Saturday, May 23, 2015

Salary Sharing Taboos and the Memory of Gordie Howe

The title of the article reads “Salary-sharing taboo a big hurdle for pay equity.” [Washington Post, 5-10-15] No single bit of American pretension, vanity and egotism does more to harm the common cause of labor than pay secrecy. It harms more than pay equity; it lowers wages for all.

The article cites a linkedIn survey of a thousand full-time U.S. workers that found 73 percent aren’t comfortable discussing their pay with anyone at their office. Only 13 percent said they were completely comfortable while 14 percent said they could discuss salary with close colleagues but not their wider team.

Pay differentials create the incentive to replace higher paid labor with lower paid labor. If Harry makes more than Barry, business has the incentive to replace Harry with Larry and pay him like Barry. Some people seem to understand this when they complain that union negotiators sell out their members by agreement to have a two-tier wage system. If Harry knows Barry makes less, it is their mutual self interest to negotiate the higher pay for both.

The article cites women as less comfortable than men when discussing pay. How foolish when women have a long history of pay discrimination. Some managers take their discrimination seriously and do not hire women at any wage, but the more unscrupulous know women are employable and productive and can be hired at low wages to replace Harry, Barry or Larry. If women would discuss pay with their male colleagues they would learn lots about the men around them, or any claims they offer about equality.

In a recent sports book about Hockey Legend Gordie Howe, he discusses some of his contract negotiations with the Detroit Red Wings. Howe admitted he and his teammates were in the dark about team salaries and for other players in the NHL. Their contracts committed them to secrecy and forbid comparing pay with teammates or players on other teams.

During contract negotiations General Manager Jack Adams would always tell Howe he was the highest paid player in the league, which would be appropriate for one the finest players ever to play hockey. Trouble is he wasn’t. It was years later that he learned from a player on another team who was head of the players association that he was not even the highest paid player on his team. With that information he negotiated a raise. There was no sign management was embarrassed by their deception.

If pay secrecy appeals to your vanity, remember Gordie. Pay differentials and pay secrecy hold wages down for everyone; they are one of many enemies of better wages.

Wednesday, May 13, 2015

Governor Scott Walker, Wisconsin Unions and the Plans Ahead

America’s National Labor Relations law as amended governs private sector unions, but not public sector unions. Public sector unions organize and operate under state enabling legislation. Some states like Virginia do not permit public sector unions. In 2011 the state of Wisconsin repealed legislation that allowed public sector unions and cut health insurance and pension benefits at the same time.

In an article from the Washington Post author Robert Samuels reported membership in unions of Wisconsin public school teachers dropped by 50 percent; Wisconsin public employee unions plummeted by as much as 70 percent. [Wis. Unions crippled by clash with governor, WP, 2-23-15] A local AFSME member quoted in the article is out knocking on doors trying to get former members to rejoin and telling them dues will be reduced from $59 a month to $36.

A union has to negotiate and administer a collective bargaining contract to serve its members. Few employers agree to an employment contract when they hire employees. Without a written contract employment is said to be “at will,” a euphemistic term for a job with no rights at all. At will employees can be fired, demoted or laid off at anytime and without recourse.

A union collective bargaining contract establishes written procedures for internal due process and terms for dismissal for cause and seniority in addition to a wage scale and other rights. Without recognition by management or a contract, there is next to nothing that remains of the unions to justify taking $36 a month in dues from members. Maybe those who have dropped out of Wisconsin unions understand that, but it is less clear what those who hang on hope to accomplish.

Without labor law, unions can only get recognition if they have the economic power and the solidarity to strike. Before 1935 and the passing of the National Labor Relations Act the government took no formal role in labor relations. There were strikes and boycotts that tested a union’s economic power to fight the dictates of employers. Win or lose strikes disrupted the economy and cut production.

The National Labor Relations Act created an official body with the National Labor Relations Board to administer and interpret the law. Several specific aims and policies emerged in just a few years and continue today. Government primarily aims to prevent strikes and economic disruptions. In that role government helped create union contract administration that eliminate strikes with a union bureaucracy that can and does act with little or no involvement from the rank and file membership.

The Washington Post article mentioned above has several quotations to illustrate working class isolation and indifference to unions. “If you do a good job everything will take care of itself. The money I’d spend on dues is way more valuable to buy groceries for my family.”

