LaborPains.org

Just in time for campaign fundraising season, Democrats are lining up to support unions and fill their campaign coffers. As campaigns file their year-end reports with the Federal Election Commission, it becomes much more obvious who’s in bed with whom.

State Rep. Sal Pace’s (D) campaign for Congress finished 2011 with a surge of money, collecting $207,632 in the final three months of the year. Running against incumbent U.S. Rep. Scott Tipton (R-CA), $62,500 of Pace’s haul came from political action committees (PAC) representing labor unions.

Priorities USA PAC – a Super PAC supporting Obama – received a $1 million donation from the PAC arm of the Service Employees International Union and another $215,234 from its non-profit sister organization Priorities USA.

The same Super PAC is also spending vast sums to run ads in Nevada and Florida that accuse Republican Presidential frontrunner Mitt Romney of having “two faces” on immigration issues.

Earlier this week, Sen. Tom Harkin (D-IA) received thunderous applause when he announced that he will continue to work to pass Employee Free Choice Act during the annual legislative-political conference of the Communications Workers of America. Harkin, chairman of the Senate Health, Education, Labor, and Pensions Committee, said he plans to introduce a comprehensive bill to that includes at least one element from EFCA in the coming weeks.

As the 2012 election season heats up, we expect to see a much closer relationship between Democrats and Big Labor. What for that last couple of years has been and dangerous dance, now looks like it’s intensifying into a torrid affair.

With the Indiana House passing right-to-work legislation, and the expected quick approval from the Senate and Gov. Mitch Daniels, Indiana might be the first, but possibly not the only state to trim back union influence this year. Other states including Minnesota and Rhode Island, to name a few, have joined the trend to scale back union influence in one way or another.

Minnesota’s 2012 legislative session began on Jan. 24, and interest in right-to-work legislation is already heating up. The Pioneer Press reports State Sen. Dave Thompson (R) plans to introduce legislation in the coming weeks, and the conservative think tank Center of the American Experiment released a report claiming if the state had prohibited closed union shops when the majority of other right-to-work states had, then on average Minnesota workers would have made from $2,260 to $3,072 more in 2008.

Providence Eye Witness News reports that Rhode Island State Sen. Nicholas Kettle (R) has plans to introduce a right-to-work bill for teachers. The current laws mandate public school teachers must pay union dues or agency fees as a condition of employment. “The National Education Association uses questionable tactics when dealing with our legislature… harming the reputation of many fine teachers and placing our children at the bottom of our priority list,” said Kettle.

While these bills may not find the same success as Indiana, they are sure to face the same critics – unions. In response to Kettle’s legislation in Rhode Island, NEA government relations director  Pat Crowley said, “The results are always the same: more profits for the 1%, more work for the 99%.” This is a bizarre response considering that giving teachers the option to opt out of union membership doesn’t create profits for anyone (though it would take money away from union leaders). If anything it could reduce the cost to the tax payer (the 99%).

In order to avoid giving Indiana House Republicans the quorum necessary to vote on right-to-work legislation, most House Democrats have been skipping work since the start of the 2012 legislative session. Yesterday, tax payers finally got their money’s worth when the Democrats showed up to the State House to do their job.

After a flurry of passionate floor speeches, House Bill 1001 passed 54-44. The bill will now move to the Senate, where it should easily pass and move on to Indiana Gov. Mitch Daniels’ (R) desk. Daniels has already indicated his approval of the bill, so it could be signed into law before the Super Bowl in Indianapolis next weekend.

Once Daniels signs the bill, Indiana will become the nation’s 23^rd right-to-work state, and the first in the traditionally union-frieldly Rust Belt. The last state to pass right-to-work legislation was Oklahoma in 2001.

The win in Indiana should be very encouraging for other states like New Hampshire and Michigan as they weigh their options regarding right-to-work legislation. A right-to-work bill has already passed the NH State House for a second time and could end up on Gov. John Lynch’s (D) desk again soon. Last November Republicans were only 12 votes shy of overriding Lynch’s veto for a similar bill.

Union membership has steadily declined for decades. Membership peaked in 1979, with over 20 million union members. Today, less than 15 million members remain—less than half of which are in the private sector. In light of the recent push for labor reform and right-to-work laws, combined with unions’ dwindling membership, labor leaders are fighting for a last chance at relevancy and control.

The AFL-CIO is attempting to revive its image with a new advertising campaign. The Wall Street Journal reports that the $1.5 million campaign featuring 30 and 60 second television ads has begun, airing in Pittsburg, PA and Austin, TX. The awkward ads attempt to show how everyone is connected by organized labor, but what they obviously don’t show is all of the people who are forced to be connected to unions in non-right to work states.

Public sector unions in Wisconsin, with the help of their national unions, are also engaged in a fight for their life, as they desperately attempt to rid the state of Gov. Scott Walker. Last year Walker championed a bill that limited state employee collective bargaining rights, leaving union leaders seething.

