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You are here: Home / Trickling down the low road

Trickling down the low road

by Kay|  December 8, 201111:35 am| 24 Comments

This post is in: Blatant Liars and the Lies They Tell

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Factual rebuttal to the effort by Mitch Daniels to destroy private sector unions in Indiana:

As a report by the Higgins Labor Studies Program pointed out, trying to attract businesses to a state based on low wages is the “low road” to economic development. It is a “trickle-down” approach that leads to a “race to the bottom.” It undermines living standards for most workers and, in a globalized environment, is unlikely to lead to a long-lasting increase in economic growth.
Most people would agree that lowering wages and benefits for Indiana workers is not the best way to promote economic development in Indiana. RTW advocates seem to recognize this and go to great lengths to deny that RTW laws lower wages and benefits. In a section in its report titled, “Testimony Supporting RTW,” the committee states that “RTW states have … higher wages when adjusted for cost of living … than non-RTW states.”
The truth of the matter is that RTW laws do lower wages and benefits — for all workers in RTW states. In a recent thoroughly documented and well-researched study (which, by the way, adjusts for the cost of living), economists Elise Gould and Heidi Shierholz demonstrate that workers in RTW states make $1,500 less in wages annually compared to workers in non-RTW states.

In its section on testimony supporting RTW, the committee repeats, without comment, the following statement: “Unions argue that they are forced to bargain for all employees, not only for union members, but there is nothing in law that forces them to do that.”
This statement, however, represents a misunderstanding of the relevant legal principles under the National Labor Relations Act. Section 9(a) of the NLRA provides that any unions selected or designated for purposes of collective bargaining “shall be the exclusive representatives of all the employees in such unit. ..” (emphasis added). Moreover, the U.S. Supreme Court has held that a union owes a duty of fair representation to all employees in the bargaining unit (union members and non-members alike), and it is because of that duty that the court has sanctioned the imposition of fees “to the extent necessary to ensure that those who enjoy union-negotiated benefits contribute to their cost.” In addition, if a union has not been designated as the exclusive representative of all employees in the bargaining unit, then the employer is under no statutory obligation to collectively bargain with the union.

It might also be useful to point out another misleading statement about unions in the committee report. Its first “finding of fact” states the following: “Based on the principles of freedom of speech and association, individuals should be able to choose whether or not to associate with unions.” There is no requirement under current labor law for any worker to join a union. The “fair share” clauses that RTW laws would ban do not require workers to become members of a union; they only require workers who benefit from the results of a collective bargaining agreement to contribute to the costs of negotiating and administering that agreement. The Supreme Court established this principle in NLRB v. General Motors Corp., and further defined it in Communications Workers of America v. Beck.

Mitch Daniels was and is the regional leader of the effort to lower wages and quality of life for working people that is now being conducted in Ohio and Wisconsin. He was first. Daniels put all of these policies and practices in, beginning way back in 2005, when he ended public sector unions by executive order. Daniels got the whole conservative-libertarian race to the bottom wish list, virtually unopposed, until now, when he’s finally, finally meeting resistance.

And what’s the result for ordinary people in Indiana? What’s the result after they made concession after concession on worker rights and sold or privatized state assets and public services? How’d that go for them?

This is the Indiana unemployment rate: 9.0

This is Ohio: 9.0

This is Wisconsin: 7.7

Ohio and Wisconsin don’t have to travel far to see what race to the bottom gets them. They can simply hop on the privatized toll road and visit Indiana. Nothing. They’ll get nothing. They can meet the demands of the politicians and pundits who serve “job creators” and when they take those hits the same people will simply tell them they haven’t given enough yet and be right back for more.

This is the report on how RTW reduces wages across the board cited in the editorial.

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Reader Interactions

24Comments

  1. 1.

    Comrade Dread

    December 8, 2011 at 11:41 am

    It’s not about freedom, or jobs, or the deficit, or any of a number of other excuses that these people claim.

    As always, it’s about power. Who has the power, and who is at the mercy of those who do.

    Destroying unions is about destroying the power of ordinary citizens to enact and fight for positive change in their lives and empowering the upper class to increase its stranglehold on government.

  2. 2.

    Martin

    December 8, 2011 at 11:56 am

    What everyone seems to miss in these economic arguments is that it’s not a problem of not enough money to pay workers. Fuck, profits are off the charts, even compared to 2007 pre-recession. There’s plenty of money, just not enough work for workers to do.

    Fucking with the wages accomplishes nothing with creating work, other than making things worse for workers and profits better for the bosses – which of course is the point. If we want more jobs, we need to find more work to do, and the money and jobs will flow.

  3. 3.

