Category: Right to Work

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The Government-Sanctioned Cat-And-Mouse Game

By Vlad Yurlov

Governments often try to pat themselves on the back. The minimum wage has long been a tool for this. As I began my trek from Foster Road to Oaks Park Way in 2015, I couldn’t wait to earn my own money! The minimum wage was $9.25 at the time, school was out, and I began working.

Starting off at about twenty hours a week, I was having a productive summer. A year later, I came back to an early Christmas present, the Portland Metro area received a minimum wage hike up to $9.75 on July 1st of 2016, which was just fine with me.

Then the hours shortened. New hires arrived. Overtime was a dirty word. The cotton candy I was making went up twenty-five cents! What happened?

As business-owners may tell you, these reactions were just a logical response to the pressure of the minimum wage. You get more wages, but you also work fewer hours, benefits are cut, and price increases are inevitable.

While contradictory studies continue to be published, simple logic dictates what employers do when the minimum wage rises. They try to find ways to keep their wages in step with the amount of profit workers create, and forcing fifteen dollars an hour won’t change that.

Vlad Yurlov is a Research Associate at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Is Oregon’s Department of Justice for Hire?

By Justus Armstrong

Last June, former Portland City Commissioner Steve Novick was hired by the Oregon Department of Justice as a Special Assistant Attorney General (SAAG). What many Oregonians may not know is that his entire salary is being paid by an out-of-state private source.

New York University’s State Energy & Environmental Impact Center, backed by Bloomberg Philanthropies, funds Novick’s legal fellowship with the aim of strengthening state attorney general offices in their crusade against the Trump administration’s environmental policies.

The unprecedented practice of providing external funding to state attorneys general to push a policy agenda ought to raise ethical concerns. As attorney Andrew Grossman put it: “What you’re talking about is law enforcement for hire….Really, what’s being done is circumventing our normal mode of government.”

In August 2018, Competitive Enterprise Institute published a report by Christopher Horner which details the roots and function of the SAAG program. Law Enforcement for Rent: How Special Interests Fund Climate Policy through State Attorneys General describes the genesis of the SAAG program as an informal coalition between states, spearheaded by former New York Attorney General Eric Schneiderman.

A letter included in the report’s appendix from Schneiderman and Vermont Attorney General William Sorrell to Oregon Attorney General Ellen Rosenblum shows she was invited to a March 2016 meeting of this coalition. The letter describes the program as “an important part of the national effort to ensure the adoption of stronger federal climate and energy policies.” Correspondence between members of the coalition (also compiled by Horner) expresses a desire to collaborate on targeting companies in the energy industry with regulatory and enforcement tools.

This same environmental policy agenda drives NYU’s Center, as expressed in its communication with state attorneys general. Emails state that the “opportunity to potentially hire an NYU Fellow is open to all state attorneys general who demonstrate a need and commitment to defending environmental values and advancing progressive clean energy, climate change, and environmental legal positions.” NYU’s website directs interested attorneys general to demonstrate a need for outside funding to pursue these legal positions.

If this sounds questionable, imagine a similar practice being used to serve other political agendas. If a nonprofit backed by Charles and David Koch offered to fund a position in a state to provide legal assistance on regulatory matters, would it be considered a conflict of interest? If the National Rifle Association were bankrolling state employees to serve as a “resource” on gun law enforcement, would it raise red flags? This isn’t simply about protecting the environment versus not. It’s a question of impropriety and corruption. NYU states in its agreements that fellows owe their loyalty solely to the state attorney general once they’re assigned there, but SAAGs like Novick are still being paid by an outside source while working on behalf of the state.

It appears that Rosenblum was anxious about the ethical gray areas of this arrangement from the start. Emails from within the DOJ show that Rosenblum instructed the DOJ not to use the word “volunteer” to describe Novick’s position in his hiring paperwork. The obfuscating language of the hiring process is notable: In reality, Novick isn’t working as a “volunteer” or a “research fellow,” but as an environmental lawyer, as he has been for years. Rosenblum also showed apprehension about the potential media attention the unprecedented arrangement could draw, as one email states:

“We need to be sure we are prepared to explain his position to the media, who, no doubt, will be interested. (Because he is being paid by an outside entity—which is quite unusual I think)….”

Novick’s position is quite unusual indeed, and Oregonians deserve an explanation. Regardless of one’s views on Novick, Rosenblum, or Bloomberg’s environmental policy agenda, embedding privately funded legal counsel in our justice department is a conflict of interest. The Attorney General’s office should be loyal to Oregon citizens, not out-of-state donors, and should uphold the law rather than push a legislative agenda.

If statutes aren’t clear enough on the practice, Oregon voters may need to consider a constitutional amendment to keep privately paid employees out of state offices and keep the DOJ from undermining the democratic process. The Resistance agenda belongs on the campaign trail, not in law enforcement.

Justus Armstrong is a Research Associate at Cascade Policy Institute, Oregon’s free market public policy research organization.

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To Work or Not to Work, That Is the Question

By Jakob Puckett

When I was growing up in Ohio, my family had an enormous garden with every kind of produce. Tomatoes, cucumbers, squash, zucchini—you name it, we grew it. We grew so much of it that we would cook the extras into zucchini bread, pickles, and pasta sauce. And we had extras of those, too. My brother and I saw an opportunity and decided to start a business called Veggies2U. We would go door-to-door in our neighborhood and sell our products, and enough people liked them that our business continued for several summers.

It’s a good thing we lived in Ohio, because if we grew up in Oregon and started the same business here, we would have run into some problems. To begin with, we didn’t have a domestic kitchen license, kids were involved in making the food, and we didn’t have a separate storage facility for the materials and food we made for ourselves and those we intended to sell. We would have been in violation of several laws, subject to several thousands of dollars in fines, threatened with jail time, and would have begun our descent into a life of crime, one pickle jar at a time.

This is just a small example, but it points to a much larger problem. Occupational licensing (essentially, getting the government’s permission to work) has become a major roadblock for people who want to work but are deterred by excessive regulations. These laws reduce entrepreneurship, raise prices, and eliminate competition. Oregon is one of the worst states in the U.S. regarding this practice. While we likely would agree that some degree of oversight can be beneficial, the situation has gotten out of hand.

Nearly 25% of Americans need a government license for their occupation, up from five percent in 1950. A 2017 Institute for Justice report found that the national average for a low- or medium-income job requires a $200 fee, an exam, nine months of training, and often additional education. That’s a lot to ask of the 75% of American workers living paycheck to paycheck. Furthermore, some licensing requirements make little sense; and many occupations licensed in one state are not licensed in others, with equal quality of service. Even jobs licensed in many states exhibit inconsistency. For example, the four months of manicurist training required by Oregon are completed in nine days in Iowa.

Occupational licensing restrictions most hurt the people who are least able to bear it—lower-income workers, military families and veterans, and middle-class families. Occupational licensing has also become a way for special interests to cement their position by eliminating competition and raising prices on consumers. Nationwide, thousands of jobs and hundreds of billions of dollars are at stake. Florists, yard workers, even pet-sitters—among countless others—face being regulated out of a job by bureaucrats who have never been in their position.

Overall, Oregon has the eighth-most-burdensome licensing requirements for low- and medium-income occupations (not doctors and lawyers), costing workers more than $300 and a year of training—both higher than the national average—just to reach their first day of recognized work. The Oregon legislature may be starting to recognize this burden. In 2015, legislators passed the Home Baked Goods bill, allowing people to earn money selling products grown and baked at home like my brother and I did, without criminalizing them.

Given the stakes, Oregon should review all existing occupational licensing laws, and requirements not related to job and consumer safety should be eliminated. Farm labor contractors, bartenders, and locksmiths are licensed by only 13 states. Only 21 states license commercial floor sanding and painting contractors; but Oregonian contractors pay hundreds of dollars in fees and undergo 1,463 days of experience and education, triple the average in other licensed states. The legislature can open Oregon for business by de-licensing these industries. Since most licensing occurs on the state level, multi-state working groups could be formed to facilitate uniform licensing standards, enhancing economic mobility among states.

Oregon should focus on building an economy that provides a way out for the hopeless and a way forward for the hopeful, and one step in that direction is to tear down the barrier of occupational licensing.

Jakob Puckett is a Research Associate at the Portland-based Cascade Policy Institute, Oregon’s free market public policy research organization. A version of this article originally appeared in The Newberg Graphic on August 29, 2018.

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Missing from Mayor Wheeler’s Homelessness Program: Long-Term Independence

By Rachel Dawson

Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime. This age-old saying seems to be lost on Portland Mayor Ted Wheeler, who just announced a $12 million pilot program to fund 50 units paired with mental health services and addiction treatment for the chronically homeless.

However, this program will have little effect on the homeless crisis in Multnomah County, where 4,177 people are homeless. At 50 units, only 0.01% of them will be helped.

This program may give the chronically homeless a roof over their heads, but it will not lift them from poverty. They will remain dependent on that unit and treatment indefinitely.

So, if throwing money at the homeless problem won’t solve it, what will?

A New York private charity known as the Doe Fund may have the answer. This organization gives food and shelter to the homeless in exchange for work at partnering profit-generating businesses like street cleaning and pest control. The Doe Fund teaches the homeless to fish rather than just giving them one.

This Portland pilot program will not help make the homeless independent or increase their economic mobility. Instead, we should be giving them “a hand up, not a hand out.”

Rachel Dawson is a Research Associate at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Supreme Court deals big setback to labor unions, local groups gather in Portland / Published in KATU

The Supreme Court issued a ruling in an Illinois labor case Wednesday that said public employees can’t be forced to pay fees to labor unions that represent them in collective bargaining.

Union organizers in the Portland area are expected to gather around 5:30 p.m. Wednesday in front of Portland City Hall.

Those in favor of the decision say it’s a victory for freedom of choice and speech for workers who may disagree with a union position and decide not to support the organization financially.

Others like Oregon Senator Jeff Merkley say it is a blow to workers represented by unions.

“This is another movement away from a nation that …

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Local unions react the ruling by the Supreme Court / Published in KVAL Eugene Oregon

EUGENE, Ore. – Top public employee unions in Oregon are less than pleased with the big decision on Wednesday when the U.S. Supreme Court ruled on union dues.

The case is called Janus versus AFSCME, and the high court’s ruling on Wednesday is causing a lot of reaction. Supporters of the ruling say that it’s a boost for first amendment rights, but detractors say it’s a big setback for working families.

The Supreme Court ruled that government workers cannot be compelled to contribute fees to labor unions that represent them in collective bargaining. It’s considered a significant financial blow to organized labor.

One of the chief free-market think-tanks in Oregon says that this decision was the right one.

“Public employees, as of today in Oregon and 22 other states that are not right-to-work states, do not have to pay dues to a union that they disagree with,” said Steve Buckstein, the Director of the Cascade Policy Institute.

Some local labor and management agencies refused to go …

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Supreme Court Decisions Deals Blow to Labor Unions / Published in KAST 1370AM

The Supreme Court ruled Wednesday that government workers can’t be forced to contribute to labor unions that represent them in collective bargaining, dealing a serious financial blow to organized labor.

The justices are scrapping a 41-year-old decision that had allowed states to require that public employees pay some fees to unions that represent them, even if the workers choose not to join.

The 5-4 decision fulfills a longtime wish of conservatives to get rid of the so-called fair share fees that non-members pay to unions in roughly two dozen states. The court ruled that the laws violate the First Amendment by compelling workers to support unions they may disagree with.

“States and public-sector unions may no longer extract agency fees from nonconsenting employees,” Justice Samuel Alito said in his majority opinion for the court’s five conservative justices.

President Donald Trump weighed in minutes after the decision was handed down, while Alito …

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Supreme Court Janus Decision Upholds Public Employees’ First Amendment Rights

By Jakob Puckett

When’s the last time you went to a store, and the store forced you to buy something you didn’t want? That’s ridiculous, you might think. Sure, someone else might want it, but they can’t spend my money for me on something I’m not looking to buy.

For the past 40 years, this is how public sector unions had been operating, having the legal right to collect what are called “agency fees” (or union dues) for any employees they wish to bargain for, even if that person didn’t want to join the union.

But thanks to the recent Supreme Court decision in Janus v. AFSCME, workers now have the right to choose whether they want to pay union dues. Mark Janus successfully argued that since public sector unions operate by interacting with public officials, everything they do is inherently political, and forcing employees to be a part of it would violate their First Amendment rights of free speech and association.

Now, instead of involuntarily funding a union they don’t agree with, workers are finally empowered to make their own decisions with their own money for their own purposes.

Like the grocery store example, nothing in this ruling prevents unions from existing and continuing to offer their services. We’re just free to choose whether or not to purchase them.

Jakob Puckett is a Research Associate at Cascade Policy Institute, Oregon’s free market public policy research organization.

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U.S. Supreme Court Rules in Favor of Public Employee Worker Freedom

By Steve Buckstein

On June 27 the U.S. Supreme Court restored First Amendment rights of free speech and free association for public employees in Oregon and nationwide. This is truly a victory for everyone who values the freedom of workers to associate with and financially support only those organizations with which they agree.

Ruling in favor of Illinois public employee Mark Janus in Janus v. American Federation of State, County, and Municipal Employees (AFSCME), the Court said he, and all other public employees nationwide, do indeed have Constitutional Rights that have been violated by the collection of so-called “fair share” or “agency” fees from their paychecks to pay for services the employees don’t want, or from unions whose political goals they oppose.

The union compulsion the Court just ended for public employees brings to mind the well-known statement by Thomas Jefferson:

“To compel a man to furnish funds for the propagation of ideas he disbelieves and abhors is sinful and tyrannical.”

The Janus case is the latest to come before the Supreme Court pitting individual workers against the powerful unions that seek to take their money without their consent. In Abood v. Detroit Board of Education (1977), public sector unions were allowed to impose fees on all workers for collective bargaining purposes.

Then, in Communications Workers of America v. Beck (1988), the Court found that unions could not compel fees for political purposes that workers opposed. Finally, in 2014 the Court went further in Harris v. Quinn and ruled that at least some workers could opt out of both the political and bargaining portions of public sector union dues.

This set the stage for freeing all public sector workers from forced union dues as Mark Janus successfully argued that everything his public sector union does, including collective bargaining with public bodies, is inherently political, and therefore he should not be compelled to support that organization with his money.

Union arguments that they should collect fees from all workers because they represent them all increasingly ring hollow because unions aren’t really required to represent all workers; they want to represent them so they can collect more dues revenue. They could just as well lobby to represent only those workers who voluntarily agree to pay them, but they haven’t done so─yet. Now, with this Court decision public sector unions may change their tune, not because they want to, but because the law of the land makes it the best option for these unions to retain relevance with workers who do want their services.

The Janus decision comports with the sentiments of most Oregonians. Several scientific surveys have been conducted in recent years to see how the public and members of union households feel about these issues. A 2013 survey found that more than 30 percent of Oregon union households would opt out of union membership if they could do so without penalty. In 2014, more than 80 percent of all Oregonians surveyed agreed that employees should be able to choose whether or not to join a union or pay union dues.

In 2015, members of Oregon union households were asked, “Are you aware that you can opt-out of union membership and of paying a portion of your union dues without losing your job or any other penalty?” Over 27 percent of Oregon union household members surveyed answered “no.” This implies that over 65,000 of Oregon’s some 243,000 union members that year didn’t realize that membership and some dues are optional. This is even more surprising given that their so-called “Beck rights,” granted by the Supreme Court in the 1988 CWA v. Beck case are named after Harry Beck, who is now retired in Oregon and is still advocating for worker freedom.

Nothing in the Janus decision prohibits unions from organizing and collecting voluntary dues from public employees. The ruling simply restores the First Amendment rights of public employees to say “no” to unions with which they don’t want to associate.

Cascade Policy Institute stands with Mark Janus and with Oregon public employees, including public school teachers, who believe as he does that they want their Constitutional rights to free speech and free association protected. Now, the Supreme Court has done just that.

Steve Buckstein is Senior Policy Analyst and Founder at the Portland-based Cascade Policy Institute, Oregon’s free market public policy research organization. A version of this article originally appeared in The Portland Tribune on July 2, 2018.

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U.S. Supreme Court Rules Today in Favor of Public Employee Worker Freedom

For Immediate Release

Media Contact:
Steve Buckstein

(503) 242-0900

Cascade Policy Institute stands with Mark Janus and with all Oregon public employees who want their rights to free speech and free association protected.

Portland, Ore. – The U.S. Supreme Court today restored First Amendment rights of free speech and free association for public employees in Oregon and nationwide. This is truly a victory for everyone who values the freedom of workers to associate with and financially support only those organizations with which they agree.

Ruling in favor of Illinois public employee Mark Janus in Janus v. American Federation of State, County, and Municipal Employees (AFSCME), the Court said he, and all other public employees nationwide, do indeed have Constitutional Rights that have been violated by the collection of so-called “fair share” or “agency” fees from their paychecks to pay for services the employees don’t want, or from unions whose political goals they oppose.

The Court has long allowed both public and private sector employees to opt out of union membership and the political portion of union dues, but it has allowed unions to collect fees for bargaining and representation purposes.

Now, Mark Janus has successfully argued that in the public sector, everything his union does is inherently political. Therefore, he should not be compelled to support that organization with his money.

The union compulsion the Court ended for public employees today brings to mind the well-known statement by Thomas Jefferson:

“To compel a man to furnish funds for the propagation of ideas he disbelieves and abhors is sinful and tyrannical.” 

Cascade Policy Institute stands with Mark Janus and with Oregon public employees, including public school teachers, who feel as he does that they want their rights to free speech and free association protected.

Nothing in the Janus decision prohibits unions from organizing and collecting voluntary dues from public employees. The ruling simply restores the First Amendment rights of public employees to say “no” to unions with which they don’t want to associate. Today is truly a day to celebrate the restoration of rights long denied a large group of citizens in Oregon and nationwide.

Founded in 1991, Cascade Policy Institute is Oregon’s premier policy research center. Cascade’s mission is to explore and promote public policy alternatives that foster individual liberty, personal responsibility, and economic opportunity.

For more information, visit cascadepolicy.org.

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What’s Better for Low-Skilled Workers: Higher Minimum Wages or Lower Taxes?

By Kathryn Hickok

What’s better for welfare recipients and low-skilled workers: a higher minimum wage, or a larger Earned Income Tax Credit (EITC)? David Neumark, director of the Economic Self-Sufficiency Policy Research Institute at the University of California, Irvine, explains in a recent op-ed in the Wall Street Journal why the EITC benefits low-income single parents more over time than does a higher minimum wage.

The Earned Income Tax Credit is a tax benefit for low-to-moderate-income wage earners who have dependent children. By reducing the amount of taxes owed, the EITC lessens the impact of taxation on earned income when people enter the workforce, and therefore can provide a strong incentive to transition off public assistance.

“The minimum wage does, of course, provide an immediate boost to earnings of employed workers,” Neumark writes. “But evidence indicates that minimum wages reduce employment among young workers, costing them work experience that generates earnings growth in the long run. One of my recent studies shows that the shift to higher minimum wages since 2000 has contributed significantly to declines in employment among teens in school, which can reduce adult earnings later.”

“Because it promotes work,” he adds, “the EITC should do the opposite among those eligible for its most generous benefits—low-skilled single mothers….The evidence shows that exposure to a more generous EITC leads to markedly higher earnings in the long run among less-educated single mothers.”

Neumark recommends that if lawmakers want to pursue policies “that help turn government assistance…into economic self-sufficiency,” they should incentivize work. Rather than make it harder to enter the workforce, lawmakers should make it easier for working parents to keep more of the money they earn. They’ll not only take home more of their paychecks, but they’ll also increase the skills and experience that will raise their wages. That combination is a winning path out of poverty and government dependence for working parents and their children.

Kathryn Hickok is Executive Vice President at Cascade Policy Institute, Oregon’s free market public policy research organization.

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“Worker’s Choice” Would End the Unions’ “Forced-Rider” Problem

By Kathryn Hickok and Steve Buckstein

This is National Employee Freedom Week (August 20-26), a national effort to inform union members about their freedom to opt out of union membership if they choose and to make decisions about labor representation and the use of their union dues.

National Employee Freedom Week (NEFW) conducts surveys of union members and households. One significant finding is that a strong majority of union members nationwide agree that if members opt out of paying union dues and fees, they should represent themselves in negotiations with employers. Union leaders argue labor laws require them to continue representing workers even after they stop paying dues. “Worker’s Choice” would end this so-called free-rider problem (which is really a forced-rider problem).

