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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As senator, Hillary Clinton paid women 72 cents for every dollar she paid men

Hillary Clinton and Planned Parenthood

Hillary Clinton and Planned Parenthood

I already knew that Hillary Clinton was pro-gay-marriage, and radically pro-abortion, but it turns out that she is a hypocrite on women’s issues, as well.

The Washington Times reports:

During her time as senator of New York, Hillary Rodham Clinton paid her female staffers 72 cents for every dollar she paid men, according to a new Washington Free Beacon report.

From 2002 to 2008, the median annual salary for Mrs. Clinton’s female staffers was $15,708.38 less than what was paid to men, the report said. Women earned a slightly higher median salary than men in 2005, coming in at $1.04. But in 2006, they earned 65 cents for each dollar men earned, and in 2008, they earned only 63 cents on the dollar, The Free Beacon reported.

[…]Mrs. Clinton has spoken against wage inequality in the past. In April, she ironically tweeted that “20 years ago, women made 72 cents on the dollar to men. Today it’s still just 77 cents. More work to do. #EqualPay #NoCeilings.”

Meanwhile, she is making “equal pay for women” her top priority.

CBS News reports:

Hillary Clinton lamented the number of women in the fields of science, technology, engineering and math at a Silicon Valley women’s conference on Tuesday, and called for more action to close the wage gap.

[…]In advocating for closing the pay gap, Clinton also endorsed the impassioned plea for wage equality made by Patricia Arquette in her Oscars acceptance speech for Best Supporting Actress.

“Up and down the ladder many women are paid less for the same work, which is why we all cheered at Patricia Arquette’s speech at the Oscars — because she’s right, it’s time to have wage equality once and for all,” Clinton said.

All right, let’s take a look at the facts on the so-called “pay gap” between men and women.

The facts

This article is from the very left-wing Slate, of all places.

Excerpt:

The official Bureau of Labor Department statistics show that the median earnings of full-time female workers is 77 percent of the median earnings of full-time male workers. But that is very different than “77 cents on the dollar for doing the same work as men.” The latter gives the impression that a man and a woman standing next to each other doing the same job for the same number of hours get paid different salaries. That’s not at all the case. “Full time” officially means 35 hours, but men work more hours than women. That’s the first problem: We could be comparing men working 40 hours to women working 35.

How to get a more accurate measure? First, instead of comparing annual wages, start by comparing average weekly wages. This is considered a slightly more accurate measure because it eliminates variables like time off during the year or annual bonuses (and yes, men get higher bonuses, but let’s shelve that for a moment in our quest for a pure wage gap number). By this measure, women earn 81 percent of what men earn, although it varies widely by race. African-American women, for example, earn 94 percent of what African-American men earn in a typical week. Then, when you restrict the comparison to men and women working 40 hours a week, the gap narrows to 87 percent.

But we’re still not close to measuring women “doing the same work as men.” For that, we’d have to adjust for many other factors that go into determining salary. Economists Francine Blau and Lawrence Kahn did that in a recent paper, “The Gender Pay Gap.”.”They first accounted for education and experience. That didn’t shift the gap very much, because women generally have at least as much and usually more education than men, and since the 1980s they have been gaining the experience. The fact that men are more likely to be in unions and have their salaries protected accounts for about 4 percent of the gap. The big differences are in occupation and industry. Women congregate in different professions than men do, and the largely male professions tend to be higher-paying. If you account for those differences, and then compare a woman and a man doing the same job, the pay gap narrows to 91 percent. So, you could accurately say in that Obama ad that, “women get paid 91 cents on the dollar for doing the same work as men.”

I believe that the remainder of the gap can be accounted for by looking at other voluntary factors that differentiate men and women.

The Heritage Foundation says that a recent study puts the number at 95 cents per dollar.

Excerpt:

Women are more likely than men to work in industries with more flexible schedules. Women are also more likely to spend time outside the labor force to care for children. These choices have benefits, but they also reduce pay—for both men and women. When economists control for such factors, they find the gender gap largely disappears.

