Editorial: RTW Challenge Falls Short

A union challenge to the state’s right-to-work law was definitely expected. The challenge that has been offered, however, lacks in credibility, according to this excerpted editorial that first appeared in the Lafayette Journal & Courier and has been echoed in other circles.

In a federal lawsuit filed in federal court, attorneys for the International Union of Operating Engineers Local 150 argue that the right-to-work law infringes on the unions’ freedom of speech.

How? The right-to-work law, signed into law this year, allows workers to skip paying union dues even if the union bargains for wages and benefits on their behalf. The lawsuit’s contention is that right-to-work limits a union’s ability to build up coffers needed to negotiate beyond the plant floor — namely in Statehouses and other political lobbying settings.

The brief filed last month, according to an Associated Press account, cites the U.S. Supreme Court’s Citizens United ruling, which made corporate campaign spending free from many reporting restrictions. Nice try.

The unions, which are scheduled to get a hearing in federal court later this month, are already being called on the strategy by legal experts. And rightly so. The Citizens United decision, whether rightly or wrongly sorted out by the U.S. Supreme Court, was about spending money to boost political speech without many of the past reporting restrictions. It was not about how corporations or organizations raised that money.

Unions faced those potential fundraising limitations before right to work, with union members able to opt out of dues that were beyond those needed for negotiations.

If unions are serious about bringing down Indiana’s right-to-work law, we’re guessing they’ll have to try another approach.

Members: Attend May 4 Policy Call on State of Economic Development

The economic development headlines evolve from, in simple terms, “getting new businesses to come to the state.” But the role of the Indiana Economic Development Corporation is also heavily focused on helping existing companies grow. It has a variety of initiatives, programs and strategies to accomplish both missions.

Indiana has fared better than most in the job creation game in recent years. What are the secrets to the state’s success? What are the biggest challenges to an even stronger performance? How can your company benefit from the state’s efforts?

Dan Hasler, Indiana’s secretary of commerce since September 2011, will join us to discuss these issues and more during our Policy Issue Conference Call on Friday, May 4 (9 – 10 a.m. EDT). It will be your opportunity to learn about the early impact of right-to-work, the competitive world of business attraction and much more. Your questions and comments are always welcome. This is for Indiana Chamber members only, and you can register online.

And the Legislators’ Grades Are …

We asked you to evaluate the efforts of the Indiana General Assembly in 2012 and you responded with how I imagine most teacher gradebooks end up looking — a wide variety of marks.

The totals:

  • 28% give legislators a B, with the same percentage not so happy as they offered a D grade
  • 21% say A
  • 17% go down the middle with a C
  • About 7% are in the "other" category (likely an "F" grade)

Right-to-work, a smoking ban that covers 95% of workplaces and elimination of the state’s inheritance tax rank high on the Indiana Chamber’s list of priorities. Despite a few missteps, I’ll go with an "A" for the year.

Our new poll question (top right) offers you the chance to play Supreme Court justice on the health care reform law. Thanks for reading and voting.

National Experts Weigh In: RTW Making a Difference

In the economic development world, Site Selection magazine is a major player. People pay attention to its annual rankings and those in the business of helping identify new company locations regard it highly.

It’s no surprise that the publication would feature a story on Indiana’s right-to-work law. And the reaction of the site selection community is expectedly strong; after all, Indiana is the first state to make the RTW move in the last 11 years.

Below are a few very encouraging quotes from the article; find it in full here.

"It changes to the positive my perception of Indiana’s business climate," writes a site consultant. "My marketplace is north Texas. I can give personal testimony that my state has attracted many relocated facilities from the Midwest for two reasons: the absence of a personal and corporate income tax and Texas’ right-to-work laws. I would expect Indiana to be able to keep more of their existing employers now rather than watch them leave for greener pastures."

