As today is a made-up celebration called “Earth Day,” be sure to have beef for dinner…
Posts Tagged ‘unions’
Time for another Texas vs. California roundup, with the top news being California’s hastening their economic demise with a suicidal minimum wage hike:
California’s drive to hike the minimum wage has little to do with average workers and everything to do with the Golden State’s all-powerful government employee unions.
Nationally, the Service Employees International Union (SEIU) is known for representing lower skilled workers. But, of the SEIU’s 2.1 million dues-paying members, half work for the government. In California, that translates to clout with much of the $50 million SEIU spent in the U.S. on political activities and lobbying spent in California. In fact, out of the 12 “yes” votes for the minimum wage bill in the Assembly Committee on Appropriations on March 30, the SEIU had contributed almost $100,000 out of the three-quarters of a million contributed by public employee unions—yielding a far higher return on investment than anything Wall Street could produce.
Unions represent about 59 percent of all government workers in California. Many union contracts are tied to the minimum wage — boost the minimum wage and government union workers reap a huge windfall, courtesy of the overworked California taxpayer.
“California’s taxes and regulations are crushing businesses, and there are more opportunities in Texas for people to start new companies, get good jobs, and create better lives for their families,” said Nathan Nascimento, the director of state initiatives at Freedom Partners. “When tax and regulatory climates are bad, people will move to better economic environments—this phenomenon isn’t a mystery, it’s how marketplaces work. Not only should other state governments take note of this, but so should the federal government.”
According to Tom Gray of the Manhattan Institute, people may be leaving California for the employment opportunities, tax breaks, or less crowded living arrangements that other states offer.
“States with low unemployment rates, such as Texas, are drawing people from California, whose rate is above the national average,” Gray wrote. “Taxation also appears to be a factor, especially as it contributes to the business climate and, in turn, jobs.”
“Most of the destination states favored by Californians have lower taxes,” Gray wrote. “States that have gained the most at California’s expense are rated as having better business climates. The data suggest that may cost drivers—taxes, regulations, the high price of housing and commercial real estate, costly electricity, union power, and high labor costs—are prompting businesses to locate outside California, thus helping to drive the exodus.”
(Hat tip: Pension Tsunami.)
Lots of Texas vs. California linky goodness, much of it via Jack Dean at Pension Tsunami, who’s been emailing me links of significant interest.
As last week’s US Census Bureau population estimates indicated, the story of population growth between 2014 and 2015 was largely about Texas, as it has been for the decade starting 2010 (See: “Texas Keeps Getting Bigger” The New Metropolitan Area Estimates). The same is largely true with respect to population trends in the nation’s largest counties, with The Lone Star state dominating both in the population growth and domestic migration among 135 counties with more than 500,000 population.
Houston, which is the fastest growing major metropolitan area (over 1 million population) in the nation includes the two fastest growing large counties. Fort Bend County added 4.29 percent to its population between 2014 and 2015 and now has 716,000 residents. Montgomery County grew 3.57 percent to 538,000. In addition to these two suburban Houston counties, Harris County, the core County ranked 16th in growth, adding 2.03 percent to its population and exceeding 4.5 million population.
Dallas-Fort Worth, the second fastest-growing major metropolitan area has two counties among the top 20. The third fastest-growing county is Denton (located north of Dallas-Fort Worth International Airport), which added 3.42 percent to its population over the past year and now has 781,000 residents. Collin County, to the north of Dallas County, grew 3.17 percent and now stands at 914,000 residents. Its current growth rate would put Collin County over 1 million population by the 2020 census.
Travis County, with its county seat of Austin, grew 2.22 percent to 1,177,000 and ranked 12th. Bexar County, centered on San Antonio grew 2.01 percent and ranks 17th.
Overall, Texas had four of the five fastest growing large counties, and seven of the top twenty. California had none. (Hat tip: Pension Tsunami.)
- “A now has by far the nation’s highest state income tax rate. We are 34% higher than 2nd place Oregon, and a heck of a lot higher than all the rest”
- “CA has the highest state sales tax rate in the nation. 7.5% (does not include local sales taxes).”
- “California in 2015 ranked 14th highest in per capita property taxes (including commercial) – the only major tax where we are not in the worst ten states. But the 2014 average CA single-family residence (SFR) property tax is the 8th highest state in the nation. Indeed, the median CA homeowner property tax bill is 93% higher than the average for the other 49 states.”
- “California has a nasty anti-small business $800 minimum corporate income tax, even if no profit is earned, and even for many nonprofits. Next highest state is Rhode Island at $500 (only for “C” corporations). 3rd is Delaware at $175. Most states are at zero.”
- “California’s 2015 ‘business tax climate’ ranks 3rd worst in the nation – behind New York and anchor-clanker New Jersey. In addition, CA has a lock on the worst rank in the Small Business Tax Index – a whopping 8.3% worse than 2nd worst state.”
- “The American Tort Reform Foundation in 2015 again ranks CA the ‘worst state judicial hellhole’ in U.S. – the most anti-business.”
- “CA public school teachers the 3rd highest paid in the nation. CA students rank 48th in math achievement, 49th in reading.”
- “California’s real poverty rate (the new census bureau standard adjusted for COL) is easily the worst in the nation at 23.4%. We are 57.3% higher than the average for the other 49 states.”
