I thought I would veer a little into economic news that is happening in the central region of the country today. There is a massive protest in the state of Wisconsin which features the union workers against the governor of Wisconsin. The state has a $3.6 billion dollar deficit and the state is trying to cover it by asking unions to contribute to their pensions and health care plans. The battle has intensified as both parties have dug in their heels.
The Teachers Union’s Argument
Scott Walker is making them contribute to their retirement and benefits plans. This will actually decrease the income of teacher’s and result in a pay decrease. Union workers will be doing the same amount of work for less take home pay. The SEIU is also concerned about the governor trying to strip the workers of their power to collectively bargain in the future.
Unions are virtually useless without the power to bargain as a collective group. Individuals have very little power when it comes to negotiating pay and benefit increases. The power lies in the group as a whole.
The Wisconsin Governor’s Argument
The state has to use every way possible to plug its $3.6 billion dollar fiscal deficit. His proposal would save the state roughly $300 million dollars. He feels that it is only fair that unions pay into their health care and retirement plans just as other workers do in other industries.
He believes that the state is hamstrung by the union’s power to negotiate contracts with the state government. He believes that in taking this power away the state would be able to negotiate fairer deals.
My Take
Politicians always go to extremes when it comes to solving budgetary problems. They always only see one solution depending on their party. The Republican answer to everything is to cut spending and lower taxes. The Democratic answer to everything is to raise taxes and boost spending.
The easiest way to solve this stalemate is to do the following:
- increase the state’s tax receipts (increase taxes)
- increase the amount that unions contribute for benefits incrementally (less federal spending)
- let the union keep their collective bargaining power
What is your solution to the crisis in Wisconsin?
Truthfully, I don’t think it to be an accident that union workers tend to lead to bankruptcy. Not only did the automakers die a slow, union-cost inspired death, so too are the state governments.
I think the reason one individual teacher does not have the bargaining power of the collective because there is no shortage of supply of teachers. Thanks in part to the hiring process, the strict and inflexible though lofty payscale, and the sheer number of people going to school as education majors, teachers are in vast oversupply. Teachers would have plenty of negotiating room if state salaries weren’t based on stupid, inflexible scales (“Get a masters and you make $x,xxx more next year!”), or if demand for teachers were greater than supply.
There was a great OpEd in the WSJ today that demonstrated it was the SEIU who spent more money lobbying for new regulations and taxes on businesses and individuals than any other organization. I wonder why SEIU should realize the value in “collective bargaining” when the taxpayer doesn’t get equal opportunity? And does anyone realize that schools are paid primarily by property taxes? Each uptick in property taxes means that one more person, at the margin, loses their home. How’s that for the people who say this is a battle between working class (unions) and the political class (everyone else)?
By the very nature of the situation, teacher pay has an inverse relationship with the wealth of the taxpayer in the state. When teacher pay increases, individual wealth declines. While you say that better wages makes the case for better teachers, smarter students, and a better long-term economy, I think we all know that the quality of education, despite its rapidly accelerating cost, is no better now than it was decades ago. In fact, I’m sure it is actually of lower quality.
tl;dr I see union busting, however scary the term, as the ONLY way to make long-term, lasting change in state budgets as it relates to wages and pensions.
JT I never said “that better wages makes the case for better teachers, smarter students, and a better long-term economy.” I think that a simple solution is to allow unions to bargain but base salaries on performance and raises on inflation and cost of living. I do think that teacher pay in many states is below average. I knew a lot of math and science majors in college who wouldn’t even consider teaching because of the low annual salaries. They liked the profession but not the wages.
Whoops, that sentence was definitely the result of some editing on my part. I meant to say that “you could say,” a phrase not at all intended to be pointed at you. It wasn’t my intention to put words in your mouth, rather to offer up a possible pro-wage increase argument and my own rebuttal.
And you’re right on the math and sciences, this is why I say there has to be a new system for determining wages in the public sector. We should be able to declare that a math and science teacher is undoubtedly worth more than a gym teacher, and this should be reflected in teacher salaries.
Also, compensation should be removed from arbitrary measures like the number of years in a particular system. Individual pay, individual reviews, individual teachers, individual success and failure. Pretty simple.
I am on the governor”s side on this issue.
1) He campaigned on these issues, and was duly elected-this is no surprise to the people of Wisconsin.
2) The lack of contribution towards health-care and retirement is not sustainable for the state.
3) Collective bargaining by state employees holds the residents of the state hostage. That is taxpayer money, and raising taxes does not make the workers more accountable to be more productive, just rewards bad behavior. As JT says, higher pay does not lead to better services.
If a private company votes to unionize, fine, but I don’t think public employees should have that option.
Dr. Dean. I think that they have to pay something towards their retirement plans and health care. A 0% contribution rate is a path to bankruptcy. I don’t think higher pay necessarily leads to better services. I would argue that if you pay a teacher $25,000 annually, you are not going to attract good talent. I believe that whenever a state has a deficit, they need to consider a dual approach. Increasing revenue and decreasing costs is the fastest way to get out of debt for a company, government, and individual.
Let the free market work itself out. Let the teachers walk and hire all the unemployed teachers that would love to just have a job.
It’s 2011. Reasonable people will cross a picket line to put food on the table. Unreasonable people will be the ones picketing.
I agree with your assessment Mark.
If it’s really about budget cuts – then make state workers start paying in and make the collective bargaining rights issue separate.
There probably should be some reform of public unions – but the reason Gov. Walker isn’t compromising is he doesn’t have to. He’s got the votes to do whatever he wants, and that’s why Dem. Senators went MIA.
I think the most important part of this story is illustrated by the polls, which show Wisconsin voters support the governor’s position over the unions. After all, elected officials are supposed to be representing the voters and not the unions and other special intrests.
As governor Chris Christie of New Jersey said, there shouldn’t be two systems, one for public employees and another for the poeple who have to pay for it.