Delaware’s Wage Growth is the Lowest, so Let’s Pass a Right to Work for Less Bill
The Economist was out with an article last week that showed that while wage growth has been horrible nationwide across the country since the Great Recession, one state had fared particularly badly: Delaware.
From 2009 to 2014, [Delaware] was the only state in which hourly and weekly earnings dropped in cash terms (see chart).
At first glance, this is puzzling. Unemployment in Delaware, at 4.8%, is well below the national average; many would expect such a tight labour market to result in rising wages. Moreover, the state is famously kind to business. Thanks to benign company laws and low taxes, there are more businesses registered in Delaware than there are people. More than 50% of all publicly traded firms in America have chosen the state as their legal home. Last year roughly 170,000 business entities formed there, a new record. A quarter of Delawareans work in finance or business services, a higher proportion than in any other state. Such vocations typically pay well.
But dig deeper, and problems appear. In recent years Delaware’s business-services industry has not looked so hot. In company litigation, its courts have lost out to rivals, particularly federal ones. Excessive litigation encourages companies to move. And Wilmington, the largest city in the state, is losing its appeal as a place to do business because of its high crime rate. Downtown is eerily quiet, even on business days. At the heavily policed railway station, a helpful video shows what to do if an armed madman launches an attack.
All this has taken a toll. The number of full-blown public and private corporations registered in Delaware is 11% lower than it was in 2000. (The number of smaller outfits has shot up, but these generate less juicy work.) Small wonder, then, that over the same period employment in Delaware’s professional and business-services sector has dropped by a tenth. Wages in that industry have fallen for the past few years. They have also tumbled in the financial sector, which has struggled recently with low profits. Delaware’s moneymen are earning 25% less per hour than they did before the financial crisis.
Add in the fact that Delaware has become a retirement haven due to its low low low taxes, with the state’s population over 65 growing by 7% between 2010 and 2013, and forecast to become one of the fastest-ageing states in the next few decades; and add in the fact that the low wage sector, also known as the leisure and hospitality section has also grown by 7% over the same time period, and you have a good recipe for lowering wages. So where did the Economist go for the ANSWER to this problem. Why of course, they went to John Stapleford of the Caesar Rodney Institute. LOLZ. Stapleford’s answer: End Unions and pass a Right to Work for Less law.
Cue Senator Lavelle, who last week introduced SB 54, the Right to Work for Less bill that would make it harder for unions to organize and would lower wages for all workers, so as to attract manufacturing business back to the state, because for some reason manufacturers cannot pay a living wage to its workers and protect their rights and safety, and still make a profit, all evidence to the contrary ignored.
Needless to say, the legislation is not winning much support beyond the anti-worker and anti-middle class Republican Party.
Sam Lathem, president of the Delaware AFL-CIO, the umbrella organization representing Delaware unions, called Lavelle’s legislation a “desperate reach” that would lead to lower wages. “We need to find a way to re-create and grow the middle class. Right-to-work isn’t going to do that,” Lathem said. […]
Markell, a Democrat, appears poised to oppose the legislation. A spokeswoman said available studies on whether right-to-work legislation creates jobs are “inconclusive at best.”
“Gov. Markell remains focused on efforts that employers tell him are most important for job and economic growth, such as providing training for a skilled workforce and spurring innovation,” spokeswoman Kelly Bachman said.
You want to know why Democrats and liberals do not trust Governor Markell when it comes to economics and worker’s rights? It’s that answer right there. The hedging. But I digress.
You know what will raise wages right away? Pass Senator Marshall’s Minimum Wage Increase Bill (SB 39) that would raise the minimum wage by 50 cents a year over the next four years until it is $10.25, and after that tie it to COLA thereafter.
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The overall state of Delaware’s economy sometimes strikes me as similar to the situation with our casinos. Think about it. For a long time our casinos raked in money based on the absence of meaningful competition, and our government came to rely on those millions to keep taxes low. Now that there is competition, the casinos expect the government to bail them out.
