Obama signs an executive order encouraging stimulus projects costing more than $25 million to use union-only project labor agreements. This means that any contractor or subcontractor working on a large project will have to submit a bids with collective bargaining agreements spanning one or more unions for the duration of the project. In theory, you could bid a job with non-union labor, but let a union run the bargaining. In practice, projects with PLAs almost always go to union shops.
What does this mean for the stimulus? Union labor is more expensive. Every project that uses a PLA will cost more, and many of those jobs will use as much capital equipment as possible to minimize the demand for labor. That means that we will get a lot less employment for every dollar of stimulus spent than we would without the PLA.
Obama is offering these "cheap" concessions to the unions because it's lookng less likely that the Democrats will be able to get EFCA through. But these things aren't free. They're just less transparent.
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"Obama is offering these "cheap" concessions to the unions because it's lookng less likely that the Democrats will be able to get EFCA through."
This appears to be a statement that if EFCA were going to pass easily, Obama would not have issued this executive order. I don't believe that for a second. If the Democrats had a few more seats in Congress (as they would if more people had followed Ms. McArdle's advice when casting their ballots), then we would have this Executive Order and EFCA. The two are hardly alternatives.
Using union labor makes the stimulus plan both more expensive and less effective.
One of the determinants of the effectiveness of the stimulus is the extent to which it puts otherwise idle resources to work rather than diverting resources from existing production. If we want to put unemployed people to work, the last thing we want to do is pay above-market wages, which will tend to attract people are already employed elsewhere. Plus, to the extent that unions have any power to direct projects, they're likely to direct desirable work to their own constituents who generally already have jobs.
Obama is unnecessarily spending additional billions and undermining the stimulus to pay off a politically useful special interest group. He should be ashamed.
My brother is a struct. engineer in NYC and claims that union-work is of sufficiently higher quality that knowing whether or not you have union labor working on the building affects the design. That is, union labor is better so you can do a slightly cheaper design. Now obviously at the margin this doesn't fully compensate or else everybody would hire union labor, but it does suggest that a direct comparison of union and non-union wages in construction will overstate the cost increase.
So if I follow the logic properly here, this PLA stuff will encourage hiring of fewer, more expensive union workers as opposed to more, cheaper non-union workers.
I always pictured the idiotic union contracts as being one guy to hold the nail, another guy to get the hammer from the truck, another guy to swing the hammer...
I cannot wait for the Two Minutes Hate your commenters are going to unleash on this. It's going to be so pure and unhinged.
But, maybe, from a stimulus package perspective you don't _want_ necessarily to save money on the design and spend it on the workers, you want cheaper and more workers.
Re: Maybe
Union labor is higher quality than non union labor? Tha'ts the first I've ever heard of that, and would like to see some supporting evidence.
Hiring union labor is inflationary, which is what we need. It may create less employment, but it's neutral as economic expansion (may even be positive, since union labor has discretionary income while non-union labor doesn't, in crude terms).
So your argument is that firms wouldn't try to minimize labor costs uf they could use non-union workers?
Maybe:
As a large commercial builder, I hope your brother truly doesn't make decisions like that. That is truly scary. Structural design should be based on the math - only. All the subjective decisions are for architects.
There is another vicious part of this Exec Order. Section 7 says that the Sec DOL and Director of OMB along with "other interested parties" will weigh in on whether Obama will expand the use of union-only PLAs to spending or "assistance" below the $25 mm threshold. Gee, I wonder what Trumka and Burger will conclude???
PLAs steal money from workers. Under a PLA, the contractor is required to pay into union vesting programs (pensions and health benefits) for the during of the project on behalf of the workers assigned to them through the hiring hall or the contractors own employees. Want to guess what happens to the employees benefits when the job is over? Yup, they weren't vested so they are sacrificed. Union plans require 5 year vesting and are 'all-or-nothing'.
What is the last building that took five years to build?
Oh and, by the way, if the contractor already had something like 401 (K) matching or profit sharing...during the PLA they will have to pay into both benefit plans. Makes it a little hard to compete when they stack the deck.
Ok, I really can't leave it at that. To point out the obvious, using non-union workers is A WAY to minimize labor costs. Which is to say that your conclusion makes no sense; using non-union labor won't lead to more employed workers, but rather to lower wages. Anyone who has passed a 200 level economcis course somewhere other than Chicago knows that.
I suppose it's understandable if you're a bit jealous of Amity Shales and are trying to duplicate the model, but at this point I don't understand why The Atlantic doesn't go all in and just hire the original.
I went to high school in the Chicago area in the '70s. You couldn[t work in the skilled trades unless you were in the union. You couldn't get into the union unless you knew somebody.
I dread that happening all over the country.
Brien Jackson:
I would not disagree with you since you define your terms within the confines of a single project.
However, government funding of the type used for building construction programs is a limited pool. For example, suppose the Army budgets $100 million for new base quarters - how many fewer houses would be built due to the higher costs? As is the case in Maryland, the escalated costs associated with Davis/Bacon scale wage rates are a part of the reason that Maryland is trimming proposed school projects. Not the sole reason, but a significant one nonetheless.
Now, consider the Stimulus Bill. If you accept the scenarios above, you would have to accept that the Executive Order would lead to fewer jobs created by the Stimulus Bill.
That makes him either reckless or a hypocrite.
As a large commercial builder, I hope your brother truly doesn't make decisions like that. That is truly scary. Structural design should be based on the math - only. All the subjective decisions are for architects.
Maybe, in being stated second-hand, it didn't come out with full context. It's possible that when this designer doesn't know who will be erecting the structure, he deliberately overdesigns beyond standard practice or uses some more expensive construction techniques in order to get around some known potential workmanship failures.
In other words, Brien Jackson, Conc just pointed out that you should probably take at least a 300 level economics course if you want to understand all this. If a student on one of my exams tried to reason that the wage level and the number of jobs were independent, either in a functioning market economy or in a goverment spending package with a fixed amount of total stimulus spending available, he'd lose a lot of points for short-sighted analysis.
"However, government funding of the type used for building construction programs is a limited pool. For example, suppose the Army budgets $100 million for new base quarters - how many fewer houses would be built due to the higher costs?"
None, because no one plans that way. If a certain amount of units HAVE to be built, but the amount budgeted for their construction can't cover the costs, then you appropriate additional funds for the project. If you cut thenumber of units built, then you're admitting you didn't really need (demand) those units in the first place, and that they were expendable at the cost of constructing them.
aMouseforallSeasons:
I think you are probably right. Something is either lost, or exaggerated in translation.
I do not build in NYC so I do not know local practices. However, I would assume that they have third-party inspectors and the like to verify that plans and specs are being rigorously followed. We sure have that in the DC Metro Area.
