U.S. Recovery Might Need Public-Sector Unions

Spencer Collins · #1 (**permalink**) 02-27-2011, 06:57 PM

Quote:

Feb. 28 (Bloomberg) -- Wisconsin Governor Scott Walker is wrong. The way to fix his state’s fiscal crisis isn’t by destroying public-sector unions and the half-century tradition of collective bargaining among teachers and state employees.

Walker argues that given the growing state deficit, there is no other choice than to slash the wages and benefits of public-sector workers whose compensation, he suggests, far exceeds that of workers in the private sector. He says he needs to gut collective bargaining because he and political leaders at the local level need flexibility to institute further cuts if necessary. Upon examination, his position is rooted more in the rhetoric of the Tea Party than in economic reality.

There is no evidence that public-sector workers in Wisconsin have higher total compensation than their counterparts in the private sector. It is true that a gross comparison shows many public-sector workers earn more, but they are significantly better-educated than most workers in the private sector. When one compares Wisconsin public-sector workers with their real counterparts, as the Economic Policy Institute has done, Wisconsin pays its public-sector workers 14.2 percent less than workers in the private sector.

Walker and other Republican leaders in the state have made a big deal of the “gold-plated pensions” of state workers, yet median state and local pensions in Wisconsin are less than $23,000. Fewer than 2 percent receive pensions of $100,000, the threshold bantered around in the press as commonplace. These pensions are most likely the managers and top administrators, as well as senior police and firefighters, who, coincidentally, are excluded from Walker’s draconian legislation.

Fiscal Responsibility

Given these modest wages and benefits, political leaders in the state haven’t been fiscally irresponsible, as Walker has suggested.

However, little has been made of Walker’s own fiscal frivolity. The Legislative Fiscal Bureau of the Wisconsin Legislature released a report in January indicating the state should have a surplus of $124 million on June 30, which instead would turn into a $137 million deficit because of some twists in the budget process. Walker, in a special session in January, went on to grant $117 million in tax cuts to business. Clearly it’s not the state pensioners at $23,000 a year who are the real problem in Wisconsin. These corporate tax cuts should be reversed immediately.

Responsive Unions

Union leaders in the state haven’t been unresponsive to this fiscal crisis. They have already agreed to significant wage and benefit reductions, yet Walker hasn’t budged on the savaging of collective bargaining and refusing to allow unions to collect dues automatically. The manner in which union dues are collected has absolutely no impact on the state budget, but can only be seen as a political move by the governor to eviscerate his political rivals.

If Walker is successful, the wreckage of labor relations in Wisconsin will drag down the state budget for years to come. What will happen to the productivity and commitment of workers who not only have their wages and benefits slashed, but have no union to file grievances on their behalf when their supervision is unfair or abusive? Walker will have created perhaps one of the most agitated and least productive workforces in the country.

If the governor is serious about creating a more productive public sector, he should negotiate with the democratically elected representatives of the workers. After all, it’s the teachers and the public-sector workers, not the governor, who know their jobs best and where the waste is.

‘Line in the Sand’

Instead, the governor talks about “drawing a line in the sand” to balance the budget. Without collective bargaining and with an open season on public-sector workers, state and municipal services may well descend into chaos.

Maybe this is what Walker had in mind all along. Destroy the unions and underfund the public sector so that it truly becomes ineffective, and then try to justify wide-scale privatization. While Republicans like Walker see privatization as the magic bullet, Walker’s own botched experiment with privatizing union courthouse security guards in Milwaukee illustrates just how disastrous it can be.

Besides the workers, the real losers in Wisconsin are its citizens. If Walker is successful in underfunding and undermining pride and dignity in the public sector, there will be long-lasting harm done to education and public services across the state. No matter what Walker believes, we know that people care passionately about their schools, their streets and their neighborhoods. These aren’t political abstractions.

While we can drive wages and benefits in the public sector down to Wal-Mart levels, it won’t deliver the kinds of public services we have come to expect. Following the low-road approach in the private sector brought us to economic ruin. Decent union jobs in the public sector can be a fundamental part of our economic recovery.

(Tom Juravich is professor of labor studies and sociology at the University of Massachusetts, Amherst. His latest book is “At the Altar of the Bottom Line: The Degradation of Work in the 21st Century.” The opinions expressed are his own.)

U.S. Recovery Might Need Public-Sector Unions: Tom Juravich - Businessweek

Governor Scott Walker is wielding a double edged sword and that's why I predict that some sort of compromise will take place.

Rush L · #2 (**permalink**) 02-27-2011, 07:32 PM

While I didn't have time, yet, to look for this author's underlying philosophy, my guess is that he thinks government workers unions are paramount. Just a guess.

There are a couple of problems that I see off hand without digging to deep. First, though the unions have come back and agreed to the concessions requested in the budget by agreeing to pay more into their retirement and healthcare plans, it was only after the legislation went beyond the wage concession and after the issue of collective bargaining. Second, Walkers issues with the unions is not the result of the new Tea Party movement but from his real life dealings with labor at the county level. Funny how the Tea Party gets the blame for this. What would you expect?

Here in Michigan, last year our teachers gave back at least 3% on top of what they were asked to pay additional to their healthcare plans. The world did not end and there was not this uproar. Could it have been that a Dem was the Gov last year and so negotiations went smoother or maybe in the State of Michigan we have a little more common sense than Swisconsin?

