Pay Striking Workers Unemployment Benefits? No Way!

People gathered together for strike

We don’t have enough money for this, we don’t have enough money for that, Oregon legislators moan. And then the Oregon Senate votes for SB 916, a bill to pay striking workers unemployment benefits.

The Oregon Employment Department projects the bill could add $11.2 million in payments to striking workers. The Legislative Revenue Office predicts it could cost $5.6 million in the next two biennia, based on striking activities between 2015 and 2024.

SB 916 would make Oregon the only State in the country to grant unemployment benefits to striking public and private sector workers. Oregonians can be proud of some of the state’s groundbreaking legislation, but this is not one to be praised. 

 Russell Lum, a Political Organizer with the Oregon Nurses Association, said in written testimony to the Senate Committee on Labor and Business, “SB 916 … can bring about fair contracts faster”, but that is unlikely. 

I bet it will cost a lot more as public and private worker unions extend their strikes, safe in the knowledge they will get compensation during their strike.  As Terry Hopkins, the President & CEO of the Grants Pass & Josephine County Chamber of Commerce, said in written testimony to the Senate Committee on Labor and Business, ”By providing UI benefits during strikes, SB 916 could inadvertently incentivize prolonged labor disputes, as the financial pressure to reach a resolution is alleviated for striking workers. This potential for extended disputes not only disrupts the operations of the directly involved businesses but also has ripple effects throughout the supply chain, impacting small businesses that are indirectly connected.”

What makes Democrats’ strong support for this bill particularly egregious is that it is aimed at benefiting unions, an extremely small portion of the labor force, but a sector that overwhelmingly favors the Democrats in campaign contributions.

In 2024, just 15.9% of wage and salary workers in Oregon were union members, according to the Bureau of Labor Statistics. Dig deeper and you find that the union membership rate for public sector workers in Oregon, about 51%, is considerably higher. That is consistent across the country, where unionization is about five times higher nationwide in the public sector compared with the private sector.

The bill has now gone to the Oregon House, where Democrats hold a 36-24 majority. Two Democrats in the Senate showed great wisdom in voting against the bill, Jeff Golden, D-Ashland and Janeen Sollman, D-Hillsboro. “Counties, cities and schools are scrambling to just maintain current services,” Sollman said. “Now is not the time to be adding more uncertainty and more expenses.”

Amen.

Portland’s Striking Teachers and Their Union Leaders are at Escalating Risk of Losing Public Support.

 Portland, Oregon, long a bastion of anything-goes progressivism, can’t take this strike much longer. 

 Facts are stubborn things. A city still recovering from the pandemic, buffeted by economic uncertainty and battered by homelessness, proliferating graffiti, rampant drug use and crime, simply can’t afford to keep its kids home.

The union says it’s fighting for the children, but they will have missed 14 days of classes by Thanksgiving and may miss more. 

This in a district which is already struggling with high rates of student absenteeism. In the 2022-2023 school year, 36.4% of the district’s students were “chronically absent”, absent for more than 10% of the academic year. Chronic absentee rates were 52.9% for Black/African American students, 48% for Hispanic/Latino students, 66.1% for American Indian/Alaska Native students, 59.9% for Native Hawaiian/Pacific Islander, 31.4% for white students and 22.7% for Asian students.

“The fact that absenteeism has gone up is the biggest issue right now and has been overlooked,” says the Lewis-Sebring Director of the UChicago Consortium on School Research, Elaine Allensworth. “People keep focusing on the test scores, but our research shows over and over again that student attendance is an incredibly strong predictor of pretty much every outcome you care about: High school graduation, college ready, college enrollment, college graduation. It’s vital that students actually come to school every day.”

And then there’s the performance of Portland Public Schools kids on state subject competency tests, likely already exacerbated by high absenteeism. Although mostly better than statewide results, they are still disappointing, often showing declining scores as children move through the system. 

