Hi!
I don't think either side management or labor ios always right or wrong but one has to look at the individual sitauation.To differing degrees they may be right or wrong on an issue.
The bottom line is labor deserves to be respected and treated decently.Management deserves the same consideration.Misuse by either to the other is not good.When public sector unions are involved the general public is then involved as taxpayers and users of that government service.To a lesser degree in the private sector is the public affected.
The question is if someone works a reasonable amount of hours should that person have a minimum of compensation and benefits of decent food,shelter,and what are perceived as BASIC human needs not luxuries?To what extent should American labor be forced to compete with labor in the various countries where labor is highly exploited?
I know I must sound like a liberal Democrat but I am a Republican.It must be remembered that the purchasing power of labor is strengthened when they get better compensation particularly if it is higher than the minimum wage.
The affordable housing crisis in Rhode Island is REAL not a figment of one's imagination!The people who have this crisis include those making more than the minimum wage!
Regards,
Scott

A couple of reactions ...

First, though this will sound cynical, I believe the historical record will bear me out. Ultimately, for liberals / “progressives” / Democrats / socialists (essentially one in the same) it is not about helping the poor or “working families” – those these are the mantras they continually spout. In reality, it’s all about wealth redistribution.

In their world-view, any social “inequality” is bad;

“Inequality” is an inherent part of the capitalist system (though in reality it is inherent in any human social structure – but they prefer to blame capitalism because it is marked by other traits they don’t like – competition and meritocracy); and therefore

Any forced “redistribution” from those who are (“privileged”) to have “more” (that they may have worked for it and earned it is irrelevant) is an inherently good thing in society (i.e., their warped version of “social justice”). Thus we get “progressive” taxation and artificial minimum wages.

If it were really about helping the poor, then THEY would be the ones calling for massive reformation of the existing “War on Poverty” programs – which over 40 years have demonstrated not only that they don’t alleviate poverty, but instead exacerbate it.

If it were really about helping the poor, then THEY would be the ones calling for women to stop having babies out of wedlock, as this is the #1 factor underlying poverty.

Second, as to Scott’s observations, while an argument can be made for unions / collective bargaining in the private sector, the rationale falls apart when it comes to the public sector. As we’ve all too painfully here in RI, allowing a group of workers to “elect” management, in an enterprise that never need concern itself with competition or failure (i.e., going out of business), and for which the revenue is derived by force (taxation) is a recipe for eventual economic disaster.

I submit that as Republicans the “platform” for “helping” the poor should be OPPORTUNITY to achieve and maintain a MIDDLE CLASS lifestyle:

1) A presumption that every able-bodied (and able-minded) person will at least finish high school (if you’re too lazy to take advantage of this opportunity, why should society owe you more?);
2) Access to world-class schools for every child (meaning dissolution of the teachers unions and therefore dissolution of the institutionalized mediocrity they bring with them and true school choice and competition)
3) Low taxes to maximize business growth / jobs … and thus, opportunity.

Yes our workers have to compete with wages where other workers are “exploited.” I submit that years of “progressive” policies – minimum wages, mandates, regulations, litigation, continued erosion of the dollar through inflation – have all resulted in making our workers too expensive (and thus non-competitive) in the world economy.

Further, as the world economy is rapidly becoming a knowledge economy - just look at the numbers of engineers etc. that China and India are producing – the semi-literate products of our NEA “mediocritized” public schools are becoming even less competitive.

The “progressive” chickens are coming home to roost. Unfortunately, history tells us that they’ll successfully convince people that implementing EVEN MORE of their destructive policies are the solution, not the root of the problem.

If anybody here has read "What's the Matter with Kansas?", you'll have a better idea of what cheap pop means. The cons in Kansas use social issue boogeymen as a means to keep the citizens in fear and voting against their own economic interests, even in dirt-poor parts of the state where the people have nothing to show for their support of Republican policies, just dying family farms and businesses and impoverished schools. Can't blame Democrats or liberals for that (the state has a Dem governor only because of a Dem alliance with the GOP Mods, who recognize the Cons' excesses).
There are signs of change in Kansas, though - Jim Ryun was voted out of Congress, and AG Phill Kline (obsessed with getting the names of teenage girls who've had abortions while not giving a damn about the boys who knocked them up) has been shown the door.
Conservatism has a chance to work when it keeps government off our backs. It's conservatism's habit in the paat 30 years of trying to nose into our bedrooms (I guess freedom to marry the person you love is one of those "libertine freedoms") that's turned people against it.