One quotation expressed bitterness with “Everyone knows teachers’ insurance was some of the best you could get. They do fairly well around here, and they do a good job teaching. But everyone in this town has had to tighten their belts. They should too.”

The Federal government and many states offer collective bargaining rights as a voluntary and practical concession to organized labor. Governor Walker and the Wisconsin legislature repealed their voluntary offer to bargain in good faith, but that does not prevent union organizing. Labor laws like those in Wisconsin suggest to the unwary they need a special law to grant rights they already have in the constitution: the right of free speech and free association.

In effect Governor Walker and his promoters want to debase the working class for personal or political purposes, but they did not acknowledge that doing so turns the clock back to the days when unions had to strike, picket and rampage to force bargaining and recognition. Governor Walker cannot eliminate the right to organize a union or its ability to disrupt the economy.

There was a time when unions did not worry about labor law. From 1905 to 1917 it took military force to end picketing and break strikes of the Industrial Workers of the World (IWW). They worked for One Big Union of all workers. Men and women of any race, creed, color or immigrants of any national origin found low fees and dues, immediate rank and file participation, and direct action on wages and working conditions.

The IWW rejected dues check off as a conflict of interest for leaders who might compromise member interests for a steady income. The IWW did not promote legislation or worry about elective politics. They wanted negotiations at the work place, not legislation, seldom enforced.

The IWW considered strikes as a necessary test of their economic power. Strike early and strike often; use mass picketing, parades and demonstrations as a show of solidarity for themselves and others.

The IWW had no use for grievance procedures that replaced rank and file action with private negotiations between employers and labor leaders. Everyone was a leader in the IWW.

The IWW did not worry about a signed contract. They expected employers to repudiate contracts unless the union had the economic power to enforce them. No terms with an employer were ever settled or final; the IWW regarded every battle as a continuing part of a working class struggle they lived with day to day.

There were plenty in business and politics in the last century who liked to taunt organized labor exactly like Scott Walker and the Koch brothers do today. In some of the more celebrated strikes in mining, railroading and steel the tycoons of industry like Henry C Frick, William R Grace, and Elbert H Gary got the working class so angry their strikes could not be broken without the armed intervention of state militia and the federal government.

At least the working class of 1910 and 1920 understood they were working class and what solidarity could do them, even when they lost. The limp and pathetic response of the people in the Samuels piece describes a divided class of people embarrassed to admit they are working class. People without an identity cannot fight; instead they slobber on the people who cheat them.

If the defunct unions of Wisconsin understand their circumstance they will change their name to “Union of Wisconsin” open to everyone who works for wages. They will lower their dues to a dollar or two a year and organize rank and file participation while accepting there cannot be full time paid staff. They must organize and support a selection of strikes. Pick out some chains or a school district to walk out and shut down for a day, or longer, and be ready to give financial support to those with the courage to do it. Of course, this assumes solidarity. What class are you in?

Thursday, May 7, 2015

The Right to Work Campaign and the Open Shop

The Right to Work Campaign and the Open Shop

The Right to Work keeps making the news. A recent Yahoo report [5-5-15] quoted Wisconsin Governor Scott Walker campaigning in Iowa where he said “He would champion a federal version of the controversial ‘right to work’ law he signed earlier this year.”

Another Yahoo piece by Sara Burnett [5-1-15] reports that Illinois Republican Governor Bruce Rauner travels from town to town to promote “cutting unions down to size.” He wants to expand the right to work in “empowerment zones” in which voters could approve making union membership voluntary, rather than mandatory, at unionized workplaces in their communities.”

Management has always promoted the right to work they just called it the open shop in the years before the National Labor Relations Act of 1935 and the Taft-Hartley Amendments of 1947. In the open shop era management expected to hire and fire anyone at any time whereas a union wanted recognition that required management to hire only union members: the open shop versus the closed shop.

In the open shop era unions typically had to strike to get recognition and bargain for a closed shop because management doubted unions had the solidarity to justify giving in to a union. During a Senate investigation after the 1919 steel strike Senator Thomas Walsh questioned former Judge Elbert H. Gary of United States Steel. Senator Walsh wanted to know why Judge Gary refused to negotiate with the steelworkers union. He asked “Did you decline because they were officials of organized labor or because you believed they did not represent the true feelings and sentiments of your employees?”

