Let’s try something new to raise wages, create jobs

Recently in Legislative Hall, the Senate Labor and Industrial Relations Committee turned its back on a bill aimed at revitalizing Delaware’s manufacturing industry.

By not releasing legislation to create Right-to-Work zones in Delaware, the Democrat-controlled committee has essentially killed this bill.

As disappointing as that is, I’m encouraged by the fact that we have finally had our first formal discussion about this issue in Delaware. And judging from the many comments we heard in committee supporting this bill, there’s no doubt this conversation will continue.

The bill is dead, but not the idea. The reason for that is simple: in the last two decades in Delaware we have lost almost 23,000 manufacturing jobs, and the efforts to get them back have failed.

Gregory F. Lavelle

Gregory F. Lavelle

Delaware has a shipping port, rail lines, a low-cost natural gas supply system, an educated workforce and even empty factories. We should have manufacturers beating down our door, yet, they aren’t. Why?

The former Boxwood Road automotive site in Newport, the former steel plant in Claymont, and the former DuPont site in Seaford are poignant reminders of the way things used to be. Additionally, there are numerous brownfield sites across the state and in Wilmington that are waiting to be revived and provide economic opportunity to local residents. When a factory closes, a solid and stable lifestyle disappears overnight.

Beyond individual situations, middle-class wages are stagnant. The Economist magazine recently reported that employees working in Delaware saw their hourly and weekly earnings drop between 2009 and 2014. Delaware was the only state to record negative wage growth during the five-year period, the magazine reported. (In 2009, the average wage was $22.49 an hour; in January, 2015 it was $21.98).

Manufacturing jobs are one of the keys to increasing middle-class wages. Delaware doesn’t have to continue falling behind.

Other states are showing the way to increase manufacturing, with the adoption of Right to Work Laws. Right to Work simply means workers have the freedom to choose whether to pay union dues or not. It has paid dividends of jobs in states that have adopted them. Between 2009 and 2014, manufacturing jobs have increased 2 percent, and manufacturing wages are up 5 percent, in Right to Work states, while manufacturing jobs and wages fell 3 percent in states without Right to Work laws (according to the U.S. Bureau of Labor Statistics).

Why is freedom to choose so important? When deciding where to build a manufacturing plant, companies have a lot of choices. To narrow the list, they use checklists. At the top of the list is a box for whether a state has a Right to Work law. If not, the state receives no further consideration.

The Right to Work law is seen as a sign a state is welcoming and has a good environment for factories. Company site-selection criteria eliminate states without Right to Work laws from consideration. Delaware’s recent effort to engage Volvo’s decision to site a factory in the United States confirms this, as state officials couldn’t even get phone calls returned.

Don’t believe these are union-busting laws. Yes, unions don’t like Right to Work laws. They prefer the certainty of requiring dues payment as a condition of employment. They complain that, without compulsory dues, some people may see the benefits of union-negotiated contracts without paying their share of the cost to run the union. While we understand the concern, we note private-sector union employment in Delaware is down to about 6,000 people, or 2 percent of the workforce.

Is it more important we continue compulsory dues, or more important we create more high-paying jobs? We come down on the side of more jobs.

Unions may have to work harder to convince workers it is worth joining the union. However, we note Indiana, which became a Right to Work state in 2012, added 120,000 new jobs, or 4.5 percent, in 2014, and added 50,000, or 20 percent, to union rolls! It may seem counterintuitive, but growing private-sector union employment in Delaware requires Right to Work legislation.

We have proposed legislation giving the Delaware Economic Development Office the authority to establish Right to Work Zones when at least 20 new employees are to be hired by a manufacturing business. Delaware also has the highest business taxes in the country, combining a Corporate Income Tax and a Gross Receipts Taxes for an effective tax rate of 12 percent.

Our bill provides five years of relief from the Gross Receipts Tax. We believe this idea will make Delaware more attractive for manufacturing companies who are looking for large parcels of land zoned for industry, close to a good port, and with plentiful, low-cost natural gas supplies.

The former Boxwood Road automotive site in Newport, the former steel plant in Claymont, and the former nylon plant in Seaford are excellent candidates to be designated Right to Work Zones.

We don’t want to see Delaware continue down the path of a gutted middle class. It is time to try something new here that seems to be working elsewhere.

EDITOR’S NOTE: Gregory F.  Lavelle, of Sharpley is Delaware Senate Minority Whip.

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