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Union Busting Doesn’t Pay Off for Boeing

When Boeing announced in 2009 that it would invest $750 million Boeing in a new South Carolina production plant to build the 787 Dreamliner, the airplane giant said it needed to cut down on costs being driven up by unions. After years of battling with machinists unions, Boeing moved to non-unionized South Carolina where workers’ benefits and pay are much lower. In South Carolina, for example, Boeing pays plant workers $15 per hour, almost 50 percent less than what Washington assembly line workers earn.

Privately, however, this was never the case. In an internal memo that later became the basis for a complaint to the National Labor Relations Board, Boeing bigwigs admitted that not only would the move cost them money, but “the only consistent advantage attributed to Charleston was the ability to ‘leverage’ the site placement decision toward ‘rebalancing an unbalanced and uncompetitive labor relationship.’”

But years later, Boeing is seeing another consequence to its costly move out of Washington – a less productive labor force. According to the Puget Sound Business Journal:

“Boeing’s South Carolina facility is running behind projections and won’t make its goal of producing three 787 Dreamliners a month by the end of 2013. In fact, the Everett plant will have to make up the difference in order for the company to reach its overall goal of 10 jetliners a month by year’s end.”

Washington’s Boeing machinists and assembly line workers are some of the best in the world because our state has the infrastructure to support their training, certification and long-term employment. The skills, awareness and experience from years of work in the industry are held partly by individual workers, but also in a local network of relationships, trust and everyday interactions in the workplace. This is clear to workers and managers close to the factory, but less so to executives in offices 2,000 miles away. Washington’s competitive edge in aerospace has even led Airbus, Boeing’s major global competitor, to consider opening a Washington engineering center.

Allan McArtor, chairman of Airbus Americas stated at the 2013 Paris Air Show, “We are attracted to Washington state for the same reason we were attracted to Wichita. That’s where the talent is. If you want to have access to the talent that developed over the last 100 years of aviation, Washington is very fertile ground.”

Put simply, we know how to do aerospace in Washington and we do it well. Aerospace unions are a central part of that. Maybe, just maybe, Boeing will realize now that union-busting isn’t just bad for their workers’ bottom lines, but their own as well.

Originally published at EOIOnline

What it’s like for kids to grow up in Washington state: The good, the bad and the ugly

A new report rates the well-being of Washington’s kids as just above average. Here’s why.

The Annie E. Casey Foundation’s annual Kids Count Data Book rates all 50 U.S. states on a multitude of factors, and uses them to calculate four main indicators: economic well-being, education, health, and family and community.

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Washington places 19th overall – the best among states on the Pacific coast, which is (kind of) an accomplishment. Northeastern states dominate the top ten, with six of the top ten states hailing from the original New England colonies (plus Vermont). The states rounding out the bottom of the order were primarily southern and southwestern states.

Washington does very well in health rankings, at sixth overall. As of 2011, only 6% of children in Washington lack health insurance, only 7% of teens used alcohol or drugs, and only 21 per 100,000 children or teens die. The only measure in that category to worsen was the percentage of low birthweight babies, which rose to 6.3% in 2010. The downside? In last year’s Data Book, Washington state ranked fourth in overall the health measure.

Our state’s worst category for kids is economic well-being. From 2005-2011, Washington’s child poverty rate increased from 15% to 18%, for a total of almost 300,000 children. Likewise, between 2008-2011 the rate of children whose parents lack secure employment rose from 26% to 33% – that’s over half a million kids! While these numbers were in large part a function of the recession, Washington’s overall economic ranking stayed the same from 2012 to 2013.

There is some modestly good news on the education front. In spite of Washington’s decade-long failure to adequately fund K-12 education, from 2012-13, Washington moved up one place in that area – from 26th to 25th. The most recent numbers show relative improvements in preschool attendance, eighth grade math proficiency, and on-time graduation rates.

While these improvements should be celebrated, we have long way to go. Washington state needs major investments in K-12 education to improve the well-being of our state children and ensure they are well-prepared to meet future challenges.

Originally published at Washington Policy Watch

Costco is great, but altruistic business leaders won’t rebuild the middle class

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Here’s a reason to renew your Costco membership: not only does the company pay its average worker $45,000 per year, it has also resisted pressure from Wall Street to cut wages and benefits since going public in 1985.

That anecdote came out in a BusinessWeek interview with Costco CEO Craig Jelinek, who said that instead of bowing to pressure and reducing wages and benefits, it has bumped them up every three years.

While 50 cents an hour won’t make anyone rich, it’s more than $1,000/year for a full time employee – and a critical way to keep people and families from falling out of the quickly shrinking middle class. It also shows Costco’s willingness to buck the big business trend of punishing employees when the going gets tough by treating workers not as cogs in the machine, but as valued employees.