The Mackinac Center for Public Policy explains: “Without requiring a complete overhaul of collective bargaining laws, [Worker’s Choice] can free unions from having to provide services to employees who do not support them, and allow individual employees to represent themselves and negotiate independently with their employers.”

According to the NEFW survey, two-thirds (66.9%) of Oregon union members agree that workers should be able to represent themselves, and they don’t want to force unions to represent non-dues payers. It remains for future court decisions, or other political efforts, to end union compulsion in Oregon. Until that happens, Worker’s Choice should continue to be brought to the attention of union members and the public.


Kathryn Hickok is Publications Director and Steve Buckstein is Senior Policy Analyst and Founder at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Time to Stop Forcing Union Membership

By Steve Buckstein and Kathryn Hickok

This week (August 20-26) is National Employee Freedom Week, a national effort to inform union members about their freedom to opt out of union membership if they choose and to make decisions about labor representation and the use of their union dues. The effort “empowers union employees with information to make the decision about union membership that’s best for them, including identifying non-union alternatives that better suit their needs.” An interactive map at employeefreedomweek.com lets workers in Oregon and other states find links to information helpful to those wanting more employee freedom. More than 100 organizations across the country, including Cascade Policy Institute in Portland, are affiliated with the annual campaign.

“Right to Work” states are states in which union membership may not be enforced as a condition of employment. Workers may choose to join a union or not, without fear of losing employment, salary, benefits, or seniority. Workers in the 22 states that are not yet Right to Work, such as Oregon, do not have full freedom to opt out of union membership. However, they do have the right to become agency fee payers, to identify as religious/conscientious objectors, or to require that their dues not be used for political purposes. According to National Employee Freedom Week’s website, “many employees are thrilled to learn that alternative professional associations provide better benefits and professional development opportunities for a fraction of the cost of union membership.”

Last year a survey of union members and union households found that about two-thirds nationwide agree that if members opt out of paying all union dues and fees, they should represent themselves in negotiations with their employer, an option known as “Worker’s Choice.” By the same margin (66.9% to 33.1%), Oregonian union members support Worker’s Choice, too. Worker’s Choice would end the so-called free-rider problem (really a forced-rider problem) commonly touted by union leaders, who argue that labor laws require them to continue representing workers even after they stop paying all dues and fees.

Oregon labor law is similar to that of many states that don’t allow individual workers to represent themselves if a union has organized their workplace. But now we know that most Oregon union members want this to change. They want workers to be able to represent themselves, and they don’t want to force unions to represent these non-dues-payers.

You would think the unions would be all over the Worker’s Choice solution, but they aren’t. Unions want to be forced to represent all workers because under current labor law, states like Oregon that don’t have Right to Work require that non-union members still contribute the non-political portion of dues to their unions to cover bargaining and representation costs. The unions want the money, pure and simple. Of course, they also wanted compulsory political dues, but in 1988 the U.S. Supreme Court Beck decision gave all workers the right to opt out of those, thanks to now-Oregonian Harry Beck’s decades-long battle to preserve his free speech rights. He tells his story at oregonemployeechoice.com.

A case heard by the U.S. Supreme Court last year (Friedrichs v. California Teachers Association) could have freed all public sector workers nationwide from paying compulsory union dues based on the argument that such compulsion violates their First Amendment rights to free speech and free association. Before the case could be decided, Justice Antonin Scalia died, leaving a four-four tie vote in the Court. This resulted in upholding a lower court decision denying ten California public school teachers their rights to be free of union compulsion.

This union compulsion brings to mind the well-known statement by Thomas Jefferson:

“To compel a man to furnish funds for the propagation of ideas he disbelieves and abhors is sinful and tyrannical.”

That is what the Supreme Court left in place—the right of public sector unions to compel workers to fund the propagation of ideas they disbelieve. It remains for future court decisions, or other political efforts, to end union compulsion in Oregon and nationwide. Until that happens, National Employee Freedom Week will continue to bring this injustice to the attention of union members and the public.


Steve Buckstein is Senior Policy Analyst and Founder at the Portland-based Cascade Policy Institute, Oregon’s free market public policy research organization. Kathryn Hickok is Publications Director at Cascade. A version of this article originally appeared in The Portland Tribune on August 24, 2017.

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The Right to Choose or Reject Union Representation Respects Workers

By Kathryn Hickok

Why do many workers choose to opt out of union membership? Some believe they can make better use of their money than giving it to a union. Others “vote with their feet” against what they perceive to be poor union service or negotiating results. Still others leave because they oppose their unions’ political positions. They simply don’t want to support an organization that promotes different political beliefs from their own.

August 20-26, 2017 is National Employee Freedom Week, a national effort to inform union members about their freedom to opt out of union membership if they choose and to make decisions about labor representation and the use of their union dues.

Many recent scientific surveys have been conducted to see how the public and members of union households think about these issues. In 2015, National Employee Freedom Week asked members of union households this question:

“Are you aware that you can opt-out of union membership and of paying a portion of your union dues without losing your job or any other penalty?” 

Surprisingly, over 27 percent of Oregon union household members surveyed that year answered No. This implies that a large number of Oregon’s current union membership of 228,000 may not realize that membership and some dues are optional.

The right to work without third-party interference is more than an economic issue; it is a profoundly moral one as well. In America, no one should be compelled to join a union or to pay union dues in order to hold a job. For more information about how employee choice can benefit Oregon workers, visit oregonemployeechoice.com.


Kathryn Hickok is Publications Director at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Oregon’s new minimum wage law will hurt the people it aims to help

By Lydia White

Just prior to Oregon’s July 1 minimum wage* increase from $9.75 to $11.25 (Portland Metro Area), a team of researchers from the University of Washington produced a study, published by the National Bureau of Economic Research, that measures the effects of Seattle’s $13 minimum wage. In just nine months, Seattle wages rose substantially, from $9.47 in 2014, to $11 in 2015, to $13 in 2016 (an increase of 37.3%), and again to $15 on the first of this year.†

Unique to this study is a data set collected by Washington’s Employment Security Department which tracks hours worked in addition to earnings, making this particular study the first of its kind. Washington and Oregon are among four states that track these data.

The study‡ found that the city’s mandates resulted in 5,000 fewer jobs around Seattle. The average low-wage employee saw 3% higher hourly wages, but 9% fewer hours worked, resulting in a net loss of $125 per month. For low-income households especially, an annual loss of $1,500 is significant.

Jacob Vigdor, one of the study’s authors, said, “Traditionally, a high proportion of workers in the low-wage market are not experienced at all: teens with their first jobs, immigrants with their first jobs here.”

Wages are prices, or market signals, that indicate the value of labor productivity employees create. Low-skilled, low-paying jobs provide the opportunity to acquire knowledge and experience they were previously without, setting up workers for their next, potentially higher paying jobs. Henry Hazlitt, author of Economics in One Lesson, wrote:

“The more the individual produces, the more his services are worth to consumers, and hence to employers. And the more he is worth to employers, the more he will be paid. Real wages come out of production, not out of government decrees.”

The least skilled are further disadvantaged when artificially high price floors are implemented. As described in the UW study, when the cost of employing a worker exceeds the value that worker creates, employers are forced to reduce hours or eliminate positions within their business by laying off employees, who are often replaced by automation. These alternatives harm low-wage employees.

Additionally, employers are less likely to take a chance by hiring an unskilled worker and instead will search for only the most qualified candidates. Since teenagers are naturally less skilled due to lack of work experience, these policies create higher youth unemployment. A study last December by Cascade Policy Institute examined these and other “unintended consequences” of the minimum wage on youth.

Instead of, or in addition to, cutting costs of labor, employers increase prices of their goods or services. Consumers may choose to forgo such products or reduce their levels of consumption, in turn decreasing the need for labor. When the price of goods inevitably catches up to the employee’s higher wages, they find the purchasing power of their earnings has diminished.

Furthermore, large businesses can more easily absorb wage increases by operating within thinner profit margins or relocating to a region with a lower minimum wage. Local mom-and-pop stores don’t enjoy that same flexibility and must close their doors. With less competition, larger businesses have more power to raise prices.

When economists warn against the costs associated with the minimum wage, it’s not to protect greedy capitalists; it’s to protect both the worker and the small business owner from being priced out of the market.

For the benefit of all Oregonians, political leaders should learn from our northern neighbors and create an environment that doesn’t punish low-wage workers and the businesses that employ them. They can start by repealing the state’s onerous minimum wage law.


*Oregon’s and Washington’s minimum wages vary depending on region, population, benefits, tips, and business size. The minimum wages discussed here refer to those of Seattle and the Portland Metro Area.

†The latest 2017 increase was not included due to incomplete data.

‡The study used a “relatively conservative” $19 per hour low-wage threshold to account for the spillover effect of “miscoding jobs lost when they have really been promoted to higher wage levels….”


Lydia White is a Research Associate at Cascade Policy Institute, Oregon’s free market public policy research organization. A version of this article originally appeared in The Coos Bay World on July 10, 2017.

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Trump’s apprenticeship message to young adults: “There is dignity in every honest job”

By Kathryn Hickok

President Donald Trump stressed the dignity of work in a speech last Friday promoting his Apprenticeship Initiative for young workers. “Today, this is the message I want every young American to hear: there is dignity in every honest job, and there is nobility in every honest worker,” Trump said.

This is a timely message. According to a recent report by the American Enterprise Institute, the workforce participation rate for men 25-54 has dropped from 96% in 1967 to about 88% in 2016, an all-time low. Young men, especially with less education, are increasingly opting out of the workforce, and not just due to a weak economy. Other causes of unemployment among men include “a lack of postsecondary education, dependence on benefit programs, opioid dependency, the rising prevalence of criminal records, a lack of available jobs in economically distressed areas, and weakening cultural norms [that expect able-bodied men to be working].”

Public policies and government regulations should make it easier—not harder—for young people to develop marketable skills and experience. When young adults at the point of entry to work lose the belief that earning a paycheck is better than the ease of drawing a benefit check, the human cost is significant. Renewing a moral sense of the value of labor can refocus policy makers onto solutions promoting gainful employment, the pride of accomplishment, and financial self-sufficiency over dependence on government programs.


Kathryn Hickok is Publications Director and Director of the Children’s Scholarship Fund-Oregon program at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Making Youth Unemployment Worse

The unintended negative effects of raising minimum wage rates

By Randall Pozdena and Steve Buckstein

President-elect Donald Trump has nominated the CEO of one of the nation’s largest fast food chains to serve as U.S. Secretary of Labor. The food preparation and serving industry employs almost half of all minimum wage workers. It is thus widely assumed that the nominee would be unfriendly to minimum wage regulation. Efforts such as the union-financed Fight for 15 are seeking to raise the federal minimum wage in the food service industry to $15 per hour—a 52 percent increase over the $9.87 average pay rate in the industry today.

The spotlight has thus returned to the issue of minimum wage regulation, including the impact of recent Oregon legislation. SB 1532, passed in 2016, phases in a $14.75 minimum wage in the Portland metro area, and $13.50 and $12.50 respectively in other metro areas and rural areas, by 2022. The average annual increase over the prior (statewide) minimum wage would be 8.5, 6.6, and 5.0 percent respectively for these three tiers over the 2016-2022 phase-in period. As with the last major reform in 2002, the legislated minimum wages would be adjusted after that time by any increases in the CPI.

To put these events in perspective, Cascade Policy Institute has released a major, new analysis of the history, theory, and empirical impacts of minimum wage regulation. The report focuses on the labor market impacts on youth, aged 16 to 24—the age cohort most likely to be affected as new entrants into the labor force. The study uses data and statistical techniques that, for the first time, allow measurement of how the impact of an increase in the minimum wage evolves over time, not just in the period immediately after the increase. In addition, it allows prediction of the interaction of the minimum wage shock with employment, wages, and labor force participation over time.

The findings have ominous implications for youth labor markets. First, as many studies over the past fifty years have shown, the new study finds that increases in the minimum wage significantly depress youth employment and labor force participation. The share of youth employed falls by 3 percent in just the first six months after a 10 percent increase in the minimum wage, and it falls by 6 percent after a year. Similarly, the share of youth participating in the labor force declines by 4 percent at 6 months and 6 percent at 18 months.

Second, contrary to the claims of minimum wage advocates that higher minimum wages create a cascade of even greater increases, youth wages only rise by the amount of the mandated increase—and then only for those lucky enough to find a minimum wage job. Collectively for all youth, what wage increases occur are more than offset by condemnation of a large share of youth to a zero wage; namely, to unemployment.

Third, the study finds that even a one-time increase in the minimum wage persistently continues to depress the share of youth who are employed. Specifically, statistically significant employment impacts can be expected to cumulate over time for at least five years into the future. Even seemingly innocuous increases in the minimum wage—such as Oregon’s prior 2002 policy of adjusting for the CPI—can significantly depress youth employment. Since the implementation of that adjustment policy fourteen years ago, the previous 56 percent share of youth employed has fallen to just 46 percent, an 18 percent decline. Thus, it appears that inflexible, automatic CPI indexing is inferior to letting markets set youth wage rates.

Oregon’s newest policy of legislating different minimum wage levels among metro and designated rural markets is, ironically, a concession to the reality that unregulated private market forces better balance the supply and demand for youth labor. Since the state imposed higher-than-market levels of wages nonetheless, the new study uses its findings to estimate the impact on the three tiers’ respective youth labor markets.

Although detailed, localized youth employment data for Oregon does not exist, application of the nationally estimated behavior measures can be used to estimate regional tier impacts. This analysis suggests that Portland metro area youth will suffer the most, with the share of employed youth falling by 30 percent by 2022. Youth in the state’s other metro areas will see a 20 percent decline, and youth in designated rural areas of Oregon will see a 15 percent decline.

Even though a three-tiered minimum wage is an attempt to accommodate real economic differences between urban and rural areas, Oregon has made a public policy mistake that predictably will be paid for by many of the state’s youngest current and soon-to-be potential members of the youth labor force.


Randall Pozdena is President of QuantEcon, Inc., an Oregon-based consultancy. He received his BA in Economics from Dartmouth College and his Ph.D. in economics from the University of California, Berkeley. He is the author of Cascade Policy Institute’s new analysis, Minimum Wage: Its Role in the Youth Employment Crisis. Steve Buckstein is Senior Policy Analyst and founder of Cascade Policy Institute, Oregon’s free market public policy research organization.

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Cascade Report Finds Long-Term Negative Impacts on Youth from Oregon’s New Minimum Wage Policy

FOR IMMEDIATE RELEASE

Media Contact:

Steve Buckstein

Senior Policy Analyst

Cascade Policy Institute

(503) 242-0900

steven@cascadepolicy.org

PORTLAND, Ore. – Cascade Policy Institute released a report today that has foreboding implications for young people in our state. The report was commissioned after passage of SB 1532 earlier this year, which phases in large increases in Oregon’s minimum wage. The law mandates minimum wages by 2022 of $14.75 in the Portland metro area, and $13.50 and $12.50 respectively in other metro areas and rural areas. These rates must be adjusted after 2022 by any increases in the Consumer Price Index.

Authored by Oregon economist Randall Pozdena, Ph.D., Minimum Wage: Its Role in the Youth Employment Crisis analyzes the history, theory, and empirical impacts of minimum wage regulation. It focuses on youth aged 16 to 24 because they are most likely to be affected by minimum wage increases as new entrants into the labor force. The report uses data and statistical techniques that, for the first time, allow measurement of how the impact of an increase in the minimum wage evolves over time, not just in the period immediately after the increase. In addition, it allows prediction of the interaction of the minimum wage shock with employment, wages, and labor force participation over time.

“This report confirms ominous long-term negative consequences of minimum wage increases, not just for those currently 16 to 24 years old, but for future potential workers coming into this age group,” said Steve Buckstein, Cascade’s founder and Senior Policy Analyst. 

Key findings of the report: 

  • Increases in the minimum wage significantly depress youth employment and labor force participation. The share of youth employed falls by 3 percent in just the first six months after a 10 percent increase in the minimum wage, and it falls by 6 percent after a year. Similarly, the share of youth participating in the labor force declines by 4 percent at 6 months and 6 percent at 18 months.
  • Contrary to the claims of minimum wage advocates that higher minimum wages create a cascade of even greater increases, youth wages only rise by the amount of the mandated increase—and then only for those lucky enough to find a minimum wage job. Collectively for all youth, what wage increases occur are more than offset by condemnation of a large share of youth to a zero wage; namely, to unemployment.
  • Even a one-time increase in the minimum wage persistently continues to depress the share of youth who are employed. Specifically, statistically significant employment impacts can be expected to cumulate over time for at least five years into the future. Even seemingly innocuous increases in the minimum wage—such as Oregon’s prior 2002 policy of adjusting for the CPI—can significantly depress youth employment. Since the implementation of that adjustment policy fourteen years ago, the previous 56 percent share of youth employed has fallen to just 46 percent, an 18 percent decline. Thus, it appears that inflexible, automatic CPI indexing is inferior to letting markets set youth wage rates.
  • Portland metro area youth likely will suffer the most, with the share of employed youth falling by 30 percent by 2022. Youth in the state’s other metro areas will see a 20 percent decline, and youth in designated rural areas of Oregon will see a 15 percent decline.

Buckstein and Pozdena conclude that “even while bowing to the reality of economic differences between urban and rural areas of the state in its latest minimum wage law, Oregon has made a public policy mistake that predictably will be paid for by many of the state’s youngest current and soon-to-be potential members of the youth labor force.”

The report, Minimum Wage: Its Role in the Youth Employment Crisis, is available here.

Founded in 1991, Cascade Policy Institute is a nonprofit, nonpartisan public policy research and educational organization that focuses on state and local issues in Oregon. Cascade’s mission is to develop and promote public policy alternatives that foster individual liberty, personal responsibility, and economic opportunity. For more information, visit cascadepolicy.org.

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Two-Thirds of Oregon Union Members Want to End the Unions’ “Forced-Rider” Problem

By Kathryn Hickok and Steve Buckstein

This month, National Employee Freedom Week (August 14-20, 2016) called attention to the rights of union members to opt out of union membership if they choose and to stop paying dues and fees to unions they do not support. National Employee Freedom Week has conducted surveys of union members and households. One of this year’s significant findings is that a strong majority of union members nationwide agree that if members opt out of paying union dues and fees, they should represent themselves in negotiations with employers.

Two-thirds (66.9%) of Oregon union members agree with this proposition. “Worker’s Choice” would end the so-called free-rider problem (really a forced-rider problem), which argues that labor laws require unions to continue representing workers even after they stop paying dues. The Mackinac Center for Public Policy explains: “Without requiring a complete overhaul of collective bargaining laws, [Worker’s Choice] can free unions from having to provide services to employees who do not support them, and allow individual employees to represent themselves and negotiate independently with their employers.”

Now we know that two-thirds of Oregon union members want workers to be able to represent themselves, and they don’t want to force unions to represent non-dues payers. It remains for future court decisions, or other political efforts, to end union compulsion in Oregon. Until that happens, Worker’s Choice should continue to be brought to the attention of union members and the public.


Kathryn Hickok is Publications Director and Steve Buckstein is Senior Policy Analyst and Founder at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Oregon Union Members Want the Option to Represent Themselves

National Employee Freedom Week (NEFW, August 14-20, 2016), aims to educate union members across the country about their rights to opt out of union membership and stop paying some or all of their dues and fees to unions they do not support. NEFW has conducted various surveys of union members and union households over the last several years. One of this year’s significant findings is that a strong majority of union members nationwide agree that if members opt out of paying all union dues and fees they should represent themselves in negotiations with their employer.

Over two-thirds of union members nationwide agree. By the same margin, 66.9% to 33.1%, Oregonian union members agree with this proposition. This would end the so-called free-rider problem unions hide behind (really a forced-rider problem), arguing that labor laws require them to continue representing workers even after they stop paying all dues and fees. Oregon labor law is similar to that of many states that don’t allow individual workers to represent themselves if a union has organized their workplace.

Now we know that two-thirds of Oregon union members want this to change. They want workers to be able to represent themselves, and they don’t want to force unions to represent these non-dues payers. You would think the unions would be all over this solution, known as Worker’s Choice; but they aren’t. Unions want to be forced to represent all workers because under current labor law, states like Oregon that are not Right to Work states require that non-union members still contribute the non-political portion of dues to their unions to cover bargaining and representation costs. The unions want the money, pure and simple.

A case heard by the U.S. Supreme Court in January (Friedrichs v. California Teachers Association) could have freed all public sector workers nationwide from paying compulsory union dues based on the argument that such compulsion violates their First Amendment rights to free speech and free association. Before the case could be decided, Justice Antonin Scalia died, leaving a four-four tie vote in the Court. This resulted in upholding a lower court decision denying ten California public school teachers their rights to be free of union compulsion.

