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Women’s March Madness

The Myth of the Underpaid Teacher Lives On

 Yet another “study” showing how poorly teachers are paid has surfaced.

Well, it’s a new school year and there is much tumult in the world of public education. Common Core battles, testing opt-outs, and litigation about school choice and teacher work rules dot the landscape. But with all the uncertainty, it’s comforting to know that there is one thing we can count on in late summer: a new bogus study showing that public school teachers are woefully underpaid.

This year’s entry doesn’t disappoint. “The teacher pay gap is wider than ever,” subtitled “Teachers’ pay continues to fall further behind pay of comparable workers” is a 29-page report released by the Economic Policy Institute, whose mission is “to inform and empower individuals to seek solutions that ensure broadly shared prosperity and opportunity.” If this were an honest statement, the word “opportunity” would be followed by “as long as the solutions are in sync with the union party line.” You see, EPI is nothing more than a union front group whose board includes a rogue’s gallery of Big Labor honchos: AFL-CIO’s Richard Trumka, SEIU’s Mary Kay Henry, American Federation of Teachers’ Randi Weingarten, National Education Association’s Lily Eskelsen-García, et al.

And not only do the teachers unions have strong board representation, they donate heavily to EPI. According to the latest labor department reports, 2015 saw NEA present a $250,000 gift to EPI, only to be outdone by the smaller AFT, which kicked in $300,000 to the organization.

The study itself is just what you would expect: loads of numbers that are supposed to make people think that teachers are essentially little more than impoverished serfs, valiantly slaving away for pennies. Among the report’s claims:

  • Teachers’ weekly wages are 23 percent lower than those of other college graduates.
  • For public-sector teachers, the relative wage gap (regression adjusted for education, experience, and other factors) has grown substantially since the mid-1990s: It was ‑8 percent in 1994 and grew to a record ‑17.0 percent in 2015.
  • Regardless of experience, teacher wage gap expanded for female teachers.

Needless to say, the unions solemnly wrote about the report as if it were “news,” with NEA blogger Tim Walker suggesting that all teachers get a raise. And as day follows night, the media jumped on board. The relentless and reliably-unreliable Washington Post education blogger Valerie Strauss dutifully posted the whole report with the title, “Think teachers aren’t paid enough? It’s worse than you think.The Fiscal Times sounded alarm bells with “Teacher Pay Hits Record—but Not a Good One.”

But like most similar studies, EPI’s doesn’t do an apples-to-apples comparison. It omits a few things like the simple fact that teachers work 6-7 hour days and 180 days a year, whereas the study’s “comparable workers” put in an 8-9 hour a day and work 240-250 days a year. (Yes, yes, I know teachers take work home, but so do many other professionals who don’t get summers off.) Also, unlike private-sector workers, most teachers have extensive health benefits for which they typically pay very little, if anything. Furthermore, as University of Missouri professor Michael Podgursky points out, the pension benefits for teachers, which they only pay a tiny portion of – the taxpayer getting hosed for the rest – add greatly to a teacher’s total compensation. (The EPI report actually alludes to this, but buries it on page 14; more on this in a bit.)

Perhaps the most honest and well-researched study done on teacher pay, including the time-on-the-job and benefits factors, was done in 2011 by Andrew Biggs, a resident scholar at the American Enterprise Institute, and Jason Richwine, a senior policy analyst at the Heritage Foundation. In their report, they destroy the teacher union-perpetuated myth of the under-compensated teacher. Their study, in fact, found that teachers are actually paid more than private-sector workers.

They make the case that workers who switch from non-teaching jobs to teaching jobs “receive a wage increase of roughly 9 percent, while teachers who change to non-teaching jobs see their wages decrease by approximately 3 percent.” Additionally, when retiree health coverage for teachers is included, “it is worth roughly an additional 10 percent of wages, whereas private-sector employees often do not receive this benefit at all.”

Biggs and Richwine conclude that after taking everything into account, “teachers actually receive salary and benefits that are 52 percent greater than fair market levels, equivalent to more than $120 billion overcharged to taxpayers each year.”

Back to the EPI study. On page 14 of the report, it acknowledges,

Our analysis of relative teacher pay thus far has focused entirely on the wages of teachers compared to other workers. Yet benefits such as pensions and health insurance are an increasingly important component of the total compensation package. Teachers do enjoy more attractive benefit packages than other professionals; thus, our measure of relative teacher wages overstates the teacher disadvantage in total compensation. The different natures of wages and benefits should be kept in mind, as it is only wages that may be spent or saved. Thus, the growing wage penalty is always of importance.

So in essence, the authors of the study come clean in this paragraph and admit that their stress on wages alone overstates the real disparity in pay. The “spent or saved” comment is especially ridiculous. Pension earnings are indeed “saved” for the future. Whatever. It’s obvious that this report is meant to tug at the heartstrings, build righteous indignation and provide local teachers unions with ammo for collective bargaining battles with school boards.

For an honest assessment of teacher pay, stick with the Biggs-Richwine study. But if one is looking for skewed and incomplete data as fodder for a splashy headline or an emotional plea, the dishonest and self-serving union-sponsored EPI report fills the bill beautifully.

Larry Sand, a former classroom teacher, is the president of the non-profit California Teachers Empowerment Network – a non-partisan, non-political group dedicated to providing teachers and the general public with reliable and balanced information about professional affiliations and positions on educational issues. The views presented here are strictly his own.

The Unions’ Favorite California State Senator

Money in politics has been a recurrent theme in this election cycle. Campaign finance reform advocates, mainstream media and certain candidates have repeatedly driven home the idea that corporations and rich conservatives are biasing the political process by making big-money donations, often without disclosure. Much of the narrative – advanced by authors such as New Yorker writer Jane Mayer and politicians like Nevada Sen. Harry Reid – has focused on the Koch Brothers, who are blamed for everything from financial deregulation to global warming.

This narrative misses a couple of key points. First, following the Supreme Court’s 2010 Citizens United decision, liberals predicted a wave of unleashed corporate spending would transform the political landscape. But after spending a combined $6 billion in 2012, Republicans and Democrats produced a federal government that looked remarkably like the one that prevailed before the election. In this cycle, spending by the Koch Brothers and other right-of-center billionaires was not enough to prevent a Donald Trump nomination or the rise of Bernie Sanders, the U.S. senator from a tiny state who occupies the extreme left fringe of the political spectrum.

Second, the Koch Brothers and their allies are not the only major donors trying to influence the process. Such left-of-center billionaires as George Soros, Tom Steyer and Mike Bloomberg also have a large impact. And government union donations are a far bigger factor in certain campaigns in California, as research by California Policy Center and the Freedom Foundation reveals.

If money doesn’t always win elections, it can indeed shape the agendas of the winners. One of the best examples of money that makes a difference is the case of Connie Leyva.

Leyva: Look for the union labelLeyva: Look for the union label

Since 2014, Leyva has represented California’s 20th Senate District, a bow-tied shaped district covering parts of San Bernardino County and northern Los Angeles County. According to Secretary of State data, her campaign committee received 324 contributions totaling almost $746,000. Of this total, we estimate that 79 percent came from unions and union-related committees.

(Our review found possible duplicates among Leyva’s contribution records. Our reporting assumes that each record shown on the Secretary of State’s site is correct and non-duplicated.)

In 2014, California limited contributions to Senate and Assembly candidates to $4100, but also provided a higher limit of $8200 for “small contributor committees.” These committees bundle large numbers of small, individual contributions and then dole them out to various candidates. Connie Leyva received the maximum $8200 contribution from 35 such committees, of which 34 were union-sponsored.

Of the 53 entities contributing the general $4100 maximum, 40 were union-related.

Leyva’s union donors included a broad spectrum of public and private labor organizations. In many cases, several locals and affiliates of a single union donated to her campaign – magnifying their support and influence. Among the unions with multiple contributors were the International Brotherhood of Electrical Workers (IBEW), the Service Employees International Union (SEIU) and the United Food and Commercial Workers (UFCW). Contributions from UFCW locals, PACs and other related entities totaled $83,900, 11% of Leyva’s 2014 campaign receipts. This is especially notable given the fact that Leyva was a UFCW union representative and president of a UFCW local before her election to the state Senate.

Although impressive, Leyva’s 79% union contribution proportion actually understates the degree to which labor interests underwrote her campaign. For example, Leyva received just over $25,000 in contributions from individuals, most of whom reported their employers. $7950 of these individual contributions came from employees of UFCW, the AFL-CIO and other labor organizations.

Leyva also received contributions from other candidate committees, including those for Anthony Rendon, Kevin De Leon and Roger Hernandez. All of these candidates received significant union support, so their ability to contribute surplus funds to the Leyva campaign is attributable in no small measure to organized labor.

Finally, Leyva benefited from a union-backed Independent Expenditure Committee. Committees of this type can campaign for or against a candidate, but must operate independently from that candidate’s campaign committee. There is no limit on the size of contributions to Independent Expenditure Committees, which makes them quite popular with large donors.

In the 2014 cycle, the Committee for Working Families spent $290,000 on behalf of Connie Leyva. This committee is sponsored by the California Labor Federation, AFL-CIO. A review of the Committee’s contributions shows that almost all of its money came from union sources (although it did receive a donation from Sean Parker, a billionaire who leans left).

The same committee also spent $44,000 on mailers opposing Democratic rival Alfonso Sanchez in May 2014. Although relatively small, this expenditure may have been especially decisive because Leyva defeated Sanchez by only 1148 votes in the primary to take the second spot on the November ballot. In the general election, Leyva defeated Republican Matthew Munson by a wide margin.

Leyva’s funding far exceeded that of her rivals. Sanchez’s committee received $44,000 in contributions – about 6% of Leyva’s total. That said, Sanchez did benefit from independent expenditures by JOBSPAC, a committee primarily funded by corporate contributions. JOBSPAC spent $269,000 for Sanchez and $66,000 to oppose Leyva.

Munson, the Republican, collected only $260 for his committee and did not receive any support from Independent Expenditures Committees.

What the Unions Got for Their Money

In the state legislature, Senator Leyva has returned the investment unions made in her election.

The California Labor Federation issues an annual legislative scorecard, rating State Senators and Assembly-members on their union-related votes. In 2015, Leyva received a perfect 100% — taking the union-endorsed position on all 25 votes the Federation considered. Nine of these bills were vetoed by Governor Jerry Brown, a Democrat.

For example, Leyva voted for AB 787, which would have banned for-profit companies from running charter schools. As Brown noted in his veto message, the bill contained ambiguous language which could have been interpreted to prevent charters operated by not-for-profits from buying goods and services from for-profit companies. Handicapping charter schools and thereby restricting school choice is an ongoing priority for education unions that contributed to Leyva’s campaign.

Brown also vetoed Leyva-supported AB 251, which would have compelled more developers to pay high state-mandated prevailing wages on infrastructure projects. Brown expressed concern that the measure was “too restrictive and may have unintended consequences.” While the bill would have benefited trade unions, it would have further increased the high cost of real estate in California.

Leyva was one of 11 state senators to receive the Labor Federation’s perfect legislative score, so her record could be seen as unremarkable. But Leyva isn’t only voting for widely-supported pro-union legislation; she is also writing and advocating new, more radical measures.

Recently, she sponsored SB 1015 which would compel disabled and elderly individuals to pay time and a half to their caregivers when they work more than 45 hours per week. This overtime pay requirement has been in place since 2014, but would end on December 31, 2016 in the absence of Leyva’s legislation. When combined with the escalation of the minimum wage to $15 per hour between now and 2022, the time-and-a-half pay requirement will become onerous for many patients who live on fixed incomes. Finally, and without disparaging the important work that caregivers provide, their long hours can be a deceptive, since the people in their charge are often sleeping or watching TV and thus not requiring active support.

Earlier in 2016, Leyva introduced SB 1167, the Worker Heat Safety Act which would require Cal/OSHA to develop new regulations to limit high workplace temperatures. However, employers are already required to safeguard employees against hazardous workplace conditions including excessive heat. Economist John Husing told the Riverside Press-Enterprise that Leyva’s bill could hurt the inland empire’s warehousing industry, which employs over 33,000 workers. “My fear is, this is organized labor going after a sector where it has not had much success in organizing,” Husing said. “They are going the legislative route.”

