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Why 'right to work' really does mean 'right to work for less money' Add to ...

These are stories Report on Business is following Wednesday, Dec. 12, 2012.

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Right to work ... for less money
Here’s the thing about the heated debate in the U.S. over so-called right-to-work legislation: Certain numbers don’t lie.

You can argue that an employee has the right to work without being forced to pay union dues, or that an employee has the right to opt for less pay so that he or she can have a job.

But you can’t argue with the facts.

Proponents of such legislation, including Michigan Gov. Rick Snyder, argue that workers have the right to choose. Opponents, including President Barack Obama, say it weakens the bargaining power of employees.

Gov. Snyder in Michigan, where the latest legislation has now been passed, in organized labour’s backyard, said yesterday that the new law “will contribute to our state’s economic comeback.”

President Obama, who visited a Daimler plant in Detroit on Monday, warned that the legislation is “giving you the right to work for less money.”

More than 20 states now have such legislation, which generally allows employees to opt out of paying union dues, thus depriving unions of money and weakening their positions.

The Michigan debate this week was fierce, with comments such as “there will be blood” from the Democrats, “more jobs will come to Michigan” from the Republicans, and “it’ll create civil war" from the unions.

No matter where you stand, there are huge pay discrepancies between the states with such legislation and those without.

In right-to-work states, according to data from the Bureau of Labor Statistics, the median hourly wage as of May 2011 ranged from lows of $13.11 (U.S.) in Mississippi and $13.68 in Arkansas to highs of $15.70 in Nevada and $16.40 in Arizona. When you chop off the highs and the lows, most were in the area of $14 and change or $15 and change.

In those states without such rules, the median hourly wage ranged from lows of $13.46 in West Virginia and $14.13 in Montana to highs of $19.87 in Connecticut and $20.65 in Alaska. But many were in the area of about $17 and up.

(I've excluded Michigan, at $16.47, where the law was signed just yesterday, and D.C., the seat of government, at $29.41. These rankings also don't take union dues into account.)

And while there are other factors at play, I’ll note that, according to the U.S. Census Bureau, and using a three-year average, four right-to-work states sit in the bottom five in the ranking of median household income, while the top five are all in the non category.

(Some readers have asked me to also look at unemployment. The lowest jobless rates, as of October, are in North Dakota, Nebraska, South Dakota, Iowa, Utah and Wyoming, all right-to-work states, at between 3.1 per cent and 5.2 per cent. The highest are in North Carolina, a right-to-work state, New Jersey, California, Rhode Island and Nevada, also a right-to-work state, at between 9.3 per cent and 11.5 per cent. Unemployment in Michigan is 9.1 per cent.)

Fed extends stimulus, sets targets
The Federal Reserve today set key new thresholds at the same time as boosting its stimulus efforts.

The U.S. central bank said it now expects to hold its benchmark lending rate at near zero for “at least as long as” the U.S. jobless rate holds above 6.5 per cent and projected inflation rates at 2.5 per cent or slower.

Projected inflation means the rate expected one to two years down the road. The Fed is saying it will tolerate inflation running half a percentage point above its target of 2 per cent.

Chairman Ben Bernanke and his colleagues on the Federal Open Market Committee, the central bank’s policy-setting panel, said these new thresholds are “consistent” with their earlier pledge to hold the Federal funds rate at its emergency low level until mid-2015.

“In determining how long to maintain a highly accommodative stance of monetary policy, the Committee will also consider other information, including additional measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments,” the central bank said.

Unemployment in the United States now stands at 7.7 per cent, and will be some time before it can get down to the 6.5-per-cent level.

“Although the unemployment rate has declined somewhat since the summer, it remains elevated,” the Fed said in its overall assessment of the economy.

“Household spending has continued to advance, and the housing sector has shown further signs of improvement, but growth in business fixed investment has slowed,” it added.

“Inflation has been running somewhat below the committee’s longer-run objective, apart from temporary variations that largely reflect fluctuations in energy prices. Longer-term inflation expectations have remained stable.”

As The Globe and Mail’s Kevin Carmichael reports, the central bank also expanded its asset-buying program into next year, to the tune of $40-billion (U.S.) a month more, with no deadline for when it will end.

Europe discusses banking union
European finance ministers meet again today, reportedly closing in on the details of a banking union that would put the European Central Bank in charge.

The chief of the European Commission, Jose Barroso, called again today for action in advance of the meeting.

“Officials have already held meetings this week to hammer out disagreements (as a reminder, Germany wants ECB supervision only for large banks, others want this applied to all banks),” said senior currency strategist Elsa Lignos of RBC in London.

“Leaks suggest the presidency’s draft compromise proposes ECB supervision for banks with balance sheets [greater than €30-billion] or for banks which exceed 20 per cent of GDP of the member state.”

Gates likes CN
Some men are really into model trains, as their basements will show. But Bill Gates is into big trains.

Specifically, Canadian National Railway Co.

Mr. Gates now effectively controls almost 12 per cent of the Canadian railway, or some 51.7 million shares, according to his investment company.

Cascade Investment LLC said today that it recently acquired almost 14,000 more shares to bring its holdings to more than 43 million, or about 10 per cent of the company.

Coupled with what’s owned by the Bill and Melinda Gates Foundation, the total is now 11.98 per cent.

“All shares acquired and/or held by Cascade and the Trust were acquired for investment purposes,” Cascade said.

Aerospace lagging
Continued economic uncertainty in Europe is hampering the recovery of Canada’s aerospace sector, says a new report.

After a year of positive growth, new orders are slowing, revenue declined early in the year and production is still weak, according to the findings in the Conference Board of Canada’s fall edition of its industrial outlook, The Globe and Mail's Bertrand Marotte reports.

The launch delay of Bombardier Inc.’s new C Series jet by six months is also having an impact on the speed of the recovery in Canada, the study finds.

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