At Portland’s elementary schools, for example, 56% of tested students met or exceeded state standards in math in the 3rd grade in 2023, while just 40% met or exceeded state standards in the 8thth grade, 55% met or exceeded English standards in the 3rd grade compared with 54% in the 8th grade and 44% met the standards in science in the 5th grade versus 38% in the 8th grade. 

At the district’s high schools, just 27of 11th graders met or exceeded state standards in Math, 50% met or exceeded the standards in English and 39% met or exceeded the standards in science.

Of course, all this probably matters less now that the State Board of Education unanimously voted to extend the 2021 law that paused a requirement that Oregon students show proficiency in Essential Learning Skills in order to graduate.

The District’s teachers also need to confront a public perception that a massive amount of money is already being plowed into the troubled system. 

Taxpayers are already spending an astronomical amount to support Portland Public Schools, as I pointed earlier this year in The Cost of Sending Kids to Portland Public Schools is More Than You Think, a Lot More. The commonly used number for spending per student is $15,000, but that’s actually way off. All funds available to the District in the 2022-23 school year totaled $1.9 billion. Divide that by 41,470 students and per student expenditures came out to $45,533.

And that was more than the District spent per student in the 2021-22 school year, even though the number of students served declined. In the fall of 2021, the District enrolled 45,005 students in grades K-12, a decrease of 1,932 students from fall 2020. The net loss was even greater than the previous year’s loss of 1,716 students.

A recent “Portland Public Schools Enrollment Forecast” by Portland State University’s Population Research Center projected that the District’s enrollment will likely continue to fall throughout most of the forecast’s horizon, declining to a low of 39,123 in 2035-36. 

How can the union expect spending to keep increasing in the face of enrollment declines.  

Portland residents also aren’t likely to look more favorably on higher taxes or fees to help the district as the strike continues.  Portland’s income tax rate of 14.7% for earners is already second only to New York City, largely because of resident’s previous misguided willingness to support innumerable feel-good programs. Portland’s rate is even more punitive when you consider that an individual hits that high earner mark in Portland at $125,000, while a New York taxpayer would have to earn $25 million.

The Portland Metro Chamber recently noted that total taxes paid by businesses located in the City of Portland increased by about one-third, or from $781 million to $1.031 billion, just from 2019 to 2021, according to calculations by the global tax consultancy Ernst & Young.

Key changes during that three-year period, included implementation of a gross receipts tax for the Portland Clean Energy Fund, a property tax to fund city parks, a rate increase in the Multnomah County business tax, an income tax to support Preschool for All (paid in part by sole proprietors), property taxes for Multnomah County library renovations, and new business and personal taxes associated with Metro’s Supportive Housing Services measure.

The Preschool for All program, for example, is funded by a personal income tax based on the following thresholds:

  • Single taxpayers. All Oregon taxable income over $125,000 is taxed at 1.5%. All income above $250,000 is taxed at 3%. In 2026, the tax rate increases by 0.8%
  • Joint filers. All Oregon taxable income over $200,000 is taxed at 1.5%. All income above $400,000 is taxed at 3%. In 2026, the tax rate increases by 0.8%.

“Portland’s higher level of business taxation dates to the enactment of corporate income taxes levied by the City of Portland and Multnomah County in 1981,” the Chamber said. “ These local-level business income taxes are not common in other cities across the U.S.”

If the Portland Association of Teachers hopes to come out of this with continuing public support, teachers need to get back too work and kids need to get back in class. Parent and student patience is not inexhaustible. 

A Lesson for the Portland Association of Teachers

The Portland Association of Teachers isn’t going to get what it wants.

Voters in Salem just signalled why.

On Tuesday, Nov. 7, Salem voters smashed to smithereens a proposed payroll tax passed by the city council in July. 

A total of 82.14% of voters rejected the tax, which would have applied to anyone who worked in Salem, including people commuting into the city from elsewhere.

