Rhode Island Politics & Taxation, Part XIX: Another Stab at Killing Off Future Economic Growth

A new ProJo editorial comments on the plan to unionize babysitters in Rhode Island:

...the Rhode Island General Assembly is roaring ahead with a very bad plan to unionize babysitters -- and send the gigantic bill to the taxpayers...

...The bill would create a new and very powerful special interest added to the one that often rules the roost on Smith Hill. In doing so, it would also create an astronomically expensive and permanent entitlement.

The plan, to be voted on in both the House and the Senate Tuesday, represents a very big present to the public-sector labor leaders who exert enormous influence in the legislature, and another assault on good government, the common interest and common sense. The only thing that will stop it is citizens rising up before Tuesday and saying to their legislators: Wait a minute, represent the public's interest!

Here is what the labor chiefs want the legislature to do: force the state to start negotiating pay and benefits with about 2,600 certified and non-certified "day-care providers" -- in some cases, no more than untrained friends and neighbors who babysit.

It would be an absurdity to treat such self-employed day-care providers as the near-equivalent of unionized employees, simply because they receive some subsidy from, and are licensed by, the state. Imagine all the money that would have to flow from the taxpayers to pay for the additional pay, health care, pensions and other benefits!

Babysitters would become a vast state monopoly and entitlement, wrapped in rigid and irrational rules.

And that would be just the start. What other people who sell some service to the state would be next in line for similar goodies?...

This has nothing to do with helping women and children. It has everything to do with further empowering the public-employee-union leaders and squeezing more money out of citizens.

If the union leaders get their way, millions of dollars in dues will pour into their coffers, and they will expand their armies of campaign workers, further strengthening the public-sector unions' power in state government.

We know where that has gotten the state to this point...

It has to stop...

State Senator June Gibbs and State Representative Susan Story, who serve as Chair and Vice-Chair of the Permanent Legislative Child Care Commission respectively, have contributed to the public debate with this important editorial:

...we are disappointed and disturbed by the Service Employees International Union Local 1199's recent push to expand its membership at the expense of the working families and child-care workers who have been helped by our Starting RIght system. Through glossy brochures and news releases, the union leadership has made some grossly unfair and inaccurate statements about child care in Rhode Island. With our experience and knowledge of the state's child-care industry, we want to set the record straight about the harmful effects that unionizing the private, home-based family child-care providers would have...

Read the entire editorial to get the real story.

Bruce Lang calls it:

...the most raw power grab I've ever seen in Rhode Island. There is absolutely nothing good or fair about this effort...

There is one advantage to the voters: If this does come up for a vote in the legislature, we all will get the clearest proof ever of which senators and representatives are truly against the people of our wonderful state. Those "public servants" who vote yes for this outrageous legislation certainly do not deserve our respect or to be re-elected.

As the debate rages here in Rhode Island, it is worthwhile to note the aggressive practices of the Service Employees International Union, which is pushing this unionization effort:

Union membership has declined steadily for decades, but...[t]he Service Employees International Union, for one, is trying to reverse the trend by waging an aggressive war against business.

...SEIU now seems to depend more on corporate intimidation rather than recruiting.

When Advocate Health Care refused to give SEIU access to its 24,000 employees, two busloads of protesters from SEIU-affiliated activist group demonstrated at the suburban Chicago home of Advocate's executive director in the summer of 2003. The demonstration wasn't about pay or labor conditions, but unrelated allegations of price gouging and predatory collection practices...

"SEIU began what Advocate and other health care observers are describing as an aggressive corporate campaign to malign the 10-hospital system's reputation until it cried uncle and gave unfettered access to employees, their home phone numbers and addresses," Health Leaders reported.

Commenting on SEIU's motives...labor attorney K. Bruce Stickler suggested that by organizing Advocate's employees, the union would gain annual dues of more than $10 million...

In its campaign to unionize the security firm Wackenhut, SEIU used a...report by the National Research Council calling for a security assessment of nuclear power plants to attack Wackenhut's reputation by releasing an alarming report, "Homeland Insecurity: How the Wackenhut Corporation is Compromising America's Nuclear Security."...

SEIU even attacked Wackenhut indirectly through one of its federal contracting partners, Alutiiq Security & Technology, a native Alaskan-owned corporation...

...but SEIU doesn't mind the victims it leaves in its wake, including the indigenous people of Alaska, who benefit from dividends, cultural programs, and scholarship funds that depend on profits from businesses like Alutiiq's.

The biggest prize for SEIU is Wal-Mart's 1.4 million employees. SEIU President Andrew Stern leads a nonprofit organization called Five Stones, whose self-described mission is to raise awareness about the "Wal-Marting" of the economy.