"In other words, Brien Jackson, Conc just pointed out that you should probably take at least a 300 level economics course if you want to understand all this. If a student on one of my exams tried to reason that the wage level and the number of jobs were independent, either in a functioning market economy or in a goverment spending package with a fixed amount of total stimulus spending available, he'd lose a lot of points for short-sighted analysis"
What about someone who sought to imply that firms would hire more workers than they required if wages were lower, or essentially argued that firms don't seek to minimize operating costs as a rule?
To point out the obvious, using non-union workers is A WAY to minimize labor costs. Which is to say that your conclusion makes no sense; using non-union labor won't lead to more employed workers, but rather to lower wages.
I perceive the the stimulus bill underlying all of this discussion to be a price tag first and a set of projects second. If you accept this presumption, using non-union labor would enable more people to be employed at the same cost.
If the goal of the stimulus bill is to create jobs, this provision is counterproductive. If the goal of the stimulus bill is to reward important constituencies, this provision makes perfect sense.
"I perceive the the stimulus bill underlying all of this discussion to be a price tag first and a set of projects second. If you accept this presumption, using non-union labor would enable more people to be employed at the same cost."
Well, no, because the government doesn't pay workers (excluding government employees, obviously) directly. They pay firms to do projectsm and the firms pay their workers. Lower wages won't mean more workers unless you think lower wages magically make management stupid to the point that they can't help but employ more people than they need. It will, however, mean the firms pocket more money, which is certainly good for business (and I feel I should note that McMegan has an MBA at this point), but not so much for aggregate demand.
Brien Jackson: there's a fixed pool of money for the stimulus. More money spent on each project means fewer projects.
Moreover, as Ann says, your notion that wages and employment rates vary independently is . . . odd. You seem to be making a badly abbreviated version of the monopsony argument, but if so, you're the first person I've met in a long while to argue either that construction is a monopsony market, or that the government artificially holds wages down at its contractors.
Brien, you're not understanding me. I'm saying the stimulus bill is effectively saying "we've got $900 Billion dollars, what projects can we do?" The number of contracts let is directly a function of the cost of each project. If you lower the labor costs, you'll can fund more projects from that fixed pool of funds and employ more people.
My argument is not that any particular project will hire more people because labor is cheaper; it's that the same stimulus bill will fund more projects. More projects funded will mean more people employed.
"Brien Jackson: there's a fixed pool of money for the stimulus. More money spent on each project means fewer projects."
Possibly, but there was a fixed pool of money for the Iraq War too, minus the hundreds of billions approriated through supplementals. Also, everyone more or less agrees that the first bill will not be the last.
"Moreover, as Ann says, your notion that wages and employment rates vary independently is . . . odd. You seem to be making a badly abbreviated version of the monopsony argument, but if so, you're the first person I've met in a long while to argue either that construction is a monopsony market, or that the government artificially holds wages down at its contractors."
Obviously it was a fairly crude statement, but nevertheless the point is that your assertion is just Shlaesesque. Firms always seek to minimize costs, as I assume an MBA is well aware. Non-union labor is a way to minimize costs, as I assume an MBA is well aware. Using non-union labor isn't going to prompt firms to employ more workers than they require, it's going to let them (the firms) pocket more money, as I assume an MBA is well aware. Which is all fine and good for business, but not so much for aggregate demand, which is a bit more pressing than the amount firms are able to pocket at the moment.
'The number of contracts let is directly a function of the cost of each project. If you lower the labor costs, you'll can fund more projects from that fixed pool of funds and employ more people.
My argument is not that any particular project will hire more people because labor is cheaper; it's that the same stimulus bill will fund more projects. More projects funded will mean more people employed."
But at lower wages, which exerts a downward force on aggregate demand, Obviously, when the goal is to increase AD, this is a bit counter-productive.
SG:
Thanks for making the point more clearly than I did.
Megan, I 'll admit that I had to look up the definition of monopsony as I am decades out of college (I was an Econ Major), but you hit it right on the head.
Using non-union labor isn't going to prompt firms to employ more workers than they require, it's going to let them (the firms) pocket more money..
What you're repeatedly missing is that machinery can be substituted for labor, so that the number of people "required" for a given project can vary. If ditch diggers are expensive, you buy a backhoe; if your roofers cost too much, you get a couple of nail guns and a compressor. But of course, machinery is expensive, too, so if labor is cheap enough, you'd rather buy a hammer and a shovel and pay people to use them.
"Minimizing costs" in a cheap-labor environment means more workers and less gear; higher labor costs mean the opposite.
Brien: If labor costs are lower, firms will put in lower bids for projects. Government contracting may not be an ideally competitive market, but it's a little silly to assume that reduced labor costs just increase the profit margins of the employer.
There are plenty of things to criticize about Shlaes, but I don't think any serious economist disagrees with her claim that artificially inflating wages at the expense of employment is a really bad way to fight deflation.
"What you're repeatedly missing is that machinery can be substituted for labor, so that the number of people "required" for a given project can vary. If ditch diggers are expensive, you buy a backhoe; if your roofers cost too much, you get a couple of nail guns and a compressor. But of course, machinery is expensive, too, so if labor is cheap enough, you'd rather buy a hammer and a shovel and pay people to use them."
Only if you're a very small operation that doesn't do a lot of business. Otherwise the cost of the machine is pretty quickly offset by its durability and the ability to do more business, and in a more efficient manner it allows you.
Brien: are you familiar with the concept of marginal costs and benefits?
Even a huge operation with 100 backhoes in its fleet will be faced with the question of how to staff and supply a new "stimulus" project. Is it cheaper to buy the 101st backhoe, to hire more workers, or to shift some machinery from another project, or what? Increasing their labor costs on a given project will affect these decisions and tilt them away from hiring and towards machinery.
Of course, there's an awful lot of heavy machinery build right here in the the US, so maybe that's the point, I don't know.
Brien Jackson -
You're trying to hold most things fixed and argue that the only variable that adjusts in real life is company profits. The amount of labor that is "required" depends on its cost and on alternative ways of accomplishing the same goal, as Rob Lyman pointed out (regardless of whether an operation is small or large, although the specific trade-offs may depend in part on scale). And the number of projects that can be completed with a fixed amount of stimulus spending depends on the cost of the various projects, as FXKLM pointed out.
As for your claim that our goal is to "increase AD" (which I'm guessing stands for aggregate demand), why should that be our only or even our primary goal? Getting more for our money and creating even more jobs in the process is a better goal than strengthening union's ability to demand above-market wages for a lucky few at the expense of everyone else.
But at lower wages, which exerts a downward force on aggregate demand, Obviously, when the goal is to increase AD, this is a bit counter-productive.