The fact is, voters are worried about their well-being and in no mood to bear increased government spending. Across the board, they feel that their incomes are being eroded by inflation, that their pay raises aren’t keeping up with inflation, and that their hard-earned living standards are threatened.

The teachers union says it’s on strike “for our students” and insists that the public is behind it. Before the strike, the union trumpeted the results of a poll it sponsored that found Oregonians were inclined to stand with educators and supported teacher strikes, especially in the Portland School District.

I don’t think the teachers can count on that support if it means more money out of the public’s pockets.

After all, taxpayers are already spending an astronomical amount to support Portland Public Schools. As I wrote earlier this year, The Cost of Sending Kids to Portland Public Schools is More Than You Think, a Lot More. The commonly used number for spending per student is $15,000, but that’s actually way off. All funds available to the District in the 2022-23 school year totaled $1.9 billion. Divide that by 41,470 students and per student expenditures came out to $45,533. That’s right, $45,533.

The state’s politicians, including the governor, have figured this out and have made it clear the state won’t bail out the district. And rightly so.  As OPB has noted, “It would be unusual — and scandalous in many corners of the state — for the Legislature to find a special pool of money just for Portland schools, particularly since other districts face similar issues.”

Multnomah County residents aren’t likely to look favorably on higher taxes or fees to help the district either. Multnomah County already has the highest marginal tax rates in the United States because of resident’s previous misguided willingness to support innumerable feel good programs. 

“I’m sure that when the voters in Multnomah County supported all of those different proposals and programs, they did it with good intent. But collectively, every time that we vote for an increase, particularly in marginal income tax, that definitely has a dampening impact on investment in our community,” Portland Mayor Ted Wheeler said earlier this year.

Multnomah County has already seen people vote with their feet against rising taxes. 

The county lost population in the year ended July 1, 2022, the U.S. Census Bureau said in its annual report on county-level changes. The county’s population stood at 795,083 on July 1, 2022, down 12,494 (1.3%) from 805,593 a year earlier. This followed a similar decline in 2021. 

Then, of course, the teacher’s union has to recognize that they want more money when the number of students in the system is declining. Enrollment numbers in the Portland Public School District have been dropping every year since 2019, with the biggest loss of students at the elementary school level. No business would give in to demands for higher pay if its sales were dropping like a stone. 

EVs Threaten Auto Parts Retailers, Too

With the UAW strike against the Big Three automakers underway, much of the media coverage has focused on how the shift to EVs threatens jobs and profits.

The predominant story line is the automaker’s assertions that accommodating the union’s demands would make them uncompetitive against nonunionized domestic and foreign EV producers, such as Tesla and China’s BYD, when the automakers are making unprecedented and costly investments in EVs. On the other side of the coin, stories focus on the Big Three workers’ fear that the shift to EVs will threaten their jobs.

Lost in the shuffle is much discussion about what the changing automotive landscape is going to mean for ancillary auto-related businesses. And much of what has been written is oddly positive. 

The Wall Street Journal, for example, recently ran a story about AutoZone, a major auto-parts retailer. “Broader industry dynamics remain favorable for auto parts retail,” the paper reported. “Cars on the road have reached a record average age of about 12.5 years and the share of vehicles in the so-called sweet spot with robust auto parts demand – those aged four to 12 years – are rising…Autozone has a clear path to growth…” 

Don’t believe it.

Auto parts retailers are in for a shellacking. 

Just as EV manufacturing will require a lot fewer workers, battery EVs are not going to need many of the products auto parts retailers sell.

I visited a massive AutoZone store in Tigard today. “Your one-stop shop for top-quality auto parts, accessories and trustworthy advice to keep your car, truck, or SUV running smoothly,” the store’s website says.

Memphis, Tennessee-based AutoZone, Inc. (NYSE: AZO) has 7,014 stores across the United States, Mexico, Puerto Rico, Brazil and the US Virgin Islands.

