Rooted in Reason: Nurturing the Seeds of Liberty

Unstimulated by maliab
August 31, 2011, 9:07 pm
Filed under: Economy | Tags: , , , , , , , ,

The President will be unveiling his new jobs plan next week.  (Though when seems to be in doubt, as Rep. Boehner has indicated that Wednesday isn’t good for him and Congress, what with the GOP presidential debate and the last minute-ness of it all, and the White House has indicated that they’re not in love with Thursday as a day–with some commentators speculating that they don’t want to compete with the first NFL game of the season.)  If presidential conversation about jobs could create employment opportunities, we’d be at about 0% unemployment right now.

But, of course, it doesn’t.  And it turns out that buying jobs with huge chunks of federal dollars doesn’t do much better.

As the Weekly Standard points out, a study of the hiring practices of firms who received stimulus funds reveals that the stimulus package created as much job poaching as job creation.  Yet more proof (if we even needed it) that Keynesian economic theory so loved by this Administration seems to crumble in the face of the real world practice:

The Mercatus Center at George Mason University has just released an important new study on the hiring practices of firms that used stimulus funds. It’s fairly comprehensive, based on over 1,300 surveys of managers and employees. There’s been very little good empirical data on the stimulus thus far, so the study contains a lot of valuable insights. Among the findings by authors Dan Rothschild and Garrett Jones:

Hiring isn’t the same as net job creation. In our survey, just 42.1 percent of the workers hired at ARRA-receiving organizations after January 31, 2009, were unemployed at the time they were hired (Appendix C). More were hired directly from other organizations (47.3 percent of post-ARRA workers), while a handful came from school (6.5%) or from outside the labor force (4.1%)(Figure 2). Thus, there was an almost even split between “job creating” and “job switching.” This suggests just how hard it is for Keynesian job creation to work in a modern, expertise-based economy: even in a weak economy, organizations hired the employed about as often as the unemployed.

Put simply, stimulus funds caused more job shifting than job creation. Another key finding? Union-friendly wage protections kill jobs:

Among organizations required to pay prevailing wages, 38.2 percent thought that they could have hired workers at wages below the Davis-Bacon prevailing wage (Figure 3) while another 17 percent were unsure. This meant higher costs for the federal government and fewer jobs created.

Of course, merely having your economic philosophy proved disastrously wrong doesn’t seem much of a hindrance to the Left.  Talk about the power of wishful thinking.


Downturn for Wisconsin Union by maliab
August 19, 2011, 5:37 am
Filed under: Economy, Limited Government | Tags:

The Milwaukee Wisconsin Journal-Sentinel is reporting that the state’s largest teacher’s union, the Wisconsin Education Association Council (WEAC) has been forced to layoff 42 employees (or 40% of its staff):

Burkhalter said that the layoffs and other budget cuts at WEAC are a result of Gov. Scott Walker’s “union-busting” legislation.

“Right now we’re engaged in membership continuation campaigns,” Burkhalter said in a statement. “We’ve made steady progress in signing up members and we anticipate further progress will be made as the school year resumes. Despite budget cuts and layoffs, our goal remains the same: to be a strong and viable organization that represents the voices of Wisconsin’s public school employees.”

The organization has been working to stay relevant in a time when state legislation has severely clipped the collective bargaining of teachers and other public workers. The legislation makes it illegal for local teachers unions to electronically deduct dues from the payroll of teachers, and local unions also have to hold re-certification votes.

The Wisconsin Association of School Boards estimates that about 275 school districts in the state are working outside of collective bargaining agreements and subject to the new legislation. About 150 or so districts are operating under contracts that were extended with their respective unions before the legislation passed.

No doubt some people will be confused (or willfully misled), so it bears repeating–these are union employees who are losing their jobs, and not the state’s teachers themselves.  It is being blamed on the fact that new legislation frees most of the state’s school districts from collective bargaining agreements, though one does wonder whether there may be other factors in play.  After all, one person’s “union busting” legislation is another’s “critical effort to resolve a budget crisis.”  Of course, one can hardly expect that the Union would also announce that they had an unsustainable model, but the fact that one of the blows to their bottom line is the fact that they can no longer electronically deduct union dues from people’s paychecks warrants at least an eyebrow raise.

Hawaii’s own state unions are immensely powerful and entwined with the government (or at least with the Democratic Party that runs most of the government in these parts), and our own state/union agreements have a significant impact on our own budget woes.  But don’t look for solutions from the unions themselves, which are more concerned with their own bottom line than the long-term economic health of the state.

