As always, the huge California workers' comp industry continues to be an area of great controversy. In 2008 the 2003 and 2004 reforms continued to settle in, but there were important new developments.

There are many possible items for a Top 10 list for California workers' comp in 2008. Here, in no particular order, are my picks:

1. GOVERNOR ISSUES VETO OF COMP BILLS

Intent on protecting the interests of business interests and loathe to make changes in his signature legislative success, Governor Schwarzenegger vetoed a group of bills passed by the Democratic-dominated legislature. Among the bills vetoed:
-a bill to reverse some of SB 899's sharp cuts in permanent partial disability benefits was vetoed for the third year in a row.
- a bill that would have explicitly prohibited discrimination in the application of apportionment statutes was nixed by a veto.
- Also vetoed was a bill that would have required California licensure of utilization review physicians
-and a bill that would have prevented abuses in workers' comp "cottage industries".

2. EAMS MAKES A ROCKY DEBUT

The California Division of Workers' Compensation unveiled the new computer management system, EAMS . Several years in the planning process by the DWC with lead contractor Deloitte and software contractor Curam, EAMS has been a subject of great anticipation and concern among comp world stakeholders.

One can only assume that the system will be upgraded over time, but as 2008 ends, attorneys, judges, and WCAB file clerks who are happy with the system are hard to find. Complaints run the gamut: forms that are too lengthy and confusing for practitioners and clients, extra work tasks occasioned by quirks in the system, poor training, lack of a coherent strategy for rolling out EAMS regulations and forms, lack of uniformity as to how to handle legacy cases, calendar delays and more.

EAMS appears to be a system best designed for data mining rather than practical interface with thousands of users.

The consensus seems to be that the system gets a "D". Unless substantial progress can be made, this assessment may be a stain on the record of Court Administrator Keven Star, currently off on extended military leave. It was under Star's watch when many of the key decisions on EAMS architecture were developed.

3. APPELLATE COURTS CONTINUE TO INTERPRET 2003/2004 REFORMS

Appellate court activity slowed somewhat in 2008, but important issues continued to be resolved. The California Supreme Court rendered its decision in SCIF v. WCAB (Sandhagen). The Sandhagen court noted that "An employer may not bypass the utilization review process and instead invoke section 4062's provisions to dispute an employee's treatment request".

In Fagundes-Guerrero the Court of Appeal rejected a challenge to the 24-visit chiropractic cap.

In Foster v. WCAB the 3rd District Court of Appeal ruled that where independent injuries result in concurrent periods of temporary disability, the 104 week two-year limitation runs concurrrently.

In Hertz v. WCAB (Aguilar) the 6th District Court of Appeal rejected a finding of permanent total disability under the LeBoeuf theory where the worker's non-feasibility was said to be due to language and literacy factors.

And at year end the comp community was awaiting a decision by the 1st District Court of Appeal in Benson v. Permanente Medical Group. Benson is an appeal of a WCAB en banc decision that rejected the decades-old Wilkinson doctrine. Unless Benson is overturned, separate injuries which become stationary at the same time will be usually be rated individually rather than rated as one. The 2nd District Court of Appeal is considering two cases (Vikitis and Forzetting) with Benson-type issues.

4. INSURERS CONTINUED TO REAP LARGE PROFITS IN THE CALIFORNIA WORKERS COMP MARKET BUT WARN REFORM SAVINGS DWINDLING
Overall premiums collected declined, but WCIRB statistics revealed that carriers continued to do extemely well in the California market. According to WCIRB statistics as of September 2008, loss ratios had deteriorated somewhat, but were projected at 52% of premium collected, a very favorable ratio by historic standards. Combined losses and overhead were 87% of premium. This was the 5th year in a row where insurer losses and expenses were significantly below premium collected.

Meanwhile, the WCIRB called for a 16% increase in comp premiums. This recommendation was rejected by Insurance Commissioner Poizner, who countered with a non-binding recommendation of a 5% increase. Most carriers came in with rates closer to Poizner's figure, casting further doubt on the WCIRB's forecasting.

In September 2008 the California Workers Compensation Institute noted concern about rising costs, particularly medical costs. Although the CWCI noted that usage of medical networks was increasing,certain medical costs, including opioid medical costs, had increased at high rates.

