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Rebecca Friedrichs. (Photo by Christi Ransom)

photo Christi Ransom, Washington Post

The National Right to Work Committee has been very active in the national movement to bring Paycheck Protection to American workers. One case the entire nation is following is Friedrichs v. California Teachers Association, a case which could essentially place Right to Work/Paycheck Protection as protected by the U.S. Constitution for every state everywhere, including states like Delaware which currently do not guarantee a worker’s right to not pay union dues and not receive union benefits.

The video below is from YouTube and discusses the case, as well as the implications depending on how the Court could rule.

here’s the link to their blogpost in full in full:

http://www.nrtw.org/en/blog/right-work-friedrichs-01122016

Which way will the court rule? What would happen if all of Paycheck Protection became national law?

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As is common in most years, domestic policy trumps all other issues. While the Republicans believe immigration is the top issue to run a winning campaign, Democrats believe the minimum wage issue is a winner for their candidates.

Democratic strategist Donna Brazile wrote an op-ed where she believes millions of low-wage employees could form a very powerful voting bloc:

Shawanda Wilson, who works at Taco Bell in Tampa, Fla. and makes $8.25 an hour, has never voted before. Neither has Tonya Harrington, a 42-year-old home care worker from Durham, NC, who makes $7.25 an hour. Both say they’ve steered clear of voting booths not because they don’t care, but because they’ve felt politicians don’t speak for them.

That’s changing. Buoyed by $15 victories across the country, including in New York, Los Angeles and Seattle, fast-food cooks and cashiers, home care workers and child care workers like Shawanda and Tonya recognize that by joining together in a movement, they can make politicians care. Now they are vowing to head to the polls, and they’re hoping to bring with them the more than 60 million Americans movement organizers say are paid less than $15.

It’s not such a crazy thought. While recent ballot initiatives for $15 failed in Tacoma, Wash., and Portland, Maine, a recent poll of workers paid less than $15 an hour commissioned by the National Employment Law Project showed that 69% of unregistered voters would register to vote if there was a candidate who supported $15 and a union; and 65% of registered voters paid less than $15 an hour would be more likely to vote if there was a candidate who supported $15 and union rights.

We know the economic recovery has not been uniform, and nearly all the gains have gone to the top 1%, or the top 0.1%, as Bernie Sanders likes to remind us. The median income for an American worker is about $28,000, and overall household income has decline almost $2,000 since 2008. Meanwhile, millions of children live in poverty and cannot get enough food to eat or access to a great education. From an emotional standpoint, raising the minimum wage would lift millions out of poverty. While $15 an hour won’t do much in New York City, $15 an hour in most part of the country would be a big boost.

The minimum wage comes down to basic math. The argument for one is true if businesses were sitting on a pile of unspent money and were hoarding it instead of investing in their company. Since few, if any, businesses (particularly small- and medium-sized businesses) are run by heartless pigs who just want to hoard cash, the fact that they may not pay $15 an hour is more a symptom of: a favorable job market for employers; and that paying $15 an hour to all employees would require prices on good and services to go up, or to layoff some employees to pay for the others to have a higher wage. Not sure how the laid-off employees will feel about being sacrificed for the “greater good”.

Today is #GivingTuesday, a break from the spending we do for the holiday season. Consider supporting  CRI this holiday season to support out 2016 objectives for Education Savings Accounts and a Paycheck Protection law for all workers in Delaware. Visit https://www.caesarrodney.org/index.cfm?ref=90905 to help us meet our end of the year fundraising goals.

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Earlier today, the Department of Labor published a new rule requiring overtime pay for workers who make up to $50,400 a year are eligible for overtime pay if they exceed 40 hours a week.

The idea, championed by President Obama, is this: If more employees are eligible for overtime pay (the average American worker makes less than 50 grad a year), then businesses will either pay their hardest-working employees more, or hire more workers to avoid paying the additional overtime penalty. The DOL estimates about 5 million people will benefit from this new ruling.

So this is wonderful, right? It’s well-known that for many people, employers can require more than 40 hours a week at no extra pay because employees are salaried and not hourly. The Cato Institute offers an opinion:

“In the very short run, employers affected by this expansion may have little choice but to pay their employees higher total compensation; in the very short run, employers have few ways to avoid this added cost.

But in the medium term, employers will invoke a host of methods to offset these costs: re-arranging employee work schedules so that fewer hit 40 hours; laying off employees who work more than 40 hours; or pushing such employees to work overtime hours off the books.

And in the longer term, employers can simply reduce the base wages they pay so that, even with overtime pay, total compensation for an employee working more than 40 hours is no different than before the overtime expansion.

So, expanded overtime regulation will benefit some employees in the very short term; cost others their jobs or lower their compensation in the medium term; and have no meaningful impact on anything in the long term.