Lower wages are a downward force on individual demand. Whether or not it lowers aggregate demand depends on whether you can make it up in volume. How many additional people get employed and what's the wage differential? It's not immediately clear (to me) which would maximize aggregate demand.
But if you believe the projects have value in and of themselves (if not, why not just cut checks directly and skip the employment aspect?), then funding more projects has value beyond the paycheck provided.
I can't see any good argument for paying more for something than you have to. With a surplus of unemployed people, paying above market clearing wages for labor just doesn't seem like an optimal policy (union members excepted, of course).
"Brien: are you familiar with the concept of marginal costs and benefits?"
Of course, which is why the point you're trying to force makes no sense.
Think of it this way; I grew up on a farm of roughly 1,500 acres, which is still fairly small comparatively but certainly larger than the stereotypical "small-farm." Of course, like every modern farm we had machinery; cultivators and tractors and planters and combines. It's certainly possible that if labor costs were low enough we could have done all of the labor with human capital rather than machines, but given the number of people it would take to farm 1,500 acres with the speed and efficiency the machinery allowed the marginal cost of labor would have had to have been effectively zero for that to work out.
On the flip side, we could have potentially scaled back to a size that was more common before the proliferation of modern machinery, say 300 acres, and used human capital instead of machines, but then we'd be giving up 80% of our returns, which would significantly reduce our bottom line.
In other words, no matter how cheaply we could get labor, it's just not feasible in any real world sense that we would have used human capital instead of machines.
"How many additional people get employed and what's the wage differential? It's not immediately clear (to me) which would maximize aggregate demand. "
It would certainly be helpful if McMegan would make a more concious effort to cite some sort of empirical work or economic literature every now and then wouldn't it?
Brien Jackson:
I having trouble understanding why this argument is not clear to you.
Rob Lyman's argument is precisely correct. It is a balance that every business has to strike. Equipment displaces labor if the operational costs are lower than cost of the labor substituted by the equipment.
For example, imagine forming a concrete wall. We used to exclusively utilize plywood, 4 x 4's, and various wall ties (to keep the wall from spreading when concrete is poured into the empty form). Presume that cost is $1000 for this example's sake. The labor cost of building the form is 5 carpenters at $20 per hour for 5 days. (5 x 20 x 40 = $4000) Total cost is $5000. This is the amount I will include in my bid for the project.
Suppose you raise the cost of labor to $40 per hour, what will I do? We still only have $5000 included in the bid our will we lose the job. I will look for an 'equipment' alternative as Rob Lyman mentioned. I can now go and rent a pre-fabricated form system that only needs 2 carpenters and will take only 2 days to complete (yes, these are real examples). How much can I afford for the form system? As long as it costs $3720 or less, I will choose that option.
If you plan to remain in business for long, you have to make this decision everyday.
"As for your claim that our goal is to "increase AD" (which I'm guessing stands for aggregate demand), why should that be our only or even our primary goal? "
Because a recession is fundamentally a deficit in aggregate demand perhaps?
"Suppose you raise the cost of labor to $40 per hour, what will I do? We still only have $5000 included in the bid our will we lose the job. I will look for an 'equipment' alternative as Rob Lyman mentioned. I can now go and rent a pre-fabricated form system that only needs 2 carpenters and will take only 2 days to complete (yes, these are real examples). How much can I afford for the form system? As long as it costs $3720 or less, I will choose that option."
The cost you pass along will go up.
On the flip side of that, the people you're employing will have a higher disposable income, meaning they'll demand more things. And that's the entire point of a "stimulus" package, to increase aggregate demand. I mean, getting things built is nice, but it's not the primary goal so much as it's a nice side-effect that makes this sort of spending preferable to, say, just writing checks to everybody.
Brian:
I think you are painting this as far too black and white. Your farm used labor and machines and the two are not mutually exclusive. It isn't a matter of how low will wages have to be to get rid of all our equipment, but rather how much we spend on equipent and how much we do by hand. Unless you are going to claim that every job that could be automated at this far, was automated.
Furthermore, as someone already pointed out, a lower labor cost will allow the firms in question to lower the bidding price, thus a firm that tries to pocket the entire labor difference is very unlikely to win the bid.
"I think you are painting this as far too black and white. Your farm used labor and machines and the two are not mutually exclusive. It isn't a matter of how low will wages have to be to get rid of all our equipment, but rather how much we spend on equipent and how much we do by hand."
Well the point really was that you have to consider marginal costs AND marginal benefits, and even if human labor could be had at a lower marginal cost than the machines, the real world impact would also be lower marginal *benefits*, and a smaller bottom line.
Brien Jackson:
OK, I give up. You seem unwilling to understand this basic premise.
A) I cannot pass along the cost or I will not be awarded the project - that is what a bid is.
B) How does paying 2 people $40 per hour for 16 hours ($1280) generate more 'aggregate demand' than paying 5 people $20 per hour for 40 hours? ($4000)
I appreciate the civility on this blog. We will simply have to agree to disagree.
Think of it this way; I grew up on a farm of roughly 1,500 acres...In other words, no matter how cheaply we could get labor, it's just not feasible in any real world sense that we would have used human capital instead of machines.
Several million first-generation Mexican immigrants might have a thing or two to teach you on that point, but perhaps they didn't emmigrate as far up as wherever your farm was. Or maybe you mostly grew cereal grains and soy, which lend themselves well to machine harvesting?
Brien,
I'm not seeing the "marginal" part in your response, which assumes an all-or-nothing choice between human labor and machines.
I'm not familiar with farming equipment so help me out: is there exactly one set of machines that are useful for 1500 acre farms? Or is it the case that there are a wide range of possible machine choices, each requiring differing amounts of human labor to complete the same work? For instance, could your farm have spent a bit more money to buy a planter and a combine that were 10% faster than the ones you actually used, thereby reducing your need for seasonal labor by a corresponding amount? And if so, do you think the added expense of buying those two machines might have been worthwhile if your labor costs had risen significantly?
Clearly, you would never have used exclusively human labor over machines, any more than bridge builders would fail to use cranes. But you probably didn't need precisely the machines you had, and you probably had fancier versions available offering enhanced productivity at additional cost. Had the cost of labor risen, those versions would have made economic sense.
"How does paying 2 people $40 per hour for 16 hours ($1280) generate more 'aggregate demand' than paying 5 people $20 per hour for 40 hours? ($4000)"
In the short run I suppose it doesn't. But if that were the goal, we'd never talk about stimulus in the first place, we'd just let the market "run its course." To which I mean we'd let aggregate supply come *down* to aggregate demand instead of vice-versa. But the practical impact of that is a sustained economic contraction; lower wages, lower output, a lower threshold for full employment, etc. What we actually attempt to do is to bring aggregate demand back up, because in the long run that creates a larger, more robust economy.
