5/23/08

State saddled with forced-labor union agenda

Punishing employers won't help create jobs

There's a right way and a wrong way to encourage investment and the hiring of local workers. The Michigan House of Representatives, with the passage of legislation this week, has chosen the wrong way. Christopher Ilitch, head of Ilitch Holdings and chairman of the Detroit Metro Convention and Visitors Bureau, by contrast, got it right.

The Michigan House passed a "Hire Michigan First" package of bills requiring companies with state contracts or seeking economic development incentives to hire Michigan workers first.

The package also penalizes employers who knowingly hire illegal immigrants. And it imposes requirements on local governments with state projects.

The problem with this approach is that it imposes a lot of what economists call "transaction costs" on firms seeking to do business with the state or use tax incentives to invest or grow. The legislation imposes reporting requirements and penalties on firms and exposes them to the risk of financial penalties.

In the case of illegal immigrants, we already have federal agents tasked with enforcing immigration laws.

In general, the House proposal increases the "hassle factor" of doing business with the state.

Michigan already has enough of that with its other laws, from environmental regulations to its prevailing wage rules, which require that contractors on state and school projects essentially pay union wages -- an expensive subsidy for construction unions.

Added to this, the House has just passed legislation that would empower a state commission to meddle in private-sector wages to try to equalize pay between men and women not based on whether they are doing the same work, but on whether their jobs require, in the opinion of the commission, "comparable" skills -- another formula for huge hassles.

The first test for any state contractor should be whether the taxpayers are getting the biggest bang for their bucks. State government shouldn't be more expensive than it has to be.

Ilitch, in seeking more convention business for Detroit, has used persuasion and example, moving more of his firm's meetings to Detroit and lining up additional voluntary support from other major firms to do the same.

In addition, Gov. Jennifer Granholm already has programs in place to encourage the use of state firms. Her "Buy Michigan First" program is a voluntary effort to encourage state firms to bid on contracts.

Michigan Department of Management and Budget spokesman Edward Woods III notes that in the 2007 fiscal year, 92 percent of state contracts went to state firms, up from 87 percent in the prior year. State contracts, he says, are worth a total of about $19 billion.

The governor's program deals with state firms, while the legislation applies to state residents, but the effects of the programs are similar. Granholm's effort, like that of Christopher Ilitch, is based on outreach and voluntary commitment.

That's a better way to go than regulations and threats.

(detnews.com)

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