Also weighing in is Robert Price, director of Atlanta-based Herron Consulting: "This issue is also closely followed overseas," he notes. "Many of our offshore clients are aware of the implications of U.S. right-to-work laws, and the significance of these laws in the site selection decision process has not waned. Some states are exhibiting greater confidence in their ability to make difficult decisions as they come to terms with the ‘new economy,’ and the change in Indiana reflects this."

"This really puts pressure on the other states in the Midwest," says site selection consultant Bob Ady, president of Mount Prospect, Ill.-based Ady International Co. "Site selection is a question of differentiation, and this is a major differentiator for Indiana and its neighboring states and throughout the Midwest."

All things being equal, would Ady steer a client to an Indiana site today — or higher up on a finalist list of Midwestern states? "Yes," he says, "though we just make recommendations. It’s up to the companies in the end. I’m working right now with an international company that is now specifically considering Indiana, where it wasn’t previously. Right-to-work has already had an impact."
 

Short Session Long on Achievement

The following is a message from Indiana Chamber President Kevin Brinegar:

It was the tale of two sessions in 2012. Act one centered on making Indiana the 23rd right-to-work state, giving current and future Hoosier workers the right to choose whether or not to join a labor union. Act two set the stage for such vital public policies as a statewide smoking ban, protection of our water rights and the inheritance tax elimination to become reality.

The passage of right-to-work (HB 1001) was truly monumental. Now, Indiana has further distinguished itself from neighboring states and given companies another big reason to bring their business and jobs here – and not there. In the short time since it passed, there has already been documented interest from several companies now putting Indiana at the top of the list for their business relocation or expansion. And it’s only just beginning!

Under the state’s new smoking ban law (HB 1149), Indiana will now protect 95% of people while at work and also allow citizens to eat at any restaurant in the state without having to encounter cigarette or cigar smoke. That will make a huge difference in all parts of the state. Many Hoosier towns are not part of a metro area and did not have a non-smoking ordinance previously in place. This new state law will protect residents in those locations.

Also now covered are companies that wanted to make their workplaces smoke-free but couldn’t due to existing labor agreements. Meanwhile, local governments still can enact stricter ordinances and the ones already passed remain in place. Sure, an even more comprehensive ban would have been preferred. What passed, however, was the strongest possible that could be done at this time and nothing short of a major accomplishment.

You can also count the inheritance tax elimination (SB 293) as a big victory. This tax only amounts to 1% of the total state revenue but made things unnecessarily difficult for so many Hoosiers. For a small family-owned company, the inheritance tax was often a tremendous hindrance to even staying in business after the death of the owner.

Effective at the end of the year, the more favorably-treated Class A category of inheritors expands (to include stepchildren and children’s spouses) and the amount excluded from the tax increases from $100,000 to $250,000. Beginning next year, the inheritance tax will be phased out equally over nine years – going away completely in 2022.

One bill that didn’t get a lot of press, but was among the most important to pass involves the state’s water supply (SB 132). Now water utilities are required to report usage to the Indiana Utility Regulatory Commission; only 15% of utilities previously did so. It also clarifies the water usage laws to confirm that private property owners, not municipalities, have control of the underground wells on their property. Both are needed steps toward a statewide plan for the protection and effective regulation of Indiana’s water resources.

In the local government arena, a multi-year effort to eliminate nepotism and conflict of interest for local government office holders and employees (HB 1005) finally made it across the finish line. There are too many examples where taxpayers pay for excessive costs because an employee also serves on the legislative body that approves that local government unit’s budget.

The grandfathering in of current employees is too generous, but nonetheless was a positive step that new local government employees will have to abide by.

We thank House and Senate leaders, along with Gov. Daniels, who took on several high-profile, emotional issues this session and guided them to passage. It was a fitting conclusion for Daniels’ final legislative session, with accomplishments that will leave a lasting positive impact on Hoosiers for generations to come.

See the full 2012 Legislative Report and Scorecard.