Conclusion

In the Inland Empire, organized labor pushed aside a business-friendly Democrat and elevated a union executive to the state legislature. They did this by injecting over $850,000 into the campaign, dwarfing spending by rival candidates. The incumbent has repaid her labor paymasters by doing what she was undoubtedly already inclined to do – maintaining a perfect pro-labor voting record and pushing the envelope in the unions’ direction with new legislative proposals.

While readers may differ about the wisdom of the legislation Leyva sponsored and supported, it is hard to debate that union money was essential to advancing her candidacy and agenda. A defense of union behavior is this regard requires one to either reject the notion that “money in politics” is necessarily bad or to argue that big campaign donations are only acceptable when they support a progressive agenda.

If those who wish to defend union support for Leyva and other Assembly and Senate Democrats adopt the latter view, they should not couch their opinions as a call for institutional improvement. Instead, they are advancing a highly partisan belief that “money in politics” is bad only when deployed by people they don’t like.

Will Swaim is vice president of communications for the California Policy Center, former vice president of journalism for the Franklin Center, and founding editor and publisher of OC (Orange County) Weekly.

ABOUT THE CALIFORNIA POLICY CENTER
The California Policy Center is a non-partisan public policy think tank providing information that elevates the public dialogue on vital issues facing Californians, with the goal of helping to foster constructive progress towards more equitable and sustainable management of California’s public institutions. Learn more at CaliforniaPolicyCenter.org.

In West Virginia Right-to-Work Debate, Unions Re-Use Scare Story Script

A labor union campaign against making West Virginia a right-to-work state is centered on scare tactics voters in Michigan would recognize.

With help from International Union of Operating Engineers Local 132, the West Virginia AFL-CIO is warning of lower wages, reduced benefits, and more dangerous working conditions if the state adopts right-to-work.

IUOE Local 132’s Stop WV Paycuts website asks visitors to contact their state legislators with those three reasons for opposing right-to-work.

West Virginia
Unions made the same arguments before Michigan enacted right-to-work several years ago.

“In states with RTW laws on the books, wages are lower, benefits are fewer, and workplace injuries and fatalities are more common,” AFL-CIO’s Working America warned in November 2012.

Since right-to-work took effect in Michigan in early 2013, employment and incomes in the state have grown faster than the national average.

Bureau of Labor Statistics data show that Michigan’s rate of nonfatal occupational injuries and illnesses was lower in 2013 than in 2012, and lower still in 2014. Compared to 2012, Michigan had two fewer fatal occupational injuries in 2013 and one more fatal occupational injury in 2014.

Right-to-work laws like the one proposed in West Virginia Senate Bill  give employees in unionized workplaces the ability to choose whether to pay a union without fear of losing their jobs. Right-to-work does not stop workers from joining unions, organizing unions, or collectively bargaining with employers over pay, benefits or working conditions.

“Right-To-Work laws lead to lower wages, less benefits and decreased work-place safety,” Stop WV Paycuts asserts in an online form letter meant for state lawmakers. The same claims are repeated elsewhere on the site. Under a graphic of a skull and crossbones is the warning, “RTW laws are intended to lower wages and benefits and decrease workplace safety.”

The website appears to be based on a graphic the West Virginia AFL-CIO adapted from campaign materials the national AFL-CIO has been using with mixed results for several years. In addition to Michigan, Indiana and Wisconsin have both passed right-to-work since 2011. Unions successfully blocked a Missouri right-to-work bill in 2015.

IUOE Local 132 did not respond to a voice mail request for comment.

A recent West Virginia AFL-CIO radio ad hammering right-to-work focused on the point of workplace safety, suggesting right-to-work should instead be called “right to die on the job.”

West Virginia has a higher rate of workplace deaths than 23 of America’s 25 right-to-work states, according to AFL-CIO’s own Death on the Job report. The risk of workplace injury or death is much greater in states where industries such as forestry, agriculture, and mining are more prevalent.

Trey Kovacs, a policy analyst at the Competitive Enterprise Institute, said CEI research shows “a significant and positive relationship between economic growth in a state and the presence of a right to work law.”

 

Trey Kovacs, a Policy Analyst at the Competitive Enterprise Institute. He focuses on economic impacts of labor and finance policy.

Trey Kovacs, a Policy Analyst at the Competitive Enterprise Institute. He focuses on economic impacts of labor and finance policy.

“In West Virginia, workers lost an estimated $2,623 from not having a right to work law,” Kovacs said.

Calling the union website an attempt to put a new spin on “old, tired rhetoric,” Kovacs added, “It is only a matter of time before a majority of states protect workers from being forced to pay dues to a union they do not support.”

About the Author: Jason Hart is an Ohio-based reporter covering labor issues for Watchdog.org, with a focus on right-to-work, public employee unions and Obamacare. Before joining Watchdog, Jason was communications director for Media Trackers Ohio. His work has been featured at FoxNews.com, The Daily Signal, RedState, Washington Examiner, Townhall and elsewhere. His investigations into labor union spending and Obamacare’s Medicaid expansion have been cited by national commentators including Michelle Malkin, Erick Erickson, Dana Loesch and Mark Levin.

The Taxpayer as Bagman

In California, the citizenry pays for the collection of dues for public employee unions.

As just about every teacher in California will tell you, union dues are deducted by the local school district from their monthly paycheck just as federal and state withholding taxes are. Then the school district turns the money over to the local teachers union. And we all get to pay for this service. Yup, the teachers union, a private organization, doesn’t pay a penny for the transactions. In fact, payroll deduction is de rigeur for all public employee unions. But not all states suck up to organized labor like California.

Other states like North Carolina and Alabama have already passed legislation prohibiting paycheck deductions. Most notably, new right-to-work states Wisconsin and Michigan have followed suit. Most recently, Oklahoma just passed a law that makes the unions responsible for collecting their own dues. HB 1749 stipulates that it “shall be unlawful for any state agency to make payroll deductions on behalf of a state employee for membership dues in any public employee association or organization or professional organization that on or after November 1, 2015, collectively bargains on behalf of its membership pursuant to any provision of federal law.”

Last week, the Pennsylvania State Senate passed a partial measure. This bill, should it become law, would prohibit public sector unions from using employee paycheck deductions to fund certain political activities. In fact, a similar tack has been tried several times in California. In 2005, Prop 75 would have allowed automatic deductions for the political portion of public employees’ union dues only if the worker gave their permission to do so. And in 2012 Prop 32, among other things, would have banned “automatic deductions by corporations, unions, and government of employees’ wages to be used for politics.” Both measures failed.

While union bosses love the taxpayer-as-bagman set-up (why wouldn’t they!), not all workers do. Years ago when I was teaching, I asked then UTLA president A.J. Duffy at a union meeting why teachers weren’t responsible for paying their own dues. He responded, “They might forget.” I didn’t respond, but knew that some of my colleagues were thinking what I was thinking. Forget? No. Not choose to pay? Yes. A 2014 poll in Pennsylvania also showed that the rank-and-file and the bosses are not of the same mind. The survey of union households across the state found that “80 percent of union households said taxpayer resources should not be used to collect campaign contributions.” Union leaders, as usual, refuse to deal directly with the issue, but instead set up straw men to attack: “It’s really about keeping control in the hands of corporations,” said Rick Bloomingdale, president of the Pennsylvania AFL-CIO, the state’s largest labor federation with about 900,000 members. Huh? He then went on to explain, “[Legislators] only want to hear from the corporations and billionaires.”

Let’s look at this another way. Say you buy a gun. After the purchase, the government starts deducting money from your paycheck whether you want it to or not and turning the cash over to the National Rifle Association. The NRA claims it is justified in doing so because it says it will advocate for you and provide legal assistance should you need it. The NRA doesn’t pay for the service, and moreover, doesn’t pay a penny in income tax. Reasonable? Hardly.

One glimmer of hope for the Golden State is the Friedrichs v California Teachers Association case. It’s possible that if the U.S. Supreme Court rules for the plaintiffs, one of the by-products could be a legislature more responsive to its constituents instead of CTA, which is by far the most powerful special interest in the state.

But by whatever means, we need to release the taxpayers from their forced bagman status. To paraphrase the late William F. Buckley, it’s time for the unions to collect their own damn dues.

Larry Sand, a former classroom teacher, is the president of the non-profit California Teachers Empowerment Network – a non-partisan, non-political group dedicated to providing teachers and the general public with reliable and balanced information about professional affiliations and positions on educational issues. The views presented here are strictly his own.

Planned Persecution

NEA claims to be for religious freedom, but Catholics and other right-to-lifers need not apply.

“The National Education Association believes that freedom of religion is a fundamental human right. The Association also believes that choice of religion is an intensely personal decision.” These high-minded words are from NEA Resolution I-33, which was passed at its recent convention. Nothing really new here; the NEA passed other similar resolutions this year, and in fact it does so every year. There is also nothing new about the union’s raving hypocrisy on the issue.

As we learned recently via several secretly recorded videos, Planned Parenthood (PP) not only performs an ungodly number of abortions every year, but is in the dead baby body parts sales biz too. One would think that the unions, which have donated millions to PP over the years, might have shown some reticence. But they have doubled down instead. Over at AFL-CIO, Boss Trumka asserted that calls to defund PP “based on doctored undercover recordings are politically motivated and wrong.” Actually, he’s wrong. The videos weren’t “doctored” at all; they were available in their entirety on the internet. SEIU president Mary Kay Henry stood her ground and affirmed in a tweet, “Extremists stoop to new low attacking women & access to preventive care.” (Henry has a familial stake in this in that SEIU VP Kirk Adams is married to PP president Cecile Richards.)

In another case of defending evil, spreading falsehoods and/or selling ignorance, American Federation of Teachers president Randi Weingarten tweeted “More than 50% of Planned Parenthood patients are enrolled in Medicaid. Defunding @PPFA would take their coverage away. #StandWithPP” Wrong again. Defunding PP won’t take anyone’s Medicaid coverage away.

But for sheer misdirection nothing beats United Federation of Teachers president Michael Mulgrew who back in 2012 announced a $125,000 gift to PP. “As a union with a large female membership, we know the importance of the kind of health care that Planned Parenthood provides, including breast cancer screening.” Well, actually, despite what many think, PP does not perform mammograms or even possess the necessary equipment to do so. Its clinics do provide referrals, but the Susan G. Komen Foundation and the American Cancer Society readily provide them as well.

It’s important to note that UFT’s $125,000 gift (and all union largess) is comprised of dues money the union collects from its teachers regardless of their religious/moral convictions. So what can a pro-life teacher do knowing that part of his/her union dues is going to fund PP, one of whose raisons-d’être is killing (and now selling body parts of) the unborn? In non-right-to-work states, these teachers have two options. They can become agency fee payers in which case they must still pay for things like collective bargaining but don’t have to support the unions’ progressive political agenda. Or a teacher can become a religious objector and pay absolutely no money to the union, but instead pay a full dues share to a charity agreed on by the teachers union and the school district. This is a difficult status to achieve because the union just can’t bear to have what it considers a freeloader in its midst. As such, a dissenting teacher must usually seek out legal assistance and go to great lengths to prove their religiosity.

Enter Linda Misja, a high school language teacher in western Pennsylvania. Ms. Misja, a devout Roman Catholic, and her union, the Pennsylvania State Education Association (PSEA), just can’t seem to agree on a mutually acceptable charity. According to Watchdog.org’s Evan Grossman, Misja initially requested that her money to go to People Concerned for the Unborn Child, a pro-life group which is opposed to artificial contraception, in-vitro fertilization and birth control. The union, which either has a dark sense of humor or is seriously delusional, came back with an offer to send her dues money to an abortion clinic.

Misja countered with an alternative: a charity arm of the National Rifle Association which works with public schools to teach gun safety. But the union nixed this idea also on the grounds that it was “too political.” As Misja and the union duke it out, $2,000 she earned as a teacher is sitting in an escrow account.

What all this points to is that the teachers unions – PSEA is but one example – put their far left agenda above all else. The high-minded assertion about religious liberty in NEA Resolution I-33 is a canard. If the union really believed in religious freedom, it would direct PSEA, an NEA affiliate, to honor Misja’s request to have her money donated to an entity that supports her Catholic beliefs. And just as ridiculous is PSEA’s claim that donating to the NRA is “too political.” Since 1989, NEA has spent $92,972,656 on candidates, PACs, etc. while the American Federation of Teachers spent $69,757,113 during the same 26 year period. (In 2014 alone, PSEA spent $2,711,333 on politics) But Ms. Misja is laughably being denied the option to donate to the NRA because it’s “too political.”