And I don't think Megan would argue with that, so much as this post is just an MBA posing as an economist engaging in some good old fashioned anti-union agitprop.
"For instance, could your farm have spent a bit more money to buy a planter and a combine that were 10% faster than the ones you actually used, thereby reducing your need for seasonal labor by a corresponding amount? "
Well you can get *bigger* equipment which will cover more ground at a time, letting you do the work faster and, if you can acquire the land, farm more ground. But roughly speaking they all require one person to operate.
Requiring union labor will create MORE jobs.
Why? Because union work rules are a farce that gets people paid for 7 or 8 hours when they actually only 3 1/2 to 5 hours day.
A 4 man masonry crew laying up walls of common brick can in New York can start at 8AM, coffee break at 10, and meat their daily quota of work by 11:30 or 12. How do I know this? Because I worked on one of those crews. My father was the contractor.
Union carpenters, in NY, can be finished with their daily quota of sheetrock by about noon. How do I know this? Because I know union carpenters and contractors that hire them.
The same goes for plumbers, electricians, etc.
By the way, when things are tough and the union guys are laid off, they go out and compete with the licensed guys doing residential work. They undercut the licensed contractors because they have none of the licensed guys costs and try to get paid cash from the homeowner - while collecting unemployment insurance. Of course, when the union slobs do this, they manage to actually work a full 8 hours or more.
"Because a recession is fundamentally a deficit in aggregate demand perhaps?"
You keep using shallow, surface analysis that leads to simplistic answers. Why is there a "deficit of aggregate demand"? Have people suddenly stopped wanting things? No, there's plenty of demand in the sense that people would like more. So why have things slowed down? One possibility is that both businesses and individuals are worried about the future, and/or they've realized that they're too far into debt and need to pay down their credit cards (or stop relying on short term bank loans or commercial paper, or whatever).
If these are the main reasons why there is a "deficit of aggregate demand", then paying excessive wages to union members for a few months or years won't necessarily bring confidence back to the economy overall. If people are smart, they'll realize that they'll get stuck with the bill for all the waste, so they'll cut back even more.
You seem to have bought the rather bizarre Keynesian notion that it's a good idea to pay people to dig, and then fill, holes simply in order to stimulate aggregate demand. In practice, such a wasteful solution isn't first best, or even second or third best. By doing these projects efficiently, we can both stimulate demand and accomplish something in the process.
What we actually attempt to do is to bring aggregate demand back up, because in the long run that creates a larger, more robust economy.
Sure, that's the theory, but the step missing from your argument is where employing fewer people at above market clearing wages is better at increasing aggregate demand than employing more people at the market clearing wage. i.e., the same stimulus amount is more effective when used to pay union wages.
I'm not saying that your theory isn't true (although I suspect that it isn't). I am saying that you haven't attempted to show it.
"Sure, that's the theory, but the step missing from your argument is where employing fewer people at above market clearing wages is better at increasing aggregate demand than employing more people at the market clearing wage. i.e., the same stimulus amount is more effective when used to pay union wages.
I'm not saying that your theory isn't true (although I suspect that it isn't). I am saying that you haven't attempted to show it."
And I suppose in the short run it isn't. But in the long run what your model lacks is any sort of upward force on AD. It's basically what economic theory tells us the market would do on its own, avoiding which is the entire point of having a large fiscal stimulus.
Well you can get *bigger* equipment which will cover more ground at a time, letting you do the work faster and, if you can acquire the land, farm more ground. But roughly speaking they all require one person to operate.
Fine, so if I'm hiring a guy to drive the combine, and by buying a bigger combine he can finish the harvest in 9 days instead of 10, then I save a day's wages on him. The question is, is 1 day's wages bigger or smaller than the (additional) cost of buying the bigger combine? And of course, if I have a big farm, the difference might not be 1 extra day, but whether to hire 90 people instead of 100.
It seems to me to be self-evident that, even given the presumption that I will be cutting costs as much as possible no matter what, the more I have to pay for labor, the more likely it is that spending more on equipment will save me money.
IF there is a quality increase in the work of union over non-union construction labor, perhaps it's a result of education.
Most unions spend money training their members; particularly in the licensed trades.
SG: You're absolutely right. There is no reason to believe that hiring union workers at higher wages is more effective at increasing production than hiring workers at lower wages. As I argued above, if you pay higher wages, you're more likely attract workers who would otherwise be employed, which means a larger part of the production going into the stimulus project is being diverted from other productive activity.
As best I can tell, Brien's argument is that increasing wages counteracts deflation. It's not persuasive. Trying to stop deflation or inflation by directly targeting price levels is always a bad idea, without exception. It was a bad idea when Nixon did it and it was a bad idea when Roosevelt did it (that's a part of the New Deal virtually no one defends).
If you try to regulate prices to stop deflation or inflation, you can't help but distort relative prices, which leads to a dysfunctional market and misdirected investments. Even with zero interest rates and the threat of deflation, we're much better off allowing the market to determine prices and using monetary policy to generate inflation. Quantitative easing is dangerous, but it still beats direct manipulation of prices.
Brien,
For this discussion, I'm accepting arguendo the notion that a large stimulus can restore aggregate demand. I'm strongly questioning your notion that stimulus is better used employing fewer people at higher (union) wages than more people at lower wages.
The devil's in the details (How many more people get employed? What's the wage differential?), but also weighing in on the side of lower wages is you get to fund more projects (more demand for materials, etc) and you reduce demand on unemployment and other social services.
So leaving aside the validity of having any stimulus, why is paying union wages a more effective use of the stimulus funds than funding more projects/employing more people at a market-clearing wage?
Meh. If the EFCA doesn't go through, Big Labor will be done once we finally accept that GM and Chrysler aren't viable any more.
In general, I don't mind unions that force higher wages, it's the work rules that are so problematic. Germany, for instance, is highly unionized, but they're still able to produce a car in roughly half the man-hours that Detroit requires.
"Fine, so if I'm hiring a guy to drive the combine, and by buying a bigger combine he can finish the harvest in 9 days instead of 10, then I save a day's wages on him. The question is, is 1 day's wages bigger or smaller than the (additional) cost of buying the bigger combine? "
No, that's *part* of the consideration. Which is the flaw in your reasoning; you're only viewing the trade-off in costs, while ingorning increased benefits. The bigger combine (really a larger platform) allows me to cover more ground in the same space of time, which means I can *farm more ground,* assuming I can acquire it. So if I can do an additional, say, 300 acres, that's 300 acres yielding 200 bushels of corn at (we'll say) $3 a bushel. That's an extra $180,000 in revenue. Averaged out over the life-span of the new machine, that's a substantial increase in my returns.
