Archives for February 2013

States Seek New Taxes on Services, including Distribution

By Joel Anderson | 02/22/2013 | 10:17 AM

This last week saw the introduction of legislation in both Ohio (HB 59) and Minnesota (Senate File 552) which will apply the sales tax rate in those two states to the service industry, including logistics and warehousing. In both instances, the legislation is part of the state's administration proposal of tax shifting between individuals, businesses, property owners, etc.  The proposed solution is to broaden the base of the sales and use taxes to raise the greatest amount of revenue in the easiest manner.

Our industry, in the past 8 years, defeated two earlier attempts: in Michigan and Pennsylvania. In Michigan, the state actually enacted the taxes on services, and then had to repeal the same because of the public protest and the very negative impact on trading industries, such as warehousing and logistics.

Unfortunately, in politics, bad ideas don't die.  They simply move from one state to another.  What legislators omit is that service businesses can also re-domicile from one state to another, particularly when the states surrounding yours does not have a service tax.

IWLA played a key role in the repeal of the Michigan service tax, a role which included the commissioning of a study by Michigan State University. The MSU study measured the impact of the service tax on the logistics industry, the probable flight of businesses to neighboring states, and the final negative net tax receipt because of the tax.  The MSU study became part of the legislative effort that supported the tax repeal.

We have a never-ending task to educate elected officals on the bad consequences of taxing services where the provider can and will re-domicile.  We know and can prove that Indiana warehousing becomes very attractive when Ohio imposes an extra fee on its warehouse and logistics companies.  The message is a continuing campaign of staying on message and staying alert.

Readers of this blog know that dis-enagement with government is a wrong-headed approach for business, especially a business that travels through so many jurisdictions as the supply chain.  In the next blog, I will cover the situations in Ohio and Minnesota specifically and what we can do to educate legislators about the wrong approach they are taking to deal with their states' financial issues.

NLRB Is Still in Business…and in Your Business

By Joel Anderson | 02/08/2013 | 11:46 AM

On Feb. 5 IWLA held its winter Washington, DC, meeting of our Government Affairs Committee. Those attending got expert views and inside skinny on topics ranging from food safety regulations, the impact of the new freight broker law, pro-business state legislative tax and labor initiatives and the outlook for transportation funding and policy, to what employers need to know to prepare their companies for the implementation of Obamacare in 2014.

(You can learn more about these issues at the 2013 IWLA Convention & Expo, March 10-12 in Orlando, Fla. For information about the program and how to attend, visit www.iwla.com)

IWLA members discussed and reviewed the January 25 Federal Circuit Court decision invalidating the recess appointments of three members of the National Labor Relations Board. Some news reports had suggested that the decision overturned all of the decisions made by the board during 2012, when the court said the board was illegally constituted.

That may turn out to be the case if the Circuit Court decision (now stayed) is upheld by the U.S. Supreme Court, but it could be as long as a year before that would happen. In the meantime, NLRB Chairman Mark Gaston Pearce publicly stated immediately following the decision that as far as he is concerned, it will be business as usual at the board, saying: "we will continue to perform our statutory duties and issue decisions."

President Obama embraced these recess appointments because of his Administration's profound belief and practice that unionization will create a strong middle class. In reading his speeches and his pronouncements, you can collect an abundance of quotes that organized labor is the critical element to a strong middle class. The Administration also sees the dramatic reduction in organized labor in the private sector and has deployed powers of the NLRB through its decisions and rulemaking for organized labor to increase its access to the employer workplace.

The activist recess appointees to the board have handed down a host of decisions that had a negative impact on employers while strengthening union positions. Two particular decisions have alerted employers that the NLRB will find ways to strengthen union organization attempts:

  • The "Ambush Election" decision that substantially shrunk the time in which employers would have to oppose an organizing election.
  • The "micro-union" decision that allows unions to organize small groups within a facility instead of having to win over all of the employees.

Here are some of the other NLRB decisions that employers could see overturned should the Circuit Court decision be upheld by the Supreme Court.

Social Media Policies and Practices -- In a series of 2012 decisions, the board expanded the range of what they considered protected social media activity by employees who vent about working conditions, and struck down employer social media policies that restrict such activity.

At-Will Statements in Handbooks – In the past it was not unusual for nonunion employers to include statements in employee handbooks confirming that employment is terminable at-will and limiting the authority of managers to change such policies. The NLRB ruled that certain at-will statements in employee handbooks violate the law because they suggest that employees cannot modify their at-will status through collective action and other protected concerted activity.

Confidentiality During Investigations – It has been common for quite some time for union and nonunion employers conducting internal investigations to ask employees keep the matter confidential and not discuss it with others. However, last year the board ruled that an employer's "blanket justification" such as protecting the integrity of the investigation was insufficient.