Chamber Celebrates Three Key Highlights of the 2012 Session

The 2012 legislative session should be remembered for far more than being the forum for Indiana becoming the 23rd right-to-work state, says Indiana Chamber President Kevin Brinegar.

"While right-to-work was deservedly the headliner, we finished with the passage of two impressive supporting acts: the statewide smoking ban and the inheritance tax elimination. Both have the potential to positively impact Hoosiers for generations to come," he offers
 
Details and specific comments from Brinegar on these three public policies:

Right-to-work for employees (HB 1001) – Prohibits unions from forcing Indiana workers to join or pay dues and fees to a labor union to get or keep a job in this state; makes it the employees’ choice. Does not eliminate unions or collective bargaining.

"With the passage of right-to-work, Indiana has further distinguished itself from neighboring states and given companies another big reason to bring their business and jobs here – and not there. In the five weeks since it passed, there has already been documented interest from several companies now putting Indiana at the top of the list for their business relocation or expansion."

Statewide smoking ban (HB 1149) – Prohibits smoking in the majority of workplaces (bars/taverns, gambling institutions are biggest exceptions), all restaurants and within eight feet of a building’s public entrance. Local governments may enact stricter ordinances.

"Smoking has direct financial ramifications for all businesses that offer health care insurance and the employees who are covered, not to mention the health implications for those non-smokers who unavoidably encounter second-hand smoke.

"Indiana will now protect 95% of Hoosiers while at work and also allow citizens to eat at a restaurant without having to encounter cigarette or cigar smoke. That is a huge positive development and legislators should be commended for coming together and taking that important step at this time."

Elimination of the state’s inheritance tax (SB 293) – Phases out the inheritance tax incrementally over a nine-year period beginning in 2013, with elimination of the tax complete in 2022. Also expands the more favorably-treated Class A category of inheritors and raises the inheritance amount (currently very low) that’s excluded from the tax; both provisions take effect this year.

"This tax only amounted to 1% of total state revenue but made things unnecessarily burdensome for so many Hoosiers. For a small family-owned business, the inheritance tax could be a tremendous hindrance to even continuing after the death of the owner."

Right-to-Work: Time to Move Forward

The legislative battle over right-to-work ended late this morning; if the noise of chanting protesters outside my office window is any indication, however, the issue will linger for some time. And that’s OK — if those disagreeing act in a responsible manner. That’s the way our free society is supposed to work.

How long will the lingering last? The obvious answer is at least November and the next election. One of the Senate Democrats speaking against the bill this morning said that this will awaken his party’s supporters. And that’s OK — that’s the way the system is supposed to work.

No one has proclaimed right-to-work will be the silver bullet that will immediately bring thousands of jobs to our state. (But one Indiana company indicated it is now staying and a Michigan business has invited previously ruled out Indiana to compete for its relocation). It is another important tool, accompanying the other contributors to our state’s strong business climate, one that will put Indiana in the running for many more jobs and economic opportunities. And our state’s batting average is pretty good when it has a chance to be in the game.

The evidence is there for those willing to listen — unions will not go away, safety will not slip, health care and pensions won’t be threatened. Will wages dramatically increase or decline? Probably not.

Right-to-work is here. It’s time to move on at the Statehouse to other important issues; it’s time throughout the state to let individuals have the choice of whether or not they wish to pay union dues as a condition of getting or keeping their job; it’s time for more companies to consider — and choose — our state for their relocations and expansions and the jobs they will bring.

Chamber media statement

Legislative Report summary

 

Laffer: Right-to-Work a Beneficial Economic Tool for States

A few Chamber staffers joined hundreds in attendance at today’s Economic Club of Indiana luncheon featuring Arthur B. Laffer, an economist, author and former member of President Reagan’s Economic Advisory Policy Board (though he also asserted that Bill Clinton was "a great president"). When asked about right-to-work legislation, he lauded Indiana’s efforts to become the 23rd right-to-work state. Back in May, he co-wrote an editorial on the issue in the The Wall Street Journal. An excerpt:

The Obama administration’s National Labor Relations Board filed a complaint last month against Boeing to block production of the company’s 787 Dreamliner at a new assembly plant in South Carolina—a "right to-work" state with a law against compulsory union membership. If the NLRB has its way, Dreamliner assembly will return to Washington, a union-shop state, along with more than 1,000 jobs.