A 2009 study commissioned by the Department of Labor found that after controlling for occupation, experience, and other choices, women earn 95 percent as much as men do. In 2005, June O’Neil, the former director of the Congressional Budget Office, found that “There is no gender gap in wages among men and women with similar family roles.” Different choices—not discrimination—account for different employment and wage outcomes.

A popular article by Carrie Lukas in the Wall Street Journal agrees.

Excerpt:

The Department of Labor’s Time Use survey shows that full-time working women spend an average of 8.01 hours per day on the job, compared to 8.75 hours for full-time working men. One would expect that someone who works 9% more would also earn more. This one fact alone accounts for more than a third of the wage gap.

[…]Recent studies have shown that the wage gap shrinks—or even reverses—when relevant factors are taken into account and comparisons are made between men and women in similar circumstances. In a 2010 study of single, childless urban workers between the ages of 22 and 30, the research firm Reach Advisors found that women earned an average of 8% more than their male counterparts. Given that women are outpacing men in educational attainment, and that our economy is increasingly geared toward knowledge-based jobs, it makes sense that women’s earnings are going up compared to men’s.

When women make different choices about education and labor that are more like what men choose, they earn just as much or more than men.

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New study: record high 30.3 percent of millenials live with a parent

Those on the left assure us that the secret to creating more jobs is making it easier for more people to go to college. We have to keep taxing job creators and workers, they say, so that we can pay for more people to get a college indoctrination. I mean education! Well, we have been trying that approach for some time – tax the private sector, make it cheaper for people to go to college. And the result is that we now have a record high number of young adults with college degrees, and a record high number of young adults living in poverty and a record high number of young adults living at home.

The article from Campus Reform tells us where we are now.

They write:

An all-time high of 30.3 percent of millennials are living with a parent, according to data released from the U.S. Census Bureau’s study, “Young Adults: Then and Now.”

The study, released Dec., 4, 2014, and tracks the young adult population from the 1980, 1990, and 2000 Censuses and the 2009-2013 American Community Survey, gathering data about salary, education level, transportation habits, and more than 40 other topics.

Millennials are living at home, and more are living in poverty with lower rates of employment than their predecessors.

According to the report, millennials are more likely to live at home than any other generation of young adults. In 1980, 22.9 percent of young adults lived with a parent, while in 1990 the percentage increased to 24.2 percent. In 2000, the percentage decreased to 23.2 percent, but by 2013 it hit a record-level by jumping more than 7 percentage points.

Millennials are living at home, and more are living in poverty with lower rates of employment than their predecessors. According to the study, one in five young adults live in poverty, up from one in seven in 1980. Currently, the study claims 65 percent of millennials are employed compared to the 1980 number of 69 percent.

Yet, 22 percent of young adults have a college degree, compared to only 16 percent in 1980.

The troubling thing about this for me is how much millenials keep voting, again and again, for higher taxes and more regulations. On the one hand, they want to vote against evil corporations. Tax them more! Regulate them, to save the planet! Then, a split-second later, they go and ask these corporations that they’ve been taught to bash for work. There is work for them, all right – in other countries with lower taxes and less regulation.

Anyway, we want to be positive, so again, I’m going to provide people with useful information.

First, study STEM programs:

  1. Petroleum Engineering – Starting Salary: $103,000 / Mid-Career Salary: $160,000
  2. Actuarial Mathematics – Starting Salary: $58,700 / Mid-Career Salary: $120,000
  3. Nuclear Engineering – Starting Salary: $67,600 / Mid-Career Salary: $117,000
  4. Chemical Engineering – Starting Salary: $68,200 / Mid-Career Salary: $115,000
  5. Aerospace Engineering – Starting Salary: $62,800 / Mid-Career Salary: $109,000
  6. Electrical Engineering – Starting Salary: $64,300 / Mid-Career Salary: $106,000
  7. Computer Engineering – Starting Salary: $65,300 / Mid-Career Salary: $106,000
  8. Computer Science – Starting Salary: $59,800 / Mid-Career Salary: $102,000
  9. Physics – Starting Salary: $53,100 / Mid-Career Salary: $101,000
  10. Mechanical Engineering – Starting Salary: $60,900 / Mid-Career Salary: $99,700

And you should also start investing early, and keep investing:

The good news is there are now more millionaires than ever. But when it comes to retirement, is a million dollars enough?

