Big Win for Big Labor?



Gary B. Smith: I'm going to try to take my opinions out of this and I just went to some sources. The first one, ‘Cause of long-term unemployment is unionization. High union wages that exceed the competitive market rate are likely to cause job losses in the unionized sector of the economy.' Do you know who said that? Lawrence Summers, who used to be an advisor to President Obama. Do you know what the Federal Reserve said? It said ‘Unionization has about the same effect on investment as a 30 percent point increase in the corporate tax.' There's a 2010 study out. ‘Unionized firms have profits that are 10-20 percent less than non-unionized firms and in a study of 510 firms, the growth of unionized firms was zero.' I'm not sure how much more of a message these studies say about unionization. It would be flat out horrible for employment and for the economy.

Tobin Smith: I'll use Walmart as an example in the 1990s. As they were facing unionization they did two things. First, they slowed down building places and stores in the United States. Number two, they sped up non-union, outside the United States-in China, in Mexico and in Canada. So, we found historically-Walmart or 20 other corporations-when they're faced with a "more rapid way to get to unionization," they have a more rapid way to get the heck out of dodge and build their businesses outside.

Jonas Max Ferris: We've been in a multi decade slide in unionization rates in this country to practically single digits, where we're heading in a few years. No change the NLRB could do, moving a vote earlier, is going to change that or really hamper business in America. Frankly, the whole notion of having a union vote earlier is actually a move to a free market. In a free market, couldn't people have a vote on whether they want to be in a union? They wouldn't have to wait 60 days or 90 days. So, I don't see how this is such a big deal or so ridiculous, nor do I think it's going to have much of an effect. As far as the current economy, a lot of the areas where there's hiring going on aren't unionized anyway. A lot of those industries have low growth rate anyway without unions. It has nothing to do with the unions. So, I don't see how it's going to have a lot of impact.

Gary Kaltbaum: There's nothing I like about these union heads. There's nothing I like about the fact that they overtake businesses. Costs go up; everything wrong happens. But, in this case I don't think it's the biggest of deals. I'd rather not see it. I'd rather elections take a little bit more time, so employees could get an idea of what the costs would be to unionize. I think we have many more problems with Obamacare, $15 trillion in debt. If you want to know what's going to hamper the jobs, that's what's going to do the trick.

Susan Ochs: The goals of these rules are only effective when cases wind up in a hearing in front of the NLRB and that's 10 percent of the cases. So, this is not some big, broad, sweeping mandate that the NLRB is giving unions. If you look at the NLRB rules, they are incredible byzantine; there are a lot of hoops to jump through and they're bad for employers and employees. They're trying to streamline. They're trying to reduce the amount of uncertainty and waiting time; reduce the amount of litigation-things get held up in litigation for years. So, this is about streamlining, cost cutting, getting things moving more quickly, and reducing uncertainty, which should be things that job producers actually like.


Gary B. Smith: Fortunately, or unfortunately, we live in a 24/7 society. This was another union play to get management to not send the emails out. You know why? They wanted to prevent worker burn out. If there are unionized employees at Volkswagen, I'm betting most of them are factory workers. I've worked in a unionized factory. The last thing I had was burn out. I was bored. I was maybe physically tired at the end of the day, but I was not burned out. What are they getting, one or maybe two emails after hours? This is the most ludicrous thing I've heard in a while. But of course, this is what the union wants, so Volkswagen had to bow to it.

Tobin Smith: This is America. We're not Europe. We don't work like Europeans. If you want to work like Europeans, move to Europe. We're in a world now where 60 percent of revenues from the S&P 500 come from offshore. I have clients all over the world. We work hard. We get phone calls. We need to respond. This is what drives America. This is why we have more productivity.

