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.
 

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."
 

NLRB Developments This Week

Here are a couple key developments from the NLRB within the last week. If you’re a business owner, prepare to be annoyed:

Mandatory Posting Requirement
The National Labor Relations Board decided Friday to delay the required posting date of its new NLRB posting yet again — this time until April 30, 2012 (it was previously January 31, 2012). The NLRB’s web site reports:

  • The National Labor Relations Board has agreed to postpone the effective date of its employee rights notice-posting rule at the request of the federal court in Washington, DC hearing a legal challenge regarding the rule. The Board’s ruling states that it has determined that postponing the effective date of the rule would facilitate the resolution of the legal challenges that have been filed with respect to the rule. The new implementation date is April 30, 2012.

Rules Regarding Union Elections
Baker & Daniels reports: 

The National Labor Relations Board (Board) has formally adopted a final rule that will expedite the pre-election process and limit the post-election process in union representation cases. The rule will be published in the Federal Register on December 22, 2011, and is due to take effect on April 20, 2012.

As we previously informed you, the Board enacted this rule, which will significantly impede an employer’s right to communicate with its employees and petition the government for redress, while faced with the prospect of losing its quorum at the end of 2011. The rule focuses primarily on union representation cases in which parties cannot agree on issues such as whether the employees the union seeks to represent are an appropriate voting group. It significantly changes existing procedures in these types of cases by limiting the issues to be determined in the pre-election process and precluding pre-election review of regional office decisions in most cases. This rule will likely mean that elections are held in a much shorter timeframe.

It is expected that a variety of pro-business advocacy groups will pursue litigation in an attempt to overturn the new rules.

Unions will most likely be emboldened by the Board’s action, and it may spark an increase in union organizing. To remain union free, it is increasingly important for employers to focus on positive-employee relations and supervisory training.

Our Statement on NLRB’s Push for Swifter Union Control Via Election Process

The National Labor Relations Board (NLRB) has just approved a push for swifter union control through speedier elections that could occur within two to three weeks after filing a petition. Before the rule goes into effect, it will be drafted into final language for a subsequent NLRB vote within the next three weeks.

Comments from Indiana Chamber of Commerce President Kevin Brinegar on this development:

"This is yet another attempt by organized labor to abandon the historical democratic process within labor-management relations and tip the scales in favor of employees voting for a union. Currently, the average time it takes to have an election is 38 days. By cutting that time in half, unions are boldly trying to rob employers of their time to fully discuss the impact of unionizing their workplace.

"It all comes down to fairness. Employees need to be able to fully hear both sides of the union organizing argument, and then let them make an informed decision. What the NLRB is attempting is basically an ambush and once again illustrates the Board’s increasing abuse of power."

There are other concerning changes covered in the new rule, says Brinegar, including no pre-election appeals to the Board and any post-election review of issues would be strictly discretionary.

Background:
The NLRB has less than three weeks to finalize its recommendations since the Board loses its quorum of three members later in December, including one key supporter of the approved election changes. The Board’s vote on Wednesday was 2-1. There are up to five members in total on the Board at any one time.

The National Labor Relations Act provides employees with the right to form or join a union in order to collectively bargain with their employer. To be recognized by an employer, a union must demonstrate it has the support of a majority of the employees. Any union election process is supervised by the NLRB.

New NLRB Poster Requirement: Place Your Pre-orders Now

We want to let you know that on August 25, the National Labor Relations Board approved a new mandatory posting for private employers regarding the National Labor Relations Act.

You can pre-order new poster sets on our web site or call (800) 824-6885. Or better yet, join hundreds of Hoosier businesses by signing up for our poster subscription service. With this service, we’ll just send you new poster sets when MANDATORY changes are made. This gives you peace of mind of not having to track updates to keep your company in compliance. The service itself costs nothing extra; you just pay for the posters as you normally would. (Poster sets are $45 each and Indiana Chamber members receive 25% off.)

The new poster has not yet been released by the NLRB, but expect your new poster set(s) about two weeks after it is. (The new NLRB notice must be posted by November 14.)

NOTE: As this is an additional notice, our sets will likely once again include three sheets instead of two. This will not impact the cost on your end, however.

House GOP: We Have a Plan

House Republicans in Congress have a plan for their quickly-approaching fall/winter session. Will it be carried out? Based on recent experiences, one has to be skeptical. But a plan to tackle relief for small businesses and specific costly regulations is a good first step.

