labor

Post image for Dear Labor, Don’t Fear the Robot

In California, a war is quietly being fought: workers versus technology. And the war has materialized in the form of a bill that seeks to ban the sale of alcohol by automated checkout machines at grocery stores. You may have seen them, those machines that allow customers to scan and bag their own items, which can speed up the process and keep lines smaller. Those machines also allow grocery store owners to reduce their costs by employing fewer workers. Herein lays the problem: workers fear that they are slowly being replaced by machines and that increased reliance on automatic check out machines threatens their jobs.

The legislation, AB 183, would ban the sale of alcohol at self-checkout aisles. The bill’s proponents drag out the old “save the children” argument, claiming that minors can easily purchase alcohol without the human oversight a traditional checkout process offers. Of course, the robots aren’t completely automated and require a worker to authorize any purchase that contains an age-restricted item such as alcohol. Additionally, the numbers of “sales to a minor” violations submitted by the state’s alcohol control board seem to indicate that most of these sales do not occur at grocery stores, but rather at liquor stores and in restaurants.

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Have a listen here.

Russ Brown, a vice president at the Labor Relations Institute and a CEI adjunct analyst, talks about recent changes made to the Railway Labor Act that make it easier for airline workers to unionize. Brown recently co-authored a CEI OnPoint paper on the reforms. Congress voted against the changes in legislation, so they were passed via regulation instead. This is another example of regulation without representation.

Post image for CEI Podcast for February 24, 2011: On, Wisconsin

Have a listen here.

Vice President for Strategy Iain Murray, who also directs CEI’s Center for Economic Freedom, discusses the labor reforms that have led to a thousands-strong sustained protest in Madison, Wisconsin. While the reforms themselves are relatively minor, both sides know that the stakes are high. This may prove to be at a watershed moment in the relationship between public sector unions and taxpayers.

Image credit: WxMom’s flickr photostream.

Government employee unions have long been renowned as one of the Democratic Party’s most loyal and dedicated supporting constituencies. For years, Democratic politicians have supported public employee unions’ agenda of increased government spending, leading to more government jobs and thus more potential union members.

For teachers unions — which are among the most politically powerful government unions — Democrats have helped them resist popular school reform efforts that could threaten the government-school monopoly, including school choice and charter schools.

That was great deal for the unions and their political allies, but a dead weight on everybody else, as taxpayers funded a continually expanding government sector, while a growing number parents saw their children stuck in underperforming schools. Now cracks are finally starting to show in that alliance — and they may get wider in the near future.

It is perhaps no coincidence that some of the nation’s boldest education reformers have been Democrats. From outgoing Washington, D.C. Mayor Adrian Fenty to New York Mayor Michael Bloomberg (who was a Democrat before he re-registered Republican and is now an Independent), it is mayors in Democrat-controlled cities who have faced the most dire conditions in the schools they were elected to oversee.

Both Fenty  and Bloomberg saw the need for drastic action, thus their appointment and strong support for their respective school chancellors — Michelle Rhee and Joel Klein — both of whom pursued an aggressive reform agenda.

Now Los Angeles Mayor Antonio Villaraigosa, also a Democrat, has joined the pro-reform chorus. Not surprisingly, his city’s teachers union, United Teachers of Los Angeles (UTLA), wants no part of Villaraigosa’s reform efforts. Moreover, Villaraigosa himself has a teachers union background. To his credit, the mayor is striking back.  In a speech this week, Villaraigosa criticized the UTLA leadership in no uncertain terms:

Over the past five years, while partnering with students, parents and non-profits, business groups, higher education, charter organizations, school district leadership, elected board members and teachers, there has been one, unwavering roadblock to reform: UTLA union leadership.

While not the biggest problem facing our schools, they have consistently been the most powerful defenders of the status quo. I do not say this because of any animus towards unions. I deeply believe that teachers’ unions can and must be part of our efforts to transform our schools. Regrettably, they have yet to join us as we have forged ahead with a reform agenda.

By partnering with the Los Angeles School Board, we created the Public School Choice program that is now allowing non-profits, charters, teacher groups — anyone with a proven track record of success — to compete to run new or failing schools. By 2012, over 50 low-performing schools will be under new leadership, with a new chance for success.

UTLA leadership fought against this reform.