Jonas Max Ferris: I think this is a great policy for a few reasons. Once again, the Europeans are leading us in the ‘easy go, high vacation, low work' schedule. If you don't own a company, you're not an executive, you don't have a huge stake in it and you're just staff, I just don't see why you have to let work drift over into your entire 24 hour cycle and into your weekends just because these phones let you do that essentially. I don't think you're responsible to work 7, 8 or 9 PM at night at most jobs in the world. Also, I don't think it helps your productivity to not do those jobs in a certain amount of time. You're working all the time, you get down on the job, you're going to work less hard at work. I think it's a good policy and an employee can't do it by himself. He needs the whole company to have this policy and instigate it so you can't work off hours.

Gary Kaltbaum: I think if a company wants to do this, fine. But, if you look at Volkswagen there are many higher staff that are not part of this. They're going to have to answer the phone at 3 AM as they say. So, I'm okay on a case by case basis. But overall, you're working for a company, you care about the company and the company needs you on off hours, you keep that phone on to make sure they can get a hold of you at any time.

Susan Ochs: I think this is a great idea. The quibble I have with how they're implementing it is that it's really only affecting less than 1 percent of Volkswagen's workers in Germany. If you really want to have a culture change that people aren't tied to their BlackBerries and chained to the desk 24/7 then it has to come from the top. So, I'd rather see people further up the chain really making a commitment to not taxing people 24/7. If you look at a lot of the economic studies that are out right now, burn out is real and it actually winds up reducing productivity.


Gary B. Smith: The only way to ensure the long term longevity of a government agency is not to do good work, but to grow your power base and grow your resources. You know that's a fact and you know that's the only way in D.C. to succeed. Studies have shown, not just with the EPA, but with all government agencies the larger they grow, the worse it is for the economy. Just from the EPA alone, a study was done on them having authority to curb power emissions. Do you know what the study found? That unemployment would rise in fact and electricity costs would rise about 12 percent over the next ten years. These government agencies want to grow because that's the only thing they can do and that's the only reason have cause to exist in the future. It's just ludicrous.

Tobin Smith: If you look at the statement from the EPA, they acknowledge that this will be a job killing act, but they have other reasons they think we're going to benefit from it. The fact is, in every region of the United States where we've had growing EPA regulations, we've had declining jobs. For them to argue it any other way doesn't make sense. Even if they were right on everything, why on earth would you do it now when we have a 2 percent growing economy? If this was really right, you would pick the time to do it when we could absorb this lack of growth.

Jonas Max Ferris: The job of the EPA is not to help the economy. In fact, most of the things they do are going to be a drag on the industries they do it to. The most obvious thing is the mercury regulations, which they're finally going to do after about 21 years of being told to do it, but being not allowed to do it by government. This is why it isn't always bad for jobs even though it can be a drag for the utility industry and can lead to higher power; there's no question that residential power might go up 3, 4 or 5 percent. But, they have to put new plants in. They have to install new scrubbers. One power company came out and said they had to hire about 1,800 people for one plant. So, it will create jobs. It's not great for the utility industry or power bills, but it lowers mercury levels in people.

Gary Kaltbaum: This is a matter of continual over reaching by the EPA. They're going after the boilers; they're going after the utilities. The EPA themselves have already come out and said this is going to cost a minimum of $10 billion to companies, which will be passed onto the consumer. If the EPA says it's $10 billion you might as well times it by 5. They're getting to this word ‘anticipatory' with their rules instead of dealing with the situation at hand.

Susan Ochs: I don't think this is a power play. If you look at the study they conducted it's about how do we think about implementing a sustainability agenda at the EPA. A lot of companies have really benefited. If you look at Walmart, if you look at other people they have reduced their operating costs by embracing sustainability. Things that were once a green nuisance are all of a sudden a good business strategy for them. So rethinking about how we're doing our environmental regulations and taking a broader swat at that could be really interesting for business if they engage in the conversation the right way.


Gary B. Smith: EBAY up 30 percent in 2012

Tobin Smith: Nike up 25 percent by 2013

Jonas Max Ferris: Vanguard Financials 25 percent gain in one year

Gary Kaltbaum: Walmart up 25 percent in one year