There's also *quality* improvements in new technology. New combines have more sophisticated shelling mechanisms, which means less grain getting tossed out with the chaff. New planters have more sophisticated delivery mechanisms which, for a variety of reasons, mean new yields. This can also cut back on the amont of labor needed; new planters, for example, are looking into ways to make no-tilling corn more feasible, which would drastically reduce the need to till the ground before planting, cutting the work required to produce corn drastically.
All of which isn't to say you're wrong, per se, just that you're only considering a very small part of the trade off and ignoring most of the factors that could lead a firm to replace people with machines.
you're only considering a very small part of the trade off and ignoring most of the factors that could lead a firm to replace people with machines.
I'm not trying to build a complete theory of man v. machine. I'm trying to point out that when you claim that increasing wages won't reduce the number of people employed on a given project because there's a fixed number of people "required," you're wrong; the number is variable and depends at least in part on the going rate.
Which you now seem to have conceded anyway.
As foolish as this is economically, it's great news politically: Obama can no longer deny that he's as strongly owned by special interests as any other pol, and hopefully will have enough self-respect to stop claiming otherwise after this quid pro quo.
"I'm not trying to build a complete theory of man v. machine. I'm trying to point out that when you claim that increasing wages won't reduce the number of people employed on a given project because there's a fixed number of people "required," you're wrong"
Then you picked a very poor way to argue your point.
Then you picked a very poor way to argue your point.
I'll settle for being right. But if you would like to show me the proper way, go ahead.
"argued that firms don't seek to minimize operating costs as a rule?"
That's easy to do, just fire everybody.
Firms seek to increase their profits, using more productive labor and paying them more usually is the best way to go. Union labor is usually less productive, and especially less cost-effective than non-union.
What does this mean for the stimulus? Union labor is more expensive.
Would not all this stimulus spending on construction be covered by Davis-Bacon? In which case, you have to pay "prevailing" (=local union norm) wages anyway, so union vs non-union labor doesn't make a difference in terms of cost.
All you anti-unionists are ignoring the fact that is in a labor union's self-interest to have as much money going to the workers as possible (more wages = more dues, since dues are typically a percentage of gross pay), and thus they will negotiate a wage structure that maximizes the amount of money that goes to workers.
As it happens, the labor union's interests align with the interests of the nation as a whole (as they usually do), which is to, as Brien says, increase aggregate demand, which is best accomplished through increased wages. A unionization requirement, therefore, is a natural regulation for maximizing the stimulus effect of government spending. Only people with anti-union prejudices fail to see this.
Your analysis is dead on. I used to work for a contractor that did both prevailing wage and private work. On the prevailing wage jobs there was always a big effort to use as little labor as possible - for example have one giant bulldozer instead of two small ones. The higher wage means fewer jobs.
Only people with anti-union prejudices fail to see this.
Or people who read the damn thread and understand that higher wages means less hiring and fewer projects for the same price.
Really, where has anyone asserted that a union will not negotiate the highest wages it can for the workers? Who has assumed otherwise?
"Or people who read the damn thread and understand that higher wages means less hiring and fewer projects for the same price."
Or it means less profit for business owners, which I think is the real motive underlying all the anti-union arguments.
"Really, where has anyone asserted that a union will not negotiate the highest wages it can for the workers? Who has assumed otherwise?"
Not the highest wages for individual workers, but the highest total payments to workers. A union would never negotiate a wage so high that it becomes more economic for a business to replace labor costs with capital costs, because that would mean fewer dues for the union.
A union would never negotiate a wage so high that it becomes more economic for a business to replace labor costs with capital costs, because that would mean fewer dues for the union.
Well, the west coast longshoreman's union proved you wrong several years ago; they had to go on strike in an effort to prevent mechanization.
"Well, the west coast longshoreman's union proved you wrong several years ago; they had to go on strike in an effort to prevent mechanization."
That doesn't prove me wrong at all. Striking is one way to maximize payments to labor. Negotiating new wage structures is another. Different means, same end.
That doesn't prove me wrong at all. Striking is one way to maximize payments to labor. Negotiating new wage structures is another. Different means, same end.
It does, however, show that the longshoremen had negotiated wages that were, in your words, "so high that it [became] more economic for [the ports] to replace labor costs with capital costs." According to you, that's impossible, and yet it happened.
And it further shows that the behavior of the union can be directed to curbing productivity, which is precisely what the "anti-unionists" of this thread are objecting to.
Rob, I feel your pain, and admire your persistence. However, I think the urge to claw your eyes out in frustration will soon surpass your desire to make them understand. That would be unfortunate for those of us who appreciate your contributions.
Clay: I'm studying for the patent bar. This is roughly 6 orders of magnitude less aggravating (although less important to my continued employment).
Any worker on a project that is funded by federal or state money has to be paid prevailing wage. That means there is no difference between wages paid to a union laborer or a non-union laborer. If labor costs are the same and material costs are the same, how does that make a project more expensive if a union contractor is the low bidder?
"It does, however, show that the longshoremen had negotiated wages that were, in your words, "so high that it [became] more economic for [the ports] to replace labor costs with capital costs." According to you, that's impossible, and yet it happened."
They obviously weren't too high when the original contract was agreed to, though. That over time, after the original wages were agreed to, machinery became cheaper than labor to perform an equivalent amount of certain work does not refute that. So no, they didn't price labor higher than capital at the time the wages were negotiated.
"And it further shows that the behavior of the union can be directed to curbing productivity, which is precisely what the "anti-unionists" of this thread are objecting to."
Unions only act to "curb" productivity when its workers are exploited to gain that productivity. Any gain in productivity ought to be reflected in the money paid to labor. Workers, after all, are the backbone of any enterprise, and all the managers, executives, lawyers, etc. associated with the company are utterly dependent on them.
Joey,
The issue with the longshoreman v. the ports was whether or not the ports could move from a clipboard-and-paper method of tracking containers to a barcode-and-computer method. Obviously, the latter is quite a bit less labor-intensive and therefore also cheaper, though with a higher capital cost.
The ports offered to make the transition in such a way that no current workers would suffer a wage cut or lose their jobs. However, some jobs would disappear when the current incumbent retired or quit.
I am at a loss to see how these facts square with your notion of the interests of labor matching those of the country at large. The longshoremen's union could have either 1) taken a wage cut to keep themselves cheaper than computers (which you erroneously suggested they would naturally want to do, present sophistry to avoid that prediction notwithstanding), or 2) accepted a gradual reduction in their workforce through attrition (not layoffs) at the same wages (how exploitive of evil management to offer such a thing!). They did neither, preferring to strike in an effort to sustain the status quo at the expense of productivity. That is, they pushed for a transfer of wealth between people who buy imported goods to themselves. Or, to put it another way, the fought to exploit the rest of the country for their own benefit.
I fail to see why we should endorse similar approach to staffing "stimulus" projects.