Tolerance is a buzzword the teachers unions use with great abandon. But when it only goes one way, it becomes dictatorial, which is a perfect word to describe many teacher union policies.

Larry Sand, a former classroom teacher, is the president of the non-profit California Teachers Empowerment Network – a non-partisan, non-political group dedicated to providing teachers and the general public with reliable and balanced information about professional affiliations and positions on educational issues. The views presented here are strictly his own.

The Friedrichs Free Rider Fraud

The Supreme Court’s decision to hear the Friedrichs case has the unions in a tizzy.

On June 30th, the Supreme Court decided to hear Friedrichs v. California Teachers Association et al, a case that could seriously change the way the public employee unions (PEUs) do business. If the plaintiffs are victorious, teachers, nurses, sanitation workers, etc. would be able to work without the financial burden of paying union dues. The responses to the Court’s decision from the teachers unions and their friends have ranged from silly to contradictory to blatantly dishonest.

In a rare event, leaders of the NEA, AFT, CTA, AFSCME and SEIU released a joint statement explaining that worker freedom would be a catastrophe for the Republic. Clutching their hankies, they told us that, “big corporations and the wealthy few are rewriting the rules in their favor, knocking American families and our entire economy off-balance.” And then, with an obvious attempt at eliciting a gasp, “…the Supreme Court has chosen to take a case that threatens the fundamental promise of America.” (Perhaps the labor bosses misunderstood the wording of the preamble to the Constitution, “In order to form a more perfect union….” No, this was not an attempt to organize workers.) While the U.S. is not without its problems, removing forced unionism will hardly dent the “fundamental promise of America.”

The California Federation of Teachers, which typically is at the forefront of any class warfare sorties, didn’t disappoint. The union claims on its website that the activity of union foes “has resulted in a sharp decline in median wages for working people and the decline of the middle class alongside the increasing concentration of income and wealth in the hands of the one per cent.” But wait a minute – the unions are the most potent political force in the country today and have been for a while. According to Open Secrets, between 1989-2014, the much maligned one-percenter Koch Brothers ranked 59th in political donations behind 18 different unions. The National Education Association was #4 at $53,594,488 and the American Federation of Teachers was 12th at $36,713,325, while the Kochs spent a measly $18,083,948 during that time period. Also, as Mike Antonucci reports, the two national teachers unions, NEA and AFT, spend more on politics than AT&T, Goldman Sachs, Wal-Mart, Microsoft, General Electric, Chevron, Pfizer, Morgan Stanley, Lockheed Martin, FedEx, Boeing, Merrill Lynch, Exxon Mobil, Lehman Brothers, and the Walt Disney Corporation, combined.”

So the question to the unions becomes, “With your extraordinary political clout and assertion that working people’s wages and membership in the middle class are declining, just what good have you done?”

Apparently very little. In fact, the National Institute for Labor Relations Research reports that when disposable personal income – personal income minus taxes – is adjusted for differences in living costs, the seven states with the lowest incomes per capita (Alaska, California, Hawaii, Maine, Oregon, Vermont, and West Virginia) are forced-union states. “Of the nine states with the highest cost of living-adjusted disposable incomes in 2011, Iowa, Kansas, Nebraska, North Dakota, South Dakota, Texas, Virginia and Wyoming all have Right to Work laws.” Overall, the cost of living-adjusted disposable income per capita for Right to Work states in 2011 “was more than $36,800, or roughly $2200 higher than the average for forced-unionism states.”

But the most galling and downright fraudulent union allegations about Friedrichs concern the “free rider” issue. If the case is successful, public employees will have a choice whether or not they have to pay dues to a union as a condition of employment. (There are 25 states where workers now have this choice, but in the other 25 they are forced to pay to play.) The unions claim that since they are forced to represent all workers, that those who don’t pay their “fair share” are “freeloaders” or “free riders.” The unions would have a point if someone was sticking a gun to their collective heads and said, “Like it or not, you must represent all workers.” But as I wrote recently, the forced representation claim is a big fat lie. Heritage Foundation senior policy analyst James Sherk explains,

The National Labor Relations Act (NLRA) allows unions that demonstrate majority support to negotiate as exclusive representatives. If they do so they must negotiate fairly on behalf of all employees, including those who do not pay dues. However unions may disavow (or not obtain) exclusive representative status and negotiate only for their members. Nothing in the National Labor Relations Act forces exclusive representation on unwilling unions. (Emphasis added.)

Mike Antonucci adds,

The very first thing any new union wants is exclusivity. No other unions are allowed to negotiate on behalf of people in the bargaining unit. Unit members cannot hire their own agent, nor can they represent themselves. Making people pay for services they neither asked for nor want is a ‘privilege’ we reserve for government, not for private organizations. Unions are freeloading on those additional dues.

If there are still any doubters, George Meany, the first president of the AFL-CIO, whose rein began in 1955 and continued for 24 years, told Congress,

When a union has exclusive recognition with a federal activity or agency, that union is required to represent all workers in that unit, whether or not those workers are members of the union. We do not contest this requirement. We support it for federal service, just as we support it in private industry labor-management relations.

While the NLRA applies only to private employee unions, the same types of rules invariably govern PEUs. Passed in 1976, California’s Rodda Act allows for exclusive representation and it’s up to each school district and its local union whether or not they want to roll that way. However, it is clearly in the best interest of the union to be the only representative for teachers because it then gets to collect dues from every teacher in the district. It’s also easier on school boards as they only have to deal with one bargaining entity. So it is really a corrupt bargain; there is no law foisting exclusivity on any teachers union in the state.

So exclusive representation is good for the unions and simplifies life for the school boards, but very bad for teachers who want nothing to do with organized labor. It is also important to keep in mind that the Friedrichs case is not an attempt to “bust unions.” This silly mantra is a diversionary tactic; the case in no way suggests a desire to do away with unions. So when organized labor besieges us with histrionics about “the promise of America,” the dying middle class, free riders etc., please remind them (with a nod to President Obama), “If you like your union, you can keep your union.” In this case, it’s the truth.

Larry Sand, a former classroom teacher, is the president of the non-profit California Teachers Empowerment Network – a non-partisan, non-political group dedicated to providing teachers and the general public with reliable and balanced information about professional affiliations and positions on educational issues. The views presented here are strictly his own.

With 2014 Mid-Term Elections Close – Unions Intensify Efforts

Control of the U.S. Senate is at stake in the upcoming mid-term elections, which is imperative for the President and Big Labor to maintain their majority if there is any hope to achieve Big Labor’s goal of eliminating the secret ballot election and replacing it with the forced unionization method of Card Check. Even at a casual glance, however, the new tactics would cause even the most gullible to take pause and say, “Really?”

In recent weeks, Big Labor’s campaigns of intimidation and misinformation have risen to new heights. This is highlighted by the recent headline “Unions say they’ll get even with Scott Walker,” for passing popular laws restricting collective bargaining agreements and dues collection in Wisconsin (see Collective Bargaining is a Privilege, Not a Right). Such tactics are typical big labor strategy, as chronicled in The Devil at Our Doorstep, which clearly exposes the SEIU’s Death by a Thousand Cuts Corporate Campaign to use intimidation and misinformation to achieve its goals!

Unions accuse corporations of have an unfair advantage, stating that they have more money to spend on election candidates. The truth, however, is that Unions are Outspending Corporations on Campaign Ads Despite Court Ruling.

Once again, Big Labor is relying on the fact that a large percentage of the population that is naïve to their cause, and is therefore easily misled and too busy to investigate the facts. However, based on big labor’s latest tactic it appears the Gasping Dinosaurs may be carrying these assumptions a bit too far. Despite the fact Union Members are Not Happy with Their Leader’s Political Spending — and it has been well documented ( see IRS turns a blind eye to unions’ political expenditures) that approximately 90% of union donations go to democrats while they outspend corporate donors significantly — big labor is now attempting to humiliate (see The New Union Organizing Tool, Embarrassment) those who disagree with their agenda and their politics. An example can be seen with the Koch Brothers, whom Big Labor is attacking by discourage people from doing business with their companies. Believe it or not, a new AFL-CIO Ad Introduces the ‘Koch Sisters’ to Counter the Billionaire Brothers.

Perhaps most unbelievable is how Big Labor not just misuses its members’ dues for its own political agenda but believes it can continue to exploit its own power and its membership’s naiveté. The following e-mail was sent to members of the SEIU and was forwarded to me by one of its disgruntled members:

Would you throw away your umbrella in a rainstorm because you weren’t getting wet?
No, you wouldn’t. But that’s exactly what the Supreme Court did a year ago when they gutted the Voting Rights Act of 1965 (VRA), the most important and successful civil rights law ever enacted by the U.S. Congress.The right to vote is at stake. SIGN THE PETITION and tell Congress to restore strength to the Voting Rights Act!In some states, especially Southern ones, it used to be really, really hard for people of color to vote. The Voting Rights Act helped end that, banning racism at the polls and carrying forward the work Dr. Martin Luther King, Jr. and so many others to ensure communities of color have a voice in our political process.But in 2013, the Supreme Court — by a 5-4 vote — undid a VRA provision that cleared barriers to voting in areas where minority voters were heavily silenced at the polls.Within hours of the Supreme Court’s decision, several states in the South immediately announced that they would pursue new voter ID laws that were clearly designed to make it harder for African Americans and Latinos to vote. And one year later, 15 states have already enacted rules making it more difficult to vote.Voter discrimination based on race is not a thing of the past. It is a current reality that persists to this day. We need to stop Republicans in states around the country from enacting racist voter ID and voter suppression laws. Passing the Voting Rights Amendment Act now is the best way to do it.

Sign the petition: Tell Congress to stop the attacks on voting rights.

We’re joining with our allies for a petition delivery to Congress next week to urge the House and Senate to take swift action to correct this injustice.

There is no right more fundamental to our democracy than the right to vote. Tell Congress to restore the Voting Rights Act now.
 
The November elections are fast approaching, and vulnerable voters could lose their voice in this democracy if we don’t act now.
 
Thanks for fighting,
SEIU.org
 
As chronicled in Election 2010 and Fraudsters the Reason Blue States Remained Blue?, the real reason Big Labor wants to eliminate Voter Identification laws through restoration of the Voting Rights Act is for union members to more effectively intimidate undocumented workers and others who either don’t qualify, are of another political bent, or are disinterested, into registering to vote and then escorting them to the polls with the directive to vote for the big labor candidate of choice (see Big Labor’s Expense for Election Foot Soldiers, is Finally in the Media Spotlight). This brazen display of misinformation by the SEIU labor bosses leads one to ask the only question that makes sense: “Do they think we are idiots?”

*   *   *

David A. Bego is the President and CEO of EMS, an industry leader in the field of environmental workplace maintenance, employing nearly 5000 workers in thirty-three states. Bego is the author of “The Devil at My Doorstep,” as well as the just released sequel, “The Devil at Our Doorstep,” based on his experiences fighting back against one of the most powerful unions in existence today.

Big Labor and Allies Escalate Tactics as Mid-term Elections Approach

Activity by the National Labor Relations Board (NLRB), Department of Labor (DOL) and Occupational Safety and Health Administration (OSHA), as well as several of the largest labor unions, over the past two weeks evidences the Obama Administration’s growing anxiety as the mid-term election approaches. The Administration, facing loss of the Senate and ultimate control in both houses, continues to direct its agencies to pass union-friendly regulations and to impose its interpretation of current law to favor accelerated forced unionism. The Administration and Democratic Party represent a typical symbiotic relationship where they are co-dependent upon each other for future survival. The Administration needs union contributions and union foot soldiers to have any chance of maintaining a senate majority and making gains in the house during the 2014 mid-term elections (see Union Money in Elections). Conversely, Big Labor is finally recognizing and admitting that their declining membership is a major problem and they need the Administration’s help (see AFL-CIO admits declining membership a major problem).