I would like to ask one question. If you can give me a satisfactory answer, I will never darken your doorstep again. How's that for incentive?

There is one reason I come here. I want someone to explain to me:

My understanding is that the denizens of this site generally advocate low taxes, little or no gov't regulation of industry/commerce, and are opposed to any sense of redistribution of wealth.

Is that a fair and accurate statement?

If so, here is my question. These circumstances describe the US in the 1890s. What this meant, in practice, is that wealthy industrialists more or less bought off, or ignored gov't. Workers were paid dirt, and were never more than one misfortune from destitute. There were thousands of workplace accidents every year that left scores or hundreds of people dead or unable to work. Think Triangle Shirt Waist Fire. Patent medicines were sold that were often useless, if not downright harmful.

A very, very few were able to make a fortune and rise to the top. Vanderbilt, Carnegie, Astor...but the vast majority of the population lived in squalor. People were beaten and killed for attempting to form unions. There was no safety net of any kind, so if you had the misfortune to suffer an accident, you were assured of living the rest of your life in dire poverty. The upside is that "rest of your life" wouldn't be very long.

Why on earth do we want to re-create those circustances?

These circumstances only changed with the arrival of the Progressive movement--that is, gov't intervention. Then, unionization raised everyone's wages. Then, the GI Bill--more gov't intervention--allowed Vets to go to college. This combination of circumstances created the American economic dynamo of post WWII.

What did Tom W say about education? Well, a college degree is now significantly more expensive than it was in the 1960s. So, at the time when it's more important than ever, it's gotten less and less affordable. How can you hold that out as a solution, when it's getting further beyond the means of most people's incomes?

The dirty little secret is that wages have stagnated since the 1970s. It's no accident that this happened when union-busting was made fashionable once again.

So, answer that question, please. Why do we want to live in the 1890s again?

So the Vanderbilts can have their Newport mansions, and the rest of us can work as servants for them? Because that was the reality.

Why do we want to do that?

I'm making ten times what I was making in the 70's, and you call that stagnation? Why do you call that stagnation?

Klaus,

The late 1800s do not necessarily represent the “Utopia” of free commerce you are projecting onto conservative thought. As abhorrent as the idea of growing and complicating government control is the concept of a monopoly. Competition unhindered by the state is the goal of free market conservatism. Inevitably, as competition is eliminated, a marriage between industry and state must take place. When this occurs, restrictions on individual freedoms abound (as in 1890), thus inducing drag on a growing economy.

There is no desire to regress to 1890 working conditions. Though I might submit that 1890 quality of life represented progress over 1790 quality of life.

Furthermore, on the wage stagnation comment, I’d agree with SMMTheory’s statement. My gross wages have increased by a factor of six since my first entry level job. My net take home pay has not, however. Perceived stagnation of wages is as much a function of taxation as anything else. In RI, wages of $40k each puts the earner in the 25% fed tax bracket and nearly 7% for the state. Coupled with 9% for payroll taxes, every $1 increase in compensation will yield only $0.59 to the taxpayer, despite costing the employer $1.09. When the employer must pay nearly double to put each dollar into the employee’s checking account, there can only be so much earnings growth.

When an organized workforce bargains for guaranteed increases of 3% annually, the net increase to the taxpaying union member will be less than cost of living increases. The villain is not the employer, who often risks everything for the business and is entitled to the reward associated with that risk, but rather is the “state” for taking nearly half of every new dollar earned by the worker while providing nothing new to that taxpayer.

Now that labor laws are set and safety standards are established (btw while regulatory in nature, do not necessarily restrict competition when applied uniformly and thus are not wholly detested by all conservatives), the primary interests of unions is to get more for its constituents. Answer me this, then. Why do unions continue to align with a party insistent on increasing the tax burden and hampering their employer’s ability to grow, thus making the pot available for negotiation larger?

>Why do unions continue to align with a party insistent on increasing the tax burden and hampering their employer’s ability to grow, thus making the pot available for negotiation larger?

