Why Would Unions And Some Big Businesses Support Raising the Minimum Wage? Some Reasons

Posted on by Patrick Ishmael

Last week’s Congressional Budget Office (CBO) report brought the negative effects of a proposed minimum wage hike into sharp focus. The CBO found that while wages would, by definition, increase for some employees, up to a million of our most vulnerable workers could lose their jobs. For all the bluster about free-market advocates being “anti-worker,” I can’t imagine a more anti-worker effect to a policy than the one you would see with a minimum wage increase. After all, what could be worse for a laborer than having his or her job taken away?

That’s what makes support for a minimum wage increase from unions and big business seem so odd at first glance. Why would unions such as the American Federation of State, County and Municipal Employees (AFSCME) support a change of policy that would hurt hundreds of thousands of Americans? Why would some businesses want to increase the cost of labor?

A few reasons stand out.

For starters, artificially raising the cost of non-union labor can make union labor more attractive. As the Cato Institute noted more than a decade ago:

Unions are labor cartels that attempt to restrict the supply of workers entering given occupations. Since non-union labor is priced below the cartelized price of union labor, it is an attractive substitute for union workers. Because unionization of all potential competition to the cartel is impossible due to the high policing costs that would be involved, unions resort to the minimum wage. By artificially increasing the wage rate of lower skilled workers — who could substitute for union workers — the minimum wage increase the demand for union workers and hence their wage rates.

Hypothetically speaking, if the labor of an entry-level employee with no experience is worth $7.50 per hour in the open market but the law requires he be paid $15 per hour, trained union labor costing $20 per hour looks considerably more attractive. By harming non-union labor, unions are able to help themselves.

Moreover, some large businesses have supported increasing the minimum wage because it would harm their competition. Costco, for instance, supports raising the minimum wage today at least in part because the entry-level wage for a Costco employee is $11.50, more than $4 per hour above the federal minimum. At a minimum wage of $10.10 per hour, Costco’s business model would remain largely unaffected.

But you know who would be affected by the change in the law? Businesses, large and small, whose profit margins are far narrower. That’s especially true of small businesses in our communities already suffering under a mountain of tax and regulatory burdens in a difficult economy.

Yes, there are, no doubt, some in both the business and labor camps who in good faith might think a minimum wage increase won’t hurt our vulnerable poor. But labor and business leadership know better, and the economics are as clear as the incentives.

Strong Arm Of Public Employee Unions Reaches For Home-Care Workers

Posted on by Patrick Ishmael

Last year, I wrote extensively about “paycheck protection,” an issue that deals with public employee unions and how they collect their political dues. But there are many facets to the public employee unionization problem beyond political dues. One of particular note is the forced unionization of home-care workers. Pamela Harris takes care of her disabled son Josh in Illinois, but because the state pays for Josh’s care, Illinois wants to force Pamela — Josh’s mother and caretaker — to join and pay dues to a public employee union.

The government is arguing that because people like Harris receive taxpayer money, they are state employees subject to union dues, though not the pensions and liability coverage that their fellow public sector workers receive. Harris was puzzled by the classification, considering that unions cannot negotiate other benefits for her family because the Medicaid program is capped.

The state receives very personal and comprehensive care for Josh, its intended beneficiary; Pamela gets to help her son. And obviously, this wasn’t a fight Pamela was picking. She just wants to take care of her child.

“I don’t want to be the face and name associated with an anti-union campaign, but this is at its heart a mother doing what she thinks is right for her son,” she told the Washington Free Beacon. “I don’t see this as a union issue, but the current administration in Illinois has an unhealthy relationship with public sector unions. We got swept up in that.”

Her son Josh, 25, has a rare muscular genetic disease called Rubinstein-Taybi Syndrome that has left him intellectually disabled, non-communicative, and unable to control his body. She bathes him, brushes his teeth, pops his dislocated limbs back into place, and takes him to meetings with doctors, specialists, and therapists.