Teaming with other left-wing activist groups, Five Stones launched a campaign called Wal-Mart Watch to force the company to capitulate to the unions, which, by the way, are routinely rejected by company employees whenever organizing is voted on.

The SEIU even attacked the Congressional Black Caucus for its working relationship with Wal-Mart, the largest employer of African-Americans...SEIU supports an aggressive expansion of the AFL-CIO's "capital strategies" program to harness union financial power to become Wall Street's largest voting bloc. But while the AFLCIO's goal is only directed at "worker friendly economic and business development," SEIU's Mr. Stern wants to focus the program on increasing shop organization. "Look at [real estate investment trusts] and find a way [to bring pension fund pressure] to organize markets, construction sites, office buildings, and hotels," Stern said.

SEIU seems bent on unionizing workers whether they want or need it, and, apparently, will say and do almost anything to make that happen, regardless of who gets hurt.

These actions are entirely consistent with the information contained in this Business Week article on SEIU's president, Andrew Stern:

...Stern's message: Labor remains in a death spiral, and its house needs a top-to-bottom overhaul if it's ever going to revive. The AFL-CIO, he charged, has become an antiquated structure that "divides workers' strength." When the SEIU's own policies and traditions hindered its expansion, Stern reminded his audience, he swept them aside. Barring drastic action, he told his delegates, the 1.6-million-member SEIU should break away and start a new federation. Change "is so long overdue that we either transform the AFL-CIO -- or build something stronger," he proclaimed.

In the clubby world of organized labor, these harsh public words were an open declaration of war -- one that has been roiling the nation's labor leaders ever since...Stern and four fellow union leaders...formed the New Unity Partnership (NUP) in 2003 to showcase what they want to do.

Now NUP, led by Stern, is accelerating its campaign, hoping to shake up the entire 16 million-member labor movement. The goal: to get unions growing again in an economy in which their membership has fallen to just 13% of the workforce. Stern, who leads by far the largest and fastest-growing U.S. union, is aiming high, planning to force the federation to confront its malaise with constitutional changes when the AFL-CIO meets next July for its quadrennial convention. He and fellow NUPsters haven't worked out the details, but they have been hashing out the broad themes for a year. The central idea is to slash the AFL-CIO's 60 unions to 15 or 20 powerful mega-unions -- and get those to focus on building what they call membership density, or share of the labor market, in specific industries, thereby giving unions more clout to lift wages.

Capturing the leadership is also in the plan...Some labor leaders say they see Stern as power-hungry and arrogant...

Nothing less than a deep sense of desperation about the fate of organized labor drives Stern & Co. The forces of globalization that began pounding labor's manufacturing strongholds in the late 1970s have intensified in recent years as offshore production has exploded. Membership has slid steadily in service industries, too. In everything from retailing to health care to office work, deregulation, heightened competition, and cheap immigrant labor have forced employers into a ceaseless struggle to keep down costs, including wages and benefits...

Most employers...see unions as more suited to an industrial age, with often-rigid work rules and little to offer in a high-tech, knowledge-based economy. Certainly, unions' ability to protect pay and benefits has diminished drastically, as seen in the huge pension losses for unionized workers in steel and airlines...

Still, Stern's drive to kick-start labor comes from watching the SEIU and a few other unions succeed in becoming relevant to workers despite all the obstacles...

Stern has been...laying the groundwork for a parallel, CIO-style federation should the campaign to transform the AFL-CIO fail to take hold...He's building separate political muscle, shelling out an astonishing $65 million to elect John Kerry and make the political atmosphere more receptive to a labor comeback. Stern helped found the Democratic Party's most successful 527 political committee, America Coming Together, which is headed by former AFL-CIO Political Director Steve Rosenthal (a close personal friend with whom he has shared a New Jersey beach house for 25 years).

The SEIU also set up a political network aimed at nonunion Americans called PurpleOcean.org, modeled after a similar effort the AFL-CIO launched last year. Stern told his convention: "We know that even if we build strength in our industries, no one union, including SEIU, can succeed as an isolated island of strength in a nonunion sea. As the largest union, it is our job to help rebuild U.S. labor's strength."

An ambitious, impatient man with the lean frame of a regular runner, Stern has turned the SEIU into a whirlwind of activity that he thinks others could emulate -- if they're willing to change how they operate...At the SEIU's 2000 convention, he persuaded delegates to set a specific recruitment spending target for all locals: 20% of their budgets, totaling $80 million. And he got them to come up with $50 million more for an organizing fund.

Meanwhile, Stern funneled half of the international union's $100 million annual spending into membership growth. Overall, the SEIU and its locals devote some $180 million a year to expansion, says SEIU Executive Vice-President Tom Woodruff. That's nearly twice the AFL-CIO's entire annual budget.

