Monthly Archives: December 2014

Another Disregard for Congress

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Congress passed the Fair Labor Standards Act in 1938, and it last was amended in 2007. Among other things, the FLSA allows the Labor Department to define who, in a business, is a manager and who is not.

There are two problems with this, either of which alone is sufficient to demonstrate the need for a further amendment. One problem is that it lets government dictate to business owners—private citizens—how they will run their businesses by dictating to them who they may have on their management teams.

The other problem, the one of interest in this post, is that Labor’s definition of who can be a manager is determined by the man’s salary and not by what he does. This definition matters because managers are “exempt employees,” that is, businesses do not have to pay them overtime for working more than full-time hours (nominally, 40 hours per week or 80 hours per two-week periods; although Obamacare muddles that definition).

Sean Higgins, of The Washington Examiner, had some thoughts on that earlier. I’ll just comment on a couple of them here; RTWT.

The president and administration officials have indicated they plan to increase the $23,000 minimum amount a worker must make before his employer can opt to exempt him from federal overtime rules….

Groups such as the liberal Center for American Progress, which has close ties to the White House, have called for the threshold to be raised to $50,000.

That’s the set up.

Higgins then quoted Joshua Parkhurst, a New York labor rights lawyer:

A fast-food restaurant can slap an “assistant manager” title on someone and…that exempts them from overtime. The white-collar exemption is far and away the most litigated issue under the act.

I’ll ignore the fee-generating litigation Parkhurst alluded to; the “error” is his implication that being an assistant manager is, of necessity, a bogus status. How many managers does a fast-food restaurant (or other small business) need? Exactly one. Who’s in charge on the shifts where the manager isn’t working? Somebody? Anyone? Answer: the assistant manager. Businesses doing 24-hour operations need at least three assistant managers—one for each shift (because the day shift’s manager would benefit from the help, and so the business would), plus one (or more) to fill in when someone gets sick or goes on vacation. How many more properly is a business decision, not a government one.

Doubling the threshold, the Center for American Progress argues, would force businesses to pay workers the overtime they are due or force employers to raise salaries to meet that level. “The average worker works 11% more hours than he or she did in 1975. If we as a nation could afford overtime rights then, we can afford them now,” center policy analyst Brendan Duke wrote….

This, of course, is nonsense. Raising the threshold (not even doubling it) would not at all force businesses to pay overtime or to raise wages. Businesses also have the option of restricting their business hours. They also have the option of restricting those workers’ hours and hiring temporary, part-time help. The former could harm the business, but it’s a business decision whether the higher labor costs or the reduced business hours would be the less harmful. The latter would be good for the temporary hires, albeit their hours and income would be uncertain. It would harm the existing workers, though, by capping them, ending their upward mobility and limiting their ability to build resume material for later, better jobs. This is what most of the workers in this sort of business are doing anyway—getting work experience and looking to improve themselves.

Or, the businesses could (and this is the most likely alternative) simply cut back on the benefits provided in order to compensate for the increase in labor cost from government’s redefinition of “manager.”

And the pseudo-logic that, just because “we as a nation could afford overtime rights” 40 years ago when we worked less, we surely can afford to pay increased costs today is breathtaking to hear from an “analyst.” Or maybe not.

Finally, here’s Parkhurst, again:

The point is, if you are shifting someone back and forth from administrative tasks to manual labor, they aren’t a manager. And slapping a title on them doesn’t change that.

This, too, is nonsense. By Parkhurst’s logic, “if you are shifting someone back and forth from administrative tasks to manual labor, they aren’t a” laborer. And calling him that doesn’t change that.

This gets to the crux of the matter. What makes a man an assistant manager is what he does, not how much he’s paid. And what he does is a matter for business to determine, not government. Or a “labor rights” litigator.

The FLSA would benefit from one more amendment, and so would the country.

Economic Viability of Wind Energy

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Tim Phillips, in The Wall Street Journal, quoted Christopher Flavin, of the Worldwatch Institute, as saying in 1984,

Tax credits have been essential to the economic viability of wind farms so far, but will not be needed within a few years.

It’s been a few years. It’s been 30 years’ worth of “few.”

In all, wind energy “generators” get $56.29 per MW-Hr in Federal subsidies. To put that in perspective, natural gas gets $0.64, and nuclear power $3.14.

These guys are free-loading off you and me, and it’s time to put a stop to it. They need to stand or fall in the free market: if their technology is ready for prime time, they’ll have no trouble. If their technology isn’t—after 30 years—they’ve had enough of our prop-up money.

Cut off the subsidies—or more accurately, do not renew them (they expired in 2013) with finality. While the new Congress is about it, it should cut off those natural gas subsidies (those for oil, too, even though they’re similarly just walking around money) and the nuclear energy subsidies, also.

The free market is a much better watchdog for energy production than the Federal government ever can hope to be, no matter how honest or diligent those bureaucrats and regulators might be.

The Taxpayer and Union Pensions

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Here’s the state of the Pension Benefit Guaranty Corporation, a Federal government entity set up to insure union-negotiated pension plans.

Overall, the PBGC has total assets of $90 billion and total liabilities of $152 billion.

The multiemployer subset of that, the section of the PBGC that “guarantees” union-sponsored pension plans to which groups of companies belong, has total assets of $1.8 billion and total liabilities of $44 billion.