Think this is just an Illinois problem? You might want to reconsider that assumption. In 2008, Missouri voters passed the Quality Home Care Act, which gave comparable power to the home-care unions in Missouri to force home-care workers to pay them tributes — I mean, dues. As the Missouri Chamber of Commerce noted (emphasis mine):

The Quality Home Care Act makes it easier for these workers to unionize and begin the collective bargaining process. The language allows a vote to go under union representation if just 10 percent of the workers expressed a desire to organize, compared to the 30 percent that is usually required. It requires all personal care attendants to pay union fees. In addition, the election to determine union representation would be conducted via mail ballot and not by secret ballot, which is current law.

This issue, now sitting before the U.S. Supreme Court, is not just a problem in Illinois — it’s a Missouri problem, too, and one we’re closely watching. Pamela Harris shouldn’t have to fight a union to take care of her son, and no worker should have to deliver unions a ransom to work in a given field. We’ll keep you posted.

Are Centralized Standards Needed For A World-Class Education?

Posted on by James V. Shuls

Tinfoil

On Thursday, sporting my tin foil hat, I drove to Jefferson City to testify against the Common Core State Standards. For a long time, proponents of Common Core have tried to paint detractors as a bunch of kooks. And to be honest, there are some ideas floating around that are a little wacky. But proponents who attempt to smear all Common Core cynics as conspiracy theorists, nut jobs, or crazy people ignore many of the issues surrounding the new de facto national standards.

Part of the problem is that supporters and opponents of the standards are too often talking past each other. Supporters put blinders on and say, “Common Core are just standards.” Opponents, on the other hand, too often point to all of the other stuff – data mining, recommended texts, etc. – and they ignore that the “Common Core are just standards.”

While I believe “all the other stuff” is important, let’s not neglect the argument about standards. Sometimes, we need to engage the proponents on their terms. Sometimes we need to talk about the standards. That is what I tried to address in my testimony.

Do we even need centrally imposed standards? Missouri did not adopt statewide standards until 1996. That’s right, for 175 years Missouri did not have centrally imposed standards. I imagine many of you reading this grew up in an era without centrally imposed standards. Does that mean that we did not have any educational standards? By no means. Rather, these decisions were decided at the local level.

Think about private schools. Without government coercion, many private schools have established learning standards that are more rigorous than our state standards. Yet, for some reason, we have come to believe that the only way we can have a world-class education system is to have a centrally governed education system that imposes standards on local schools. That is simply not the case.

Budget Battle Breakdown

Posted on by Michael Rathbone

When entering into an argument, it is necessary to have a common ground from which to argue. For example, in arguing about whether the Cardinals or Royals will have a better season, it is necessary to agree that Major League Baseball will actually be played this year. If you can’t agree on that, it pretty much makes any further discussion useless. A similar (but by no means exactly the same) situation is occurring in Jefferson City this year, but instead of arguing about baseball, there is an argument about the state budget.

Every year there are arguments about the budget. Every department wants everything on its wish list and there is only a finite amount of money. Some (like yours truly) argue that certain programs shouldn’t even exist. However, things have started to degenerate. Now it seems that the governor and the legislature cannot agree about how much money there even is to dole out. Missouri Gov. Jay Nixon is much more bullish about the future of the state’s revenue collection. He expects revenues to grow by 5.2 percent this year. Conversely, the legislature believes the state’s revenues will grow by only 4.2 percent. That seems like small potatoes but the difference in terms of actual dollars is in the hundreds of millions.

The fact that the legislature and the governor haven’t settled on a consensus revenue estimate is newsworthy because these types of disagreements are rare. However, this disagreement isn’t a cause to panic. The House will mark up its own appropriations bills and the budgeting process will continue. It’s just disappointing to see that governor and legislature can’t seem to agree on a revenue estimate, which is probably one of the more straightforward, less partisan issues. Hopefully, next year, both sides can agree on a number. Then the real fighting can begin.

Next Wednesday: A Public Discussion About Kansas City International Airport

Posted on by Joseph Miller

As the Kansas City Business Journal reported, Kansas City’s City Council recently passed an ordinance that requires a public vote on any proposal that would demolish or replace the current terminal structure at Kansas City International Airport. The ordinance also bars the use of public dollars to campaign for or against any future proposal. That means that the Kansas City Aviation Department’s proposed new $1.2 billion single terminal plan cannot go forward without the approval of voters in Kansas City.