It has worked -- which is one reason even labor leaders Stern rubs the wrong way still pay him heed. While most unions are shedding members, the SEIU will hit 1.8 million by the end of the year, with only about 100,000 of the growth coming from mergers with smaller unions, says Woodruff. No other union comes close to matching such a record...

To Stern and his NUP colleagues, the lesson is elementary: Unions can't lift workers into the middle class unless they control a significant chunk of the labor market, either geographically or by industry. Hence their focus on membership density. It's not enough, they say, to simply increase their absolute numbers. Unions must think strategically, targeting whole areas and industries and coordinating their efforts against market forces that drive companies to undercut each other...

Clearly, in an economy dominated by corporate giants, Stern and his NUP colleagues argue, unions must gain scale, too...

...Stern, by contrast, has an intense, driven personality that propelled him into leadership roles at an early age. The son of middle-class parents in suburban West Orange, N.J., he got an Ivy League education at the University of Pennsylvania, where he gravitated toward the student movement. He joined the SEIU at 21 as a state social worker and soon became head of the local. By 29, he had vaulted onto the international union's Executive Board, the youngest person to have made it there.

His zeal for left-leaning social causes dovetailed with the traditions of the SEIU. As a young SEIU official in the early 1980s, Stern joined other activists in the union to force through controversial resolutions opposing U.S. military intervention in Latin America. More recently he threw his union's weight behind Howard Dean's Presidential campaign, switching to the more mainstream Kerry only after Dean flamed out. He also has cultivated close relations with a wide range of social leaders. (His wife, Jane Perkins, from whom he is getting a divorce, headed the environmental network Friends of the Earth in the 1990s.)...

...Stern's outspokenness has riled a number of union presidents who perceive him as self-serving. Critics argue -- with some validity -- that much of his recruitment success has come among easy-to-organize public-sector workers in home health aid and child care -- not among the tough-as-nails private-sector employers that unions must prevail against to grow again...

Think about the magnitude of the challenge we face in Rhode Island: A largely passive citizenry facing a compliant state legislature who march to the beat of a tough, power-driven union who doesn't care what happens to the Rhode Island economy - as long as they get theirs. They are steadily kllling off any potential for economic growth in this state.

There are consequences to the union's actions, as I wrote in a 2004 ProJo editorial:

Even so, this debate is about...about freedom and opportunity for all -- and family budgets in the future. The greatness of our country is that people can live the American dream through the power of education and hard work.

High taxation and mediocre public education create a disincentive for new-business formation in Rhode Island. That means fewer new jobs, and less of a chance for working people to realize the American dream. It also means people have an economic incentive to leave the state -- and the ones who can afford to do so will continue to leave.

Unfortunately, the ones who cannot afford to leave are the people who can least afford the crushing blow of high taxation and mediocre education. The status quo dooms these families to an ongoing decline in their standard of living. That is unjust.

The unions have political power on their side today. They will, no doubt, win some short-term battles. But, like all those clinging to untenable economic models, they are on the wrong side of history and will lose the war over time. The only question is how much economic pain they will inflict on the state's residents along the way.

We are at a crossroads in Rhode Island. If we tackle issues now, a turnaround with only some pain is possible. If we delay, we will doom multiple generations of working families and retirees to further tax hell and a reduction in their standard of living. That is wrong.

This public debate is about breaking the chains of bondage and giving all citizens the freedom to live the American dream here in Rhode Island. What greater legacy can we leave for our children than a fair shot at the American dream here in their state?

This posting continues a periodic series on Rhode Island politics and taxation, building on eighteen previous postings:

I - Guiding Principles for Sound Public Policy
II - The Outrageous Tax Burden in Rhode Island
III - 2004: The Year in Review
IV - The NEA's Disinformation Campaign
V - Governor Carcieri's State of the State Address
VI - "Citizens for Representative Government's" Deceitful Manipulation of the Constitutional Convention Vote
VII - The Extreme Tax Burden in the City of Providence
VIII - Rhode Island Gets a C+ on its Report Card
IX - How Speaker Murphy's Changing of the Rules of the House Reduces Your Freedom
X - East Greenwich Teachers' Salary and Benefits Data
XI - What Was Rep. Fox Doing in Portsmouth?
XII - Why Do RI Citizens Passively Consent to Governmental Control by Powerful Interests?
XIII - RI House Leaders Show No Respect for Rule of Law by Undermining Separations of Powers, Part I
XIV - More Bad Faith Behavior by the NEA
XV - RI House Leaders Show No Respect for Rule of Law by Undermining Separations of Powers, Part II
XVI - Tom Coyne - RI Schools: Big Bucks Have Not Brought Good Results
XVII - RI Public Pension Problems
XVIII - Union Doublespeak, Again

ADDITIONAL INFORMATION:

Here is a Washington Times article about the SEIU and union politics entitled 5 unions plan new group to fuel labor.