In order to get the ball rolling, several pro-labor steps have been taken by OSHA, the NLRB and the Department of Labor (DOL). First, OSHA has reaffirmed its position that union officials may accompany OSHA inspectors on safety inspections in non-union facilities. This issue was reported in a previous blog, OSHA Opens New Door For Big Labor, and was more recently presented by the CEO of PJS on the Greta Van Susteren Show this past week, in CEO: How union organizers are targeting my non-union company. The union involved – the SEIU – used such tactics as part of its ongoing Corporate Campaigns to force a cleaning company in Houston to sign a Neutrality Agreement and achieve forced unionization through Card Check, as described in SEIU Uses Federal Inspections to Target Houston Small Business. As if that wasn’t bad enough, the SEIU is buying votes in polls and gaining naive media attention, from media groups like the Los Angeles Times, to support its attack on fast food companies as chronicled in Beware SEIU, Especially Bearing “Polls”.

Not to be outdone, the General Counsel of the National Labor Relations Board is looking to limit the ability of business owners to relocate their businesses without approval of the union (see NLRB will limit ability of unionized business to relocate). This move is an obvious attempt to preserve union membership heading into the midterms while taking away the fundamental right of a free market society. On a bright note, House, Senate Leaders Introduce Legislative Response to NLRB Ambush Election Rule, which was approved by the House Education and Workforce Committee this past week

In a surprising move, the NLRB complains Walmart Black Friday protesters broke rules, went too far and must Cease and Desist! This decision was made by a local NLRB Region and is not expected to survive the pro-labor board in Washington D.C. Finally, the DOL, under the Administration’s direction, limited the reporting responsibilities of unions during the President’s first term. Labor unions, particularly the United Food and Commercial Workers continue to take full advantage of it by funding OUR Walmart, a “Worker Center” operation utilized to advance its Corporate Campaigns against Wal-Mart in an attempt to force Card Check and force unionize Wal-Mart’s workforce.

The UAW appears to be attempting to force Volkswagen into Card Check. This past week, an anti-union group said Volkswagen may ignore the election results and bring in the union, basically agreeing to Card Check. Additionally,Unable To Sell Unionization On Its Merits, The UAW Turns To Race, Rappers And An Actor For Aid, and the UAW Bosses Turn To Bovine Excrement Manufacturing. Despite the fact these tactics continue not to work for the UAW, the union has decided to continue to press the issue and to replace outgoing President Bob King with UAW Secretary Treasurer Dennis Williams who supports King’s tactics. Once again The United Auto Workers Promote Failure. Isn’t the definition of “insanity” to repeat the same things over and over again, with the same failed results?

Finally, the question must be asked, is the unionization of college sports spreading? The answer appears to be both yes and no. Recent reports indicate that the University of Notre Dame could be next (see Notre Dame could be next front in union battle). However, it appears any progress on this movement will take a long time as Northwestern University has filed an appeal on the decision made by the NLRB administrative law judge finding college athletes to be “employees” (see Northwestern University Appeals NLRB Ruling on Athletes as Employees). Contrary to the judge’s finding, an Ohio bill says college athletes aren’t employees.

Unions and the Democratic Party desperately need money as mid-term elections approach as discussed in It’s All About the Dues Money! Desperation is setting in despite the fact the Administration has aligned the federal labor agencies in big labor’s favor. The American people are beginning to wake up, and businessmen across the country are standing up to big labor’s Death by a Thousand Cuts Corporate Campaigns and saying “no” as chronicled by the PJS CEO and this Hilarious Car Dealership Outwitting Labor Union Tactics — And This Video May Just Be the Victory Lap where a Wichita auto dealership beat a union at its own tactics.

Desperation is setting in and it is only going to get uglier as the mid-term elections approach.

David A. Bego is the President and CEO of EMS, an industry leader in the field of environmental workplace maintenance, employing nearly 5000 workers in thirty-three states. Bego is the author of “The Devil at My Doorstep,” as well as the just released sequel, “The Devil at Our Doorstep,” based on his experiences fighting back against one of the most powerful unions in existence today.

California Federation of Teachers Boss Speaks Power to Troops

In a refreshingly candid speech, union leader minimizes bromides about “the children” and relentlessly bangs the class warfare drum.

In his March 22nd state-of-the-union talk to the faithful, California Federation of Teachers president Josh Pechthalt made no bones about the ultimate mission of his union. Absent were the usual silly platitudes like “working together with other stakeholders” and “if we need to strike, it will be for the children.” Nah. Pechthalt didn’t waste any time using weasel words. He went right to the heart of the union’s raison d’être, which is advancing a leftist agenda. Here are a few snippets from a speech that would have made the late Karl Marx beam:

… CFT has been a beacon of progressive, social justice unionism.

… we have consistently supported single payer health care reform….

We are currently part of a coalition with many of our Millionaires Tax and Prop 30 partners working on an effort to amend Prop 13….

The super wealthy and their swollen circle of reactionary think tanks and echo chamber conservative media are committed to eradicating what remains of the labor movement and giving corporations unlimited power over every aspect of American life.

We understand that central to the mission of public education is the need to advocate for a different kind of society…. (Emphasis in original.)

Don’t get me wrong – I am not implying that teacher union bosses don’t care about children. They care, in fact they really care, but maybe not in ways that you and I do. They tend to see children as avatars-in-training for the brave new world that they are attempting to shove down our throats.

But getting our own members organized won’t be enough. We must reach out to our students, their parents and our community members and organizations.

Pechthalt clearly gives no thought to his members who don’t have the same affection for the Comintern that he apparently does. According to Pechthalt’s counterpart, California Teachers Association president Dean Vogel, about one-third of teachers in California are Republican. I wonder what was going through their minds when Pechthalt said, “… open school libraries have become as rare as a congressional republican (sic) with something good to say about the affordable care act (sic).” But then again, it really doesn’t matter, because the way the unions have things rigged, those right-of-center members are still forced to fork over monthly dues just like everyone else. But when you are a true-believer in “social justice,” purloining money from unwilling teachers is nothing more than a bourgeois concern.

Pechthalt was especially rough on the Students Matter (Vergara v California) case, which aims to ensure that all kids in California have an effective teacher by removing the tenure, seniority and dismissal statutes from the state education code. His comments were ad hominem and oozed class warfare sentiments.

The latest attack on public education has been the Vergara lawsuit, backed by billionaires David Welch and Eli Broad and the corporate-friendly law firm of Gibson Dunn and Crutcher.

… We did that while one of the backers of the Vergara lawsuit, Eli Broad, put money into a failed secret Arizona PAC effort that pumped millions of dollars into California in the run-up to the 2012 election to try and defeat Prop 30 and try to pass prop 32, the anti-union initiative.

… The hard cold reality though is that the Vergara suit underscores our challenge: to convincingly tell our story and build deep relationships with parents and community partners in the face of (a) well-funded effort by the opponents of public education to lie and twist reality and erode our influence. (Emphasis added.)

The vilification of Broad is particularly ironic because he is a lifelong Democrat. And regardless of his political affiliation, to progressives, some billionaires are less equal than others. For instance, why the Koch Brothers are considered evil and involved in “dark money” but George Soros is portrayed as an angel of light is beyond me. (Okay, it’s not beyond me….)

And in all the yammering about billionaires and the evil rich, it’s worth noting that when it comes to political spending in California, a teachers union – the California Teachers Association – is #1 by far. Between 2000 and 2013, it spent over $290 million on candidates and causes. That was far more than dreaded corporations AT&T, Chevron and Philip Morris spent in the Golden State combined.

Pechthalt’s and CFT’s attempts to conduct class(room) warfare by aggrandizing the union movement are well-documented.  Courtesy of Kyle Olson’s Indoctrination, we know that CFT has put out “lessons” for tots as young as five. In “Trouble in the Henhouse: A Puppet Show” we find an oppressive farmer whose hens unionize and convince the heartless farmer that he’d better respect them “or else.” Then there is “The “Yummy Pizza Company,” another lesson from CFT – actually ten – that delves into the process of organizing a union local. They include instructions on how to collectively bargain as well as a sanitized look at prominent labor leaders. Click Clack Moo, a popular book promoted by CFT parent organization AFL-CIO, tells second graders about unhappy cows that refuse to work until the mean farmer is forced to meet their demands.

It’s important to note that the “workers of the world unite and bring your children to the party” mentality is hardly new for CFT. This is the organization that brought us “Tax the Rich: An Animated Fairy Tale” in 2012. This vile video pushed class warfare to the limit, attempting to whip up hatred of people who have been successful in life but “don’t pay their fair share of taxes.” As Investors Business Daily described it,

“Rich people love their money more than anything in the whole world,” narrates Hollywood actor and noted leftist Ed Asner, in tones used in reading to schoolchildren. “Over time, rich people decided they weren’t rich enough so they came up with ways to get richer.”

…The bile that oozes in the union’s puerile seven-minute screed was unspeakable: The world was a paradise full of good jobs and safe streets until “rich people” decided to get more money, so the video begins.

Instead of paying their “fair share” of taxes, the rich decided to do three things: seek tax cuts, engage in loopholes and evade taxes by shipping their fortunes to the Cayman Islands, illegally of course, mendaciously suggesting that any financial tie with the Caymans is illegal.

It only gets worse: The rich people’s supposed greed led them to buy media and politicians, with a not-so-subtle cartoon depiction of a man who looks a lot like Fox News owner Rupert Murdoch, and then money amassed as coins in big stacks, which then crashed down first on middle class people’s houses, and then on the jobs of police, firefighters, teachers and librarians.

After that “the rich” tried to blame defaulted mortgage holders and after that, teachers and firefighters (conveniently ignoring the bloated pensions and entitlements and waste that are the doings of public employee unions). “Maybe it was the firefighters,” Asner sarcastically narrated.

The scene that received the most attention was of a rich man urinating on the “poor.” CFT pulled that scene shortly after posting, but no matter, the highly offensive video was a shameful attempt to indoctrinate children into the ugly world of class conflict.

It is essential that teachers who are more in love with teaching than with CFT’s attempts to wage war on rich people stop supporting the union’s political agenda. (To learn how to do this, go here.) Until teachers do that, they are complicit in the union’s overall mission, which is dedicated to promoting class warfare and indoctrinating children.

Larry Sand, a former classroom teacher, is the president of the non-profit California Teachers Empowerment Network – a non-partisan, non-political group dedicated to providing teachers with reliable and balanced information about professional affiliations and positions on educational issues.

Unions and Obamacare, Part 2: How Unions Got Obamacare Passed

Unions were at the forefront in the desperate campaign for Obamacare.

The organization “Health Care for America Now!” included some 1,030 organizations and was the principal coalition working to pass the program. HCAN’s 20-member steering committee included the AFL-CIO, the Communication Workers of America, the teachers’ unions (both the National Education Association and the American Federation of Teachers), the American Federation of State, County and Municipal Employees (AFSCME), the United Food and Commercial Workers (UFCW), the United Auto Workers (UAW), and the Service Employees International Union (SEIU), along with Working America, an AFL-CIO front group.

Taking the lead in organizing unions and their allies for Obamacare was Dennis Rivera. Rivera was the longtime head of the nation’s largest union local—Local 1199 (SEIU Healthcare Workers East)—until he left that job in 2007 to run SEIU’s national effort to organize healthcare workers. In his new position, he was working for Andy Stern, the SEIU president who would later be the most frequent visitor to the White House in the early days of the Obama administration. Back then, in 2007, Stern said Rivera was perfect as chair of SEIU Healthcare because “He’s tough, smart, and compassionate, just what’s needed to transform healthcare in this country. At this moment in history, as the winds of change are blowing toward fundamental healthcare reform, and as SEIU redoubles its efforts to fix our broken healthcare system, Dennis’ decision to shift his focus to the national effort couldn’t come at a better time.”

Stern was eerily prophetic. Rivera was the perfect person to lead the change. Rivera’s specialty at Local 1199 was forming alliances with businesses and hospitals, as well as spending heavily on campaigns that supported his political friends and punished his political enemies. He was close to the leading Democrats in New York (and served on the transition team for Gov. Elliot Spitzer in 2006-2007), but he also took advantage of splits within GOP ranks, partnering with Gov. George Pataki and other Republicans who had big business ties. His skill at building anti-taxpayer coalitions would prove invaluable to the Obamacare effort.

In June 2009, shortly after President Obama took office, the pro-Obamacare “Kaiser Health News” reported that “Unions have created a formidable political machine for the battle on health care, one that they’re already begun to deploy to support their positions and undercut those they oppose. They say they’re ready to spend $80 million.”

