Wintery Knight

…integrating Christian faith and knowledge in the public square

Right-to-work states gained jobs three times faster than forced union states

Gallup poll on right-to-work, August 2014

Gallup poll on right-to-work, August 2014

This is from economist Stephen Moore writing in Investors Business Daily.

He writes:

Wisconsin is poised this week to become the 25th “right-to-work state,” ending forced unionization and allowing individual workers to decide if they want to join a union or not.

The Wisconsin Senate just recently passed right-to-work, and our sources in Madison say that the House, which is controlled by Republicans, will enact a similar law in the days ahead.

Republican Gov. Scott Walker, a leading presidential candidate, is sure to sign the bill when it gets to his desk. “This isn’t anti-union,” insists Walker. “It restores worker rights and brings jobs back to Wisconsin.”

Some 3,000 liberal protesters stormed the Capitol in Madison over the weekend to reverse the momentum for the new law. This isn’t Walker’s first dust-up with union bosses. Four years ago, nearly 100,000 activists grabbed nationwide headlines when they protested his reforms in Wisconsin’s collective bargaining process with public employee unions.

If the new law passes, Wisconsin would join two other blue-collar, industrial Midwestern states — Michigan and Indiana — to recently adopt right-to-work. “If you had told me five years ago that right-to-work would become law in Indiana, Michigan and Wisconsin, I wouldn’t have thought it was even remotely possible,” says economist Arthur Laffer.

Laffer and I have conducted substantial economic research showing three times the pace of jobs gains in right-to-work states than in the states with forced union rules that predominate in deep blue states such as California, New York and Illinois.

In the 2003-13 period, jobs were up by 8.6% in right-to-work states, and up only 3.7% in forced union states. Most of the southern states, with the exception of Kentucky, are right-to-work

Many auto jobs in recent decades have moved out of Michigan and Ohio and into states such as Texas, Alabama and South Carolina, due in part to right-to-work laws in Dixie.

But as union power recedes in the Midwestern states, many of the region’s governors see factory jobs returning to their backyards. “Right to work is already lowering unemployment in Indiana and causing a manufacturing revival here,” says Gov. Mike Pence.

Companies are more attracted to right-to-work states, and that means more jobs become available.

Here is Congressional testimony from James Sherk, senior policy analyst in labor economics at The Heritage Foundation. I really recommend bookmarking this article. Even though it is very long, it is up-to-date and comprehensive. I am linking to it because he responds to objections to right-to-work laws raised by unions.

Do right-to-work laws hurt the middle class?:

Union Strength and the Middle Class. Unions and their supporters frequently claim the opposite: that unions helped build the middle class and weaker unions hurt all workers—not just union members. To make this point they often juxtapose the decline of union membership since the late 1960s with the share of income going to the middle class. The Economic Policy Institute did exactly this when criticizing the possibility of RTW in Wisconsin. These comparisons suffer from two problems. First, the absolute standards of living for middle-class workers have risen substantially over the past generation. Inflation-adjusted market earnings rose by one-fifth for middle-class workers between 1979 and 2011. After-tax incomes rose at an even faster pace. Middle-class workers today enjoy substantially higher standards of living than their counterparts in the 1970s.

Secondly, these figures conflate correlation with causation. During the time period EPI examined union membership correlates well with their measure of middle-class income shares. Extending the graph back another two decades eliminates this correlation. U.S. union density surged in the late 1930s and during World War II. It peaked at about a third of the overall economy and private-sector workforce in the mid-1950s. During this time period America had few global competitors. From the mid-1950s onward global competition increased and U.S. union membership steadily declined. Between 1954 and 1970 union density dropped from 34.7 percent to 27.3 percent. Unions lost over a fifth of their support in just over a decade and a half.

During this period middle-class income and living standards grew rapidly. No one remembers the 1950s and 1960s as bad for the middle class, despite the substantial de-unionization that occurred. Over a longer historical period changes in U.S. union strength show little correlation with middle-class income shares. Liberal analysts come to their conclusion by looking only at the historical period in which the two trends align.