    General Stuck

    December 8, 2011 at 11:57 am

    Good morning Kay :)

    I think the union busting of the wingnuts, has gone past the bottom line effect of business and the wingers role as defenders of business and their profit margins relative to collective bargaining for higher wages.

    It is mostly about elections now, I think, and the organizing and funding effects of unions in service to getting democrats elected to office, and keeping republicans out of power. They are frightened to death, the GOP, and all they have to do is look at Obama and their worst fears are confirmed, that the overall electoral tide is turning against them, and something must be done, now. And radical, and no longer piecemeal with measured effort to sabotage such a potent electoral ally of the dem party. Indiana republicans have been more successful at it than WI and OH, that backfired badly on the GOP/ I suspect IN just has deeper right wing roots, and maybe Daniels having a lower key approach than the banty roosters of Walker and Kasich.

  4. 4.

    Soonergrunt

    December 8, 2011 at 11:57 am

    Excellent article as usual, Kay.
    My only nit, and it’s not with you personally, is that we need to stop referring to rich people as ‘job creators’ even sarcastically. The real, actual job creators in the American economy are, and have always been, the middle and lower classes because they actually buy things. If we give even one iota of credit to the idea that market economies are best, then we must accept that jobs are created to fill markets that exist, and markets are created by demand and there is a hell of a lot more demand from the middle- and lower-classes than from the highest class, and that those jobs to fill that demand would come into existence one way or the other, except when (as really happens) the richest of our populace decide to not exploit or serve new markets and keep profits to themselves (as is their right–stupid, but right to do).

  5. 5.

    slag

    December 8, 2011 at 12:05 pm

    It might also be useful to point out another misleading statement about unions in the committee report. Its first “finding of fact” states the following: “Based on the principles of freedom of speech and association, individuals should be able to choose whether or not to associate with unions.”

    All you need to read to know you’re dealing with a wingnut.

  6. 6.

    jonas

    December 8, 2011 at 12:09 pm

    In a section in its report titled, “Testimony Supporting RTW,” the committee states that “RTW states have … higher wages when adjusted for cost of living … than non-RTW states.”

    Ah — “when adjusted for cost of living.” And why do RTW states generally have low costs of living? In part because they’re generally reliant on low-paying service sector jobs (e.g. call centers), agriculture (also low-paying, non-unionized) and low-paying manufacturing that produces a barely-scraping-by working class that can’t afford anything else. So yes, it’s great when the average house in the area costs under $100k. But it sucks that the reason it’s so cheap is that hardly anyone can actually afford even that.

    Race to the bottom.

  7. 7.

    ThatLeftTurnInABQ

    December 8, 2011 at 12:10 pm

    @Martin:

    Fucking with the wages accomplishes nothing with creating work, other than making things worse for workers and profits better for the bosses – which of course is the point. If we want more jobs, we need to find more work to do, and the money and jobs will flow.

    Ayup. Demand isn’t depressed because rising labor costs have pushed product too far up the price curve, demand is depressed because there aren’t enough potential customers with money to spend.

    I recall reading about (sorry, can’t remember the source) a conversation that occured during the New Deal involving a particularly savvy businessman, who said to one of FDR’s brain trusters “Don’t try to create jobs. That isn’t your (the government’s) job to do, that is my job to do that. I need you to create customers. If you create customers, I’ll create the jobs to go with them.”

  8. 8.

    rikyrah

    December 8, 2011 at 12:11 pm

    I appreciate these, Kay

  9. 9.

    Linnaeus

    December 8, 2011 at 12:16 pm

    @rikyrah:

    I appreciate these, Kay

    Seconded. Blogovia has been doing a better job on labor issues over the past few years. It’s good to see.

  10. 10.

    Benjamin Franklin

    December 8, 2011 at 12:26 pm

    The Plausible Denialists perpetually whine about Union ‘thugs’.

    The origin of Unions in the US had crooked timber for a specific reason.

    For example, Jimmy Hoffa and his Teamsters had to deal with Pinkerton variety thugs and the bought-and-paid for Police who broke heads with impunity.

    Just like the ‘White Shirts’ at OWS, the historic methodology of the Status Quo is to attack peaceful protest in the hope self-defense can be described as ‘violent protest’.

    When Hoffa created an alliance with the Mob, he did it only because there was no other defense for his camp. Unfortunately, the corruption which followed
    became endemic, because once those criminals were in, you couldn’t get them out.

    They changed the landscape forever; some for good, some for the bad.
    Still, organized groups, no matter their agenda or affiliation, are the only path to progress against the SQ. They won’t give it up without a fight.

  11. 11.

