Today’s News & Commentary — June 20, 2017

According to the Bureau of Labor Statistics, youth in Illinois face an unemployment rate of 70% nearly 16 times the state-wide average. These job disparities widen when considering race, as 85% of African American youth and 81.5% of Latinx youth are unemployed as compared with 73.4% of Caucasian youth. Moreover, a recent analysis suggests this level of unemployment will cost the state over $9 billion in lost tax revenue.

 

After President Macron’s victory in France and his majority in the French parliament, unions have lost many of their allies in government. Unions are unsure whether they will still have a voice in government or whether President Macron will simply ignore their demands. One looming question is whether various unions can mend their differences and work together to achieve policy reform.

 

Google has revamped its search tool to include job posts from Monster and LinkedIn. Users can now search for “jobs near me” and filter through jobs based on various criteria. Google product developer Nick Zakrasek commented: “With this new experience, we aim to connect Americans to job opportunities across the U.S.” Importantly, Google will not allow companies to directly post jobs on its platform; instead, it will simply pull job posts from other websites.

Pensions v 401(k)s: An Illinois Case Study

Illinois’ pension liability is estimated to stand at more than $130 billion.  The reason behind Illinois’ ever-growing pension liability is one of debate.  Some attribute the deficit to legislators voting on pension bills they didn’t fully understand.  Others argue that politicians chose to kick the pension ball down the road to avoid raising taxes or cutting spending on their watch.  Still others, like Illinois Governor Bruce Rauner, argue the structure of the pension system itself is to blame: employees change jobs as a way to qualify for more than one pension and many seek raises in their final years as that guarantees them higher payouts during retirement

While there is much debate about the cause of the deficit, its existence is certain.  Despite being in the top 1/3 of the nation’s wealthiest states, Illinois has one of the most poorly funded retirement systems in the country.  Illinois has only funded 39 cents for every dollar it has promised to pay out in pensions. The pensions of similarly populated states like New York and Pennsylvania are far better funded, with New York at 89 percent and Pennsylvania at 62 percent, respectively.  It is clear that Illinois needs to rethink its current pension scheme.  Some groups like Illinois Policy, a conservative think tank, advocate for Illinois to adopt 401(k)s for new government workers, but the idea has not received much traction among state employees.  While the traditional debate has been between keeping traditional defined benefit plans like pensions or moving to a defined- contribution plan like a 401(k), there is a lesser explored option as well: the hybrid 401(k)-pension plan.  The hybrid plan combines the guaranteed income of a pension while lowering employer contributions with a 401(k).

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Illinois HB 580: The Political Battle Over Interest Arbitration

When it comes to labor news in Illinois, most attention is on the Chicago Teachers Union and its likely strike in April.  But HB 580, a labor bill pending in Illinois, merits attention as well, as it has ignited fierce debate in the state for over a year.  Though the future of the bill is uncertain, it raises important questions about public sector unions that have little choice but to engage with partisan politics.

Current Law & Stalemate

HB 580 would create an additional method for concluding agreements between public sector unions in Illinois and the state government, creating the option of using binding arbitration instead of providing for exclusive use of the Illinois Labor Relations Board.

Currently, under the Illinois Public Labor Relations Act, public sector unions negotiate directly with the governor.  If negotiations break down, either side may ask the Board to find that an impasse has been reached, triggering the union’s right to strike as well as the state’s right to lock out workers and shut down the government.

The state’s contract with the American Federation of State, County, and Municipal Employees (AFSCME) Council 31, the union that represents the majority of Illinois public employees, expired on June 30, 2015.  Despite multiple bargaining sessions, AFSCME and Governor Bruce Rauner have yet to reach an agreement over a new contract.  The central points of disagreement are the state’s demands to freeze wages for four years, raise the threshold for overtime from 37.5 to 40 hours a week, and increase employee contributions to health care plans.  AFSCME wants higher wages and to keep the state’s proposed changes out of the new agreement.

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Today’s News & Commentary — August 6, 2015

The Los Angeles Times Editorial Board has come out swinging in the wake of the newspaper’s recent report on exploitative working conditions in immigrant detention centers (see OnLabor‘s discussion of this issue here). The board strongly suggests that a nefarious motive is behind the employment scheme, which pays migrant detainees pennies per hour to perform manual labor in the very detention centers that imprison them: “According to one estimate, the private contractors and local governments that run most of the facilities shave at least $40 million off their annual operating costs by having work done in-house for which they otherwise would have to pay minimum or market wages.” Accordingly, the board calls upon the Obama administration to “treat the job-holding detainees like the workers they are” by paying them the federal minimum wage or, better yet, extending the Fair Labor Standards Act to cover immigration detainees.

Locally grown vegetables. Pasture-raised beef. Happy workers? While that last consumer label might not be making its way to supermarkets anytime soon, one MIT professor has created a tool for consumers to learn more about how grocery store chains treat their workers. The Boston Globe reports that Professor Zeynep Ton and several of her students have “developed an index that they hope will empower shoppers to ‘vote with their wallet’” by ranking stores according to, among other factors, employee satisfaction. Costco tops the list, with Whole Foods not far behind — although, apparently, the index does not account for the workers who manufacture the products themselves.

