Friday, February 18, 2011

An "Assault" on Unions? What About the "Assault" on Taxpayers?

Yesterday, President Obama, exhibiting the new era of civility, said that Wisconsin Governor Scott Walker's proposals to require public employees to contribute to their own pensions and health insurance premiums and limit collective bargaining rights to salary alone amounts to an "assault" on unions. I won't delve into the "assault" on the democratic process by Democratic legislators hopping on a bus to go out of state to prevent a vote on the issue, or the "assault" on the academic development of students who are missing yet another day of school. Instead, let's look at why Governor Walker has made such a proposal.Wisconsin was listed by the Pew Center in a report published in 2010 as one of the top 10 states in fiscal peril. They have an estimated state budget deficit of $3,000,000,000. That's a deficit not their overall debt. A significant part of the deficit is the spending on public employee pensions and health insurance. The governor has proposed that public employees contribute some of their own money to their pensions - a whopping 5.8% and that they contribute 12.6% of their salary to their health insurance premiums.

My first reaction when I read this was, "Welcome to the world the rest of us live in!" We have no pension and the retirement we have is there becaue we make our own contributions to it with a small matching percentage thrown in by the company. Thanks to the higher costs of Obamacare, this year we are paying 25% of our health insurance premium.

Wisconsin isn't the only state with this type of problem. There was a story in Massachusetts the other day where the head of Massport, Thomas Kinton, announced he was retiring in June so he could collect his $195,000 per year pension and over $455,000 in unused sick time - and he is not the only one benefitting from this boon.

Again, here in the real world, we can carry maybe a week of personal days over to the next year - but any more than that you lose it.

And, no, public employees are not making up for poor salaries with extravagant benefits. Study after study has shown that public sector employees are making more than comparable jobs in the private sector. Although the private economy continues to shed jobs, the stimulus money that was meant to keep unemployment below 8% has paid for the continued growth of government jobs - no doubt with higher salaries and better benefits than the rest of us.

Lest we forget:
The people in the private sector who work for less pay, pay those in the public sector higher pay.
The people in the private sector who are used to contributing 15-25% or more of their pay for health benefits are paying the entire health premiums for many in the public sector.
The people in the private sector who can't carry over more than a week of personal time are paying for the head of Massport to collect $455,000 in unused sicktime.

The private sector is shrinking, the public sector is growing.

There are many words to describe this madness, but the most important word is "unsustainable". Something has to change and I applaud Governor Walker for his courage. I can only hope others have the same courage.


  1. The unions in Wisconsin are now saying that they want to negotiate, but they have not made any concessions as far as I know. While the media doesn't report this, I suspect the reason the Governor wants to reduce the power of the unions is that local governments have little leverage when it comes to collective bargaining with the unions. In Vermont, school boards are made up of virtually unpaid local elected officials The teacher's union is a statewide organization with a highly paid executive director. That coupled with the fact that the school board members deal on a regular basis with teachers and administrators, and get to know them personally, makes it difficult to be tough in negotiations. It's also easier to say yes to teachers when it is someone else's money you are spending. School Board membership is a thankless job, and my hat is off to them; they just do not have the resources unions do. It appears that Governor Walker is trying to level the playing field.

  2. I've been asked if financial concessions are enough so that collective bargaining can be left alone. My response is "no" and I would even advocate going further. I think collective bargaining on benefits has led to the extravagances in benefits we have seen among public employees. I would like to see
    public employee unions made illegal again. There are many reasons, but the most important reason is that there is only one side at the negotiating table when we are talking about public company unions. A company in the private sector that must deal with a union needs to keep costs down or it will go out of business. They have some leverage when they are negotiating with a union. Government notoriously has no interest in keeping costs down - mostly because they are spending someone else's money and because they are government employees themselves. This is what I believe has led to these extravagant benefits and pay that most of us in the private sector do not get ourselves, but that we pay for out of our tax dollars.