    Commenting at Balloon Juice since 1937

    December 8, 2011 at 12:30 pm

    Anyone who desires to live in a RTW state is free to move to one.

  12. 12.

    Schlemizel

    December 8, 2011 at 12:35 pm

    sorry but I feel compelled to say this when I read stories like this so this may be a rerun:

    When will you people finally understand that there will be plenty of jobs & growth once you people come to accept Chinese-worker levels of compensation? Its really quite simple, you can even have unions, the Chinese do (they are controlled by the government but I am sure that is just a technicality) once you agree that their wage, safety and pollution standards are all you need. And it must be OK because you never hear about them being unhappy with the situation.

  13. 13.

    Paul in KY

    December 8, 2011 at 12:37 pm

    @General Stuck: I think Daniels is a bit smoother than either Walker/Kasich.

  14. 14.

    kay

    December 8, 2011 at 12:43 pm

    @General Stuck:

    It is mostly about elections now, I think, and the organizing and funding effects of unions in service to getting democrats elected to office, and keeping republicans out of power.

    I used to subscribe to that theory, but I don’t (completely) anymore. I think they’re afraid of any push-back, at all, from the actual workers.

    If they succeed, and there is no organized labor anywhere, at all, Democrats will simply tap into another constituency.

    They’re afraid of labor because they’re afraid of organized and focused and (especially) issue-savvy workers. Labor’s big strength isn’t “Democrats”, broadly. It’s that they focus on issues that matter to them, and they keep at it. They’re afraid of labor on labor’s own merits. They tell the conservative base it’s about labor and Democrats, but it’s more than that.

  15. 15.

    mcmullje

    December 8, 2011 at 12:45 pm

    I live in Colorado which is a RTW state and I can tell you – it is misnamed. It should be RTBFFNR – Right to be Fired for No Reason. I have Graves Disease and it first manifested itself with thyroid eye disease. One eye looked like Marty Feldman and the other eyelid hung down over my lashes – lovely. It got me fired because he said “I can’t stand looking at your eyes and you should not be greeting clients.”

    I called a lawyer who said I had no case because Colorado is a RTW state.

  16. 16.

    Unsympathetic

    December 8, 2011 at 12:49 pm

    What the what? These comments haven’t expressed two sides of a debate.

    Of course you need demand to create jobs.. the only method for ever actually “creating” a job is by achieving a rising marginal profit per unit.

    The problem is: Poor people still spend real money, and rich people are grabbing an ever-increasing share of those expenses through rent-seeking behavior.. thereby DECREASING their companies’ income even though they don’t understand what they’re doing.

    Henry Ford paid an above-average wage to his employees because he recognized that they would consume his product. The solution to achieving rising profits for industry conglomerates is NOT a race to the bottom but rather to pay more to workers.

    Cost of living has increased since 1970, but workers have achieved no rise in pay to compensate. So naturally consumption decreases. This is the race to the bottom – it should be no shock to anyone that the most prosperous time in America was when the cost of living and worker salaries rose in lockstep.

  17. 17.

    kay

    December 8, 2011 at 12:49 pm

    @General Stuck:

    The reason I think that (and this can’t be said enough) is that a substantial portion of union workers in these states vote for Republicans. That’s why we heard all the lies during the Wisconsin and Ohio fights about how it wasn’t unions, it was the budget.
    They tried to split public sector unions and private sector unions. They did that because they hoped to hold their voters who are private sector union members.
    They’re not bothering with that anymore. It’s a full-out assault. They’re not afraid of Democrats. They’re afraid of union members. So much so that they’re willing to LOSE the 40% or so of union voters who support them.

  18. 18.

    General Stuck

    December 8, 2011 at 12:52 pm

    @kay:

    If they succeed, and there is no organized labor anywhere, at all, Democrats will simply tap into another constituency.

    Yea, but another constituency is not likely to have the infrastructure, and ground game, especially with GOTV operations, like labor unions do helping democrats.

    I just think the wingnuts are broadly at war with not only democrats and liberal ideology, but the very mechanisms of democracy visa vi the election process. On all fronts, whether it be stalking and ultimately destroying ACORN, crushing unions, or the absolute frenzy of voter ID suppression efforts in states where they control the legislature. That is in addition to the reasons you state, that I agree with.

  19. 19.

    kay

    December 8, 2011 at 1:00 pm

    @General Stuck:

    Yea, but another constituency is not likely to have the infrastructure, and ground game, especially with GOTV operations, like labor unions do helping democrats.