Because the union movement is now essentially a PUBLIC SECTOR union movement.

Organized labor is now less than 10% of the private sector workforce - mainly because in a competitive environment, over time, unionized companies tend to shrink (if not go out of business). Just ask FORMER auto workers and steel workers and airline workers what unionization has done for them.

Conversely, public sector unionization rates approach 50%, and are climbing. This mushrooming began with JFK rewarding the AFL-CIO for its campaign support by signing an executive order permitting federal employees to unionize (EVEN FDR, WHO ENACTED THE NATIONAL LABOR RELATIONS ACT AS PART OF THE NEW DEAL, WAS OPPOSED TO PUBLIC SECTOR UNIONIZATION).

The Democratic-controlled states soon followed for their own employees (RI in 1966).

Today the private sector segment of organized labor is becoming the minority, with the majority of AFL-CIO comprised of public sector employees (and quasi-public sector employees, such as the national trend to unionize daycare workers a/k/a welfare-mom babysitters).

So today organized labor is mostly concerned with getting compensation increases for public sector employees - and increasing its dues revenue by increasing the ranks of public sector and quasi-public sector employees (e.g., "lower class sizes" in schools, providing baby-sitting services for welfare queens).

THIS MEANS GROWING GOVERNMENT AND INCREASING THE TAX BURDEN, FOR ULTIMATELY MUCH OF THIS MONEY IS RECYCLED BACK INTO THE UNION BOSS' COFFERS.

Rhode Island is a poster-child for this dynamic.

And it this harms private sector working families, even those in unions, they're "expendable" to the unions for they're no longer its primary constituency.

Moreover, ironically, the private sector pain helps the Democrat / public sector union bankrollers by increasing demand for "government action" to help the "working poor," "affordable housing" etc. etc. etc.

So the schmucks who vote for Democrats think that the Democrats are going to do something to help their situation, when in fact it's only going to make it worse.

So the choice, Klaus, is between a gov't which leaves the workplace completely unregulated and a gov't that overregulates all aspects of business to the point of smothering; funds a sizeable, counter-productive entitlement block (welfare, expanded TDI definitions, etc.); wastes tax dollars by the billions on pork (Republicans as guilty as Democrats); and creates its own bloated, lumbering, duplicative workforce?

Surely we can vision a third, more appealing scenario.

Excellent points by Roland and Ragin'. Funny that Ragin' used "schmucks" in that context. That was exactly the word that occurred to me about the driver of a car I saw a couple of weeks ago that had both "Charlie" and "Whitehouse" bumperstickers on it. The Dems have a lot of people bamboozled.

One politician has seen the light about bloated gov't, by the way. Not an American. The country of Libya just announced that it will lay off a third of its gov't workforce "to try to ease budget pressures and stimulate the private sector". Can we get their Prime Minister to sit down with Billy Murphy?

Guys, I appreciate the effort, but you'r not getting to the heart of the question.

Roland and SusanD are on what feels like the right track. No one wants a centrally-planned economy. No one wants regulation that strangles enterprise.

However, my point is that, right now, in the real world, business is pushing for every inch it can get. Think Enron. Think back-dating of options. The gov't body regulating mine safety relaxed requirements for emergency breathing equipment and there was a spate of mine disasters.

And, in the 1890s, what you had was a powerful movement towards monopoly. In the railroads. Steel. Electricity.

I realize that no one is advocating that as an ideal. My point is, without a large, powerful, central gov't, who or what is going to stop business from re-enacting monopolistic behavior. Look at Microsoft right now: they can buy and strangle rival net browsers, and free operating software can't compete with their near-monopoly on PC systems.

Who will be able to put the next JP Morgan in his place, if gov't can't do it? Answer: no one.

And, as far as the comments on unions, we need to set context. Ragin' in RI: I mean this constructively, but you are confusing unions as the exist with the role they played from 1930 on. Right now, public sector unions are about the only ones left with real clout. But, 'twas not always thus.

Back in the period 1930-70, they lifted millions of workers from the ranks of the proletariat and dropped them comfortably into the middle class. I'm talking Steelworkers, UAW, AFL-CIO. The success of the union movement is why American never developed a legitimate Communist Party the way Europe did. Henry Ford was a commie-hater, but he was smart enough to realize that he had to co-opt his employees rather than grind them into the dirt, which is too much of the prevalent attitude today.