Partnering with the School Board and the charter school community, we doubled the number of charter schools in an effort to raise our test scores and alleviate overcrowding.

Partnering with the Parent Revolution, we successfully passed legislation here in Sacramento, empowering communities to shut down, reopen or takeover a failing school if a simple majority of parents petition to do so.

Working with LA Unified, I founded the Partnership for Los Angeles Schools to turn-around 21 of the lowest-performing schools.

And partnering with civil rights organizations and the ACLU, we filed a lawsuit to take a stand against the practice of seniority-based layoffs, which were disproportionately affecting our poorest schools and students of color.

At every step of the way, when Los Angeles was coming together to effect real change in our public schools, UTLA was there to fight against the change and slow the pace of reform.

Now let me pause to underscore the point once again that I come from an organizing background. I vociferously believe in the fundamental right for a worker to organize, to have a voice and a seat at the bargaining table. But union leaders need to take notice that it is their friends, the very people who have supported them and the people whom they have supported, who are carrying the torch of education reform and crying out for the unions to join them.

UTLA boss A.J. Duffy angrily dismissed Villaraigosa’s remarks, saying that, “Pointing fingers and laying blame does not help improve our schools.” Yet pointing fingers at those responsible for the dire state of public schools is what is needed.

Duffy’s reaction, while unfortunate, is not surprising. For he and other government union bosses to change course, the incentive structure under which the UTLA, and government employee unions in general, operate needs to change.

As the late president of  American Federation of Teachers, Albert Shanker, so honestly put it, “When school children start paying union dues, that’s when I’ll start representing the interests of school children.” Until they do, Villaraigosa’s call on UTLA leaders to drop their opposition to his administration’s reform efforts and join him in making L.A.’s public schools better is likely to continue falling on deaf ears.

Likewise, government employee unions exist to represent the interest of their members, not of taxpayers. And government employees benefit from the growth of government, so the interests of public sector unions and those of taxpayers are fundamentally at odds.

Adding to the problem is the fact that it is on union-friendly politicians’ interest to give the unions what they want, since — in the classic concentrated benefits/diffuse costs public-choice problem — they’re more likely to protest at being denied greater compensation than taxpayers are likely to protest seeing their taxes go up gradually. Former San Francisco Mayor Willie Brown, also a Democrat, recognized this, though unfortunately once he was safely out of office:

The deal used to be that civil servants were paid less than private sector workers in exchange for an understanding that they had job security for life. But we politicians — pushed by our friends in labor — gradually expanded pay and benefits . . . while keeping the job protections and layering on incredibly generous retirement packages.

In government, unionization is greater at the state and local levels. For years, state and local governments were able to sustain their unionized employees’ generous compensation packages, as long as their economies continued growing. But since the nation’s economy went south, states and localities are struggling, and state and local politicians — Democrat and Republican alike — must face this crisis.

Indeed, in New York, Governor-elect Andrew Cuomo — yes, also a Democrat — may be headed for a showdown with government employee unions over wages and pensions. The unions won’t like it, but the taxpaying public will. In that regard, I think left-leaning Mother Jones blogger Kevin Drum gets it right:

I sometimes wonder if [UTLA head A.J.] Duffy understands just how widely his union is loathed? Somebody should correct me in comments if I’m wrong, but as near as I can tell UTLA literally has no support anywhere from anybody that it doesn’t directly give money to. Everybody else hates them with a passion. That doesn’t mean Villaraigosa can win a big public battle with UTLA, of course, since they give lots of money to lots of people, but he might. If Villaraigosa plays his cards right, he’ll have about 90% of the city on his side. Pass the popcorn.

Indeed, this and other similar fights will be worth watching.

For more on public sector unions, see here and here.

Recently, I wrote about french protesters shutting down France and destroying Paris. This is all due to the fact that Sarkozy is asking citizens to work two more years to receive their pensions. Apparently, someone needed to be an adult and explain that it is impossible to sustain a system where people receive five weeks vacation, produce very little and earn a pension at age 60. The math just doesn’t work.

Well, I was surprised to see Ana Kasparian of “The Young Turks” enthusiastic about the French protest. In the video below, you’ll notice that she says nothing about the sustainability of the system. Instead, she seems to be thrilled that these people are “fighting for their rights.” Does she ever consider that the money has to come from somewhere, which results in it just being other people’s money?