Delaware’s dependence on the financial sector for its economy was always–like any other major industrial dependence–going to be a time-limited affair before competition and the changing nature of the game began reducing revenues from that source. The State government bet heavily (and continues to bet heavily) on major corporations as job and revenue providers, despite growing evidence of diminishing returns. Retirees move in because our taxes are low and Wilmington crumbles.
It’s getting to be time to face the facts: Delaware–in its casino, financial, and corporate “industries”–has reached the painful point at which rebuilding toward any entirely new strategy has to take place.
On second thought, maybe the current Phillies would be a better metaphor for our state. Reuben Amaro=Jack Markell, Ryan Howard=Bloom, and Fisker is all the pitchers who were supposed to bring us seasons of victory but almost all of whom soon thereafter disappeared …
4 of the 5 top quality of life states do not have right-to-be-poor laws. The bottom 5 in quality of life are right to work states, and most of the bottom 20 states are right to be poor states:
http://www.politico.com/magazine/story/2014/01/states-of-our-union-are-not-all-strong-102547.html#.VSVjWfnF9xy
The problem with such laws extends beyond the people whose unions will suffer. Economic analysis shows that ALL salaries in RTW states are affected.
Sample quote from a 2012 WaPo article: “One careful study conducted by Hofstra’s Lonnie Stevans in 2007 found that right-to-work laws do help boost the number of businesses in a state — but the gains mostly went to owners, while average wages went down.”
So the rationale offered by the DelGOP for pushing this bill is false on its face.
The article contains a link to the cited study:
http://www.washingtonpost.com/blogs/wonkblog/wp/2012/12/10/how-right-to-work-laws-could-reshape-michigans-economy/
Unions are the free market. Negotiating wages for your employees can be done on an individual or group basis. Only problem I have is the government forcing a company into a binding contract when 6/10 people decide to unionize. The other 4 should still be free to do what they want as they see fit. I took a job down the port to get more experience with manufacturing and labor, and to see first hand what it’s like to live with that type of career. Been a great experience so far.
People who get to vote themselves raises and accommodating work rules need to STFU on the rights of other folks to negotiate wages and work rules.
“The other 4 should still be free to do what they want as they see fit.”
In other words, the other 4 should benefit from the union dues of the 6. I can see why you would like that deal. Perhaps you can see why that deal has destroyed unions and kept wages low in every state in which it exists.
That hasn’t been my experience though. I’m non union and I make a great wage working alongside longshoremen while making less than they do. I negotiated my pay with my employer.
Not saying you’re wrong, just that it’s not always the case.
Anecdotes are not data. Look up the data and you’ll find that RTW destroys wages. It’s not up for debate.
Ok Geezer, So I have 10 employees, the Union arrives and “negotiates” a 20% higher wage, I lay-off 2 workers. 8 folks now are getting paid good wages, 2 are unemployed. We magically have a better quality of life, as long as you are one of those who still has a job. Now be Volvo, looking to open its first assembly plant in North America, they passed on DE? Is it those “good” wages or maybe the lower employee cost in a right-to-work state? Either way Boxwood road is still empty, at least Republicans understand getting any job is better than the rut we are stuck in now. Oh those right-to-work jobs are limited to a few struggling parts of the state that could use a little economic development, no one is proposing an end to Unions.
Liberals now believe in trickle down? Union wages boost other wages? Hardly
You get paid for the value your work produces not what your Union produces
Lavelle may be a chump but to make workers join a union is DUMB
Unions are corrupt and benefit few while taking from the many. Delaware unions are a disgrace always sucking the taxpayer teet.
Most state employees are making the same salary they made 10 years ago. That means they make less than 10 years ago with inflation
So I have 10 employees, the Union arrives and “negotiates” a 20% higher wage, I lay-off 2 workers.
So you are keeping your labor costs constant, but what do you do about the workload? Unless you can live with 20% less productivity, then you missed an opportunity to right-size awhile ago.
Most state workers are a waste of money and too bad anyone doesn’t know Union wages destroy jobs Lots of jobs with stupid rules and rampant laziness
Most state workers are a waste of money and too bad anyone doesn’t know Union wages destroy jobs Lots of jobs with stupid rules and rampant laziness
OK, let’s start with the cops. Let us know how that works out.