Which explains the stagnant wages. Folks, make a distinction between your personal experience and the general trend. When I say wages have stagnated, what I mean is that the median (not the mean, or average) wage has not risen since the 1970s. And that is in real dollars, adjusted for inflation. And median is the proper measure, because it's the point at which 50% are making more, and 50% are making less. As such, it's not as susceptible to outliers, like Bill Gates. If he walks into a room of 100 people, the mean/average goes through the roof, but the median probably doesn't change. As such, it better reflects the reality faced by most of the population.

And it's no coincidence that this has occurred in a period when private-sector union membership has cratered.

So, that brings my original question: if you remove the regulations, and the power of gov't to check business, what is to stop a reversion to the 1890s?

As for the improvement 1790-1890, I'm skeptical. In 1790, most people were farmers, which meant a likely minimun of stuff to eat. City dwellers who work in factories and live in tenements are more apt to starve, or die of malnutrion-related disease. There were more people in 1890, but the improvement in living standard would have been minimal, if not negative.

So, again, why re-create the circumstances that saw most people living like wage slaves? A few very, very wealthy people and a huge proletariat. Why not work towards re-creating the 1950s, when income was much more effectively distributed? And, btw, that sort of distribution means a lot more people have money to spend, which creates a virtuous cycle.

PS. The fact that median wages have stagnated is why the raises for public sector unions seem so outrageous.

When wages in the private sector are not climbing, increased taxes take an ever-larger bite out of take-home pay.

The conservative solution seems to be to cut the wages of public employees. A better solution is to raise the wages of the taxpayers. And that means their wages. Tax cuts ain't going to do it. Let's face it: the $300 that most of us got in 2002 isn't making a whole lot of difference.

And, btw. If increased marginal rates are such a deterrent to people making more money, one would expect to see clusters of wage earners poised just below the next bracket, as they stop working hard because any increase will just go towards taxes. Well, guess what? It doesn't happen. Taxes have no deterrent effect on wage earnings.

That is a classic case where (bad) economic theory departs radically from real life.

Charles Murray had three excellent articles in this week's WSJ. One of his points answers Klaus' question, "Who will be able to put the next JP Morgan in his place, if gov't can't do it?" http://www.opinionjournal.com/extra/?id=110009541

Murray described the leaders of industry as the intellectually gifted - "The encouragement of wisdom requires being steeped in the study of ethics, starting with Aristotle and Confucius. It is not enough that gifted children learn to be nice. They must know what it means to be good."

Klaus,

For somebody who claims to work in the private sector, you just don't get it. In a world of interstate, never mind global competition, if you bring in your private sector union and make unreasonable wage demands, guess what? Companies leave Rhode Island, either for other states or for other countries. Just look at what happened last year (or was it the year before? Time flies when your state is heading into a fiscal black hole)at Bradford Soap. Now contrast that with what has happened time and time again in public sector union negotiations in RI. Bascially, why not drop the ideological rhetoric and word games, and join the rest of us in the real world. If you can't see the difference between public and private sector unions, and the reality we face in RI today -- well, I guess that's why you're neither a CEO nor Governor, and why you probably don't see the clue train barrelling down the tracks and ready to destroy so many long cherished and now outmoded Ocean State myths...

Klaus

We seem to agree that monopolies generally aren’t good. Yet you are only concerned with the corporate monopolies. What about the current public employee union monopoly? They have a monopoly on local politics, influence all levels of government, inflate the cost of living and taxes on all - especially those who can least afford them, and, due to a lack of any competition, give our society a mediocre product.

If public employee unions really are concerned about “the working family”, and you are indeed right that corporate America is to blame for the plight of us working folks, then why aren’t the unions using all that union dues/political clout to rectify things. Why aren’t the unions spelling this out for the working people, as you are, so the masses can understand who is keeping them down, how they are being kept down and why?