Raids by the Economic and Employment Enforement Coalition in 2008 continued to find many California employers without comp insurance, cornfirming a 2007 study for CHSWC that claimed that uninsured employers were defrauding the system of billions in premiums.

5. WORKERS AND THINK TANKS NOTED THE SYSTEM IS NOT WORKING

The current system came under criticism from workers and some system researchers.

In a November 2008 report prepared for CHSWC, UC Berkeley researcher Frank Neuhauser claimed that California state disability (SDI), funded by workers, is subsidizing California workers' comp. Neuhauser's research finds that up to 8.4% of work injuries and two-thirds of occupational diseases are being misclassified as non-industrial. Neuhauser also noted that SDI delivers benefits at a cost of about $.05 per dollar of SDI benefits whereas workers' comp costs $2.40 to deliver $1 in benefits.

Neuhauser called for integrating workers' comp and SDI. The publisher of workcompcentral.com, David DePaolo, issued an impassioned call for rethinking the system overall. But with the Governor and the legislature failing to advance healthcare reform in California, all eyes at the end of 2008 turned to see what the incoming Obama administration will propose on healthcare and how that might affect workers' comp.

Disabled workers received no relief from low permanent disability awards. Several post 2004 studies (including sudies by UC Davis and UC Berkeley researchers and the DWC's own figures) had shown that awards are reduced by as much as 50% or more from pre-2004 levels.
A legislative PD fix was vetoed by the Governor in September. The DWC unveiled a tentative proposal for a revision of the rating schedule which would result in a small PD increase, but at the end of 2008 that proposal appears to be in administrative limbo.

Meanwhile, WCIRB figures released in 2008 demonstrated that insurer overhead (ALE and ULAE) had risen and that when broker commissions and insurer overhead are added together, the cost of middlemen/overhead is as much as 60% of the benefits paid to or on behalf of disabled workers.

Concerns about system benefit adequacy went unaddressed. Worker advocates continued to note that benefits to workers seemd to be dwarfed by the interests of system stakeholders.

6. THE STATE COMPENSATION INSURANCE FUND RECEIVED NEW MANAGEMENT CONTINUED UNDER SCRUTINY

SCIF, California's largest comp insurer, has had its share of problems over the past few years. A scandal over arrangements with directors and certain "safety groups". A scathing audit and resulting legislative investigation. Removal of two executives in 2007 and resignation of 3 board members.

New management was at the helm in 2008, but problems persisted. New management sought to "rebrand" SCIF with a new image. Yet, SCIF was haunted by word that its loss-adjustment expense ratio had tripled to 38.4% over the past six years as its market share decreased from 50% to around 20% of the California market.

A Department of Insurance report noted that SCIF was bloated; SCIF had staffed up to process increased claim volume, but had not decreased staff as its market share declined. As the year ended it was not clear whether furloughs and layoffs proposed the the Governor would apply to SCIF (or the WCAB district offices for that matter) and whether this might provide impetus to SCIF to shed some of its overhead.

7. RECESSION RESULTS IN HIT TO SELF-INSURERS FUND
As both the national and California economies rapidly deteriorated in the fall of 2008, the parent of AIG teetered on the verge of bankruptcy before receiving government bailout rescue funding. Several other corporate parents of California comp insurers found themselves under pressure due to exposure to the subprime mortage fiasco.

A major corporate casualty of the economic downturn (and alleged chicanery by venture capitalists who took over the company) was major retailer Mervyn's. Since Mervyn's was self-insured, its comp obligations have been transferred to the California Self-Insurers' Security Fund.The projected exposure is said to be around $19 million.

In November 2008, fund manager Jeff Pettegrew was quoted as noting that the Self-Insurers Fund has adequate funding in place to absorb Mervyn's claims. According to an article in workcompcentral. com, Pettegrew noted that the Alternative Security Fund's 355 members have $5.5 billion in assets and "a recent actuarial report by Oliver Wyman concluded that the fund could withstand a major recession, pandemic or major earthquake".
With a number of companies having trouble in the current business climate, we may not have seen the end of this story.