We at the Show-Me Institute have written about the new terminal plan many times. We have expressed skepticism at the lack of alternatives to the expensive new terminal plan. Our research has pointed out the danger of the airport assuming so much debt. We also have cast doubts on the Aviation Department’s alternative repair cost estimates.

Now that the law states that the public must approve any new terminal plan, it is more important than ever for residents to be informed regarding the costs and benefits of the new terminal plan.

With that goal in mind, the Show-Me Institute hosts a meeting about the future of Kansas City International Airport from 6:30 to 8:30 p.m. on Wed., Feb. 26 at the Kansas City Public Library (Central location: 14 W. 10th Street in Kansas City). Show-Me Institute Western Missouri Field Manager Patrick Tuohey and I will present our research about the proposed new terminal plan and answer the public’s questions. This is a free event so sign up today to attend and receive valuable information about the airport plan that does not come straight from the Aviation Department.

Medicaid Expansion Proponents Should Be Faithful To Missouri’s Values

Posted on by Patrick Ishmael

One of the bigger news items this week was the introduction of a Medicaid expansion proposal. Along with instituting some work requirements, the latest bill would raise the Medicaid eligibility level for many adults to 138 percent of the federal poverty level and implement what some call the “Arkansas model” for those between 100 percent and 138 percent of poverty, who would get state-supported health insurance.

The cost of the expansion would be enormous. Obamacare’s 90/10 “enhanced match” — that is, how much the federal government pays for Medicaid versus how much the state pays — only kicks in for newly eligible enrollees, not currently eligible enrollees. A 2012 study by the Kaiser Family Foundation suggests the cost to the state of that new population would be well north of a billion dollars over the next decade; the added cost of the currently eligible population, due to the Affordable Care Act, would be closer to $2 billion. It’s still not clear yet how the state would pay for any of this new spending.

The bill would also adopt a variation of the Arkansas expansion plan to try and use Medicaid funds to pay for private insurance for those between 100 percent and 138 percent of poverty. Again, the plan would be very expensive to the state. However, as often as Arkansas comes up in Missouri’s Medicaid conversation these days, what if I told you that even Arkansas is second-guessing the Arkansas model?

The State House for a second day in a row defeated a compromise plan to expand Medicaid by using federal Medicaid funds to buy private insurance for low-income residents. The program was approved last year as an alternative to expanding Medicaid’s enrollment under the federal health law. The House speaker, Davy Carter, has said the House will keep voting on the measure until it passes.

Reform must precede any proposed expansion in Missouri. Arkansas’ plan — which despite current opposition could still end up getting passed in that state by year’s end — isn’t so much a reform as it is a grab for federally financed deficit spending, which is why the expansion is alluring to politicians nationwide. That might fit with the way elected officials think, but that isn’t the way Missouri families try to run their households day-to-day.

That brings us back to Missouri’s sensibilities. Missouri’s motto (and the name of this Institute) stem from a saying that W.D. Vandiver popularized many years ago.  While the origin of the saying – “I’m from Missouri; you’ll have to show me” — is subject to some dispute, Mr. Vandiver described its meaning thusly in a letter published in 1922 (emphasis mine):

“The public has not seemed to care for any prepared formula and has apparently accepted the ‘Show Me’ as properly indicative of the inquiring spirit and the cautious habit, about as given by the Literary Digest and the dictionary which defines it as the attitude of ‘one not easily taken in.’ “

Prudence: it’s one of Missouri’s hallmarks. And that’s why if we recognize that Medicaid is a failed program, expanding without first fixing it is a fool’s errand — one lacking in prudence. It is clearly irresponsible to set into motion a new entitlement whose foundation is in substance the current Medicaid program; that’s what this new bill seems to do.

Ask Not For Whom The Bell Clangs

Posted on by Patrick Tuohey

It clangs not for thee, according to Kansas City Mayor Sly James.

If you are reading this, the streetcar is not for you. In a Feb. 13 interview on KCUR radio, James said the following:

We need people to understand, a lot of the folks who are against this [streetcar expansion] are people who have been vested here, they’re already here. They’ve lived most of their lives if not close to all of it [here]. We’re not building this city for them. We’re building this city for the next 75 years.