The single employer subset, the PBGC section that “guarantees” the pensions of individual companies, has total assets of $88 billion and total liabilities of $107 billion.

The reason for this is that what are being insured are not just any old pension plans, but defined benefit pensions in particular. Recall that these are the plans that guarantee a pensioner a set amount of money every month for life, regardless of how much money the pension plan actually has in it. Somebody has to make up the difference and make the payments, or the plan goes bust, and the pensioner gets nothing. With the PBGC, that guarantor is you and I: us taxpayers.

Of course, the PBGC proclaims that it has never taken a penny of taxpayer money, and that’s true. But the PBGC has never been in worse shape, either, and it’s deteriorating rapidly. Last year, the PBGC was in the hole only $36 billion, compared to this year’s $63 billion pit.

The PBGC also proudly proclaims its mission is to

encourage the continuation and maintenance of private-sector defined benefit plans.

Fine. Congress, as part of the budget bill it will pass next winter, should cut us taxpayers out of this corporation altogether. Congress should spin off the PBGC into a wholly private sector insurance corporation with no ties to the Federal government at all. Let the new company prosper or fail entirely on the private sector merits of encouraging and insuring private-sector defined benefit plans.

EU Immigration

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British Prime Minister David Cameron may be starting to stand strong on the matter of immigration into Great Britain. It sounds like he’s beginning to agree with German Chancellor Angela Merkel, who said four years ago

We kidded ourselves a while, we said: “They won’t stay, sometime they will be gone”, but this isn’t reality.

And of course, the approach [to build] a multicultural [society] and to live side-by-side and to enjoy each other…has failed, utterly failed.

Cameron announced measures Friday:

[M]igrants from the EU should have to wait at least four years before receiving benefits such as tax credits or access to state-subsidized housing. EU migrants also no longer would be eligible to receive state child welfare payments unless their children have moved with them to Britain, a measure which he said is designed to stop the practice of using handouts to support family in their home countries.

He also said that his proposals would be “an absolute requirement” in any renegotiation of the terms of Britain’s continued EU membership that he’s promised to conduct with the EU if he wins a second term in the elections next spring.

Britain isn’t alone in starting to take such a firm position, either. Apart from Germany, the conservative parties of France (despite President François Hollande’s words to the contrary), the Netherlands, even Sweden, are starting to demur from easy border crossing and easy access to government-funded welfare.

If it gets hard for immigrants to go there, though, where else might they go? What other western nation has notoriously porous borders?

Hmm….

US Defense, Foreign Policies

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Russia, China, Iran, and Islamists are waging unconventional warfare around the world, and the United States currently lacks a clear strategy to counter the threat, according to a recent report by the Army Special Operations Command.

“This challenge is hybrid warfare combining conventional, irregular, and asymmetric means, to include the persistent manipulation of political and ideological conflict,” states the Army white paper, Counter-Unconventional Warfare.

Foreshadowed by Iranian actions throughout the Middle East, and by Chinese “unrestricted warfare” strategists in the 1990s, hybrid warfare has now reached its most brazen form in Russia’s support for separatist insurgents in Ukraine.

[“Non-kinetic”] tools…include covert and clandestine special operations commando activities combined with political, intelligence, diplomatic, and financial warfare methods to counter the activities of states like Russia, China and Iran, and insurgent activities by terrorist groups such as the Islamic State.

And

US government “lacks a cohesive [information warfare] strategy to counter adversary [unconventional warfare] campaigns conducted by state and non-state actors….”

Russian examples include

using special operations forces, intelligence agents, political provocateurs, and news media reporters, as well as transnational criminal elements in eastern and southern Ukraine.

“Funded by the Kremlin and operating with differing degrees of deniability or even acknowledgement, the Russian government uses ‘little green men’ for classic [unconventional warfare] objectives,” [according to the white paper].

Examples of the People’s Republic of China’s…techniques…include

unconventional warfare [based on the book,] Unrestricted Warfare…calls for using all means to defeat enemies, including cyber attacks, ecological warfare, financial warfare, and terrorism.

“China will use a host of methods, many of which lie out of the realm of conventional warfare,” [according to the white paper]. “These methods include trade warfare, financial warfare, ecological warfare, psychological warfare, smuggling warfare, media warfare, drug warfare, network warfare, technological warfare, fabrication warfare, resources warfare, economic aid warfare, cultural warfare, and international law warfare.”

Examples include China’s threat several years ago to sell off large US debt holdings to protest US arms sales to Taiwan, and cutting off sales of rare earth minerals to Japan in a dispute over the Senkaku Islands in the East China Sea.

Chinese news outlets also are used in media warfare….

Iran’s techniques are more limited in scope, but no less deadly:

“…Iran provides ‘material support to terrorist or militant groups such as HAMAS, Lebanese Hezbollah, the Palestinian Islamic Jihad, the Taliban, and Iraqi Shia groups,’ [according to the white paper]. “Hezbollah is the primary terrorists’ proxy for Iran working together with a campaign of terror against Israel, the United States, and other western nations.”

It’s entirely possible that an administration more interested in American global interests would have missed this, also. It’s virtually certain, though, that this administration, bent as it is on American withdrawal from the world, wouldn’t have cared even had it recognized any of this.

The Free Beacon‘s article is well worth reading in its entirety, and so is the USA SpecOps’ white paper on the matter.