8. ADMINISTRATIVE INACTION AND ACTION

As 2008 ends, it's apparent that the DWC has been in no hurry to finalize a number of long-promised regulatory changes. Among the regulations that have gone through multiple drafts and repeated public comment are:
-proposed new QME regulations
-proposed medical treatment utilization schedule (MTUS) regs, which would add chronic pain treatment guidelines consistent with the ODG guidelines and postsurgical treatment guidelines

Also of note on the regulatory front was the departure of DWC Medical Director Anne Searcy. Searcy headed to a position with Zenith Insurance.

9. THE SUN SETTING ON VOCATIONAL REHABILITATION
As the year ended, voc rehab for workers injured before 1/1/04 was considered by many to be sunseting 1/1/09 per Labor Code 139.5. If so, this marks a historic end to a benefit that was a pillar of the workers' comp benefits package for decades (note; workers injured after 1/1/04 may qualify for a lesser benefit, a schooling voucher).

In an e-mail, Neil Sullivan, deputy commissioner of the WCAB noted that after 1/1/09 the WCAB has jurisdiction to preside over "whether or not injured workers might be entitled to new or additional vocational services or benefits on or after 1/1/2009".The Rehab Unit as we have known it is gone as of 1/1/09.

What is not clear is whether the WCAB will have any statutory basis to award future voc rehab services or benefits after 1/1/09. You can expect litigation over this issue in 2009.

10. QME POOL SHRINKING

In June DWC Administrative Director Carrie Nevans noted in remarks at a CSIMS conference that 1,000 QMEs had dropped out of the California workers comp system over the past five years. At a time when evaluations under the AMA guidelines have become more complex, the graying and thinning of the pool of QMEs has been of great concern to many system observers.

That's the list. In a coming post I'll list links to many of the studies cited in this piece. In the meanwhile, you can use the search box feature on the right column to read posts I've done in 2008 on all these issues.

In coming posts I'll feature a quiz on projected events and trends for 2009. Stay tuned. Happy New Year to my readers.

Julius Young
www.boxerlaw.com
(you can subscribe to the blog by clicking on the RSS reader button on the lower right corner under "most Recent Entries")

Santa brought stuff I needed and stuff I didn't need. Sometimes the latter stuff is the fun stuff.

This year, it was a box of "Corporate Flashcards".
They are billed as "the perfect gift for the unemployed or the overemployed".

I feel my understanding of the business world expanding already.

With the set you can bone up on terms like these:
-blamestorm
-ego wall
-envisioneer
-externality
-future-proof
-geek gap
-golden handcuffs
-sheeple
-job spill
-joy-to-stuff ratio
-mindshare
-proof of concept
-repurpose
-reverbiagize
-Scooby snack
-coffee-spitter
-zero-drag
-alpha pup
-download
-lunch bag
-milker
-office creeper
-pain point
-top-of-mind

And of course, there are the old standbys: low-hanging fruit, knowledge management, human capital, face time, bandwidth, value-added, transparency, team player, synergy, swag, spin, self-starter, revolving door, proactive, flexecutive, 24/7, brandalism, next big thing, brain dump, zeitgeist, operationalize, RIF, results-driven, plug and play, corporate culture, mommy track, outsource, high-profile sneezer, seamless integration, planned obsolescence, affluenza, work-life balance, paradigm shift, globalization, viral ideas and outside the box.

Time to put the rubber on the road.....So here's a test....

Andy came in at 9 to get set for morning meetings. The staff was in a
tizzy. Glenda's Macbook was missing. The week before someone had snatched the antique Buddha from the conference room credenza. Everyone was really concerned that the guy there to check the heating vents was really just an OFFICE CREEPER.

Andy couldn't allow himself to get distracted. He had to keep his cool. After all, he saw himself (and others shared this) as an ALPHA PUP.

The 10 o'clock meeting with Herb was critical. Every few weeks they reserved an hour to DOWNLOAD about the project. The firm was trying to transition into another SPACE. Brash and focused, Andy had some ideas about how to increase the firm's MINDSHARE among its targeted customers.

Andy had a job, but not a life. As his roommate said the night before, "you have a crappy "JOY-TO-STUFF" ratio.

But Herb really liked Andy. Andy had no committments, and Herb could pile on the assignments, knowing Andy was a ZERO-DRAG employee.

Andy had to sit in Herb's office while Herb finished up a conversation, scheduling his Wednesday golf match. Looking around, Andy had plenty of time to note the plaques and degrees on Herb's EGO WALL.