This union compulsion brings to mind the well-known statement by Thomas Jefferson,

“To compel a man to furnish funds for the propagation of ideas he disbelieves and abhors is sinful and tyrannical.”

That is what the Court left in place, the right of public sector unions to compel workers to fund the propagation of ideas they disbelieve. An Oregon initiative measure that would have allowed public sector workers to opt out of all union dues and represent themselves did receive a ballot title this year, but did not collect signatures to be placed on the November ballot. Backers were hoping that the national Friedrichs case would have made their effort unnecessary, but for various reasons they were unable to mount a successful campaign.

It remains for future court decisions, or other political efforts, to end this union compulsion in Oregon and nationwide. Until that happens, National Employee Freedom Week will continue to bring this injustice to the attention of union members and the public.

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Help the Working Poor Adam Smith’s Way

This year’s May Day activities in Portland centered on promoting “workers’ rights” and “resistance to capitalism.” Unfortunately, too few critics of capitalism seem to realize that many of the workers they seek to help are being kept from using their knowledge and talents by a system of occupational licensure that dates back centuries.

May Day activists may not know that eighteenth-century Scottish philosopher and political economist Adam Smith, Capitalism’s Founding Father, was not simply interested in how markets profit those they now call “the one percent.” In fact, Smith strongly condemned restrictions on the working poor that kept them from benefiting from free exchange and the division of labor enabled by markets.

What in Smith’s day was called “incorporated trade” is today known as occupational licensure. Smith noted that apprenticeship requirements for weavers, hatters, tailors, etc., kept many out of these trades, while raising the wages of those already secure in them.

Today, most states impose fees and training requirements that keep many workers from entering dozens of occupations such as cosmetology, athletic training, and dry wall installation. Oregon, in fact, imposes some of the heaviest occupational licensing burdens on the working poor.

So, rather than simply berating capitalism, it would be nice if May Day activists could study a little economic history and then help reduce some of the licensing restrictions that limit workers’ rights today.

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Governor Jerry Brown: “Economically, Minimum Wages May Not Make Sense”

As California Governor Jerry Brown signed his state’s $15 minimum wage bill into law on April 4, he acknowledged, “Economically, minimum wages may not make sense.” He went on to say that work is “not just an economic equation,” calling labor “part of living in a moral community.” “Morally and socially and politically, [minimum wages] make every sense because it binds the community together and makes sure that parents can take care of their kids in a much more satisfactory way,” Brown said.

So now it’s official—at least in our neighbor to the south—that laws don’t have to make economic sense for politicians to enact them. Laws just have to somehow “bind the community together.” When a strong majority of voters want a law to pass, as they apparently do for higher minimum wages, politicians take that as a signal that they can give voters what they want even if the law will hurt many of the very people they claim it will help. Governor Brown was just honest enough in this case to effectively admit that people may be hurt, but so what? Binding the community together apparently makes everything OK.

Of course, communities bound together by such faulty ideas will eventually come unbound, at least in the sense that many of their members will be priced out of the jobs and economic opportunity the politicians promised they would enjoy.

Minimum wage laws primarily hurt younger, less skilled, and less educated workers who will lose their jobs or not get jobs in the first place because employers can’t justify paying them what the law says they must. Employers who can’t generate enough, or any, profits at mandatory higher wage rates will also be hurt, as will consumers who end up paying higher prices they can ill afford in return for “binding their communities together.”

The governor of New York signed his state’s new $15 minimum wage law on April 4 also, and Oregon’s Governor Kate Brown signed our new slightly lower minimum wage law on March 2. Neither of these two leaders acknowledged what California’s governor did: that minimum wage laws may not make economic sense. They probably know it, but why raise doubts? They would much rather take plenty of credit, and later blame employers for not delivering the economic goodies government is so good at promising and so bad at producing.

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Oregon Legislators Raised the Minimum Wage; Students Lose Their Jobs

Oregon’s three-tiered minimum wage law was just signed by Governor Kate Brown last week, but it’s already set to cost Oregon university students their campus jobs. The Oregonian reports that Oregon’s public universities are now calculating how the wage increases will affect their budgets for student workers.

Most college jobs paying the current minimum wage are not part of the federally funded work-study program; student workers are hired by the universities, which pay them hourly. According to The Oregonian, “Oregon’s new minimum could put more money in some students’ pockets, but it will more likely lead administrations to either cut back on the number of students they hire or the number of hours they’re allowed to work.”

The new wage law goes into full effect over six years, and Oregon is divided into three wage regions, so the cost increases will compound over time and affect colleges differently depending on where they are located. A spokesman for Oregon State University says OSU may need to cut up to 700 student worker positions by 2019, which is about a nine-percent reduction in student employment.

Until legislators understand that income cannot be generated by state mandate, minimum wage increases will continue to hurt workers they’re thought to help, including first-time job-seekers, workers with less experience, and college students just trying to get a part-time campus job.

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Oregon’s Minimum Wage Law Perverts Compassion into Coercion

Picture two Oregon workers. One, a highly skilled and educated woman named Kate, earns well over $40 per hour based on a 40-hour work week. The other—a younger, less skilled, and less educated woman also named Kate—has a job that pays her Oregon’s minimum wage rate of $9.25 per hour.

The first Kate happens to be the Governor of Oregon. She, along with some of her colleagues in the legislature and activists on the campaign trail, believe that the second Kate should be paid as much as $15.00 per hour by law, depending on where she lives.

Wanting our second Kate to earn more is commendable; but forcing Kate’s employer to pay her more than he or she can afford, or more than Kate may be worth to their business, is not commendable.

Some politicians may feel good by “giving” more money to the Kates of Oregon, but how should they feel for “taking” that money from someone else?

I join many policy analysts, economists, and business owners in pointing out the negative effects of raising Oregon’s minimum wage. Younger, less educated and lower-skilled workers may lose their jobs, or not gain jobs in the first place, if the law prices them out of the labor market. Some employers will be forced to hire fewer workers, let some workers go, and/or raise their prices to all the Kates of Oregon who will blame them, not the politicians, for their suddenly higher cost of living.

But, the practical effects of raising the minimum wage, good or bad, should not cause us to forget the moral aspects of a state policy that dictates what one adult is required to pay another. Voluntary transactions between workers and employers are moral; imposing wage floors from Salem or any other layer of government is not.

I have no illusions that Oregon’s Governor, legislature, and activists will now see the light and abandon their plans to impose yet another burden on employers while helping some workers at the expense of others. I simply want it on the record that I agree with the author who wrote:

“The minimum wage is the modern perversion of compassion into coercion: I believe there is a moral imperative for you to earn more, so I force someone else to pay more. I feel moral while sticking someone else with the bill.”*

So, rather than raise Oregon’s minimum wage rate, the legislature should do the moral thing and end the policy altogether. Then we can all work together with Oregon Governor Kate Brown to find better, moral ways to help all the other Kates of Oregon earn more money without perverting our compassion into coercion.

* Doug Bandow, Cato Institute, January 14, 2014, The Minimum Wage: Immoral and Inefficient.


Steve Buckstein is Founder and Senior Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization.

 

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Will Oregon Price the Least-Skilled out of the Workforce…Too Slowly?

As Oregon’s February legislative session approaches, Governor Kate Brown wants to head off a contentious minimum wage ballot measure that would raise Oregon’s rate up to $15 per hour over three years. But, her plan seems to upset all sides.

She has determined that the Portland area minimum wage should be exactly $15.52 by 2022. She has also figured out that the rest of the state should impose a $13.50 minimum by 2022. “That is entirely too long” to wait, according to activists behind the ballot measure.

Solid research concludes raising the minimum wage at all is not an effective way to alleviate poverty. It is, however, an effective way to pander to voters who either don’t read the economic literature, don’t believe it, or don’t care.

Oregon already has one of the highest minimum wage rates in the country at $9.25 per hour. But, with some cities and states determined to raise their rates to $15 soon, our Governor’s $15.52 Portland area proposal over six years may not be enough to keep us at the forefront of pricing the least-skilled people out of the workforce altogether.

Perhaps she should go for a $30 minimum wage rate by 2030. Or a $40 rate by 2040. Or…well, you get the idea.

Steve Buckstein is Founder and Senior Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Give Every Oregon Employer a Personalized Minimum Wage

Union-backed and activist groups are trying to put measures on the November 2016 ballot to raise Oregon’s minimum wage from the current $9.25 to either $13.50 or $15, and to allow local governments such as the city of Portland to go above whatever the statewide minimum ends up being.

State Senator Michael Dembrow (D) thinks he can improve minimum wage policy by recognizing that different regions of that state have different costs of living and employment climates. He’s trying to craft a bill for the February 2016 legislative session that would set three different minimum wage rates: one for the Portland Metro region, one for the Willamette Valley, and one for everywhere else.

Assuming the Senator is on to something (a dubious assumption at best), why stop at three rates? Clearly, every employer has somewhat different circumstances, so why not set a different rate for each of them? Dembrow could give each employer a hearing lasting as long as the legislature gives the public to testify on bills—three minutes—to explain their particular circumstances. He then could assign them their own personalized minimum wage rates. Assuming about 100,000 employers in the state, working eight hours every business day with no breaks, the Senator could have the perfect minimum wage bill crafted in only two and a half years. Voilà, problem solved! Or is it?

Of course, in reality, Dembrow and the activists are trying to solve a problem through government that is better left to free people in a free society. Minimum wage laws are nothing more than price controls that end up hurting the very people they purport to help: often young, less educated, and less experienced workers who will find it harder to get or keep a job when the government prices their labor above what a business can economically justify.

Steve Buckstein is Founder and Senior Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Uber and Portland: “The Future and Its Enemies” Clash in the Rose City

The Portland City Council has voted 3-2 to let ridesharing companies Uber and Lyft operate permanently in the city. The normally “progressive” council members’ split decision revealed a conflict of visions that does not fall along ideological lines as much as it falls along lines revealing how they view the future.

Author Virginia Postrel wrote a book in 1998 that virtually foresaw the conflict Portlanders and others around the world are wrestling with in the new sharing/app economy – an economy that didn’t even exist until 2008. In The Future and Its Enemies: The Growing Conflict Over Creativity, Enterprise, and Progress, Postrel argued that the opposing world views of “stasis” and “dynamism” are replacing “left” and “right” as we struggle to define our cultural and political debate in the twenty-first century.

Many large cities, including Portland, have regulated the taxicab industry for over 100 years. Regulating prices and limiting the number of taxis on the road has resulted in a small group of crony capitalist companies benefitting at the expense of their passengers, and often at the expense of their own drivers.

It got so bad in Portland, that for over twenty years beginning in 1976 not one new taxi company was allowed to enter the market. And regulators wouldn’t even let one new cab on the streets unless an owner could prove the demand existed for that vehicle; something that was almost impossible to do even as the city’s population grew.

In 1998, Cascade Policy Institute helped a group of Ethiopian immigrants win approval from the city to start Green Cab, the first new Portland cab company allowed in more than two decades. Regulators agreed, not because the proposal made sense (which it did), but likely because they knew that the libertarian public interest law firm Institute for Justice would go to federal court to protect the economic liberty rights of those wanting to earn an honest living by providing transportation services to consumers.

Once smartphone apps emerged in 2008, the “stasis” of the transportation marketplace began giving way to the “dynamic” future that Uber pioneered in 2010. Thanks to the mobile devices most of us now carry in our pockets, the future of transportation and many other fields are quickly changing for the better…at least in the minds of the dynamists.

Once Uber entered Portland without city approval on December 5, 2014 and thousands of Portlanders put the app on their smartphones, city officials may have realized that most of these folks were also voters. They struck a temporary deal with Uber and agreed to develop new rules that would let it operate permanently in the city.

Even the city commissioner once seen as Uber’s biggest foe, Steve Novick, now says he never understood why the city should have a limited-entry system in which a small number of taxi companies were given a sharply restricted number of permits to operate cabs. He says the taxi companies had a sense of “entitlement” after being treated like a city utility for the past century. After being given authority for taxi regulation by the Mayor, Novick ended the strict limits on taxi permits, and the city increased the number of permits by 64 percent.

Novick set up a Task Force to suggest rules for both taxi companies and ridesharing firms like Uber. Traditional taxi drivers quickly became disappointed that “The Future” wasn’t going to include protections for them and strict limits on their new competitors. On December 2, 2015 Novick joined two other commissioners in voting Yes for dynamism, while two voted to keep the stasis that is quickly becoming transportation’s past.

The foremost opponent of the plan to let Uber operate permanently was commissioner Amanda Fritz. She prepared and read a ten-minute statement before voting No. She delineated several issues she believed were unfair to existing taxi companies and that could be harmful to Portlanders, including relatively low insurance limits for ridesharing drivers when passengers aren’t in their cars. One part of her statement clearly puts her on the side of “stasis” and denies the liberating power that the free market and technology provide for drivers and passengers alike:

“New taxi companies will no longer be scrutinized by the grueling public vetting and approval by City Council in an open public hearing. I feel so sad for my friends in Union Cab, supported by the Communication Workers of America Local 7901. You worked so hard to win approval. You offer dozens of immigrant families not only a chance at the American Dream, but an opportunity to belong to an American union, part of the united American Federation of Labor movement. You achieved the dream, in winning approval of your franchise. And now the majority of Council is telling you you’re an expendable casualty in the free market – the free market that is grinding the working class and the middle class into the servants of the billionaire corporations.”

Contrary to Fritz’s charges, the free market is liberating people worldwide from grinding poverty. In Portland it is allowing several thousand people to work for themselves as full- or part-time Uber and Lyft drivers. It is giving passengers new, cheaper, and quicker options to travel around the city.

The free market and technology are combining to help mold a dynamic future. Those trying to stop this future, including city commissioners who voted against it, are clinging to a stasis that cannot and should not prevail. “The Future and Its Enemies” is playing out right now in the City of Roses. Thankfully, The Future is winning.

Steve Buckstein is Founder and Senior Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization.

 

Steve was interviewed about this topic on KUIK’s The Jayne Carroll Show on Wednesday, December 9, 2015. You can listen to his interview here.

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The Minimum Wage Conversation Never Ends

Oregon and some other states mandate that their minimum wage increase every year with the Consumer Price Index. Based on that formula, last Wednesday it was announced that Oregon’s minimum wage, the second highest in the country at $9.25 an hour, will stay unchanged in 2016.

That same evening during the Republican presidential debate, one candidate called for both a higher national minimum wage and for indexing it to inflation. He argued that this would mean “we never have to have this conversation again in the history of America.”

Well, if Oregon is any example, that’s not exactly true. Oregon began indexing its minimum wage in 2002. Yet, earlier this year, there were no fewer than twelve legislative bills introduced to raise the rate to as high as $15 per hour. Activists promised that if the legislature didn’t act, they would put a measure on the 2016 General Election ballot.

So clearly, putting minimum wage increases on autopilot won’t take this conversation off the table. Until legislators and voters understand that income cannot be generated by state mandate, minimum wage increases will continue to hurt the very workers they’re meant to help: the young, the less educated, and the less skilled. They are the ones who often can’t produce enough value for employers at higher wage rates to justify gaining or keeping a job.

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Event Video – Ending the Public Employee Union Stranglehold on State Politics

The Executive Club and Cascade Policy Institute were pleased to welcome David Nott, president of Reason Foundation, at the Executive Club’s September 2, 2015 dinner event. Introduction by Cascade founder Steve Buckstein.

David Nott is president of Reason Foundation, a non-profit think tank advancing free minds and free markets. The foundation also publishes the award-winning and critically acclaimed national magazine, Reason. Reason Foundation hosts the annual Reason Media Awards featuring the Bastiat Prize. David created Reason.tv and the Drew Carey Project to produce and distribute internet video journalism, whose home page has reached over 200 million hits since its launch as well as the Reason.com news, which receives over 3 million hits a month. He is executive producer of the Reason Foundation 2013 film, “America’s Longest War: A Film About Drug Prohibition.”

David is an engineer by training. He received his Bachelor of Arts and Sciences with Distinction, in economics and engineering, from Stanford University. He has three children and resides in El Segundo.

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Employee Freedom Respects Workers’ Choice

Why might workers like the opportunity to opt out of union membership? Some believe they can make better use of their own money rather than giving it to a union. Others “vote with their feet” against what they perceive to be poor union service or negotiating results. Still others leave because they oppose their unions’ political positions. They simply don’t want to support any organization that doesn’t share their political beliefs.

Many scientific surveys have been conducted to see how the public and members of union households feel about these issues. A survey conducted for this year’s National Employee Freedom Week asked members of union households this question:

“Are you aware that you can opt-out of union membership and of paying a portion of your union dues without losing your job or any other penalty?”

Surprisingly, over 27 percent of Oregon union household members surveyed answered No. This implies that over 65,000 of Oregon’s some 243,000 union members don’t realize that membership and some dues are optional.

The right to work without third-party interference is more than an economic issue; it is a profoundly moral one as well. In America, no one should be compelled to join a union or to pay union dues in order to hold a job. For more information about how employee choice can benefit Oregon workers, visit oregonemployeechoice.com.

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Ending the Public Employee Union Stranglehold on State Politics

The Executive Club and Cascade Policy Institute are pleased to welcome David Nott, president of Reason Foundation, at the Executive Club’s September dinner event.

Date: Wednesday, September 2, 2015

Time: Buffet dinner begins at 6:30pm. The regular program starts at 7:00 pm.

Location: Portland Airport Shilo Inn, 11707 NE Airport Way, Portland, OR 97220

This event is free to attend. If you would like to purchase the dinner buffet, you are welcome to do so for $20 at the door.

About David Nott:

David Nott is president of Reason Foundation, a non-profit think tank advancing free minds and free markets. The foundation also publishes the award-winning and critically acclaimed national magazine, Reason. Reason Foundation hosts the annual Reason Media Awards featuring the Bastiat Prize. David created Reason.tv and the Drew Carey Project to produce and distribute internet video journalism, whose home page has reached over 200 million hits since its launch as well as the Reason.com news, which receives over 3 million hits a month. He is executive producer of the Reason Foundation 2013 film, “America’s Longest War: a Film About Drug Prohibition.”

David is an engineer by training. He received his Bachelor of Arts and Sciences with Distinction, in economics and engineering, from Stanford University. He has three children and resides in El Segundo.

Reservations for this joint Executive Club/Cascade event are appreciated but not required. We hope to see you on September 2!

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Taking Leave of Sickness

By Maxford Nelsen

A version of this article by Freedom Foundation labor policy analyst Maxford Nelsen originally appeared in The American Spectator on July 1, 2015.

Oregon’s Legislature just passed a law requiring employers with 10 or more employees to offer five days of paid sick leave to their employees per year, making Oregon the fourth state to adopt sick leave mandates for employers, following Connecticut, California, and Massachusetts. Oregon employers with fewer than 10 employees must offer five days of unpaid sick leave per year.* At the federal level, President Obama called for a national paid sick leave law in his 2015 State of the Union address.

But while labor activists treat paid sick leave like a proxy war against Wall Street, the casualties are all on Main Street. In practice, paid sick leave mandates like Oregon’s fall short of supporters’ expectations and are startlingly ineffective at achieving their basic goal of keeping sick employees from coming to work.

Only about 10 studies have attempted to measure the impact of existing paid sick leave regulations, which took off after San Francisco adopted a sick leave ordinance in 2006. A Freedom Foundation report, which was informally reviewed by academic and professional economists, evaluated the existing research and came to some surprising conclusions.

First, while supporters argue that public health demands mandating paid sick leave, workers come to work sick just as often with a mandatory paid sick leave policy as they do without one. Of the five studies to examine the effect of mandatory paid sick leave laws on workplace illness, four found no reduction. One study for the Seattle City Auditor noted that the lack of any decline in workplace illness “seemingly contradicts the intent of the [Seattle] ordinance.”

Second, mandatory paid sick leave laws do nothing to reduce turnover. One methodologically questionable study of Connecticut’s paid sick leave law by a pro-sick leave advocacy group reported a slight decrease in turnover, while a more credible study of Seattle’s paid sick leave ordinance by the University of Washington reported effectively no changes in turnover.

The result should not come as a surprise. As one small business owner in San Francisco—who offered paid sick leave—explained, “Since the new ordinance, employees will have the same benefit no matter where they work. There’s less of an incentive to stay and work for me.”

Third, consumers, workers, and employers are all negatively affected by mandatory paid sick leave policies. Employer surveys indicate that affected businesses frequently respond to paid sick leave laws by increasing prices, decreasing employee benefits and hours, and limiting expansion. Even after taking steps to offset the additional expenses, many businesses report reduced profitability.