Here is John Hazen White, Jr.'s letter to the editor entitled Nail in R.I.'s Coffin.

Here is an editorial from Stan Israel, vice president of District 1199 of the SEIU.

Here is Ed Achorn's editorial entitled A Bright, Clear Line in R.I., which includes these words:

...But the special interests can defeat the common good only when the majority lets them. The union leaders are counting on the majority to be ill-informed, apathetic, distracted by family life or summer fun, or too busy working to pay attention. If every citizen reading this took the time to call his or her legislator to protest this latest assault, most members of the General Assembly would tremble at pursuing this destructive and ill-considered path...

The State House passed a bill on June 15.

The State Senate passed a bill on June 16.

Here is another letter to the editor.

Two state legislators in favor of the bill comment here.

Tom Coyne also offers some excellent thoughts in his June 17 OnTheRadar posting on a subject which has not been discussed publicly:

...As we have noted, our fundamental problem with the home daycare workers bill has nothing to do with unions. We have worked with private sector unions, and have no problem with them for one simple reason. As Bradford Soap showed, in the private sector, unions and management operate in a naturally self-regulating system. If the union asks for too much, the company goes out of business, or outsources jobs offshore. Just as important, in the private sector, management is prevented by antitrust law from colluding -- taking common negotiating positions versus unions, agreeing to charge consumers a certain price, or to limit the amount they pay their suppliers. Antitrust law ensures competition between private sector firms, which leads to the lowest price for consumers, and the best deals possible for labor and suppliers. Now consider this: at the heart of the home daycare workers legislation just passed by the General Assembly is an exemption from federal antitrust law. Under the so-called "state action" doctrine, state governments are allowed to exempt certain private sector companies from federal antitrust law to achieve a more important public policy goal. As we have noted below, the Federal Trade Commission has been aggressively investigating what it perceives as widespread abuses of the "state action" doctrine, which it believes has too often been used to confer preferential economic benefits on politically-connected private sector firms. So, let us be clear about the implications of the home daycare workers legislation. Because they are exempt from antitrust law, these independent contractors will be allowed to legally collude, in determining (1) the rates they charge the State of Rhode Island to provide their services; (2) the wages and benefits they pay to their workers; and (3) the prices they pay to their suppliers. It does not take great foresight to understand that collusion will lead to higher prices paid by the State of Rhode Island, and hence to either higher taxes or cutbacks in spending in other areas (e.g., social safety net spending, investment in roads and bridges, public sector employee benefits, or aid to education)...

This ProJo editorial notes:

It is now on the record. Forty-one Rhode Island state representatives are so beholden to the public-employee-union chieftains that they are advancing a truly bizarre scheme: forcing the state to negotiate with home-based self-employed babysitters.

We advise citizens to clip and save the "How they voted" box on Page A-15 of yesterday's Journal -- and consult it before going into the booth in the election of November 2006. Also, watch for how the members of the Senate vote on this legislation.

And please tell your legislators what you think of their vote on this issue. (To find out who your legislators are, go to this Web site.)

The "yes" votes in the "How they voted" box represent lawmakers willing to further boost the cost of government -- and, of course, stick it to the taxpayers -- so that they may line the pockets of special interests. It's all about making a deal: The lawmakers get campaign contributions and support, and the public-employee unions get a new gusher of dues and ready-made campaign workers.

The only people who will suffer are the majority of Rhode Islanders -- who, if this bill is enacted, will pay even higher taxes. Meanwhile, protection of children in child care will be undermined.

It makes no sense to require the state to negotiate with self-employed babysitters (some of whom, far from being the "poor women" described in public-union literature, make well over $70,000 a year from the state). They cannot be state employees, because the state does not hire and fire them; it only licenses and regulates them. No other state negotiates pay and benefits with independent child-care providers.

Such an "innovative" change would, of course, open the gates to other workers who deal with the state to also grab a bigger piece of the taxpayers' money.

The child-care providers would inevitably use their clout on Smith Hill to erode the state's authority to regulate day care -- that is, to protect babies and children. The focus would shift from child protection to the job and contract interests of the newest interest group...

...Governor Carcieri's promised veto...remains a close call. Which is why you should contact your legislators now -- and remember them next year at election time.

Governor Carcieri has vetoed the bill. The article notes his comments:

Calling it "the worst piece of legislation" he's seen, Governor Carcieri today vetoed a bill that would give home-based child-care workers the right to bargain with state agencies.

Caricieri, who had been expected to veto the bill, also described it as "a full-scale assault on Rhode Island taxpayers and families by powerful labor unions."

Here is the Hall of Shame, showing who voted for the bill. We will never forget: These people deserve to be defeated in 2006.

Here is an excellent letter from David Cote. All of us should consider the implications for working families in his letter and be quite concerned.