Not only is the streetcar not for people in Kansas City; voters ought to discount the views of Kansas Citians exactly because they are from Kansas City. In the same interview, James said:

And despite people’s objections, despite their willingness to look at it in some instances, when we’re out looking for talent to come to this city, they’re not looking for some place where they can drive all around town, they are demanding public transportation.

Got that, Kansas City taxpayers? The streetcar is not for you, it is for others, either in the future or those who live somewhere else. You’ll just be paying for it. Planning ahead for city growth and seeking to attract new citizens are noble goals. The problem is that nothing in the research about streetcars indicates that it accomplishes either.

Kansas City Airport Officials Decide To Do Their Job

Posted on by Patrick Tuohey

In an agreement emanating from the Kansas City City Council, according to the Kansas City Star:

Aviation officials and the eight airlines serving Kansas City pledge to collaborate over the next two years on plans for airport terminal improvements. The agreement, with council approval, would take effect May 1 and sets the stage for both sides to work together on a project the public can embrace.

In other words, the Kansas City Aviation Department is announcing that it will do its job: work with airlines to determine what is best for the airport and Kansas City. Remember that Aviation Department Director Mark VanLoh once said on the radio:

. . . he works for the airlines and not the flying public.  He said his goal is to make things easier for the airlines, and not necessarily for passengers.

Yet VanLoh didn’t consult the airlines about the new terminal idea before going public. When the airlines finally learned of the plans, they “cautioned against building something so expensive that it drives up costs and drives away airlines” (as the Show-Me Institute pointed out months earlier).

Once the public learned of the project, they balked as well. VanLoh complained about local politics hampering his efforts. As a result of VanLoh’s own failures to communicate with important stakeholders, the mayor appointed a window-dressing advisory group. The advisory group spent $100,000 on a consultant that attempted to downplay the airlines’ important concerns. (This is on top of the $117,000 the Aviation Department contracted out to convince the public that a new terminal is a good idea.)

This could have all been avoided if VanLoh just did what he was hired to do. According to the Star, Kansas City City Councilman John Sharp said of the recent deal:

“I feel clearly the city dropped the ball in not consulting with the airlines earlier,” Sharp said, adding that the lease approach should address that shortcoming.

For his part, VanLoh is “thrilled” about the new agreement:

Because after what we’ve all seen and heard, we got agreement from all parties that we’re going to sit down together and get us into the future somehow.

That is how bad the airport situation has become in Kansas City — an agreement to merely sit down together with one’s tenant airlines is thrilling. It’s no wonder that some in Kansas City have already called for new airport leadership.

Significant Tax Cuts March Forward In Missouri House

Posted on by Patrick Ishmael

Last week, I was invited to testify on Missouri House Bill 1366, a combined tax cut and tax credit reform of the type we have discussed many, many times. Particularly after the passage of Boeing’s special tax cut last year, it is even more important to reiterate that a better tax policy is one that doesn’t choose winners and losers in the tax code, but one that empowers all Missourians. I also submitted testimony this week on what is left of 2011’s Aerotropolis, the Missouri Export Incentive Act. As you might expect, this proposed legislation doubles down on a broken tax credit status quo by, ultimately, unnecessarily subsidizing imports. I will be following both bills closely… for obviously different reasons.

But those, of course, aren’t the only bills I’m following, and on Wednesday, another piece of legislation — a big tax cut — cleared its first hurdle in the House. That bill, HB 1253, is a stripped-down version of last year’s Broad-Based Tax Relief Act. The new bill gets back to the basics, cutting taxes for businesses of all sizes by half over a five-year period (assuming the revenue triggers are made annually, of course.) I expect that simplicity will serve the bill well, and so it was not surprising that the bill received significant backing from the chamber yesterday with a 104-48 vote.

We have talked repeatedly about how destructive income taxes, and particularly taxes on business income, are to growth. It is good to see the legislature responsibly moving forward to lift the tax burden on the family businesses in our communities, just as it was so willing to do for Boeing just a few months ago. Long way to go, but this is a start.

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