Driving Up Our Costs by maliab
July 28, 2011, 6:56 pm
Filed under: Limited Government | Tags: , , ,

I just bought a new car.  Well . . . new to me, anyway.  It was about as fun as a root canal and took much longer.  And if you’re not fortunate enough to be able to walk onto a car lot and pick something out without regard to price, room for car seats, gas mileage, probable maintenance costs, or any of the other hundred things that make a car purchase a difficult and stressful process for us ordinary folks, then you probably don’t have much to worry about with regard to the Obama Administration’s new federal regulations on fuel efficiency standards.  Unless you’re also concerned about the economic future of our country and automobile safety.  As the Heritage Foundation’s Mike Brownfield explains:

The Washington Post reports that the Obama Administration and the auto industry have reached agreement on new federal regulations that would raise fuel efficiency standards for cars and light trucks, hitting an average of 54.5 miles per gallon by 2025—a 40 percent reduction in fuel consumption compared to today.

Those new standards, though designed to reduce greenhouse gases, bring with them significant costs. Fourteen of Michigan’s 15 representatives in Congress—including Democrat Senators Debbie Stabenow and Carl Levin—wrote a letter to the President warning him of the consequences that draconian fuel efficiency standards could have for their state, the home of General Motors, Ford, and Chrysler, citing a report by The Center for Automotive Research which warned that overly stringent standards could add $10,000 to the cost of a new car. Heritage’s Nicolas Loris explains how those higher costs can lead to job loss:

Higher prices reduce demand and force people to hold onto their older vehicles longer. Reduced demand means fewer cars produced, which means automakers have to shed jobs. The Michigan-based consulting firm Defour Group projected that a 56 mpg standard would destroy 220,000 jobs.

In addition to lost jobs and costlier cars, forcing automakers to achieve those standards could result in a loss of life. In order to make cars more fuel-efficient, automakers reduce the weight of vehicles. As Reason reports, “a 2002 National Academy of Sciences study concluded that CAFE’s downsizing effect contributed to between 1,300 and 2,600 deaths in a single representative year, and to 10 times that many serious injuries.”

All the costs of the new CAFE standards aside, can the auto industry even achieve the high-mileage goals? Not without massive government subsidies. Reason‘s Shikha Dalmia explains:

[E]ven the Environmental Protection Agency admits that the market share made up by hybrids and electric plug-ins will have to touch 49 percent if the industry is to come anywhere near compliance. Given that these vehicles now occupy only 3 percent of the market despite hefty subsidies, it is a foregone conclusion that expanding their presence will mean massively expanding subsidies to them.

And, as always, these kind of increased costs always hit Hawaii a little harder.  After all, we already pay a little more for everything except leis and aloha spirit.

Is the Autoworker’s Union involved in this change?  Does the sun rise in the east?  Is the Pope Catholic? Does Donald Trump buy his hair in bulk?  The UAW actually reversed its earlier position on such regulations (previously based on the fear that the damage to SUV and truck production would cost jobs), teaming up with environmental groups to lobby for regulations that (not coincidentally) will require major retooling of the industry and major subsidies from the federal government.  Brownfield concludes:

And there you have it. The Obama Administration is issuing rules—without congressional approval—to significantly change the way the auto industry is doing business, forcing it to make vehicles that few are buying today (only 2,745 Chevy Volts have been sold this year). And in order to achieve that compliance, the Administration will likely have to fund the retooling plants and subsidize consumers’ purchase of the high-mileage cars. Meanwhile, the cost of gasoline is going up, yet the President has restricted drilling in the Gulf, leaving the United States unable to tap its domestic oil reserves.

The President’s environmental and energy policy is driving in circles. The costs are high, and the American people and businesses will pay the price.

Bureaucracy 1, Heroism 0 by maliab
July 27, 2011, 6:45 pm
Filed under: Security | Tags:

Back when I was in grade school , lessons about unions inevitably focused on courageous picketers and abused factory workers.  Upton Sinclair’s The Jungle was involved.  Even the slow kids got the message: Unions save the little people from unfair circumstances.  In retrospect, the fact that my teacher was a member of a union undoubtedly had an influence on the content of those lessons.  Still, it’s interesting to imagine a grade school history class that showed more recent union history.  One that included collective bargaining, NFL-style, Furlough Fridays, and public employee pensions that can bankrupt the state.  For those who doubt that unions can come between the employee and the public they are meant to serve, consider this recent column by Steven Greenhut of the Pacific Research Institute:

On Memorial Day, a suicidal man waded into San Francisco Bay outside the city of Alameda and stood there for about an hour, neck deep in chilly water, as about 75 bystanders watched. Local police and firefighters were dispatched to the scene after the man’s desperate mother called 911, but they refused to help. After the man drowned, the assembled “first responders” also refused to wade into the water to retrieve his body; they left that job for a bystander.