A casual stroll through the Tigard store reveals the threats it faces, with shelf after shelf of products an EV owner won’t need:

 “In an EV, there is no internal combustion engine, fuel tank, or fuel pumps, “ the Natural Resources Defense Council (NRDC), points out on its website.  “You won’t need to go get an oil change, and due to the use of regenerative braking, you won’t need to get your brakes changed as often either. Many EVs don’t even need or have a transmission. Those that do have a much simpler, single-speed system as opposed to the multi-speed gearboxes in gas-burning vehicles.”

Lawrence Burns, a former vice president of research and development at General Motors Co. until 2009 who now advises companies on the future of mobility, put it this way: “You don’t have an exhaust system, so you don’t have all those parts and the catalytic converter that goes with it. You don’t have the transmission. The transmission has an enormous number of parts — torque converters and clutches and gears. The automatic transmission is one of the most sophisticated mechanisms ever created. None of those are needed on an electric car.”

Tesla says its drivetrain, what provides the power to move the wheels, only has about 17 moving parts, compared to the hundreds of parts in a typical drivetrain for an internal combustion engine vehicle.

Ernst & Young has estimated that vehicles with conventional powertrains have as many as 2,000 components in their powertrains, with even more components if parts used for engine cooling and exhaust and sensors used in emissions control systems are added. 

Green Car Future, an EV evangelist organization, emphasizes the difference in complexity between an EV and an internal combustion with the following:

Your Tesla – Complete Without…

  • Oil pump or filters
  • Fuel pump, filters or fuel injection systems
  • Air intake system
  • Exhaust system
  • Belts of any kind
  • Air filters (outside of a/c)
  • Muffler
  • Gudgeon pins
  • Chains
  • Alternator
  • Clutch
  • Multi-speed transmission
  • Conrods
  • Balance shafts
  • Spark plugs
  • Valve springs
  • Pressure regulators
  • Ignition leads
  • Main bearings
  • Piston rings
  • Coils
  • …and so the list goes on.

As Consumer Reports and the Argonne National Laboratory, a science and engineering research center, have reported, the reduction in complexity means EVs generally cost less for maintenance and have fewer maintenance requirements in comparison with internal combustion vehicles. 

With all this, my advice to investors contemplating putting their money into auto parts retailers like AutoZone for the long term?

Don’t.

Memo to Verizon strikers: you’re doomed

Hillary Clinton and Bernie Sanders are mining for union votes, so their pandering to the 39,000 Verizon strikers is par for the course.

Both greeted strikers yesterday at Verizon offices in Brooklyn and Manhattan. “This is just another major corporation trying to destroy the lives of working Americans,” Sanders said  in Brooklyn. “And today you’re standing up not just for justice for Verizon workers. You’re standing up for millions of Americans who don’t have a union.”

sandersverizon2

Bernie Sanders addressing striking Verizon workers IN Brooklyn. “Thank you for your courage in standing up against corporate greed,” he told them.

 

hillaryverizon2

Hillary Clinton speaks to union leader, Denis Tranor, while she visits striking Verizon workers in Manhattan.

The full-throated proclamations of support from Clinton and Sanders don’t, however, change the fact that the jobs of most of the strikers are doomed.

That’s because, as was the case with a 2011 Verizon strike, many of the strikers service the company’s shrinking landline, or wireline, phone business, or the company’s FIOS network, where Verizon is trying to reduce its role. They don’t service Verizon’s Wireless network, which provides most of Verizon’s profits.

The striking workers are complaining about not sharing in Verizon’s profits, but ignoring the fact that they are not the ones generating the profits. Why in heaven’s name would Verizon want to go out of its way to accommodate the strikers when the customer base they serve is collapsing?

All the public back and forth accusations being covered in the media, which love conflict, obscure the simple fact that the business is changing and nothing the strikers or the politicians grasping for votes say will change that.