Posted by Jim Lindgren:
Administration Says Wage Reductions Violate Recovery Act.
http://volokh.com/archives/archive_2009_05_03-2009_05_09.shtml#1241801117
President Obama campaigned on cutting soaring medical costs. So what
happened when the state of California cut the state's contribution to
the wages of home medical care workers from a maximum of $12.10 per
hour to a maximum of $10.10?
SEIU, the powerful union that has been closest to Obama and is the
parent union of ACORN, asked the Federal government to stop the
cost-cutting. And that's just what the [1]administration is doing:
The Obama administration is threatening to rescind billions of
dollars in federal stimulus money if Gov. Arnold Schwarzenegger and
state lawmakers do not restore wage cuts to unionized home
healthcare workers approved in February as part of the [California]
budget.
Schwarzenegger's office was advised this week by federal health
officials that the wage reduction, which will save California $74
million, violates provisions of the American Recovery and
Reinvestment Act. Failure to revoke the scheduled wage cut before
it takes effect July 1 could cost California $6.8 billion in
stimulus money, according to state officials. . . .
The wages at issue involve workers who care for some 440,000
low-income disabled and elderly Californians. The workers, who
collectively contribute millions of dollars in dues each month to
the influential Service Employees International Union and the
United Domestic Workers, will see the state's contribution to their
wages cut from a maximum of $12.10 per hour to a maximum of $10.10.
The SEIU said in a statement that it had asked the Obama
administration for the ruling. . . .
Schwarzenegger on Wednesday sent U.S. Secretary of Health and Human
Services Kathleen Sebelius a letter urging the federal government
to reconsider.
"Neither the Legislature nor I make decisions to reduce wages or
benefits lightly, but only as a last resort in response to an
unprecedented fiscal crisis," Schwarzenegger wrote.
One of the reasons that the Great Depression in the 1930s lasted so
long is that FDR was successful in [2]keeping wages above the
market-clearing wage. The downward stickiness of wages is one of the
main causes of unemployment in a recession. If the 2009 Recovery Act
actually does prevent wages from dropping to the point where people
will be hired, then it would be another example of how the Recovery
Act tends to prevent recovery rather than promote it.
References
1.
http://www.latimes.com/news/local/la-me-health-cuts8-2009may08,0,4592200.story
2. http://online.wsj.com/article/SB123353276749137485.html
_______________________________________________
Volokh mailing list
[email protected]
http://lists.powerblogs.com/cgi-bin/mailman/listinfo/volokh
