Breaking Down the Latest Union Numbers

wNationally, union membership did not change from 2014 to 2015 – remaining at 11.1% of wage and salary workers. In Indiana, membership declined from 10.7% to 10% over that same time period.

The Bureau of Labor Statistics recently released updated union data. Five states had union membership below 5%: South Carolina (2.1%), North Carolina (3.0%), Utah (3.9%), Georgia (4.0%) and Texas (4.5%). Two states – New York (24.7%) and Hawaii (20.4%) – topped 20%. Nearly half of the 14.8 million union members lived in seven states: California (2.5 million), New York (2.0 million), Illinois (800,000), Pennsylvania (700,000) and Michigan, Ohio and New Jersey (600,000 each).

Other findings include:

  • Public-sector union rates (35.2%) were five times higher than that of private sector workers (6.7%).
  • Within the public sector, the union membership rate was highest for local government (41.3%). In the private sector, industries with high unionization rates included utilities (21.4%), transportation and warehousing (18.9%), educational services (13.7%), telecommunications (13.3%) and construction (13.2%).
  • By age, highest union membership rates were among older workers – 14.3% for ages 55 to 64 and 13.6% for ages 45 to 54.

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Work Share Gets Dog and Pony Show, but No Vote

statehouse-picThe 2016 legislative session marked the first time in the last several years that the work share policy made it to the hearing stage, despite having strong bipartisan support. Still, the Chamber knew in advance of the hearing that Rep. Doug Gutwein (R-Francesville), chair of the committee, was probably not going to take a vote on the bill. Our plan was to give it our best shot and hope that the chairman would change his mind.

The bill’s author, Rep. Ober, testified that work share is a win-win for employers and employees, and he laid the groundwork for why the bill is important for both. Employers in an economic downturn retain skilled workers who receive partial unemployment compensation instead of being laid off. That means employers then do not have to rehire employees (and retrain) when the economy picks back up. Employees also retain their jobs and their employer sponsored benefits while drawing a prorated unemployment compensation benefit. Additionally, Rep. Karlee Macer (D-Indianapolis), a co-author on the bill, testified of her long-time support for the issue.

The Chamber presented study findings, released just this month; the research was conducted as a joint request by the Indiana Department of Workforce Development (DWD) and the Indiana Chamber. Noted economist Michael Hicks from Ball State University, the author of the study, was unable to be present for the hearing. The most important point made by the study was the impact on the economy. During the peak of national unemployment in 2010, Indiana having a work share program would have translated into $500,000 less in month to month income volatility and approximately 10,500 employees would have kept their jobs.

The Chamber would like to thank members Tom Easterday of Subaru Indiana Automotive and Mark Gramelspacher of Evergreen Global Advisors for taking the time out of their busy schedules to come testify before the committee in favor of work share. Their points to the committee were right on the mark. Easterday noted that Indiana is the most manufacturing intensive state in the U.S. Additionally, he talked about the state’s shortage of skilled workers and why retaining skilled workers during an economic downturn is so vital to manufacturing in Indiana – and a work share program can help accomplish that.

Gramelspacher testified, “There is a better way to run the unemployment program and that is work share. It creates a win-win from a lose-lose. This is a rare opportunity for the legislative body. Work share allows employers to maintain the employment relationship with known individuals and people that employers have already recruited, interviewed, tested, trained and invested in.”

The Indiana Institute for Working Families and AFL-CIO testified in favor of the bill as well.

The Indiana Manufacturers Association (IMA) testified that previously it was not supportive of work share, but because of the Chamber’s recent study it recognized the benefits and now supported the concept. However, the IMA then proceeded to express various concerns for implementing the actual program.

Prior to the hearing, the DWD representative acquiesced that the Chamber had been able to remove most of the agency’s arguments in opposition to the bill. In testimony, however, DWD opposed even moving the bill out of committee for further debate. That was a curious strategy, given the discussion before the hearing and the fact that the agency partnered with the Chamber on the study.

The Indiana Chamber brought forth two viable options to pay for the minimal cost to set up a state work share program and maintain it annually.

Nonetheless, the committee chairman followed DWD’s lead and announced at the close of the hearing that no vote was being taken then or essentially anytime this session.

Once again, here is why work share would be extremely beneficial for the state:

Report: Work Share Program Would Have Positive Impact on Indiana

CYNJvbRUoAA_kOmA new report released today by the Indiana Chamber of Commerce encourages the state to implement a voluntary work share program, labeling it “a clear stabilizer during a business cycle.” Work share would enable employees to stay on their job at reduced hours during tough economic times and collect partial unemployment compensation.

