Posted by LaborLawGuy | Posted on 03-04-2009
Category : Federal Labor Law, Random Musings, State Labor Law
Tags: Karl Marx, unions
Us taxpayers (bad Inglish intended) may get the last laugh, or as Karl Marx said, “History repeats itself, first as tragedy, then as farce.” This time around, the Great Depression II is indeed looking a lot like farce (see D.C., Washington; bailout, Paulson and Gaithner; Detroit, UAW and Big Three; everywhere, public employee unions).
Unionized government workers have always felt, “They can’t touch me,” and laughed at the rest of us mere mortals who, in times of recession, would get laid off instead of enjoying six weeks’ vacation and a 5-percent pay raise.
Cities, counties and states are now watching with bated checkbooks as legal drama unfolds in the courthouse and City Hall of Vallejo, Calif., which ran out of money and filed Chapter 9 bankruptcy. One big problem for the city: What to do with bloated and impossible-to-pay public employee contracts?
Chapter 9 is used so rarely that no one knew for sure if it allowed government entities to void employee contracts. Union lawyers argued that their contracts were protected under California labor laws, but Judge Michael S. McManus curtly informed them that state law is trumped by federal law in bankruptcy proceedings. He gave the city the power to tear up the contracts.
The unions and the city are now negotiating, but what really matters is what the rest of the nation is doing, or going to do, in light of governments’ newfound power to evade and rewrite employee contracts.
The “gotcha” smirk now moves from the unions to the cities and states.
If you thought that four years late and $350 million over budget for the largely unneeded U.S. Capitol Visitor Center was bad, wait till you see what the projects flowing from the recent $787 billion stimulus package will cost.
The 1931 David-Bacon Act (which obviously did nothing to shorten or alleviate the Great Depression) provides that contractors for government construction projects pay a “prevailing wage” to all employees. The prevailing wage–natch–is set by the government itself, and with the Obama people running things, only Karl Marx himself knows how high that can go.
Davis-Bacon was enshrined and expanded to cover virtually everything in the recent stimulus package, so the sewer next to you might end up costing 300 percent of what it would normally cost on the open market.
Wait, it gets better. Not only is Davis-Bacon being married to stimulus projects, but Obama has issued an executive order requiring project labor agreements (PLAs) for major construction projects, currently those costing $25 million or more, but surely and shortly to be lowered by Labor Secretary Hilda Solis, who has authority over such matters.
PLAs require contractors to accede to all union demands regarding work rules, working conditions, pay, hiring (which must be done in union hiring halls), and union dues (which must be paid even by non-union members). A PLA was and is in place for the infamous Big Dig in Boston, which the Boston Globe projects will cost at least $22 billion, after being budgeted at $6 billion, and not be paid off until at least 2038.
Now, the irony here is that it’s Massachusetts’ Commonwealth Care medical program that the Obamaites are hoping to copy for the rest of us, and that plan makes the cost overruns of the Big Big pale in comparison.
Why does this seem like deja Great Depression all over again?