“If they want to be financially independent, retire at 65 and be able to have an income of $40,000 a year in retirement for 30 years, then it’s likely that they’re going to need a million dollars to retire to generate that lifestyle,” said Bruce Allen, an independent wealth advisor.

Living comfortably on $40,000 a year in retirement, which would require a $1 million nest egg by the time you reach the retirement age, will depend on your expenses, investment returns and health-care costs.

[…]Many retirees make it work with less. According to Census data, the median household income for those 65 and older is $34,000, but that’s almost half the $66,000 for ages 55 to 64. In order to preserve that preretirement standard of living, financial experts say you’ll need more than a million dollars.

And the last piece of advice I would be this – if you are a young person, you should be looking into understanding how to save and invest, and you should be reading unbiased financial news. It’s not enough to hope that the government is going to bail you out. In all likelihood, the government will be coming to you in 15 years, looking for you to bail them out of their obligations to pay the pensions and health care costs of retirees. You should not take pride in being ignorant of economics and politics. This is your problem. Wishing and hoping that things will be OK will not make these challenges go away. Just because your friends, your favorite musicians, your favorite authors, your co-workers, etc. are not talking about these issues to you, it does not mean that these challenges don’t apply to you. They do apply to you. And just getting good grades now is NOT a guarantee that you will be OK later. You’re going to be expected to do more with less in a way that your parents never had to do. They are leaving you a worse financial world than they received.

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Gallup CEO: The real unemployment rate is much higher than 5.6%

This is a striking column from Jim Clifton, CEO of the Gallup polling company. His claim about the real unemployment rate is going to come as no surprise to most of my regular readers, who are used to me pushing labor force participation as the real measure of unemployment. Still, it’s nice to get some confirmation from high places.

He writes:

Here’s something that many Americans — including some of the smartest and most educated among us — don’t know: The official unemployment rate, as reported by the U.S. Department of Labor, is extremely misleading.

Right now, we’re hearing much celebrating from the media, the White House and Wall Street about how unemployment is “down” to 5.6%. The cheerleading for this number is deafening. The media loves a comeback story, the White House wants to score political points and Wall Street would like you to stay in the market.

None of them will tell you this: If you, a family member or anyone is unemployed and has subsequently given up on finding a job — if you are so hopelessly out of work that you’ve stopped looking over the past four weeks — the Department of Labor doesn’t count you as unemployed. That’s right. While you are as unemployed as one can possibly be, and tragically may never find work again, you are not counted in the figure we see relentlessly in the news — currently 5.6%. Right now, as many as 30 million Americans are either out of work or severely underemployed. Trust me, the vast majority of them aren’t throwing parties to toast “falling” unemployment.

There’s another reason why the official rate is misleading. Say you’re an out-of-work engineer or healthcare worker or construction worker or retail manager: If you perform a minimum of one hour of work in a week and are paid at least $20 — maybe someone pays you to mow their lawn — you’re not officially counted as unemployed in the much-reported 5.6%. Few Americans know this.

Yet another figure of importance that doesn’t get much press: those working part time but wanting full-time work. If you have a degree in chemistry or math and are working 10 hours part time because it is all you can find — in other words, you are severely underemployed — the government doesn’t count you in the 5.6%. Few Americans know this.

There’s no other way to say this. The official unemployment rate, which cruelly overlooks the suffering of the long-term and often permanently unemployed as well as the depressingly underemployed, amounts to a Big Lie.

[…]Gallup defines a good job as 30+ hours per week for an organization that provides a regular paycheck. Right now, the U.S. is delivering at a staggeringly low rate of 44%, which is the number of full-time jobs as a percent of the adult population, 18 years and older. We need that to be 50% and a bare minimum of 10 million new, good jobs to replenish America’s middle class.

