Balancing the Pain on Loans to the Auto Industry

The debate surrounding the auto loan is running hot and heavy and it may be hard to know who or what is right. I am not going to use the term “bail out” because I believe it is an emotional term that inflames the debate and tends to come from those totally opposed to providing funds to the auto industry.

Generally, I believe the best solution is the one that people on either end of the ideological spectrum find distasteful. With the current plan for loans to the auto industry, we may be at the right spot. Why, because no one seems to like it! The UAW is opposed, http://money.cnn.com/news/newsfeeds/articles/djf500/200812191552DOWJONESDJONLINE000977_FORTUNE5.htm
http://www.latimes.com/news/opinion/commentary/la-oe-raynor18-2008dec18,0,4066838.story

the stockholders are opposed, the free market people think it goes too far http://www.politico.com/news/stories/1208/16753.html

and the socialists don’t think it goes far enough

http://the-reaction.blogspot.com/2008/12/bailouts-and-corporate-form.html

I tend to be a free market type of person but we must realize we are not currently in a free market system. The government is very involved in regulating and controlling our economy. When I was in the Army, there were arguments about the relative rank of First and Second Lieutenants. It was disruptive and served no useful purpose. Our commanding officer said “Arguing about rank between Lieutenants is like arguing about virtue among whores.” That is probably about where we are when we argue about free market economics and a government controlled economy. We should keep fighting against the erosion of a free market economic system while realizing it has been eroded and more erosion is likely to occur.

Given that caveat, I would say there is one gaping hole in the current plan for loans to the auto industry and that is how the non-union employees will participate in the pain. The government has decided the union will be forced to renegotiate its terms and conditions to come in line with non-union companies; they will take stock instead of cash payments to their retirement funds and they will give up their severance pay (job bank program). Management will give up their “golden parachutes” and there is some rumor their pay and bonuses will be controlled. Creditors and investors will see their bills paid with 2/3 company stock and 1/3 cash. I still haven’t heard about the pain to be shared with the non-union supervisors, engineers, accountants, clerks, etc.

If the government is going to essentially force work practices on the union why not force some things on the non-union workforce. For example:

The ratio of administrative / management staff to production workers in the Big 3 should be the same as that found in the comparable non-union, foreign owned car industries.


The pay for the administrative / management employees in the Big 3 should be comparable to that of those in the comparable non-union, foreign owned car industries.


Generally there should be 5 to 6 levels of supervision / management between the floor worker and the CEO. Each level’s pay should be 20% greater than the pay of the people they supervise / manage. For example, if we strip off the benefits costs, the retiree costs, etc. from the basic auto worker wage we get to a base wage of about $29 / hour or $60,320 a year. http://www.reuters.com/article/idUSTRE4BB6VB20081212?virtualBrandChannel=10276
Following the above levels of management thesis, first level supervisors would be paid $72,500 a year, second level supervisors $87,000 a year, department heads $105,000 a year, division heads $126,000 a year, vice presidents $151,000 a year, executive vice presidents $181,200 a year and the CEO $217,500 a year. Pay for specialists should fit into this pay schedule based on their experience and contribution but would generally be somewhere between the pay of a first level supervisor and a department head.

It is obvious most people will disagree with this kind of pay structure because it seems ridiculously low when compared to the compensation packages generally paid to executives. However, that is one of our problems. We have let management / executive pay escalate far beyond that of the first level employees thus creating the huge gaps in income and the acknowledged vanishing middle class. It has resulted in the growing class warfare and irrational decision making and a probable outcome is the failure of our economic system and government.

The benefits package for the administrative / management employees in the Big 3 should be comparable to that of those in the comparable non-union, foreign owned car industries.

If the government is going to intervene and specify the comparative level of compensation and work practices for the union employees, then they should do the same for non-union employees. A better solution is to do neither, provide no taxpayer money and let the companies manage themselves to either get competitive or go out of business.

The Employee Free Choice Act is Unconstitutional

Many of you read the Wall Street Journal so you may have already seen this article. If you have not and you are interested in the Employee Free Choice Act, then check out the column.

http://online.wsj.com/article/SB122964977342320545.html

More on the Employee Free Choice Act

Here is a letter sent by the US Chamber of Commerce to members of Congress about the Employee Free Choice Act. It is succinct, on-point and accurate and can be used to explain the bill to your friends and enemies.