Soon Herb was off his call. They could talk about ways to market the product to SHEEPLE, those easily persuaded mass market consumers
(also known as FAD SURFERS). Andy pitched some of his product ideas. The company needed to go for a FUTURE-PROOF solution. The goal? a product that would not be rendered technologically obsolete.

Aardvark Enterprises was well positioned for this task, Andy offered. After all, Aardvark could exploit its advantage in the GEEK GAP, the disparity in technical knowledge between creators and acquirers of systems.

Herb liked what he heard. True, nothing Andy said was so provocative as to be termed a COFFEE-SPITTER. But his approach was good enough to be the foundation of the emerging STRATEGIC INITIATIVE. Next?
They needed to operationalize some of these ideas. Time to DRILL DOWN further.

But that would not happen today. Reception called. The 11 o'clock meeting with the MILKER was starting in the conference room. The MILKER is that dreadful consultant hired by Herb's boss. He's a consultant who seems to drag out studies and projects just to see his consultancy thrive. MILKER was tasked by the big boss to do a BLAMESTORM on why the last project went so poorly. Was it lack of internal planning? Or did it crash and burn because of an EXTERNALITY?

Herb and Andy knew the meeting would suck up all the time before lunch, so they decided to play BUZZWORD BINGO. As MILKER and some of his acolytes droned on about spillover from the company's strategic mistakes and the resulting collateral damage to the firm's goodwill, Herb and Andy marked off buzzwords spoken by discreetly coughing.

As MILKER warned against future marketing disasters, everyone agreed that from now on there had to be PROOF OF CONCEPT before any work on a project would be authorized.

Andy wished he'd brought his barf bag. That thought quickly passed as he realized it was time for lunch.

On his way to the reception foyer, he was snared by the snarky woman at the front desk. "Your lunch bag has arrived", she snickered. This was not a delivery from Subway, Andy knew. The "lunch bag" was a windbag friend of a friend he'd reluctantly agreed to meet with. The guy was out of work and "networking".

Andy wanted to put his fist through the wall right then and there, but there was no escape. And going on workers' comp with a hand injury? Not a pretty picture.

Feeling suddenly altruistic, maybe I should feel sorry for him, Andy thought. He comes out of a legacy industry, all bricks and mortar. All those deadweight retiree costs are killing those rust belters.

All through lunch, the poor schlemiel kept musing to Andy (over his Kerala spiced tiger prawns) on what the next big thing was going to be.
Having escaped his GOLDEN HANDCUFFS when he was given the heave ho as his company moved its back office operation to Bangalore , schlemiel was wallowing in his existential malaise. Schlemiel floated an idea: REPURPOSING Aardvark's product line.

No wonder this guy was office roadkill.

Andy was losing his patience and constantly fidgeting with his Patek Phillipe. How long must I sit here listening to this guy trying to REVERBIAGIZE some of these stupid ideas, he thought to himself. This guy is a loser.

He's the kind of guy that Herb keeps happy with SCOOBY SNACKS; little perks to keep him docile. Throw them a bone now and then and they'll be lifers, Herb always says.

As they left the Kerala Kottage, Andy smiled and, lying through his teeth, promised to keep schlemiel TOP-OF-MIND. Parting, schlemiel reminded Andy that he hoped to be seen as an ENVISIONEER.

And so it was time to go back to work. Andy would spend the whold afternoon in deep thought, trying to come up with a BLEEDING EDGE solution that would thrill Herb and satisfy MILKER. A solution that would synergistically build on Aardvark's CORE COMPETENCY in Web 2.0.
A solution that would satisfy the PRODUCT EVANGELIST. A solution that would qualify Andy for a golden parachute someday.

But, lo! The space/time continuum seems to have collapsed. Without warning, it was dark outside, The office was quiet. 8 o'clock. Time to order take out from Kerala Kottage and go feed the cat. Another day of JOB SPILL.

We try harder, we try harder, we try harder, My job is my life, my job is my life, my job is my life was his mantra as he fell asleep on the couch.

Thanks, Santa. (and kudos to the purveyors of Corporate Flashcards, at www.knockknock.biz; "MADE IN CHINA")

Stay tuned for my Top 10 Developments in California Workers Comp in 2008.