Instead, the employer bears the burden to determine in each individual case whether investigation witnesses need protection, evidence is in danger of being destroyed, testimony is in danger of being fabricated, or there is a need to prevent a cover up.

Off-Duty Employee Access to Workplaces -- The NLRB limited an employer's ability to keep off-duty employees off the employer's property by reversing its long-held position is that a policy prohibiting all access to the employer's premises by off-duty employees is presumptively unlawful.

The board determined that a rule that denies off-duty employees access to an employer's parking lots and other outside non-working areas is generally found invalid, unless the employer has a specific business reason for the exclusion.

Dues Check-Offs – The board held that it is an employer's duty to collect union dues from employees if there is a dues check-off provision in their contract even after the contract has expired.

Employee Discipline – No grievance process contained in the contract? No problem. The NLRB ruled that unionized employers must give the union notice and an opportunity to bargain before imposing discretionary discipline involving demotions, suspensions, and terminations where the collective bargaining agreement does not establish a grievance-arbitration process.

In summary, the Circuit Court decision was a welcome action, but until it is confirmed/upheld by the U.S. Supreme Court, the recess-appointed NLRB will continue to issue decisions that find ways and means to enable labor to organize your workplace.

The Economy Grows by Creating Consumer Wealth With Jobs

By Joel Anderson | 02/01/2013 | 12:01 PM

After President Harry Truman sought the advice of a series of top economists on the future course of the economy and they kept saying, "on the one hand…" and "on the other hand," he famously asked: "Aren't there any one-armed economists out there?"

You can be forgiven if you are wondering something similar when it comes to the conflicting reports of economic indicators we have been receiving over the past six months. Take some of the most recent ones. On the one hand, the government reported 0.1 percent negative growth in the Gross Domestic Product in the fourth quarter of 2012. But on the other hand, economists quickly lined up to attribute this to a temporary drop in government spending on military equipment and characterize as a blip in the slowly-progressing recovery.

This was followed by a report that unemployment edged upward in January from 7.8 to 7.9 percent. On the other hand, we are told that the overall employment and personal income trends are showing steady gradual growth. (Although, as CNBC reported it in their oddly chosen comparison, transportation and warehousing lost 14,000 positions in January "while hospitality positions such as bartenders and waiters, which led the way through much of 2012, was little changed.")

In recent weeks the stock market has been soaring, but at the same time we were confronted by a report that the consumer confidence index plunged 8.1 points in January from December to hit 58.6 -- the lowest reading in 14 months and the third straight decline. What is going on?

The overt fact-reporting with a deep political party influence complicates the situation. When I go to the Fox News website, the economy is in a tailspin because of the actions of the Administration. When I go to the New York Times website, the Administration's bold actions prevented a second depression, and both stories reference the same set of Bureau of Labor Statistics numbers.

Here is what we do know:  

  • Consumer spending is the overwhelming driver in our Gross Domestic Product.
  • Consumer spending depends upon consumer wealth.
  • Consumer wealth depends upon jobs, wealth embedded in property, debt load, etc.
  • Consumer wealth has yet to rebound for the general workforce.

The business community solution to the lack of consumer wealth is reduce regulations, taxes and the cost drivers from government, cost drivers that would otherwise be spent on innovation, marketing initiatives, new ventures and pay increases for the workforce.

As readers of this blog know, my opinion falls on the side of the business community solution. With the 2 percent payroll tax increase on all wage-earners since January 1, we should a better measurement of whether government tax increases contract or expand our consumer wealth. Of course, in an economy of multiple inputs and outputs, it is impossible (despite news media claims) to isolate cause and effect, even with sophisticated statistics, as we discovered when some of the supposedly best minds were selling the worst debt instruments.

The American tradition of consumer choice is in total opposition to the cost-push, central planning model, favored by some politicians. IWLA represents a large part of the supply chain sector. When we gauge public policy positions to embrace, we evaluate legislative and regulatory policies regarding how they approach consumer wealth creation. We believe the sound approach is to reduce the cost of hiring and to encourage private sector employers to put Americans back to work.

The opinions expressed herein are those solely of the participants, and do not necessarily represent the views of Agile Business Media, LLC., its properties or its employees.

About Joel Anderson

Joel Anderson

Joel D. Anderson is president and CEO of the International Warehouse Logistics Association (IWLA). Based in Des Plaines, Ill., IWLA is the 120-year-old association of the warehouse-based third-party logistics industry, with 500 members in the U.S. and Canada. Before joining IWLA, Anderson spent 28 years at the California Trucking Association, the last 13 as executive vice president and CEO. An economist by training and profession, Anderson was also a past board member of Cascade Sierra Solutions. He is a frequent speaker before supply chain industry groups.


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