Saturday, February 19, 2011

Governors and Unions

I find in many discussions that many people watch some news but never really understand what is happening or even why. Too many of us get our news from headlines and don't ever see the big picture. By now you have heard about what is going on in Wisconsin between the Governor and unions. I will focus a little on this battle but then look at what is going on behind the scenes. Let me give you an order of events.

1. Scott Walker was elected Governor in 2010 with the benefit of having a GOP controlled congress in Wisconsin. Less then two months into his term he put out an audacious bill which has a few parts. State workers must increase contributions to their pensions to 5.8 percent of salary, and double contributions to their health insurance premiums to 12.6 percent. This would result in a cut in take-home pay of about 8 percent.It would also limit collective bargaining to the issue of wages, and cap increases to the rate of inflation as well as prohibit employer collection of dues. There would also be a voter referendum for any future salary increase. It should be noted that the average teacher salary in Milwaukee Public Schools is $56,000 and total compensation is over $100,000. Police and Firemen are exempt from the collective bargaining changes. There would also be no more union dues....

2. A vote in the House requires that 20 people be there there in order for the vote to take place. Currently there are 19 Republicans and 14 Democrats, so to postpone the vote Democrats fled  to a hotel in Illinois and show no willingness to return for a vote.

3. Protests began in Madison outside the Capitol and have gotten bigger every day. Schools have been shut down as teachers have joined in the protests. In Madison, schools were cancelled Friday morning because 600 of the 5400 teachers called in sick, roughly 11%. I have seen estimates between 25 to 50 thousand at the protests and they have attracted national attention. All politicians have spoke out about the matter in no uncertain terms and I suspect many prominent Dems to be there this weekend.

The events I have listed above are well documented and if you pay attention to the news you have heard them. But there is a much bigger issue here that must be understood: the true ramifications of this bill do not involve a balanced state budget but a transformation in the political landscape.  Take a look at the big picture here............

Leading Union Political Campaign Contributors
American Fed. of State, County, & Municipal Employees$40,281,900$547,700
Intel Brotherhood of Electrical Workers29,705,600679,000
National Education Association27,679,3002,005,200
Service Employees International Union26,368,47098,700
Communication Workers of America26,305,500125,300
Service Employees International Union26,252,0001,086,200
Laborers Union25,734,0002,138,000
American Federation of Teachers25,682,800200,000
United Auto Workers25,082,200182,700
Teamsters Union24,926,4001,822,000
Carpenters and Joiners Union24,094,1002,658,000
Machinists & Aerospace Workers Union23,875,600226,300
United Food and Commercial Workers Union23,182,000334,200
Sheet Metal Workers Union16,347,200342,800
Plumbers & Pipefitters Union14,790,000818,500
Operating Engineers Union13,840,0002,309,500
Airline Pilots Association12,806,6002,398,300
International Association of Firefighters12,421,7002,685,400
United Transportation Workers11,807,0001,459,300
Ironworkers Union11,638,900936,000
American Postal Workers Union11,633,100544,300
Nat'l Active & Retired Fed. Employees Association8,135,4002,294,600
Seafarers International Union6,726,8001,281,300
Source: Center for Responsive Politics, Washington, D.C.

The numbers add up to roughly 486 million for Democrats and 29 million for the Republicans. But it is important to understand that unions do much more than raise money for candidates. They represent large numbers who will be voting regularly. Historically they have been very active during election cycles when it comes to assisting the local party. Politics is often about money and power, unions give both.This is the heart of the issue and it is why the debate is so heated. The who are protesting are really not concerned about that 8% pay decrease but rather the future role of unions in politics.  Governor Walker is attempting to balance the budget while scoring a large political victory. If politics were like boxing, Walker is going for the knockout in the first round. In addition many other states are watching to see what happens and would seek to make these same changes.

Personal Thoughts
It's hard to know if he will be successful but I think he could. National Republican leadership will not want him to back down because all they are risking is one Governor's seat while I cannot put into words their upside. In addition see how his opponents have operated since Wednesday. The House left the State and have not been seen. Teachers are in calling sick so they can go protest under union advisory while schools are cancelled. How long will these actions go on before the citizens of Wisconsin revolt? Will these actions or those of Governor Walker draw more scorn?

On the other hand every good negotiator starts by asking for more and then "negotiating down." If you don't believe me watch Pawn Shop and you will see negotiating in action! Is Walker just going to pass on the collective bargaining and ask for greater salary cuts? It will be interesting to see how Obama responds throughout the debate because this is a major part of his constituency that is still frustrated from when a pro-union bill failed to get through the Senate when Democrats had control. There is no point speculating in detail about how defeat in Wisconsin would affect him in 2012 but it could not be good.

I struggle sometimes to think about unions as good or bad. The truth is they are not wholly one or the other.There have been times in American history when they were needed and they played a role. For a nation born through unprecedented  change we certainly don't adapt very well. The struggle is to evaluate the role and place of unions in modern America. But that being said these teachers who march have a job which they know they cannot be fired from, assuming they are somewhat competent. That is not true for most Americans.In addition see this scary website....

I also believe that unions played a huge role in the financial meltdown of GM, due to what are known as legacy costs-the costs of providing health care and pensions to scores of retired workers. For every GM worker, there are about 10 dependants, which are defined as retired workers and their families. From every car GM sells, $2,000 goes to legacy costs-paying people who don't work for you anymore. That two grand must be built into the sticker price of any new GM car and truck. And that's money on top of developing, producing and marketing a car--costs that Honda, Toyota and others don't have.  GM's per-hour labor rate for car assembly is about $75 per hour, compared to $40 to $45 for other car companies. While this was a private union, the principle can still apply when understanding the idea of legacy costs.

This will be fascinating to see how it plays out. If anyone has some thoughts about anything I have said please post them. I would enjoy it greatly if this site was a place where thoughts could be expressed openly and respectfully regardless of what those thoughts actually are. Have a good weekend....


Scott said...

unions bad, engaged involved and aware worker good.

great blog, it really shows how driven by money/power the beast is.

Anonymous said...

Good, well thought-out and researched post Josh. You've certainly done more reading than I have but I have gathered some perspective too just living amongst it in the state right now. I've felt and said from the beginning that this isn't a black and white issue. On the personal side, I feel the pain of a close friend who is a part of a teacher's union and feels devasted and cut to the core about this issue. She is a good teacher, who truly does have a heart for what she does, and to her this is personal, as it would feel to anyone of us going through it I suppose. I certainly don't feel like all teachers unions are evil, or that Walker is perfect in all his ways and decisions. However, while I wouldn't say I wanted this to happen...I understand why it happened. I see these events as one more birth pang in the whole series of economic downfall in our country. As you know, americans in the private sector have been feeling the painful hit of pay decrease and job lay offs for several years now, and this is no exception. Not to say it shouldn't be painful for these teachers, but it should be put into perspective that they are not the only ones feeling this pain (and I do not say that lightly or disrespectfully). We all will feel, if not already, the coming pain of a crumbling economy.

You brought up the interesting political side of it though with the issue of union contribtors - it would not surprise me if that were at least part of these past week's events.

Thanks for your thoughts Josh!