Julius Young
www.boxerlaw.com
(you can subscribe to the blog by clicking on the RSS reader button on the lower right corner under "Most Recent Entries")

iPhones, iPods and social networking sites aren't the only newfangled things coming out of Silicon Valley......

Now we have "Aguilar", courtesy of the San Jose-based 6th Appellate District of the Court of Appeal. A link to the text of Aguilar (Hertz Corporation vs WCAB and Manuel Aguilar) is included at the bottom of this post.

Aguilar deals with LeBoeuf issues under the "old" rating schedule. Dueling vocational experts testified as to whether Aguilar, a car detailer, was feasible for vocational rehabilitation. Aguilar had a long work history but limited English language skills and was virtually illiterate.

Two of the three justices noted that Aguilar's physical disability rating would be "around 60 percent", noting that was "even with his significant
physical restrictions". Aguilar was noted to use a cane for ambulation at home and to and from his car. He sometimes required a walker for more extensive outings.

The vocational rehab counselor was of the opinion that with his language and literacy limitations, Aguilar was not able to do even very light duty jobs.

If the correct concept is that the defendant insurer takes the employee as they are, it would seem that it's the injury which creates the inability to compete in the open labor market (pre SB 899) or loss of earning capacity (post SB 899). After all, one of the first cases most law students read is a case about the "eggshell skull" plaintiff, dealing with proximate causation.

Moreover, Aguilar argued that language and illiteracy were "secondary factors" and that the physical restrictions were the "primary reason" he could not benefit from voc rehab. Aguilar was an "old schedule" case, and Aguilar cited the LeBoeuf case in arguing that if he was not able to benefit from voc rehab, he was 100% disabled.

That was an argument accepted by the trial judge and by the WCAB on defendant's appeal. Essentially, the trial judge found that Aguilar was not feasible for retraining and was therefore unemployable. But for the injury he would not have been totally disabled.

Defendant Hertz decided to take the issue to the Court of Appeal.

The 6th Court of Appeal does not reject the ongoing validity of the LeBoeuf opinion. But it does trim LeBoeuf where language and illiteracy are a factor in non-feasiblity for retraining.

Citing the voc rehab testimony, the court noted that Aguilar might be employable despite his physical restrictions and need to use a walker if
"he had better language skills and education".

Like hundreds of thousands of hardworking folks, Aguilar (who worked as much as 80 hours a week and who had been employed by Hertz for around 15 years) had not finished school and had emigrated from Mexico (there is no indication that he was here illegally).

In the court's interpretation of the voc rehab testimony, language and literacy was the factor that took him from being disabled but employable to disabled and infeasible for retraining and thus unemployable.

The problem, as noted by concurring Justice McAdams, is that this case may cause defendants to claim an "Aguilar factor" is cases henceforth.

Each human has natural strengths, abilities and skills.

Even the most talented "Renaissance man" (or woman) has things they can never do. I could never be a sommelier, a fighter pilot, an astrophysicist, an acrobat, a jeweler or a strip club pole dancer. Each involve special skills, intellectual traits, attention to detail, physical agility or sex-based characteristics I don't have.

I also tend to get numbness in my hands and feet when it's cold and wet, a characteristic which would probably make me not feasible for work around water or in very cold settings.

These factors may seem extreme. But could any number of such factors be raised to show that an otherwise disabling injury isn't the cause of loss of all ability to compete or loss of all earning capacity?

If you're a dumb-ass and can't work, is there a dumb-ass apportionment?

Where does this stop? Not at language, obviously. What if the worker was developmentally disabled (e.g. "retarded"). Would such a result obtain, or would we find that offensive?

In a future California that become more "brown" and more Spanish speaking by the day, will some "illiterate" Appalachian migrant pear-picker who falls from a Sacramento Valley orchard find that his inability to speak Spanish is a factor in his "infeasibility"?

Not jumping the shark here. Just asking questions. Questions that concerned Justice McAndrew enough to write a rather eloquent concurring but cautionary separate opinion. McAndrew cautioned against overuse of the "Aguilar factor".

