Olympia Business Watch

Recommendations for Reforms in Public Sector Collective Bargaining: Evergreen Freedom Foundation State of Labor Report

As we approach Labor Day, the Evergreen Freedom Foundation (EFF) released its The State of Labor report for 2008.  According EFF, the costs of state collective bargaining have helped to increase state payroll and benefit expenditures in Washington.  Between 2004 and 2007, taxpayer dollars spent on state salaries (excluding K-12 education) increased from $1.9 billion to $2.2 billion due, in part according to EFF, to changes in state law that strengthen state worker collective bargaining.  State spending on employee health benefits increased by $100 million over the same three-year period.

EFF has four recommendations to reform the public sector collective bargaining system.  They include:

1. Open contract negotiations to the public;
2. Require financial transparency of union finances so unions spend dues on legitimate bargaining and grievance issues, member services and intra-union educational activities;
3. Provide paycheck protection so union political expenditures are truly voluntary and not commingled with union dues; and,
4. Public sector unions should not be permitted to hold taxpayers hostage and force negotiating concessions by going on strike or threatening to do so.

In the introduction of the report, EFF calls attention to the nationwide union effort to pass what is called the Employee Free Choice Act which would eliminate secret ballot elections in the workplace over whether or not to unionize with a card-check system. Union leaders want to allow union organizers to come into your business, circulate cards asking for worker support to organize a union and stand over the shoulders of workers while they fill out the cards.  Get enough signed cards and the union is established.

Former Democrat Presidential Candidate George McGovern (South Dakota) thinks eliminating the secret ballot is a bad idea even though Sen. Barack Obama, the current Democrat Presidential Candidate, says it is not a matter of "IF" card check is passed, it is a matter of "WHEN."

EFF estimates the unions will spend over $360 million nationally in this election cycle which is a whopping $200 million more than in the 2004 general election.  The goal is to elect a filibuster proof U.S. Senate and a Democrat President.

Don C. Brunell, President (DonB@awb.org)

Number of Health Care Uninsured in U.S. Declines

According to the U.S. Census Bureau report released earlier this week, real median household income in the United States climbed by 1.3% between 2006 and 2007 while the number of people without health insurance declined from 47 million (15.8% of the population) in 2006 to 45.7 million (15.3%) in 2007.  The new median income is $50,233. Meanwhile, the nation's official poverty rate in 2007 was 12.5% which was not statistically different from the previous year.

These findings are contained in the Census Bureau report titled:  Income, Poverty, and Health Insurance Coverage in the United States: 2007. 

The good news is real median household income grew and the number of uninsured declined.  Hopefully, that trend will continue.

Don C. Brunell, President (DonB@awb.org)

Yep! He Did It....SFO Mayor Signed Commuter Benefit Ordinance

Remember a couple of weeks ago, I wrote a blog titled:  Did a UFO Hit SFO?   Well, maybe a UFO didn't strike, but San Francisco Mayor Gavin Newsom signed the "first of its kind" commuter ordinance which is suppose to reduce SFO's 2012 greenhouse gas emissions by 20% from 1990 levels.   And, you guessed it, the employer got stuck with the tab and the responsibility.

Under the ordinance, employers will have a choice of three options to offer employees:

1. Set up a program under which employees can make pretax contributions to the federal legal limit of $115 a month to pay for mass transit expenses.  Not really a bad idea if the administrative burden isn't too costly or complicated....and if the transit pass is less than $115 a month. If not, does the employer make up the difference?
2. Employers can directly pay for employees' transportation expenses, such as buying transit passed for employees.
3. Employers can furnish transportation by setting up van pools for employees.

The ordinance, which will take effect in late December, will apply to employers with at least 20 employees and will have to be offered to employees who work an average of at least 10 hours per week.

While it may seem like a good idea and somewhat innocuous, when cumulative impact of ALL of the city's ordinances coupled with state and federal requirements, not only drains the employer's bank account but zaps the energy out of businesses struggling to stay in business and control costs.

