Thursday, March 5, 2015

Wisconsin Right To Work Bill

Now what self respecting American can be against a bill like this that affirms the freedom of American individuals to spend their personal money where they want to?  Wisconsin RTW Bill

Liberals are always concerned about making sure that every one can vote at least once. (if not more)  Yet they insist that to get a job, people be forced to pay up to 85% of Union dues even if they do not belong to the union.  What is their rationale for supporting this extortion?

CS Monitor Wisc RTW

Especially in the Public Sector where more work rules/restrictions, higher than market employment compensation, staffing constraints and the Union costs require taxes to be raised on all American citizens.  Also the tendency of Unions to protect and over pay senior workers tends to ensure that the perfomance / cost balance is not optimized. (ie higher than necessary cost / lower than the possible quality)

Thoughts?

51 comments:

jerrye92002 said...

I personally think that more senior employees SHOULD be paid more, considering experience as one component of merit and merit pay increases. The problem with union rules is that seniority is the ONLY thing that matters in the pay scale.

I think right to work is just that. AND I think the "impact" on workers is minimal since the unions long ago outlived their usefulness; how else to explain the dwindling percentage of workers in unions today. BUT the effect on the politicians who are addicted and beholden to union money, that might be quite a different story.

John said...

"how else to explain the dwindling percentage of workers in unions today"

My peers and I were just comparing notes regarding how much waste silly Union personnel actions have cost the companies we have worked at or visited.

- A truck that was not unloaded for 6 hours because the Union warehouse guys would not let a non-union driver pull up to the dock. Then when management demanded it be backed up to the dock, they made my peer unload it by hand as they pulled up chairs and watched. Then the next day they filed a greivence on him.

- The Union Mechanic who was working for me who went into the Warehouse to get a part on a Saturday. Which triggered a grievance and one of the Warehouse Union personnel to get paid for 8 hours of work.

Unions drove many companies into bankruptcy, no wonder there are fewer people in Unions. The jobs went away when the Union personnel made the companies uncompetitive.

John said...

And no I do not deny that Bad Management, and other factors did not help...

Laurie said...

if someone doesn't want to join a union why don't they just work for a non union employer. If they want to be in a union choose an employer with unions. It seems to me right to work is just trying to break up unions, but I don't know much about it. I do think the demise of unions has contributed to the stagnat wages of the last 10-20 years.

jerrye92002 said...

Laurie, if a person doesn't want to belong to a union, why do they have to join a union just to take the job they want with the employer willing to hire them? Why must they be paid what the union says they must be paid, rather than a wage negotiated with the employer directly?

Sure, unions had a place when working conditions were often fatal and wages were seriously sub-par, but then we started paying "union leaders" whose position required an adversarial stance with management but did not lose a thing when they called a strike! For example, I worked at one plant where the leaders held the union out on strike for three months and eventually won the 5 cents/hour they had originally been offered. Do you think those workers EVER broke even on that deal?

And permit me to disagree. I think the stagnation of wages is caused by two things: union rules that prevent productivity-enhancing capital investments and modernization, and previous union "wins" making their companies uncompetitive and unable to offer more (and often must offer less). Another story: A plant I worked at was going to become the "plant of the future" that would triple output with the same workers, through new work structures and automation. The union was promised nobody would lose their job and some new people would be hired, but the union rules would have to be changed to allow workers to "float" between multiple work stations and functions. The union refused, and the "plant of the future" went to a non-union plant in Georgia. 1500 people lost their jobs as all production was transferred. Modern unions exist only because of coercion and force. It is rare that anybody would choose to join.

John said...

Since the government has the ability to keep raising taxes to pay for the Union generated inefficiencies and ineffectiveness.

And since many many public services are monopolistic or near monopolistic and customers can not reasonably go elsewhere when dissatisfied with quality and/or performance. Especially the poor folk...

Unions continue to thrive within the government services. So are you saying that anti-union people should not be free to pursue government jobs? Or they should be forced to pay dues to this non-government entity that they despise?

Unions do benefit their members at the cost of the cost, quality, perfomance, etc to customers, tax payers, students, etc.

Remember when RDale outsourced Busing, the district freed up $1+ million per year that could go to the classroom. Not so good for the drivers, but great for the students and tax payers.

Sean said...

If unions are holding down wages, why has wage growth decreased as union power has declined?

I'm not going to sit here and say that there aren't unions who are very poorly managed. There are. Just as there are corporations who are very poorly managed.

Funny, we don't hear about the serial mismanagement of corporations being a reason to get rid of corporations, though.

jerrye92002 said...

