Labor Unions, GE, and the Job Czar

[Sandra]

Unions, as monopoly sellers of labor, have the power to push wages above the competitive level in the marketplace

Labor Unions, GE, and the Job Czar

 
 - Dr. Ileana Johnson Paugh  Thursday, July 28, 2011

In a free market economy, no single wage level applies to all workers. In general, wage differentials are determined by the fact that we have many labor markets, each with its own supply and demand and equilibrium wage.

Each worker in a specific labor market has certain ability and expends a degree of effort commensurate with their ability and work ethic. Other factors of production make American workers more productive because they have generous supplies of machinery, natural resources, and technical expertise.  Therefore, they earn higher wages. Some workers have a superior education, training, and experience.

The size of the available working population explains the magnitude or dearth of industrial activity. Sparsely populated Alaska experienced high wages when the Alaskan oil pipeline created many jobs, while wages in Appalachia remain low.

The nonmonetary attractiveness of a job explains why pleasant and self-satisfying jobs, such as teaching, attract many workers and pay a relatively low wage. Disagreeable and dangerous jobs, such as working with gunpowder or mining, command higher wages.

Some workers receive economic rent for their unique abilities that few people can duplicate, such as a famous surgeon, athlete, or actor. Their wages will have a component to the pay that does not reflect necessarily the amount of labor hours.

Investment in education or human capital is also a variable in wage differentials. It is the perceived incorrect opinion that an educated person will make a better worker.

Doctors and lawyers earn such high salaries partly because of their many years of training and financial investment in their human capital, time, tuition and books. They have to eschew any part-time work for years in order to study for very difficult classes and exams. The years that they do not work, is income lost that cannot be recovered in the future.

Education theorists assume that students in high schools and colleges acquire skills that make them more productive and knowledgeable. Experience tells us that is not necessarily the case. Some are more willing to learn than others are, but are not necessarily productive. People with higher education earn more money but there is definitive disagreement among experts why.

The dual labor market has the primary “good jobs” market with the possibility of promotion and the secondary “bad jobs” market with little hope for advancement. Increased education leads to promotion in the first tier while more education in the second tier offers little hope for promotion.

In many labor markets, the supply of labor is not competitive because it is controlled by labor unions and collective bargaining, a form of monopoly. Less than 9 percent of the labor force is now unionized; the decline was caused by the diminishing manufacturing base and the move to a service economy.

Unions, as monopoly sellers of labor, have the power to push wages above the competitive level in the marketplace. Unions and management settle on the terms of a labor contract through a process called collective bargaining: mediation, arbitration, and strikes.

Outsourcing and cheap foreign labor, in spite of the economists denial, have hurt the American manufacturing base and American workers. Consumers, however, have benefitted greatly and so did the Chinese, other foreign workers, and their respective economies, built on the destruction of our industrial base and reverse engineering.

The National Labor Relations Board (NLRB) was established by Executive Order 6763 on June 29, 1934 and was formed on July 5, 1935. In 2008, it had 1,628 employees.

The National Labor Relations Board (NLRB) is an “independent agency of the U.S. government charged with conducting elections for labor union representation and with investigating and remedying unfair labor practices. Unfair labor practices may involve union-related situations or instances of protected concerted activity.”

The NLRB is governed by a five-person board and a General Counsel, all appointed by the President with Senate consent. Board members are appointed to five-year terms and the General Counsel is appointed to a four-year term. The General Counsel acts as a prosecutor and the Board acts as an appellate judicial body from decisions of administrative law judges.

In April 2011, NLRB filed a complaint “seeking to force Boeing to bring an airplane production line back to its unionized facilities in Washington State instead of moving the work to a nonunion plant in South Carolina.”

Companies have taken advantage of the “right to work” rules in most Southern states to locate there without fear of work stoppages at every turn. Any company should have the right to locate their business where they feel it is in their best interest. Apparently, the government disagrees when union employees are employed in another state.

Boeing transferred a second production line of its 787 Dreamliner plane to South Carolina; they were accused of unlawful retaliation against union workers for their past strikes in Washington and discouraging future strikes. NLRB acting general counsel, Lafe Solomon, said it was “illegal for companies to take actions in retaliation against workers for exercising the right to strike.”

President’s appointees at NLRB have declared open season on Right to Work states, independent workers, and job providers

President’s appointees at NLRB ”have declared open season on Right to Work states, independent workers, and job providers like the Boeing Company.”

The saga continues with a “quickie or ambush election rule” that would shorten the time for union elections from a median 38 days to as little as 10. The stacked deck in favor of unions would:

• Deny employees adequate time to make informed decisions on whether to join a union
• Silence employers from expressing their views on unionization to employees
• Push Big Labor’s radical agenda

Wisconsin’s Governor Scott Walker waged a battle with labor unions in his attempt to balance the state’s budget. Wisconsin had public collective bargaining rights since 1959 and employees had very generous benefits. I would never understand why public employees need protection from the public, essentially themselves. They simply expected other workers in the state to pay for their Cadillac health care plans, benefits, generous salaries, and retirement pay.

After a three week standoff during which massive union and Democrat forces from across the country caused millions of dollars in damage to the State’s Capitol, the 14 Democrat Senators fled the state in order to deny a quorum vote to pass a budget measure, the Republicans outmaneuvered them, and the law was passed.

A recent update alleges that some school districts in Wisconsin are now showing a surplus instead of a deficit. It seems that the insurance company that provided all the benefits to the teachers was owned and operated by the teacher’s union.

The insurance was guaranteed to get the teacher’s business and the State had to pay for it, not the teachers.  The insurance would increase the annual costs every single year, to become the most expensive insurance in the state.  In turn, the insurance company would donate millions of dollars to their favorite Democrat politician. Once elected, the politicians kept funding the unions’ outrageous costs.

The latest development in the Big Labor saga is the move by the General Electric to transfer its X-ray machine operations from Waukesha, Wisconsin to China. The 100-year-old business will “tap emerging market growth.” Is this a wondrous coincidence or what?

GE will invest $2 billion across China, including opening six “customer innovation and development centers.” Is this a good idea since we have such high unemployment here in the U.S.?  Are they using taxpayer dollars when we are broke and are debating default v. raising the debt ceiling by borrowing another trillion dollars from China?

“The move follows the introduction earlier this year of GE Healthcare “Spring Wind” initiative to develop and distribute medical products and services in China,” GE said in a statement.

GE is the biggest maker of MRI and CT scanners and sold $1.1 billion of its $16.9 billion in China last year. GE will hire 65 new engineers and support staff at the new Chengdu facility. GE has already hired a “large number” of engineers who are in training.

Considering that Mr. Immelt, General Electric’s CEO is our Jobs Czar, does it not seem bizarre that he is killing jobs in the U.S. and creating jobs in China? Is this punishment for Governor Walker winning the fight in Wisconsin against Big Labor?

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