Fourth, studies tend to exaggerate employer support for mandatory paid sick leave laws. All four of the studies that asked employers whether they supported the mandate found a majority of employers were supportive. In each case, however, a majority of employers were already mostly or completely in compliance with the law and had to make few changes in response, with the rate ranging from 50 to 89 percent.

While it is hardly surprising that unaffected businesses support a mandate that places additional costs on their competitors, most businesses that had to create new or modify existing policies appear to be opposed to paid sick leave mandates. Many of these businesses also report significant difficulty implementing the mandates.

Lastly, some paid sick leave laws are designed to promote union organizing. Paid sick leave statutes in at least San Francisco, Seattle, Washington, D.C. and Oregon’s new law contain provisions that allow labor unions to waive sick leave requirements in collective bargaining.

Such statutes allow unions to approach non-union employers and offer to waive the sick leave requirements in exchange for the employer’s cooperation in unionizing employees. Studies of San Francisco and Seattle’s sick leave ordinances indicate the waivers are frequently used.

But if paid sick leave is a basic workers’ right, as labor activists contend, why should union workers be the only ones exempt?

Overall, the evidence indicates that requiring employers to provide paid sick leave benefits produces few appreciable benefits and even raises costs.

Oregon’s course may be set, but it’s not too late for other states and the federal government to take heed of the evidence and approach paid sick leave mandates with a healthy dose of skepticism.

* “Employers with Portland operations and who employ at least six employees anywhere in the state will similarly be required to provide up to 40 hours of paid sick leave benefits. Employers with fewer than 10 Oregon-based employees, and fewer than six employees, if operating in Portland, must provide up to 40 hours of unpaid sick leave per year.” Source:  http://www.natlawreview.com/article/oregon-enacts-paid-sick-leave

Maxford Nelsen is Labor Policy Analyst at the Freedom Foundation in Washington State and a guest contributor for Cascade Policy Institute, Oregon’s free market research organization. A version of this article originally appeared in The American Spectator on July 1, 2015.

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Oregon’s Proposed Sick Leave Law Doesn’t Fit All

By Anna Mae Kersey

Senate Bill 454, which mandates that employers implement paid sick leave for employees, may leave small business owners and the agriculture industry in the dust.

SB 454 states, “Employers that employ at least 10 employees working anywhere in this state shall implement a sick time policy that allows an employee to earn and use up to 40 hours of paid sick time per year.” Employers with fewer than 10 employees must provide the same amount of sick time, but it can be unpaid.

For big businesses and corporations, this mandate might not pose a problem; many larger companies already offer competitive benefits packages that include paid sick leave and vacation time.

For small businesses and the agriculture industry, however, 40 hours of paid sick time per year translate into five days during which the employer will not only be short an employee, but will still be compensating that employee for his or her time.

According to the Associated Oregon Industries, 88,000 business owners in Oregon employ fewer than 50 people. Although the Senate had the opportunity to accommodate those industries, that motion failed. By forcing business owners to take a uniform approach, instead of one tailored specifically to best suit both the employer and the employee, this bill could have real economic consequences.

These business owners will now likely have to cut costs by downsizing their companies, lowering wages, and increasing prices in order to offset the mandate’s impact.

Anna Mae Kersey is a research associate at Cascade Policy Institute, Oregon’s free market think tank. She recently graduated from Mercer University in Macon, Georgia with an Honors B.A. in Philosophy and is pursuing a Master’s of Liberal Arts at St. John’s College in Santa Fe, New Mexico.

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Minimum Wage Follies

Fourteen bills have been introduced in the Oregon legislature to raise Oregon’s already high minimum wage or let localities do so. Apparently, some legislators believe that political laws can override the laws of economics.

In this case, the law of supply and demand tells us that raising the price of labor will lead employers to demand less of it. Those hurt will likely be less skilled, younger, and less educated workers who will find it harder to find jobs or will be let go from jobs they did have at lower wages.

Not exactly the outcome proponents foretell, but they may be OK with it because those harmed by their policy aren’t likely to blame them. They’re more likely to blame the employers who let them go or don’t hire them in the first place.

Proponents know that they have little to lose and much to gain politically by telling workers that they deserve to be paid more, and that it’s only greedy business owners standing between them and the higher wages they desire.

If legislators don’t commit the folly of increasing the minimum wage this year, a union backed group has filed an initiative to raise it from the current $9.25 up to $15 per hour. That will give voters the opportunity next year to commit the folly themselves.

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Oregon’s Minimum Wage Debate: Disadvantaged Youth Are Crucial Issue

The Oregon legislature is considering raising the minimum wage over the next few years from $9.25 per hour to as much as $15. What the minimum wage means for disadvantaged youth should be the central question of this controversial topic. Plenty of middle- and upper-class teenagers take their first jobs at the minimum wage, working part-time or summers. I don’t much care whether they make five dollars an hour or ten or fifteen. They’ll be fine.

There are also some older people working at low-skilled jobs. A higher minimum wage doesn’t really solve their problem, which is low skills. However, many people parlay on-the-job learning into higher-paying jobs. Combine that with some more education and these folks should be all right.

Disadvantaged teenagers and youth in their early 20’s concern me, however. For them, the minimum wage is a big issue.

When my own kids were going out to their first job interviews, their mother and I prepped them well. We both had experience in job interviews and we helped our kids succeed at theirs. Many disadvantaged youth lack parents with good work experience themselves, so they go into their first job interview with no coaching. Which kid do you figure gets the job? It’s usually not the teenager who stares at his shoes instead of the manager’s eyes, who stammers and is unsure of himself and is surprised by simple questions.

Put this into a business context. Suppose you are trying to sell a product that looks inferior on the outside. You are sure that your product’s functionality is as good as the better-looking competitors, but yours doesn’t present itself as well. What would you do?

A business manager’s first thought might be to cut the price. Other approaches are to offer free samples, introductory discounts, special coupons, and so forth. These marketing techniques could get buyers to try your product.

The disadvantaged youth is not allowed to do any of these things. The wage cannot be lower than the legal minimum, no unpaid work is tolerated by our laws, no discounting or trial offers are allowed. The kid who interviews poorly is in trouble.

This is the worst kind of trouble for both society and the young person. We need disadvantaged youth to get jobs and learn the soft skills every employer wants: following instructions, getting along with others, serving customers. The first job is vital for learning those skills. (I recall learning a lot in my first job: to get along with people I didn’t much like, to take direction from a boss I didn’t respect, and to accept that I had to do the worst tasks because I was the newest employee. These were all valuable lessons.)

To help disadvantaged youth, we need to let them compete. That means a low or zero minimum wage. Employers will provide more coaching and help for workers just starting out if that’s what it takes to get workers at a low wage. And that is exactly what will help disadvantaged youth in the long run.

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Government-Imposed Minimum Wage Increases Don’t Work for Oregon Small Businesses

The concept that everyone should earn at least some government-mandated minimum wage is politically very appealing. It’s almost the classic example of taking from the few and giving to the many. “The few” in this case are portrayed as rich businessmen who could never spend all the money they have, so what’s wrong with making them pay their workers a little more? Now, proponents of raising Oregon’s minimum wage are trying to convince us that somehow such policy is actually good for small business owners.

A recent report from the Oregon Center for Public Policy claims that a higher minimum wage works for small businesses by giving them “more of what they need most: customers with money.”

In reality, raising the minimum wage would only benefit small businesses if owners didn’t mind depleting their own savings or investment funds in order to support higher labor costs. Otherwise, they would have little choice but to raise prices, which would harm all their customers, especially those on the lower rungs of the economic ladder.

And, because minimum wage laws actually cut off those lower rungs on the economic ladder, younger, less educated, and less experienced workers will be even less likely to get or keep the very jobs they need to be customers in the first place. They may spend their unemployment checks, but those checks won’t go as far once prices are raised to cover the higher labor costs that a boost in the minimum wage imposes.

The argument that a higher minimum wage pumps more money into the economy assumes that the resulting pay increases are somehow “new money.” In reality, much if not all of that “new money” will be offset by a corresponding loss of savings or investment funds that otherwise would contribute to more economic growth and hiring more workers.

Just because low-wage workers are likely to quickly spend any wage increases doesn’t mean that on balance that’s good for small business. Taken to its logical conclusion, that would mean small business owners, and everyone else, should never save and invest for the future, but immediately spend every dollar they earn also. If this behavior really benefitted the economy, why are we seemingly so concerned about the dismal rate of saving and investing for retirement among Oregonians? Couldn’t small businesses benefit even more by encouraging everyone to spend all their income right now?

Another set of arguments for raising the minimum wage include the assumptions that higher wages “motivate employees to work harder;” “attract more capable and productive workers;” “lead to lower turnover, reducing the cost of hiring and training new workers;” and “enhance quality and customer service.”

While higher wages may lead to the benefits stated above, if business owners believe that is the case then they should be willing and eager to raise wages whenever possible. The fact that minimum wage proponents want to force business owners to reap these benefits weakens their case.

Finally, there is a real irony in the campaign to boost Oregon’s minimum wage. Minimum wage laws conspicuously leave out a class of individuals who don’t get a paycheck from someone else, but hopefully get one from themselves. Self-employed people, small business owners, and entrepreneurs trade a steady paycheck for the opportunity to be their own boss. They often risk everything―their homes, their savings, all their assets―to build a business that might someday earn them a much higher paycheck than they could ever earn working for someone else.

But, while building a business, many entrepreneurs actually earn less than the minimum wage. They may actually have negative earnings, dipping into savings or borrowing money to keep their doors open and pay their employees. And yet, if these risk-takers hire anyone to help them make their dreams come true, government says they must pay those workers at least $9.25 per hour in Oregon today, and perhaps as much as $15 per hour in the near future.

So, while business owners are free to do a lot of things, and take a lot of risks, one thing they cannot do is hire anybody for less than the minimum wage, even if they are earning less than that themselves. Of course, this may not be a winning argument politically.

It’s easier to demonize supposedly “rich” business owners than to tell workers and job seekers the uncomfortable truth that to be employed in a successful business they must produce as much or more value than they wish to be paid.

Proponents of raising the government-mandated minimum wage know that they have little to lose and much to gain politically by telling young, less educated, and less skilled workers that they deserve to be paid more, and it’s only greedy business owners standing between them and the higher wages they desire.

Let’s just hope that if another bump in Oregon’s minimum wage results in some workers losing their jobs and others not getting hired in the first place that they place the blame for their troubles where it belongs―not on employers, but on those who promised them higher wages but couldn’t deliver because economic reality stood in the way.

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$15 Minimum Wage? More May Turn Out to Be Less

Last summer, Seattle passed an ordinance raising its minimum wage to $15 per hour. A Portland-area restaurant owner recently explained in The Oregonian how a $15-per-hour minimum wage here would spell lower total wages and less opportunity for his employees.

Lee Spectator wrote: “I start most of my new hires at minimum wage, then, based on their performance, give them a raise within their first 30 to 60 days. I give merit raises based on performance [and] annual performance reviews….With a $15 per hour minimum wage, that would go away. I would have no room to pay them any more, and they would have no incentive to work harder.”

With increased wage expenses also come higher taxes and workers-comp insurance. These would balloon to nearly 48 percent of Spectator’s total business expenses, he says.

So, what would be the likely result if Portland raised the minimum wage to $15 an hour? To start, fewer jobs will be available in small businesses that pay hourly. Fewer employers will want to hire low-skilled workers like teenagers, since they will need more productive and experienced workers to justify paying them a higher wage. Entry-level workers should have the chance to climb the ranks and achieve higher earnings as a consequence of their hard work, not to be stuck at one uniform pay grade or else have no job at all.

Kathryn Hickok is Publications Director and Director of the Children’s Scholarship Fund-Portland program at Cascade Policy Institute.

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Eight Out of Ten Oregonians Agree: Let employees choose whether or not to join a union or pay union dues

Because of a deal struck by Governor John Kitzhaber, Oregonians won’t have the opportunity to end forced union dues in the public sector this year. However, a just-released public opinion poll makes it clear that if the Public Employee Choice Act had been on this November’s ballot, most voters likely would have supported it.

The poll, conducted for National Employee Freedom Week (August 10-16) asked adults across America:

“Should employees have the right to decide, without force or penalty, whether to join or leave a labor union?”

Nationwide, 82.9 percent of respondents answered Yes. Of the 500 respondents in Oregon, a resounding 84 percent answered Yes.*

These results are significant because Oregon and twenty-five other states require workers to pay so-called “fair share” dues even if they decline union membership and refuse to pay the political portion of union dues. The other 24 states have taken advantage of federal Right to Work law that lets workers choose not to pay any dues at all if they decline to join a union. The federal government also prohibits forced union dues in its own workplaces; yet unions still represent some federal workers, and they represent workers in Right to Work states who voluntary choose to join.

Forced union dues are on the political front burner this year because of the recent Harris v. Quinn U.S. Supreme Court decision. It favored certain Illinois home care workers who don’t want to join a public employee union or pay dues just because their services are paid for with state funds. While the ruling may be narrowly interpreted, it did cause two of Oregon’s largest public employee unions to stop collecting fair share dues from some ten thousand home and child care workers in this state who have chosen not to join their ranks.

Unions claim that such workers should pay fair share dues because the unions are currently required to bargain for and represent them even if they decline union membership. But that is not the fault of those workers, and the unions haven’t seemed to mind as long as their dues money kept flowing.

Unions also claim that without their representation, workers would see their pay and benefits decline. But, after union stronghold Michigan became the latest Right to Work state in December 2012, per-capita personal income actually rose from $38,291 in 2012 to $39,215 in 2013, according to the U.S. Department of Commerce’s Bureau of Economic Analysis. That was the ninth highest increase in the country.

Why do workers want to opt out of union membership and all union dues? Some think they have better uses for their own money. Some want to “vote with their feet” against what they see as poor union service or negotiating results. Still others oppose their unions’ political agendas. They simply don’t want to support any organization that doesn’t share their political beliefs, whatever those might be.

The right to work without third-party interference is more than an economic issue; it is a profoundly moral one as well. No one should be compelled to pay union dues in order to hold a job. Hopefully, Oregon will soon grant true employee choice to every worker in our state.

* Last year’s National Employee Freedom Week poll asked union households, “If it were possible to opt out of membership in a labor union without losing your job or any other penalty, would you do it?”

The results were released in this June 2013 Cascade Commentary: More than thirty percent of Oregon union households want out.

Steve Buckstein is Founder and Senior Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization.

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New Poll Shows 84% Percent of Oregonians Support Employee Choice

Eighty-four percent of Oregonians support allowing union employees to leave their union without force or penalty, a concept generally referred to as Right to Work. That’s the finding of a new poll, released today by Cascade Policy Institute as part of National Employee Freedom Week, which runs from August 10 to 16. NEFW is a grassroots campaign of 77 organizations in 44 states dedicated to helping union employees learn about their right to leave their unions.

The poll, with a sample size of 500 Oregon residents, asked this question: “Should employees have the right to decide, without force or penalty, whether to join or leave a labor union?” Of the respondents, a resounding 84 percent answered Yes.

The coalition also released a poll showing 82.9 percent of Americans nationwide support the Right to Work principle. Currently, 24 states have passed Right to Work laws which allow workers to leave their union without penalty or having to pay dues to an organization they choose not to belong to. Because of a deal struck by Governor John Kitzhaber, Oregonians won’t have the opportunity to end forced union dues in the public sector this year.

The poll results are significant because Oregon and twenty-five other states require workers to pay so-called “fair share” dues even if they decline union membership and refuse to pay the political portion of union dues. The other 24 states have taken advantage of federal Right to Work law that lets workers choose not to pay any dues at all if they decline to join a union. The federal government also prohibits forced union dues in its own workplaces; yet unions still represent some federal workers, and they represent workers in Right to Work states who voluntary choose to join.

Cascade Policy Institute founder Steve Buckstein notes, “Most Oregonians now support letting workers decide whether to both join and pay any dues to a union. Cascade research finds significant economic benefits if Oregon becomes a Right to Work state, but employee choice is more than an economic issue. It’s a profoundly moral one as well. No one should be compelled to pay union dues in order to hold a job.”

Unions often do as little as is required by law to inform their employees that they have the right to opt out. But as previous NEFW polling illustrates, over 33 percent of those in union households want to leave. Therefore, educational efforts like NEFW are necessary to inform and educate union members about their workplace rights and empower them to make the decision about union membership that’s best for them. More information is available at www.EmployeeFreedomWeek.com and at Cascade’s new website, www.OregonEmployeeChoice.com.

The poll was conducted by Google Consumer Surveys, between July 11 and July 31, 2014. It surveyed adults nationwide, including roughly 500 Oregonians and has a margin of error of approximately 3.76 percent.

Cascade Policy Institute is Oregon’s free market public policy research center. Cascade’s mission is to explore and promote public policies that advance individual liberty, personal responsibility, and economic opportunity.

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Seattle’s Giant Job Killer

By Erin Shannon

The city of Seattle made history last month with an ordinance that will force every employer in the city to pay every worker a $15 per hour minimum wage, which is the highest in the nation. But before progressives in Portland try to hold up Seattle as a model, they should watch what happens to workers there. The controversial wage mandate passed by Seattle’s City Council has not even been enacted yet, but it is already having a chilling effect on jobs.

Small business owners are expressing deep worry over the coming super-high minimum wage. Many of these job creators say they are holding off on opening new ventures or expanding their current business in Seattle, while others say they are delaying plans to hire new workers. A commercial property landlord says several of her tenant business owners may not renew their leases if the $15 wage becomes law.

As she puts it, “It’s just too expensive to operate in the city.”

Even business owners who have supported a higher minimum wage are having a change of heart. Jody Hall, owner of Cupcake Royale and respected progressive activist, initially supported a $15 minimum wage. But now she says the proposed policy is “keeping me up at night like nothing ever has.”

Hall told KUOW/NPR radio she now has “serious second thoughts” about a $15 minimum wage, especially since Seattle would be “going it alone” with a wage that is significantly higher than any other minimum wage in the nation.

Her second thoughts about a $15 minimum wage mandate have led to second thoughts about expanding her business. She had planned to open a new business in Seattle this year but has tabled the idea for now. Hall says if she considers any new locations in the near future, they will be outside the city limits.

That is one way a high minimum wage often kills job opportunities, by eliminating them even before they are created.

A city-commissioned study says a $15 minimum wage would help low-wage workers and reduce poverty. But the mandate can help only people who have jobs; this study omitted any estimations of the impact on employment. A subsequent study by a Seattle economist predicted significant job losses.

 

It would seem the Seattle economist has been proved right early. The $15 wage is not yet in effect, and it is already pushing businesses into neighboring cities and killing jobs in Seattle, as business owners stop growing their companies and hiring new workers.

Employers cannot pay workers more than the value of their output. If an employer must pay a worker $15 per hour, he must ensure the worker produces at least that amount in economic value, or the employer will be forced to reduce the cost of labor in the only legal way remaining, by cutting benefits or hiring fewer people.

That’s what is happening in SeaTac.

Northwest Asian Weekly reports employees subject to the narrowly passed $15 minimum wage law in that Seattle suburb say they have lost benefits such as 401(k) plans, paid holidays, paid vacation, free food, free parking and overtime hours. One hotel waitress said she is earning less now because tips have decreased since the high wage law. In many cases these benefits, plus the previous minimum wage, added up to more than workers receive under the $15 wage law.

As one SeaTac worker put it, “It sounds good, but it’s not good.”

SeaTac’s $15 minimum wage has been in effect less than six months, and workers in that city are discovering the high-wage mandate comes with a steep cost. In Seattle, a minimum wage has not even gone into effect, and employers are already adjusting by canceling plans to expand and hire new workers. We can expect many Seattle businesses to cut benefits as SeaTac employers had to. Others, especially small businesses, will be forced to lay off workers.

“$15 Now!” is the battle cry of activists in Seattle. A more accurate slogan would be, “It sounds good, but it’s not good for workers.”

The last thing workers need is fewer jobs.


 

Erin Shannon is Director of the Center for Small Business at Washington Policy Center in Olympia, Washington. She is a guest contributor at Cascade Policy Institute, Oregon’s free market public policy research organization. A version of this article originally appeared in the Puget Sound Business Journal.

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U.S. Supreme Court rules that freedom of association trumps public sector union demands

The U.S. Supreme Court today ruled in Harris v. Quinn that home health care workers in Illinois cannot be forced to pay public sector union dues because that violates their freedom of association as protected by the First Amendment. The decision should help similar workers in Oregon who are being forced to pay dues to the state’s largest public sector union, SEIU.