The unions’ greatest worry was that they would spark a backlash among voters, such as the backlash against Hillary Clinton’s healthcare plan that, in 1994, gave Republicans control of Congress for the first time in 40 years. Said Len Nichols of the left-wing New America Foundation: The unions understand “that if Democrats fail, last time we got [House Speaker Newt] Gingrich, this time we could get [conservative radio host Rush] Limbaugh.”

(The worriers were right: The backlash against Obamacare gave Republicans, in 2010, their best election in 60-80 years, but by then the program had already become law.)

Forewarned and forearmed, prepared for perhaps the key political battle of their lifetimes, the pro-Obamacare unions and their allies set up their “Health Care for America Now!” campaign on Washington’s K Street, the infamous home for special-interest lobbyists. The operation was funded by MoveOn.org and other organizations funded by billionaire George Soros, and by Soros-connected donors such as the Atlantic Philanthropies, Peter Lewis of Progressive Insurance, and Herb and Marion Sandler. The tax disclaimer for HCAN stated: “HCAN is related to Health Care for America Education Fund, a project of the Tides Center, a section 501(c)(3) public charity.” On the board of the Tides Center was ACORN founder Wade Rathke [see Part 3, to be posted Monday, November 11].

During the campaign for Obamacare, SEIU’s Dennis Rivera took the lead in forming alliances with industries that hoped to profit from the new system directly (health insurance, non-doctor-owned hospitals, the pharmaceutical industry) and indirectly (companies like Walmart that hoped to dump their employees’ healthcare costs onto the taxpayer). Rivera also took advantage of the can’t-we-all-just-get-along weariness of opponents of nationalized healthcare. Many of them had been persuaded by the major news media that President Obama and the Democrats and their healthcare-rationing ideas represented the wave of the future; others wanted a place at the negotiating table as the nation’s healthcare resources were divvied up. In 2009, Crain’s New York Business reported:

Dennis Rivera, the indomitable labor leader, was on Capitol Hill in late June to persuade members of a powerful House committee to include a public insurance option in its massive overhaul of the nation’s health care system. Karen Ignagni [representative of the health insurance industry], perhaps the most feared lobbyist on the Hill, was there to sway the lawmakers in the opposite direction. Yet during a break in the hearing, Ms. Ignagni—whose group of insurers served up the “Harry and Louise” ads that helped kill the Clinton health care reform effort—walked over to Mr. Rivera, greeted him with a warm embrace and asked to meet the following week. . . .

[After his success in New York forming coalitions with Republicans and businesses, Rivera] has exported his mastery of transactional politics to the Beltway, appealing equally to would-be adversaries’ self-interest and their fears to lure them to the table. . . . As chairman of the Service Employees International Union’s health care division, he’s brought together groups including insurers, drugmakers and doctors—all of whom defeated previous attempts at reform. In a nation grown weary of confrontational politics, Mr. Rivera’s brand of bridge-building has injected civility into a complex process, forging a path to health care reform that has eluded Washington for decades.

Rivera, as the healthcare chief of the union most closely connected to President Obama, blurred the lines between his union and the Obama Administration. “To some degree, Dennis is an independent actor, and to some degree, he’s working for the White House,” said a senior vice president of a medical technology group. “That played into making the process a success and people wanting to get involved. It’s not too great to be on the wrong side.”

During the Obamacare campaign, Rivera convened strategy sessions at 9 a.m. in a “war room” at SEIU headquarters. According to Crain’s, the campaign deployed “an army of 400 SEIU staff and members who are fanned out across 16 priority states. Union leaders have identified 20 senators and nine representatives they believe need some swaying to the cause of reform, and researchers have produced 100-page dossiers on each of them. The reports contained detailed information ranging from lists of associates who might influence these legislators to notes about how they typically respond to TV ads that protest their positions. The union has drawn up specific plans to target each elected official, ranging from writing letters and making phone calls to bird-dogging and holding sit-ins. If an official typically doesn’t respond to union pressure, it’s duly noted, and sympathetic leaders from religious or women’s groups have been primed to work them over.”

Particularly valuable in Rivera’s effort were left-wing groups that are not perceived by the general public as left-wing, such as the AARP and the American Cancer Society, which are thought by most people to be a senior citizens’ group and a traditional charity.

One of the key politicians with whom Rivera formed an alliance was Sen. Max Baucus (D-Mont.), chairman of the Senate Finance Committee. A relative moderate from a conservative state, Baucus had little history with SEIU before 2008. Rivera targeted Baucus, gradually building a relationship, then using the endorsement of so-called “reform” by Walmart as leverage to get Baucus on board. Without the help of Baucus, it’s unlikely Democrats would have held together in support of Obamacare—and without the unanimous support of the Senate’s 60 Democrats, the legislation could not have passed.

The irony: It was Baucus who, this year, labeled the rollout of Obamacare a “train wreck.”

Rivera’s efforts bore fruit when Obamacare passed Congress. In the course of the campaign, the legislation’s supporters had labeled opponents as racists who only fought against the President’s program because it was proposed by a black man. In a 2010 speech, AFL-CIO President Richard Trumka recalled personally witnessing the racism of Obamacare opponents on the day of the key vote: “I watched them spit at people. I watched them call [civil rights hero and U.S. Rep.] John Lewis the N-word.” Recordings of the incident proved that no such display of racism ever occurred, but it hardly mattered. Claims by opponents that Obamacare would be a disaster, claims that were backed up by the most thoughtful analysis available, hardly mattered. To the unions, what counted was victory. Any problems could be fixed later—right?

Dr. Steven J. Allen (JD, PhD) is editor of Labor Watch. This post is the second of a three-part series originally published by Labor Watch, a project of the Capitol Research Center, and is published here with permission.

Unions and Obamacare, Part 1: Why Unions Want Exemptions

Summary: Unions are largely responsible for the passage of Obamacare, but once the program was passed, they fought to get themselves excluded from it because of the costs it would impose on them. They have already succeeded in receiving hundreds of waivers, and now they’re proposing even more extreme waivers that would cost taxpayers billions.

Leaders of labor unions provided the political muscle that got Obamacare through Congress. They furnished the troops at the grassroots level and in the nation’s capital to block efforts to repeal or reform the program. They declared that Obamacare is the law of the land and must not be altered or abridged.

Today some of those same union officials say that Obamacare is a disaster that will harm working people in general and union members in particular. Now—surprise!—they want Obamacare changed in ways to benefit their unions.

Obamacare-Oops-demonstrators

President’s promise ‘simply not true
Through the 2010 and 2012 elections, unions kept their concerns under wraps with regard to the Patient Protection and Affordable Care Act (often called the ACA or Obamacare). But in September, at the quadrennial convention of the AFL-CIO, the nation’s largest union federation, delegates were speaking openly of the need to reform or repeal the program.

Not even AFL-CIO President, Richard Trumka, one of the President’s closest allies, could quiet his members. The best he could do was to prevent passage of a resolution calling for Obamacare’s outright repeal. The convention called for reforms instead.

One union, the International Longshore and Warehouse Union (ILWU), made its position especially clear. The ILWU withdrew its membership from the AFL-CIO just weeks before the convention and accused the labor federation of caving in to administration pressure regarding Obamacare’s tax on high-cost union health plans. (ILWU also cited the federation’s position on immigration reform and a local labor dispute.)

Last April, the United Union of Roofers, Waterproofers and Allied Workers International (the Roofers’ Union) called for the “repeal or complete reform” of Obamacare, stating that the healthcare program puts union workers at a competitive disadvantage and threatens their current health plans. A month later, Joseph Hansen, the president of the United Food and Commercial Workers (UFCW), declared in an op-ed in the Washington newspaper The Hillthat the President’s key promise about Obamacare—“if you like your [current healthcare] plan, you can keep it”—is “simply not true for millions of workers.”

The President made that promise, by the way, at the previous AFL-CIO quadrennial convention, in 2009.

Unions in jeopardy
Union officials aren’t just concerned that their members will have to pay higher premiums under Obamacare or that their health plans won’t be able to compete. They believe Obamacare threatens the very existence of their unions.

At the AFL-CIO’s quadrennial convention in September, Joseph Nigro, president of the Sheet Metal, Air, Rail and Transportation Union had some frank words on what Obamacare may mean for the AFL-CIO in particular: “You allow an ACA bill to go through like this, I guarantee you by your next convention four years from now, you won’t meet a quarter of this room. We won’t be here.”

“If unions’ role in negotiating health coverage is taken over by the government, unions lose a big chunk of their utility,” wrote Forbes health policy expert Avik Roy. Union health plans are fundamental to the success or failure of unions. Roy quoted Paul Starr, author of The Social Transformation of American Medicine, who noted that unions “derive some advantage of good will, power, or profit from serving as a financial intermediary in health care.”

Many unions make health insurance available to their membership through so-called Multi-employer Health Plans (MHPs), which were authorized in the 1947 Taft-Hartley Act and are sometimes referred to as Taft-Hartley plans. Rather than covering all workers within a given company, such plans typically cover workers in different companies, often workers in the same or related industries. By some reports, such plans cover 20 million Americans. Of the 1.3 million members in the UFCW, The Hill reports that 500,000 are covered by MHPs.

These plans must be negotiated as part of a collective bargaining agreement, and each is run by a board of trustees made up of both employer and union representatives. Such a plan has significant advantages. It allows employers, in lieu of salary, to pay for employees’ health insurance with pre-tax dollars. If the plan is self-insured, it cannot be regulated by state insurance bureaucracies. In addition, MHPs make healthcare insurance portable for their union members. Union workers can work for multiple employers within a plan without having to change their insurance each time they change jobs. According to the International Foundation of Employee Benefit Plans, MHPs are common in the “construction, arts and entertainment, retail stores, transportation, service (including lodging and health care workers), mining and communication” industries.

Union officials list several reasons why Obamacare now threatens the existence of these plans.

►First, they point out that they have to compete against small companies (50 or fewer employees) that aren’t subject to Obamacare’s employer mandate and thus aren’t required to purchase insurance for their employees. At the same time, unions are worried that employers with 50 or more employees may prefer to pay Obamacare’s fines rather than bargain for union health plans. “The concern,” says liberal health law scholar Timothy Jost, “is that employers will be less willing to collectively bargain with unions through Taft-Hartley if the employers believe their employees would be as well off or perhaps better off in the exchanges with the premium tax credits.”
Unions are now admitting that Obamacare’s employer mandate will cause people to lose their jobs. As The Hill reported:

. . . ACA includes a fine for failing to cover full-time workers but includes no such penalty for part-timers (defined as working less than 30 hours a week). As a result, many employers are either reducing hours below 30 or discontinuing part-time health coverage altogether. This is a cut in pay and benefits workers simply cannot afford. For example, a worker making $10 an hour that has his or her schedule cut by six hours a week would lose $3,100 a year in income. With millions of workers impacted, this would have a devastating effect on our economy.

You would expect, then, that unions would have greeted President Obama’s July decision to delay the implementation of the employer mandate with enthusiasm. They did not. On July 3, the AFL-CIO’s Trumka called Obama’s decision to delay the employer mandate “troubling.”

Perhaps unions are more concerned that the Obama Administration is making concessions to businesses and not to unions. The Wall Street Journal reported that James Hoffa Jr. of the Teamsters called the President’s decision “a huge accommodation for the employer community,” while union requests for special favors have been “disregarded and met with a stone wall by the White House.” In a statement the UFCW called it “a significant hand-out to employers,” but added that the decision encouraged the union to continue seeking changes from the Obama Administration, since it “appears open to changing the rules.”

►Second, Obamacare taxes high-cost healthcare plans, so-called “Cadillac” plans, by setting a limit on cost. Plans that cost more than the limit are taxed at 40% of the amount beyond the limit. Cadillac health plans often have small or no co-pays or deductibles.

Unions often enjoy Cadillac plans for reasons that go back, like so many problems connected with healthcare, to World War II. Wartime federal wage-and-price controls forced employers to give “raises” to their employees in the form of benefits like healthcare instead of in cash. Unions were happy because they could claim they obtained those benefits for their members. The government could have taxed the value of healthcare coverage as income, but instead it let employers purchase health insurance for their employees tax-free. This began a system that greatly distorted the health insurance market by linking insurance coverage to a person’s job—something that became a major problem as society changed and people stopped spending their entire careers with the same employer.