Dave1 · #3 (**permalink**) 02-27-2011, 07:58 PM

Blaming WI's financial woes on collective bargaining isn't anything more than right wing corporate cheap labor utopia.........

They won't even listen to concessions........

That speaks volumes........

Good article Mr. Collins......

When corporate tax cuts aren't also mentioned just as much as unions, the end result is obvious........

There are many more financial problems with WI than just union labor......

When those jobs are gone, the volume of money spent in that state will devastate other local businesses like they've never seen before. Who's gonna buy all their new stuff with Walmart wages.......?

Gordon Shumway · #4 (**permalink**) 02-27-2011, 08:03 PM

Not all states have collective bargaining for their public employees & the world hasn't ended for them.

Here's an interesting look from the Cato Institute...
http://www.cato.org/pubs/tbb/tbb_61.pdf

Here's the unemployment rate for each state --- look at the top three & the bottom three & compare that to the graph from the Cato link showing union shares of state & local government employment.
Unemployment rates - Unemployment rates by state from CNNMoney

While the pain of initially losing collective bargaining for public employees might seem like too much to bear --- the longterm benefit will likely be a blessing down the road.

Dave1 · #5 (**permalink**) 02-27-2011, 08:14 PM

Quote:

Originally Posted by Gordon Shumway

While the pain of initially losing collective bargaining for public employees might seem like too much to bear --- the longterm benefit will likely be a blessing down the road.

Explain the blessing of work rules that disappear and lower wages for the rest of the community to benefit from......?

VS the millions given to corporations for tax cuts........

Who benefits more, the money union members spend in their neighborhoods or tax cuts for very few....?

Spencer Collins · #6 (**permalink**) 02-27-2011, 08:26 PM

Quote:

Originally Posted by Rush L

Second, Walkers issues with the unions is not the result of the new Tea Party movement but from his real life dealings with labor at the county level. Funny how the Tea Party gets the blame for this. What would you expect?

Agreed,I also found his cheap shot at the Tea Party movement unwarranted.He made a few good points,he didn't have to go after the TPM.

Rush L · #7 (**permalink**) 02-27-2011, 08:37 PM

Corporations don't pay taxes, people pay taxes. Corporations hire people.thus spreading the wealth, also corporations are owned by the people ie. the shareholders. Corporations when not engaged in corporatism are subject to market forces. Unions when attached to corporations act for the most part in concert with those market forces.

Government in many cases have almost no connection to the market at least in the short term. When a government runs a deficit it can do so for some time and or raise a bond, raise taxes, or print money as needed depending on which government we are talking about. Government workers function within the same set of rules. There is almost no function of market forces that influences the outcome of workers salary or benefit package.

rjaz · #8 (**permalink**) 02-27-2011, 09:08 PM

Quote:

Originally Posted by Dave1

When corporate tax cuts aren't also mentioned just as much as unions, the end result is obvious........

What is the ideal corporate tax rate as a % of income? And keep in mind corp tax rates are paid before dividends which are distributed and the shareholders pay taxes as well on the leftovers.

lizzie · #9 (**permalink**) 02-27-2011, 10:01 PM

Quote:

Originally Posted by Dave1

There are many more financial problems with WI than just union labor......

When those jobs are gone, the volume of money spent in that state will devastate other local businesses like they've never seen before. Who's gonna buy all their new stuff with Walmart wages.......?

Oftentimes, it's not just "union labor" that is the problem. It's the cost of government employees and other associated costs vs private contracting some of the functions of government offices. As an example, in our county precinct offices last year, it was found that contracting out certain jobs could save the county hundreds of thousands of dollars yearly because the county wouldn't need to buy, keep, and maintain heavy machinery on a continuous basis. The county employees didn't get cuts in pay, although they did have to start paying for more of their own health care benefits. Frankly, if you and I in the private sector are expected to pay for our benefits, I don't see why public sector employees shouldn't.

saltwn · #10 (**permalink**) 02-27-2011, 10:07 PM

Quote:

Originally Posted by Gordon Shumway

Not all states have collective bargaining for their public employees & the world hasn't ended for them.

Here's an interesting look from the Cato Institute...
http://www.cato.org/pubs/tbb/tbb_61.pdf

Here's the unemployment rate for each state --- look at the top three & the bottom three & compare that to the graph from the Cato link showing union shares of state & local government employment.
Unemployment rates - Unemployment rates by state from CNNMoney

While the pain of initially losing collective bargaining for public employees might seem like too much to bear --- the longterm benefit will likely be a blessing down the road.

Idaho just passed anti bargaining legislation along with a nurse or doctor now having the ability to over ride your living will. So much for freedom.
The collective bargaining got a little whimper out of teachers and sympathizers. We're so under the nuevo GOP thumb here workers haven't had many "rights" since the late eighties. Along with the right to work Idaho swept in some very vague worded double speak concerning even workman's comp insurance.
A worker's life is not worth much here much less his/her views.

Quote:

Originally Posted by rjaz

What is the ideal corporate tax rate as a % of income? And keep in mind corp tax rates are paid before dividends which are distributed and the shareholders pay taxes as well on the leftovers.

At least 35-40%

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