In 2011, unions spent $35 million in a failed attempt to stop labor reform by recalling a number of Republican state representatives, and this year Walker himself told Fox News, “[Unions] want those automatic dues, and they’ll spend just about anything to get it back.”

With the current standoff in Indiana over right-to-work leaning in its opponent’s favor, the unions’ survival skills will again be tested.

Today the Center for Union Facts launches a multi-million dollar campaign educating Americans about the need for labor law reform.

It’s been more than 50 years since Congress overhauled America’s labor laws. During the following decades we’ve witnessed a workplace revolution that has fostered innovation, opportunity, and flexibility for America’s 150 million member strong workforce. Despite this, labor union leaders continue to cling to outdated labor laws that stifle job creation and trample employee rights.

You can read more about the Employee Rights Act at www.Employee Rights Act.com or you can join our new Facebook page.

After the successes of New Jersey’s Chris Christie and Wisconsin’s Scott Walker in tempering the power of public sector unions, the failure of Senate Bill 5 in Ohio was a difficult loss. But the desire to curb Big Labor’s power is not completely lost; Ohio and Indiana are proving otherwise – even if the odds are against them.

Despite the recent defeat of Ohio Senate Bill 5, Ohioans have set their sights on ending forced union membership. “Ultimately, freedom to associate also means freedom not to associate,” said Maurice Thompson of the 1851 Center for Constitutional Law to The New American. Thompson heads the organization, which is one of several attempting to pass a right to work law in Ohio. If the newly proposed “Workplace Freedom Amendment” is approved by Ohio voters in November 2012, then the state will become the 23^rd state to protect the freedom of choice for its employees – unless Indiana beats them to it.

Indiana leaders also have their eye on the right to work prize. In the 2011 session, right to work legislation was tabled after House Democrats fled the state forcing the Indiana House to shut down. Passing such legislation looks more promising this time around, especially since Governor Mitch Daniels is reportedly willing to put his weight behind the bill. Indiana Republicans control both the House and the Senate, so the votes are likely there. That leaves Indiana Democrats with only the extreme option of once again fleeing the state.

Yet despite the somewhat favorable political environment, observers doubt that either Ohio or Indiana will become the 23^rd right to work state. Right to work legislation hasn’t been successfully passed since the 1980’s, with the exception of Oklahoma in 2001. The reason? Labor unions will fight these efforts tooth and nail. It is estimated that Unions spent up to $50 million to successfully fight against SB5 in Ohio.

An excellent example of just how difficult it is to pass this kind of legislation can be seen in Colorado. In the fall of 2008, Colorado sought to pass right to work legislation, Amendment 47. In response, unions launched four “poison pill” measures, Amendments 53, 55, 56, and 57. These initiatives would have been “devastating to Colorado’s economy,” said Denver Metro Chamber of Commerce president Joe Blake to the Colorado Statesman.

The poison pill measures were more or less introduced as union bargaining chips in order to kill Amendment 47 by effectively blackmailing businesses – and it worked. Members of the business community struck a deal and pledged $3 million to defeat Amendment 47 in exchange for the removal of the offending measures. Amendment 47 did not pass, and Colorado was left with its hybrid right to work law, which allows employees by a vote of 75 percent or more, to eliminate right to work privileges and become a closed shop.

Union leaders are so desperate to retain their members that they are willing to go to almost any length to make sure right to work legislation is out of play. Right to work legislation is a great way to expand employee rights, but history suggests you shouldn’t hold your breath for it to pass in either Ohio or Indiana.

The Economic Policy Institute: STILL Wrong on Public Employee Compensation

—Center for Union Facts—

Despite statements by labor unions and their supporters that a sizable compensation premium is a benefit of union membership, the Economic Policy Institute (EcPI)—with the assistance of associate professor Jeffrey Keefe of Rutgers University—has gone to great lengths to argue that this compensation premium doesn’t hold in the public sector. Specifically, EcPI and Keefe argue that public sector workers suffer approximately a four-percent compensation penalty when compared to similar workers in the private sector.[i]

Criticism of Keefe’s original study demonstrated that claims of a compensation penalty were off the mark. An analysis from the Center for Union Facts that includes all relevant employees and properly accounts for the size of their employer demonstrates that public employees receive a compensation premium of at least 5 percent over their private sector counterparts. Others suggest that properly accounting for the value of public sector job security, retiree health benefits, and pension funding could create an even larger premium—as high as 30 percent.[ii]

In a recent Issue Brief, Keefe doubled down on his assertion that public employee union leaders are ineffective at doing their job—specifically, that there is no public employee pay premium.[iii] Keefe dismissed our criticisms of his original study as “desperate,” “unsound,” “inappropriate,” “unreliable,” and “incorrect.”  Strong words—but unfortunately for Keefe, they’re not backed up by equally strong facts.

MISSING EMPLOYEES

The Center for Union Facts (CUF) criticized Keefe’s original analysis because he excluded part-time, full-year employees, including one-quarter of all teachers (a major public sector occupation). In total, that means approximately 12,700 people were missing from his analysis, an exclusion that made the public employee pay gap appear smaller than it otherwise would have been.