The NLRB’s action, which Boeing will challenge at a hearing next month, is a big deal. It’s the first time a federal agency has intervened to tell an American company where it can and cannot operate a plant within the U.S. It lays the foundation of a regulatory wall with one express purpose: to prevent the direct competition of right-to-work states with union-shop states. Why, as South Carolina Gov. Nikki Haley recently asked on these pages, should Washington have any more right to these jobs than South Carolina?

A recent New York Times editorial justified the NLRB decision by arguing that unions are suffering from "the flight of companies to ‘Right-to-Work’ states where workers cannot be required to join a union." That’s for sure, and quite an admission. We’ve been observing that migration pattern for years, but liberals have denied it’s actually happening—until now.

Every year we rank the states on their economic competitiveness in a report called "Rich States, Poor States" for the American Legislative Exchange Council. This ranking uses 15 fiscal, tax and regulatory variables to determine which states have policies that are most conducive to prosperity. Two of these 15 policies have consistently stood out as the most important in predicting where jobs will be created and incomes will rise. First, states with no income tax generally outperform high income tax states. Second, states that have right-to-work laws grow faster than states with forced unionism.

As of today there are 22 right-to-work states and 28 union-shop states. Over the past decade (2000-09) the right-to-work states grew faster in nearly every respect than their union-shop counterparts: 54.6% versus 41.1% in gross state product, 53.3% versus 40.6% in personal income, 11.9% versus 6.1% in population, and 4.1% versus -0.6% in payrolls.

For years, unions argued that right-to-work laws were bad for workers and for the states that passed them. But with the NLRB complaint, they’ve essentially thrown in the towel. If forced unionism is better for the economy of a state, why would the NLRB need to intervene to keep Boeing from leaving Washington? Why aren’t businesses and workers moving operations to heavily unionized places like Michigan, New York, Ohio and Pennsylvania and fleeing states like Georgia, Tennessee, South Carolina and Texas?

In reality, the stampede of businesses from forced-union states like Washington has accelerated in recent years. A 2010 study in the Cato Journal by economist Richard Vedder of Ohio University found that between 2000 and 2008 4.8 million Americans moved from forced-union states to right-to-work states. That’s one person every minute of every day.

Right-to-work states are also getting richer over time. Prof. Vedder found a 23% higher per capita income growth rate in right-to-work states than in forced-union states, which over the period 1977-2007 amounted to a $2,760 larger increase in per-person income in those states. That’s a giant differential.

So now the unions concede that this migration is indeed happening, but they say that it is unhealthy and undesirable because workers in right-to-work states are paid less and get worse benefits than the workers in union states. Actually, when adjusting for the cost of living in each state and the fact that right-to-work states were poorer to begin with, a 2003 study in the Journal of Labor Research by University of Oklahoma economist Robert Reed found that wages rose faster in states that don’t require union membership.

Employers that move away from forced-union states mainly do so not to scale back wages and salaries—although sometimes that happens—but to avoid having to deal with intrusive union rules, the threat of costly work stoppages, lawsuits, worker paychecks going to union fat cats, and so on.
 

Weighing In (Over and Over) on RTW

What did you do Monday to honor the memory of Dr. Martin Luther King? With the holiday providing a day of respite from picketing the Statehouse, right-to-work opponents decided to focus in part on this blog and "influence" (we’re supposed to stay away from negative words) the poll question asking whether respondents support RTW.