The policy – currently in place in more than half the states – has enjoyed support on both sides of the aisle the last few years, but has yet to make much progress in the state Legislature. The Indiana Chamber hopes this research, led by Michael Hicks of the Center for Business and Economic Research at Ball State University, will help get the ball rolling to pass work share legislation. The research was conducted at the request of the Indiana Chamber Foundation and the Indiana Department of Workforce Development.

The overriding conclusion reached by Hicks is that a “work share program would reduce business costs for participating firms by reducing search and hiring costs, and would stabilize families and communities.”

He continues, “We anticipate that unemployment and earnings will suffer less volatility associated with an economic downturn. This may have longer term impacts by reducing long-term unemployment and increasing consumer spending and growth in sales tax revenues over the short run.”

The report notes that the manufacturing sector, particularly the medium-sized manufacturing firms, would be the ones using the program the most. Indiana remains the most manufacturing intensive state in the country.

These findings confirm what advocates have been saying for several years, remarks Indiana Chamber President and CEO Kevin Brinegar.

“The benefits are real and significant. Work share allows employers to maintain a skilled, trained and stable workforce, while at the same time, employees keep their jobs and benefits instead of facing unemployment and further financial uncertainty.

“There is no negative impact on the state’s unemployment insurance fund,” he offers. “Instead of paying full benefits to a smaller group of recipients, a larger group of employees will receive reduced benefits.”

Here’s an example of how a work share program unfolds. Instead of laying off 10 workers due to decreased demand, a company could keep the full workforce in place but reduce the hours of 40 workers by 25%. The impacted employees would receive three-quarters of their normal salary, as well as be eligible for partial unemployment insurance benefits to supplement their reduced paycheck and keep full benefits.

Brinegar explains that “work share is generally a temporary solution used by employers for no more than six months during an economic slowdown.”

Tom Easterday, executive vice president for Subaru of Indiana Automotive in Lafayette, believes now – while the state’s economic picture is still bright – is the perfect time to enact a work share program.

“If we wait until there’s another economic downturn to take action, then it will be too late. Businesses across Indiana may already be impacted and jobs will be in jeopardy. Now is the time to prepare by implementing an efficient and effective workshare program, so it’s in place when needed.”

In the report, Hicks replays the unfortunate domino effect that took place in Kokomo in 2009 when two large automakers (GM and Fiat-Chrysler) suspended manufacturing for two months. While they could afford to continue employment due to their cash reserves, their large supply chain of smaller companies could not and were forced to lay off employees.

“Work share would have likely enabled some of these operations to continue at a slower pace. … The commercial benefits would have accrued primarily to these smaller manufacturing firms and would likely have stabilized the Kokomo economy significantly during this time.”

Brinegar reveals that early estimates place the annual costs to establish and operate a work share program in Indiana to be between $1 million and $1.5 million. He believes a nominal yearly surcharge of $10-$15 for those Hoosier businesses currently paying into the unemployment insurance fund would reach that amount and make the most sense.

“The amount is so small, especially for the possible benefits to an employer down the road,” he begins. “This group also received a per employee break recently when the state executed the early payoff of the federal unemployment insurance loan. This saved each business more than $126 per employee.”

Establishing a work share program in the state is one of the Indiana Chamber’s 2016 top legislative priorities.

The work share research document is available at www.indianachamber.com/labor.

Work Share Program Needed in Indiana

Right now, state lawmakers and their staff are drafting bills for introduction and molding strategies for the opening of the Indiana General Assembly only three weeks away. One of the most important things they can do is to enact a work share program for the state.

Work Share, or short-term compensation as it is sometimes called, is a voluntary and cost equivalent alternative to traditional unemployment benefits.

In lieu of laying off a number of employees during an economic downturn, an employer elects to retain those employees and reduce the hours of employees of a particular group or department. Those employees are then permitted to draw a partial unemployment compensation benefit based upon the hours reduced.

Employers are able to maintain a skilled and stable workforce while employees are able to keep their jobs and benefits instead of facing unemployment and economic ruin. The state wins by reducing the number of job losses. Taxpayers win in keeping jobs in place with no net increase in unemployment insurance costs.

Work share is an innovative, win-win program now in place in 26 states, but not yet in Indiana. State legislators need to hear from employers and citizens alike right now to urge them to seriously consider and enact a work share program in the next few months.

Please take a moment to send a message to your own state legislators urging them to move forward and establish a work share program in 2015. Simply visit the Indiana Chamber’s online grassroots center to send an email message to your legislators.

 

Labor Issue Proves Costly; Could You Be Next?

A recent labor case has been in the news, in which a prominent coffee company has been deemed by the National Labor Relations Board to have illegally dismissed a problem employee because the staffer was “pro-union.”

