Why Unions Are Focusing on the "Service" Industries

I get this question more often these days . . . from employers in the service industries -- hotels, food service, and the like, to include employers in technology who have never had to worry about their employees being approached by union organizers.

Why? Why me?

The answer is simple and straightforward -- as a percentage of the American workforce, the service sector has grown dramatically over the last 30 years while manufacturing has been not so slowly disappearing.

From its peak of 19.5 million in 1979, manufacturing employment has declined, on average, by about 1.5 million jobs each decade until 2001. Then it fell off a cliff: America lost 2.5 million manufacturing jobs from 2001 to 2007 and almost that much again during the latest recession.

Bottom line? 5 million American manufacturing jobs have disappeared since 2001, an astonishing 29% plunge in less than 10 years. Another way of looking at it -- the United States has lost more than 42,000 factories during that time.

Of course, unions stick to what they know as we all have a tendency to do, but there is less of what they know still around. Which leads to understanding the adage, "necessity breeds invention." And, from organized labor's standpoint, the disappearing manufacturing sector has become the mother of invention. Unions know that if they are to survive and thrive, they must go to where the people are and in the United States they are in hotels, restaurants, offices and retail stores.

So, what has the American employee learned from the recession?

Here's a question . . . What's the lesson the American worker has learned from being unemployed, underemployed, or just afraid of losing his job?

The common answer I hear is, "He's learned to appreciate his job and his work."

And, like most common answers, it is wrong.

To the contrary, a recent study by Florida State University reveals that the ravages of recession has focused employees away from work and toward home and family -- their most credible relationships.

Respondents to the survey said that the hard times has helped them appreciate the "value of people," increased appreciation for their families and increased hostility toward their employers and former employers who they feel have often betrayed them and discarded them or their co-workers, i.e, "I gave my everything to my job and they never really appreciated it."

Today, more than a third of all employees are questioning the importance of work in their life picture. This is especially true among the Millennial Generation (born between the mid-1970's and the early 2000's). They have seen their parents put everything into their work and question just how much they got back. As a generation, work is of lesser status compared to other dynamics of life to include friends, family and leisure.

Next question: What's the American employer to take away from these facts?

You tell me.

NLRB Continues To Implement EFCA Unilaterally

The National Labor Relations Board is working overtime to implement proposed provisions of the Employee Free Choice Act which the Obama Administration could not force Congress to pass.

As per a blog sent last week, expectations are for a dramatically-shortened election period which will put employers at a huge disadvantage in NLRB-supervised elections where employees decide whether or not to embrace the representation (as well as the costs and risks) of a labor union.

In the interim, the NLRB has issued two important decisions that will act to chill an employers' decisions to terminate employment and that will chill their freedom of expression on union issues:

1. Back pay. For the past 50+ years, when the NLRB ordered reinstatement and back pay to an employee, the interest was calculated on a simple interest basis. Now, the Board has decided that is not punitive enough and that in the future back pay will be based on a "compounded daily" formula.

2. Notices. The NLRB has compelled employers to post notices in the workplace in the past for past infractions. Now, they have granted themselves the power to require employers to put such notices not only on bulletin boards but on company intranet sites, and to require employers to e-mail such notices to their employees.

The impact of these decisions can only be speculated, but here's one speculation . . . First, some employers will be more reticent to terminate, even when there is just cause, for fear that this NLRB will judge their guilt or innocence and that if found guilty, the price of poker has just gone up. Second, the ignominy of having to post an NLRB notice on a company's intranet will cause PR-sensitive companies to limit campaign rhetoric for fear they will be forced to submit to a government-imposed humiliating display on their own in-house Internet site.

More to come . . .

Have you heard the one about "debt?"

Of course you have.

You have heard plenty -- banks, auto companies, government, consumer.

Can there be anyone else in deep debt trouble?

Not surprisingly, "yes."

Corporate America.

Especially companies in Corporate America whose employees are represented by unions and who are in what are known as "multi-employer pension plans."

The long, but mostly short of participating in one of these plans is this: If 10 employers are contributing to one of these plans and 9 go bankrupt, the 10th company is odd man out and is liable for the entire unfunded pension liabilities of the other 9 employers.

