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Archived News Release--Caution:
information may be out of date.
For more information call: 202/219-8211.
Secretary Reich Cites Executive Order as "Central Feature
of Efficient, Economical and Productive Government Procurement"
A new study refutes an Economic Policy Foundation (EPF)
report that claims President Clinton's executive order prohibiting government
agencies from doing business with employers that permanently replace lawful
strikers will cost taxpayers $2 billion or more every year. The report also
counters EPF's stand that the executive order will increase strike
activity.
In an independent analysis of "The Economic Costs of
Executive Order 12954" written by EPF's Kenneth L. Deavers, University of
Alabama-Huntsville professors Cynthia L. Gramm and John F. Schnell found that
the EPF's estimates of the aggregate annual economic cost of the executive
order are "not credible" since they are derived from contaminated data and
based on several "demonstrably false" assumptions. Gramm and Schnell point out
that EPF's data used to calculate cost estimates contain an unknown number of
work stoppages that would not be covered by the executive order, and that the
data used do "not supply the information needed to calculate credible cost
estimates."
Gramm and Schnell also disagree with the EPF study's
prediction that the executive order will increase strike activity. They counter
with empirical evidence which demonstrates that Canadian labor laws -- similar
to a permanent replacement ban -- "do not have a statistically significant
effect on either strike incidence or strike duration."
The EPF report also mistakenly states that there is no
evidence to support claims that firms have been using permanent replacements
more often in recent years. Gramm and Schnell examined the studies cited in the
report, as well as three additional studies that EPF ignored, and found
indirect support for the view that firms are using permanent replacement
workers more frequently, especially after President Reagan fired the
Professional Air Traffic Controllers Organization (PATCO) in 1981. They noted
that "recent evidence also finds that strikes involving permanent replacements
have involved more workers and have become longer in the post-PATCO era."
Secretary of Labor Robert B. Reich commented that "federal
contractors must have stable and productive labor-management relationships if
they are going to provide tax payers with the best quality goods in a timely
and reliable way." He added that the executive order, which President Clinton
issued on March 8, 1995, "advances cooperative and stable labor-management
relations, which is a central feature of efficient, economical and productive
government procurement." Gramm and Schnell's analysis of EPF's flawed study, he
said "demonstrates that there is substantial empirical evidence and scholarly
analysis supporting the President's decision to issue the executive order."
An executive summary of An Analysis of "The Economic Costs
of Executive Order 12954 Barring Federal Contractors From Hiring Permanent
Striker Replacements" by Cynthia L. Gramm and John F. Schnell of the University
of Alabama-Huntsville is available from the Department of Labor's Office of
Public Affairs at 202/219- 7316.
Archived News Release--Caution:
information may be out of date.
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