As with most Leftist ideas, there is no consideration whatsoever about whether the policy works. To Ana, she certainly feels good about it, and with the Left that is all that matters.

Many people in France are waking up to the reality that they cannot sustain the welfare state indefinitely. Apparently, it isn’t economically feasible to have citizens take five weeks of vacation, produce very little, and then be guaranteed pension benefits at age 60. It just doesn’t work.

Consequently, Nicholas Sarkozy has attempted to solve this problem by raising the standard pension age from 60 to 62 and the age of a guaranteed “full” pension from 65 to 67. This “extreme” measure has led to French unions striking and shutting down the French economy.

Yes, that’s correct. Asking people to work two more years in France in order to prevent the country from bankrupting itself is worthy of a strike.

The unions claim Sarkozy is being unfair to people who enter the workforce later in life; those individuals would not be eligible for pensions until they were 67. Ironically, the unions never question how their own policies have prevented people from entering the workforce. For example, unions increase demands on employers and make it virtually impossible to fire anyone. This increases unemployment, especially for those below the age of 25.  However, this would not be the first time that union policy had the result of harming workers.

Overall, the problem with guaranteed pensions is that the public will never be satisfied with the reality that long-term income security can’t be created by legislation. Only increased productivity and wealth creation can accomplish that.  Sadly, there are people in our government currently advocating that America move towards a French-style pension system (see PDF). While it may create a guaranteed political future for those who distribute these “guaranteed” benefits, it will only lead to economic disaster for the country.

Photo credit

@whitehouse on Twitter alerted me this morning that applications for internships at the White House are due by October 3. I couldn’t help but look at the details, all the while reminded by a quote from the satirical stuffwhitepeoplelike.com:

White people view the internship as their foot into the door to such high-profile low-paying career fields as journalism, film, politics, art, non-profits, and anything associated with a museum. Any white person who takes an internship outside of these industries is either the wrong type of white person or a law student. There are no exceptions.

If all goes according to plan, an internship will end with an offer of a job that pays $24,000 per year and will consist entirely of the same tasks they were recently doing for free. In fact, the transition to full time status results in the addition of only one new responsibility: feeling superior to the new interns.

When all is said and done, the internship process serves the white community in many ways. First, it helps to train the next generation of freelance writers, museum curators, and directors assistants. But more importantly, internships teach white children how to complain about being poor.

I really went to check the internship to see if it was paid. The government support of unpaid (or underpaid) internships, of which many thousands come through government offices every year, makes a mockery of minimum wage laws. I was not disappointed, the internship is full-time and unpaid.

Earlier this year, there was a small uproar over the increase in unpaid internships. Naturally, with firms struggling to stay afloat, they were more than willing to allow recent college graduates to work for them, gaining much needed experience — but not much money.

The Department of Labor released a statement on the legality of unpaid internships. It speaks for itself:

The following six criteria must be applied when making this determination:

  1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
  2. The internship experience is for the benefit of the intern;
  3. The intern does not displace regular employees, but works under close supervision of existing staff;
  4. The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;
  5. The intern is not necessarily entitled to a job at the conclusion of the internship; and
  6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

For an internship to be compliant with the DoL, the intern must not add any actual value to the company, and interns are encouraged at times to get in the way.

Unfortunately, a little note at the bottom states that this doesn’t apply to non-profits or the public sector. The demonization of the “for-profit” side of society continues, and the White House is safe from the legal wrath of the Department of Labor.

But seriously, with the amount of money you guys spend each year, you couldn’t even scrape together a small stipend?

The current issue of the Manhattan Institute’s City Journal features a must-read account of how government employee unions have turned California into “The Beholden State,” by Steven Malanga. The piece covers a wide range of issues and trends relevant to public sector unionism, so I will focus here on one particularly interesting section, in which Malanga ties together organized labor’s support for greater government intervention in the (already heavily regulated) health care market with the growing crisis of underfunded union and public employee pension funds. As in so many stories of recent union power grabs, the Service Employees International Union (SEIU) is a major player.