Today, because of this tax benefit for employer-provided health insurance, many unions have negotiated generous health benefits instead of higher wages. Naturally, unions dislike the idea of taxing any of those benefits. As first drafted, the Cadillac tax would have gone into effect this year, but unions successfully lobbied for a five-year delay. Instead of starting this past January, the tax won’t start until 2018.

Originally, the tax would have charged 40 percent of a health plan’s cost that went over $23,000 a year ($8,500 for individuals). Health Affairs calculated that those thresholds would hit one in five large employer health plans. Now, in another change, the thresholds have been raised to $10,200 a year for individuals or $27,500 a year for families.

►Third, unions complain that their employees don’t have access to the health insurance subsidies offered in the health insurance exchanges created under Obamacare. Exchanges are online insurance marketplaces where private health insurers can sell and individuals can purchase health insurance. Obamacare requires most individuals to have health insurance in the form of a plan meeting strict requirements set by the federal bureaucracy (including many things that consumers don’t want, such as maternity coverage for a 60-year-old woman or drug-addiction counseling for non-addicts).

For people who have incomes between 100% and 400% of the federal poverty line (an arbitrary line set by bureaucrats) and whose employers are not providing affordable health insurance (“affordable” as defined by bureaucrats), access to the subsidies is limited. These individuals can only take advantage of the federal health insurance subsidies if they purchase insurance through a government health insurance exchange, rather than, say, through a union.

►Finally, unions are particularly annoyed that Obamacare requires their healthcare plans to pay a tax of $63 per employee to pay for their share of the new federal reinsurance program. That reinsurance program is one of three programs in Obamacare that attempt to keep insurers from seeking out healthy individuals to the exclusion of others. These three programs (risk adjustment, risk corridors, and reinsurance) are sometimes referred to as the Three Rs.

The Three Rs are complicated, but here’s a brief explanation: Because Obamacare requires insurers to take all comers, regardless of people’s current health conditions, some insurers could end up with a high percentage of customers with serious health risks, which has the potential to put insurance companies out of business. To avoid this, Obamacare uses the Three Rs to transfer money from health plans that have fewer high-risk individuals to plans that are spending more because they have more high-risk individuals.

Of course, someone has to pay for running these transfer programs, hence the reinsurance program to shift the risk. In 2014, HHS will raise $12 billion dollars for the reinsurance program alone by taxing all health plans $63 dollars per enrolled person per year.

Waiverland
In the year after it passed, Obamacare began to ban health plans from placing lifetime and annual limits on benefits. The problem was that many of the most affordable plans, called “mini-med” plans, had benefit limits well below the new mandates. Employers and insurers were faced with either raising the plans’ benefit limits—thus making them unaffordable—or dropping the plans altogether because they violate the new law. As a result, Obamacare was poised to take affordable insurance away from millions of employees, including union members.

In an effort to save these plans, the Obama Administration created a waiver program just two months prior to the November 2010 congressional elections. Plans that received a waiver were absolved for one year from having to meet Obamacare’s new lifetime and annual limit mandates.

Soon after these waivers became available, the Wall Street Journal reported that McDonald’s was planning to apply for waivers for its employees. Later it was discovered that many unions were doing the same. The Obama Administration began granting waivers to non-union and union plans alike. Many of the unions now calling for the repeal or reform of Obamacare received these waivers. For instance, both the Roofers’ Union and the UFCW received multiple waivers.

A total of nearly 1,000 health plans have received waivers to date, and those plans cover 3.2 million mini-med enrollees, including 1.5 million union enrollees, according to federal statistics. The Administration issued so many waivers that Obamacare opponents joked about Waiverland, a vast swath of the American landscape metaphorically occupied by waivered plans.

In late 2010 and early 2011, the tally of waivers announced each month by the media generated recurring, unwanted media attention. Administration officials realized that granting yearly waivers on a monthly basis was bad from a public relations standpoint. So in 2011 the Administration required officials who wished to renew their plans’ waivers to request a single waiver that would last past the 2012 presidential election and through the end of 2013.

Come January 1, 2014, these waivers will expire. When they do, affordable mini-med plans will no longer be an option for American workers. Employers and unions will be forced to provide more expensive insurance or high-deductible alternatives to their lower-wage employees and members.

Yet another waiver
In January, the Wall Street Journal reported that unions had been quietly lobbying the Obama Administration to request a different sort of waiver, one that would let their members receive Obamacare’s federal health insurance subsidies. It’s hard to calculate what the unions’ request would cost American taxpayers, but here’s one estimation from Avik Roy of Forbes:

If, suddenly, the 20 million people on Taft-Hartley plans were eligible for subsidies, Obamacare’s costs would skyrocket. If half of those Taft-Hartley enrollees gained $5,000 per year in tax credits along with their tax-free health benefits, we’re talking $50 billion a year in additional insurance subsidies for those individuals. That’s more than half a trillion dollars over ten years, accounting for health inflation.

After news broke that unions were seeking these waivers, House Republicans pressured the Administration to admit that such waivers would be simply illegal. The Congressional Research Service found no legal way to give Obamacare healthcare subsidies to union members under a Taft-Hartley plan.

Undeterred, UFCW officials made it known publicly in May that they were seeking waivers. In July, the administration announced its decision to delay the employer mandate (but not the individual mandate), infuriating the unions. Teamsters President James Hoffa Jr. wrote House Minority Leader Nancy Pelosi (D-Calif.) and Senate Majority Leader Harry Reid (D-Nev.) on behalf of the Teamsters, UNITE-HERE, and the UFCW. “Time is running out: Congress wrote this law; we voted for you. We have a problem; you need to fix it. The unintended consequences of the ACA are severe.” Hoffa and the others declared that “perverse incentives” are “already creating nightmare scenarios.”

Republicans took notice of the controversy over whether to grant unions a waiver. In a joint statement, Sen. Orrin Hatch of Utah and House Ways and Means Chairman Dave Camp of Michigan responded:

There has been far too much special treatment for politically favored friends of Obamacare. When it comes to employers and taxpayers picking up the health care tab for labor unions—it appears that is a price that is simply too high. Perhaps even this administration recognizes that there are limits to them stretching the law to reward their friends.

But opponents of Obamacare shouldn’t fool themselves. While some unions are attacking the program, hoping for special fixes that benefit their unions, others such as the SEIU remain wholly in support. And even strong critics among union leaders are likely to stay within the fold. When Sen. Ted Cruz (R-Texas) cited union complaints, Hoffa responded that “we disagree wholeheartedly with the efforts of extreme right-wing Republicans to gut the ACA.”

“Any suggestion otherwise,” Hoffa declared, “is simply political posturing.”

John Vinci is a Virginia attorney, health care policy expert, and former staff attorney for Americans for Limited Government. This post is the first of a three-part series originally published by Labor Watch, a project of the Capitol Research Center, and is published here with permission.

Union Strategy to Join Progressives & Environmentalists Will Backfire

Over the Labor Day holiday, Big Labor once again demonstrated how desperate it is to rebuild its diminishing membership rolls. Despite the fact the tactics they have been utilizing for the last 20 years are not working, they keep on using them. As Albert Einstein once said, “Insanity: doing the same thing over and over again and expecting different results.” The union membership results speak for themselves as presented in a recent article by James Sherk of the Heritage Foundation:

Union Membership Dropped By 398,000 In 2012, Leaving Membership At Post-WWII Low Of 11.3 Percent:

“While employers added almost 2 million net new jobs in 2012, unions lost 398,000 members … Union density in the American workplace fell to another new post–world war ii low of 11.3 percent in 2012. Union Manufacturing Employment Fell 4.7 Percent From 2010 To 2012, While During Same Period Non-Union Manufacturing Employment Grew By 6.5 Percent.”

“On net, however, all of that hiring took place in non-union firms.  Between 2010 and 2012, non-union manufacturing employment expanded by 6.5 percent.  At the same time, unionized manufacturing employment continued to fall, dropping another 4.7 percent.”

(James Sherk, “Labor Unions: Declining Membership Shows Labor Laws Need Modernizing,” The Heritage Foundation, 1/23/13)

One would think by now some type of lesson would have been learned and Big Labor would change its strategy. However, despite the declining membership numbers and paltry organization results, Big Labor continues to utilize its “outdated” Corporate Campaign tactics of intimidation and coercion to attain its goals, as described in The Devil at Our Doorstep. It also continues to rely on a phony President and the Rogue NLRB to hand it Card Check through Regulation vs. Legislation. Additionally, when the Corporate Campaign tactics fail, and they face actual ‘Secret Ballot Elections,” Big Labor resorts to intimidation and bribery to win these said elections, further eroding its credibility in the eyes of the working public.

Despite the blaring membership facts, Big Labor returned to these obsolete tactics over the Labor Day holiday. The infamous SEIU attempted to orchestrate a national “Fight for Fifteen” campaign, a disguised Living Wage Argument against fast food restaurants and other companies in the retail/service business with minimal success. Additionally, is the SEIU is in the midst of a Worker Center Scheme, attempting to bypass the National Labor Relations Act as discussed in  Promises, Promises: Desperate Unions Grow Weary of Phony Distractions.

Meanwhile the AFL-CIO teamed up with the Interfaith Workers Justice group out of Chicago, and whose tactics are immortalized in both of my books (see Proselytizing for Unions: AFL-CIO Announces Holiday ‘Labor and Faith’ Services). They are “immortalized” because one of its own clergy members readThe Devil at My Doorstep, met with me, apologized and wrote a letter of recommendation for me and my company which is featured in the new book. Obviously the association between the AFL-CIO and Interfaith Workers Justice and its holiday “Labor from the Pulpit” tactic has not worked, as few churches outside of Chicago and Boston have joined the program. Additionally, very little has been mentioned in the mainstream media, which is undeniably pro-union, pro-left wing and supported by George Soros.

If Big Labor bosses were running corporations where they were held accountable to investors and banks, they would be thrown out on their ears. However, the rank and file membership in unions do not have that type leverage or power. They have to put up with the continued lack of attention to membership needs as well as Underfunded Pensions and health care programs while the Big Labor bosses continue to use membership dues for failing membership campaigns and political foolishness.

2009 Moody’s Report Found That, Based On Examination Of 125 Multi-employer Plans, Their Asset-To-Liability Level Had Declined From 77 Percent To 56 Percent:

“In 2009, Moody’s came out with a report based on about 125 multi-employer plans, and concluded that their overall asset-to-liability level declined from an already disturbing 77 percent in 2007 to 56 percent in 2008, the year of the stock market collapse.  Of the roughly dozen affiliates of the Carpenters union, only one even exceeded 70 percent.  Construction industry plans were only about 60 percent funded.  Transportation industry plans, typically sponsored by the Teamsters or the Machinists, averaged slightly below 60 percent.” (Carl Horowitz, “New Reports Show Severe Shortfalls In Multi-employer Union Pensions,” National Legal And Policy Center, 7/2/13) At The Same Time, Unions Bosses Spent Billions On Lobbying & Politics. GAO Concluded That By 2017 Union Pension Fund Insolvencies Would More Than Double.

When will the Big Labor Gasping Dinosaurs realize their organizations will collapse (see The Labor Movement in Full Collapse) unless they learn to compete with integrity and honesty in the free market system? When will they start treating their members like today’s successful businesses treat their employees? They may not be as “big” as they once were, or enjoy the financial and political clout they now attempt to possess, but they would be creating meaningful support and services for current members and potentially those who work for businesses that have employees who might benefit from being unionized. If they would only give up their thirst for power and control they could be instrumental in revitalizing the work place and ultimately Restoring America’s Prosperity. Until Big Labor eliminates senseless campaigns, like those utilized this Labor Day holiday, union members will continue to vote with their feet.

David A. Bego is the President and CEO of EMS, an industry leader in the field of environmental workplace maintenance, employing nearly 5000 workers in thirty-three states. Bego is the author of “The Devil at My Doorstep,” as well as the just released sequel, “The Devil at Our Doorstep,” based on his experiences fighting back against one of the most powerful unions in existence today.

Detroit Bankruptcy Protection Affirmed by Judge

As hoped and expected Detroit Bankruptcy Protections Affirmed, Snyder Shielded.

 Detroit can enjoy the protections of bankruptcy, including immunity from lawsuits related to the case, a federal judge ruled, extending that shield to Michigan Governor Rick Snyder.

