Dealing with public union benefits and collective bargaining rights is a very charged issue. No one relishes anyone losing promised benefits or jobs, but a balanced approach to our fiscal crisis requires shared sacrifice and a hard look at what government priorities to protect and fund.
On Wednesday, Wisconsin Governor Scott Walker and Republican senators stared down union leaders, demonstrators and absent state senators and passed a law limiting the collective bargaining to negotiating salaries for most public employees.
President Obama has expressed concern over this "assault on unions." Some union signs call Walker the "Mubarak of the Midwest," and Walker's face has been superimposed on Hitler's. Gov. Walker makes an easy target, but the resulting media circus disregards the fact that many states have no collective bargaining rights for public unions, and many more are moving to do the same.
Gov. Walker and others face possible recall elections over their actions. But, even though thousands may have taken to the streets in protest, conservative politicians are counting on support from millions of frustrated taxpayers. There’s reason to expect that support.
When the U.S. economy was humming along, no one noticed or complained about the public employee salary and benefit packages. But with states struggling with unprecedented deficits, taxpayer outrage has been heightened.
In cash strapped CA, higher taxes have just stifled the private sector, motivated corporations to leave the state, and strangled job growth. The economic pain is not shared equally. According to the Employment Development Department, while private-sector workers have lost over a million CA jobs since the recession began, CA government employment has increased 1,200 jobs. CA now has over 489,000 state workers who are paid by a million fewer taxpayers, many of whom have seen their incomes compromised.
In the private sector, when a union strikes, customers can find a competitor. With public employees, there is a virtual monopoly. Yes, rich parents can send their children to a private school, but the only affordable, “free” choice is a public school.
As a result, collective bargaining is an invitation to disaster for state budgets. Allowing public unions to use union funds to support the campaign of politicians and expecting those same politicians to protect taxpayer interests in collective bargaining, is unrealistic. When you are beholden to unions and you’re using someone else’s money, it’s easy to be extravagant.
Larry Kudlow reports: “Nationwide, state and local government unions have a 45 percent total-compensation advantage over their private-sector counterpart.” Now, aware of the imbalance, more voters are electing politicians committed to limiting union power and renegotiating unsustainable contracts.
Wisconsin’s visible battle is just a tip of the iceberg that unions face. Private sector union membership has declined steadily in recent decades from over 35 percent 40 years ago to barely 7 percent today. According to the Bureau of Labor Statistics, the union membership rate for public sector workers is over seven times higher at 36.2 percent.
Outside of government, the labor movement in America is barely alive. Unions have become irrelevant to most working people. Why? First, more leaders have moved from historical command-and-control models to more engaging strategies that encourage commitment and involvement. Leadership Engagement Surveys have shown improved trust in leadership and overall job satisfaction. Second, unions depend on a sizeable number of dissatisfied employees and a desire to want to stay in their current job. The new Y generation seems to have no patience for staying in a job they don’t enjoy. If the job isn’t working out for them, they’re ready to leave for another opportunity.
Martin Feldstein notes a glaring difference between the success of public and private unions: “Since governments, unlike private firms, don’t have to compete with products from abroad or from other producers, they can often pay higher union wages and pass those costs along in higher taxes.”
Frightened people fight change. Public union members are frightened, and they’re fighting changes that could ultimately help them and the public they are called to serve.
New approaches are revolutionizing government incentive systems. Mark Aesch, CEO of the Rochester Genesee Regional Transportation Authority, took over the money-losing Rochester transit system five years ago. Inefficiencies have been addressed, service has improved, fares have actually been lowered, and deficits have been turned into a multimillion-dollar surplus. While neighboring transit systems in Albany, Syracuse, and Buffalo have increased fares, Rochester has instituted a performance system that rewards public workers for performance and results. Instead of fighting change, public workers are now benefitting from higher wages and public support for improved service. The four neighboring New York transit authorities are now negotiating to join the party!
In a column in the Wall Street Journal, Gov. Walker spoke of his hope to balance the state budget and to free schools and local governments to have the tools needed to reward productive workers and improve operational efficiencies. Commenting on Indiana’s changes in collective bargaining six years earlier, Gov. Walker said, “The average pay for Indiana state employees has actually increased, and high-performing employees are rewarded with pay increases or bonuses….”
Change is coming. May it be done with collaboration instead of rancor. May the shared sacrifices instituted be fair, and may they set the stage for renewed optimism where public and private workers can share in a more balanced, profitable and sustainable future.