- “Of 100 U.S. real estate markets, in 2013 CA contained by far the least affordable middle class housing market (San Francisco). PLUS the 2nd, 3rd, 5th, 6th and 7th.”
It’s like a whole bunch of Texas vs. California roundup statistics all in one big green ball of fail. Read the whole thing. (Hat tip: Pension Tsunami.)
CKE Restaurants CEO Andy Puzder told the Wall Street Journal in 2013, “California is not interested in having businesses grow.”
The article points out that many factors, including local building regulations, make one community less desirable than another for businesses.
For example, it takes 60 days in Texas, 63 in Shanghai, and 125 in Novosibirsk, Russia for one of CKE’s restaurants to get a building permit after signing a lease. But in Los Angeles, Ca. it takes a whopping 285 days.
Puzder added, “I can open up a restaurant faster on Karl Marx Prospect in Siberia than on Carl Karcher Boulevard in California.” The street in California is ironically named for the restaurant chain’s founder.
California’s labor regulations may also play a role in a company’s desire to seek alternative locations. In that same interview with WSJ, Puzder said his company had spent $20 million in the state over the past eight years on damages and attorney fees related to class-action lawsuits.
(Hat tip: Pension Tsunami.)
While the rest of the country was tuned into The Trump Show playing before the Black Gate, Friedrichs vs. California, a plucky little court case with the power to unmake the Democratic Party, has finally reached Mount Doom.
In brief, public school teachers in California seek to invalidate state law requiring that non-union members must nevertheless pay the public teachers union fees for collective bargaining and related expenses. Those related expenses are fairly broad and include public relations campaigns on issues to be collectively bargained.
Overturning existing law altogether is much more difficult under the related principles of stare decisis and deference to precedent. But that’s what the Friedrichs Plaintiffs are looking for, and if they succeed the new rule – banning compelled contributions to any public union activity at all – would apply to every public union in the United States.
Compelled union dues are heart and muscle of the Democratic Party, since unions dominate the top Democratic political donors list. As Scott Walker demonstrated, give workers the chance to keep their own money and they flee unions in droves.
According the Legal Insurrection, oral arguments have been going extremely badly for unions. “The teachers [the anti-union side] seem to have at least five votes and likely seven. Depending how the decision is written the Court could even reach a unanimous decision holding that compelled contributions to public unions are unconstitutional.”
Without the iron group of unions, not only is the Democratic Party critically weakened, but a host of previously difficult reforms (public pension reform, school choice) suddenly become possible.
And there’s likely nothing Sauron can do about it…
(Metaphor blatantly stolen from Walter Russell Mead.)
Been a while since I did a Texas vs. California update, due to Reasons, so here’s one:
While all the numbers are constantly in flux, in 2014-15, the California Public Employees’ Retirement System saw its status fall from 76.3 percent funded to 73.3 percent, likely due to the fact that investment returns fell far below expectations. The long-neglected California State Teachers’ Retirement System, as of June 30, 2014, was 69 percent funded. Combined, the systems report unfunded pension promises of more than $160 billion.
The current budget shows steep and consistent increases in state funding to the two systems. Whereas CalPERS is set to receive $4.3 billion in state contributions in the 2015-16 fiscal year, which ends June 30, it could receive $4.8 billion the following year. CalSTRS is to receive $1.9 billion this year and about $2.47 billion next year.
In comparison, CalPERS and CalSTRS received $3.1 billion and $1.26 billion, respectively, in 2011-2012.
While it is perfectly reasonable for costs to rise over time, the rate that costs have risen for the two giant pension funds is mainly a consequence of California trying to play catch-up for years of inadequate forecasting and planning, aggravated by investment losses. But because the pension systems are run for public employees – CalPERS’ board is full of former public employee union leaders – the necessary changes and adjustments have been made far too late to avoid calamity.
(Hat tip: Pension Tsunami.)
California has given us three new truths about government.
One, the higher that taxes rise, the worse state services become.
Two, the worse a natural disaster hits, the more the state contributes to its havoc.
And three, the more existential the problem, the more the state ignores it.
California somehow has managed to have the fourth-highest gas taxes in the nation, yet its roads are rated 44th among the 50 states. Nearly 70 percent of California roads are considered to be in poor or mediocre condition by the state senate. In response, the state legislature naturally wants to raise gas taxes, with one proposal calling for an increase of 12 cents per gallon, which would give California the highest gas taxes in the nation.
In California, costs to run a business are higher than in other states and nations largely due to the states tax and regulatory policies and the business climate shows little chance of improving. It is understandable that from 2008 through 2015, at least 1,687 California disinvestment events occurred, a count that reflects only those that became public knowledge. Experts in site selection generally agree that at least five events fail to become public knowledge for every one that does. Thus it is reasonable to conclude that a minimum of 10,000 California disinvestment events have occurred during that period….For about 40 years California has been viewed as a state in which it is difficult to do business. Gov. Jerry Brown’s Administration’s less than candid approach regarding the business climate has misled the Legislature, the news media and the public about the flight of capital, facilities and jobs to other states and nations.
The study also shows that Texas had the most new facilities opening up in the nation in 2014, with 689. California, despite being the most populous state, tied for 12th with 170.