U.S. Bankruptcy Judge Steeven Rhodes in Detroit today blocked lawsuits by public employee groups and pension funds who alleged the state overreached in seeking court protection from creditors. Such claims must be heard in bankruptcy court, Rhodes said. His ruling gives the city the opportunity it said it needs to address $18 billion in debt without disruptions.

Chapter 9 of the U.S. Bankruptcy Code, which covers municipalities, typically prevents creditors from taking actions against the debtor that might interfere with reorganization.

City unions and pension officials claim Snyder, 54, violated Michigan’s constitution by authorizing Orr to file for bankruptcy. Pension funds for retired city workers sued in state court to have the filing declared illegal.

Barring lawsuits against Snyder related to the bankruptcy would be unfair to Michigan’s citizens, said Sharon Levine, an attorney for the American Federation of State, County & Municipal Employees, part of the AFL-CIO.

“We’re taking away very fundamental constitutional rights,” Levine said.

Michael Artz, a lawyer for the American Federation of State, County & Municipal Employees, said outside court after the hearing that while the question of the constitutionality of the Chapter 9 filing should have remained in state court, the union “will fight whatever court we’re in.”

Fights by AFL-CIO Welcome

I welcome these fights by the AFL-CIO. Indeed I hope they spend every cent they have because they are going to lose.

And when they lose, others cities will decide to escape preposterous unions contracts and pension benefits via bankruptcy.

General Obligation Bondholders Beware

Several people emailed me that that bondholders should have nothing to worry about because the bonds are backed by tax revenue.

Really?

If that was the case, then there should be little to no difference in interest rates between such bonds. But there is. Just like there is a difference between Greek bonds and German bonds, even though we heard the ECB say for years “we say no to default”.

Well guess what? The market was correct, not the ECB.

All bets are off in bankruptcy court because you cannot tax a hollow shell. And what is Detroit but a hollow shell?

Triumph of Math Over Unions

As for pension claims and the Michigan constitution? Same thing: You cannot pay what you do not have. This is the triumph of math and common sense over union greed, arrogance, threats, and coercion.

Future Rating Impact

The Bond Buyer says Detroit Filing Could Impact Future Rating Analysis

 CHICAGO – As Detroit enters into what would be the largest municipal bankruptcy in the U.S., ratings agencies said the outcome may have a negative impact on unlimited-tax general obligation bonds in future credit analysis.

Detroit emergency manager Kevyn Orr’s restructuring plan treats the city’s unlimited-tax general obligation bonds as unsecured, on par with the its lowest-secured debt, such as retiree health care benefits.

The move marks a departure from traditional treatment of ULTGOs, typically considered among the strongest municipal debt.

Orr’s plan, if accepted by a bankruptcy judge, may affect the way Fitch Ratings analyzes ULTGOs in the future, the ratings firm said in a comment released Friday.

Fitch analyst Amy Laskey said in a telephone interview that it’s still uncertain how broad the impact would be if a bankruptcy judge approved Orr’s plan.

“These are issues we’re talking about internally, how broadly that might extend,” Laskey said. “It would certainly make us reexamine the value to credit quality of having that unlimited-tax pledge versus other tax-supported obligations,” she said.

“Our feeling was that with unlimited-tax general obligation bonds you have the pledge to levy property tax without limitation to pay the debt, and that seemed somewhat more secure [than other tax-supported bonds],” said Laskey. “They do give you a little more financial flexibility because you have the ability and the obligation to pay for them, which you don’t have for limited-tax bonds, certificates of participation, or lease revenue bonds.”

If the city moves into Chapter 9, the case could set precedents when it comes to treatment of ULTGOs, she said.

Once again, I cite common sense: you cannot tax a hollow shell. Bondholders took a risk for higher yield, just as did buyers of Greek debt. If there was no risk, yields on Detroit bonds would not have been higher in the first place.

So, pensioners and bondholders both should take it on the chin.

Detroit Will Be In Bankruptcy ‘For A Long Time’ 

Harvey Miller, partner at Weil, Gotshal & Manges, tells Bloomberg Law’s Lee Pacchia that Detroit’s recently filed Chapter 9 bankruptcy case will not be an easy restructuring. In addition to the profound economic challenges facing the city and the limited ability of a bankruptcy court to force changes on its government, the fundamental tension between bondholders, pensioners and taxpayers could mean Detroit will remain in tangled up in litigation for a long duration of time. “There’s going to be a lot of legal fighting in this,” he says.

Link to video: Harvey Miller on Detroit Chapter 9

Expect a lot of municipal bond downgrades before too long. Downgrades are coming, deserved, and welcome.

About the Author:  Mike Shedlock is the editor of the top-rated global economics blog Mish’s Global Economic Trend Analysis, offering insightful commentary every day of the week. He is also a contributing “professor” on Minyanville, a community site focused on economic and financial education. Every Thursday he does a podcast on HoweStreet and on an ad hoc basis he contributes to many other websites, including UnionWatch.

Unions Demand Special Exemptions From Obamacare

Obamacare, officially known as the “Affordable Care Act”, is quickly proving to be so unaffordable that neither businesses nor labor unions want anything to do with it.

In increasing numbers, US business complain about ‘Obamacare’ costs (but they are not the only ones).

David Dillon, chief executive of the Kroger supermarket chain, told the Financial Times that some companies might opt to pay a government-mandated penalty for not providing insurance because it was cheaper than the cost of coverage.

Nigel Travis, head of Dunkin’ Brands, said his doughnut chain was lobbying to change the definition of “full-time” employees eligible for coverage from those working at least 30 hours a week to 40 hours a week.

Some restaurants, including Wendy’s and Taco Bell franchises, have explored slashing worker hours so fewer employees qualify for health insurance, arguing that they cannot afford the additional healthcare costs. Other businesses are deliberately keeping headcounts below 50.

The penalty for not providing coverage is $2,000 per worker. According to the Kaiser Family Foundation, a non-partisan policy group, the average annual cost to employers of insurance is $4,664 for a single worker and $11,429 for a family.

Companies with more than 50 workers have to pay a penalty if they do not provide full-time employees with health insurance. The employees can instead buy private coverage subsidized by the government on new insurance exchanges.

Not Even Labor Unions Want It

If it’s costly for businesses, labor unions must like it. Right? Wrong.

The Washington Time reports Labor unions that pushed Obamacare through want out

Unions, or rather the professional class of union leaders, were vehement supporters of Obamacare’s federal takeover of health care. Now that they’ve had a chance to actually read the 2,801-page bill and “find out what is in it,” they are upset and want out.

Major unions like the AFL-CIO and the Teamsters are now demanding that they be allowed to stay on their current health care plans and receive government subsidies to cover the increased costs some of Obamacare’s provisions will impose on lower-income workers. They want to eat their government cake and have it too. What else is new? Who would foot the bill? You guessed it: We, the taxpayers.

The rank hypocrisy of Obamacare-backing unions began almost immediately after the passage of the bill three years ago, with hundreds of thousands of union workers being exempted from the law through waivers from the Obama administration.

In total, more than 1,200 entities were granted waivers from President Obama‘s signature legislation, the vast majority of them labor unions. In fact, unions representing 543,812 workers received waivers, while only 69,813 employees at private firms, many of them small businesses, managed to secure a waiver.

The same unions that fought tooth and nail to impose this program on all Americans used million-dollar lobbyists to make sure they didn’t have to play by the same rules as the rest of us.

Readers will recall Mr. Obama’s constant mantra: “If you like your health care, you can keep it.” Not so. According to the Congressional Budget Office, more than 7 million Americans will lose their employer-based insurance thanks to Obamacare. Unintended consequences always come back to haunt us, and try though they might, government actors are incapable of overturning economic law by mere decree.

Job Market Distortions

I have commented on the labor market distortions of Obamacare many times.

Here is a brief recap: Since the “Unaffordable Care Act” defines full-time employment at 30 hours, many businesses are cutting back the number of hours employees can work to 25. In turn, this led to more hiring, all part-time jobs of course. Some medium-sized businesses reduced employment to under 50 workers and other businesses turned to consultants to get around the act.

Now businesses are investigating opting out of the plan even for full-time employees. Other than social pressures and disgruntled employees, why not?

Arguably, every business should opt out and pay the penalty. Businesses could even give a nice subsidy to its employees and come out ahead. Let voters see for themselves just how “affordable” Obamacare is.

As a primary benefit, if enough businesses do opt out, there will be massive voter support to scrap or at least overhaul the program.

About the author: Mike “Mish” Shedlock is a registered investment advisor representative for Sitka Pacific Capital Management. His top-rated global economics blog Mish’s Global Economic Trend Analysis offers insightful commentary every day of the week. He is also a contributing “professor” on Minyanville, a community site focused on economic and financial education. Every Thursday he does a podcast on HoweStreet and on an ad hoc basis he contributes to many other websites, including UnionWatch.

When Union Officials Hold Office: An Infected Community College Board

In December 1997, the AFL-CIO implemented its “2000 in 2000” program to help elect union activists to public office. As the AFL-CIO reported in February 1999, “In 1998, we made progress toward our goal of putting 2,000 union members on the ballot in the year 2000. Over the next two years we will make a substantial effort to recruit, train, and assist union members running for office.”

Following that election, the AFL-CIO declared the 2000 in 2000 program as a success, with over 2500 union members holding elected office. It’s unclear if these union members were elected for the first time in 2000, or if the AFL-CIO simply managed to discover through surveys that more than 2500 union members were already in office.

It then launched the “Target 5000” program to get 5000 union members into elected office in 2002. The lack of triumphant AFL-CIO press releases about this program suggests it never achieved the goal of 5000 public office holders, but the dream of Target 5000 persisted at least through the 2004 elections. It is still referenced on web pages of the Massachusetts and Pennsylvania AFL-CIO.

In California, union officials are routinely elected to the California State Legislature and local government boards in the state’s major metropolitan areas. Union officials in elected office are particularly prevalent in Los Angeles, where Miguel Contreras improved the effectiveness of local election involvement of the Los Angeles County Federation of Labor, AFL-CIO during his leadership from the mid-1990s through 2005.

Sometimes the union presence on elected boards is outrageously brazen. For example, the chairman of the board of the John Swett Unified School District (in the San Francisco Bay Area) presided over a February 10, 2009 vote for a Project Labor Agreement on future John Swett district school construction while wearing a T-shirt representing his employer, the Ironworkers Local Union No. 378. The chairman threatened to have police remove a man and a woman from the board room when they complained from the audience that he was applying a strict three-minute time limit on speakers opposed to the labor agreement, but allowing speakers in favor of the labor agreement to speak without a time limit. (In response, they walked out voluntarily.)

Other times, public exposure can at least compel a union official not to vote with self-interest on union-related business, such as when a board member recused himself from a vote for a Project Labor Agreement at the Contra Costa Community College District after the public revealed he had failed to submit his legally-required statement of economic interests and then failed to report income from his union employer. (See the October 15, 2012 www.UnionWatch.org article Unions Increase Control of California’s Community College Boards).

The latest controversy at a California local government related to a union official on an elected board is at the Allan Hancock Joint Community College District in Santa Barbara County. In November 2004, the business representative for the International Brotherhood of Electrical Workers (IBEW) Local Union No. 413 in Santa Barbara County was elected to the Allan Hancock College board of trustees.

Electrical contractors with employees not in a union have experienced continual difficulties bidding on college construction projects since his election. This shouldn’t be a surprise, considering an explicit objective on the home page of the IBEW Local Union No. 413 is “to organize all workers in the entire electrical industry…including all those in public utilities and electrical manufacturing, into local unions.”

Because many California electricians choose not to belong to a union and have the requisite work experience and test scores to obtain their state electrician certification, the IBEW Local Union No. 413 needs to pursue this objective by using the coercive power of government to restrict competitive bidding. Here’s a compilation of antics concerning taxpayer-funded construction at Allan Hancock College since November 2004, complete with documentation when available: 

January 2006: Contractor associations learned through inside sources that someone was agitating for the Allan Hancock College board of trustees to require its construction contractors to sign a Project Labor Agreement with the Tri-County Building and Construction Trades Council. Contractors and organizations provided arguments to the college district against the proposal, and it did not come up for a vote.

December 2009: Shortly before a bid deadline, Allan Hancock College issued an addendum to bid specifications for the One-Stop Student Services Center. The addendum added “Enhanced Safety Requirements” that required 75 percent of the workforce of the general contractor and all subcontractors to be graduates of a California state-approved apprenticeship program. This was aimed at hindering bids from construction companies whose employees learned their trade and/or obtained state certification outside of the union training model.