Sean, perhaps I was not clear. As union membership declines because they put their employers out of business, employers become capable of keeping wages in line with the markets and STAYING in business. This reduces the unsustainable wage growth that union monopoly power creates and demands. I once took an airline trip next to a mountain of a man coming from a Steelworkers national meeting in Pittsburgh. "I'm president of the Gary local," he said, "and 8000 of my 9000 members are out of work." A man that size, I wasn't going to tell him it was his fault for demanding unwarranted wages and benefits that took the place of steel mill capital investment and modernization. At that time, the NEWEST steel mill in the US was older than the oldest steel mill in Japan, and Japanese steel was sweeping the market (just as their cars did). Generally speaking, modern union membership is bad for the economy AND for the membership alike. Right to work simply makes sense.

Sean said...

The reality, of course, is that in our current economy, wages are at their lowest level of the total economy since the end of WW2.

https://research.stlouisfed.org/fred2/graph/?g=2Xa

But apparently, you think American workers are getting paid too much.

jerrye92002 said...

I'm not seeing the problem. As productivity increases, the worker's share of the total corporate revenue/national economy shrinks, while the individual worker earns more. Since unions tend to fight against productivity-increasing capital investment, they tend to create conditions under which their wages cannot increase without making their employers less competitive.

Sean said...

"while the individual worker earns more."

That ain't happening either.

http://talkingpointsmemo.com/images/productivity.png

jerrye92002 said...

Something wrong with that chart. It tells me that American workers haven't had a per-hour wage increase since 1975, and that's not possible. And in some fields, like education, productivity has actually gone DOWN.

John said...

Sean,
Actually, no one here is asking to "get rid" of Unions. We are demanding that membership and dues paying be voluntary. Just like for every other organization that we choose to join.

Corporate management personnel negotiate their compensation and are fired if they do not perform. Seems about right.

As we have discussed many times, most Americans stopped making "Buy American" part of their purchasing criteria in the 1980's. Thus the highest quality / lowest cost provider wins. How again would American wages stay higher when the majority of Americans are happily sending their money over seas?

"High Wages" and "Low Cost Products and Services" do not align... Yet Liberals keep trying to make them.

John said...

Fed Link
Talking Points Link

John said...

It is pretty amazing how aligned the Talking Points curve is aligned to America's desire to pay more for American vehicles.

John said...

Right down to both of them starting to change significantly in 1978.

jerrye92002 said...

You realize how much different capital improvements are in Japan? Where they don't seek ROI in a fixed time period, and where the unions PUSH for these investments knowing that it is a competitive advantage. The sad tale of GM's bankruptcy ought to tell us what we want to know about forced unionism in the US.

Sean said...

"It tells me that American workers haven't had a per-hour wage increase since 1975, and that's not possible."

The chart is adjusted for inflation.

John said...

For more details. EPI Report

"Wage inequality at the bottom—called the “50/10 wage gap” because it reflects wage differences between the median and bottom 10 percent—has primarily been driven by periods of high unemployment and the erosion of the minimum wage.

The continuing growth of the wage gap between high and middle earners is the result of various laissez-faire policies (acts of omission as well as commission) including globalization, deregulation, privatization, eroded unionization, and weakened labor standards.

The gap between the very highest earners—the top 1 percent—and all other earners, including other high earners, reflects the escalation of CEO and other managers’ compensation and the growth of compensation in the financial sector."

John said...

Though I disagree with EPI's conclusion / solution / perspective, I do think that publication has some good points.

"About EPI. The Economic Policy Institute (EPI) is a nonprofit, nonpartisan think tank created in 1986 to include the needs of low- and middle-income workers in economic policy discussions. EPI believes every working person deserves a good job with fair pay, affordable health care, and retirement security. To achieve this goal, EPI conducts research and analysis on the economic status of working America. EPI proposes public policies that protect and improve the economic conditions of low- and middle-income workers and assesses policies with respect to how they affect those workers."

John said...

Here is a newer one. It looks like they have the same solution. Make American companies pay their employees more through Collective Bargaining or Hire Minimum wages...

EPI Erosion of Collective Bargaining

John said...

Which begs my usual question...

If the American employers are forced to pay more, how are we going to force American and Foreign consumers to pay more for those American Products and Services?

It seems the EPI folks think that the wealthy people are making those large profits off the efforts of American workers...

Where as I believe capital moves to where ever a profit can be made. And since American Consumers demand low cost and high quality, and are indifferent as to who they pay and where they live. The capital is invested where labor costs are low and quality is high.

No wonder American Capital is being rewarded and American Labor is luke warm at best.

John said...

So the EPI folks think that increasing compensation, work rules, benefits, etc will help the American workers...

All the while ignoring that this will increase Labor costs and reduce Productivity in the USA... Thus increasing the costs of American products and services.

Thereby encouraging American consumers to buy even more products and services from over seas. And reducing the need for products and services provided by American workers...

John said...