Do right-to-work states have lower wages?:

Unions Argue RTW Hurts Wages. In the same vein, unions argue that RTW laws lower wages. As the Wisconsin AFL-CIO recently claimed:

These anti-worker Right To Work laws just force all working families to work harder for lower pay and less benefits, whether they’re in a union or not. The average worker makes about $5,000 less and pensions are lower and less secure in Right to Work states.

This statement contains a degree of truth: average wages in right-to-work states are approximately that much lower than in non-RTW states. This happens because right-to-work states also have below-average costs of living (COL). Virtually the entire South has passed RTW, but no Northeastern states have passed an RTW law. The Northeast has higher COL and higher average wages; the South has lower living costs and lower wages.

[…]All but one right-to-work state has living costs at or below the national average. All ten of the states with the highest COL have compulsory union dues. Analyses that control for these COL differences have historically found that RTW has no deleterious effects on workers’ real purchasing power.

Recently the Economic Policy Institute has claimed that workers in RTW states make 3 percent less than workers without RTW protection, even after controlling for living costs. Heritage replicated this analysis and found that EPI made two major mistakes: it included improper control variables and did not account for measurement error in their COL variables. These mistakes drive their results. Correcting these mistakes shows that private-sector wages have no statistically detectable correlation with RTW laws. The supplement and the appendices to this testimony explain the technical details of this replication. Properly measured, RTW laws have no effect on wages in the private sector.

Although the history of unions shows that unions were a valuable and necessary check on the power of greedy corporations in times past, today unions are using the dues they collect from workers to elect Democrats. The vast majority of political contributions made by the big unions go to Democrats.

Here’s one example, using the Service Employees International Union numbers:

Service Employees International Union

Service Employees International Union

(Click for larger image)

So if you oppose what Democrat politicians are doing, it makes sense to free workers from being forced to pay union dues for causes that are against their values. The average rank-and-file member of a union does not share Democrat values on things like abortion and gay marriage, in my opinion. Why should they be forced to pay union dues that go to elect politicians who oppose their values?

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New study: EPA carbon emission regulations eliminate 586,000 manufacturing jobs

Why don’t we build anything in America any more?

Well, we do build many things, but if the question is changed to “why aren’t we building more?” then the answer is that the costs of building things in America are much higher than building them elsewhere. One reason is that we have the highest corporate tax rate in the world. Another reason is that we pass regulations that make it expensive to make anything here.

Here is a report from the Daily Signal about a new study by the Heritage Foundation.

They write:

A new study predicts that more than a half million manufacturing jobs will be eliminated from the U.S. economy as a result of the Obama administration’s proposed regulations to curb carbon dioxide emissions.

“Every state would experience overwhelming negative impacts as a result of these regulations, but especially those with higher-than-average employment in manufacturing and mining,” said Nick Loris, a co-author of study, which was completed by energy experts at The Heritage Foundation—the parent organization of The Daily Signal.

The researchers projected how many manufacturing jobs would be eliminated in each state and congressional district as a consequence of the carbon plan, which is the centerpiece of President Obama’s effort to combat climate change.

The results show that 34 states would lose three to four percent of manufacturing jobs by 2023, and nine other states would lose more.

In Ohio alone, 31,747 jobs would be lost.

The study predicts that the Midwest would be hit the hardest, with Illinois, Indiana, Michigan, Ohio and Wisconsin losing more than 20,000 jobs each.

[…]The analysis comes just months before the Environmental Protection Agency is set to finalize its carbon regulations covering new, existing and modified/reconstructed power plants by mid summer of 2015.

Heritage’s study looked at the totality of the Obama administration’s efforts to limit carbon dioxide emissions—from motor vehicles and power plants, both new and existing.

The EPA’s plan forces states to cut power-industry emissions by 30 percent in 2030 from 2005 levels.

We have to save the planet!!!1!!

Meanwhile, in Boston:

It's global warming! The EPA must save us!

It’s global warming! The EPA must save us!

So, the next time anyone asks you why we don’t build anything anymore, tell them it’s because they voted for Democrats, and how this resulted in higher taxes and more burdensome regulations. Higher taxes and more regulation causes companies to close down here at home and move elsewhere, or they just scale back here and expand elsewhere. Democrats cause American jobs to go overseas, raising the unemployment rate. That’s why our labor force participation hasn’t been this low for decades. It’s basic economics.