Why does anyone think that higher taxes, massive government spending, huge deficits, and 18 trillion national debt would encourage job creators to create more jobs? Only a Democrat voter could believe that making things worse for job creators would actually result in more jobs. And maybe it does – just in some other country, when the companies here tire of high taxes and burdensome regulations and ship their jobs overseas.

Here is the labor force participation graph:

Labor Force Participation 2015

Labor Force Participation 2014

That’s where unemployment really stands – this is what Democrats like Barack Obama, Nancy Pelosi and Harry Reid deliver. The Republicans lost control of the House and Senate in January 2007, and George W. Bush was a good President, but a lousy at vetoing socialist bills passed by Pelosi and Reid. Every dip in the labor force participation from 2008 on should be blamed on Democrats. They were in the driver’s seat, they crashed the car.

 

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New study: raising minimum wage hurts young, minority workers most

This report is from the libertarian Cato Institute.

Except:

A new working paper from the National Bureau of Economic Research finds that significant minimum wage increases can hurt the very people they are intended to help. Authors Jeffrey Clemens and Michael Wither find that significant minimum wage increases can negatively affect employment, average income, and the economic mobility of low-skilled workers. The authors find that significant “minimum wage increases reduced the employment, average income, and income growth of low-skilled workers over short and medium-run time horizons.”  Most troublingly, these low-skilled workers saw “significant declines in economic mobility,” as these workers were 5 percentage points less likely to reach lower middle-class earnings in the medium-term. The authors provide a possible explanation: the minimum wage increases reduced these workers’ “short-run access to opportunities for accumulating experience and developing skills.” Many of the people affected by minimum wage increases are on one of the first rungs of the economic ladder, low on marketable skills and experience. Working in these entry level jobs will eventually allow them to move up the economic ladder. By making it harder for these low-skilled workers to get on the first rung of the ladder, minimum wage increases could actually lower their chances of reaching the middle class.

Most of the debate over a minimum wage increase centers on the effects of an increase on aggregate employment, or the total number of jobs and hours worked that would be lost. A consensus remains elusive, but the Congressional Budget Office recently weighed in, estimating that a three year phase in of a $10.10 federal minimum wage option would reduce total employment by about 500,000 workers by the time it was fully implemented. Taken with the findings of the Clemens and Wither study, not only can minimum wage increases have negative effects for the economy as a whole, they can also harm the economic prospects of  low-skilled workers at the individual level.

With that in mind, I have some bad news for everyone who likes the idea of young people of color finding work.

The Daily Signal explains: (H/T Dad)

At the stroke of midnight today, 19 states increased their minimum wage. Residents of three more and the nation’s capital can expect hikes later on this year.

[…]Federal legislation was met with resistance. though. Republicans argued raising the minimum wage would cause an increase in prices for consumers and low-wage workers likely would face layoffs as companies grappled with the higher costs associated with hiked wages.

Some of those concerns were validated last month by a University of California, San Diego, study. For three years, researchers followed low-income workers residing in states that saw wage hikes and those that did not. The study found that minimum wage hikes had negative impacts on employment, income and income growth.

[…]“Minimum wage supporters have good intentions, but those good intentions cannot repeal the law of unintended consequences,” James Sherk, an expert in labor economics at The Heritage Foundation, told The Daily Signal. He added:

Minimum-wage increases reduce the total earnings of low-wage workers — the higher pay for some workers gets completely offset by the nonexistent pay of those no longer employed.

In its study, UCSD researchers found that after minimum-wage increases, the national employment-to-population ratio decreased by 0.7 percent points between December 2006 and December 2012.

In addition, the study found that minimum-wage increases hindered low-skilled workers’ ability to rise to lower-middle -lass earnings.

So we need to be really careful about setting economic policy based on emotions. Things that sound nice, which we feel will help the poor, actually hurt the poor. We have to have evidence-driven public policy, not feelings-driven public policy. People’s lives are depending on it.

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