    It’s a complicated relationship, labor and Democrats. I feel as if it’s evolving, somewhat, from unions playing a huge role re: candidates, to unions playing a huge role on issues.
    I think they’re very, very good at educating/mobilizing members on issues. I think they’re less effective on candidates.
    I also think this is good. They’re more effective as a (somewhat) outside force.

  20. 20.

    eldorado

    December 8, 2011 at 1:07 pm

    job creationists

  21. 21.

    ThatLeftTurnInABQ

    December 8, 2011 at 1:33 pm

    @eldorado:

    job creationists

    Jobs, like all good things which we get even though we don’t actually deserve them, come from the ultimate 1%er, the Good Lord Almighty. He bestows this blessing on the morally pure of heart, as is right and proper. And the path to achieving moral purity is through suffering. Be willing to suffer, yeah! grovel in the dirt at the feet of your masters, and you too can get a job. I know this because I read all about it in the Book of Jobs.

  22. 22.

    DanielX

    December 8, 2011 at 4:27 pm

    @Paul in KY: Yup – Mitch is a smoother and more polished version of Walker and Kasich. Standard issue corporate Republican – and he’s not running for re-election, which means he can do pretty much whatever he wants. Which, for Mitch, means ignoring the social/religious red meat issues that standard issue corporate Republican could care less about, and getting down to business. That business being to bring about a more bidness-friendly environment in the great Hoosier state, primarily by screwing workers in one way or another.

  23. 23.

    JR

    December 8, 2011 at 8:25 pm

    Unions are why 10-year-old children aren’t working 50 hour weeks picking slate from coal.

    Unions are why people get vacations, a concept that allows the worker to go to the beach, or fishing, without losing their job.

    Unions are why we work a 40-hour week, and get paid overtime if we work more than that. Once upon a time, you had to work as long as it took to complete your assigned task, and got paid if you completed it on time. Some people get paid per piece of work completed. If the piece of work fails some arbitrary inspection, you won’t get paid. Unions stop this kind of exploitation.

    Unions are why dangerous equipment that harms workers is illegal, and OSHA exists to fine and otherwise punish management which ignores safety requirements.

    When unions are broken, you see beat-up little campers at a job site, with workers sleeping in them when they aren’t working. Rent is taken out of their pay for their housing. When unions are broken, workers are sometimes paid in scrip, which is like money, except you can only spend it in the company store, at prices unrelated to the cost of the product wholesale.

    Tennessee Ernie Ford sang a song about the company store:

    “Saint Peter, don’t you call me, ’cause I can’t go,
    I owe my soul to the company store!”

    Kind of a spiritual for union bargaining rights.

    All this is to say, republicans want businesses to be able to treat workers like Chinese slaves. Like people in the Gulag work camps were treated. Like black people here were treated, before emancipation and before unions.

    Republicans want to make us into modern-day slaves, trapped into working forever — with no control over our pay or conditions, without being able to quit and go to a better job, because there are no better jobs.

    People with pre-existing health conditions can’t quit now, because they won’t be eligible for health insurance if the Republicans have their way and the health care reform act is repealed. They are slaves to their employer, as long as he continues to cover their health insurance.

    I sat in a hospital waiting room today with a woman with stage-2 cancer. She can’t get government health benefits yet, so she’s waiting to go blind when she will qualify for benefits to pay for chemo for her disease. Truth! How horrible is that.

    There also was a guy with stage-4 cancer who had coverage, because they discovered he was sick just before they planned to cancel their private policy that was costing him $1700/month. They still can’t afford it, but they can’t afford to cancel it either, because he will die more miserably if they do.

    We were in the waiting room for the X-Ray department in a big-city hospital, as big as you get in W.Va, anyway. Three horror stories, and they were willing and able to talk about these private disasters, because people sharing their pain helps lessen that pain.

  24. 24.

    Epicurus

    December 9, 2011 at 11:38 am

    What, another Republican is lying?? I’m shocked! I’m shocked that the author is shocked by this behavior. This is now SOP for the GOP; facts be damned, we’ll make up our own narrative. Orwell continues to rotate in his tomb, at a very high RPM. “In the end the Party would announce that two and two made five, and you would have to believe it. It was inevitable that they should make that claim sooner or later: the logic of their position demanded it. Not merely the validity of experience, but the very existence of external reality, was tacitly denied by their philosophy. The heresy of heresies was common sense. And what was terrifying was not that they would kill you for thinking otherwise, but that they might be right. For, after all, how do we know that two and two make four? Or that the force of gravity works? Or that the past is unchangeable? If both the past and the external world exist only in the mind, and if the mind itself is controllable—what then?” We ARE through the looking glass, people. I eagerly await the press release from Fox, telling us that 2+2 does in fact equal five. It’s coming…

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