Of course the best way to maximize benefits for the American workers and citizens is to eliminate Muda. Then our culture would provide better value for all.

Imagine what would happen if the Government and Public Services were 20% more efficient / effective? That could be a 20% tax cut for all of us.

jerrye92002 said...

"...to eliminate Muda."

Of course, one way to eliminate waste is to eliminate unnecessary overhead. Unions are unnecessary overhead. They consume dollars and return impediments to the business paying those dollars. Government unions are worse, because their workers are completely overhead, producing only impediments to progress.

Sean said...

"Where as I believe capital moves to where ever a profit can be made."

That doesn't seem to be how the stock market works anymore. I read an article a few weeks back which talked about the failure of the shareholder value model over the last 30 years. Some 91% of retained earnings in publicly-traded companies were sent directly back to the shareholders instead of going back into the business. Privately-held companies spent 2x as much as publicly-traded ones reinvesting in their businesses.

So the purpose of the market has changed -- it's not about putting money into growing, capable businesses as it is about extracting money out of businesses to benefit high-powered investors.

That, for instance, is why you've seen private equity firms invest strongly in some market sectors like traditional supermarkets lately. There's not much growth to be had there -- in fact, the sector is in a slow decline -- but there's profit to be made in what's left and the real estate value in the large chains is immense. These firms aren't interested in growing the business, but milking it for all it's worth while it can, then selling off the real estate when it's done.

John said...

I think that is what I said.

"Where as I believe capital moves to where ever a profit can be made."

A profit can be made through capital appreciation and/or dividends. If a company has more profits than they can wisely re-invest into the firm, they should return those to the investors.

Then the investors like ourselves will move our capital to where ever a profit can be made.

Have you ever intentionally invested your retirement, college and/or saving accounts in such a way to minimize your returns? I am guessing the answer is NO, since most people who save and invest are interested in growing that nest egg so their kids can go to a good school or they can have a financially secure retirement.

With this in mind, do you want companies that you invest in to keep low profit grocery stores open, or do you want them to be shuttered and your money moved to a more profitable use?

Should the Rainbow grocery stores have been kept open, even they were relatively empty?

jerrye92002 said...

And back on topic, unions tend to make their employers less profitable and less able to employ capital effectively. One of the great missed opportunities was to have let GM go bankrupt and be purchased by others, abrogating those crippling union contracts.

Sean said...

"A profit can be made through capital appreciation and/or dividends. If a company has more profits than they can wisely re-invest into the firm, they should return those to the investors."

I would agree, but the the fact that so little is being reinvested in the business is problematic -- and an indication that the logic you describe above isn't being followed.

"Should the Rainbow grocery stores have been kept open, even they were relatively empty?"

By the time Rainbow got to the end of the line, there was no going back for them. But the problem --as someone who works in the industry -- was that Rainbow's owners hadn't invested to keep the stores up-to-date. There was a time a decade ago that Rainbow was pushing Cub to be the top traditional grocer in the Twin Cities, a push that fell flat once Rainbow became owned by a private equity firm.

jerrye92002 said...

What Sean is describing is a business known as a "cash cow"-- one that for some reason is doing well but cannot be improved (quickly enough) by investment, or is essentially in a dying market space. To some extent this describes GM and other companies saddled with strong unions that preferred higher wages and benefits to capital and productivity improvements, in the face of mounting competition from imports.

Sean said...

I would argue against the notion of a traditional supermarket being in a dying space. Walmart and Target are trying to build stores that are much more akin to the traditional grocery store -- more food focused and smaller in footprint than their supercenters.

Now, its' true you do need substantial capital to refresh your stores. But, those companies that have done it (think Kroger or Publix, for instance) have been remarkably successful in fighting back against WMT and TGT.

John said...

"a push that fell flat once Rainbow became owned by a private equity firm."

Please remember that Private Equity firms typically only buy very sick firms. (ie low cost with potential) At which time they either work to turn them around, or they work to parcel them out for maximum profit.

I work near the Bylerly's that was a Rainbow in Eden Prairie. I am not sure anything is going to save that location. It is still pretty dead during the day.

They turned my local Plymouth Rainbow into a Kohls, which seems to be doing better with the Target just across the street to draw traffic into the area.

John said...

An interesting link.Corporate Cash Puzzle

Sean said...

"Please remember that Private Equity firms typically only buy very sick firms. (ie low cost with potential) At which time they either work to turn them around, or they work to parcel them out for maximum profit."

I would say that's true when they're buying larger companies, less true the smaller the company gets.

"I work near the Bylerly's that was a Rainbow in Eden Prairie. I am not sure anything is going to save that location. It is still pretty dead during the day. "

I was surprised they didn't do a complete remodel on that store when they bought it, but I think their primary intention with that location is to freeze Whole Foods out of the EP area.