The Court ruled that requiring in-home health care workers to pay so-called “fair share” fees for public sector union collective bargaining costs violates their constitutional rights by compelling them to associate with the union. The Court has previously found that freedom of association is an essential part of Freedom of Speech, which is protected in the First Amendment.

Even though it is narrowly crafted, today’s decision should apply to other states like Oregon in which public sector unions are allowed to force in-home health care workers to either join their union or pay “fair share” dues. And, the arguments used by the Court to uphold the constitutional freedom of association rights of home health care workers should be expanded in future cases to workers in general who object to being forced into paying fees for union services they don’t want.

In Oregon, for example, more than 30 percent of union households would opt if they could, and some 30 percent of SEIU public employees have already opted out of membership but are required to pay “fair share” dues for collective bargaining costs. While today’s Court decision may not free them from that financial burden, it will bolster the case that their freedom of association is being violated. At some point, the Court will need to further clarify who can and who cannot exercise their First Amendment rights when faced with paying fees to an organization they would choose not to support.

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Seattle’s $15 Minimum Wage: A Wolf in Sheep’s Clothing

By Erin Shannon

On June 2 the Seattle City Council made Seattle the first city in the nation to mandate a $15 minimum wage for all workers. But far from being a victory for workers, a super-high minimum wage is likely to cause more harm than good by destroying businesses and reducing workers’ options.

Effective April 1, 2015, all businesses must pay $10-$11 per hour, with the remainder of the $15 wage phased in over seven years for small businesses (those with less than 500 employees), and three years for large businesses (those with 500 or more employees).

While supporters of the $15 wage say it will have no negative impact on the city’s employment or economy, the reality is it is already killing jobs. Some business owners in Seattle say they are holding off on opening new business or expanding their current business, delaying plans to hire new workers and even moving into neighboring cities. In SeaTac, where some employers have been paying a mandated $15 minimum wage for six months, the benefits workers used to receive have been reduced or eliminated and prices have increased for consumers.

Restaurants, in particular, will be hit hard by Seattle’s new wage. The Puget Sound Business Journal reports that one restaurant owner calls the $15 wage a “mortal threat” and has halted plans to open another location. The CEO of a restaurant chain says his company is also holding off opening new locations in Seattle, and will likely be forced to reduce employees’ health benefits. The company currently offers health care coverage to employees who work at least 25 hours per week, but that may now be increased to 30 hours per week. That company will also likely eliminate tips for servers, and instead automatically charge customers a service charge or gratuity that would be split between servers and other restaurant staff, such as kitchen workers.

And it is not just Seattle workers who are losing potential jobs and reduced benefits. In a twist, the $15 wage is impacting job creation and worker benefits in other cities.

A pizza franchise with 11 locations, six of which are in Seattle, that employs 430 workers has tabled plans to open another location in Lynnwood over concerns the new location and its new jobs would bump the company into the “big business” category. Under the new law, “big businesses” have a shorter phase-in of the high wage; they must begin paying all workers $15 over the course of three years. By

staying under the 500-employee threshold, the company remains a “small business” and has up to seven years to phase in and adjust to the new wage for its six Seattle stores. That is 70-plus jobs workers in the city of Lynnwood just lost.

The company that says it may reduce health benefits in response to the $15 wage would have to do so for all of its workers, even those outside Seattle. Federal law requires companies to offer the same health benefits to all employees. So if the company is forced to increase the threshold to qualify for health benefits in order to offset the new high wage of employees in Seattle, it must increase the benefit threshold for all employees, including those earning a lower minimum wage in other cities.

The CEO of the chain restaurant warns that many small, mom-and-pop businesses will go out of business as a result of the increased labor costs: “Successful downtown restaurants will find a way to make it work, but smaller restaurants will die.”

This sentiment is echoed by the CEO of CKE Restaurants, which owns Carl’s Jr. and Hardee’s. Andy Puzder, author of the book Job Creation, says the push for a higher minimum wage is the one of the greatest threats facing restaurants: “I think you’ll see a lot of restaurants closing. I don’t think that restaurants can operate profitably if they’re paying a $15-an-hour minimum wage.”

Some of Portland’s leaders want to imitate Seattle, but they should think again. Those who support higher minimum wages may not have bad motives, but good motives in support of bad policy still result in driving job creators out of our communities and hurting the very people they want to help.


 

Erin Shannon is Director of the Center for Small Business at Washington Policy Center in Olympia, Washington. She is a guest contributor at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Does a Higher Minimum Wage Always Benefit Workers?

By Erin Shannon

The debate over raising the minimum wage is everywhere. Fast food workers around the country have been striking for higher pay, Oregon’s minimum wage is set to increase to $9.10 per hour in January, and Seattle Mayor Mike McGinn is demanding that Whole Foods pay workers there more than the company’s current average wage of $16.15 per hour. But while Oregon’s neighbors to the north already have the highest minimum wage in the country at $9.19, a dramatic minimum wage battle is set to take place in SeaTac, Washington. Voters there will decide in November whether the city will increase the minimum wage for workers in SeaTac’s hospitality and transportation industries to $15 per hour.

Proponents of SeaTac’s Proposition 1 argue a mandated higher minimum wage than the state’s current minimum of $9.19 per hour is necessary to help lift low-wage workers out of poverty. Plenty of research shows that forcing a big increase in the minimum wage would have the opposite effect, hurting small businesses and pricing many low-wage workers out of their jobs.

But the most compelling arguments against a super-high minimum wage come from homegrown Washington businesses with real-world experience.

Take, for instance, some of Seattle’s most popular restaurants. Restaurant owner Tom Douglas voluntarily raised the wages of the employees of his 14 restaurants to $15 an hour last month. Douglas says the wage increase was a personal and business decision that he can afford after years of profitable success with his restaurants.

But Douglas readily points out that if he were forced to pay the equivalent of such high wages when he opened for business in 1989, he would be out of business today: “You know, if I were to try and do what I’m doing now when I first started out 24 years ago, I would be bankrupt. I couldn’t have done it. So I think there is a time and place for this and I think there is a sense that in my mind that, you know, you have to be the business owner that wants to do it. I’m not a big believer in the whole government mandate.”

Seattle fast-food favorite, Dick’s Drive-In, provides another convincing argument. Dick’s has made the choice to reward its 180 fast-food employees with reasonable pay and great benefits. The Seattle Times reported that Dick’s offers workers a starting wage of $10 per hour, as well as merit raises, employer-paid insurance, up to $8,000 for child care or college tuition, a 401(k) retirement program with employer match, paid time for volunteer service, and up to three weeks paid vacation.

Government has not forced Dick’s to provide generous wages and benefits; the company does it because it chose a business philosophy that works for them. Dick’s Drive-In founder Dick Spady ran his business according to two rules: “The No. 1 job of a business is to make a profit. If you don’t, it’s not worth anything. No. 2 thing is to take care of your people. They’re the key to success.”

These two rules continue to drive Dick’s business model. But the company’s vice president and the founder’s son, Jim Spady, recently told The Seattle Times that forcing businesses to pay a high minimum wage, such as the proposed $15 per hour, will hurt small businesses, especially new ones. These businesses rely on less experienced or low-skill workers and do not have the profit margin to withstand a massive forced wage increase.

Spady points out that many minimum- or low-wage companies, like Dick’s, are “transitional employers,” where the vast majority of workers start with no experience, develop valuable work skills, and end up moving on to somewhere else. “The way to improve the wages of the poorest people is to encourage them to upgrade their skills, not to pass a law that requires we pay X dollars an hour….So if you force law-abiding businesses to pay more, they will—or they will automate their processes so they use way less labor….So what these high minimum wage laws do is they help a few people get better wages, but a lot of current people will lose their jobs.”

Forcing employers to pay starting workers $15 per hour may make some people feel good, but it will have consequences. It may force many employers out of business, or reduce the number of jobs and hours available. In the case of Dick’s, it may result in the loss of many of that company’s popular employee benefits. Or it may result in young or inexperienced workers being squeezed out of the market by their more experienced counterparts. These workers don’t earn $15 an hour; they get zero.

The real-world consequences of minimum wage increases may vary, but they will happen. And none of them will help low-wage workers. No matter what happens in SeaTac this November, Oregon lawmakers should keep that in mind.

Erin Shannon is Director of the Center for Small Business at Washington Policy Center in Olympia, Washington. She is a guest contributor at Cascade Policy Institute, Oregon’s free market public policy research organization. A version of this article originally appeared in the Puget Sound Business Journal.

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Right to Work is Right for Oregon

Please join us for Cascade’s monthly Policy Picnic led by Cascade Founder Steve Buckstein on Wednesday, October 16th, at noon.

Since the U.S. Supreme Court Beck decision in 1988, no American must join a union to hold a job. But in 26 states, including Oregon, workers still have to pay union dues. The plaintiff in that historic court case, Harry Beck, is now an Oregonian. He recently told Cascade that “Beck Rights are not enough. No one should be forced to pay dues to a union they choose not to join.” Come join Steve Buckstein to discuss this situation, and what Oregonians can do now to grant workers more employee choice.

Admission is free. Please bring your own lunch. Coffee and cookies will be served. Space is limited to sixteen guests on a first come, first served basis, so sign up early. To RSVP, please fill out the ticket form below.

 

Sponsored By

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Take That First Job

A week after Labor Day, The Oregonian published a front-page story about Oregonians who rely on public assistance and how state officials want to help them transition into the workforce. What the article doesn’t mention, however, is that in 13 states, including Oregon, being on welfare can pay more than $15 per hour. The level of public assistance currently available to welfare recipients, compared with the wages they might earn for entry-level work, can act as a severe disincentive to taking a first job and breaking the cycle of long-term dependence.

According to a new study by the Cato Institute, welfare currently pays more than a minimum-wage job in 35 states. That’s more than $31,000 per year, tax-free. Instead of helping people to transition into the workforce, ever-expanding government programs―and the tax disincentives of earned income―can trap the poor at the bottom of the economic ladder just as they are trying to begin the climb.

In The Work Versus Welfare Trade-Off: 2013, authors Michael Tanner and Charles Hughes compare welfare benefits available to a “typical welfare family” (which they define as a single mother with two children) with the wages the adult would need to earn to take home an equivalent dollar income. The authors note that reports on welfare commonly focus on the cash-benefit program Temporary Assistance for Needy Families (TANF), giving the impression that welfare benefits provide families with “a bare subsistence level of income.” “In reality,” Tanner and Hughes write, “the federal government currently funds 126 separate programs targeted toward low-income people, 72 of which provide either cash or in-kind benefits to individuals.” This being the case, a more accurate assessment of the value of welfare “is likely to be far higher than simply the level of TANF benefits.”

The conclusion? In many states, a welfare recipient would lose money by accepting full-time work instead of continuing to rely on public assistance. Welfare benefits are tax-free, so they can exceed the take-home pay a typical recipient could expect to earn entering the workforce. According to the Cato study, “[i]n 11 states, welfare pays more than the average pre-tax first year wage for a teacher. In 39 states it pays more than the starting wage for a secretary. And, in the 3 most generous states a person on welfare can take home more money than an entry-level computer programmer.”

With disincentives like this, it’s hard for people with few skills to give up the security of a welfare check for any kind of paid work. For those with tenuous work habits, or who are very young, it may take even more motivation to forgo welfare (and the leisure time they have while not holding a job) in favor of the hard work, inconvenience, and discipline involved with earning that first entry-level wage. But it is precisely by working that people gain the skills and experience needed to progress in a job, get promoted, earn raises, receive further education or training, create professional networks, think in longer timeframes, build assets, and be in a place where new doors of opportunity can open.

Both research and common sense clearly demonstrate that work is crucial to escaping poverty, beginning with a low-wage, entry-level, or even part-time job if necessary. The U.S. Census Bureau reported in 2010 that only 2.6 percent of full-time workers and 15 percent of part-time workers are poor, according to Federal Poverty Level standards. In contrast, 23.9 percent of adults who do not work at all are poor. A widely cited 2009 Brookings Institution study by Ron Haskins and Isabel Sawhill likewise asserted that three key factors in avoiding poverty in adulthood (and becoming middle class) are to finish high school, to work full time, and to marry before having children. Only two percent of people in the U.S. who do all three of those things live in poverty.

Unfortunately for those who want to leave welfare and become wage earners, the short-term financial consequences are not in their favor while they have few skills, limited education, or little work experience. If young people at the point of entry to work, and people who currently rely on public assistance, lose the belief that earning a paycheck is better in the long term than drawing a benefit check, the cost to their futures will be significant. The workforce participation rate for men 16-24 has dropped from 80% in the 1970s to about 58% today. Young men, especially with less education, are increasingly opting out of the workforce, and not just due to a weak economy. An enabling factor is that with all the government entitlements available, work doesn’t seem to pay.

Many welfare recipients do want to work and are trying to find employment. But many others will continue to make what seems to them to be a rational choice to stay on welfare if it pays more. If policymakers want to reduce dependence and reward work, they should strengthen welfare work requirements and resist allowing the cumulative benefits of welfare to continue to outpace earned income. Tax reform allowing low-wage workers to keep more of their own money (such as the recent temporary reduction in the FICA tax) would be a great boost for people leaving welfare for work. Taking a paying job is and always will be the on-ramp to the road to the middle class.

Kathryn Hickok is Publications Director at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Vincent Vernuccio Talks on Worker Freedom

Mackinac Center for Public Policy’s labor expert Vincent Vernuccio came to Portland in September to discuss how Michigan secured the freedom for employees to choose whether or not they want to pay for union representation. Here is his talk before the Executive Club on September 4th:

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Press Release: Angry Protesters Reject Proposals for Employees’ Freedom to Choose

For Immediate Release

Media Contact

Patrick Schmitt, patrick@cascadepolicy.org

503-242-0900

Angry protesters reject proposals for
employees’ freedom to choose

Attendees and Speaker Harassed at Northwest Employee Freedom Event

VANCOUVER, Wa. – Several dozen union protesters marched outside Clark College’s Columbia Tech Center in Vancouver on Thursday evening. The hostile group tried to block attendees from entering the event venue scheduled to hold the first Northwest Employee Freedom One Night Event, jointly sponsored by Cascade Policy Institute of Portland, Oregon and The Freedom Foundation of Olympia, Washington.

After yelling, harassing, and shoving event attendees and organizers, protesters entered the venue and began shouting and using bullhorns to disrupt the event. The keynote speaker, Mackinac Center for Public Policy’s labor expert Vincent Vernuccio, was also spat on by a protester. The Vancouver Police Department was called and escorted protesters out of the event center. The two who refused to leave were arrested for trespassing.

This peaceful gathering of Washingtonians and Oregonians was meant to educate them on the story of how Michigan secured the freedom for all of its public and private sector employees to choose whether or not they want to be represented by a union without financial consequences.

“This kind of behavior is most saddening because it shows a real lack of understanding of what Cascade Policy Institute wants for Oregon,” said Cascade founder Steve Buckstein.

“We do not seek to end unions or union representation. We simply want all Oregonians to have the right to choose whether or not union membership and representation is something they desire for themselves,” he said. “All Oregonians deserve that right, even those who reject our efforts.”

“At the end of the day, this is a fight for freedom and justice. No amount of harassment or intimidation will change that fact,” he ended.

Photos from the event, including images of protesters and arrests, can be found here: http://on.fb.me/1aUbH2C

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Statement on Employee Freedom for All Oregonians This Labor Day

While the first Labor Day was celebrated as a “workingman’s holiday” 131 years ago, today Americans in all sectors of the economy celebrate the day.

And when we are remembering the effort that has gone into improving the working conditions of Americans, let us also remember that freedom of association is important to all Americans. Unfortunately, workers in over half of the states, including Oregon, do not always possess that freedom in their workplaces.

In 24 states, all workers have the right to work for an employer whether or not they choose to join a union or pay dues for collective bargaining and related union services. Workers in Oregon and 25 other states do not yet have this freedom. But this doesn’t have to be the case.

The Public Employee Choice Act (currently known as IP9) is awaiting court approval to begin gathering signatures that will place it on the November 2014 general election ballot. Oregon voters then will have the opportunity to let public employees choose whether or not they want to be in a union or to pay union dues.

This freedom to keep your own money when you need it for your family or to keep it away from political causes you don’t support is within the reach of Oregon public employees.

Let’s take this holiday to remember that all workers deserve this opportunity to make their own decisions about whom they associate with, and where their hard-earned money goes.

Steve Buckstein is founder and Senior Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization. He will be presenting more on why Oregonians deserve employee freedom at Cascade’s Northwest Employee Freedom One Night Event at Clark College in Vancouver, Washington on September 5th.

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This Labor Day, Celebrate the Rights of All Workers

By Paul R. Farago and Angela Eckhardt

This is a slightly updated version of a Commentary the authors originally published in August 2000.

In 1887 Oregon was the first to make Labor Day an official state holiday. Labor Day was intended to be a celebration of American workers’ achievements and a rallying call for workers’ rights. Today, as we reaffirm our support of workers’ rights, we should rethink what exactly that means.

Unionism was initially designed to be a means for the individual worker to use toward the creation of a better work environment. But now the union leaders and the individual worker have switched places in priority. The political power of labor unions has increased, but not to the benefit of individual workers.

One Oregonian, Harry Beck, knows this firsthand. In the mid-1960s Beck began to question his union, the Communication Workers of America (CWA). What started as a struggle for more local union autonomy developed into a fight over misuse of forced union dues. Beck ultimately prevailed in the 1988 landmark U.S. Supreme Court decision, CWA v. Beck.

Beck describes himself in his youth as “an avid union man.” Returning from duty in the Air Force to his career in telecommunications, Beck “traded [his] M-1 carbine for a picket sign and parades for picket lines.”

Soon, however, Beck confronted the dark underbelly of union politics. With CWA control centered in several major cities, suburban workers like Beck, who lived outside Washington, D.C. at the time, lacked a voice. He and his colleagues tried to get someone elected to their union’s Executive Committee, but as he reports, “the election process was rigged.” Next, they tried to form their own Local, and were denied. Finally, Beck withdrew his union membership.

Although he was no longer a union member and had no voting power, Beck was still required to pay the equivalent of dues in the form of an Agency Fee. He began to notice where his “stolen money” was going―particularly in terms of political spending. “The union’s publications were demanding their union people vote for Hubert Humphrey,” Beck explains. “That was the straw that broke my back.”

In 1976, 20 employees who chose not to be union members challenged CWA’s use of their agency fees for purposes other than collective bargaining, contract administration, or grievance adjustment. The National Right to Work Foundation represented the workers.

The District Court ultimately ruled, and the U.S. Supreme Court concurred, that only 21% of CWA’s spending was on collective bargaining matters. Fully 79% was misspent on union politics. The courts further ruled that workers cannot be forced to support political speech through union dues.

Not surprisingly, the Beck decision has been ignored by labor unions. Today, most workers do not know of their “Beck Rights,” or have difficulty exercising them. Unions continue to rake in billions of dollars in coerced payments each year, and dedicate vast sums to political candidates and causes without first receiving individual workers’ authorization.

We should be grateful for people like Harry Beck who struggled for the rights of individual union workers. There are now 24 “Right to Work” states that have gone a step beyond Beck Rights. In these states workers who choose not to be union members are also freed from the obligation of paying for collective bargaining representation they don’t want. Oregon is not yet such a state, but Oregon voters may have the chance to vote on the Public Employee Choice Act (Initiative Petition 9) in November 2014. The initiative would allow anyone to become or remain a public employee without being required to join a labor union or pay dues or “fair share” fees.

This Labor Day, let’s celebrate all who have made this country a free and prosperous nation, be they wage earners or entrepreneurs. Let’s respect one another enough to give more Americans the opportunity to make our own decisions about representation and political spending. In the spirit of Harry Beck, let’s uphold the rights of the individual worker.

Paul R. Farago is a former board member and Angela Eckhardt is a former program director at Cascade Policy Institute, a Portland-based think tank.

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Surprise! Mandatory Paid Sick Leave Has Real Costs

By Erin Shannon

In March, Portland’s City Council unanimously voted to enact mandatory paid sick leave for Portland businesses. While the law sounds well intentioned, it is poised to hurt the very employees it’s meant to help and may damage the businesses that employ them. A recent survey by the Employment Policies Institute (EPI) reveals that Seattle’s 2012 paid sick leave ordinance is increasing the cost of doing business there. Our law could have similar results in Oregon when it takes effect in January.

The Seattle survey targeted service industry employers, such as restaurant and retail businesses that would be newly providing paid sick leave to employees as a direct result of the new law. More than 56% of these employers said the new mandate would increase their cost of doing business, with over one quarter of those saying the increase would be “big.”