However, here are some comments that worker reportedly made to his manager during one instance when he felt the manager should have helped during a busy period: “it’s about damn time”; “this is bull****”; and “do everything your damn self.”

Charming.

But since the employee in question had organized union protests and the manager included that fact in the reasons given for dismissal, the NLRB determined his firing was at least in part because of his union support. It ordered the company to offer this person his job back — and compensate him for loss of pay and benefits. It goes to show that common sense doesn’t always apply with today’s NLRB and labor issues.

Barnes & Thornburg LLP and the Indiana Chamber of Commerce are proud to offer the second edition of The Indiana Guide to Labor Relations. Last published in 2000, a great deal has changed at both the federal and state levels, as well as in the workplace. This is a comprehensive guide, illustrating how employers can deal effectively with all varieties of union issues. New updates in this edition include:

  • The NLRB’s recent attack on social media policies and disciplinary decisions
  • Updated discussion on how to defend against union organizing
  • Indiana’s right-to-work law
  • New union election rules being contemplated by the NLRB
  • Updated analysis of employers’ ability to lock out employees during bargaining

This book is available for $89, or $66.75 for Indiana Chamber members. It can be ordered online, or by calling (800) 824-6885.

Here are some other resources from the Indiana Chamber you may find helpful:

Jack the Plumber on the Realities of the Skills Gap

Jack Hope, owner of Hope Plumbing in Indianapolis, recently spoke to the Ready Indiana Advisory Council about his experience with the skills gap in the plumbing industry.

He explained the biggest issue he faces as an employer is finding qualified help. The candidate pool lacks applicable skills, and he said this problem is widespread among all skilled trade industries.

“Every time I talk to someone about plumbing, they comment on how gross it must be and every time I reply, ‘That is why they pay us the big bucks,’” Hope explains in his blog. “People, of course, think I am kidding, but the average starting salary for a licensed plumber in our shop is $45,000 per year with full health benefits, life insurance, a paid cell phone, a take home vehicle and matched retirement savings.”

You can learn find information about the plumbing industry in Indiana, including number of job postings broken down by region, most requested skills and average salaries, at www.IndianaSkills.com.

Court Strikes Down Controversial NLRB Poster Requirement

This issue has been kicked back and forth in the court system in the last couple of years. There finally appears to be some closure, much to the relief of America's business community. The Hill reports:

Industry groups, which quickly challenged the rule after it was issued, cheered the ruling. Jay Timmons, the president and chief executive of the National Association of Manufacturers, pledged to remain vigilant against the “rogue” NLRB.

“The poster rule is a prime example of a government agency that seeks to fundamentally change the way employers and employees communicate,” Timmons said in a statement. “The ultimate result of the NLRB’s intrusion would be to create hostile work environments where none exist.”

Judge A. Raymond Randolph, who wrote the decision for the U.S. Court of Appeals for the District of Columbia, suggested the rule was a clear violation of free speech rights because the government “selected the message and ordered its citizens to convey that message.”

Freedom of speech, Randolph wrote, “includes both the right to speak freely and the right to refrain from speaking at all.”

The court did not rule on whether the union poster regulations were constitutional, deciding only that the NLRB exceeded its legal mandate…

Business groups argue the NLRB has favored unions under President Obama's administration and pointed to the poster rule as one of the most egregious examples.
 
“Today’s decision is a monumental victory for small-business owners across this country who have been subject to the illegal actions of a labor board that has consistently failed to act as a neutral arbiter, as the law contemplates,” Karen Harned, executive director of National Federation of Independent Business's Small Business Legal Center, said in a statement.

The advocacy group National Right to Work called the NLRB’s poster rule an “outrageous effort to transform itself into a taxpayer-funded arm of union organizing.”

This is the second major court defeat for the NLRB in recent weeks. The same appeals court ruled in January that Obama’s recess appointments to the board were illegal and therefore invalid. The independent agency is tasked with prosecuting unfair labor practices and conducting union elections.

“Stopping the NLRB’s burdensome agenda of placing itself into manufacturers’ day-to-day business operations is essential to preventing further government-inflicted damage to employee relations in the United States,” Timmons said.

Union Landscape Continues to Change

More than twice as many union members now work for the U.S. Postal Service than in the domestic auto industry. Given that and other facts of declining union membership, the Heritage Foundation notes that labor laws need to be updated. Indiana Congressman Todd Rokita's efforts are mentioned.

Unions Resist Recognizing Achievement

Such sharp drops in union membership indicate that U.S. labor laws are out of step with the modern economy. Traditional unions no longer appeal to workers the way they did two generations ago. Outdated restrictions in labor laws are now seen as holding back both employers and employees.