>>Back in the period 1930-70, they lifted millions of workers from the ranks of the proletariat and dropped them comfortably into the middle class. I'm talking Steelworkers, UAW, AFL-CIO. The success of the union movement is why American never developed a legitimate Communist Party the way Europe did.
The credit you give unions is way overblown. The unions came along in the 1930’s and had no noticeable effect on wages – can’t for long go against the tide of the overall economy, i.e., “The Great Depression.” Similarly, though the “New Deal” didn’t end the depression, WWII did. And the United States came out of it with a rip roaring economy and, and to paraphrase JFK (member of the pre-McGovern / Jane Fonda takeover of the Democrat Party): “a rising tide lifted all boats.”
Private sector unionization rates peaked in the mid-1950’s … and yet private sector incomes peaked around 1973. If unions were the cause and effect of the growth of the “middle class” and “working family” income growth, then the figures would correlate more closely in time. What the peak in family incomes does closely follow is the huge growth in government (and taxation) that was precipitated by the “Great Society” and the early-1970’s addition of numerous government bureaucracies (not to mention the growth of the existing ones).
Your use of the terms “proletariat” and “legitimate Communist Party” are most telling. Twentieth century history has shown, indisputably, that collectivism – whether in the form of communism, socialism or fascism - is not just an economic failure, but also the single-greatest precipitator of genocide.
>>The fact that median wages have stagnated is why the raises for public sector unions seem so outrageous. When wages in the private sector are not climbing, increased taxes take an ever-larger bite out of take-home pay. The conservative solution seems to be to cut the wages of public employees. A better solution is to raise the wages of the taxpayers. And that means their wages.
WRONG. Public sector compensation - wages and benefits – should track those of private sector work of similar skills and responsibilities. The private sector – the free market – best determines the worth of a particular occupation. Current public sector compensation is totally divorced from any relationship to true worth – it is a result of “rent seeking” – unions recycling forced-dues into political campaigns in order to elect and control politicians to direct the inherently coercive power of taxation toward the unjust enrichment of the unions.

Wow.

The problem with public-sector union wages is that private-sector non-union wages are stagnant.

No, I get it. Corporations cannot afford to pay higher wages to their workers. But they can afford to pay mega-salaries, dry-cleaning bills, give free beer, pay health-club memberships, subsidize purchase prices on houses and fork over hundreds of millions of dollars to CEOs who did a crappy job.

Let me ask you this: how many times can you divide $100M by, say, $10,000?

Answer: a lot. Like, 10,000 to be exact. The choice is: give Nardelli from Home Depot $200M in severance, or give 20,000 employee a raise of $10,000 year. Zero-sum game.

Nope. Sure can't afford them union wages in the private sector.

Ragin': yes, there was a delay. Unions didn't increase wages overnight. But the effect was immediate, and long-lasting. Let's see...competition. If union shops pay higher wages, doesn't that force non-union shops to pay higher wages, in order to compete? So don't union wages create upward pressure for everyone? Isn't that what your free-market ideology says is supposed to happen?

And, did you realize that, at it's peak, GM alone employed almost a million people? And each well-paid GM worker could support another 5-10 others (merchants, bankers, dentists, etc.) And there were how many large industrial employers like that? That's a lot of $$ to spread around an economy.

Microsoft, OTOH, employs 40,000? Which situation creates more wealth for the whole economy?

And the period you cite is also when the effects of the GI bill kicked in: Vets back from WWII went to college in the late 40s and hit their peak earning years in the 60s. But I'm sure that was just a coincidence.

And I said that it was the two of these working together that brought up wages for everyone. Unions and a gov't program. Oh, and the 50s & 60s (post JFK) were also the period when there was a lot of gov't money available to help the children of other Vets go to college, which also drove up wages.

So your "bureaucracy-as-cause" argument is looking a little shaky.

And pay attention. My use of the term "proletariat" was absolutely correct. Union wages took employees out of low-level, wage-slave type conditions and put them into the middle class. Guess you never heard of Henry Ford, or General Motors, or US Steel? And by "legitimate" Comm Party, I was comparing the US to Europe, where the Communists were a palpable force in politics, not a collection of cranks like they were in the US.

No, I'm not WRONG. By saying that public-sector wages should track the private sector, you're saying their wages should stagnate and fall. I'm saying that we need to work on the other end of the equation: redistribute wealth. Put more money into the hands of people that will spend it. THAT will create the rising tide that raises the boats. What we've had over the past 30 years is a very selective tide that's lifted a very few boats, and left the rest of us fighting over scraps.