Among my questions about the Aguilar case, I'd note:
-Aguilar was noted to have sustained two separate knee injuries, one to his left knee and one to the right knee, as well as a cumulative injury to wrists and shoulders and an ankle; despite this, no mention is made of the Benson case. Benson (depending on what the First District Court of Appeal does) would seem to have major implications for Aguilar's claim on remand

Here's the link to a pdf version of the case:
http://www.courtinfo.ca.gov/opinions/do ... 032438.PDF

On another topic, here's a link to a piece on a suit filed to challenge the Governor's ability to order worker layoffs and furloughs:
http://www.latimes.com/news/local/la-me ... 0801.story

Stay tuned. I'll be finishing out the year with a column on Top 10 events in California Workers' Comp in 2008, and a quiz for the cognoscenti on likely events in 2009. Happy holidays to all my readers.

Julius Young
www.boxerlaw.com

Lots of stuff is getting destroyed these days.

In a deflationary environment, there is "demand destruction". Oil prices go to $50 a barrel. Prices for recycled paper, copper and other materials have fallen off a cliff. Across a wide range of the economy, there are no buyers, only frustrated sellers.

Business models are in transition even for many long-successful enterprises.

But one big concern for workers is whether there will be additional pressure for workers' rights and benefits to devolve. Yes, devolve.

Baby boomers have lived in a time when American workers rights basically were evolving.

The folks outside of Silicon Valley did not get a chance to have on site gyms and Friday beer bashes, but they did enjoy increased benefits in the latter part of the 20th Century (an era that is starting to sound quaint).

But that's been stalling for some time now, as wages have stagnated and many company sponsored health plans have been eliminated or cut back. And manufacturing jobs were outsourced, often while executive pay packages soared.

Even in the wake of a gargantuan bailout, some of the bailed out financial institutions are awarding huge bonus packages.

Union membership tanked, failing to keep up with changes in the type of IT workforce and service economy that was developing.

Workers' comp benefits have been cut in many states over the past decade, with carrier profits ballooning as a result.

Financially stressed, many companies are now cutting 401(k) contributions. Many California employers hope for changes in wage and hour laws as part of a 2009 budget crisis solution.

Are we in a race to the bottom?

Here's a warning from Bob Herbert of The New York Times:
http://www.nytimes.com/2008/12/23/opini ... .html?_r=1

Stay tuned. Later today I'll be posting a piece on the Aguilar case which was recently decided by the California Court of Appeal. Following that, I'll be posting the Top 10 Developments in California Workers Comp for 2008.

Julius Young
www.boxerlaw.com

Being a chief executive in government is a difficult thing. You have to deal with your own party, your own base.

Gov. Schwarzenegger continues to have problems in that department. We now know he'd like to run for President (he can't). But acting erratically during last week's budget negotiations, no one seems to know what's in his head:
http://www.latimes.com/news/local/la-me ... umn?page=1

Meanwhile, Obama faces an early test in dealing with his labor base. When Bush stepped up at the last minute to provide short-term bailout funding to GM and Chrysler, terms included targets for wage reductions to levels at other U.S. auto plants. Those would be the non-union factories of German and Japanese automakers in the South.

That may be popular with taxpayers, and it may allow Detroit's workers to keep working. But it is hardly going to stem the trend of declining union membership in the USA.

The wage reductions are targets, and it will be up to Obama and his people to deal with the details. As I said, it's not always easy dealing with your base.

Labor is hoping to reverse the declining membership trend.

Most labor advocates were heartened by the appointment of Hilda Solis to be Secretary of Labor. Solis has been a longtime friend of working people's interests as a member of the California legislature and as a member of Congress, elected from a Los Angeles district. I've seen her speak, and she seems to be the real deal.

It's not clear whether Obama will push for quick action on the Employee Free Choice Act, the Holy Grail for many in labor, or whether he will put this lower on the agenda. This will be a divisive issue in Congress and much political capital will be spent.

The Pastor Rick Warren controversy and the difficulty finding a CIA director who will satisfy critics of CIA rendition, torture and Guantanamo policy has shown that Obama may have trouble with his base.

Here's an interesting take on all of this written by Peter Brown of the Quinnipac Poll (what follows in quotes is by Brown) that appeared in the Wall Street Journal:
" President George W. Bush, in giving the auto companies a financial reprieve, presented President-elect Barack Obama and the new Congress the choice of putting another nail into organized labor’s coffin, or starting off the Democratic era with a decision that will rile most of the American people."

"Left for the Democratic president and even more Democratic Congress — both more pro-union than their predecessors — is the knotty question: Should the government insist on conditions for an auto bailout that could put industrial unions even closer to the endangered species list by reducing their value to the membership?"