For example, union wage rates are legally both minimum and maximum wages: A unionized employer may not pay employees more than the union rate without the union’s permission. While unions happily accept group raises, they often resist individual performance pay. They typically insist that employers base promotions and raises on seniority instead of individual recognition.

In 2011, Giant Eagle gave individual raises to two dozen employees at its Edinboro, Pennsylvania, grocery store. These raises were in addition to the union wages. United Food and Commercial Workers Local 23 nonetheless argued that the pay increases violated their collective bargaining agreement. They objected to the fact that some entry-level employees made more than senior union members. The union filed charges. Last November, the Federal District Court for Western Pennsylvania ordered Giant Eagle to rescind the pay increases. Nationwide, union members are less than half as likely to receive performance pay as non-union employees.[8]

This holds back union members. A one-size-fits-all approach was workable when all employees brought essentially the same skills to the bargaining table. But the nature of work is changing. Employers have automated many rote repetitive tasks. At the same time, employers are also flattening the job hierarchy. The line between management and workers is blurring. Employers increasingly expect workers to exercise independent judgment and take initiative on the job. Employers want to reward—and employees want to be rewarded for—individual contributions that no collective contract can reflect.

Analyst: RTW Opponents Use Flawed Math

Citing research by James M. Hohman of the Mackinac Center, Michigan Capitol Confidential takes issue with the claim that right-to-work states feature lower wages. Hohman's conclusion is that, after all the facts are in, right-to-work states actually have the higher per-capita incomes.

Scores of right-to-work critics ranging from politicians to economists have cited lower per-capita incomes in right-to-work states as why the new law is not good for Michigan.

However, not factoring in cost-of-living exposes a flaw in that analysis, said Mackinac Center for Public Policy Fiscal Analyst James Hohman. Once that is considered, Hohman said the per-capita income is higher in right-to-work states than non-right-to-work states.

For example, Texas per-capita income was $37,098 but would have a purchasing power of $49,700 in the state of New York in 2007, according to Hohman’s analysis. New York’s per-capita income was $47,852.

Hohman found that in terms of Michigan dollars in 2000, right-to-work states had 4.1 percent higher per-capita personal incomes than non-right-to-work states when factoring in cost of living. Michigan was considered a non-right-to-work state because the law was passed in late December 2012. Hohman said the right-work-states didn’t surpass non-right-to-work states until 2003.

“One of the most basic arguments repeated time and time again by right-to-work opposition is that Michigan is going to lose income by passing this law,” Hohman said. “That just isn’t the case. When you adjust for what a dollar can get you, the difference reverses itself."

Hohman used the cost of living index done by political scientists William Berry, Richard Fording and Russell Hanson. They adjusted for cost-of-living in every state from 1960 to 2007.

Pennsylvania Legislators Introduce Right-to-Work

The Washington Free Beacon reports that legislators in the Pennsylvania legislature want to bring right-to-work to their state, citing its passage in Indiana and Michigan and the need for job growth and desire to attract businesses.

Six GOP lawmakers on (Jan. 22) introduced a proposal to make Pennsylvania, the “Keystone State,” the nation’s 25th right-to-work state.

The legislation, which would end the longstanding practice of forcing employees to join unions as a condition of work, has stalled several times over the past decade. The bill’s sponsors say new laws in Michigan and Indiana forced the state’s hand.

“The needs of our economy dictate that it must be adopted at some point in time,” said state Rep. Daryl Metcalfe. “The victory of right-to-work in Michigan and Indiana certainly thrust the spotlight on it and made the General Assembly look it more seriously than the past.”

Pennsylvania is one of the most heavily unionized states in the country with more than 700,000 workers belonging to organized labor groups. That is nearly 100,000 more union members than in Michigan.

The advent of right-to-work in the traditionally labor-friendly Midwest and Rust Belt has left policymakers scrambling to catch up, said Nate Benefield, director of policy analysis at the free-market Commonwealth Foundation.

“Indiana and Michigan are states that we directly compete with,” he said. “We’re going to have to evolve to remain competitive and it’s also a great opportunity for us to outcompete the northeast.”

If Pennsylvania passes right-to-work, it will be the first state to do so in the northeast. That could give it an economic advantage over neighboring New York and New Jersey, which lead the nation in union membership as a percentage of the workforce, advocates of right to work legislation said.

“We’re playing catch-up to Indiana and Michigan, but our immediate neighbors, New York, New Jersey, and Maryland are even less competitive than Pennsylvania is,” Benefield said. “I think right-to-work is a big part to improving our business climate.”

Restricting the use of compulsory union dues also could deal a blow to union influence.