Common Construction Wage Repeal Now in the Mix at the Statehouse

statehouse picIt was a welcome surprise last week when the Indiana Chamber learned that the Common Construction Wage Bill (HB 1019) was going to receive a committee hearing. The Chamber testified it was in strong favor of repealing the CCW statute, noting this has been the organization’s position for many decades.

The Chamber told the committee that CCW prevents open and fair bidding competition for public construction projects. It establishes a government-sanctioned advantage for one set of contractors and workers over all others. It requires taxpayers to pay significantly above market wages, and therefore excessive taxes, on public construction projects. And it requires the setting of a government-mandated price to be paid for construction labor that is excessive and completely unnecessary; we don’t set minimum prices to be paid on other forms of labor, construction materials or equipment.

At the core of the issue for the Chamber: CCW costs taxpayers hundreds of millions of dollars in excess and unnecessary tax burdens. Chamber members – over 80% of which are small businesses – and the rest of the business community pay over half of the excess taxes caused by CCW. The remainder is paid by farmers and residential property owners, including elderly homeowners on fixed incomes.

In testimony, Chamber President Kevin Brinegar relayed the unfortunate situation that occurred nearly a decade ago when three massive public construction projects were going on in Indianapolis at the same time: Lucas Oil Stadium, the new Indianapolis Airport and the expansion of the Indiana Convention Center.

The wage committees on those projects chose union scale. And they further chose union-only project labor agreements which effectively excluded the non-union contractors from participating. At the height of the construction of those projects, there was not enough union labor to work on all three simultaneously. And rather than go to skilled, trained Hoosiers who didn’t happen to hold a union card to fill those needs, they went to union halls in Ohio, Kentucky and Illinois. That meant literally thousands of out-of-state workers – approximately 4,000 – came to work on our projects funded by our tax dollars instead of using qualified Indiana workers. The wages paid to those individuals went back to Ohio, Illinois and Kentucky to be used in their economies, not in ours. The Chamber views this as unfair and inappropriate.

Brinegar also told the group he served on approximately 40 wage-setting committees during his 12 years on the Noblesville School Board. In a property tax-capped environment, cash-strapped local units of government, like schools, cannot afford to pay inflated costs for their construction projects.

The Chamber closed its argument by calling CCW an unnecessary and wasteful interference by government into the free enterprise system and a relic of the 1930s – a costly one that is far past time to be repealed.

Many others testified in favor of the repeal. The Anderson Economic Group said it had conducted a study in Illinois and Michigan on how much CCW added to overall costs. The Fort Wayne City Council president testified to the many projects that will be coming to Fort Wayne that could save millions of dollars if CCW is repealed. He further testified that the CCW committee process is predetermined. The former mayor of Terre Haute added that cities have been beaten up over the property tax caps; repeal of CCW would alleviate some of that problem. The Associated Builders and Contractors stated that government should not be in the business of mandating wages.

House Bill 1019 is expected to receive a final floor debate on Monday. Organized labor is mounting stiff opposition to the measure in an effort, much like in the fight over right-to-work, to protect a special, government-created privilege at the expense of taxpayers and the free market. The Chamber will be diligently working with like-minded organizations to secure passage of HB 1019.

Call to Action: Please send a brief message to your state representative in support of HB 1019 and repealing the common construction wage law. It’s quick and easy via our grassroots program!

Non-Union Teacher Contract Bargaining Requires Flexibility

Finding, retaining and empowering great teachers must be a top priority for Indiana schools. However, the state’s teacher bargaining law ties the hands of administrators and forces the union-bargained contract and all its controls on every teacher in a district, whether or not they choose to even join the union.

Senate Bill 302, authored by Sen. Pete Miller (R-Avon), would allow school districts to negotiate employment contracts directly with individual teachers or groups of teachers that choose not to join their union, instead of being forced to negotiate exclusively within the bargaining agreement and impose those same contract provisions on all teachers.

Today, schools and districts cannot recruit superb educators and those with specific skills needed (e.g. STEM, foreign languages, etc.) and cannot be offered higher pay or other incentives. And in districts with teacher shortages, there is no room to negotiate a contract to hire a teacher that might be needed to fill an important gap. There is no flexibility – it’s the union’s contract or nothing, even in a right-to-work state like Indiana.