Does any politician in SFO, or anywhere for that matter, ever put an employer's shoes on and figure out how THEY would comply with and pay for all of the laws, rules and regulations they pass?   

Try it, you may not like it!

Don C. Brunell, President (DonB@awb.org)

Paid Family Leave Dies in New York: Washington Lawmakers Should Drop The Issue in 2009

New York legislators adjourned after failing to pass a paid family leave bill. The legislation passed the Assembly but died in the Senate when the session ended last week. There were many versions of the paid leave circulating around Albany. They were all very costly.  Here is a sample of the proposals:

• One would impose 12 weeks of disability insurance benefits for family leave on ALL businesses for employees of newborns, families adopting children and caregivers of sick parents, spouses and children.
• Another would provide 13 weeks of leave and would have increased the maximum disability benefit from $170 to $550 per week by 2010 and would have permanently indexed the benefit to one-half of the state's average monthly wage.

As for the proposal to pay for it.  Workers would have to pay a mandatory 45 cents per week payroll tax, which according the the Business Council of New York, was inadequate to pay for the program's costs.

The Buffalo News editorialized when the bill failed:  "Hopefully, that will be the end of it in New York.  The question to ask is if this proposal will add to private-sector job growth.  The answer is NO!  New York State can hardly afford to be in a situation in which workers will automatically receive a maximum of 50 percent of their regular weekly pay, up to a maximum of $170 per week.  Offering Cadillac benefits places New York at a disadvantage when businesses choose to locate, an even greater issue in struggling areas upstate and western New York, especially where the competition is Pennsylvania and Ohio."

Only Washington, California and New Jersey have paid family leave programs and only California's is operational.  Lawmakers in our state haven't found a palatable funding source pay for our program. It will be an issue in the 2009 legislative session in Olympia and AWB is pushing them to revisit the whole issue to determine the real costs, who pays and who benefits. 

In place of the new law, AWB believes flexible leave policies where employers and the people who work for them work out family leave arrangements is the way to go.  It has worked for employers AWB talks with and it keeps from adding a whole new layer of costly state bureaucracy. This is not just an issue with private sector employers, but many school districts and public employers have the same concerns about costs and potential abuses. 

It is the unintended consequences which sink good intentions.

Don C. Brunell, President (DonB@awb.org)

Chicago Bottle Water Tax Trickling In---First in Nation Tax Has People Running to the Suburbs to Beat the Tax

Chicago Mayor Richard M. Daley (D) now is faced with millions in budget cuts because the nation's first tax on bottled water is only "trickling" in.  The 5 cents a bottle tax took effect in January and was suppose to bring in $10.5 million in revenue.  To date, the city has collected $2 million and the city has a $20 million shortfall.

According to Budget and Tax News, local business people and bottled water industry officials told the mayor and city council it would not work.   "We're not surprised, said Tim Bramlet, executive director of the Illinois Beverage Association. "When people are used to paying $4 a case and suddenly the price goes to $5.20, they respond."  Where people would buy two cases, they now buy one.  Or, they'll buy their bottled water outside the city limits.   Bramlet said:  "The city ignored this.  They just put their heads in the sand."

Hopefully, Seattle, other Washington cities and the state will learn from the Chicago experience.

Don C. Brunell, President (DonB@awb.org)

The Columbian on EFCA

The Columbian runs a notable editorial in today's pages denouncing the "Employee Free Choice Act," the federal "card check" legislation that would abolish the employee's free choice to vote by private ballot on whether to join a union.

More Paid Leave Mandates Coming?

UPDATE: This afternoon, Monica Guzman, the PI's online reporter, blogs on the story mentioned below, asking her readers "Should Washington mandate paid sick days?"  Guzman's summary says "We did just pass a law making sure employers pay workers who are out taking care of brand new kids."   We did?  She might mean 2007's unfunded, unimplemented paid family leave law but it is important to note that law purports to provide paid family leave through a state-run social insurance program.  Its mandate is that employers make due with the absent employee for six weeks; thus far, the employer doesn't have to pay (directly) for it.