That's nothing new, but this this: The Financial Accounting Standards Board (FSAB) is about to issue new rules that will require employers to identify these contingent liabilities on their balance sheets. For heavily unionized employers, their books are going to look a lot different to Wall Street and their shareholders.

Which leaves the only real question in these days and times -- will this be the next bailout using money hot off the presses?

We shall see soon enough.

"Engagement" -- Does Anybody Care Anymore?

According to a recent Gallup study on employee engagement, 54 percent of employees in the United States are not engaged, 17 percent are actively disengaged, and only 29 percent are engaged.

What is "engaged?" The short answer are employees who like their work, like their jobs, like their bosses, and voluntarily go beyond what it takes to get a gentleman's "C" on their performance reviews. They "own" their work.

Engagement was the hot issue 5 years ago when things were good. Companies strove to "engage" employees, from relationship development to communications, work-life balance to perquisites.

But that was then and this now.

The recession to end all recessions crushed corporate America and corporate America, in turn, turned to more immediate needs -- like staying in business, for example.

"Engagement" was out. Layoffs were in.

Now that layoffs are slowing down (at least for the moment), what about "engagement?" What happened to "engagement?"

Does anyone really care anymore?

The answer (the truthful answer) is "a handful."

A few forward thinking employers still read and recognize the intersection of engagement and financial performance. A recent Towers Perrin study concluded that companies with a highly engaged employee population turned in significantly better financial performance (a 5.75 percent difference in operating margins and a 3.44 percent difference in net profit margins) than did low-engagement workplaces.

What about the rest of employers, the huge majority?

They are still playing defense, remaining as lean as possible, disregarding employee needs and wants if only because they can. After all, most employees who have jobs know that "engaged" or not they have to perform to keep those jobs since there are a lot of would-be employees in the wings waiting for a chance.

What these majority of employers are getting is what I call "sugar engagement," kind of like a sugar high -- real but temporary. Fear can make employees do amazing things, one of which is put on a pretty good act of being engaged.

The problem with fear, admittedly an instant motivator, is that fear doesn't last. It is a poor long-term motivator. People don't stay afraid. At some point they take a leap of faith and change their circumstance and my guess is the best of those will look for employers where "engagement" remains relevant.

EFCA: Being Implemented Now -- Piece By Piece

And you thought you'd have to wait to know whether the Employee Free Choice Act would become law . . .

You don't. Part of it already has become law, no legislation necessary.

The Acting General Counsel of the National Labor Relations Board (NLRB) took it upon himself to issue new rules, some of which look remarkably like provisions in the Employee Free Choice Act (EFCA) which has been shot down legislatively more than once.

EFCA, for example, would add language to the National Labor Relations Act requiring the prioritization of unfair labor practice charges occurring during an organizing campaign, including unlawful discharges. The same is true with the new NLRB rules that streamlines the handling of what are called "10(j) cases" that involve firings during union organizing campaigns. Section 10(j) allows the NLRB to seek an injunction from a federal court in certain situations, including discharge cases in which the injunction requires the employer to reinstate the employee pending the outcome of the NLRB’s administrative process. While it has been on the books a long time, it has been rarely used. Under the new process, expect many (if not most) discharges during an organizing campaign to be reviewed by the NLRB to decide whether or not to seek an injunction.

Practical impact: While firing decisions during organizing campaigns are always risky, terminations will be even more difficult now since the NLRB will seek injunctions requiring immediate reinstatement when employer decisions are questionable (in the NLRB's opinion.)

The net effect in cases where injunctions are sought and granted will be this -- the union will take credit for "getting the employee's job back" and the employer will lose most of those campaigns, thus making the decision to discharge an employee not just a matter of right and wrong, but one that could (and perhaps will) affect the outcome of the election.

Dems Readying For the "Nuclear Option" In The Lame Duck Session

As we've reported for many months, EFCA (the Employee Free Choice Act) is not dead.

It should be dead. But it is not dead.

Why?

Because of the period between the elections in November and the seating of a new Congress in January, 2011.

Even the most optimistic Democrats know they are about to be taken to slaughter by the General Public in November but they also know that they remain in Congress, even if they lose, until January.

Hence, the "lame-duck" session where the losers have nothing left to lose and can vote their consciences or at least pay back those whom they owe.