Proponents of paid sick leave argue employers will offset those increased costs through reduced employee turnover. But the EPI survey shows two-thirds of Seattle employers who have started providing paid sick leave do not believe the law will reduce turnover, and one third of Seattle employers think the law will increase unscheduled absences among employees taking advantage of the benefit even though they are not sick.

These employers are likely not off the mark. A survey by the Urban Institute in San Francisco found few employers reported reduced employee turnover as a result of that city’s paid sick leave law. As one business owner noted in that survey, if every employer is required to provide the benefit of paid sick leave, turnover becomes a moot point because that benefit is no longer an incentive for an employee to remain with one employer over another.

Regardless, many employers are not relying on offsetting increased business costs with reduced employee turnover, because they are offsetting those costs in other ways. In Seattle, employers reported that in response to the new paid sick leave mandate they had taken one of the following cost-cutting measures:

  • 15.7% of employers raised prices in response to the paid sick leave law.
  • 18.3% of employers reduced hours and staff.
  • 17.3% increased the cost to employees of current benefits, or eliminated benefits they used to offer.

These survey results are not unusual. Surveys in San Francisco and Connecticut, which both mandate paid sick leave, revealed similar results.  A survey of San Francisco employees by the Institute for Women’s Policy Research found nearly 30% of the lowest-wage employees were laid off or given reduced hours after passage of that city’s paid sick leave mandate. The Urban Institute survey similarly found some San Francisco employers had cut back employee bonuses, vacation time, and part-time help to absorb the new costs. In Connecticut, employers reported that state’s paid sick leave law forced them to raise prices, reduce hours and wages, and sometimes eliminate jobs.

There is no arguing that mandatory paid sick leave increases the cost of doing business. It is a fact. Employers are forced to pay the wages of the worker who has called in sick, while paying another worker to fill in for the sick worker. Alternatively, the employer can opt to let the sick employee’s work go unfinished and sacrifice service, productivity and sales (while still paying the sick worker). Either way, it is a cost to the employer.

Some employers, especially the larger ones, can absorb the increased cost. Others, like restaurants, already allowed employees to trade shifts with sick workers without the law, thereby costing no one. But many employers, especially those running small businesses, operate on a shoestring profit margin. When the costs to run their business go up, they simply cannot afford to absorb them. They have no other choice than to pass those costs on to consumers, or to the very workers paid sick leave is designed to protect.

Erin Shannon is Director of the Center for Small Business at Washington Policy Center in Olympia, Washington. She is a guest contributor at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Northwest Employee Freedom One Night Event

On Thursday, September 5 Cascade Policy Institute will be partnering with the Freedom Foundation to host the Northwest Employee Freedom One Night Event. National labor policy expert Vincent Vernuccio of the Mackinac Center for Public Policy will share the story of how Michigan passed historic labor reform last year, becoming the 24th right-to-work state. Join us with other labor experts to learn more about the local efforts to increase employee freedom in Washington and Oregon.

In Oregon, signatures may soon be solicited to place Initiative Petition 9 (the Public Employee Choice Act) on the November 2014 General Election Ballot. It would allow anyone to become or remain a public employee without being required to join a labor union or pay dues or “fair share” fees.

F. Vincent Vernuccio

Vernuccio is director of labor policy at the Mackinac Center for Public Policy. He is a graduate
of the Ave Maria School of Law in Ann Arbor, Mich. Under President George W. Bush he served as special assistant to the assistant secretary for administration and management in the Department of Labor. Vernuccio has published articles and op-eds in such newspapers and magazines as Investor’s Business Daily, The New York Times, The Washington Times, National Review, Forbes and The American Spectator. He has been cited in several books, and he is a frequent contributor on national television and radio shows, such as “Your World” with Neil Cavuto and Varney and Company. Vernuccio is a sought-after voice on labor panels nationally and in Washington, D.C. A regular guest on Fox News channels, Vernuccio has been described by Stuart Varney as a “top union watchdog.” He has advised senators and congressmen on a multitude of labor-related issues. He testified before the United States House of Representatives Subcommittee on Federal Workforce, Postal Service and Labor Policy. Vernuccio lives in Ann Arbor, Mich.
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In Defense of Liberty: Unions, Right-to-Work, and Majority Rule

By F. Vincent Vernuccio

“We are a democracy, we operate by majority rule. Therefore, we can force you to give us your money.” Such is the message from unions justifying forced dues and opposing laws that protect worker freedom.

It is liberty, not democracy, that is the highest form of society.

Make no mistake, democracies, direct or representational, are better than any other form of government. However, they are only as good as the extent to which they protect the liberty that individuals enjoy. These liberties exist in spite, rather than because, of government institutions.

Many opponents of right-to-work laws justify their ability to force workers to financially support unions because those workers are within a group whose members at one time voted to force everyone in the group to pay.

This is different from voluntarily joining an organization that requires all members to pay dues for the use of their facilities, such as a golf club or a gym. Joining or being associated with a union is not voluntary or a matter of choice. In most cases it is a condition of employment.

Workers do not take a job at Ford because they want to join the United Auto Workers union. They join the UAW because they took a job at Ford. Michigan became the 24th Right to Work state earlier this year so that such workers can keep their jobs without being forced to pay union dues. Likewise, Oregon public employees who are now forced to pay union “fair share” dues against their will may very well support IP9, an initiative petition that would allow Oregon public employees to totally opt out of paying such dues if they wish. Once the Oregon Supreme Court approves IP9’s ballot title and slightly more than 87,000 valid voter signatures are collected, it will appear on the November 2014 General Election Ballot.

The union defense of “we can do anything we want because we have majority rule and we are a democracy like the government” fails on many fronts.

The first and most glaring inaccurate comparison is that the United States is a direct democracy. With the exception of some very small towns and state and local ballot measures, our government is a republic.

Furthermore, we are not just a republic that elects representatives to make our laws, but rather we are a constitutional republic in which certain rights of the individual are protected against laws made by the “majority.”

Pure majority rule in our country has its necessary limits.

The Founding Fathers correctly worried about tyranny of the majority and created several protections against it. James Madison warned against taking liberty out of a democracy. In The Federalist Papers No. 10 he wrote, “Liberty is to faction what air is to fire, an aliment without which it instantly expires.”

That is where defenders of forced unionism fail. When liberty is taken out of democracy and the majority is given the ability to steal from the minority, that no longer is a good and noble form of government or representation. Thankfully, that is not, for the most part, the case in America.

Even if the majority of a small community in the United States with a town hall style democracy or a state with voter initiatives and referendum voted for a law that banned people from going to church, it would not stand because of the First Amendment to the Bill of Rights in the United States Constitution.

It would not matter if a majority of the voters supported the law, majority rule would not be allowed to infringe on the rights and liberties of the minority protected by our Constitution.

Finally, unions are not government. The First Amendment’s freedom of association itself protects workers’ rights to ban together and join unions.

The special privileges granted unions include acting as the monopoly exclusive representative for workers, compelling an employer to negotiate with them, and other collective bargaining abilities that come from the laws government made such as the National Labor Relations Act, National Railway Act, and various state labor laws among others.

Unions, on the other hand, do not provide for government. If someone breaks one of the government’s laws or threatens to harm its citizens, the government, because it has a judicial system, has the ability to arrest and even to incarcerate that person.

While unions in non-right-to-work states can get a worker fired for not paying them (again a privilege granted to them by government) they do not have the ability to create their own jail and incarcerate that worker.

The reason for these limitations is simple—unions are not government. They cannot have a police force, they cannot have jails, and most of all they were never formed to govern citizens.

As unions try to use the majority rule argument to justify their ability to compel others to pay them, they must be reminded that there are rights more fundamental than giving the many carte blanche authority over the few.

Purveyors of this argument must be reminded: When there is a conflict between liberty and democracy, we must always err on the side of liberty.

F. Vincent Vernuccio is director of labor policy at the Mackinac Center for Public Policy and a guest contributor at Cascade Policy Institute. He is a graduate of the Ave Maria School of Law in Ann Arbor, Michigan. A version of this article originally appeared in Michigan Capitol Confidential.

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Employer Mandate a Recipe for Unemployment

By Sally C. Pipes

Walmart recently announced that it will not offer health insurance to new employees who work less than 30 hours a week. It’s reserved the right to do the same for existing workers. For these new policies, Walmart’s employees can thank ObamaCare.

The federal health reform law’s “employer mandate” requires companies with over 50 employees to provide insurance for anyone working 30 or more hours a week or face fines. That creates a strong incentive for companies to push their workers into a workweek fewer than 30 hours—and thereby avoid the additional costs ObamaCare intends to saddle them with.

Walmart isn’t alone. The employer mandate will make it harder for many businesses to operate efficiently, to hire new employees—or to ensure that existing employees can stay on full time.

Papa John’s CEO John Schnatter recently came under fire for stating that the employer mandate will take a bite out of his company’s pie. He said that his pizza chain’s franchisees would likely cut back employee hours—and that ObamaCare would add up to 14 cents to the cost of each pizza.

The owner of several Denny’s franchises in Florida has contemplated slapping a 5-percent ObamaCare surcharge on every meal, and a New York Applebee’s franchisee has said he may stop hiring because of the additional costs borne by the law.

ObamaCare’s defenders suggest that these businessmen are just greedy. But it’s been widely known that the employer mandate would deliver a hefty blow to businesses since President Obama’s health care reform law was merely a bill.

In early 2010, the Congressional Budget Office (CBO) estimated that the employer mandate would force businesses to pay $52 billion in tax penalties from 2014 to 2019. That money will have to come from somewhere—whether higher prices for consumers or reduced wages for workers.

Further, the CBO recently cautioned that the employer mandate would cause a 0.5-percent reduction of the American labor force. That may not sound like much—but it’s equivalent to eliminating about 700,000 American jobs.

These job cuts will hurt the working poor most. According to a paper by Harvard economist Katherine Baicker and University of Michigan economist Helen Levy, those who earn within three dollars of the minimum wage are at the greatest risk of losing their jobs thanks to an employer mandate. Baicker and Levy concluded that “1.4 percent of uninsured full-time workers would lose their jobs” under the mandate.

In some cases, the employer mandate may backfire—and actually encourage businesses not to provide health insurance.

Businesses that do not furnish coverage must pay $2,000 per employee, excepting the first 30, if at least one of their workers receives subsidized coverage through the new insurance exchanges. Folks with incomes of up to four times the poverty level, or nearly $90,000, could qualify for subsidies. So a firm with 50 employees could be looking at a fine of $40,000.

But health insurance is expensive—far costlier than the fine. Average premiums for single coverage were north of $5,600 in 2012 and above $15,700 for family policies, according to the Kaiser Family Foundation. Many employers may find it more economical to pay the fine and turn their workers loose in the exchanges.

Indeed, former CBO Director Douglas Holtz-Eakin estimates that as many as 35 million Americans out of about 160 million could lose their existing employer-provided insurance thanks to—ironically enough—the employer mandate.

Taxpayers will pay the price. Richard Burkhauser and Sean Lyons of Cornell and Kosali Simon of Indiana University estimate that the feds could have to spend an additional $48 billion a year if employers dump their workers into the exchanges.

For now, though, the employer mandate’s impact will largely be felt in the business community, at firms as big as Walmart and as small as the local diner. “I don’t know what secret [the politicians] know, where they just assume we can write them a check,” Sam Facchini, owner of Metro Pizza in Las Vegas, recently told a Nevada newspaper. “We can’t pay for this. Most of us operate on a thin margin and trying to stay in compliance [with the law] will make things much tighter.”

Sally C. Pipes is President, CEO, and Taube Fellow in Health Care Studies at the Pacific Research Institute in San Francisco. She is a guest contributor for Cascade Policy Institute. Her latest book is The Pipes Plan: The Top Ten Ways to Dismantle and Replace ObamaCare.

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Oregon Cosmetology Regulations Entangle Hair Braiders

By Shane Young

Did you know you need a license to braid hair in Oregon?

Last year, Amber Starks of Portland tried to start a hair braiding business geared towards young girls in foster care. The State of Oregon informed Starks that she could not start her business without a cosmetology license. A cosmetology license typically requires over $1,000 and a minimum of 1,700 hours of training focusing heavily on the proper use of hairstyle chemicals and heating equipment―things hair braiders don’t use.

Starks then tried to braid hair as an unpaid volunteer with the state foster care system. She was told once again that it would be illegal for her, and nearly anyone else, to dress hair outside their own homes without a license.

Regulations like these prevent people like Starks from providing simple yet desired services at competitive market prices. Meanwhile, those with cosmetology licenses are protected from competition in markets such as hair braiding―fields that hardly require 1,700 hours of training.

Where public health and hygiene are issues, the state could require professional braiders to undergo a basic health course in lieu of a cosmetology license. By analogy, the Oregon Food Handler’s Card certifies that people who prepare and serve food for the public know basic food safety.

In 2005, Washington State declared that braiders no longer need cosmetology licenses. It’s time for Oregon to do the same.

Shane Young is a research associate at Cascade Policy Institute, Oregon’s free market public policy think tank.

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Oregon’s Minimum Wage Prices Teens Out

By Michael Nielsen

Oregon’s minimum wage laws are changing our economy, and it doesn’t seem to be for the better. When analyzing Monthly Current Population Survey data from the Census Bureau for 2012, it is suspicious that we are behind the rest of the nation in teen employment, while our lowest paid workers are paid the second highest in the country. Teens, who often hold entry-level, minimum wage jobs, are severely disadvantaged by this policy.

Oregon’s unemployment among high school graduates aged 18 to 20 tops the national charts, with a rise of more than 200% from 2008 to 2011.* This gigantic leap dwarfs the U.S. unemployment rate for the same demographic, which only shows an increase of around 30%. Our minimum wage, being tied to inflation, has increased steadily over the last four years and has been harming the bottom line for employers because of higher labor costs.

It seems impossible that increases in the minimum wage are helping employment rates among teens. Considering that Oregon’s young workers are employed at some of the worst rates in the country, it seems probable that our minimum wage laws are pushing young workers out of the labor market. Our state wage regulations should be seriously reconsidered.

* This number was corrected on 7-9-12 from “more than 300%” in the original post. While the rate did more than triple from 2008 to 2011, the increase from 11.1% to 35.4% is actually about 218%, not 300%.

 Michael Nielsen is a research associate at Cascade Policy Institute, Oregon’s free market public policy think tank.

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Union Members Can’t Be Forced to Pay for Political Activities

By Victoria Leca

Last Thursday the Supreme Court rejected the idea that public sector unions can charge non-members for political activities.

It was a 7-2 decision, and the practice was struck down on First Amendment grounds. The majority opinion held that while employees can be required to pay dues for the direct benefits they get from the union, they cannot be forced to give money to unions for political activities.

At first the Service Employees International Union offered refunds to employees who were non-members and who disagreed with the political cause the union was promoting, but the Supreme Court ruled that the individuals had to choose to “opt-in” to the payment.

The workers who do not join unions should not be forced to pay for the union’s political activities. The fact that the Supreme Court majority decided that the worker has to opt-in to paycheck deductions, rather than opt-out of these payments, restores protection of individuals’ right to free speech and property.

Coming on the heels of Governor Scott Walker surviving his recall election in Wisconsin, this is one more victory for the rights of workers to be independent of union control. Workers shouldn’t have to join a union to have the right to work, and they certainly shouldn’t be forced to make political contributions against their will.

Victoria Leca is a research associate at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Renewing Labor’s Moral Sense

New Jersey Governor Chris Christie gave a speech Tuesday expressing concern about Americans’ shifting attitudes toward work and government.

 

“We’re turning into a paternalistic entitlement society,” he said. “That will not just bankrupt us financially, it will bankrupt us morally….We’ll have a bunch of people sitting on a couch waiting for their next government check.”

 

The workforce participation rate for men 16-24 has dropped from 80% in the 1970’s to about 58% today. Young men, especially with less education, are increasingly opting out of the workforce, and not just due to a weak economy. An enabling factor is that with all the government entitlements available, work doesn’t seem to pay.

 

If young people, especially at the point of entry to work, lose the belief that earning a paycheck is better than drawing a benefit check, the human cost will be significant.

 

The value of human labor is deeper than its cash value. Work is an extension of the human personality. Through labor we exercise talent, creativity, and initiative. We don’t merely exchange one thing for another, we develop as persons. We participate in the act of creation.

 

None of that happens with a welfare check. For a healthy society, we must renew our moral sense of the value of labor. We must stop asking government to provide quick cash and remember that raw purchasing power isn’t the measure of man.

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Eric Fruits discusses how a Right to Work law would benefit Oregon

Dr. Eric Fruits, Ph.D., sits down with the Cascade Policy Institute to discuss his latest study on how a Right to Work law would be advantageous for Oregonians.

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Why Oregonians Deserve the Right to Work

The twenty-two states that have not required workers to join a union and pay union dues have enjoyed, as a group, more rapid employment and income growth, better job preservation, and faster recoveries from recession. Oregon is not one of those states, yet. Here, policymakers tried to pull us out of the most recent recession through greater state spending, funded by the Measure 66 and 67 tax increases. Research concluded that those measures actually will make our situation worse. Now, new research confirms that a better approach is for Oregon to remove a key barrier to private sector initiative and job creation by enacting a so-called “right-to-work” law.

Right-to-work laws provide job seekers and current employees the right to work for a company whether or not they choose to join a union. On February 1 Indiana became the twenty-third Right-to-Work state when its Senate approved a bill and Governor Mitch Daniels signed it into law.

A new study from Cascade Policy Institute (Right to Work Is Right for Oregon) examines the economic impacts right-to-work legislation would have on Oregon. The study is consistent with the vast majority of peer-reviewed research in finding that if Oregon were a right-to-work state, we would see improved employment and income growth. For example, enacting right-to-work legislation this year would lead to:

  • 50,000 more people working in five years; 110,000 more working in ten years.
  • $2.7 billion more in wage and salary income in five years; $7.0 billion more in ten years.
  • 14 percent more taxpaying families per year moving into Oregon from non-right-to-work states.

A right-to-work law can be viewed as part of a pro-investment package that encourages firms to locate and expand in the state. In turn, the improved opportunities would have the effect of attracting more taxpaying families to Oregon from other states, while slowing down the number who leave. By examining IRS mobility data, we found that a right-to-work policy here would increase net in-migration from non-right-to-work states by 14 percent from what it otherwise would be. That is a significant number of new families bringing their earning power and their consumer needs with them. Think how our depressed housing market could benefit from such a trend.

Our study breaks new ground by covering 70 years of data and every state and relying on what we believe to be the largest datasets ever used to study the impacts of right-to-work laws. The results demonstrate more than just a correlation between right-to-work policy and economic growth, but point toward a causal link. In other words, we conclude that the right to work actually contributes to more employment, higher incomes, more net in-migration of taxpaying households, and faster economic growth. It is, therefore, a policy we believe Oregon should adopt.

Unlike fiscal policies that must weigh spending against taxes or pit one government program against another, enacting right-to-work legislation will not take a single dime out of state coffers. Indeed, right-to-work legislation is one of the few pro-growth policies that are actually costless to enact.

Oregonians need to recognize that capital and people are mobile. Tax measures 66 and 67 push high-income people and corporations away from the state and likely will lose Oregon up to 70,000 jobs and 80,000 high-income tax filers in the ten years after their passage. Enacting a right-to-work law will put mobility to work in our favor, likely adding 110,000 jobs in ten years and 14 percent more taxpaying families from non-right-to-work states every year.

Even if our research had not shown so clearly that Oregon’s economic prospects would improve as a right-to-work state, we still would support the policy based on the non-economic benefits that the name itself implies. It is unconscionable that workers are denied the right to earn a living simply because they decline to join a union. Basic principles of liberty and justice demand that we defend everyone’s right to work without third-party interference. The right to work is, therefore, a moral as well as an economic imperative.

Click here to read the full report.

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Why Oregonians Deserve the Right to Work

The twenty-two states that have not required workers to join a union and pay union dues have enjoyed, as a group, more rapid employment and income growth, better job preservation, and faster recoveries from recession. Oregon is not one of those states, yet. Here, policymakers tried to pull us out of the most recent recession through greater state spending, funded by the Measure 66 and 67 tax increases. Research concluded that those measures actually will make our situation worse. Now, new research confirms that a better approach is for Oregon to remove a key barrier to private sector initiative and job creation by enacting a so-called “right-to-work” law.

Right-to-work laws provide job seekers and current employees the right to work for a company whether or not they choose to join a union. On February 1 Indiana became the twenty-third Right-to-Work state when its Senate approved a bill and Governor Mitch Daniels signed it into law.

