Iowa Employers should not get immunity for negligent acts.

Iowa Senate File 167 would expand the ability to work for young Iowans between the ages of 14 and 18. Part of the bill pertains to school work-study programs. One provision reads:

“A business that accepts a secondary student in a work-based learning program shall not be subject to civil liability for any claim for bodily injury to the student or sickness or death by accident of the student arising from the business’s negligent act or omission during the student’s participation in the work-based learning program at the business or worksite.”

I don’t see any good reason to grant this immunity to businesses for their own negligence. Of course, businesses would like this immunity, but what they would like does not make it the right thing to do. This provision should be taken out of the bill.

Right To Work laws need fixing.

Here is a letter to the editor that I just sent to The Des Moines Register – in response to both an editorial and a letter that were recently published on the subject:

Both sides of the “Right To Work” laws are wrong.  The right answer is that the government should get out of the business of regulating employment relationships between private employers and employees.  Neither employees nor employers should be forced by our government to do something against their will.  And both employers and workers should be prohibited from using force against the other.

That means private employers should be free to negotiate or not negotiate with a union and workers should be free to strike or call for boycotts against any employer.  If they want, private employers should be free to require that all of their employees join the union.  Employees should be free to accept an employer’s terms of employment, negotiate better terms, or look elsewhere for work.  In all cases, no one, including the government, should be able to use force against anyone else.

In the case of government employment, the government should not be forced by law to negotiate with a union and employees should not be forced by law to join a union.

John Deere workers need to be careful to stay competitive.

The striking workers at John Deere just rejected the second contract proposal offered by the company. The workers need to be careful to not put John Deere in the position of being not competitive in world markets.

About 40% of John Deere’s revenues come from outside the U.S.  If the company is not competitive internationally it will see a dramatic decline in revenues, profits… and jobs.  Many people today push us to “buy American”.   That sounds good and patriotic, but if other countries do the same we will all be poorer.

International free trade, just like free trade among the states in the U.S., has two sides:  In the long run, it makes everyone better off, but in the short run disrupts the lives of many.  The best policy is to have a safety net that helps those who lose their jobs transition to new jobs, while allowing free trade to help improve the income and wealth of people around the world.

Right-to-work laws need a change.

Laws and regulations should not require a person to join a union in order to work for a unionized employer, including the government.  But for privately owned businesses, the owners should be able to work exclusively with a union, and require employees to join the union, if that is what the owners want.  Most if not all right-to-work laws do not give owners that right.  Those laws should be changed.

Pay gap between men and women does not need further regulation or legislation.

According to an article in the Des Moines Register, The American Association of University Women (AAUW) issued their annual report on the “pay gap” between women and men.  According to the report, women in Iowa earn about $10,000 less per year than men. This article, and the related report, are excellent examples of misuse of meaningless statistics.  (See link below.)   Comparing the median pay for all women with the median pay for all men tells us nothing about whether or not sex discrimination is taking place. A valid analysis would compare the pay of women and men who do the same work for the same employer.  The report by the AAUW did not do that.

This report tells us more about the bias of the AAUW than it does about bias in the workplace.  As you reported, Kim Churches, chief executive officer of AAUW, said, “It’s unacceptable. There is no gender differentiation when it comes to quality, skills, and talent.  It’s time to close this gap and give every woman in Iowa and across the country the salaries they deserve.”  She advocated for more regulation.

Based on the facts given in the article, and assuming that women and men can and do perform equally, then it is fair to presume that the AAUW would agree that if any woman wants to earn the same pay as a man, then they should go for the same jobs that men go for.   When the relevant qualifications, working conditions, and job duties are accounted for, the difference in pay between women and men reduces dramatically.  The pay gap has been reducing for years.  Our current laws are working.  We don’t need to add more regulations.

Link to pay gap article in Register:   https://www.desmoinesregister.com/story/money/business/2018/10/24/iowa-gender-pay-gap-female-male-women-men-equality-wage-american-association-university-women/1739015002/

Link to AAUW report: https://www.aauw.org/aauw_check/pdf_download/show_pdf.php?file=The_Simple_Truth

Iowa Public Employees’ Retirement System needs to be changed to a defined contribution plan.