Teachers are professionals and should be treated like it. They have the right to be a union member and bargain collectively should they so choose, but they also should have the right to negotiate their own contracts. If we want better teachers in this state, we need to encourage and support excellence.

The bill would free teachers from a longstanding stranglehold on contracts, allow for excellence to be rewarded and recruited, and stop treating all teachers like interchangeable parts under the same contract terms regardless of skills, performance or a school’s needs.

Please take a moment to send a message to your state senator and the Senate Pensions and Labor Committee to ask for support of Senate Bill 302 to provide for more flexibility for school districts and teachers.

Legislative Testimony: Employment for Non-Union Teachers

The Indiana Chamber’s Caryl Auslander testified today in support of Senate Bill 302 – Employment Contracts for Non-Union Teachers, authored by Sen. Pete Miller (R-Avon) and Sen. Jim Smith (R-Charlestown).

The Indiana Chamber has long supported similar legislation allowing employees to choose whether or not they want to join their union. And as such, those that choose NOT to join their respective union for whatever reason should have the opportunity to negotiate their contract outside of the collective bargaining agreement that was set forth by that union – just as any other employee in the state might be able to do.

We feel that this legislation empowers both the employer and the employee to negotiate a contract that works best for BOTH parties.

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.”


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:

Unions Growing Skeptical of Affordable Care Act

Even though labor has been a major contributor to President Obama during his two election bids, there is a growing skepticism about whether or not the Affordable Care Act — often labeled "Obamacare" — will be a benefit to their members. CBS News reports:

Some labor unions that enthusiastically backed President Barack Obama's health care overhaul are now frustrated and angry, fearful that it will jeopardize benefits for millions of their members.

Union leaders warn that unless the problem is fixed, there could be consequences for Democrats facing re-election next year.

"It makes an untruth out of what the president said — that if you like your insurance, you could keep it," said Joe Hansen, president of the United Food and Commercial Workers International Union. "That is not going to be true for millions of workers now."

The problem lies in the unique multiemployer health plans that cover unionized workers in retail, construction, transportation and other industries with seasonal or temporary employment. Known as Taft-Hartley plans, they are jointly administered by unions and smaller employers that pool resources to offer more than 20 million workers and family members continuous coverage, even during times of unemployment.

The union plans were already more costly to run than traditional single-employer health plans.

But Obama's Affordable Care Act has added to that cost — for the unions' and other plans — by requiring health plans to cover dependents up to age 26, eliminate annual or lifetime coverage limits and extend coverage to people with pre-existing conditions…

Unions backed the health care legislation because they expected it to curb inflation in health coverage, reduce the number of uninsured Americans and level the playing field for companies that were already providing quality benefits. While unions knew there were lingering issues after the law passed, they believed those could be fixed through rulemaking.

But last month, the union representing roofers issued a statement calling for "repeal or complete reform" of the health care law. Kinsey Robinson, president of the United Union of Roofers, Waterproofers and Allied Workers, complained that labor's concerns over the health care law "have not been addressed, or in some instances, totally ignored."

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.

Double Standard Approach Not Helping Teamsters

Having worked in Democratic politics, my take on labor in America has certainly been influenced. Without getting too deep in the woods, I think there is definitely a time and place for organization in some industries — and a functional coexistence between a union and an employer can be a healthy thing if both sides act responsibly. The unfortunate aspect of that, however, is that sometimes union tactics become so aggressive — and even hypocritical — they hinder their relevance and hardly endear anyone to their cause. Red State takes a look at a recent Teamsters strategy that even had the National Labor Relations Board irritated. As the author of the post points out, their actions seem to punish the very workers they purport to help.

Now, a Teamsters union local in Memphis is fighting its two clerical workers from unionizing with the Steelworkers and–again, the Obama labor board is having none of it.

In November, the regional office of the NLRB held a hearing to determine whether or not two clerical workers employed by Teamsters local 667 should be allowed to unionize by the United Steelworkers International Union.

Like the vast majority of employers, the Teamsters hired an outside lawyer.

In the NLRB’s Decision and Direction of Election [PDF], the Acting Regional Director notes that the Employer [the Teamsters] tried to claim that one of the two clerical employees the Steelworkers is trying to unionize should be ineligible because she is confidential.