Judge Gary answered that he did not believe the union leaders “represent the sentiment of the large majority of our people, if any of them.” His statement came after the steel strike when 365,000 steelworkers walked off their jobs; many were not even union members.

Senator Walsh asked if there were any other reasons he refused to talk with labor leaders. He said “Well, I want to be frank enough to say that it has been my policy, and the policy of our corporation, not to deal with union labor leaders. … We are not willing to do anything, which we believe, after consideration, amounts to the establishment of a closed shop as against an open shop, or that tends to do that. We stand firmly on the proposition that industry must be allowed to proceed untrammeled by the dictates of labor unions or anyone else except the employer and the employees and the government.”

It was an age before any restrictions from labor relation’s law so a union could strike and shut down production of any industry if it had the solidarity and the economic power to support members in a strike. Judge Gary doubted steel unions had the economic power to win strikes, but with an open shop he had no restrictions from labor relations law either. He could fire anyone for joining a union if he could find more labor to replace them.

In the open shop era managers would tell the press they wanted to protect the right to work of loyal employees. In his testimony to Senator Walsh Judge Gary declared his opposition to the closed shop in those exact terms. He said “When an employer contracts with the union labor leaders he immediately drives all of his employees into the unions. Otherwise they cannot get employment.”

So true, except union leaders know they cannot maintain a wage scale for anyone if management can fire high wage union employees and replace them with low wage non-union employees as they can do with the open shop.

In the modern era the right to work discussion is the equivalent to the open shop with slight differences caused by the passage and evolution of U.S. labor law after 1935. Collective bargaining agreements start by setting union security that defines who will be in the bargaining unit and the requirements for employees to be in the union and pay union dues. Unions want the closed shop as the best possible way to control membership in their union.

Other forms of union security evolved as a compromise between the extremes of a closed shop and the open shop. The union shop requires new hires to join the union in 60 to 90 days. An agency shop requires payment of a non-member fee as long as the union used the non-member funds only for contract negotiations, contract administration and grievance procedures rather than for political or ideological activities.

However, the closed shop was banned with the 1947 Taft-Hartley Amendments and Section 14b gives authority to state governments to eliminate the union shop, and the agency shop for unions within their state. Twenty-five states have eliminated the union shop, agency shop and all dues check off, which makes them right to work states in the popular jargon of union hating business and their politicians everywhere.

Once a state legislature passes Section 14b legislation it becomes much more difficult to organize a new union because the new union has to be an open shop with no control over its membership. For established unions dues check off ends and union members can volunteer to pay union dues. Union members and nonmembers alike have the same rights under an existing collective bargaining contract and so no one has the incentive to pay dues for what they get for free.

Because American labor law requires a union to represent all workers in the bargaining unit existing private sector unions with collective bargaining contracts can continue after Section 14b legislation, but without control over new members or the right to collect dues, they will be in a fight to survive.

The wording of Section 14b does not have “right to work” anywhere in it. Those who oppose unions characterize the conditions of union security as a violation of individual rights and personal freedom. Governor Walker said “As much as I think the federal government should get out of most of what it’s in right now, I think establishing fundamental freedoms for the American people is a legitimate thing and that would be something that would provide that opportunity in the other half of America to people who don’t have those opportunities today,”

Governor Rauner said “These special interests have got to be stopped. That’s the key to turning our state around.”

The wealthy classes and their politicians call unions a special interest group because it helps divide the working class just as it did back in Judge Gary’s day. America’s working class is so big it could be the dominant class but only if Americans understand what class they are in, which some do not. In the last few years Governor Walker has convinced the low paid working class of Wisconsin that union members are in a separate privileged class. Instead of recognizing the common interests of everyone who works for wages and the need to raise everyone’s wages, they identify with Judge Gary and Governor Walker as though they could benefit from the intentions of the wealthy. Do they prefer to work for low wages?

In the piece mentioned above by Sara Burnett she quoted a guy named Joe Steichen, a board member of a union in Illinois: Operating Engineers Local 150. When talking about Governor Rauner’s plans, he said “the county has a healthy budget surplus and business environment achieved without trying to "destroy" the working class.” Here is a guy who knows what class he is in. For those who work for a living and support right to work legislation, they should be known as the class of fools.