Which brings us to EFCA. The threat is to resurrect EFCA after the elections in November during the lame-duck session. It would pass Congress by a large majority and, depending on who wins and who loses in the Senate races, a possibility that it might pass there also. The chances of President Obama signing it if it hits his desk are 100%.

A good example of other legislation recently proposed in anticipation of the losers electing what we'll call the "nuclear option" is California Congressman Brad Sherman's (D) legislative proposal to repeal the “Right-to-Work” laws in 22 states. With less than a month before the mid-term elections and five weeks before a lame-duck session in Congress, Sherman introduced legislation that would otherwise be laughed out of Washington. (Note: there are 22 states in the U.S. that have laws where workers who are employed at companies that are unionized have a choice whether or not to join or pay the union. These states are known as Right-to-Work states. And in the 28 Non-Right-to-Work states (also called union security states), it is legal for a union to negotiate a “union (income) security clause” that requires all workers covered by the union to pay the union does or ‘agency fees’ as a condition of employment. If the workers refuse to pay the union, under a “union (income) security clause,” the union can have them fired from their jobs. The point of this legislation is to require every employee in a union environment to join the union and pay dues, regardless of their personal wishes or beliefs.

This is a clear finger in the face of the voters who have opposed both EFCA and have supported "right to work" laws for more than 50 years.

In the end, politics is not about satisfying the majority. It is about satisfying who contributes. And that is why we must remain vigilant against attempts by the "lame ducks" in November from changing the future of America for many years to come.

It's the "R-word" - Get it?

30% of American workers are physically affected by work stress. Indeed, some who have studied the topic believe it is the leading cause of absence from work.

What's the answer?

There are a lot of them, but a Portfolio Magazine poll showed that 87% of workplace stress is due to an unmotivated workforce that arises from the dissatisfaction of having a poor relationship with the boss.

Relationship - the "R" word.

Companies that are working to improve relationships, what we call "Credible Connections," are destined to reduce stress, increase productivity and crush their competitors, all else equal.

What is your company doing?

Another Reason The General Public Is Unhappy -- No Raise in 40 Years

We have known for a long time that the happiness, satisfaction and contentment of the average employee in the United States has been on the decline for years. The question is why and the answers are numerous. One is basic economics -- the average Joe hasn't gotten a raise (on an inflation adjusted basis) in about 40 years . . .

This is excerpted from an article entitled, "Fragging Your Own Money" but Bill Bonner in today's Daily Reckoning. The link to the website to read the whole article is published at the end of this piece. Highly recommended . . .

"From the end of the Napoleonic wars until the beginning of World Wars of the 20th century, the world’s money system was backed by gold. You couldn’t “manage” it. You couldn’t devalue it. You couldn’t talk it up or talk it down. You couldn’t beggar thy neighbor by cheapening it or enrich him by making it more dear. It was what it was. The new experimental money system began in the Year of Richard Nixon, 1971. Thereafter, the supply of money could increase much faster than the supply of goods and services. US money supply (M2) rose 1,314% between 1970 and 2008, from $624 billion to $8.2 trillion. What did all this ersatz new money do? First it flattered…then it corrupted…and finally, it robbed.

"America’s working stiffs were the first to get whacked. Inflation made them feel like they were earning more; but they haven’t had a real, hourly raise since the system was put in place 4 decades ago. And now, America is struggling to make sure they get none in the future either. Lowering the dollar against the [Chinese] renminbi increases the cost of probably 90% of the goods in Wal-Mart and Costco – where the working classes shop.

"But this has been going on ever since the managers began taking liberties with the dollar. In the 1960s, the working man – 90% of the population – got 60% of the income gains of the period. By the end of the bubble years – 2001- 2007 – he got just 11%. This has resulted in a “record income gap,” says this week’s news. Half the nation’s income goes to the top 20% of the population, nearly twice as much, compared to the bottom 20%, as in 1967; it’s the biggest gap since they began keeping track."

The average worker probably can't cite these statistics, but they know the impact -- at a cellular level -- which may explain why work is despised by so many American employees (even as they smile for the boss and the cameras.) Given a chance to quit and not starve, most businesses in American couldn't field a punt return team. Not nice, but a fact nevertheless.

The article appears here: http://dailyreckoning.com/fragging-your-own-money/

-Karger