As it happens, the labor union's interests align with the interests of the nation as a whole (as they usually do), which is to, as Brien says, increase aggregate demand, which is best accomplished through increased wages. A unionization requirement, therefore, is a natural regulation for maximizing the stimulus effect of government spending. Only people with anti-union prejudices fail to see this.
Maximizing expenditures does not necessarily maximize stimulus effect. Projects that divert otherwise productive resources do not increase total production so they are not effective stimulus. If the stimulus projects pay higher wages, they are more likely to attract workers who are already employed elsewhere.
Spending $100 billion on low-skilled workers who would otherwise be unemployed is more effective stimulus than spending $100 billion on workers who would otherwise have jobs in the private sector. You can't simply measure the effectiveness of stimulus by the dollar amount spent. It's not that simple.
Any worker on a project that is funded by federal or state money has to be paid prevailing wage. That means there is no difference between wages paid to a union laborer or a non-union laborer.
Davis-Bacon can be suspended by executive order in times of national emergency. If we're talking about preventing The Great Depression, Part II ("This time it's personal"), it seems like it would qualify.
But I'm hard-pressed to see this as anything other than a payoff to valued constituencies. Any stimulative effect is purely coincidental.
"I am at a loss to see how these facts square with your notion of the interests of labor matching those of the country at large."
The vast majority of the American workforce is part of the working class.
"The longshoremen's union could have either 1) taken a wage cut to keep themselves cheaper than computers (which you erroneously suggested they would naturally want to do, present sophistry to avoid that prediction notwithstanding), or 2) accepted a gradual reduction in their workforce through attrition (not layoffs) at the same wages (how exploitive of evil management to offer such a thing!). They did neither, preferring to strike in an effort to sustain the status quo at the expense of productivity. "
You're forgetting option 3: Raise the wages of the longshoremen so so that they, too, benefit from the increase in productivity. Increased productivity without increased compensation is exploitation.
"That is, they pushed for a transfer of wealth between people who buy imported goods to themselves. Or, to put it another way, the fought to exploit the rest of the country for their own benefit.
I fail to see why we should endorse similar approach to staffing "stimulus" projects."
Wrong. They wanted to keep more of the wealth created by their hard work, and not have less sucked out by the leeches at the top of the company.
"Maximizing expenditures does not necessarily maximize stimulus effect. Projects that divert otherwise productive resources do not increase total production so they are not effective stimulus. If the stimulus projects pay higher wages, they are more likely to attract workers who are already employed elsewhere."
So the jobs that they leave will be open to other people. Where, exactly, is the problem?
"Spending $100 billion on low-skilled workers who would otherwise be unemployed is more effective stimulus than spending $100 billion on workers who would otherwise have jobs in the private sector. You can't simply measure the effectiveness of stimulus by the dollar amount spent. It's not that simple."
Naturally. It matters a lot not just how much money is spent, but where it is spent. Working class spending will stimulate the economy much more than business profiteering, so any stimulus policy ought to be crafted with that in mind. This is why the unionization regulation is such a good idea. It will maximize the flow of wealth to the workers.
*not have more
Yeah, the suspension of Davis-Bacon worked real well in the rebuilding of New Orleans. Obviously.
What's amazing is that (1) Megan missed the big point that there is no competition on wages and bennies on public projects, and (2) it took 70 comments for that to be pointed out.
Finally, most large infrastructure projects are built union anyway, as it's rare that a contractor with the skills and ability to do the work and run the back office on a public job would be non-union. So once again, your ideology is trumping reality.
This is why the unionization regulation is such a good idea. It will maximize the flow of wealth to the workers.
But it won't maximize the number of workers. Which is more important? I tell you what, just give the $900 billion directly to me and I'll go fill some potholes. There will be no funds wasted on those capitalist leeches at the tops of companies - 100% of the stimulus funds will go to the working class.
Does my proposal fail? How does your proposal (overpay for labor and by necessity fund fewer projects) substantively differ?
You're forgetting option 3: Raise the wages of the longshoremen so so that they, too, benefit from the increase in productivity.
And you're quite intentionally ignoring option 4, which is that prices for transshipment of goods at the ports decline, to the benefit of everyone who buys imported goods (i.e. everyone).
Increased productivity without increased compensation is exploitation.
That is a rather more expansive definition than I have seen used before. What percentage of the increased productivity must be passed on to workers to avoid "exploitation"? It can't be 100%, because then productivity enhancements are pointless. So what's the threshold?
And do the customers of the ports get a look-in on the exploitation sweepstakes? Is not decreasing effort while charging the same price exploitation of those customers as well?
It will maximize the flow of wealth to the workers.
I would prefer to maximize the flow of wealth to the nation as a whole. That is, if we can build two non-union bridges for the price of one union bridge, why in heaven's name would we prefer the latter?
"And you're quite intentionally ignoring option 4, which is that prices for transshipment of goods at the ports decline, to the benefit of everyone who buys imported goods (i.e. everyone)."
So all the cost savings gained by capital investment are passed on to customers? Really?
"That is a rather more expansive definition than I have seen used before. What percentage of the increased productivity must be passed on to workers to avoid "exploitation"? It can't be 100%, because then productivity enhancements are pointless. So what's the threshold?"
It's certainly greater than 0%, which is what the management was offering!
"And do the customers of the ports get a look-in on the exploitation sweepstakes? Is not decreasing effort while charging the same price exploitation of those customers as well?"
Management sets the prices, not labor.
"I would prefer to maximize the flow of wealth to the nation as a whole. That is, if we can build two non-union bridges for the price of one union bridge, why in heaven's name would we prefer the latter?"
Because this is a ridiculous strawman argument. The business contracted to build any bridge would sooner pocket any excess funds than use it to build more bridges.
Arguing about union vs. non-union wages in the context of federal construction is a waste of time. It is irrelevant.
All of the construction spending in the stimulus package is subject to union wages and benefits via the federal prevailing wage laws established by the Davis-Bacon Act (DBA). The DBA is a minimum wage law that only applies to the construction industry. Unions have manipulated the DBA and related acts through the legislative and regulatory process to essentially guarantee that the prevailing wage is the union wage. Go to www.wdol.gov and look up some wage rates in your area. If you have any sense about construction wages in the free market, you will be shocked to see how much money per hour construction workers are paid on a federal project in your community.
Federal construction wages are generally higher than private free-market wages. That's because the laws of supply and demand don't apply to federal construction worker's wages.
PLAs increase costs between 10 percent and 20 percent when compared to non-PLA projects. PLAs increase costs not because of wages (remember, those are constant) but because of inefficient union work rules (again, labor costs but not labor costs tied to wages) required by union collective bargaining agreements contractors agree to when signing a PLA. (Think of an ironworker standing idly until a pipefitter completes a simple task that is out of the ironworker's union jurisdiction. It is a waste of labor productivity. Non-union workers are efficiently managed - they have completed task specific training and don't have these union work rule restrictions).
