Published: Wednesday, December 14, 2011
Boeing deal should supply needed boost in confidence
We've had Black Friday and Cyber Monday. Now, for retailers in the Puget Sound region, this week might just bring Boeing Thursday. That's the day the $5,000 bonus checks, part of the recently approved four-year contract extension, are distributed to members of the International Association of Machinists and Aerospace Workers (IAM). After taxes, that's between $3,500 and $4,000 available to each worker just before Christmas.
Economist Dick Conway told the Seattle Times that the bonus checks distributed to 29,000 Machinists in the metro area will add $217.5 million to the region's personal income as the money circulates through the economy. That spending will also support about 1,300 additional jobs over the next year.
That's a welcome boost this year. Holiday sales appear to be trending up, with analysts citing records for the traditional day-after-Thanksgiving start of the Christmas season, as well as record online sales the following week.
Much more important to this state, however, is the heralding of a new era in labor relations at Boeing. By all measures, the new contract is a win for the union, for the company, and for the state economy. In addition to the signing bonuses, union members get annual wage increases, incentive bonuses, and pension improvements. The company is assured production stability through September 2016, and some relief in health care expenses as workers pay a larger share of benefit costs.
And we all benefit from the solid commitment to maintain 737 MAX production in Washington. After the second 787 production line headed to South Carolina, we had reason to fear further erosion in Boeing manufacturing in our state. That labor and management were able to heal the rift for the long-term benefit of the company and its workforce -- and do it nearly a year before the current contract expired -- is something for which all Washingtonians can be grateful this year.
State economist Arun Raha noted Monday that benefits of the contract will largely be realized in future years. The direct impact of the bonus money, he said, will probably bring in just $3 million to $5 million in retail sales taxes this year. With a $2 billion shortfall, that may seem trivial. It's not. Last week I saw revenue agents checking the Capitol grounds with metal detectors to see if the Occupiers left any spare change. Everything helps.
Raha said the "agreement will immediately boost business and consumer confidence by ensuring that thousands of aerospace jobs will remain in Washington."
As part of the deal, the IAM agreed to drop the complaint it filed with the National Labor Relations Board following Boeing's decision to build new 787 production facilities in North Charleston, S.C. After the contract was ratified, the NLRB agreed to drop the case. That's a very good thing for Boeing, sparing the company the cost of sustained litigation and uncertainty. But it should not be the end of congressional scrutiny of the NLRB for taking up the case in the first place.
Last April, the labor board responded to the Machinists' complaint by charging that Boeing's North Charleston expansion amounted to illegal retaliation against the union for past strikes. It ignited a national firestorm. In the months since, it's frequently been cited as an example of regulatory overreach and arrogance. Earlier this year I called the action "malign nonsense." Dropping the case doesn't end the larger problem.
As Randy Johnson, who handles labor policy for the U.S. Chamber of Commerce, told Bloomberg News, it could happen again. And that possibility leaves "a cloud of uncertainty hanging over the business community."
At least for now the cloud has been lifted for Boeing. But as long as the labor board presses a one-sided regulatory agenda, the uncertainty will continue to act as a drag on investment and job creation.
There are many reasons for us to be apprehensive this season. The Eurozone crises, persistently high unemployment, presidential politics, congressional gridlock … the list is too easy to develop. As Raha has noted before, lack of confidence is holding the economy back.
But at least locally, the new contract and Boeing's commitment to the region will restore some lost confidence, boost retail sales and put more people back to work.
Richard S. Davis, president of the Washington Research Council, writes on public policy, economics and politics. His email address is rsdavis@simeonpartners.com.
Economist Dick Conway told the Seattle Times that the bonus checks distributed to 29,000 Machinists in the metro area will add $217.5 million to the region's personal income as the money circulates through the economy. That spending will also support about 1,300 additional jobs over the next year.
That's a welcome boost this year. Holiday sales appear to be trending up, with analysts citing records for the traditional day-after-Thanksgiving start of the Christmas season, as well as record online sales the following week.
Much more important to this state, however, is the heralding of a new era in labor relations at Boeing. By all measures, the new contract is a win for the union, for the company, and for the state economy. In addition to the signing bonuses, union members get annual wage increases, incentive bonuses, and pension improvements. The company is assured production stability through September 2016, and some relief in health care expenses as workers pay a larger share of benefit costs.
And we all benefit from the solid commitment to maintain 737 MAX production in Washington. After the second 787 production line headed to South Carolina, we had reason to fear further erosion in Boeing manufacturing in our state. That labor and management were able to heal the rift for the long-term benefit of the company and its workforce -- and do it nearly a year before the current contract expired -- is something for which all Washingtonians can be grateful this year.
State economist Arun Raha noted Monday that benefits of the contract will largely be realized in future years. The direct impact of the bonus money, he said, will probably bring in just $3 million to $5 million in retail sales taxes this year. With a $2 billion shortfall, that may seem trivial. It's not. Last week I saw revenue agents checking the Capitol grounds with metal detectors to see if the Occupiers left any spare change. Everything helps.
Raha said the "agreement will immediately boost business and consumer confidence by ensuring that thousands of aerospace jobs will remain in Washington."
As part of the deal, the IAM agreed to drop the complaint it filed with the National Labor Relations Board following Boeing's decision to build new 787 production facilities in North Charleston, S.C. After the contract was ratified, the NLRB agreed to drop the case. That's a very good thing for Boeing, sparing the company the cost of sustained litigation and uncertainty. But it should not be the end of congressional scrutiny of the NLRB for taking up the case in the first place.
Last April, the labor board responded to the Machinists' complaint by charging that Boeing's North Charleston expansion amounted to illegal retaliation against the union for past strikes. It ignited a national firestorm. In the months since, it's frequently been cited as an example of regulatory overreach and arrogance. Earlier this year I called the action "malign nonsense." Dropping the case doesn't end the larger problem.
As Randy Johnson, who handles labor policy for the U.S. Chamber of Commerce, told Bloomberg News, it could happen again. And that possibility leaves "a cloud of uncertainty hanging over the business community."
At least for now the cloud has been lifted for Boeing. But as long as the labor board presses a one-sided regulatory agenda, the uncertainty will continue to act as a drag on investment and job creation.
There are many reasons for us to be apprehensive this season. The Eurozone crises, persistently high unemployment, presidential politics, congressional gridlock … the list is too easy to develop. As Raha has noted before, lack of confidence is holding the economy back.
But at least locally, the new contract and Boeing's commitment to the region will restore some lost confidence, boost retail sales and put more people back to work.
Richard S. Davis, president of the Washington Research Council, writes on public policy, economics and politics. His email address is rsdavis@simeonpartners.com.
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