A new study from Cascade Policy Institute (Right to Work Is Right for Oregon) examines the economic impacts right-to-work legislation would have on Oregon. The study is consistent with the vast majority of peer-reviewed research in finding that if Oregon were a right-to-work state, we would see improved employment and income growth. For example, enacting right-to-work legislation this year would lead to:

  • 50,000 more people working in five years; 110,000 more working in ten years.
  • $2.7 billion more in wage and salary income in five years; $7.0 billion more in ten years.
  • 14 percent more taxpaying families per year moving into Oregon from non-right-to-work states.

A right-to-work law can be viewed as part of a pro-investment package that encourages firms to locate and expand in the state. In turn, the improved opportunities would have the effect of attracting more taxpaying families to Oregon from other states, while slowing down the number who leave. By examining IRS mobility data, we found that a right-to-work policy here would increase net in-migration from non-right-to-work states by 14 percent from what it otherwise would be. That is a significant number of new families bringing their earning power and their consumer needs with them. Think how our depressed housing market could benefit from such a trend.

Our study breaks new ground by covering 70 years of data and every state and relying on what we believe to be the largest datasets ever used to study the impacts of right-to-work laws. The results demonstrate more than just a correlation between right-to-work policy and economic growth, but point toward a causal link. In other words, we conclude that the right to work actually contributes to more employment, higher incomes, more net in-migration of taxpaying households, and faster economic growth. It is, therefore, a policy we believe Oregon should adopt.

Unlike fiscal policies that must weigh spending against taxes or pit one government program against another, enacting right-to-work legislation will not take a single dime out of state coffers. Indeed, right-to-work legislation is one of the few pro-growth policies that are actually costless to enact.

Oregonians need to recognize that capital and people are mobile. Tax measures 66 and 67 push high-income people and corporations away from the state and likely will lose Oregon up to 70,000 jobs and 80,000 high-income tax filers in the ten years after their passage. Enacting a right-to-work law will put mobility to work in our favor, likely adding 110,000 jobs in ten years and 14 percent more taxpaying families from non-right-to-work states every year.

Even if our research had not shown so clearly that Oregon’s economic prospects would improve as a right-to-work state, we still would support the policy based on the non-economic benefits that the name itself implies. It is unconscionable that workers are denied the right to earn a living simply because they decline to join a union. Basic principles of liberty and justice demand that we defend everyone’s right to work without third-party interference. The right to work is, therefore, a moral as well as an economic imperative.

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Press Release: Cascade Policy Institute Report predicts 110,000 jobs for Oregon with enactment of a Right-to-Work Law

FOR IMMEDIATE RELEASE

February 2, 2012

Contact:

Steve Buckstein
Senior Policy Analyst & Co-Founder
Cascade Policy Institute
Office Phone: 503-242-0900
E-Mail: steven@cascadepolicy.org

Cascade Policy Institute Report predicts over 100,000
jobs for Oregon with enactment of a Right-to-Work law

Cascade Policy Institute just released a major economic study, The Right to Work Is Right for Oregon, which concludes that Oregon would see major economic benefits if it became a right-to-work state, where job seekers and employees are not forced to join a union and pay union dues to gain or keep their jobs.

Written by Randall Pozdena and Eric Fruits, the same Oregon economists who analyzed the negative impact of tax measures 66 and 67, the Right-to-Work study concludes that enacting right-to-work legislation this year would lead to:

  • 50,000 more people working here in five years; 110,000 more working here in ten years.
  • $2.7 billion more in wage and salary income in five years; $7.0 billion more in ten years.
  • 14 percent more taxpaying families per year moving into Oregon from non-right-to-work states.

Cascade Senior Policy Analyst and founder Steve Buckstein praised the study for not only finding a correlation between right-to-work policy and economic growth, but for actually pointing to a causal link. In other words, Buckstein stated:

We conclude that the right to work actually contributes to more employment, higher incomes, more net in-migration of taxpaying households and faster economic growth. It is, therefore, a policy we believe Oregon should adopt.

The study breaks new ground by covering 70 years of data, every state, and relying on what the authors believe to be the largest datasets ever used to study the impacts of right-to-work laws.

The study confirms that the twenty-two states that do not require workers to join a union and pay union dues enjoy, as a group, more rapid employment and income growth, better job preservation, and faster recoveries from recession. Oregon is not one of those states, yet. Buckstein argues:

Rather than repeat Oregon’s failed attempt to pull us out of recession by raising taxes on high-income individuals and corporations, a better approach is to remove a key barrier to private sector initiative and job creation by enacting an Oregon right-to-work law.

Buckstein added,

Oregonians need to recognize that capital and people are mobile. Tax measures 66 and 67 push high-income people and corporations away from the state, likely losing us up to 70,000 jobs and 80,000 high-income tax filers in the ten years after their passage. Enacting a right-to-work law will put mobility to work in our favor, likely adding 110,000 jobs in ten years and 14 percent more taxpaying families every year coming from non-right-to-work states.

Buckstein continued,

Unlike fiscal policies that must weigh spending against taxes or pit one government program against another, enacting right-to-work legislation will not take a single dime out of state coffers. Indeed, right-to-work legislation is one of the few pro-growth policies that are actually costless to enact.

Buckstein concludes,

Even if our research had not so clearly shown that Oregon’s economic prospects would improve as a right-to-work state, we still would support the policy based on the non-economic benefits that the name itself implies. Everyone should have the right to work if the employer hires them and they accept the position. No third party should be able to deny individuals the right to work simply because they decline to join a union. Right-to-work is, therefore, a moral as well as an economic imperative.

Click here to download the full report.

###

The Right to Work Is Right for Oregon
A Comprehensive Analysis of the Economic Benefits
from Enacting a Right-to-Work Law
By Randall Pozdena, Ph.D. and Eric Fruits, Ph.D.
Cascade Policy Institute • February 2012
https://cascadepolicy.org/links/43

 

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Taking Work Personally: How Individual Accounts Reward Personal Responsibility

Recently, I had a long conversation with an owner of a bakery near Medford, Oregon. He told me of the problems his company faced due to the disincentives inherent in Oregon’s unemployment insurance system. Two years ago, in the middle of the recession, this entrepreneur offered a job to a man who promptly responded that he would not be able to start work for another month. Why? Because his unemployment benefits did not run out until then.

This example is one of the more troubling stories I’ve heard about the problems created by unemployment insurance. Most are less dramatic. A friend of mine only applied for highly competitive jobs she knew she had little chance of getting. She really preferred to stay on benefits. She was expecting her child to be born soon, and it didn’t make sense to start a new job, particularly since her husband was gainfully employed.

Peer reviewed research shows that people receiving unemployment benefits commonly take longer to find a job. Unemployed workers who receive benefits take more than twice the time to find a job than those who do not. The instances of recipients finding a job increase strikingly just before UI benefits are exhausted (see graph below). That doesn’t mean individuals who use unemployment benefits are dishonest, lazy, or bad. It does mean that incentives and logic play roles in their job searches. A new job is not only work, but it is full of risks and uncertainty. In some cases, a new job may pay less than unemployment benefits.

Unemployment benefits come with certain requirements precisely because of these incentive issues. Workers must actively search for work and accept appropriate full-time employment. However, requirements are frequently ignored or misunderstood. A U.S. Department of Labor report showed overpayments in unemployment benefits across the nation amount to almost $19 billion in waste. Beating the national average of 11%, Oregon overpaid an estimated $392 million over the last three years―about 12.2% of all state unemployment benefits paid during that period, according to the Labor Department. About one third of overpayments involved workers receiving benefits when ineligible because they were not available for work or because they failed their work search requirements.

The Labor Department’s report only examined the improper payments within state programs, which usually last up to 26 weeks. These figures do not include federal unemployment benefit extensions that currently allow many workers to claim up to 99 weeks (almost two years) of benefits.

So what’s the solution?

Chile’s unemployment insurance savings accounts have cut back on the disincentives that slow the job search for many who receive unemployment benefits. Chile’s workers and employers pay a portion of wages into Unemployment Insurance Savings Accounts. Each worker has his or her own account. When a worker becomes unemployed for any reason (even if it is voluntary), he or she may draw 30-50% of the previous wage for up to five months from the personal unemployment account. Workers who are laid off with small account balances receive help from a more traditional unemployment insurance safety net. At the end of their careers, workers may keep any balance in their unemployment accounts for use in retirement.

Chile’s experience demonstrates that these accounts offer an improved safety net that also improves some of the disincentives within the U.S. system. The personal accounts system motivates workers to return to work faster so they can have more money upon retirement. Chile’s system also broadens the pool of eligible recipients, since workers own their personal accounts. That means workers who cannot accept full-time employment (like a working mother or student) and workers who quit their jobs for personal or professional reasons (who are not covered under our system) would have some limited coverage under Chile’s system. This system may not solve all overpayment problems, but it would prevent a significant portion of overpayments, since ultimately workers are first paid from their own accounts.

One recent state-specific study (commissioned by Cascade Policy Institute) by economists Stéphane Pallage and Christian Zimmerman showed that switching to a system similar to Chile’s unemployment accounts system would benefit 97% of Oregonians. Even those who are most likely to be unemployed or most likely to have empty personal accounts would benefit from the switch. According to the economic model used, such a system would decrease the unemployment component of payroll taxes while improving outcomes for nearly everyone.

Oregon’s unemployment insurance system is rife with waste because it promotes longer unemployment and has inordinately high overpayment rates. Unemployment accounts would be a huge step in the right direction, improving incentives and rewarding hard work and personal responsibility while still maintaining the safety net that most Americans have grown accustomed to.

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Extending Unemployment Benefits: Good Intentions, Bad Results

Last Thursday, President Obama asked Congress once again to extend unemployment benefits, allowing workers to continue receiving benefits for up to almost two years. His request may be at odds with his newly proposed chairman of his Council of Economic Advisers, Alan Krueger.

During Mr. Krueger’s career as a Princeton economics professor, he wrote about the effects of unemployment insurance on the unemployed. He, along with numerous mainstream economists, wrote that unemployment insurance increases the time that workers remain unemployed. More generous benefits lead to longer periods of unemployment. Thus, a bill aimed at helping the unemployed may actually have the opposite effect.

Many economic analyses have estimated that unemployment insurance has significantly increased the unemployment rate. For example, one recent publication from the Federal Reserve Bank of Chicago, conservatively estimated “[t]he extension of unemployment insurance benefits during the recent economic downturn can account for approximately 1 percentage point of the increase in the unemployment rate.”

Adding another 4% to the estimated 2012 deficit, the President’s requested extension would cost around 45 billion dollars. And what about the human cost? Is it right to delay so many workers’ reemployment? Is it right to artificially inflate unemployment? As with so many government programs, good intentions too often lead to bad results. In this case, those results can be measured in fewer jobs and in less personal dignity.

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Unemployment Insurance, Savings Accounts or Both? A Way Forward for Oregon’s Workers

One silver lining of the burst housing bubble has been the increase in the personal savings rate. For many years prior to the recession, analysts furrowed their brows, bemoaning the nation’s poor savings rate, questioning the prudence of Americans. Both personal and business savings increased quickly after the recession hit. When individuals are nervous about the future, they save more; when they feel secure, they spend and invest more.

A logical extension of such reasoning, economists have long found that government safety nets decrease the amount individuals feel they need to save. Precautionary savings is that pool of money or other assets that individuals and businesses accumulate as a buffer against future stresses on income: unemployment, health problems or other unforeseen troubles. Unsurprisingly, unemployment insurance, among other safety nets, causes individuals to accumulate less precautionary savings.

Economists Eric Engen and Jonathan Gruber studied this effect and found that “[unemployment insurance] crowds out up to one-half of private savings for the typical unemployment spell,” decreasing overall asset accumulation.[i] Some may argue that this is not a problem since these workers may need less precautionary savings because of the government safety net. But such a simplistic justification neglects deeper implications.

Assets not only provide financial security, they actually change the way people behave. Asset owners tend to lead more stable lives, think in longer time frames and have more hope for the future.[ii] They are also more likely to be involved in community affairs and to plan for their children’s futures. For example, over a decade of research into the effects of assets indicates that the children of asset owners are more likely to succeed in school and to escape poverty. The effect of asset ownership on education and test scores is more significant than that of income.[iii]

Interestingly, research indicates that this relationship is likely causal, meaning that owning assets likely causes individuals to have greater expectations and those expectations cause them to accumulate more assets.[iv] Extending that logic, government programs like unemployment insurance (UI), which typically cause individuals to save less, probably damage inclinations toward long-term thinking, and consequently individuals’ stability, hope and children’s success. Along that vein, it also damages many individuals’ self-respect and confidence.

Personal savings has larger economic benefits, too. Though during recessions we hear frequently that individuals and businesses are “saving too much,” high savings rates are good in the long term. When people save more money, that creates a “greater supply of loanable funds” which tends to “stimulate capital investments.”[v] Under the current UI system, funds from unemployment taxes are “‘invested’ by the Treasury into the U.S. government debt obligations, which does little – to put it mildly – to help the economy grow.”[vi]

Those who like the perks of unemployment insurance are frequently afraid to experiment with something that they think works fine. Fortunately, Chile has already experimented with an alternative: Unemployment Insurance Savings Accounts. Chile’s system maintains the benefits of traditional UI, while harnessing the power of individual saving.

 

Chile’s workers and employers must pay a portion of wages into Unemployment Insurance Savings Accounts. Each worker has a full property interest in his account and will receive the remaining balance upon retirement. When a worker becomes unemployed for any reason (even if it is voluntary), he may draw 30-50% of the previous wage for up to 5 months. If a worker is laid off, small account balances are supplemented with a social unemployment insurance, funded with a small portion of the payroll tax.

These accounts offer an improved social safety net that preserves the benefits of personal savings. Workers can see their retirement and rainy day savings grow and with it, their expectations. Such expectations lead to long term planning and better lives.

These unemployment savings accounts also offer other benefits. While our unemployment compensation causes a well-documented lengthy increase in the time it takes the average worker to find a job and in the overall unemployment rate, the personal accounts system motivates workers to return to work faster so that they can have more money upon retirement.[vii] Chile’s system also broadens the pool of eligible recipients, since workers own their personal accounts. That means workers who can’t accept full-time employment (like a working mother or student), and workers who must quit their job for personal or professional reasons and are not covered under our system, would have some limited coverage under Chile’s system.

One recent state-specific study (commissioned by Cascade Policy Institute) by economists Stephane Pallage and Christian Zimmerman (now Assistant Vice President at the Federal Reserve Bank of St. Louis) showed that switching to a system similar to Chile’s unemployment accounts system would benefit 97% of Oregonians.[viii] Even those who are most likely to be unemployed or most likely to have empty asset accounts would benefit from the switch, according to the economic model.

Government safety nets give citizens a false sense of security and encourage short-term thinking. Incorporating private accounts into unemployment insurance not only would improve the system for most workers and decrease unemployment, but could transform the way many Americans think about their future.


[i] Eric M. Engen and Jonathan Gruber, “Unemployment Insurance and Precautionary Saving,” National Bureau of Economic Research Working Paper no. 5252 (Sept. 1995).

[ii] Michael Sherraden, Assets and the Poor (1991).

[iii] Zhan & Sherraden, “Assets, expectations, and children’s educational achievement in single-parent households,” 77 Social Service Review 191-211 (2003).

[iv] William Elliott III, Mesmin Destin and Terri Friedline, “Taking Stock of Ten Years of Research on the Relationship between Assets and Children’s Educational Outcomes: Implications for Theory, Policy and Intervention” (2011), available at http://cfed.org/assets/pdfs/CSD_Taking_Stock_of_Ten_Years_of_Research.pdf.

[v] David Honigman and George C. Leef, “It’s Time to Privatize Unemployment Insurance,” 45 The Freeman: Ideas on Liberty, (Sept. 1995).

[vi] Ibid.

[vii] Gonzalo Reyes Hartley, Jan C. van Ours and Milan Vodopivec, Incentive Effects of Unemployment Insurance Savings Accounts: Evidence From Chile, The Institute for the Study of Labor, Discussion Paper No. 4681 (Jan. 2010).

[viii] Stéphane Pallage, Ph.D and Christian Zimmermann, Unemployment Accounts: A Better Way of Protecting the Unemployed (Aug. 2010), available at https://cascadepolicy.org/wp-content/uploads/2010/08/UI_Reform_ Report.pdf.

 

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Ready, Fire, Aim, for Oregon’s Payday Lending Policy

By Christopher Robinson

In 2006 and 2007 the Oregon legislature passed two bills which significantly curtailed the ability of traditional “brick and mortar” payday lenders to operate within the state. Senate Bill 1105 (2006) and House Bill 2203 (2007) capped interest rates greater than 36%, limited origination fees to 10%, established a waiting period between payday loans, and required a minimum 31-day maturity. The goal was to protect Oregon consumers from “predatory” lending practices.

Prior to the legislation, there were 346 licensed payday lenders in Oregon. As of 2008 that number had dropped to 82, according to data from Oregon’s Consumer and Business Services Department. On paper the crackdown looks good: “In terms of achieving what the legislation set out to do, it is a complete success story for consumers,” says Dave Rosenfeld, executive director for Oregon State Public Interest Research Group (OSPIRG). However, the reality goes beyond what is on paper.

History shows that when significant demand exists for a good or service, and people are denied access, they will find other methods to satisfy the need, including circumventing the law altogether. Alcohol and drug prohibitions are two notable examples. There is no question that demand for payday loans is, in fact, significant. In Oregon it was a $334 million business and $40 billion nationally.

The biggest proponent of the payday lending legislation was U.S. Senator Jeff Merkley, during his time in the Oregon legislature. Merkley’s website explains the reasoning behind his support: “Many Americans are being forced to turn to short term payday loans just to deal with day to day expenses…causing financial burdens that are practically impossible for families to escape.” This implies that those who seek most payday loans are families who have fallen on hard times. Academic research shows otherwise.

In October 2008, a researcher at Dartmouth University published a study on the Oregon payday loan rate cap. The purpose was to determine its effect on borrowers and also who those people were. “The results suggest that restricting access to expensive credit harms consumers on average,” the study says. This may come as a shock, but when given the facts it makes sense. All people surveyed for the study were payday loan customers. Less than 50% of respondents were married (with an average of 1.1 dependents), and only 12% were unemployed. 66% said they used the loan to pay for emergency expenses (such as car repairs and medical) as well as bills (such as utilities). 70% said if a payday loan hadn’t been available, they would have had no other option or did not know where they would get the money. Finally, 76% expected their financial situation to improve after receiving the loan. The study shows payday borrowers are primarily employed individuals with unexpected expenses. If they are unable to pay for these expenses, their financial situation will be worse in the long run.

Legislators have jumped the gun in banning traditional payday lending in Oregon. They aren’t protecting vulnerable consumers as much as denying a necessary service. Furthermore, there has not been a major push to provide consumers with a convenient, viable alternative.

Senator Merkley’s office could not be reached for further comment, but it appears legislators used the issue for political gain without doing significant research. Responsible advocates should have, at the very least, devised a new business model to provide quick cash at low interest rates to these high-risk borrowers. So far nothing has materialized, leaving former customers worse off than they were before.

Payday lending may seem negative because of high interest rates, but in any industry there will be a premium for last-minute transactions. If you book an airline ticket the day before a flight, the price usually will be much higher than if the ticket had been purchased six weeks in advance. The same principle applies to lenders, especially when the borrowers have poor credit and there is a relatively high risk of default.

Washington State also enacted payday lending restrictions, but some legislators there are already considering relaxing them. Oregon should consider doing so as well. According to the Portland Business Journal (February 11, 2011), there already has been a rise in complaints against out-of-state online payday lenders conducting fraudulent and illegal business practices. These are the real risk to consumers because the Oregon Attorney General’s office has little control over them. If legislators had looked deeper into the facts before enacting legislation from a politically favorable standpoint, this situation could have been avoided.


Christopher Robinson is a research associate at Cascade Policy Institute, Oregon’s free market public policy research organization.

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REPORT: The Dirty Secret Behind Clean Jobs

With unemployment on the rise, new jobs are scarce. Creating jobs has become a top priority for politicians. One can hardly watch the news without hearing catch phrases like the “renewable energy economy,” “green jobs” and “leading the world in clean energy technologies.” In short, environmental policies have been rebranded as job creators.

Cascade Policy Institute’s new report, The Dirty Secret Behind Clean Jobs, reveals numerous flaws with this approach. The authors address the misconceptions behind creating “green jobs.” The definition of “green jobs” is vague, green job subsidies are based on flawed economic principles and, lastly, assumptions for job growth are inaccurate or downright false.

