalating Ohio’s capital drain.  Consumers will be hurt by the higher prices which will be required to cover the costs of Ohio’s sick day requirements.

David Hansen also discussed the proposal back in May with WSPD’s Brian Wilson.

Gongwer reports on yesterday’s Controlling Board meeting–they’re the guys who write the checks, or cause them to be written, anyway–that “prevailing wage” is coming down the pike from Gov. Strickland.

The Strickland administration confirmed Monday it is considering a major policy change in which private companies that receive millions in state aid would have to pay prevailing wage on their construction projects.

Word of the expansion in the application of prevailing wage – the geographic pay scale usually tied to union contracts – surfaced as the Controlling Board released $2 million in Third Frontier Program grants.

Well of course prevailing wage is coming. There hasn’t been much doubt about that. This is a great reporting catch, though, the good stuff, because it’s the real meat and potatoes. Knowing something is coming is quite different from catching it when it does come.

It’s really a shame how much of government is just about shoveling money from one pocket into another, and of course the only pocket the money is being shoveled out of is yours. Our officials seem interested only in the debate over what pocket it gets shoveled into: the unions, large corporations or entitlement programs. (I wonder if there are any economists out there studying how large the politicians’ commissions are among these groups? My initial guess would be that it’s pretty constant, but that’s just to start the models going.)

As for those few of you who save anything, there is only one message for you: suckers.

Robert Scott, the author of the EPI report which I criticized earlier today, defended his study in a response to my post. In that defense, he draws heavily upon statistics and models from which his conclusions and assumptions are drawn. It’s easy to get caught up in numbers and leave the principles that give them meaning far behind. But detailed observations don’t always reflect the truth, and it’s easy to fall into a trap when one forgets which is the master and which is the servant. For thousands of years, humans observed the sun moving from the east in the morning to the west at night. From this observation, they developed the theory that the sun revolved around the earth. They were so convinced of their beliefs that they were willing to kill others to preserve their theory. As we now know, however, they were wrong. Data and observations by themselves serve only as the various colors on a painter’s palette. One must have the principles to use as a brush if he wishes to paint a picture. (more…)