John said...

"I would say that's true when they're buying larger companies, less true the smaller the company gets."

If not to turn them around, grow them or break them apart for greater value... Why would they invest?

Sean said...

You didn't say "grow them" in your original post. The "Grow them" option tends to be with smaller companies. Larger investments tend to fall into the "break them up" mode.

jerrye92002 said...

In case no one noticed, Gov. Walker signed the RTW into law yesterday, effective immediately. I expect a rush to the door of union membership, people claiming a pay raise for themselves. I also notice that all of Minnesota's neighbors are now RTW states. It will be interesting to see whether the effect on new business locations, or old business relocations, is as predicted. Or whether the effect will be simply that worker's wages will go down, as unions predict, which I seriously doubt.

Sean said...

And Walker's overall approval rating has gone from +2 in October to -9 today, driven by a huge drop-off among moderate voters -- with whom he now has a 67% disapproval rating. Among WI moderate voters, he draws less than 30% against either Hillary, Biden, or Warren.

http://www.publicpolicypolling.com/pdf/2015/PPP_Release_WI_31015.pdf

jerrye92002 said...

Proving how effective those big-money, forced-dues union anti-Walker ad campaigns can be. For now. I'm looking forward to the secondary effects of this new law, which is cleaner political campaigns.

John said...

PPP Wisc

John said...

"Where as I believe capital moves to where ever a profit can be made."

Profits can be made many ways, including growth.

Sean said...

Look at Target: plateaued business ready to spend billions on stock buybacks.

http://www.startribune.com/business/295841711.html

jerrye92002 said...

That PPP poll tells me almost nothing about RTW and even less about Scott Walker. What it does show me is that a) big bucks negative campaigning works and b) there are some people-- those who think Hillary would be a better president than anybody in the Republican field-- who should not be allowed to vote.

Sean said...

Here's a good argument against RTW:

http://www.theweek.com/articles/543506/why-scott-walkers-righttowork-law-wont-deliver-goodpaying-familysupporting-jobs

John said...

Star Trib Target Stock Buy Back

The Week RTW No Good paying Jobs

John said...

Target tried to grow in Canada, invested lots of money and failed. Not sure why they prefer buying back shares to paying dividends. However if they have more cash than effective growth ideas, more power to them.

As for the RTW article, the author did not deal at all with the global competition pressure. They seem to live in a world where the Unions can demand more compensation for American workers, and the consumer will happily pay more...

Which of course we know is not true based on the experience of the last ~40 years.
Trade Balance Image

Sean said...

Global competitive pressures don't touch many of the remaining service-sector jobs in the U.S. RTW doesn't do anything to make these jobs "good-paying, family-supporting", to use Walker's phrase.

John said...

The key concepts of being efficient, effective and competitive in a global market are:
- All capable citizens are actively learning, working, adding value, etc. Free Loaders on the system raise the cost of doing business in that country.
- The society's "overhead" is optimized. (ie cost vs benefits of government, other society costs) Excessive "overhead" raises the cost of doing business in that country.
- The people are paid what the market values their services at. "Over Compensated" workers raise the cost of doing business in that country.

Same argument I have against minimum wages, government is arbitrarily raising the costs/burden for every citizen and business in America. Either directly or indirectly. This then makes American products and services too expensive for many foreign markets.

As Conservatives would say... Let's raise the minimum wage or union wage to $100/hr. Then let's see what we can export and how many jobs we have left.

Anonymous said...

Same argument I have against minimum wages, government is arbitrarily raising the costs/burden for every citizen and business in America. Either directly or indirectly

isn't this an argument against any pay raise or price increase? Wouldn't business work a lot more optimally if employees would agree to work for free?

--Hiram

Sean said...

"The society's "overhead" is optimized. (ie cost vs benefits of government, other society costs) Excessive "overhead" raises the cost of doing business in that country. "

Does it? To go back to your favorite example, let's look at the American car industry. When they began bleeding market share, they lost it -- first -- to companies in Japan and Germany (and Western Europe).

Those are countries with universal health care, stronger labor protections, higher tax rates, and more wealth transfer.

jerrye92002 said...

That's why it is so hard to reach conclusions in these debates-- because even when we agree on the facts, we differ in the conclusions we draw from those facts, or in fact choose different facts on which to base our conclusion.

In this example, I point out that Sean is correct that US car companies may have been bested by more "unionized, socialistic" countries, but I would point out that Japan always enters a new market as the low cost producer anyway, and that the Germans out-competed GM based on quality. For GM to compete more effectively, they would have needed some combination of a) relief from onerous union rules, b) from overly generous union benefits, c) from union wages not covered by productivity, d) from unnecessary government regulations, and e) from high US taxes. It's not a case of "all things being equal."