But hey, that's Reaganomics for you.

Odd, though: there was a period in which the stagnation in wages was arrested and even reversed. During the Clinton presidency. You know, all those high taxes? But ol' George W comes along and cuts them taxes and the median wage starting going right back down again. And, btw, gov't revenues dropped. GWB is the only president who did not collect more in taxes than his predecessor. And that sure has been one rip-snortin' great economy we've had--if you're in the top 1% of the top 1%. They've done fabulously.

I agree that the situation with public-sector unions s untenable. However, I propose a different solution. Make companies pay their taxes. Wal-Mart's effective tax rate has been falling over the past five years. Hasn't done their employees much good, though.

Nope. Executive compensation as a % of corporate profit is at record highs. Corporations are sitting on huge piles of cash. But they can't afford to increase wages. See anything wrong with this picture?

So, let's not lecture me on the real world, s'il vous plait? And dontcha just love it when I talk French?

Oh, and PS.

Another reason union membership peaked in the 50s, and wages continued to increase is that the economy was transitioning from a manufacturing-base to a service-sector based economy. Those blue-collar kids who grew up on the Mickey Mouse Club didn't go work in the factory like dad; they became white-collar workers.

That's about 3 or 4 factors for the lag in peak wages to the single one you mention. I would say that, collectively, my cluster of causes probably had a lot more impact on driving up wages than people working for the state or fed gov'ts.

And PPS.

I just re-read Justin's penultimate sentence:

...It's easy to sound big-hearted. It's also easy to score political points with people who think the world owes them something by giving them handouts instead of structure...

People who think the world owes them something...You mean you're OK with the idea that someone can work full-time and not make enough to live on?

And the people looking for handouts could just as easily be corporations. Ever read the tax code? One hand-out after another. Ever hear of the sugar subsidy? Or the last agriculture bill? A $200B handout. It blows my mind that you quibble over a couple of bucks and swallow the billions given to corporations every year.

Question for Klaus:

American Power Conversion resisted outsourcing jobs to Asia, and got taken over. Schneider (to satisfy its shareholders, many of whom are union and public sector pension funds) will probably close down APC's RI ops and outsource many of them to Asia to improve shareholder returns.

If you were Don Carcieri or Bill Murphy, what would you do next Monday at 8am to change this picture?

Basically, do you have a clue about how the real world works today, or are you just a master of barroom rhetoric?

Klaus:

It isn’t about corporations “being able to afford” to pay more. It’s about what the market determines that a job is worth. Unions don’t make a job worth more. All they do is reduce employment and increase the wages of those who remain.

Europe has high unionization rates, and the generous “social safety net” that you presumably support, and also has a permanent 10-15% unemployment rate (paid for by their still-working union brethren paying 60% tax rates – which begs the question as to how their “net” compares to U.S. workers). Meanwhile Mercedes and BMW have built non-union plants in the United States – so those 10-15% unemployed in Europe will stay that way.

Ditto the UAW here, which is now one-half the size it once was, as those jobs have transferred to non-union plants in the South.

Do UAW wages precipitate some increase in wages in the non-union plants in the south? Probably. But between permanently laid-off UAW members, and the basic economic law that as you increase price you reduce marginal demand, can you honestly say that on a NET basis the unions contribute anything?

Using your logic, folks working in primarily (if not entirely) non-union industries would all be making minimum wage. But this is not the case. So obviously skill and demand for skills is the essential factor in determining ultimate wages.

As for Wal-Mart paying taxes, ULTIMATELY CORPORATIONS DON’T PAY TAXES, EVER! The “corporate income tax” is merely a stealth sales tax added to the price of the final product … paid for by the working stiffs who ultimately purchase the product. (Which begs the question, does Wal-Mart outsourcing production to China, and thus increasing its taxable profits, aid Wal-Mart and the government at the expense of U.S. “workers?”)

Ditto, you should like high executive compensation, for these folks are at the highest tax brackets the result is a greater “take” for the government than if the money were distributed to lower tax bracket workers.

As far as corporate tax breaks and special deals go, I agree with you. There should be NO “corporate welfare” - nor should the government be involved in “social welfare” – all either do is enable politicians to pander to special interest groups, at the expense of the rest of us.