The Small Business & Entrepreneurship Council says the following was included in a memo from Majority Leader Eric Cantor of Virginia to caucus members:

The House GOP plans to repeal specific regulations, and advance broader regulatory reform bills such as the REINS Act and Regulatory Flexibility Improvements Act.  In addition, there will be forthcoming action on a bill to allow small business owners to take a tax deduction equal to 20% of their income. Hopefully, the House will move quickly on this pro-growth proposal.

The House GOP will move to repeal the 3% withholding mandate on government contractors. As SBE Council and its allies have argued, this withholding tax would especially burden small business contractors by worsening cash flow conditions and putting small firms at a competitive disadvantage in the government procurement marketplace. The mandate will also raise costs for taxpayers and state and local governments.      

The "top 10 job-destroying regulations" identified by the GOP leadership, and the time-table for congressional action follows:

NLRB’s Boeing Ruling (Action: Week of September 12): H.R. 2587, the Protecting Jobs From Government Interference Act, would take the common sense step of preventing the NLRB from restricting where an employer can create jobs in the United States.

Utility MACT and CSAPR (Action: Week of September 19): H.R. 2401, the Transparency in Regulatory Analysis of Impacts on the Nation (TRAIN) Act would require a cumulative economic analysis for specific EPA rules, and specifically delay the final date for both the utility MACT and CSAPR rules until the full impact of the Obama Administration’s regulatory agenda has been studied.

Boiler MACT (Action: Week of October 3):  H.R. 2250, the EPA Regulatory Relief Act would provide a legislative stay of four interrelated rules issued by the EPA in March of this year.  The legislation would also provide the EPA with at least 15 months to re-propose and finalize new, achievable rules that do not destroy jobs, and provide employers with an extended compliance period.

Cement MACT (Action: Week of October 3):  H.R. 2681, the Cement Sector Regulatory Relief Act would provide a legislative stay of these three rules and provide EPA with at least 15 months to re-propose and finalize new, achievable rules that do not destroy jobs, and provide employers with an extended compliance period.

Coal Ash (Action: October/November): H.R. 2273, the Coals Residuals Reuse and Management Act would create an enforceable minimum standard for the regulation of coal ash by the states, allowing their use in a safe manner that protects jobs.

Grandfathered Health Plans (Action: November/December): The Energy and Commerce, Ways and Means, and Education and Workforce committees will soon be working on legislation to repeal these ObamaCare restrictions. Small business owners and their employees will not be able to "keep the health care plans they currently have" as promised by President Obama and supporters of the health care law.

Ozone Rule (Action: Winter): This effective ban or restriction on construction and industrial growth for much of America is possibly the most harmful of all the currently anticipated Obama Administration regulations. Consequences would reach far across the U.S. economy, resulting in an estimated cost of $1 trillion or more over a decade and millions of jobs. 

Farm Dust (Action: Winter): The EPA is expected to issue revised standards for particulate matter (PM) in the near future. The House will act on H.R. 1633, the Farm Dust Regulation Prevention Act. H.R. 1633 would protect American farmers and jobs by establishing a one year prohibition against revising any national ambient air quality standard applicable to coarse PM and limiting federal regulation of dust where it is already regulated under state and local laws.

Greenhouse Gas (Action: Winter): The EPA’s upcoming greenhouse gas new source performance standards (NSPS) will affect new and existing oil, natural gas, and coal-fired power plants, as well as oil refineries, nationwide. 

NLRB’s Ambush Elections (Action: Winter): This summer, the NLRB issued a notice of proposed rulemaking that could significantly alter current union representation election procedures, giving both employers and employees little time to react to union formations in the future. The result will increase labor costs and uncertainty for nearly all private employers in the U.S. The House will soon consider legislation that will bring common sense to union organizing procedures to protect the interests of both employers and their workers.

Indy News Anchor Files Complaint Against Union

WRTV-6 news anchor Trisha Shepherd is one of many American workers who believe she should actually receive the money she earns rather than a union she would prefer not to belong to. Most telling is her quote that she’s not trying to make a political statement, just trying to protect herself. While unions have every right to exist, how can forced membership be justified? The Indy Star reports:

A news program anchor for WRTV (Channel 6) has filed an unfair labor practice complaint against the union representing workers at the Indianapolis television station.

Trisha Shepherd, who anchors the evening newscasts, claims in a complaint to the National Labor Relations Board that the American Federation of Television and Radio Artists is illegally trying to collect dues or fees from her.

Shepherd’s two-page complaint, filed this week with the NLRB office in Indianapolis, has echoes of the controversy over right-to-work legislation that failed to pass the Indiana General Assembly.

Unions consider such laws to be politically motivated attempts to weaken the labor movement by cutting their ability to charge fees even to nonmembers who receive the benefits of collective bargaining.