The other reason why costs go up with PLA projects is because they cut competition from non-union contractors.
In the private construction industry today, 84.6 percent of the U.S. private construction workforce and their employers (contractors and subcontractors) do not belong to a union. When you exclude eight out of 10 workers (and their corresponding employers), of course costs increase. Union contractors don't sharpen their estimating pencils.
PLAs are a recipe for waste.
Obama's executive order is payback to his union political patrons who invested a lot of resources in getting him into the White House. Unfortunately, this payback is at the expense of taxpayers and non-union workers and contractors.
www.abc.org/pla has some great information on this issue.
So all the cost savings gained by capital investment are passed on to customers? Really?
All? No. But clearly a goodly fraction in a competitive environment. That's why so many ordinary people can afford what were formerly high-end luxuries, like cars with power windows and monstrously large TVs.
The business contracted to build any bridge would sooner pocket any excess funds than use it to build more bridges.
My argument is not half so ridiculous as yours. If labor on the bridges are cheaper, the bids will be lower, and the government will find itself with enough money to do more than if labor were more expensive.
As long as there is competition--between multiple ports, or a proper bidding process--management can't simply suck up all savings and spend in on mansions in the Hamptons. Surely the pro-unionists among us favor some forms of cost savings--you could employ a hell of a lot of people if you made all of your cranes human-powered--so what's wrong with saving on labor, too?
Also, the idea that non-union contractors don't complete public construction contracts is a complete myth. This is just speculation, but I'm sure Engineering News Record has a list of top 100 contractors and I would estimate that about 60-75 of them are non-union contractors or double breasted shops and the rest are union.
If anything, union contractors need to suck from the teat of the federal government to get any work at all.
Once the Davis-Bacon prevailing wage rate sinks below the union collectively bargained wage rate, union contractors are at a massive disadvantage in labor costs (this is about wages now, not productivity). Non-union contractors can satisfy the federal prevailing wage while the unions are forced to pay their artificially high collectively bargained wage.
Unions must keep the Davis-Bacon wage rate at or above their union collective bargaining rate, or they have to make wage concessions. If they don't do this, they won't win contracts.
Unions make wage concessions all of the time. They have agreements that charge the construction owners different rates (collective bargaining rate on public projects and a lesser amount on private projects) depending on what type of project it is. This is the same work.
Finally, isn't one of the main selling points of the stimulus spending to fix our crumbling infrastructure and reshape our energy infrastructure?
If PLAs increase construction costs, I don't see how building four schools, hospitals, power plants or windmill farms for the price of five benefits anyone other than organized labor.
Also, check your facts when making assertions that organized labor represents the majority of working class Americans.
In 2008, union members accounted for 12.4 percent of employed wage and salary workers, up from 12.1 percent a year earlier. Most of the gains have been in public employee unions where productivity and cost are not a concern because taxpayers are footing the bill. See for yourself: http://www.bls.gov/news.release/union2.nr0.htm
"All? No. But clearly a goodly fraction in a competitive environment. That's why so many ordinary people can afford what were formerly high-end luxuries, like cars with power windows and monstrously large TVs."
So the question, then, is on how to distribute the money that isn't passed on to consumers. I say that most of it should go to the workers, who created that wealth through their labor.
"My argument is not half so ridiculous as yours. If labor on the bridges are cheaper, the bids will be lower, and the government will find itself with enough money to do more than if labor were more expensive."
Two things:
1)The same end can also be achieved if contractors cut their profit margins.
2)The primary purpose of the stimulus bill is not to build infrastructure (that is a secondary purpose). It is to stimulate the economy. Wage cuts run counter to that mission.
"As long as there is competition--between multiple ports, or a proper bidding process--management can't simply suck up all savings and spend in on mansions in the Hamptons. Surely the pro-unionists among us favor some forms of cost savings--you could employ a hell of a lot of people if you made all of your cranes human-powered--so what's wrong with saving on labor, too?"
I suppose there's nothing inherently wrong with labor cuts (provided that labor is not alone in this sacrifice), but labor cuts defeat the purpose of a stimulus bill.
1)The same end can also be achieved if contractors cut their profit margins.
Profit margins are typically much smaller than the price of labor; cutting them to zero makes a smaller difference than cutting wages some amount.
labor cuts defeat the purpose of a stimulus bill.
In that case, there's no reason we should bother building anything at all, is there? Why not just send checks to everyone, or to all union members, or to anyone who is unemployed, or whatever group you like?
"Profit margins are typically much smaller than the price of labor; cutting them to zero makes a smaller difference than cutting wages some amount."
Maybe, maybe not. In any case, though, I do not believe it ethical, particularly in these times, to cut the wages of labor without making similar cuts to profits.
"In that case, there's no reason we should bother building anything at all, is there? Why not just send checks to everyone, or to all union members, or to anyone who is unemployed, or whatever group you like?"
We should do that, too (through UI and food stamps primarily), but the US needs infrastructure upgrades, and an economic panic is the best time to undertake such projects. However, steps must be taken to ensure that those projects provide the greatest short-term stimulus, and unionization is a great way to do that.
"Lower wages won't mean more workers unless you think lower wages magically make management stupid to the point that they can't help but employ more people than they need."
Not an expert on government contracting, but are these contracts not to some degree awarded on a competitive basis? I know that in my line of business, the starting point for making a bid on a project is our expected costs. So if I can keep my costs down, I can afford to bid lower than I would otherwise and have a better shot at getting the job.
On the other hand, if all the bidders are forced into using high price, and inflexible union labor, won't all the bids probably be higher?
I have heard enough of President Obama's stump speeches to labor crowds and read enough union leadership statements to believe that this is what it appears - payback for union support, AKA patronage.
"So the question, then, is on how to distribute the money that isn't passed on to consumers. I say that most of it should go to the workers, who created that wealth through their labor."
How did labor "create" productivity gains, when they're just showing up like they always did, in many cases even using restrictive work rules to try to block any improvements? If you mean that labor, in their spare time, did research and came up with a better product that increased productivity, then of course they deserve to share in the wealth that they've created, but they'll get their return through their ownership of the new technology.
But what you seem to be arguing is that, by simply showing up, doing what they're told and collecting their paycheck, labor somehow creates all advancement in the world, even though it's others that actually put in the long hours, take the risks and do the research to improve productivity.
Some laborers (engineers) design a product, built by laborers (factory workers), that other laborers (longshoremen, or whoever) use to become more productive. Where does nonlabor fit into this equation?
"Where does nonlabor fit into this equation?"