Recently, candidates for office in Iowa have been asked to promise future Iowa public employees that they will make no changes to the Iowa Public Employment Retirement System (IPERS) retirement plan.  Instead, politicians need to state clearly that they make no promises to future employees about their retirement benefits.  The fact that IPERS is currently underfunded by about $7 billion shows clearly that we already have over-promised benefits when compared to what we expected taxpayers and public employees to pay.

(When government has a defined benefit plan, the participants seem to think that any over-funding is their asset, but any under-funding is a liability of the taxpayers.  In the past, when IPERS was over-funded, benefits were increased!)

The way to make sure that we don’t make retirement benefit promises that turn out to be more expensive than we expect to pay is to put new government employees on a defined contribution retirement plan – just like most employees in the private sector.  This will cause the unfunded liability to come due over the next 50+ years, but at least it won’t get worse.

 

 

Stop Defined Benefit Plan for Public Employees. It’s a Ponzi Scheme!

In a recent Iowa View essay in the Des Moines Register, Josh Mandelbaum wrote that Republican proposals to move the Iowa public employee’s pension plan (IPERS) away from a defined benefit plan and toward a defined contribution plan are, “ideologically driven”.  If by that term he means an ideology under which employee pensions should be financially sustainable and fair to both employees and taxpayers, then count me as ideologically driven also… and that’s a good thing.

In our political/government employment environment, defined contribution plans have mostly been significantly underfunded and unsustainable. In an actuarially sound defined benefit plan, the balance in the fund should have a surplus as often as it has a deficit.  But, as we have seen in the past, when there appears to be a funding surplus, politicians increase benefits rather temporarily lowering the contributions paid by both taxpayers and employees.  There is a built-in tendency for politicians to over-promise and under-fund because future benefits will not be paid out until many years later.  Supporters of the current IPERS system like to say that Iowa has one of the most financially sound retirement systems in the U.S.  IPERS is only about $7 billion short of the funds necessary to keep its promises!  It has only about 81 cents for each dollar that it owes.

Defined contribution plans can have most of the same benefits, and potentially more, for employees.  It does shift significant responsibility and risk to the employee to invest wisely and to not spend retirement money too fast during retirement.  But, under a defined contribution plan the employees own the money in their retirement account, and can take it with them if they decide to change employers, and can leave it to anyone they wish after they die.

There will be a significant fiscal challenge that must be met if we were to make the change from a defined benefit to a defined contribution plan: If new employees put their retirement contributions into a defined contribution plan and don’t contribute to the existing defined benefit plan, the already-existing $7 billion of under-funding of IPERS will come due and need to be paid out over the next 50 – 60 years. In a big way, IPERS is still operating like a giant Ponzi Scheme – taking money from new investors to payoff old investors.  (Illegal if done in the private sector.)  It is time for us to lock-in the under-funding liability and stop making it worse. We need to put new government employees into a defined contribution plan.

Link to Register letter: https://www.desmoinesregister.com/story/opinion/columnists/iowa-view/2018/06/12/dont-jeopardize-ipers-ideologically-driven-changes/692231002/

Average pay for men and women working for State of Iowa need not be the same.

In Des Moines Register’s recent article about the pay gap between men and women working for the State of Iowa, the headlines and introductory paragraphs seemed to imply that there is something wrong about the fact that men working for the State get paid, on average, about $5,300 more than women.  (See link below.)  The proper question that needs to be asked and answered is: Are men and women with substantially the same job and qualifications paid differently or treated differently?

The full article was fairly balanced.  Toward the end of the fairly lengthy article the Register reported: “A 2006 study at the University of Iowa found that almost all faculty pay variations were the result of known factors that were expected to affect salary, including the discipline taught, seniority, tenure status and faculty rank.”  “When those factors were taken into account, ‘there were no overall statistically significant gender- or minority-status based salary differences,’ Jeneane Beck, a University of Iowa spokeswoman, said.”  Also further down in the article the Register quoted Iowa State University economist, Dave Swensen, saying, “It remains that large fractions of administrative support employment are female, which do earn substantially less than management, technical and other professional occupations,”

So, although there may or may not be some isolated problems, overall there appears to be no overall problem with the pay difference that was reported.