Shepherd said Thursday that her complaint to the NLRB isn’t intended as a test case on right-to-work issues.

She said the controversy in Indiana, Ohio, Wisconsin and other states did not motivate her complaint against AFTRA.

"This is not intended as a political statement," she said.

"I’m just like any other citizen trying to protect myself," Shepherd said.

The union has been trying to collect $1,032 as of April 18. It hired a Pennsylvania collection company to try to get her to pay, according to NLRB filings.

Good to Know: NLRB Sides with Employer in Twitter Dismissal

If you’ve drafted a social media policy for your company, you’ve learned by now that it’s a bit of a gray area. A recent decision by the National Labor Relations Board should inspire some confidence in employers that — should the time come — it could be allowable to dismiss a staffer due to questionable use of social media. Although, in this case, note that the Tweeter in question did identify himself as an employee of the company in his bio. An electronic alert from the Oregon law firm Barran Liebman has the report (reposted here with permission):

In good news for employers, the National Labor Relations Board (NLRB) issued an advice memorandum finding that an Arizona newspaper’s termination of one of its reporters for inappropriate Twitter postings was not an unfair labor practice. The NLRB’s advice memo itself is great guidance for employers looking to understand what they can and cannot do when employees post offensive or disruptive messages about the company on social media sites.

Here are the basic facts that the NLRB examined: A Tucson, Arizona newspaper publisher terminated its public safety reporter after he posted a series of messages on his Twitter account, which the newspaper encouraged him to set up and which identified him as a reporter for the newspaper and included a link to the newspaper’s website. After the reporter tweeted, "[The newspaper’]s copy editors are the most witty and creative people in the world. Or at least they think they are," human resources questioned him about why he felt the need to post his concerns on Twitter instead of speaking to people within the organization. Although the newspaper did not yet have a formal social media policy, it then told the reporter that he was prohibited from airing his grievances or commenting about the newspaper in any public forum.

The reporter continued tweeting, including a tweet about a local television news station misspelling something in its Twitter feed and several tweets of his own commentary about homicides in Tucson:

"You stay homicidal, Tucson. See Star Net for the bloody deets."

"What?!?! No overnight homicide? WTF? You’re slacking Tucson"

"Hope everyone’s having a good Homicide Friday, as one Tucson police officer called it."

The publisher confronted the reporter about his tweets and instructed him to not tweet about anything work-related until they determined what to do. The newspaper then suspended him and terminated his employment.

The reporter filed a complaint with the NLRB, alleging that his termination violated Section 7 of the National Labor Relations Act (NLRA). Section 7 prohibits employers from disciplining employees (regardless of whether the workplace is unionized) who have engaged in "concerted activity." In this case, the NLRB attorneys concluded that the reporter’s Twitter messages were not protected and concerted activity because they did not relate to the terms and conditions of his employment, or seek to involve other employees in issues related to employment. For that reason, the newspaper was free to discipline and terminate him for misconduct since his conduct did not involve protected activity.

UPDATE (May 24): Here’s another NLRB decision regarding social media and the termination of employees. Clear as mud now?

New Posting Proposed, Would Be Mandatory

Though still in the comment period, it appears there could be a new mandatory federal posting looming. As always, you can trust the Indiana Chamber to keep you informed and to release new sets if this new posting is adopted. HRWatchdog posts:

The National Labor Relations Board (NLRB) proposed the new posting requirement in a Notice of Proposed Rulemaking submitted for publication in the December 22, 2010, Federal Register.

The new posting requirement would cover all employers subject to the National Labor Relations Act (NLRA), and would require posting of employees’ right to unionize under the NLRA. This posting would be mandatory in most all workplaces, regardless of whether union employees are present in the workplace. The posting requirement is similar to one that is now required for government contractors.

Employers may comment on the proposed rule during a 60-day comment period.

The new posting, as proposed, would include information on employees’ right to:

Organize a union;

  • Discuss terms and conditions of employment;
  • Take action to improve working conditions; and
  • Strike and picket. 

The posting would also have to include conduct prohibited by the NLRA, such as:

  • Prohibiting employees from soliciting for a union during non-work time;
  • Firing, demoting or transferring employees because of their support for a union; and
  • Threatening to close the workplace if employees unionize.

Finally, the new posting, as proposed, would require information on activities that the NLRA prohibits unions from undertaking:

  • Threatening loss of job unless the union is supported;
  • Refusing to process a grievance because of union criticism by an employee; and
  • Taking adverse action against an employee based on whether or not the employee has joined or supported a union.

Be sure to sign up for our poster subscription service so you never have to worry about tracking poster updates again. The service is free; you just pay for the posters.