If the NLRB found that the one employee was a confidential employee, she would have been excluded from being in a bargaining unit and the unit would have been inappropriate since there must be two or more.

The Acting Regional Director found that the individual was not confidential and, as a result, order an election to be held.

The case didn’t end there, however.

The Teamsters deployed their outside attorney to file a lengthy appeal (known as a Request for Review) to the NLRB in Washington.

On December 31, the union NLRB members in Washington denied the Teamsters request for review as it raised “no substantial issues warranting review.”

While the NLRB may not have found any substantial issues warranting a review, here are a couple:

Why is the Teamsters union spending thousands of dollars on hiring lawyers to fight unionization of their own workers?

Couldn’t the Teamster bosses just practiced what they preached and voluntarily recognized the Steelworkers and bargain a…you know…fair contract?

Note: Unions usually call these types of tactics “union busting”…Except, apparently, when it’s unions engaging in said tactics.

Worst of the Worst in 2012 Regulations

There’s room for one last "Bottom 10" list of 2012. With thousands of new government regulations each year, it’s difficult to select the worst new rules put into place. Two Heritage Foundation experts give it a try, starting with 1,099 pages of new mortgage disclosure rules that have the stated goal of simplifying home loans.

(10) Mortgaging the Future: New mortgage disclosure rules were released in July by the newly created Consumer Financial Protection Bureau, with a stated goal of simplifying home loans. The rules run an astonishing 1,099 pages. The net result of this and similar rules? Fewer consumer mortgage lending options and increased costs.

(9) Tracking Your Travels: In December, the Department of Transportation proposed that electronic data recorders, popularly known as "black boxes," be required in most cars starting in 2014. The stated goal is to collect more information about car accidents. But this spooks privacy advocates, who warn that federal bureaucrats could misuse this information.

(8) Essential Choice Cutbacks: Under the Obamacare "essential benefits" rule, health insurers will be forced to cover health care services that the government deems essential, whether you want to buy them or not. The net result will be to increase health care costs, increasing the burden on consumers, employers and taxpayers.

(7) Instant Union: In April, the National Labor Relations Board issued new rules that shortened the time allowed for union-organizing elections to between 10 and 21 days. This leaves little time for employees to make a fully informed choice on unionizing, threatening to leave workers and management alike under unwanted union regimes.

(6) Don’t Let Them Eat Cake: The Department of Agriculture in January published detailed new nutrition standards for school lunch and breakfast programs. More than 98,000 elementary and secondary schools are affected — at a cost exceeding $3.4 billion over the next four years. The new rules sparked protests, and even a few hunger strikes, from students nationwide.

(5) Cleaned Out: Regulators admit that the new Energy Department rules governing dishwashers will do little to improve the environment. Rather, proponents claim they will save consumers money. But they will also increase the price of dishwashers, and only about one in six consumers will keep their dishwasher long enough to recoup the cost.

(4) Soda Socialism: On Sept. 13, at the behest of Mayor Michael Bloomberg, the New York Board of Health banned the sale of soda and other sweetened drinks in containers larger than 16 ounces. New Yorkers apparently are still allowed refills, at least for now. No word on how many NYC cops will be moved from crime prevention to monitor the city’s soda fountains.

(3) Sticker Shock: Adopted in August, these new automobile mileage rules require a whopping average fuel economy of 54.5 miles per gallon by 2025. Sticker prices will jump by hundreds of dollars. Regulators argue that the fuel savings will make up these costs. Whether consumers want to make such a tradeoff doesn’t matter. The government has decided for them.

(2) Increasing Energy Costs: The Environmental Protection Agency in February finalized strict new emissions standards for coal- and oil-fired electric utilities. The benefits are highly questionable, with the vast majority being unrelated to the emissions targeted by the regulation. The costs, unfortunately, are certain: estimated to be $9.6 billion annually. The regulations are likely to undermine energy reliability and raise energy costs across the entire economy.

(1) Conscience Denial: The Department of Health and Human Services on Feb. 15 finalized its mandate that all health insurance plans include coverage for abortion-inducing drugs, sterilization procedures, and contraceptives. The mandate allows no exception for church-affiliated schools, hospitals and charities whose religious principles conflict with the mandate. To date, 42 lawsuits representing more than 110 plaintiffs have been filed challenging this restriction on religious liberty as a violation of First Amendment.