"The Bush bailout that provides cash for the auto makers to keep them operating through March, leaves it to the new administration and Congress to find a long-term solution to the problem, but the bailout contains provisions that require the United Auto Workers by the end of 2009 accept a pay and work rule package roughly on par with the one in place at nonunion, foreign car plants in the South."

"The Obama White House and the Democratic Congress have the power to change that requirement once they take over."

"Knowing that was likely to be the case, union leaders earlier this month refused to sign a deal with Congress for a bailout that included parity, which would mean UAW workers would have to accept the lower pay and more flexible work rules."

"They are hoping to make fewer concessions to the taxpayers when the changing of the guard means Democrats control all the levers of power in Washington next month."

"Yet, the new president’s embrace of bailing out the Big Three without requiring their workers sacrifice to keep their jobs, especially when those concessions would just mean they will be treated like other American workers who work on assembly lines where the weather is warmer, would require him to spend substantial political capital that he might prefer to save for other battles."

"Of course, no one at the UAW — or for that matter among congressional Republicans who for political reasons would be just as happy if that Democratic Party patron disappears — will couch the decision about that portion of the proposed bailout in those terms."

"That would be tacky, and would raise emotional issues better left unsaid at this point as the future of the American auto industry hangs in the balance."

"But make no mistake about it: If the UAW can’t get a better deal for its members than workers get at Nissan, Toyota or Honda in Dixie, at some point those on the Ford, Chrysler and General Motors assembly lines up North may start wondering why they are paying union dues."

"A Last-Ditch Opportunity

The irony is that all this comes at a time when both friends and foes of the union movement have viewed the election of Mr. Obama and a heavily Democratic Congress as a last-ditch opportunity."

"With 12.5% of U.S. workers – including just 7.5% of those in the private sector – belonging to unions these days, organized labor sees the coming years as a last chance to reverse a trend that has taken it from major political power broker to an oft-ignored voice, even within the Democratic tent."

"What ultimately happens to the car companies and the strings that will be attached to any federal bailout will be the best indication of whether the new Democratic majority will be willing and able to help unions grow, rather than continue to wither."

"It would be naive to think that the next four years offers anything but a throwback to yesteryear, when the unions and business groups battled it out for public opinion and favorable government-mandated rules relating to organizing and business operations."

"When President-elect Obama takes office Jan. 20, it will be the first time in 14 years that Democrats control both ends of Pennsylvania Avenue. These years have witnessed a growing global economy based on intense wage competition that has contributed to the further diminution of the union label in the U.S."

"Declining Union Membership
Roughly a third of workers belonged to a union when Dwight Eisenhower took the oath of office 52 years ago, the high water mark for organized labor in the U.S. When Democrats Lyndon Johnson, Jimmy Carter and Bill Clinton were inaugurated in 1964, 1976 and 1992, that share had dropped to 30%, then 28%, and finally 16%, respectively."

"The Obama administration would seem likely to be the most pro-union of the last half-century. During his campaign for the Democratic nomination, Mr. Obama said he would walk a picket line as president to show his solidarity with workers."

"Although he didn’t make any similar remarks after clinching the nomination, President-elect Obama is clearly much more committed to increasing the role and clout of unions in the American economy than Messrs. Johnson, Clinton, or Carter."

"All three of the most recent past Democratic presidents came from the South, which was never a bastion of organized labor."

"But whether the new president can revive a movement that has fallen on the hardest of times in a world where flexibility and wage competition have become the economic coins of the realm is another question."

"Business and labor are already girding for a gigantic fight over a union proposal to do away with secret ballots in union elections. Business, which calls the proposal the biggest revision of labor laws in the last 75 years, says it would allow union organizers to publicly pressure workers to sign election petitions."

"Union leaders say the secret ballot requirements are biased in favor of management. If the change becomes law, labor thinks unions can organize many industries that are mostly non-union."

"The structure of any final deal to save the auto makers — and what it will require from the UAW members – will be an early indication of whether the Obama administration will be able to do anything to reverse the decline of unions in America."

Stay tuned.

Julius Young
www.boxerlaw.com
(you can subscribe to the blog by clicking on the RSS reader button
on the lower right corner under "Most Recent Entries")