The incident sparked widespread outrage in Northern California, and the response by the Fire Department and police only intensified the anger. The firefighters blamed local budget cuts for denying them the training and equipment necessary for cold-water rescues. The police said that they didn’t know if the man was dangerous and therefore couldn’t risk the safety of officers.

After a local TV news crew asked him whether he would save a drowning child in the bay, Alameda Fire Chief Ricci Zombeck gave an answer that made him the butt of local talk-show mockery: “Well, if I was off duty, I would know what I would do, but I think you’re asking me my on-duty response, and I would have to stay within our policies and procedures, because that’s what’s required by our department to do.”

. . . .

There’s no doubt that firefighters and police have tough and sometimes dangerous jobs, but that doesn’t mean the public has no business criticizing them, especially if they have become infected with the bureaucratic mind-set spread by public-sector union activism. The unions defend their members’ every action; to the extent that they admit a problem, they always blame tight budgets.

The unions that represent first responders also have a legislative agenda to reduce oversight and accountability. I recall when a state Assembly member closely aligned with public-safety unions contacted me about a union-backed bill that was too egregious even for his taste. Sponsored by a firefighters union after a district attorney prosecuted an on-duty firefighter for alleged misbehavior that led to a death, the bill in its original form would have offered immunity to firefighters even for gross negligence on the job. The legislation failed after the media started paying attention and ignited a contentious public debate.

(Read the whole article here.)

Conflict of (Accumulating) Interest by maliab

By Malia Hill

Collective bargaining between state employees and state government has been something of a . . . contentious topic in recent weeks.  And I’ve noticed that those who advance positions that are not completely pro-union tend to get a lot of nasty hate mail.  So I would like to begin by pointing out that this particular blog entry was written by Charlie Sheen.

The problem seems to be that we, the non-state-employee taxpayers are represented in these negotiations by people who are not necessarily thinking of their position as safeguarding the economic future of Hawaii or the burden placed on regular citizens.  And the position of the unions is quite straightforward.  Plus, they have the ability to shut down necessary public services, making us taxpayers and citizens all the more annoyed and frustrated.  So that even when we’re sinking in budget and pension problems, we get negotiation results like the recent agreement for compensatory time (in other words, days off) for state employees.  From the invaluable Greg Wiles of Hawaii Reporter:

Recent labor union settlements negotiated between the state and labor organizations will give thousands of workers at least four days off on a paid basis and bring an end to their furloughs.

The state said it believes the agreements negotiated with the Hawaii Government Employees Association (HGEA) and the United Public Workers (UPW) unions won’t increase its labor costs, though a former Gov. Linda Lingle Administration executive said the state may end up footing a bigger payroll bill.

. . . .

But perhaps more significantly, the deals includes something known as Compensatory Time Off, which past and present government executives said can be taken as paid days off or cash payments.

The federal/special funded employees are to receive 32 hours of Compensatory Time Off in return for four furlough days taken during the months of February and March. Some employees may get up to 88 hours in Compensatory Time Off.

Material given to the Hawaii Public Housing Authority directors and posted on the agency’s website also says under the UPW all furloughed employees shall receive 56 hours of Compensatory Time Off.  The directors were told the settlement agreement will involve the majority of the Hawaii Public Housing Authority staff.

“The termination of the furlough requirements for the UPW and HGEA will impact the Hawaii Public Housing Authority fiscally; the agency will have to pay 100% of salaries and provide four days (32 hr.) of compensatory time off for each of the filled positions which are currently either 100 percent federal or 100% special funded,” the memo to Hawaii Public Housing Authority directors says.

. . . .

Others have questioned why the state would give workers pay for not working in resolving a situation involving furloughs.

Moreover, there are questions if the state can use federal funds for the payments. Added payroll costs would come at a time when the state is facing budget deficit because of lower tax collections. Over the next two years the deficit is expected to be more than $1 billion.