And the folks who get the snow off of the highway. Employers all over the state will breathe a sign of relief that their employees won’t be coming in til the snow melt.
In New Mexico, we have a similar problem. We are not a right to work state. Why, because until this last election, democrats have been in charge for 60 years. We live off government and oil, but it is not enough. We are a poor state. If anyone could attract new manufacturing it should be New Mexico with our diverse culture, competitive production to earnings ratio, and relatively abundant resources coupled with fairly sparce population to land ratio. BUT no, democrats have been in charge for 60 years, so manufacturing companies and high tech companies that could bring good high paying jobs to our state just go elsewhere
A more likely reason manufacturers don’t locate there is the same reason the nuclear program did: It’s out in the middle of nowhere.
It amazes me that you shy away from the point that all this bill does is authorize the establishment of Right to Work zones. It is specifically intended to revitalize places like the Boxwood Rd plant. It appears that you would much rather see it rot rather than be occupied.
Actually I’m quite curious. Please answer a few questions regarding this issue:
Why is being forced to join a union acceptable? Imagine if you were forced to join the GOP in order to keep your job.
Why is it good that workers are forced to comply with antiquated union work rules? Studies repeatedly show that lack of work flexibility leads to increased stress. Within reason, why can’t employees & employers work out arrangements that are mutually beneficial?
I firmly believe that all workers, including small business owners & corporate management should be able to join (or not join) the union of their choice. The one that best represents their personal interests. Would this concept not be in line with what you profess to be Progressive?
Rusty,
New Mexico’s problem is gross receipts tax pyramiding on business to business transactions including raw materials and sub contracts. We (the federal government) always add 17% to construction projects in NM for taxes. Why would someone want to build a manufacturing plant in NM?
“Why is being forced to join a union acceptable?”
Because this country’s laws make it quite difficult to establish a union. If the majority of workers vote to join a union, then everyone has to. This is called “democracy.” Democracy does not give the individual absolute freedom; that is called “anarchy.” Under democracy, even if your side loses, you are bound to accept the result. You probably don’t realize this because, in this mislabeled “democratic” country of ours, the GOP always refuses to let the other party drive the vehicle, even when it wins.
“Imagine if you were forced to join the GOP in order to keep your job.”
It wouldn’t cost anything to join the GOP, so why would I object?
“Why is it good that workers are forced to comply with antiquated union work rules?”
Such rules are established by collective bargaining. Again, under a democratic system, you are bound to follow the majority’s decision.
“Studies repeatedly show that lack of work flexibility leads to increased stress.”
Really? I’ll wager that studies repeatedly show that having dickheads for bosses leads to more stress than “lack of work flexibility.”
“Within reason, why can’t employees & employers work out arrangements that are mutually beneficial?”
Ask the employers.
“I firmly believe that all workers, including small business owners & corporate management should be able to join (or not join) the union of their choice.”
Well, it’s hard to refute your pollyanna worldview, but since you don’t know what you’re talking about in the first place, I won’t bother.
“The one that best represents their personal interests. Would this concept not be in line with what you profess to be Progressive?”
You have progressivism confused with libertarianism.
Delaware has hundreds of highly skilled jobs that remain open. Salaries that easily eclipse $80,000
Does anyone know how many jobs Chase has open for Delaware? 431 according to their webiste.
Bank of America? 45
Cap One? 150
Dupont? 94
BNY Mellon? 39
Christiana Care? 158
I could go on…
Why does this matter? To me it says everything that is wrong with our state. All these jobs allegedly remain open, but nothing has been done to get the talent to fill them by the employers. The companies don’t want to train them, they don’t want to move people up into these positions, they want to bring in H1B visa candidates so they can pay them shit wages instead of the 70, 80, 90k a year a resident of Delaware would require. Training people to fill these jobs takes time, takes commitment, takes leadership. Who has time to bring along an employee over the course of 2 to 3 years when you get can get talent from India for half the cost and no commitment.