You're absolutely right! The entrepreneurs that came up with the idea and perfected it, the managers that organized everyone, and even the venture capitalists or angel investors that had to vet the idea and decide whether or not to put money into it are all laborers, doing valuable work that creates wealth. I'm impressed that you recognized this.
Of course the laborers that worked out the idea and implemented it generally create far more wealth than the union guys that just show up and do the basics, but they're all working, and they should all get paid something that reflects their marginal contributions.
Dave-
You are exactly right. PLAs are nothing but political patronage to unions. Democrats predominantly advance them at the local, state and federal levels and it is no coincidence that unions are the biggest political contributors to Democrats.
It is a ridiculous feedback loop and parastitic relationship that will hold honest government hostage for the forseeable future. Democrat public officials approve the use of PLAs on public works projects. PLAs ensure that mostly union workers get jobs. Unions deduct portions of union members' hourly wages, which line the coffers of union political funds. These union political funds are used to make campaign contributions and ground support to get more Democrats elected. Democrats grow the government and toss more contracts to the unions. Rinse and repeat.
I don't want this to devolve into a political discussion, but Obama's rhetoric that the White House is closed to special interests and lobbyists is a complete sham. Unions are going to sit on every economic taskforce and drive the economic agenda of our country. They are going to make our economy even worse in today's globalized economy. Look what they did to Detroit.
Organized labor runs the Democratic party. I would say that their level of influence is even greater than Big Business' pull on Republicans.
Joey, in the case of the port operators, they offered to pay workers to sit around doing nothing until they retired. That seems like a pretty awesome wage raise--go home and collect a paycheck. The union said no.
If what you mean is that there are supposed to, always and forever, be guys physically running the port operation with paper and pencil, getting ever-higher wages for this task, then no, they're not entitled to share in the increased productivity. These guys weren't going to increase their productivity; they were going to be made obsolete. That's sad, but it's also how progress is made--if we didn't allow it to happen, we'd each have two or three changes of clothes, all from hideously expensive cloth produced by cottage weavers. The port operators were offering them as decent treatment as they could get, consistent with allowing economic progress: making sure that the workers who had already committed to being longshoremen didn't get stranded on the job market in late life with no marketable skills.
I have worked for both Union and Non Union contractors for over 20 years and can state from experience that in a normal bid environment that a non-union contractor has an advantage over a union contactor.
As stated earlier Davis Bacon Wage rates are usually set at whatever rates are contained in the current contract for any particular trade. The rates are made up of two components, wages and benefits. The value of the benefits is equal to the sum of all of the different benefits that are provided under the union contract (pension, annuity, medical benefits, vacation, etc).
A non-union contractor has to provide his employees with a compensation package that has the same value as the union package. If the prevailing wage is $10/hr with benefits valued at $5/hr the non-union contractor has to pay out the $10/hr, assign a value to the benefits package that they provide and make up the difference as a cash payment to the employee. If the benefits provided by the non union contractor are worth $3/hr then the employee would be paid $12/hr.
Assuming that both union and non union have the same labor productivity and require the same number of man-hours to complete the work the non union contractor can gain an advantage in a couple of different ways.
1. Changing employee classifications – call an employee an apprentice but have him perform journeyman work
2. Classify employees as subcontractors allowing them to paid on a lump sum basis, bypassing the wage and benefit requirements
3. Creative accounting – by overstating the value of their benefits package a non-union contractor can reduce their overall hourly cost
4. Payment of the benefits differential into a 401k type of program, this is pretax and saves the contractor their portion of the FICA tax. The employees usually have no choice in the matter.
The union contractors because of their contracts can do none of the above. In some cases as we our prepared bids we would attempt to quantify the value of the advantage and reduce our labor hours (hoping that we could be more productive), or reduce our profit. I have lost many a bid to non-union contractors who employed some mix of the techniques I described above.
In a lot of cases the prevailing wages benefits the non-union worker more so than the union worker. My brother-in-law sees his hourly wage go from $24/Hr to over $40/hr, albeit some of deferred until he retires.
For the record I am not a proponent of unions or prevailing wages
You know, using slave labor is even cheaper than non-union labor. Why don't we use slaves instead? We could put a lot of people to "work" then.
Vitorjose-
That is a very fair and honest analysis and is something to consider for sure. Thanks for sharing.
Obviously there are compelling arguments on both sides of this issue.
The key would be to come up with an equitable way to create fairness and open competition on public construction contracts.
I think we can all agree that the Obama Executive Order does not satisfy that need.
The cost of "labor" on these projects is the SAME! Because of the prevailing wage law, Davis/Bacon, the wage is set before the project begins. The only thing that rises is the quality of construction. This executive order goes a long way to insure that the public will get their money's worth from these projects.
The only that would have been better would have been if the threshold was lowered to $100,000 or less!
Anyone who is delusional enough to believe that union work is higher quality than non-union needs to spend some time actually working with and within the confines of a unionized shop.
At my former employer, where I was the HR Manager for a Distribution complex employing both warehousemen and truck drivers, Teamster union employees had accidents, took post accident drug tests, and failed. They were sent to treatment, released and put back to work. Even after failing not one, or two, or even THREE positive drug tests for driving a big rig under the influence of HEROIN could the company terminate the driver. After the fourth positive test, and after another shady Teamster arbitrator ordered us to put this slime back onto to road (at this point he had killed a motorcyclist and had injured a family of four) I had seen enough.
I have more horrific stories just like it -- like the warehouseman who had been previously caught smoking marijuana during his lunch hour, suspended, put back to work by the Teamsters, and a month later put a 22 year old kid into a coma and vegetative state by not following safety rules and slammed his forklift forks into the head and spine of the unsuspecting employee .....of course the post accident test was positive for drugs; do you think we could terminate him? Heck no. The Teamsters fought hard to put him back to work!!
The fact is, the unions are in place to insure the continued employment of irresponsible and ignorant employees. They do not care one whit about quality, safety, or ethical business practices. The union members who do not display such reprehensible work habits detest the union and hate having to back up the worthless slugs but because they are "union brothers" they are forced to do so.
Shame on the sheep who voted this "obamanable" politician into office. Those of us still working will end up paying for this appalling debacle for the rest of our lives.
To "one who knows"?
And what's your point? Do you think for a moments that the same problems don't exist in "merit" shops?
The difference in construction, between union shops and open shops, is the training. It is not disputed that the joint (union) apprenticeships have the best training in the industry. If you’re paying the same hourly wages doesn’t it make sense to get the best value? Or would you rather eat at the local McDonalds and pay Ruth Criste’s prices.
Oh, and by the way: In my union we established a comprehensive drug testing program more than a decade ago. Guess where our positive tests that don’t want to rehabilitate go? You’re right, the merit shops!!!