Friday, May 1, 2015

Jobs for Attorneys


Standard Occupational Classification #23-1011 Lawyers

SOC Definition -- Lawyers #23-1011 Represent clients in criminal and civil litigation and other legal proceedings, draw up legal documents, and manage or advise clients on legal transactions. May specialize in a single area or may practice broadly in many areas of law. Examples of common names in use include Attorney; Real Estate Attorney; Corporate Counsel; Public Defender.

There is a famous line in Shakespeare. "First thing, kill all the lawyers." We have to be glad no one is talking that way now but not everyone feels happy with the modern day legal services industry. People would appreciate lawyers more if they would think about the different legal specialties: bankruptcy, divorce, crime, personal injury, medical malpractice. As we can see lawyers spend their professional life in the middle of somebody else’s argument. Bickering, wrangling, hectoring fill their days. And who ever tries to shore up their morale? Even the winning plaintiffs can be hostile. “I should’a got a better settlement.”

Arguments and other legal business employed 603,300 as lawyers in 2014. Jobs are up since 2000 when jobs were 489,500. The annual average job increase equals 8,127 per year since 2000 at a growth rate of 1.50 percent. The Bureau of Labor Statistics is forecasting job growth for lawyers at 7,480 per year through 2022 with a growth rate of 1.19 percent a year.

It is important to know that only lawyers working as lawyers in jobs at establishments are counted in the totals above. Lawyers can maintain bar membership, but if they work as managers or in another occupation their job will not be counted as a lawyer. A 51 percent majority of employed attorneys work in the Legal Services industry, another 18 percent work in government with small percents scattered in many other industries working as in-house counsel.

The totals above do not include lawyers working as self-employed attorneys in their own business. They have to be counted separately because the Bureau of Labor Statistics checks all their employment numbers with the unemployment insurance rolls. The self employed with no payroll do not have to be in the unemployment insurance system so they cannot be checked and counted in establishment employment, but have to be counted separately. The self-employed census estimate is 166,218, which brings the total of lawyers doing lawyer’s work to 769,528.

Job openings for establishment jobs give a better measure of new hiring than job growth. Job openings are job growth and the number of net replacements. Net replacements count people who permanently leave an occupation for another occupation or retirement and must be replaced before there can be job growth. Job openings for lawyers are forecast to be 19.6 thousand a year through 2022.

The basic wage data from the BLS occupational employment survey includes a wage distribution. Averages are not used much in wage data. A few high wages pull up the average and make it unrepresentative. Instead a distribution range of wages is published with the 10th, 25th, median, 75th, and 90th percentiles of wages. A 10th percentile wage means 10 percent working in this job have wages equal to or less than the 10th percentile wage and so on. Annual wages are converted to hourly wages by dividing annual wages by 2080 hours.

The entry wage for lawyers in the national market equals the 10th percentile reported as $55,400 in 2014. The 25th percentile wage equals $75,630. The median wage is $114,970, the 75th percentile wage equals $172,540 and the 90th percentile wage is $187,200.

The wages of lawyers have not kept up with inflation during the last decade. For example, to have the buying power of the 2006 median wage of $102,470 in 2014, the lawyers wage would need to be $120,329.10. In stead it was $114,970, a 4.45 percent decrease in the real wage for those six years.

The wages of lawyers have not kept up with inflation from 2013 to 2014. For example, to have the buying power of the 2013 median wage of $114,300.00 in 2014, the lawyers wage would need to be $116,154.20. In stead it was $114,970.00, a 1.02 percent decrease in the real wage for those six years.

Back in Abe Lincoln’s day, Abe and other aspiring lawyers studied the law working in law offices and learned through the mentoring system. Now we have three years of postgraduate law school and the summer bar exam. This system helps keep people out of the work force a full seven years and generates jobs in law schools.

The National Center for Education Statistics (NCES) reports degree data for law schools as well as the American Bar Association (ABA). Both report recent law school degree totals for 205 accredited law schools to be in the 46 thousand range. The ABA reports 43,979 degrees for 2011, 46,364 for 2012 and 46,776 for 2013. Degrees can be compared with job growth and openings. With 46,776 law degrees in June 2013, the last year of complete degree data, the ratio of relevant JD degrees to openings equals 2.39, or 46,776/19,600, assuring a large surplus of qualified candidates to fill job openings.