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Arthur Brooks: Europe’s core problems are demographic, not economic

AEI President Arthur C. Brooks writes about Europe’s most pressing problem in the far-left New York Times, of all places.

He writes:

According to the United States Census Bureau’s International Database, nearly one in five Western Europeans was 65 years old or older in 2014. This is hard enough to endure, given the countries’ early retirement ages and pay-as-you-go pension systems. But by 2030, this will have risen to one in four. If history is any guide, aging electorates will direct larger and larger portions of gross domestic product to retirement benefits — and invest less in opportunity for future generations.

Next, look at fertility. According to the Organization for Economic Cooperation and Development, the last time the countries of the European Union were reproducing at replacement levels (that is, slightly more than two children per woman) was the mid-1970s. In 2014, the average number of children per woman was about 1.6. That’s up a hair from the nadir in 2001, but has been falling again for more than half a decade. Imagine a world where many people have no sisters, brothers, cousins, aunts or uncles. That’s where Europe is heading in the coming decades. On the bright side, at least there will be fewer Christmas presents to buy.

There are some exceptions. France has risen to exactly two children per woman in 2012, from 1.95 in 1980, an increase largely attributed to a system of government payments to parents, not a change in the culture of family life. Is there anything more dystopian than the notion that population decline can be slowed only when states bribe their citizens to reproduce?

Finally, consider employment. Last September, the United States’ labor force participation rate — the percentage of adults who are either working or looking for work — reached a 36-year low of just 62.7 percent.

Yet as bad as that is, the United States looks decent compared with most of Europe. Our friends across the Atlantic like to say that we live to work, while they work to live. That might be compelling if more of them were actually working. According to the most recent data available from the World Bank, the labor force participation rate in the European Union in 2013 was 57.5 percent. In France it was 55.9 percent. In Italy, just 49.1 percent.

[…]It is true that good monetary and fiscal policies are important. But the deeper problems in Europe will not be solved by the European Central Bank. No matter what the money supply and public spending levels, a country or continent will be in decline if it rejects the culture of family, turns its back on work, and closes itself to strivers from the outside.

Either people keep their own money and run their own lives, or bureaucrats take their money and make the decisions about social programs. In America, we used to prefer the former, but Europe has been preferring the latter for decades. Would I get married and have kids in a society run by European bureaucrats? Do I want secular leftist public schools to tell my children what to believe? It doesn’t sound very exciting to me. And I’ll bet it doesn’t sound very exciting to a lot of men in Europe. Men don’t want to be taxed, so that they can be replaced by the state’s social programs. We want to chart our own course, and guide our own families. But that’s not OK with people who want to replace men with government social programs.

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Should young Americans feel confident about their economic prospects?

Wages of Young Americans (Source: The Atlantic)

Wages of Young Americans (Source: The Atlantic)

Graph: Young People’s Wages Have Fallen Across Industries Between 2007 and 2013.

Young Americans are taking longer to graduate and graduating with more debt, but that’s not all – they aren’t find jobs, and the jobs they do find typically don’t allow them to pay back their loans.

Here’s an article from The Atlantic, which leans left.

Excerpt:

American families are grappling with stagnant wage growth, as the costs of health care, education, and housing continue to climb. But for many of America’s younger workers, “stagnant” wages shouldn’t sound so bad. In fact, they might sound like a massive raise.

Since the Great Recession struck in 2007, the median wage for people between the ages of 25 and 34, adjusted for inflation, has fallen in every major industry except for health care.

These numbers come from an analysis of the Census Current Population Surveyby Konrad Mugglestone, an economist with Young Invincibles.

In retail, wholesale, leisure, and hospitality—which together employ more than one quarter of this age group—real wages have fallen more than 10 percent since 2007. To be clear, this doesn’t mean that most of this cohort are seeing their pay slashed, year after year. Instead it suggests that wage growth is failing to keep up with inflation, and that, as twentysomethings pass into their thirties, they are earning less than their older peers did before the recession.

The picture isn’t much better for the youngest group of workers between 18 and 24. Besides health care, the industries employing the vast majority of part-time students and recent graduates are also watching wages fall behind inflation. (40 percent of this group is enrolled in college.)