Do Democrats need their own Scott Walker? Holman Jenkins of the Wall Street Journal apparently thinks so. And he’s not talking about a progressive rival to challenge Walker’s antiunion rhetoric. Instead, Jenkins suggests that to truly undermine unions — which he characterizes as, among other things, “the main political obstacle to just about every kind of reform” and the driving force behind the “high-risk experiment for low-skilled workers,” i.e., the Fight for $15 — there needs to emerge a stronger antiunion voice within the Democratic Party. “An antiunion Republican candidate is practically a redundancy these days,” Jenkins insists. “Too bad we don’t have a Democratic Scott Walker yet. We’ll need one.”

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Today’s News & Commentary — July 22, 2015

Following its largest city, Los Angeles County voted to increase the minimum wage to $15 by 2020. Between the county law—which applies to all unincorporated areas of the county—and the Los Angeles city legislation, more than half of the county workforce will be guaranteed more than state minimum wage. According to the Los Angeles Times, organized labor’s next challenge is to convince other local governments within the county to adopt the same increases.

The AFL-CIO leadership convenes next week, when they will meet with four presidential contenders: Hillary Clinton, Bernie Sanders, Martin O’Malley and Mike Huckabee. According to Politico, the federation plans to push candidates on trade, wages and strengthening collective bargaining. AFL-CIO president Richard Trumka tells Politico that the federation is seeking to pass a series of smaller bills, including an expansion of the NLRA’s coverage, new remedies for workers who win unfair labor practice cases, and possibly a proposal to make labor organizing a civil right.

The Chicago Tribune reports that the state of Illinois waived 99% of pension penalties for school districts that had given steep raises to outgoing educators. Since 2005, when the state created penalties for hefty raises for retiring teachers, school districts have amassed more than $150 million in penalties. But after finding loopholes in state law, more than half the districts have avoided paying the majority of their penalty bills.

In Kenya, teachers unions are appearing before the Court of Appeal today to defend a judgment that requires the government to increase their salaries, reports the Daily Nation. A lower court called on the government to increase teacher pay by 50-60% over the next four years. The government claims it cannot afford the salary increases, which go into effect immediately, and that the order takes away the parties’ freedom to negotiate voluntarily through the collective bargaining process.

Weekend News & Commentary — May 9-10

President Obama was criticized for choosing to visit Nike as part of his push for the Trans-Pacific Partnership trade pact, because of Nike’s troublesome overseas labor practices.  The Los Angeles Times outlines some of the most prevalent criticisms of Nike in spite of improved practices.  The New York Times has more on the conflict in the context of Obama’s relationship with Nike.  Lydia DePillis in The Washington Post described the potential impact of the pact on improved working conditions in Vietnam.     

Writing in The Washington Post, Lydia DePillis also describes efforts to pass state and local legislation that addresses “just-in-time scheduling,” the increasingly common practice of employers to time shifts at the last minute exactly when work is needed.  The proposals would give workers more control over their schedules.  The first such bill, which went into effect this year in San Francisco, requires that employers “give workers two weeks’ notice of their schedules, pay workers for the shifts when they’re on call and give hours to current employees instead of hiring more, among other provisions.”

The New York Times reports that Republicans are undertaking efforts to “end prevailing-wage laws are emerging in statehouses around the nation.”  The laws were generally passed during the Great Depression and exist in 32 states and for federal contracts, requiring “private contractors to pay workers on public projects wages in line with those earned by people doing comparable work in the same region.”

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Guest Post: Should Municipal Bankruptcy be Allowed in Illinois?

David Skeel is a visiting Professor at Harvard Law School.

In her characteristically thoughtful post, Professor Michelle Wilde Anderson points out that Illinois cities might not alter their pensions (or might not alter them much) even if Illinois enacted legislation authorizing its cities to file for municipal bankruptcy. I think Professor Anderson is completely right about this, and that she rightly points to the recent Detroit and Stockton bankruptcies as evidence that troubled cities will bend over backwards to protect most pension benefits. If I differ from Professor Anderson—and I’m not sure that I do—it’s only in being a little more convinced that the bankruptcy option is necessary and a little more optimistic about its benefits.

Under Chapter 9, the federal bankruptcy rules for municipalities, a city can only file for bankruptcy if state law explicitly authorizes cities, or the city in question, to file for bankruptcy. Illinois currently does not permit its cities to file for bankruptcy. (The only exception is for cities under 25,000, and even for these small cities the authorization may not be sufficiently explicit to qualify.)  If the state or troubled Illinois cities such as Chicago could make modest adjustments to their pension obligations outside of bankruptcy, the bankruptcy option might not be necessary. But the Illinois state courts have construed a state constitutional provision that protects “[m]embership in any pension or retirement system” extremely broadly. Last year the Illinois Supreme Court held that this provision prevents any adjustment of retirees’ health benefits. And the Illinois Supreme Court recently heard arguments in challenge to 2013 legislation that would, among other things, reduce cost of living increases and slightly increase the retirement age for current employees. If the court holds that even these adjustments are not permissible, as it is widely expected to do, the state’s hands will be completely tied. It and its largest city will not be allowed to make any adjustments to their pensions for current employees, yet the pensions are so radically underfunded– $111 billion for Illinois, roughly $30 billion for Chicago, by very conservative estimates—that it seems impossible to pay them in full.

It is important to point out that, if it is impossible to make even minor adjustments to the pensions of current public employees, Illinois public employees (or would-be employees) will likely bear a significant portion of the pain in other ways. Illinois cities and the state may be forced to curb future hiring, no matter how urgent the needs that would otherwise be addressed. They may also face pressure to lay off existing employees, a step that would be more damaging for most employees than adjustments to their future pension benefits.

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