So, to me wage growth goes no where, people don’t and haven’t gotten ahead in this state because some of our biggest employers sit on their asses and say, “WE CANT FILL THESE JOBS, WE NEED H1B CANDIDATES!!!” And what do our Congressional representatives do? They push for bills to bring in low wage workers. They give them tax breaks to stay in the area. The bend over backwards to reward them for maintaining their footprint
It’s a crock of shit, and Markel is at the head of the line when it comes to bending over backwards to help our states corporations maintain the status quo and still reap the rewards for their shareholders.
“If the majority of workers vote to join a union, then everyone has to.”
In most cases, NONE of the current employees voted to join the mandatory union. It was simply forced upon them when they were hired. If employees cannot pick the union that they join, they should at least be able to collectively vote for union representation on a regular basis, eg. every year or two.
“Within reason, why can’t employees & employers work out arrangements that are mutually beneficial?”
“Ask the employers.”
Union contracts bind both the employer & employee to certain work rules. These become non-negotiable by individual employees. IMO this is tantamount to slavery.
“Well, it’s hard to refute your pollyanna worldview, but since you don’t know what you’re talking about in the first place, I won’t bother.”
Thank you for the affirmation that I am correct. Whenever you can’t come up with a logical answer I know that I have exposed a flaw in your thinking.
What you don’t seem to realize is that RTW laws also equal Right to Unionize (even if the majority of workers don’t). RTW will boost union membership by allowing traditionally non-union businesses to offer the opportunity of union membership. RTW is a win-win scenario. Employees can join a union if they wish, others can get a better deal on their own, unions will become accountable to their members and as this happens they will make union membership more attractive which , in turn, will lead to an increase in membership.
” IMO this is tantamount to slavery.”
IMO that statement is tantamount to stupidity, but you’ve already demonstrated that.
“Thank you for the affirmation that I am correct. Whenever you can’t come up with a logical answer I know that I have exposed a flaw in your thinking.”
Uh, no. “Whatever union you want”? Multiple unions to represent the same workers? Even if that union has no connection to the business you’re working in? That’s nonsense, and if you don’t know it it’s pointless to continue the discussion.
This is called “democracy.” Democracy does not give the individual absolute freedom; that is called “anarchy.” Under democracy, even if your side loses, you are bound to accept the result…Thanks Geezer, I will very much enjoy cooking your own words for you to eat after the 2016 elections. A Republican Senate, a Republican Congress, and a Republican President (who might win without a majority of the popular vote, but an electoral college victory only) , a very wise man said, “you are bound to ACCEPT the result”. I may be a republican, but I understand the bill of rights, and the messy but necessary rights of the minority. That whole concept of Government from the consent of the governed is a pain, but anything less is government by coercion. Coercion is the beginning of the road to hell even when you are only applying it to labor markets.
In most cases, NONE of the current employees voted to join the mandatory union.
If employees don’t want a union, they can petition to decertify it, then the NLRB conducts a secret ballot to see if a majority of workers want to decertify. It is pretty much the opposite steps to certifying a new bargaining unit. Democracy can work.
This is what coercion looks like.
This is what coercion looks like, too.
This bill died in committee, but there are more efforts afoot to make your life more available to your employer.
“Coercion is the beginning of the road to hell even when you are only applying it to labor markets.”
OUr government can force you to join the armed forces and send you to war. It doesn’t do so currently, but retains that ability nonetheless. Your “freedom” is an illusion.
I accepted GWB as president despite his inability to win the popular vote in 2000. Your point?
More coercion by Walmart.
Yes, Cassandra you’re correct about de-certifying a plant. Usually, a competitor just opens a new plant in a right-to-work state and over time builds a better product capturing market share, jobs and ultimately all the money. Just look at all the auto plants closed in MI, DE, all the “Old” manufacturing states. Today the largest manufacturing state are, TN, SC and NC. More importantly all the growth in manufacturing is in the southern eastern US. You may think they have stupid economic policies, but soon they will have the money and political clout that comes with it. Better place to live? Charlotte, Atlanta, or Jacksonville? or Baltimore, Detroit, Buffalo. It may not be FAIR, but in another twenty years it will no longer be the rural poor South, but the poor rust belt of the Northeast and the Midwest. Or has that already happened??