Be aware that it is highly unlikely this Act will be presented as a stand alone bill. It is very likely the Act will be tied to another bill; i.e. the announced Obama economic stimulus plan, making it difficult to vote for economic recovery without voting for the EFCA. That strategy has to appeal to the Democrats as it gives them a way for early payback to the unions for their support during the election and once again making the Republicans look like the bad guys if they vote against an economic stimulus package.






CHAMBER OF COMMERCEOF THE UNITED STATES OF AMERICA
R. BRUCE JOSTEN
EXECUTIVE VICE PRESIDENT
GOVERNMENT AFFAIRS
1615 H STREET, N.W.
WASHINGTON, D.C. 20062-2000
202/463-5310



November 21, 2008






TO THE MEMBERS OF THE UNITED STATES CONGRESS:


The U.S. Chamber of Commerce, the world’s largest business federation representing more than three million businesses and organizations of every size, sector and region, strongly opposes H.R. 800/S. 1041, the “Employee Free Choice Act,” which is expected to be reintroduced and considered in the early part of the 111th Congress. The Chamber urges you to oppose this legislation, and not cosponsor this legislation.


The Chamber believes this bill would undermine long standing principles of workplace democracy and fairness and result in employees having less ability to determine if they wish to be represented by a union. The Employee Free Choice Act (EFCA) is being promoted by organized labor as labor law reform to level the playing field and allow employees to more easily form unions. This bill does not represent “reform” in any sense of the word. Rather, the legislation will radically restructure 60 years of carefully crafted labor law balances that have served both unions and employers well for many decades.



The bill consists of three provisions, each of which is unacceptable:

• Elimination of Secret Ballot: This legislation mandates that a union be recognized if a majority of employees in a designated bargaining unit sign authorization cards. This is the provision from which the nickname for the bill, “card check,” comes. If this provision is enacted, the current system where a federally supervised election process with secret ballots determines whether employees will have a union in their workplace would be effectively eliminated. The secret ballot ensures that neither the employer nor the union knows how someone votes. If the bill becomes law, no union would take their chance on an election when getting a few more signatures would guarantee them victory. In contrast to the secret ballot, the card check process would expose employees to a “free for all” environment where any tactic for getting a signature could be used. It has been well established through court cases, precedent under the National Labor Relations Act, and testimony on Capitol Hill of former union organizers that the card check process of obtaining signatures is routinely characterized by harassment, intimidation, and coercion, including employees being threatened in their homes and other locations away from the workplace.



• Writing contracts through government imposed arbitration: The second provision would result in contracts being written by federal arbitrators instead of the process of collective bargaining and negotiating. Currently, after a union has been recognized, the parties bargain to a first contract where there are protections to make sure both sides negotiate in good faith. Under EFCA, if a first contract is not agreed to within 120 days (which is an extremely short time period for these negotiations) the matter would have to be submitted to binding interest arbitration and a contract developed by a panel with likely no understanding of the business, or the competitive forces it faces, would be imposed on the company for two years. This contract would cover precise details of how that business would operate for the duration of the contract such as the wages, benefits, ability to use employees most productively, and how many employees would be used for specific tasks. This process would virtually always result in a contract that is beyond what the employer is prepared to accept and provides a strong incentive for the union to undermine the collective bargaining process to ensure that the process lasts long enough to end in binding arbitration. Finally, this provision would result in employees losing a second vote since they would have no opportunity to ratify the contract as they currently have in most cases. In a recent poll of registered voters conducted by the Chamber, 75 percent of the respondents preferred a system that encourages good faith negotiations, while only 16 percent preferred a system where government arbitrators write the contract. While the card check provision has received most of the attention in the media, this provision is regarded as equally offensive to employers.
  



• Unreasonable and one-sided penalty expansion: Finally, the Employee Free Choice Act imposes dramatic new penalties on employers for violations of the National Labor Relations Act, but not a single new penalty on unions or labor organizers. Under one provision of the new penalty structure, employers would be vulnerable to an injunction reinstating a dismissed employee if that employee, or the union seeking to represent him or her, merely alleges that the dismissal was because of union activity. Such a low threshold makes a mockery of traditional labor law due process. The Chamber believes that the Employee Free Choice Act would have a particularly devastating impact on small employers who, as the primary source for new jobs, would be counted on to reverse the current economic downturn. You may hear that the EFCA should be considered in the context of helping to revive the economy. This bill is an awful idea in good economic times and a catastrophic idea in the difficult economic times now upon us. For more information, analyses, and polling data, please go to
  http://www.uschamber.com/issues/index/labor/cardchecksecrbal.