The report’s co-author, Nick Sibilla, states, “Our report focuses on Oregon, national and international attempts to create green jobs. Overwhelmingly, we found that green jobs are based on faulty economics and wishful thinking.”

The Dirty Secret Behind Clean Jobs reveals:

  • Numerous definitions of the term “green jobs” exist. In fact, most government agencies interchange the terms “clean” and “green,” adding to the confusion of what really constitutes an environmentally friendly job.
  • Proclamations about green jobs fixing the economy are exaggerated and misleading. Oregon employers predicted the number of green jobs would grow 14 percent between 2008 and 2010, which would have equated to 7,400 new jobs in the state. Meanwhile, statewide employment levels have dropped by 140,000 jobs over the same two-year period.
  • “Clean jobs” turns out to be just another term for big government. According to The Brookings Institution, the industry of “regulation and compliance” (i.e., government employees) was the fourth largest source of clean jobs in the United States. Meanwhile, in Oregon, three of the larger green jobs employers are the U.S. Forest Service, the U.S. Army Corp of Engineers and the U.S. Bureau of Land Management. All of those salaries are ultimately paid by taxpayers.
  • One clear example of green job pork barrel spending is the Shepherds Flat wind farm under construction in Gilliam and Morrow Counties. The project has obtained $1.2 billion in federal, state and local subsidies but will create only 35 permanent jobs. Each job will cost over $34 million to American taxpayers.
  • Green job estimates do not account for job losses in other sectors. Spain, a pioneer in renewable energy before the recession, is a sobering example. A recent Spanish economic analysis revealed that for every green job created, more than two jobs were lost.
  • Many green job advocates claim that green industries are more labor intensive and thus create more jobs than other sectors of the economy. Although inefficiency is not something to be praised, the claims are still downright false. A recent Italian study suggests the green industry is a capital-intensive, not a labor-intensive, industry and that the data show that green investments generate fewer jobs than investments in other sectors of the economy.

Cascade’s vice president and co-author of the report, Todd Wynn, stated, “Despite the continued rhetoric from politicians, our report shows the utter failure of the green job movement. It turns out to be more about corporate welfare and government handouts than actual job creation.”

DOWNLOAD THE DIRTY SECRET BEHIND CLEAN JOBS REPORT

FOR MORE INFORMATION:

Todd Wynn
T: 503.242.0900
F: 503.242.3822

 

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The Dirty Secret Behind Clean Jobs

By Nick Sibilla

New jobs are scarce. In June, Oregon’s unemployment rate rose to 9.4%. Many environmentalists claim the government should invest in “clean jobs” to address both the unemployment rate and their concerns about climate change. Unfortunately for them, clean jobs have a blackened record.

The Brookings Institution defines a “clean job” as a job that produces a good or service with some sort of environmental benefit attached to it. Brookings recently claimed there are almost three million clean jobs nationwide. Among U.S. states, Oregon had the second-highest proportion of clean jobs.

But many of these clean jobs are heavily subsidized by the government. Of the top ten cities with the highest share of clean jobs, six are state capitals. They include Albany, Harrisburg and Sacramento. While Brookings praises these cities, the report neglects a few inconvenient truths.

For example, Harrisburg, Pennsylvania is the fourth cleanest city in the Brookings report. But Harrisburg is on the verge of municipal bankruptcy. In 2010, the city’s debt burden topped $670 million, or $9,500 per resident. What led to this fiscal insolvency? A $300 million scheme to update its trash incinerator…and save 60 clean jobs.

Clean jobs have a dirty secret: They will not put Americans back to work.


Nick Sibilla is a research associate at Cascade Policy Institute, Oregon’s free market public policy research organization.

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How to Turn Oregon’s Business Climate Around

Two recent reports confirm that Oregon has a long way to go if it wants to be seen as a business-friendly state.

 

Earlier this month, Chief Executive magazine released its latest survey of 550 CEO’s. They were asked to rank states for their business environment based on a wide range of criteria, including taxation, regulation, workforce and quality of living. Oregon came in at a disappointing number 33. The top five states, in order, were Texas, North Carolina, Florida, Tennessee and Georgia.

 

Last week, the co-authors of “Rich States, Poor States,” which ranks every state’s economic competitiveness, reported in the Wall Street Journal that two of the 15 policies they look at “have consistently stood out as the most important in predicting where jobs will be created and incomes will rise. First, states with no income tax generally outperform high income tax states. Second, states that have right-to-work laws grow faster than states with forced unionism.”

Authors Arthur Laffer and Stephen Moore further noted that “between 2000 and 2008, 4.8 million Americans moved from forced union states to right-to-work states—that’s one person every minute of every day.”

Oregon doesn’t have either of these two most important business-friendly policies. Not only do we have an income tax, but it’s the highest in the country at 11 percent right now. And, we allow forced unionization.

 

Oregonians, and their elected representatives who are looking for ways to improve our business climate and create jobs, need look no further than these two policies. Eliminate our income tax and end forced unionism, and watch Oregon grow.

 

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A “Training Wage” Can Get Teens Their First Job – And Jumpstart Their Earning Potential

Have you ever tried to hire an average teenager? A few years ago, when I needed some furniture moved, my mother reached out to some fundraising teenagers on my behalf, offering the wage that I had set. The three boys eagerly accepted the offer, showed up for work and proceeded to demonstrate why it can be so difficult for many teenagers to land and maintain employment. They not only lacked experience, but they required detailed tutoring in seemingly straightforward work. More time was spent teaching them how to lift, move and pack furniture than they actually spent working. 

In Oregon, you cannot legally employ anyone, teen or otherwise, for less than $8.50 per hour, even if his actual labor is worth much less. It should be little surprise then, that our population’s least experienced workers – teenagers – had an unemployment rate of 28.8 percent last year (much higher than the state’s rate of 10.2 percent). The national teen employment rate in 2010 was a meager 27 percent, which has dropped substantially since 2000, when it was healthier (but still too low) at 45%.

Such dismal employment levels are what inspired House Bill 3279, for which the Oregon House Business and Labor Committee held a hearing a few weeks ago. The bill would allow teens to work for less than minimum wage (as low as $7.25, the federal minimum wage) for their first 90 days of employment. Sadly, many legislators met the bill with suspicion, fearing it would create an unfair bias in favor of teenage workers. These legislators worry that teenagers would displace adults by being able to work for less.

Six percent of U.S. workers paid by the hour earn federal minimum wage or less. Only four percent of workers older than 25 earned at or below the federal minimum wage in 2010, according to the Federal Bureau of Labor Statistics. But 25 percent of working teenagers earned at or below minimum wage. Multiple studies have shown that most minimum wage workers move ahead to higher wages. A more detailed study of minimum wage workers revealed that few adults, and even fewer parents, rely on their minimum wage job as their primary source of income. Most minimum wage workers are providing a secondary or third source of family income. And most workers, as they build skills, eventually will earn more than minimum wage. Accordingly, it would behoove legislators to help teens build their skills earlier, rather than pricing them out of the market.

Instead, with the bar set too high for many teens, not only are they earning less money to spend and save for valuable investments later (like college), they are not gaining the invaluable experience that will allow them to earn more down the road by developing their skills, or “human capital.”

“Human capital” describes a person’s attributes that increase her earning potential and ability to grow wealth. It includes a person’s “intelligence, educational background, work experience, knowledge, skill and health,” according to Michael Sherraden’s influential book, Assets and the Poor. It is also important to our nation. According to Gary Becker, a prominent theorist, human capital accounts for around 75% of the United States’ wealth, with the rest consisting of capital in businesses, homes, goods, and government capital and cash. It is the proverbial knowledge of how to fish, versus the fish itself.

Teenagers are easily influenced. According to Andrew Sum, Director of the Center for Labor Market Studies at Northeastern University, especially among low-income and minority youth, “[t]he more teens work this year, the more they work next year.” If they do not work now, they are less likely to work later. But with increased experience, teens will earn better wages and be more likely to hold a steady job later. They are also more likely to graduate from high school (developing another form of human capital).

With such a weight of evidence, legislators should reconsider HB 3279. Inexperienced teens need the opportunity to work for a “training wage,” something less than minimum wage, so that they, too, can acquire the skills and experience to earn more in the future.

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Unemployment Benefits Warrant a Second Look

Oregon’s legislature is currently rushing to approve bills that will extend unemployment insurance yet again. But legislators should pause to consider that while it may feel good, the costs may sabotage the effect they seek.

 

This year, the average payroll tax to support unemployment insurance is $995 for an employee who makes at least $32,300 in Oregon. This is $109 more than it was in 2010. And that doesn’t even include the costs of large federal extensions. Why have these taxes increased so much? Because Oregon’s unemployment is high and our benefits are generous, or at least prolonged. In Oregon, workers can claim benefits for more than two years.

 

Some will say that $1,000 per worker is a fair price to pay for a popular safety net. Yet, such a hefty price demands that we ask hard questions or at least look for ways to improve unemployment insurance. The current program has repeatedly been shown to increase unemployment. It also indirectly taxes many employees who personally can never benefit from the program if they become unemployed because they, for example, cannot accept full-time work.

 

Let’s encourage our federal and state legislators to stop rushing through extensions and pause to ask hard questions about unemployment insurance. The cost is too great to continue ignoring its problems.

 

 

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GovDocs adds Portland salary information

Ever wondered how much Portland government officials are compensated? TheOregonPolitico.com has just launched a new Portland salary database for their GovDoc website.

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Unemployment Accounts: A Saving Opportunity

Christina Martin

Cascade Commentary

Unemployment Accounts: A Saving Opportunity
by Christina Martin

Download PDF

After multiple extensions by Congress, many unemployed workers now can receive unemployment benefits for nearly two years. These extensions may bring some individuals a sigh of relief, but they are a cause for concern for the larger economy. A recent JPMorgan Chase study claims that unemployment insurance extensions actually have raised unemployment by 1.5 percentage points. Dr. Robert Barro, a Harvard professor, recently claimed that the extensions have raised unemployment as much as 2.7 percentage points.

(more…)

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Lemonade Stand Lessons

Lemonade Stand Lessons

by Steve Buckstein

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In this persistent recession, it’s supposed to be all about jobs…jobs…jobs. But now, thanks to the budding entrepreneurial efforts of one seven-year-old girl, many people in the Portland metro area are focused not so much on jobs as they are on the limits of state power to restrict business activity.

It all came down on July 29 when an Oregon City mother, Maria, and her daughter Julie set up a lemonade stand at the “Last Thursday” monthly art fair in Northeast Portland. Julie wanted to earn some summer spending money, and her mother realized that setting up at the busy art fair rather than in front of their home in Oregon City meant many more potential customers for her “little capitalist” (my term, not theirs).

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Unemployment Accounts Would Benefit Most Oregonians

Rebecca Steele
QuickPoint!

Unemployment Accounts Would Benefit Most Oregonians
by Rebecca Steele
The recent federal extension of unemployment insurance benefits, which will allow the unemployed to get benefits for more than 2 years, is a misguided attempt by the United States Senate to aid unemployed workers. In reality, it will not serve as an economic stimulus and does little to help the unemployed, who really need jobs. According to a recent study for JP Morgan Chase, unemployment benefits extensions alone have raised the unemployment rate by 1.5 percentage points during this recession, a figure that should make legislators think twice before perpetuating a broken system.

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Unemployment accounts would be better for most Oregonians than traditional unemployment insurance

For Immediate Release
August 4, 2010

Contact
Christina Martin, Asset Ownership Project Director
Cascade Policy Institute
503-242-0900
Christina@cascadepolicy.org

Unemployment accounts would be better for most Oregonians than traditional unemployment insurance

By Christina Martin

PORTLAND, Ore. – Ninety-seven percent of Oregonians would benefit by switching from a standard unemployment insurance system to a system of unemployment savings accounts, according to a study released today by the Cascade Policy Institute.

The study, Unemployment Accounts: A Better Way of Protecting the Unemployed, was completed by economists Stéphane Pallage, Ph.D, chair of the Department of Economics at the University of Quebec in Montreal, and Christian Zimmermann, Ph.D., Associate Professor of Economics at the University of Connecticut.

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Unemployment Insurance Extensions Appeal to the Heart but Rob the Soul

Christina Martin
Cascade Commentary

Unemployment Insurance Extensions Appeal to the Heart but Rob the Soul

By Christina Martin

Download the pdf here

The federal government is likely to extend unemployment benefits with approval from both conservatives and liberals. If all federal extensions pass, Oregonians will be eligible for up to 105 weeks (about two years) of Unemployment Insurance (UI) benefits, compared to the usual 26 weeks. Oregon’s extended benefits bill recently passed the state legislature with unanimous support by Democrats and Republicans. The U.S. Congress’s extensions, likewise, are predicted to pass with bipartisan support. Why have these extensions received such wide approval? Are they incontrovertibly good, or do these bills just feel good?

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Oregon.gov Publishes State Workers’ Salaries

Jacob Szeto

 

PRESS RELEASE
CONTACT: Jacob Szeto

In an effort to meet requirements for a transparency website created by House Bill 2500, the Department of Administrative Services has compiled and made available state workers’ salaries.

The data provided includes approximately 32,620 state workers’ salaries. Not included are employees of the Oregon University System, Oregon State Treasurer, and semi-independent agencies, temporary employees, or records protected by the courts.

Of the top three individual earners, the top two are from the Department of Human Services. Both DHS workers are classified as Principle Executives and earn $242,004 and $231,996. The third top earner, from the Department of Corrections, is classified as a Clinical Director and earns $229,332. (more…)

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Cascade Policy Institute Stands by Economic Analysisof Job Losses due to Measures 66 and 67

Steve Buckstein
FOR IMMEDIATE RELEASE
CONTACT: Steve Buckstein
T: 503.242.0900
F: 503.242.3822

 

Supporters of higher taxes in Oregon are desperate to debunk the overwhelming economic logic that the personal and corporate income tax increases in Measures 66 and 67 on the January ballot will result in tens of thousands of job losses. (more…)

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Will Work for Human Capital

Cascade CommentaryChristina Martin

Summary: The teenage unemployment and underutilization rates are staggeringly high. This has a negative impact on teenagers’ ability to build human capital such as job skills and education. Policies like minimum wage laws should be amended or reversed to allow teens to better develop their human capital. (more…)

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Two Job-Killer bills threaten to destroy 100 TIMES more jobs than Oregon’s so-called “stimulus package” will create

Steve Buckstein

CORRECTION of media release dated June 24, 2009

The state recently announced that its $176 million “stimulus package” has created or saved 3,236 jobs in the first three months, spending about eight percent of the money to date. But an Associated Press analysis now finds that those jobs only provided an average of 35 hours of work apiece. When converted to full-time jobs over a year, the number of jobs shrinks to just 54. Once all the funds are spent, assuming the same rate of job creation, the AP analysis finds that it will have created or saved the equivalent of just 688 full-time jobs for one year.

What the state still hasn’t told citizens is that Oregon risks losing one hundred times as many jobs if two “anti-stimulus” tax bills take effect.  (more…)

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Oregon could add 20,000 new jobs at no cost to taxpayers if Congress will end the federal estate tax

Steve Buckstein

For Immediate Release
Contact: Steve Buckstein
(503) 242-0900 or steven@cascadepolicy.org

 

Portland, Oregon, July 15, 2009 – Oregon could add some 20,000 new jobs at no cost to taxpayers if the federal estate tax were repealed, according to a new analysis by Cascade Policy Institute.

The estimates are based on research by the former director of the nonpartisan Congressional Budget Office, Douglas Holtz-Eakin. The research was conducted for the nonprofit American Family Business Foundation (AFBF), Washington, DC.  (more…)

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Two Job-Killer bills threaten to destroy ten to twenty times more jobsthan Oregon’s so-called “stimulus package” has created

Steve Buckstein
For immediate release
Contact Steve Buckstein
(503) 242-0900 steven@cascadepolicy.org

The state recently announced that its $175 million “stimulus package” has created or saved 3,236 jobs.1,2

What the state hasn’t yet told citizens is that Oregon risks losing ten to twenty times or more as many jobs if two “anti-stimulus” tax bills take effect. (more…)

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Digging Holes in Oregon: The Governor’s Plan to Save the Unemployed Will Deepen the Pit

Cascade CommentaryChristina Martin

Governor Kulongoski has a plan to save Oregon’s sorry economy: raid the Unemployment Insurance Trust Fund of a total of $90 million. Forty million dollars would further extend unemployment benefits “for 11,000 unemployed Oregonians who face the loss of benefits in that time period, provided no additional benefits are made available by the federal government.”[i] He would use the other $50 million to pay thousands of Oregonians to work at unknown community projects or to go into training programs. His plan (House Bill 3500) aims to create 7,100 jobs for individuals who are receiving unemployment insurance (UI) benefits, paying between $8.40 and $10 per hour (which is more than average benefits) and providing transportation and childcare for up to 2,500 low-income individuals in the program. Each participant in the job creation program could get an additional $2 per hour placed into an Individual Education Account if participants jump through a few hoops. (more…)

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“A Job in Every Home”

Cascade Commentary

Click here to read the full report in PDF format

Just when federal and state legislators are passing economic stimulus packages to get people working, House Bill 2204 in the Oregon State Legislature would end innovative programs that provide exactly the kind of stimulus that spurs people to continue working. Pieces of legislation are pending at both the state and the federal level for the addition of multiple public projects as part of economic stimulus packages. In contrast to the old “chicken in every pot” (more…)

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My Two Cents and My Freedom:The Cost of Paid Family Leave

Christina MartinCascade Commentary

Click here to read the full report in PDF format

Some Oregon activists are begging the state legislature to create yet another social safety net: paid family leave. Senate Bill 966 would create “insurance” benefits for family leave, subsidizing time off from work to care for a new child or a seriously ill family member. Proponents argue that if society values families, then this bill is vital. (more…)

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Expanding a Broken System Only Widens the Cracks

Christina MartinCascade Commentary
By Christina Martin

Summary

The Unemployment Insurance Modernization Act, tacked onto the current version of the proposed federal stimulus bill, provides an incentive to states to modify UI to ameliorate some of the system’s more publicized inadequacies. However, true UI modernization requires real innovation, not more of the same. (more…)

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Extending Unemployment Benefits or Extending Unemployment?

Sreya Sarkar Cascade Commentary

Click here to read this Commentary in PDF format

Summary

The Unemployment Compensation Extension Act (H.R. 6867) expands unemployment benefits to up to 59 weeks in Oregon. Unfortunately, paying workers not to work longer helps neither the economy nor workers, who (more…)

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Man and Machine Can Be Friends

Sreya SarkarQuickPoint!

In the early 1980s federal investment in research and development of agricultural machines was suspended because of a political campaign by the prominent United Farm Workers leader Cesar Chavez to protect farm workers’ jobs and the technological challenges of that time.

Today the situation has changed. Now American farms are seriously disturbed about (more…)

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New Pilot Study Initiative Aims to Increase the Mobility of Low-Income Workers in Portland through Auto Ownership

FOR IMMEDIATE RELEASE

Contact: Sreya Sarkar
Tel.: 503-242-0900
Fax: 503-242-3822
E-mail: Sreya Sarkar

Cascade Policy Institute has released a report unveiling a pilot project to examine the feasibility of promoting low-income auto ownership as a transit strategy. (more…)

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Self-employment, a way out of welfare

Sreya SarkarQuickPoint!

To fit in with the latest federal requirements set by Deficit Reduction Act of 2005, Oregon needs to change its existing Temporary Assistance to Needy Families (TANF) program significantly. Oregon could lose up to $14 million annually if it fails to connect half of the TANF recipients to work-related activities.

The Legislative Assembly is currently considering (more…)

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Prevailing Wage Laws: Legislating Inequity

Oregon Economic Opportunity Project

Introduction and Summary

“Prevailing” wage legislation requires that a particular wage rate be paid to laborers working on government construction projects. The rate is determined through government surveys and is usually found to be substantially higher than the market rate. Many politicians and unions argue that paying the “prevailing” wage rate is beneficial and fair because it provides a just wage for hard-working families, results in quality construction and provides a responsible example for construction firms paying lower rates on private projects.

The federal “prevailing” wage law was adopted in (more…)

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Give Workers the Choice to Save

Steve BucksteinQuickPoint!

If no changes are made to the Social Security system, it will be $11.9 trillion short of being able to pay retirees their benefits over the next 75 years.

This is because Social Security depends on the contributions of current workers to fund current retirees’ benefits. Sixteen workers supported each retiree in 1950, but only three do today. By 2030, there will be only two. This demographic trend guarantees that (more…)

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