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The Seattle PI today runs an AP story out of Connecticut on the push by a handful of states and the federal government to mandate employers provide a minimum number of paid days off to employees. 

Senator Karen Keiser, D-Des Moines, who incidentally sponsored the state's so-far unfunded, unimplemented paid family leave mandate, floated this idea a couple years ago but it didn't get very far.  The bill's purported purpose was to protect workplaces from workers down sick with the Avian flu.  But the predicted pandemic never happened (knock on wood).

The proposal could be back next year in Washington.  In her Everett Herald column yesterday, paid leave advocate Marilyn Watkins laid the familiar rhetorical foundation:

The last few years have seen the beginnings of change, with Washington and New Jersey joining California in adopting paid family leave, San Francisco and Washington, D.C., passing minimum sick days ordinances, and similar bills introduced in other states and Congress.

We still have a long way to go, in our state and nationally.

Not so fast.  Advocates ought to wait and see what happens in Ohio this fall, where an SEIU-led ballot measure on mandated paid leave is before the voters.  Just today, it was announced that Democratic governor Ted Strickland came out opposed to the measure, claiming the initiative is "unworkable, unwieldy and would be detrimental to Ohio's economy."   

 

Politics and Business

The Seattle PI's Bill Virgin waxes philosophical in his column today, exploring why he believes the business community "can't capitalize on its inherent advantages" in the political realm.  Virgin's point of departure is local Seattle politics, but his observations, valid or not, should apply statewide as well. 

What do you think?

Good News: Manufacturing Production Increased in July.....And U.S. Will Manufacture More Than China Next Year

The National Association of Manufacturers (NAM), the Association of Washington Business (AWB) national affiliate for manufacturing, reports manufacturing production was up again in July.  The 0.2% increase follows a 0.4% hike from June.  July capacity stood at 79.9% and even motor vehicle (cars and trucks) and parts output rose by 3.6% in July.

While the news is good, industrial output remains below the 1972-2007 average of 81% of capacity, reports the Wall Street Journal.

The news was particularly welcome in New York State, long considered part of the "rust belt." Bloomberg reports New Yorks manufacturing unexpectedly grew in August as the price of raw materials cooled. Increasing foreign demand because of the weakened dollar and decreasing energy prices as the cost of a barrel of crude declines contributed to the upswing. 

The weakness, according to the Associated Press, remains in the auto industry where the capacity is 10.4% below 2007 and the prolonged slump in housing.

AMERICA REMAINS #1 IN MANUFACTURING:  NAM President John Engler, former Michigan governor, says the U.S. is still the world's largest manufacturer and China, while growing at a 10% annual rate of manufacturing, will not surpass the United State next year as the Financial Times reported last week.  NAM figures that may happen by 2020, but not in 2009.

Don C. Brunell, President (DonB@awb.org)

Things Cooling Down for Paid Family Leave System

The Olympian's Adam Wilson reports that the executive branch hiring freeze may have a chilling effect on the state's so-far unfunded, unimplemented paid family leave program. 

It's hitting at the staff necessary to fulfill the Legislature's $6.2 million appropriation for the rudiments of a computer system before benefits become payable in October of next year.  Notes the ESD staffer quoted in the story, "It's a very tight plan to get there, with benefits by 2009. There's not a lot of wiggle room[.]"

Of course OBW readers know the $6.2 million for early IT work was a drop in the bucket of the tens of millions of dollars (and dozens of FTEs) necessary to initialize and run the program. 

While it would make sense that the hiring freeze, if extended into 2009, would imperil the full implementation of the program, a more fundamental and interesting question for Wilson to ask would be whether the spending adjustments necessary to help offset a $2.7+ billion general fund shortfall will shelve a new and unfunded mandate like this anyway?