Sunday, February 27, 2011

Who Is Really Being Attacked in Wisconsin?

It bothers me to see the critics of Governor Scott Walker in Wisconsin and John Kasich in Ohio argue that efforts to rein in the power of the public sector unions is an attack on the middle class or a violation of worker rights.  This line of reasoning does not recognize the fundamental structural differences between public sector and private sector unions.  It also totally ignores the fact that middle class workers and taxpayers in the private sector have really been the ones under attack in recent years.  This is the group that has borne most of the job losses over the last few years and this is the group that is paying the taxes that are funding public sector pay and benefits.   Pay and benefits that actually exceed their own.

David Brooks in the New York Times this week explains the key differences.

In Wisconsin and elsewhere, state-union relations are structurally out of whack.
That’s because public sector unions and private sector unions are very different creatures. Private sector unions push against the interests of shareholders and management; public sector unions push against the interests of taxpayers. Private sector union members know that their employers could go out of business, so they have an incentive to mitigate their demands; public sector union members work for state monopolies and have no such interest.
Private sector unions confront managers who have an incentive to push back against their demands. Public sector unions face managers who have an incentive to give into them for the sake of their own survival. Most important, public sector unions help choose those they negotiate with. Through gigantic campaign contributions and overall clout, they have enormous influence over who gets elected to bargain with them, especially in state and local races.
As a result of these imbalanced incentive structures, states with public sector unions tend to run into fiscal crises. They tend to have workplaces where personnel decisions are made on the basis of seniority, not merit. There is little relationship between excellence and reward, which leads to resentment among taxpayers who don’t have that luxury.

If private sector workers have less job security, lower pay and lower benefits how can it be argued that middle class public sector employees are under attack?

When it comes to workers rights, public employees enjoy much greater rights than private sector employees without even considering collective bargaining rights.  Many government employees enjoy civil service protections and many teachers also enjoy tenure protection.  Contrast this with the private sector in which most are employed under the doctrine of employment-at-will.  This means that any hiring is presumed to be "at will" and the employer is free to discharge individuals for "good cause, or bad cause or no cause at all"  Likewise, the employee is equally free to quit or cease work at any time.  How can this be an attack on public sector employee rights when they enjoy much greater rights and protections than their private sector counterparts?

I thought that this chart that was published last April in The Washington Examiner was also interesting.  It shows that public sector unions and state debt go hand in hand. As Brooks says above,"states with public sector unions tend to run into fiscal crises".  While there are many reasons for states to take on debt, there is definitely a correlation between the states that have the highest percentage of state and local employees in unions and the per capita debt load in the state.  Bear in mind that this chart was published almost a year ago when this issue was not close to being front page news so there was no axe to grind.

All the talk of attacks and rights makes for nice drama.  However, it has no reasonable basis in fact. The public sector union argument is about one thing-political power.   The unions like the required dues and the Democrats like the money that comes from the dues.  Of the top 8 donors to political campaigns in 2010, 4 were connected with public sector unions or teachers.  They spent approximately $25 million on political campaigns.  3 of the 4 (Service Employees International Union, American Federation of Teachers and American Federation of State/County/Municipal Employees) did not give one cent to Republicans. The National Education Association gave 2% of their take to Republicans. 

The workers and teachers are merely supporting actors in this play.  The public sector union bosses and Democrats are the leading actors.  Taxpayers will be nothing but bit players as long as that continues.

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