Link to Register article:  https://www.desmoinesregister.com/story/news/investigations/2018/01/21/exclusive-women-workers-iowa-government-earn-5-k-less-median-pay-than-men/1014917001/

Many Iowa licenses protect existing businesses more than public safety

In today’s Des Moines Register, the guest opinion by Kollan Kolthoff was very vague in his call for “common sense reform” of the licensing of cosmetologists.  (See link below.)  He wrote, “…leaders from within the industry are uniquely aware that there are problems that need to be addressed.”   I presume the industry leaders he refers to are existing licensed cosmetologists and  licensed schools of cosmetology.  After a person has completed the 2,100 required hours of education and paid as much as $20,000, it is very understandable that they would not want to see license requirements significantly lowered – thereby indirectly lowering the value of what they have already paid for.  Similarly, licensed schools of cosmetology have a very strong financial incentive to maximize the number or hours of schooling required for a license.

He also wrote Iowa needs reform that, “…protects consumers against the deregulation of licensed beauty professionals.”  Deregulation does not and should not mean a lessening of regulation to keep consumers safe.  Deregulation should focus on removing regulations that have the primary purpose of protecting the income of existing cosmetologists and schools of cosmetology.

The same issues apply to a large number of occupations that require a license from the state.  Most calls for licensing, and opposition to deregulation, come from existing businesses and licensees, not from the general public.  Our elective representatives should establish a process to review and reduce licensing requirements in Iowa so that only public safety is is taken into account when requiring Iowans to get a license from the state before being able to work in any particular job.

Link to guest editorial:  https://www.desmoinesregister.com/story/opinion/columnists/iowa-view/2017/12/21/cosmetology-reform-win-win-iowa/970915001/

Some of the rich are getting poorer, and some of the poor are getting richer.

The Des Moines Sunday Register published a lead article (Page 1) titled, “The rich keep getting richer”.  (See link below.)  Included were a number of misleading statistics or misleading conclusions based on the statistics.  For example, according the think tank, Iowa Policy Project, the median hourly wage in 2016 was $16.04 per hour.  37 years ago, the average wage, adjusted for inflation, which is fair, was $15.91.  The Register concluded, “This means a typical wage earner  working 40 hours per week for a full year would have seen a real increase of $270.40 over a 37 year span.”  While the statistics are technically true, you cannot logically conclude and that any specific person or group of people did not move themselves from a lower wage to a significantly higher wage.  I’m sure it is true some people moved down while some people moved up.  An interesting study would be to see how wages correlate to the number of years in the employment market.  It would be interesting to know the median starting hourly rate for a young inexperienced worker versus and an experienced worker who has been in the labor market to 30 years.  The fact that the average stays about the same my be a problem, but almost no one stays at the average wage for 37 years.

Another statistic was that the number of people who earned $1 million or more during specific years increased from 5,031 in 2010 to 8,325 in 2015.  Their “slice” of the state’s total adjusted gross income grew 37%.  Meanwhile, the number of Iowans claiming gross incomes of $40,000 to $99,999 climbed by 23%  while their slice of the state’s total adjusted gross income fell 2%.  First, I would venture to guess that a significant majority of the $1 million+ earners are people who sold their businesses or had other one-time income.  So, again,there is no logical reason to presume that the $1 million+ club is made up of the same people year-after-year.  At the same time, from 2010 to 2015 the Iowa economy was generally continuing to improve, so values and prices of businesses likely climbed.  Also, in the case of an “expanding pie”, the fact that any group gets a smaller percentage of the total does not mean that their real income is not increasing.

Finally, the Register reported that their analysis of U.S. Census data showed that the bottom fifth of earners saw practically no growth in household income – going from $13,798 in 2006 to $13,848 in 2016, again adjusted for inflation.  Here again, there is no logical reason to believe that the specific group of people who were in the bottom 20% in 2006 are the same people who were in the bottom 20% 10 years later.  It would be interesting to know what percent of the people in the bottom 20% in 2006 were still in the bottom 20% 10 years later.   My guess is there would be some, but not a majority.

As a society we need to make sure we don’t put hurdles in front of people who are trying to improve their lot in life.  In many cases this means removing government created regulatory barriers to entry into certain jobs.  The Register has done very good work exposing job licensing regulations that are in place more to protect existing businesses from competition and to protect the profits of licensing education businesses, than to protect the public.  Yet, the Iowa Legislature has done precious little to address this real problem for low income workers who are trying to work their way up in our economy.

Link to Register article:  https://www.desmoinesregister.com/story/money/business/2017/11/25/most-iowa-wages-have-stagnated-but-rich-keep-getting-richer/818770001/