The ABA also reports current tuition for accredited law schools, which tends to be in the $30,000 range, but varies widely. Some tuition is under $1,000 such as the University of Dayton with reported tuition of $910, while at prestigious Yale tuition rings in at $43,750. High law school tuition has the potential to make law school quite profitable, but colleges including law schools do negotiate reductions for especially promising students.

The difference in tuition puts significant but different financial pressures on graduates. Investing three years worth of $43,750 tuition at 4 percent a year would generate $276,665.80 after 20 years. Current interest rates are less than 4 percent but long term stock market returns are higher so 4 percent represents a defensible middle of the road return. It will be necessary to earn $19,574.57 a year more in wages to justify the tuition investment, again over 20 years and discounting the additional wages at 4 percent interest and annual compounding. Thanks go to Excel spreadsheet functions for these calculations.

Graduates of the high priced and well known schools like Yale and Stanford can find jobs in the largest law firms at salaries of $140,000 to $160,000, which is enough to make the three year investment in tuition payoff quite well. Large law firms pay better than smaller law firms, typically at least double small ones. Recent data show 21 law firms have more than 1,000 attorneys and a couple have over three thousand, but there are typically no more than 300 United States law firms with more than a hundred attorneys.

While the newly hired associates at large law firms can expect $140 to $160 thousand salaries, their numbers are small compared to the number of graduates each year. Large law firms can be expected to employ 60-65 thousand associate attorneys, the number varies some year to year, but that represents no more than 10 percent of jobs for associate attorneys.

The 10th percentile wage of $55,400 should be thought of as a realistic entry wage for new law school graduates. The lower entry salaries for most of the graduates makes the law school payoff more uncertain. A safe calculation should compare three years of law school tuition with any increase in salary based on a wage of $45 to $65 thousand. As of 2014 it is quite possible that law school can be a bad investment.

To be a lawyer representing clients before a court requires admission to a state bar association and the payment of bar dues. Some lawyers decide to practice law in several states but that requires passing more bar exams and paying bar dues to multiple state bar associations. Bar association dues are like the union dues paid by machinists or electricians who have to demonstrate their skills to belong to the International Association of Machinists, or International Brotherhood of Electrical Workers.

People in associations with common skills, like bar associations for lawyers, have successfully cultivated a different image for themselves than the public perception of people in unions like machinists or electrical workers. Machinists and electrical workers join a union. Lawyers support a prestigious professional association, but lawyers, machinists, and electrical workers have an identical set of needs and goals.

Each has a need to assure that people who enter the practice of law, machinist, or electrician have a common set of essential skills. Imposters are bad for practitioners and consumers alike, but the time and expense learning the skills of a lawyer, machinist, or electrician has to be covered in higher wages. Partly higher wages give the incentive to learn new skills, but incentive alone is not enough. That is because not everybody can afford the time and expense it takes to learn a skilled profession unless they can pay for the investment later with higher wages.

The median wages reported for lawyers are among the highest median wages in the Occupational Employment Survey. Physicians are generally higher, and a few other occupations like chief executive and selected actors and entertainers. Trouble is lawyers who are already lawyers have two reasons to limit entry. In addition to maintaining high skills those already qualified and licensed have the incentive to prevent too many new entrants from lowering wages.

In America, law courts do not allow partial license that would let someone represent others in divorce law, or real estate law, or other legal specialty. The requirement for a three year law degree, the bar exam and bar dues as prerequisite to represent anybody amounts to a one size fits all lawyer that limits the number of lawyer jobs. Comparison with court practices in other countries might show that America’s restrictions are not necessary, except to limit entry and keep earnings higher for lawyers.

Law firms usually charge clients by the hour with charges of $300 an hour or more, which limits legal access to the well-to-do and corporations and government, but it also limits jobs. The Legal Services industry employment in all its occupations has remained at about 1.1 million since about 2002 with a 20 year record of slow growth. Actually it is .72 percent a year since 1990; .36 percent a year since 2000; -.75 percent for last year 2013 to 2014; the worst record among professional service sub sectors. America needs jobs, more legal services and a broader approach legal representation could help.