Through Sunday, the "yes" votes were 65% with about 300 total votes cast. By 5 p.m. Monday, there were nearly 1,000 votes with 79% or so on the "no" side. Quite an amazing reversal of fortunes, huh?

Although the admittedly unscientific poll is supposed to be one vote per person, it’s no secret that one can work around that caveat without too much effort. Congratulations to union advocates for a strong social media campaign, driving large numbers of people to vote (early and often as they used to say in Chicago). Leading the way, however, was the person who either found an automated way to impact the results or had little else to do on a Monday afternoon, voting about 100 times himself or herself in a short period of time.

Ingenuity gets an A; democracy a failing grade. 

With the poll removed for obvious reasons, attention has turned to commenting on various blog posts that explain the good aspects of individuals having the choice of whether they wish to join a union, etc.

For those pushing that no business should have to pay dues to belong to the Indiana Chamber, about 5,000 companies each year voluntarily pay dues while many others throughout the state do not. All businesses benefit from many of our efforts. If we do our job well, many will retain their membership or become new supporters.

Thanks for contributing to the debate; let’s hope just that takes place at the Statehouse this week as lawmakers make the determination on whether Indiana should become the 23rd right-to-work state.

Obama’s NLRB Appointments Raise Concerns About Board

The National Labor Relations Board has been in the news quite a bit lately, as we mentioned a couple of weeks ago on this blog. Now, President Obama’s latest NLRB appointments are drawing the ire of some concerned he may be creating an anti-business sentiment on the board. National Journal reports:

President Obama made three recess appointments (recently), filling vacancies on the National Labor Relations Board that were left open by Republican refusals to confirm appointees.

The appointments to the NLRB, a lightening rod for conservatives opposed to any expansion of labor rights, are Sharon Block, currently deputy assistant secretary for congressional affairs at the Labor Department; Terence Flynn, now the chief counsel to NLRB member Brian Hayes; and Richard Griffin, general counsel for the International Union of Operating Engineers.

Block’s appointment fills a vacancy left by Craig Becker, a former associate general counsel to both the Service Employees International Union and the AFL-CIO who was seated on the NLRB via a recess appointment in March 2010. Obama withdrew his appointment of Becker for a full term last month after it was fiercely resisted by Senate Republicans.

The NLRB appointments followed Obama’s controversial recess appointment of Richard Cordray to a new consumer board…

The Wall Street Journal also reports how business groups are less than thrilled about the appointments, or the manner in which they were appointed:

Unions applauded the appointments, which will likely earn Mr. Obama some goodwill with this key Democratic constituency heading into November’s presidential election. SEIU President Mary Kay Henry said Mr. Obama "showed true leadership" with his installments, a notable compliment given that last year, union leaders accused the president of being too willing to compromise with Republicans.

The International Union of Operating Engineers, which employs Mr. Griffin, said he is fair-minded and would provide "stability and balance to American workers and employers." The Senate Republicans that have tried to cripple the NLRB have a position "comparable to ejecting the referee if you don’t like the score of the game," the union said in a statement.

Business groups and Republicans disagreed. Sen. Mike Enzi of Wyoming, the ranking Republican on the Senate Health, Education, Labor and Pensions committee, said he was "extremely disappointed" in Mr. Obama’s decision to "avoid the Constitutionally mandated Senate confirmation process." Mr. Enzi said that two of the three nominees were submitted to the Senate on Dec. 15, just before the Senate was scheduled to adjourn for the year. That gave the Senate "only one day to consider and review these nominations," he said in a statement.

Some labor lawyers who represent employers suggested Wednesday that lawmakers might legally challenge Mr. Obama’s appointments. Senate Republican Leader Mitch McConnell stopped short of saying he would do so but suggested Mr. Obama might have overstepped his boundaries. The NLRB and consumer protection agency appointments "potentially raise legal and constitutional questions," Mr. McConnell said in a statement, adding that the ones at the NLRB "are particularly egregious."