Ted Hong, chief state negotiator during the Gov. Linda Lingle’s Administration, said he did not know specifically about the settlements, but believes the state might have a higher labor bill.

He said typically the federal government does not fund payments that involve comp time or overtime, and that the state may have to foot the bill this portion of the Compensatory Time Off given the workers.

Hong said typically Compensatory Time Off recipients can choose to take the time off or receive cash. That could lead to a situation where workers cash in the Compensatory Time Off in the years leading up to their retirement, adding to the salary figures used in calculating their pensions.

He said the employees might also elect to take Compensatory Time Off payments on a day they earn overtime, and possibly qualify for double-overtime pay.

Has anyone else started to notice a pattern here?  It seems that every time the state negotiates with the state union, it ends up creating more and more “future debt”.  Eventually, that bill isn’t going to be able to be pushed off any longer.

Narrow Escape for Transparency by maliab
March 9, 2011, 6:52 pm
Filed under: Hawaii Sunshine | Tags: , ,

By Malia Hill

One of the most popular features at Hawaii Sunshine, the Grassroot Institute’s transparency site, is the table of state salaries.  And why not?  When questions about collective bargaining and state employees’ unions seem to rule our news, it’s only logical that people are going to be curious about what those state salaries actually are.  This is especially true here in Hawaii, where problems with our current state employee pension system threaten to eventually bankrupt the state.  Since all of us are going to have to bear the economic and tax burden of the public sector employment benefits, it seems only fair that the public should be able to know about public sector salaries.

Not only fair, but responsible.  The default position in so many government agencies is to withhold information from the public–after all, if no one knows about something, then the agency won’t ever be the target of public outrage, media attention, or legislative action.  Transparency keeps shining sunlight into those areas that government would prefer kept dark, thereby helping to ensure more honest and responsible government.  In terms of civic responsibilities, keeping an eye on government spending may not be glamorous, but it’s still important.

And it still requires vigilance.  Just last week, Senate Bill 1094 died in committee on a tie vote–talk about your photo finishes.  The bill proposed allowing Hawaii public employees to conceal their name, compensation range, and job description.  It was introduced by Senate Judiciary and Labor Chair Clayton Hee (D–Kahaluu) who was joined in by Senator Mike Gabbard (D–Kapolei) in voting to pass it out of committee.  Voting against were Senator Les Ihara (D–Kaimuki) and Senator Sam Slom (R–Hawaii Kai).   If you support open government, be sure to thank Senators Ihara and Slom for voting to preserve transparency in Hawaii.

Lights Out on Oahu by grassroothawaii
March 8, 2011, 11:34 am
Filed under: Economy | Tags: ,

by Frances Nuar

The last few days have been dreary and rainy to say the least, as I’m sure you all experienced yourselves. Instead of blue skies and sunshine, Oahu saw dismal amounts of rain and more rain–in fact at one point I woke up in a daze wondering if I had teleported to Seattle. But no, here I was in Honolulu. Despite the rain here, I’m just happy I wasn’t in Ewa Beach where thousands of residents were without power all weekend thanks to the shenanigans of Hawaiian Electric Company and the International Brotherhood of Electrical Workers Local 1260. As the Star Advertiser reported:

About 1,300 HECO workers went on strike at 3:30 p.m. Friday and began walking picket lines on Oahu, the Big Island and in Maui County. The strike’s timing was a blow to about 8,000 Oahu residents, most in Ewa Beach, who lost power early Friday morning after a powerful wind and rain storm swept over the island.

So maybe the only thing worse than a rain storm when all you want is a beach day is a rain storm in the dark. It took days to restore power, but not by those union workers–no, it was non-union workers and management that came in to help. I can’t imagine any of those 8,000 residents being very happy with the union over the weekend and with good cause. Electricity is a public utility. We pay for it, we expect our lights to turn on when we flick a switch. And we expect problems with electricity to be readily resolved. (I mean you can’t leave poke un-refrigerated long before your house will adopt the permeating smell of fish. And that smell is very hard to get rid of.)

Giving unions the power to throw temper tantrums (go on strike) at the expense of the public is an outrage. Imagine if we all decided we were going on strike from our jobs and didn’t show up to work, especially during an emergency situation. I’m guessing we’d all be fired. Imagine calling 911 to find out dispatch workers, doctors, and nurses are all on strike–and the utter chaos that would ensue.

Public utility workers should be banned from going on strike. Binding arbitration to ensure both sides play fair is one option–but no one wants sour milk.

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