Most telling is a quote from Costco CFO Richard Galanti, who said:

Could Costco make more money if the average wage was two or three dollars lower?” asks Galanti. “The answer is yes. But we’re not going to do it.”

This isn’t the first time Costco has been in the news for its good treatment of employees. In July 2005, The New York Times profiled the company, calling it the “Anti-Wal-Mart”. In that piece, the author writes that some Wall Street analysts are critical of the company because it is “overly generous not only to Costco’s customers but to its workers as well.” Likewise, the Seattle PI outlined its employee benefits in a 2004 article, saying that while only a fraction (13%) of its workforce is unionized, nearly all employees enjoy a good deal of benefits ranging from high wages to health care.

Costco – a local company – is a prime example of the kind of business model that not only leads to tremendous profit but a strong economy. For the fiscal year ending in August 2012, for example, Costco reported a $1.7 billion net profit.

But in today’s world of cutthroat capitalism, with the aforementioned pressures placed on businesses from Wall Street, many businesses have not taken Costco’s route, instead choosing to slash wages and benefits. This means more people – even some working full time – are forced onto public assistance for health care and food. Essentially, corporations like Wal-Mart that pay low wages and offer meager benefits (or none at all), are forcing their employees onto public assistance. This pencils out to massive public subsidies for multi-billion dollar corporations.

In order to rebuild the middle class, we can’t wring our hands and hope altruistic business executives simply decide to pay higher wages and benefits. Most corporations – bowing to Wall Street pressure – have gone in the opposite direction. Instead, we need to support the right of workers to organize and bargain for fair wages and benefits, because no one working full-time should have to live in poverty.

We also have a duty as consumers to vote with our wallets; we should choose to spend money in places where workers are valued, respected, and fairly compensated. Otherwise, corporate executives will continue to garnish the paychecks of workers while simultaneously vilifying them for needing government assistance.

Originally published at Washington Policy Watch

Hog fuel or health care? WA state Senate considering 14 more more tax loopholes

he fourteen tax breaks proposed by the state Senate – despite a revenue shortfall and $1 billion funding deficit in K-12 education – beg the question: can we really afford this?

Some loopholes have their place, but as the state legislature tries to put together a budget that preserves essential state services with limited resources, every new tax break must be scrutinized. Even the most logical loopholes still mean funding siphoned away from education, health care, and critical infrastructure.

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The WA Senate is considering a tax break for clay pigeons. PHOTO/Jesrushton

Take Senate Bill 5862, which would exempt mint growers and processors from sales and use taxes for the purchase of propane or natural gas, a loss of $300,000 from essential state services. The entire Republican caucus on the Senate Ways and Means committee voted in favor of this tax giveaway, plus Democrat Sen. Brian Hatfield.

Or Senate Bill 5866, which would extend the sales and use tax exemption for hog fuel for 11 more years. This loophole – which will cost the state $63 million over the next two years – was originally created to help the timber industry. But now a few multinational oil companies receive 98% of the subsidy – at a time when their profits are already sky high.

Then there’s Senate Bill 5622, which promises to create “thousands of jobs” in Washington’s airplane retrofitting industry. Maybe this “Boeing exemption” will help to restore some of the jobs being moved out of state?

There’s also Senate Bill 5831, which would provide a tax exemption for gun clubs to buy clay targets. The bill’s Republican sponsors want to exempt gun clubs from paying sales tax on clay pigeons. While the state would only lose approximately $29,000 over the next two years should the loophole be enacted, the bill is a convoluted giveaway to gun clubs.

All of these tax breaks have a purpose – some promote or discourage certain activities, while others simply provide preferential treatment to specific industries/organizations. But in a time of difficult budgeting, should more tax giveaways really be considered by the legislature? Washington’s tax code already has more than 500 exemptions, and when the budget gets squeezed, these importance of these loopholes are rarely weighed against critical budget items like public schools. Instead, state services – like public education – die a death of a thousand cuts.

In the short-run, some of the Senate’s proposed tax breaks may or may not encourage economic activity. But it’s important to remember that low taxation in itself doesn’t fuel economic growth. A favorable business climate requires more, including an educated workforce, critical infrastructure, and a healthy populous. Without these and other critical services offered by state government – all of which cost money – the business climate isn’t so favorable after all.

Tax breaks aren’t free – in this case, they come at the cost of providing high-quality, low-cost primary, secondary, and higher education. So what will it be: clay pigeons or textbooks? Hog fuel or health care?

Originally published at Washington Policy Watch