The SEIU’s rise in California illustrates again how modern labor’s biggest victories take place in back rooms, not on picket lines. In the late 1980s, the SEIU began eyeing a big jackpot: tens of thousands of home health-care workers being paid by California’s county-run Medicaid programs. The SEIU initiated a long legal effort to have those workers, who were independent contractors, declared government employees. When the courts finally agreed, the union went about organizing them—an easy task because governments rarely contest organizing campaigns, not wanting to seem anti-worker. The SEIU’s biggest victory was winning representation for 74,000 home health-care workers in Los Angeles County, the largest single organizing drive since the United Auto Workers unionized General Motors in 1937. Taxpayers paid a steep price: home health-care costs became the fastest-growing part of the Los Angeles County budget after the SEIU bargained for higher wages and benefits for these new recruits. The SEIU also organized home health-care workers in several other counties, reaching a whopping statewide total of 130,000 new members.

The SEIU’s California numbers have given it extraordinary resources to pour into political campaigns. The union’s major locals contributed a hefty $20 million in 2005 to defeat a series of initiatives to cap government growth and rein in union power. The SEIU has also spent millions over the years on initiatives to increase taxes, sometimes failing but on other occasions succeeding, as with a 2004 measure to impose a millionaires’ tax to finance more mental-health spending. With an overflowing war chest and hundreds of thousands of foot soldiers, the SEIU has been instrumental in getting local governments to pass living-wage laws in several California cities, including Los Angeles and San Francisco. And the union has also used its muscle in campaigns largely out of the public eye, as in 2003, when it pressured the board of CalPERS, the giant California public-employee pension fund, to stop investing in companies that outsourced government jobs to private contractors.

In other words, SEIU pushed CalPERS to make an investment decision based not on what the returns from it would be, but on how it would advantage SEIU’s organizing — in this case, by maintaining a larger government workforce. This should constitute a clear violation of fiduciary duty under any sensible definition of the term. This kind of politicization of union pension investments has been going on for some time, so some pension funds have years of lost gains behind them today.

Further, to unionize “health-care workers paid by government medical programs like Medicaid,” unions are now trying to redefine the definition of “public” to any social service provider who receives state subsidies, even while not being directly employed by the state. By extending new subsidies to more people, the recently enacted health care “reform” bill has created even more opportunities for such a dubious expansion of the definition of “public.”

Now that Andy Stern has announced his retirement, is he is riding off into the sunset triumphantly after leading SEIU during its successful campaign to pass Obamacare, or is he jumping off a sinking ship as he leaves SEIU a financial mess? Maybe a bit of both.

For more on SEIU, see here, here, and here.

For more on public sector unions, see here and here.

Jeffrey Miron comments on state officials’ claim that increasing the use of unpaid (or barely paid) interns might run afoul of minimum wage laws.

Your first reaction to this story might be, “Well that’s just ridiculous: how can it make sense to prevent employers and interns from engaging in a mutually beneficial interaction?”

It does not. But that is exactly what minimum wages laws are meant to do: prevent a willing employer and employee from engaging in mutually beneficial interaction at a wage below the legal minimum.

Indeed, it’s so wrongheaded, that the entrepreneurial libertarian video documentarian Jan Helfeld once decided to confront a famous intern employer and supporter of the minimum wage just on this topic. See video below.

As the federal government continues to expand at an ever-growing pace, the Old Dominion is doing things differently. As The Richmond Times-Dispatch explains, Governor Bob McDonnell is trying to get the state to live within its means (and those of taxpayers), focusing on a key issue.

The most significant piece of McDonnell’s budget — though not widely noted — was the decision to trim the pension costs of future state employees. By shifting the model for those hired after July 1 to one that more closely resembles private-sector retirement plans, McDonnell took an enormous step in ensuring the state’s solvency — which should soon emerge as a distinct competitive advantage for Virginia’s economic development — while keeping faith with past promises made to current state workers.

This essential reform would have been impossible if Virginia politics were dominated by the public-sector unions that seem determined to drive California and New York, to name the most prominent examples, into bankruptcy, crippling tax increases — or perhaps both. McDonnell has set an important precedent here.

Indeed, as the Cato Institute’s Chris Edwards notes, Virginia, by barring collective bargaining by public employees, should serve as a model for other states. Almost as important is to depoliticize pension fund investment decisions, which have led pension funds to under-perform.

For more on public sector unions, see here and here.