They won’t have the money or political clout. They are still among the poorest states in the union AND they have to spend their tax money on keeping those employers. The root of the problem is that this is a country that stupidly let go its economy of manufacturing stuff for one that depends on its citizens buying stuff. And now we see the consequences of that in an environment where manufacturing jobs are insanely valuable, but remarkably few. And the only to things important to the GOP about all of this is 1) sending tax money to help the bottom lines of these businesses and 2) making sure that the people doing the work are paid as little as possible. Neither of which supports a middle class.
“Usually, a competitor just opens a new plant in a right-to-work state and over time builds a better product capturing market share, jobs and ultimately all the money.”
Bull. Also shit. When VW tried to bring the UAW into its Tennessee plant, GOP officials went apeshit and improperly inserted themselves in the process. If non-unionism was the advantage you claim, why did they have to get involved?
All German autos (the ones from Germany) are union-built, and most are considered among the best-built in the world. The shittiest car I ever owned was a Mercedes make in South Carolina.
By the way, when manufacturing doesn’t pay much, it’s a shitty job. Your beloved south lags the rest of the nation in every quality-of-life measure, including income.
And we are better off for not having a draft, No? My point is “consent”. Interestingly, it is not a concept that comes from our European roots. In 1776 all the nations of Europe had Kings, government from God, and coercion. Native American tribes gave us the concept of the “town meeting”, which exists in New England to this day. Tribes REQUIRED 100% agreement to implement new law. Not some messed-up 51% wins. Ultimately, Government works because we respect and consent to its laws. Unionization at its heart and soul assumes I do not have the brains to negotiate my own employment agreement, and anyone who will work for less needs to be constrained. Good employers are good employers. Bad employers are not made good by a Union contract. Employers who pay higher wages do so because it is in their interest to do so. My point? coercion is a bad policy, consent and agreement is necessary. I love visiting Phoenixville, Pa where the steel plant used to be, it’s been gone for over 35 years, across the street is the union office still open representing workers who have not earned a dime in 40 years, yet paid for the union for all this time. Who’s the leach and who’s the provider? Who’s operating plan is based on divine right/coercion and who’s running a operation based on cooperation and consent?
“Unionization at its heart and soul assumes I do not have the brains to negotiate my own employment agreement, and anyone who will work for less needs to be constrained.
You are so wrong. One of the main reasons people can negotiate today is due to unions. You like your weekends, sick days, vacation, etc. then thank unions. I’m not saying unions are perfect, but to pretend all these things I listed above would have happened without them demonstrates a stunning ignorance.
Not to mention, one of the biggest incentives for businesses to keep up with union standards is because they don’t want to unionize. Fine, but there’s no denying that the presence of unions increases pay and benefits for everyone, not just union members.
BTW, I’m still laughing at this: “You may think they have stupid economic policies, but soon they will have the money and political clout that comes with it.”
Having a great day, Geezer thinks Buffalo, Detroit, Cleveland, etc beats any place to live in the south ( I knew this about him, but it must be his fear of southern hospitality and good looking women or weather or jobs, or Republican Governors). Pandora thinks she gets sick days because some Union guy went on strike in 1918, and not because she is well, maybe a valuable employee? I’m glad you think coercion is bad when its done by Walmart and UPS, how about whet done by the Gov’t and teamsters? And yes, Karl Marx’s contribution to economics is that power follows money, not the other way around, laugh, but he is right.
“Unionization at its heart and soul assumes I do not have the brains to negotiate my own employment agreement, and anyone who will work for less needs to be constrained.”
I will chalk this statement up to ignorance and an apparent belief in libertarianism. What it actually assumes is that workers united have more leverage than workers individually, and real world experience proves its truth.
Peddle your horseshit theories among the white boys who believe in it with you. Have fun in Galt Gulch.
Unintended Consequences doesn’t understand collective bargaining. No surprise. He also doesn’t know his history. And… “southern hospitality and good looking women” tells you all you need to know about this neanderthal. LOL! What is it about conservatives and this fantasy about conservative women? FOX really knows its audience – creepy old men.
No, what I dislike about the South is that they are born liars. “Southern hospitality” is what they do to your face. They aren’t so nice once your back is turned. So yes, I would prefer Cleveland, Buffalo or any other northern city than living among the shit-kickers.