Local contractors were incensed. Associated Builders and Contractors (ABC) of California coordinated with the Santa Maria Valley Contractors Association and the Western Electrical Contractors Association (WECA) to ask the college to extend the bid deadline and remove the “enhanced safety requirements” through a new addendum. College officials acknowledged the requirement was inappropriate and promptly issued an addendum removing the union-backed requirement and extending the bid deadline.

December 2010: At the direction of the IBEW board member at the November 16 meeting, the Allan Hancock College board of trustees held a “special meeting” on December 7 featuring a “Local Hire Preference Workshop” leading up to a vote at the December 14 meeting.  The workshop was intended to be “an exploration into a local preference hiring policy for capital construction projects,” but strangely the “exploration” did not include an invitation to contractors or contractor associations for participation. Nevertheless, contractors caught onto the plot, and representatives of the Santa Maria Valley Contractors Association and the San Luis Obispo County Builders Exchange spoke against the proposal in opposition to union officials supporting the proposal during public comment. One board member had warned the IBEW board member at the November 16 meeting that his occupation might create a conflict-of-interest, so people were aware that unions were behind the proposal. When the IBEW board member made a motion to approve the policy at the December 14 meeting, no one seconded the motion, and it failed.

See Labor Agreements Explored at Hancock Workshop – Santa Maria Times – December 8, 2012

The policy was similar to a policy previously proposed by the IBEW Union Local No. 413 to the California Space Authority (based in Santa Maria) and to the City of Lompoc. In addition, the Tri-County Building and Construction Trades Council was pushing at this time for an alleged local hiring policy (a “Local Jobs Construction Stabilization Agreement”) at the Santa Barbara County Board of Supervisors that was in reality an ordinary Project Labor Agreement. As shown in its December 2010 newsletter, the IBEW was concerned that non-union electrical contractors were winning numerous public works contracts in the Central Coast counties of Santa Barbara and San Luis Obispo.

October 2012: Allan Hancock College advertised for bids on Building “D” Repairs and Upgrades. Bid specifications included a requirement that any electrical installation worker on the job “must have completed an indentured IBEW/NECA apprenticeship program” (that is, a training program operated by the International Brotherhood of Electrical Workers union).

Contractor representatives from the Coalition for Fair Employment in Construction, Associated Builders and Contractors (ABC), and the Western Electrical Contractors Association (WECA) objected via email to the union-only requirement and pointed out that it was unfair and illegal, but the college did not rescind the requirement. Here is how a college official explained the situation:

The District takes considerable care to establish requirements for the District’s construction projects that reflect the needs of each project and which incorporate requirements consistent with applicable law. Underlying this approach by the District are principles of fair and equal bidding opportunities for all prospective bidders, regardless of a bidder’s union or non-union affiliation.

The District was not aware of the restrictive electrician apprenticeship requirement incorporated into the specifications for the Building D Repairs and Upgrades Project until the issue was brought to the attention of the District on October 10, 2012. The District could not take the action requested by ABC in its October 10, 2012, communications (amendment of the specifications provisions limiting acceptable electrical apprenticeship programs) because those communications were sent and received after the opening of Bid Proposals on October 9, 2012.

District staff forwarded the October 10, 2012 ABC letter to counsel for review and response, including discussions with the Project architect and the architect’s electrical engineering consultant. Through that evaluation process and communications with the project design professionals who prepared the specifications, District staff and counsel concluded Monday afternoon that the specifications provision was unduly restrictive and that the restriction on acceptable electrical apprenticeship programs was inconsistent with applicable law. With that conclusion, District staff and counsel determined that the appropriate and proper action is to amend the recommendation for award of the contract for the Project. Rather, an amended recommendation will be presented to the Board of Trustees at the meeting tonight to the effect that: (i) the original bidding process incorporated a flawed electrical apprenticeship provision; (ii) the Board should take action rejecting all Bid Proposals; and (iii) District staff be authorized to re-bid the Project after correcting the electrical apprenticeship provision.

At the October 16 board meeting, a representative of the Western Electrical Contractors Association (WECA) asked the board to rebid the project without the union requirement that prevented electrical subcontractors from participating in the bidding. This request upset the board, as well as the contractor with the winning bid (the contractor incorporated a union electrical subcontractor). There was even a veiled threat that the board would impose a Project Labor Agreement on future construction if non-union contractors continued to hassle the college. Ultimately, the board gave college staff authorization to proceed with awarding the bid, unless one of the contractors’ associations refused to be understanding of the mistake and submitted an official objection.

First time fool me, shame on you – second time fool me, shame on me. Would an established business organization have the courage to refuse to play along and instead insist on what is right and fair? Yes! On October 24, 2012, WECA submitted its formal written objection against Allan Hancock College awarding the bid with the IBEW requirement in the specifications.

Obviously, the public will need to perpetually monitor the board agendas and the bid specifications for contracts at Allan Hancock College, as long as someone on the board holds a vocational goal “to organize all workers in the entire electrical industry… into local unions.” As the AFL-CIO intended through the “2000 in 2000” and “Target 5000” programs, that board member is merely doing his job for his union. Meanwhile, the people need to do their job of seeing their interests properly represented at their own community college district.

Kevin Dayton is the President and CEO of Labor Issues Solutions, LLC and is the author of frequent postings about generally unreported California state and local policy issues at www.laborissuessolutions.com.

Occupy Wall Street Receiving Support and Funds from SEIU and AFL-CIO

I’ve written about it in my book and blogs – the mainstream media is attempting to portray the Occupy Wall Street (OWS) movement as the Left’s version of the Tea Party. Nothing could be further from the truth. I’ve spoken at several Tea Party events and observed those in attendance as respectful and thoughtful, unlike the rabble-rousers at the OWS events across the country whose main goal is to disrupt – at all cost.

OWS is not the voice of the people; it is part of a grand scheme concocted by labor unions to serve their agenda. Watching the protests on TV, you will notice numerous Service Employees International Union (SEIU) and AFL-CIO participants in the crowds. This is clearly an organization attempt by labor unions, despite SEIU President Mary Kay Henry’s attempt to distance SEIU involvement in OWS. (Interestingly enough, the AFL-CIO was very up front in its involvement.)

The fact is: the OWS movement is no longer a citizen protest; it is now a well-organized, hardcore far-left movement designed to cause as much trouble as possible. The participants with “good intentions” abandoned the idea a long time ago. What remains now is a professional politically-driven organization with one goal in mind: to re-elect President Obama. This is a quote from a recent segment on The O’Reilly Factor:

 “The Occupy movement is now being run out of Washington, D.C. and offices belonging to the Institute for Policy Studies, a far left outfit. The director of the group is John Cavanagh, a long time liberal activist. His non-profit institute accepts money from George Soros through the Tides Foundation. Hundreds of thousands of dollars are involved. The Service Employees International Union (SEIU) headed by Mary K. Henry is paying rent for the OWS crew in D.C. – about $4,000 a month, the union is picking up. The SEIU has more than two million members and collects about $300 million a year from dues and other financial vehicles. Miss Henry herself has visited the White House a number of times as has the former head of the SEIU, Andy Stern, who has also been a frequent visitor to the White House and remains deeply involved with the union. From their D.C. offices, the Occupy leadership e-mails game plans to their hardcore members, telling them where to assemble, what to protest and even what to wear.”

The goal of the occupiers is no longer to raise awareness of economic injustice; it is to disturb the peace and attack those with whom they disagree. The occupiers have big plans for the political conventions this summer and disruption and violence is their strategy. So, why does President Obama protect and even defend this movement and the people who have acted out against the law? Because he has a vested interest in keeping OWS alive and his union supporters happy.

About the author: David A. Bego is the President and CEO of EMS, an industry leader in the field of environmental workplace maintenance, employing nearly 5000 workers in thirty-three states. Bego is the author of “The Devil at My Doorstep,” as well as the just released sequel, “The Devil at Our Doorstep,” based on his experiences fighting back against one of the most powerful unions in existence today.

 

Obama, Teachers Unions and Tax Evasion

President Obama has talked a good education reform game, but when push comes to threats, he is above all a good union man.

On August 25th, AFL-CIO boss Richard Trumka uttered a few words that seemed to resonate with President Obama. He said, “The AFL-CIO has not yet decided if it will participate in next year’s Democratic National Convention, as labor union members ponder whether President Obama has earned their support.…” He said the major economic speech the president has planned for early next month will tell union members what they need to know about whether he will be worth supporting.”

Trumka has a history of following through on his threats. As president of the United Mine Workers in the spring of 1993, he wanted to ensure that no one would be able to find employment as a miner without paying union dues to the UMW. Accordingly, he proceeded to order more than 17,000 mine workers to walk off their jobs, and told the striking miners to “kick the sh– out of every last one” of their fellow employees and mine operators who resisted union demands. UMW thugs dutifully responded by vandalizing homes, firing gunshots into management’s offices, and cutting off the power supply to another mine, temporarily trapping 93 miners underground.

Now it’s true that Trumka didn’t threaten to “kick the sh–”out of the president, but he may as well have. Last week, when Obama gave his speech to Congress, the thuggish Trumka was part of a small group who sat with Mrs. Obama listening to the President spew out yet another stimulus plan (how’d that last one work out, Mr. President?) This time it will cost $447 billion, and like the 2009 version, will allegedly fix all our economic ails. Long on demagogic rhetoric and short on details, the president made it sound so simple, “Pass this jobs bill, and we can put people to work rebuilding America.”

Perhaps even more important to the president than AFL-CIO backing is the support of the biggest union in the country – the National Education Association. So not surprisingly he also offered more “free” money – $60 billion – to education. This money will allegedly save 280,000 jobs according to U.S. Secretary of Education Arne Duncan. Since NEA gets $168 in dues from each of its members, it’s obvious why it welcomed Obama’s proposal. But that doesn’t mean that the union was satisfied.

When NEA President Dennis Van Roekel was asked if this was enough money to make him happy, he was dubious, saying that what’s needed is “more than they are willing to spend.” That’s because there is one dollar amount – and only one — that Van Roekel thinks is enough and that number is $MORE.

Clearly the extra money will fatten union coffers, but will keeping all these extra teachers’ jobs benefit American children and their families? Some will and some won’t. Due to the political heft of NEA, we still live in a country that treats teachers as widgets – and all do an equally good job.

As usual, Obama and his teacher union pals are avoiding a couple of obvious ways to save money. It has been demonstrably shown that charter schools do as good or better job for considerably less money and that a voucher system would save even more money.

As writer RiShawn Biddle put it, “This move is really just a waste of both taxpayer’s money and time that Obama could use to rally support for the education reform efforts that have been mostly-embraced on a bipartisan level. He would be better off tossing out the education portion of this stimulus and getting back to pushing for systemic reform.”

But Mr. Obama seems intent on his new tax-and-spend program and should Congress pass it, I have a suggestion as to where we might come up with some money. The NEA, which has an annual budget of $371 million, spent more than $56.3 million in the 2007-2008 election cycle on state and federal campaigns, political parties, and ballot measures, $12.5 million ahead of the second-place group. And yet, NEA doesn’t think it should pay income tax and rarely does.

The law says you must pay income tax unless you are a tax exempt entity, and if you are accorded that status, you cannot be involved with politicking. The Landmark Legal Foundation has been on to the NEA and its tax evasion for years now, and has gained some traction. In 2006, the Wisconsin Education Association, a NEA affiliate “realized it needed to pay $171,000 in federal taxes after LLF asked if the organization had paid taxes on $430,000 it gave to the Democratic Legislative Campaign Committee. Stan Johnson, the WEAC’s president, admitted the organization should have paid taxes on the expenditures.”

If NEA ever stopped blathering about the rich not paying their “fair share” and actually started paying its own (and were dinged for past years’ payments with appropriate penalties), it would certainly help to solve the budgetary problems it claims are inhibiting our education process.

Mr. President, as a “fair share” proponent, why don’t you look into why NEA, which spends hundreds of millions on politics – almost exclusively on liberal candidates and causes – pays almost no taxes? But then again, I guess I just answered my own question.

About the author: Larry Sand is the president of the non-profit California Teachers Empowerment Network – a non-partisan, non-political group dedicated to providing teachers with reliable and balanced information about professional affiliations and positions on educational issues.