In his rebuttal, Keefe ignores this point. Instead, he defends his decision to exclude all part-time employees—something that CUF never criticized. This clever bit of rhetorical misdirection makes it appear that Keefe and EcPI address our criticisms while actually ignoring them.

Even if Keefe had been correct in his decision to exclude part-year full-time employees (including teachers) from his analysis, he still should be analyzing a sample of approximately 60,000 people. Instead, he’s looking at 44,280—over 15,000 fewer people than there should be for this study to be accurate.

In total, Keefe left out about 40 percent of the employees who should have been included in the analysis—28,213 people. It’s unclear whether they were excluded intentionally, or because of lack of knowledge of the data being used. What is clear is that the tens of thousands of missing people in Keefe’s analysis seriously biased his results.[iv]

UNREALISTIC ASSUMPTIONS

CUF also criticized Keefe’s original analysis for inappropriately controlling for the size of an organization that an employee works in. Keefe assumed that any employee currently working in state government would otherwise be employed in a large private sector business with 1,000 or more employees. It’s like arguing that every tech support person in the Department of Motor Vehicles is qualified to work at Google or Microsoft—a plainly unrealistic assumption.

Once again, instead of responding to our criticism in his rebuttal, Keefe ignores it. He defends his decision to include a con

trol for organization size—a decision that CUF never criticized (and, in fact, agreed with, even though we disagreed with the manner in which he controlled for size). This rhetorical sleight of hand again makes it appear that Keefe addresses our criticisms instead of cleverly avoiding them.

As the chart below demonstrates, well over half the employees in the private sector are employed by companies with fewer than 1,000 employees. Keefe’s unrealistic and inaccurate assumption that each state public employee would be qualified to work in the largest size company (with traditionally better benefits) significantly biases his results. Correcting for this error alone turns a public employee compensation penalty in the range of 2 to 4 percent into a compensation premium of 3 percent.



CONCLUSION

In his original analysis released by the Economic Policy Institute, Dr. Keefe found that public employees suffered a 4 percent compensation penalty relative to similar employees in the private sector. Correcting for errors in that analysis, the Center for Union Facts demonstrated that the 4 percent penalty is actually at least a 5 percent premium—a 9 percentage point margin. Keefe and EcPI made an attempt to defend their errors, but—as we’ve shown here—those defenses amount to more rhetoric than substance.

The conclusion of our original piece still stands: public employees are overpaid.

---

[i] Jeffrey H. Keefe. “Debunking the Myth of the Overcompensated Public Employee.” Economic Policy Institute, September 2010.

[ii] Andrew Biggs and Jason Richwine. “Are California Public Employees Overpaid?” Heritage Foundation Working Paper.

[iii] Jeffrey H. Keefe. “Desperate Techniques Used to Preserve the Myth of the Overcompensated Public Employee.” Economic Policy Institute, March 2011.

[iv] See table A4 in “The Economic Policy Institute is Wrong: Public Employees Are Overpaid.” Center for Union Facts.

Today, the Center for Union Facts released a new analysis proving that public sector employees, on average, earn five percent more in wages and benefits than their counterparts in the private sector. This flies in the face of data from the Economic Policy Institute (EcPI), a “think tank” that has taken millions from labor unions and has released a series of studies making the counterintuitive claim that public sector employees are underpaid by four percent when compared to those in the private sector.

Redoing the same analysis from EcPI’s study, the Center for Union Facts controlled for two key factors that EcPI improperly accounted for: private sector business size and the treatment of full-time, part-year workers (a category that includes roughly one quarter of all teachers). When those two factors are properly considered, the results reverse themselves: public sector, taxpayer-funded employees actually enjoy a compensation bonus of at least five percent.

“We have been hearing for months now about the underpaid public sector workers from outfits that are funded by public sector unions, an obvious conflict of interest,” said Rick Berman, the executive director of the Center for Union Facts. “Unfortunately, the study’s author made two key errors, both of which coincidentally skew the results in the direction that labor unions support.”

The argument that public workers are underpaid has been made in order to deflect attention from public pay in states that are experiencing multi-billion dollar budget gaps.

“The Economic Policy Institute study assumes that every state employee would otherwise be working in a large private sector business  with 1,000 employees or more,” Berman explained. “Using this assumption is like saying that every computer tech in the state capital would qualify for a job at IBM – it’s bogus, and it creates a fictitious gap in wages that EcPI was more than happy to exploit for political gain. They also excluded full-time, part-year workers like certain teachers and recent retirees, another move that inflated that false deficit.”

Berman continued: “And that doesn’t even include other unaccounted for factors, like the ironclad job security in the public sector and the fact that most teachers’ full-time salary covers a work year only 36 weeks long. In times of economic distress, we all have to give a little back; public sector unions can’t hide behind the false pretense that their members are ‘underpaid’ any longer.”

Click here to read the report.