You’re free to move there. Look at it this way: They have already fucked over their populations, so they’re already well on their way to what you consider paradise. The best part is you won’t earn enough to visit the North.
@Pandora: Lots of the creeps are young, I’m afraid.
Marx wasn’t talking about power following money as a good thing. And nor would he approve of the government putting its thumb on the scale for the sole profit of businesses.
I’ve spent an entire career avoiding job offers located in the South. But isn’t it funny that a guy in Delaware who certainly isn’t moving to the South is having on about how great it is? Besides — both Cleveland and Buffalo are growing centers for the health care business.
@cassandra: I have southern relatives by marriage. One of them told my then-fiancee she would be better off marrying a n*****, because they didn’t beat their wives as much as Eyetalians did.
To get back to the original post, the Economist article is worth reading for the outsider perspective on the state. It’s also noteworthy that the magazine presents our tax-haven-for-retirees status as part of the problem:
“Retirees are also playing a role, says Gus Faucher of PNC [Bank]. Many move to Delaware for its low taxes on retirement income. From 2010 to 2013 the share of the state’s population over 65 grew by 7%, well above the American average, and Delaware is forecast to be one of the fastest-ageing states in the next few decades. Working for gamblers and pensioners pays poorly: hourly wages in leisure and hospitality are half the state average.”
Ugh, Geezer, that’s pretty bad, and I’m sorry you had to deal with that.
And the fact that the state’s economy is bending towards retirees can’t be an enticement for businesses to come here, either.
@geezer: I will chalk this statement up to ignorance and an apparent belief in libertarianism.
As a libertarian who was also for six years a union president, let me clarify the misapprehension that all libertarians do not favor unions. Workers have the right to organize and negotiate; new employees who don’t like the existing union contract have the right not to not take the job if they are uncomfortable with having higher wages and due process protections. Frankly, as a libertarian there are large parts of Taft-Hartley and the NLRB I’d like to repeal because, in exchange for Federal recognition of collective bargaining, unions gave up some of their most effective negotiating tactics, which in part accounts for the decline in their influence today.
@Steve: When I talk about libertarians, I don’t mean people like you. I mean sci-fi nerdboys who read too much Heinlein and Rand.
“You want to know why Democrats and liberals do not trust Governor Markell when it comes to economics and worker’s rights?”
Fisker
Bloom Energy
Poor Budgeting
Common Core
Waste
I read the comments posted and it isn’t hard to pick the ones out from the hard left. You people need to wake up and realize that truly smart business people generally make business decisions based on facts not emotions. I know someone close to the Volvo deal and part of their analysis was the political climate. Bottom line Delaware has no balance politically. There where plenty of other negatives too.
Keep up the great work!
^^Read both of these comments closely and know why neither of these morons are Warren Buffet. But they *may* qualify as leadership for the Delaware State GOP! 🙄
@Steve Newton:
Should the law compel an employer to bargain with a union? Or should an employer be free to say “nope”? Assuming, of course, that the union can protest the decision by any means permitted under generally applicable laws.
@Davy
1–Ask the question the other way around: if employees organize into a union for collective bargaining purpose, should the employer be able to fire them for that action?
2–If not by union contracts, should the law in any fashion protect the due process rights of employees, and–if not–should all employees, all the time, be purely “at will”?
The advocates of “right to bar unions” (which is really what the euphemism “right to work” mean) either argue that the employer and employees are on a level playing field (which is manifestly NOT the case) in individual negotiations, OR they prefer 100% of the time to support the employer’s “right” to suppress the workers’ right to organize.
The typical answer revolves around spouting “free market” bullshit in a market that is anything but free. If employers want the right to not have to deal with unions, that’s cool, as long as they give up the tax breaks, incentives, funds for worker training programs, guaranteed government loans, grants, and etc. and agree to make it purely on their own without funds provided at least in part by their own workers. Then I’d be happy to endorse something along the lines of a level playing field argument.
But while employers are accepting government hand-outs quit crying to me about them being forced to negotiate. You can’t have it both ways.