Is that a victory for middle class economics?”

We at CRI agree with Cato. Just like with every other “well-intentioned” government law, those who are likeliest to “suffer” from it (in this case, employers), will find a way around it, especially in the long-haul. Employees who demonstrate clear value will likely not have to worry about their jobs, but anyone who doesn’t demonstrate clear value should be concerned. While many will benefit right away with the increases in pay, new hires may find their base pay is lower, so their potential overtime is lower. After all, time-and-a-half for a worker at $8.50 an hour is much less than at $15 an hour.

Plus, those who benefit now could see hours cut or, if the overtime pay began to turn business revenues from a profit to a loss, the businesses will lay off employees to stay in the black. This is what’s happened for many people as a result of the ACA: turning full-time workers into part-time in order to avoid the penalty, or simply paying the penalty and dumping people into the health exchanges, since that’s cheaper than offering health insurance. And with insurance companies asking for premiums increases, things are not looking up for American workers.

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Since 2008 America has seen a greater number of businesses close than open. According to Gallup, roughly 6 million businesses out of 26 legally recognized actually function; the rest are inactive or exist only on paper. Of these 6 million “real” businesses, 3.8 million employ 1-4 employees. Only about 108,000 businesses in America (2% of “real businesses”) employ 100+ people. If we continue to kill off small business with over-regulation and over-taxation, how will the government be able to pay its bills, short of more printing, borrowing, and cancelling debts?

From Gallup: (article truncated for space)

“The U.S. now ranks not first, not second, not third, but 12th among developed nations in terms of business startup activity. Countries such as Hungary, Denmark, Finland, New Zealand, Sweden, Israel and Italy all have higher startup rates than America does.

We are behind in starting new firms per capita, and this is our single most serious economic problem. Yet it seems like a secret. You never see it mentioned in the media, nor hear from a politician that, for the first time in 35 years, American business deaths now outnumber business births.

The U.S. Census Bureau reports that the total number of new business startups and business closures per year — the birth and death rates of American companies — have crossed for the first time since the measurement began. I am referring to employer businesses, those with one or more employees, the real engines of economic growth. Four hundred thousand new businesses are being born annually nationwide, while 470,000 per year are dying.

You may not have seen this graph before.

Until 2008, startups outpaced business failures by about 100,000 per year. But in the past six years, that number suddenly turned upside down. There has been an underground earthquake. As you read this, we are at minus 70,000 in terms of business survival. The data are very slow coming out of the U.S. Department of Census, via the Small Business Administration, so it lags real time by two years.

Here’s why: Entrepreneurship is not systematically built into our culture the way innovation or intellectual development is. You might say, “Well, I see a lot of entrepreneurial activity in the country.” Yes, that’s true, but entrepreneurship is now in decline for the first time since the U.S. government started measuring it.

Because we have misdiagnosed the cause and effect of economic growth, we have misdiagnosed the cause and effect of job creation. To get back on track, we need to quit pinning everything on innovation, and we need to start focusing on the almighty entrepreneurs and business builders. And that means we have to find them.”

No matter how much some people will try to convince you the Roaring Twenties are back, the reality is that we have far too many businesses closing and not enough replacing them.Businesses do open and close all the time, but a lot of business closings are small businesses getting shut down because of government policy via regulation and taxation. A lot of these policies are Cronyist policies pushed by big business to weaken their competition, which is smaller stores. Thus for example, a big chain like Costco can safely come out in favor of the minimum wage increase knowing it will end up hurting the roughly 80 percent of businesses which employ nine or fewer people, while at the same time reaping the benefits of “caring” for their employees (note: we don’t object to Costco paying its employees well; we applaud it. But just because Costco might be able to afford a wage increase doesn’t mean every business can).

Crony business policies, government bureaucrats who make new regulations to justify their jobs, politicians who want to “do something” to get votes, and a well-intentioned but misinformed public which votes for things like minimum wage hikes  all result in a decline in new business startups and jobs lost and never created in the first place. We at CRI support economic policies which make it easier for people to start businesses and create new (hopefully well-paying) job opportunities without sacrificing necessary regulations and basic standards of decency. But unless we fundamentally change the way our country is operating, that 70,000 per year decrease in total businesses operating in America will increase in number.

Help support CRI! Your support allows us to research and provide analysis to the public on policies which will best grow the economy and create jobs. An end to the prevailing wage, Right to Work legislation, an end to Delaware’s gross receipts tax and lower corporate income taxes and personal income taxes, health care reform which encourages innovation from the private sector, and energy policies which would give people more choices would go a long way to helping Delaware, and America, make a sound economic recovery for all. Please consider making a contribution today.

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