It just keeps getting better and better in Texas, thanks to governor and potential 2012 Republican presidential candidate Rick Perry, who signed pro-business tort reform legislation last week—forcing loser-pays rules for groundless lawsuits. The state is already a leader in tort reform and job creation, making Rick Perry “America’s Job Creator in Chief.”
For the 12 months through April, Texas has added 250,000 private-sector jobs. Over the last 10 years, it has added 733,000. New England, in contrast, lost 244,000 over the last 10 years. That’s a 977,000-job spread between Texas and New England.
Here’s why: Texas has implemented tort reform; has essentially no business, income, or estate tax; is a right-to-work state; and doesn’t allow collective bargaining agreements by public-sector employees.
New Hampshire on the Verge of Right-to-Work
States compete with each other, pure and simple, and because of the close geographical proximity of the New England states, competition is especially fierce. New Hampshire House Speaker Bill O’Brien gets it … and is doing what he can to override Governor Lynch’s veto. “Passing right-to-work on top of not having an income tax could make us the Hong Kong of the region,” says O’Brien. New Hampshire’s unemployment rate of only 4.9% is the lowest in New England. Even if Rhode Island’s unemployment were cut in half, it would still be higher than that of the “Granite State.”
Public-Sector Unions Control the Purse
The year 2009 marked the first time in history that the number of unionized public employees outnumbered those in the private sector—51% of all union members are dues-paying public employees. Of the government workforce, 37% are members of a union, and in Rhode Island that figure is 70%. The reason for the decline in union membership in the private sector is simple—when there’s no more money, there are no more jobs, whereas in the public sector, union membership grows as long as there are taxes. It’s the taxpayers who make good on the promises made to union leaders by unaccountable CEO governors and a general assembly they help to elect.
Rhode Island and the 25 other states that have collective bargaining for all state and local employees need to give control of the state purse back to the taxpayers. Remove collective bargaining powers, and the incentives are put back into alignment with the interest of taxpayers. But in Rhode Island, there’s no political will to make the obvious and necessary changes.
A States’ Rights Template: Ohio’s Senate Bill 5 Paves the Way
Ohio governor John Kasich’s signing of SB 5 was the first major reform of Ohio’s 27-year-old collective bargaining law for government employees. Over the weekend, unions set up drive-through stations in grocery store parking lots, gathering signatures to overturn the law by putting it on the November ballot. Here’s a breakdown of the items in SB 5 that unions find most contentious:
1. Public employees can continue to collectively bargain on issues related to their wages, hours, and terms and conditions of employment. However, they will not be permitted to negotiate on issues considered to be management decisions.
2. Public employees will be asked to pay a modest share of their benefits costs (at least 15% of their health insurance plan, when private-sector workers pay an average of 31%).
3. Government employees who are not union members cannot be required to pay a portion of their salaries to a union, and government contracts cannot require a public employer to collect payroll funds for political use without employee authorization.
4. In terms of pension reform, taxpayers will no longer pay the 10% employee portion of the pension contribution; employees will have to pay it themselves (taxpayers already pay a 14% contribution).
5. If employees are not happy with their union representation, 30% of a bargaining unit will be able to petition for a decertification vote. The vote to decertify would require a majority. Also, non-union members will not have to pay a fee for the union’s effort to negotiate and enforce a contract on their behalf.
Unions claim SB 5 is an attack on the middle class. Yet the law applies to only 6.5% of Ohio’s 5.5-million-person workforce. If Rhode Island had its version of an SB 5, unions would take the same approach. Like Ohio, only around 6.0% of Rhode Island’s 571,000 workers would be affected. It would not be an attack on the middle class; it would be a support of the taxpayer.
Wisconsin Supreme Court and Governor Walker’s Right-to-Work Legislation
On Monday, the Wisconsin Supreme Court began hearing arguments in the legal challenge against Governor Scott Walker’s law that eliminates collective bargaining rights for public workers. The law was voided by a circuit judge. The opponents argued the law was invalid because Republican lawmakers had violated Wisconsin’s strict open meetings law when they passed the measure using a legislative maneuver. It is now before the Supreme Court, where one of the seven justices is recently reelected judge David Prosser. A union-led assault forced a recount of his reelection results. He won the recount by 0.5% of 1.5 million votes. If unions don’t get what they demand, they go for a recount and take it to court.
California: The Biggest Loser
Over the last 10 years, California has been the biggest loser of jobs, shedding a total of 624,000 private-sector workers. A political contingent travelled to Texas to learn how to save or create jobs. Unions pressured the Democratic wing of the contingent not to go to Texas. While the group visited Texas, business leaders were testifying about how the state’s tort reforms had improved the job market in Texas. On the day this was going on, what was California doing? As John Fund of The Wall Street Journal writes in his article “California Dreamin’—of Jobs in Texas”:
On April 14, the state senate passed a bill mandating that all public school children learn the history of disabled and gay Americans.
One speaker from California shook his head in wonder: “You can have the most liberated lifestyle on the planet, but if you can’t afford to put gas in your car or a roof over your head it’s somewhat limited.”
It’s this lack of political will on the part of politicians in states like California and Rhode Island, among others, that lose their states jobs to the reformers—like Texas’s Rick Perry, Ohio’s John Kasich, Wisconsin’s Scott Walker, and maybe New Hampshire’s House Speaker Bill O’Brien—who are just as happy to take them.