It’s not just that – the Democrats are doing a pretty good job of wrecking other parts of the economy, from energy development to health care to entitlement programs to college tuition, which rises higher as government throws more money into the system. They are doing everything they can to wreck the economy with higher taxes and burdensome regulations.

As a result of our headlong rush towards socialism, the U.S. economy has now fallen to number 2 in the worldbehind China.

Look:

We’re no longer No. 1. Today, we’re No. 2. Yes, it’s official. The Chinese economy just overtook the United States economy to become the largest in the world. For the first time since Ulysses S. Grant was president, America is not the leading economic power on the planet.

It just happened — and almost nobody noticed.

The International Monetary Fund recently released the latest numbers for the world economy. And when you measure national economic output in “real” terms of goods and services, China will this year produce $17.6 trillion — compared with $17.4 trillion for the U.S.A.

As recently as 2000, we produced nearly three times as much as the Chinese.

To put the numbers slightly differently, China now accounts for 16.5% of the global economy when measured in real purchasing-power terms, compared with 16.3% for the U.S.

This latest economic earthquake follows the development last year when China surpassed the U.S. for the first time in terms of global trade.

So things are bad for young people, and it’s going to get worse.

It’s important to check what major you are studying to make sure you get a return on your investment, and don’t be scared to study something you hate if it means that you can make your career work. Your education and career choices are not about fulfillment and thrills. You have to make hard choices in order to make ends meet so that you have freedom to do the things you ought to do, especially if you want to get married and start a family. Those marriage and family plans start the day you step into high school, in my opinion.

UPDATE: 17.7% Teen Unemployment in America – Still Above Rate of 6 Years Ago and Labor Force Participation Remains at 36-Year Low.

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White House threatens veto of bipartisan small businesses tax cut bill

It’s actually for research and experimentation, and small businesses.

Investors Business Daily reports on the story.

Excerpt:

The White House move this week to torpedo a deal between House Republicans and Senate Democrats to extend dozens of expiring tax breaks suggests that the executive action legalizing 5 million unauthorized immigrants may have been no fluke: Compromise appears to be near the bottom of President Obama’s agenda for his last two years in office.

Despite — or perhaps because of — the Republican wave election that capsized Democrats’ Senate majority, Obama is tugging his party further left, which could make it harder for the GOP to govern effectively. A shift away from the center might seem counterintuitive, but it’s consistent with the Democrats’ post-mortem election analysis that put the blame on the party’s failure to focus enough on its economic agenda.

The White House’s veto threat, which apparently surprised dealmakers, was “really pretty stunning” considering that soon-to-be-demoted Majority Leader Harry Reid was its quarterback, said Chris Krueger, political analyst at Guggenheim Partners’ Washington Research Group.

In blowing apart the deal, estimated to cost $440 billion over 10 years, the White House lined up behind liberal Massachusetts Sen. Elizabeth Warren, who attacked it as “a massive handout to big corporations” that asks “working families to pick up the tab.”

The Obama administration used the same justification in explaining its threat to veto the bill if it reached the president’s desk: “It would provide permanent tax breaks to help well-connected corporations while neglecting working families.”

The centerpiece of the deal is a $160 billion provision to make permanent and expand a research and experimentation tax credit, an idea that the administration has supported. The next two biggest pieces, both about $73 billion over 10 years, would make permanent the American Opportunity tuition tax credit and an allowance for small businesses to write off capital investments permanently.

Individuals would be able permanently to deduct sales taxes instead of income taxes, important for residents of states like Florida and Texas, at a cost of $34 billion. Controversial wind production taxes would be extended but phased out over two years, costing $20 billion.

Other smaller pieces include extending a financial-crisis related provision to shield the value of written-down mortgage principal from taxation; making permanent an expanded deduction for users of mass transit; and making permanent tax-free charitable contributions from tax-protected retirement accounts.

That last point about being able to give away your retirement plan tax-free is huge for me, because that’s what I planned to do with my 401K when I retire, since it doesn’t look like I am going to ever get married. If that tax break on charitable deductions from retirement accounts is ever revoked, it would be bad news for the apologists and Christian scholars I donate to. But it’s in keeping with the leftist idea that individuals like me are only good for earning money, but it takes a big secular government to know how to spend it. They have other plans for my money, like free abortions, IVF and sex changes. Yay, big government!

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