Sincerely,
R. Bruce Josten

How People Vote

We have just completed what some people say is the most important presidential election in the country's hisory. The campaign process was almost two years long with extensive press coverage. One would think that given the importance and the media coverage the electorate would have been well informed. As usual what one thinks and reality are all to often two different things.

Watch the video on this site and then ask youself:

1. Are the American people simply unable to cast informed ballots?
2. Did our media fail us?
3. How did people decide who to vote for?

http://www.howobamagotelected.com/

Employee Free Choice Act

The Employee Free Choice Act is an important piece of legislation having far reaching impact on our economy coming before Congress. So much information is available about the bill and virtually all of it is biased from the perspective of either the employer or the labor organizations, that it makes something pretty simple appear to be very complex. This post will attempt to serve as a gatekeeper to lead you to information about the bill. I have made a decision but it is up to you to study the information and make your own decision on the merits of the EFCA. I would have to agree that there is little in life that is absolutely black and white and two rationale people can look at the same facts and draw different conclusions.

Where can I read the actual language of the bill?

1. http://thomas.loc.gov/cgi-bin/query/z?c110:H.R.800:

Can you give a synopsis of the bill?
Those generally opposed to the bill, for example The Heritage Organization say:

1. It requires the National Labor Relations Board to certify a union after a majority of the employees in a recognized group having common interests (a bargaining unit) has signed union authorization cards. This provision will effectively put an end to almost all organizing elections.
2. It requires companies and newly certified unions to enter binding arbitration if they cannot reach agreement on an initial contract. Neither companies nor employees could appeal the arbitrator's ruling, and the contract would last for two years.
3. It dramatically increases the penalties for unfair labor practices committed by employers, but not unions, during an organiz­ing drive

Those supporting the bill, for example the AFL - CIO say:

It would restore worker's freedom to choose a union by:

1. Establshing stronger penalties for violation of employee rights when workers seek to form a union and during first contract negotiations
2. Providing mediation and arbitration for first contract disputes
3. Allowing employees to form unions by signing cards authorizing union representation

Where can I learn more about the bill?

Congresspedia http://www.sourcewatch.org/index.php?title=Employee_Free_Choice_Act

What potential impacts does the bill have on our economy?

1. Institute for America's Future http://www.ourfuture.org/files/z_historic/EFCA/UnitedStatesofAmerica.pdf
2. Agenda for Shared Prosperity http://www.sharedprosperity.org/bp181.html
3. Kilpatrick and Stockton LLP http://efcaupdate.squarespace.com/

Why are people for the bill?

1. The AFL - CIO http://www.aflcio.org/joinaunion/voiceatwork/efca/
2. American Rights at Work http://www.americanrightsatwork.org/employee-free-choice-act/home-102/

Why are people against the bill?

1. The Heritage Foundation http://www.heritage.org/research/Labor/bg2027.cfm
2. Union Facts.com http://www.unionfacts.com/articles/cardCheck.cfm
3. National Right to Work http://www.nrtw.org/rtws.htm

Mike's thinking:

We should encourage our elected representives to oppose the EFCA and we should have a bias ( I say a bias because I don't believe in single issue voting) to oppose the election of supporters of the EFCA for the following reasons.

1. It will represent a major step backwards in labor relations. Labor and management now play on a balanced field that both parties understand. Labor unions are no longer able to organize because they made a strategic decision to move from obtaining improved working conditions through collective action to legislative action. Unions and politicans got in bed with one another for money. Unions had the money collected from members' dues and wanted to exchange it for power. Politicans wanted the money to maintain their positions; therefore, legislation like the Fair Labor Standards Act, Occupational Safety and Health Act, Employment Retirement Income Security Act, Family Medical Leave Act, Equal Employment Act, etc. The result is that labor has obtained 'benefits' that previously could only be gained from collective action. Now employees have all the benefits of union representation except they don't pay union dues. Unions can't organize workers because they have very little to offer. And the resulting cost is that all of us pay union dues in the form of taxes.
2. One of the most likely outcomes of passage of the EFCA will be increased labor strife and violence as people are intimidated into signing union authorization cards. It is easy to find multiple references to union violence and intimidation during card signing campaigns and representation elections. http://www.unionfacts.com/articles/laborPractices.cfm
3. In my opinion, there is no way to reconcile taking away the basic American principles of secret ballot elections and majority rule to select our representatives with the provisions of the EFCA.
4. Introducing the government into the determination of labor contracts through mediation and arbitration is in direct violation of a fair market system.

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