Labor Relations Insight by Phil Wilson

by | Mar 11, 2011 | Labor Relations Ink

What Wisconsin Means to Private Sector Employers I’ve been on the road speaking a lot lately. The first question I get asked after a speech now is, “what do you think about what’s happening in Wisconsin?” As it turns out I am writing this month’s Insight while flying home from Milwaukee. Earlier in the day the Wisconsin Senate voted to strictly limit collective bargaining rights for public employees. Thus I am perfectly positioned to give you a report based on conditions on the ground at the epicenter of the labor movement’s “re-awakening.” Here is the report: it is still winter in Wisconsin (6 inches of snow fell in about 40 minutes this morning) and the beer is as good as ever (if you ever get the chance, try the Ballistic IPA from Ale Asylum in Madison – it is lovely). The re-awakened labor movement? It’s too early to comment on the long-term (after all, unions have snatched defeat from the jaws of victory quite a bit lately), but things are looking much brighter than they did 2 weeks ago. Wisconsin is a really interesting state (not to mention beautiful – I camp there every summer and it is just a wonderful place) and in many ways a microcosm of America. It is “blue” in its big cities (Madison and Milwaukee) but “red” in its vast rural areas. It is a critical battleground during national elections. Like several other states last fall, the Republican party swept both branches of the legislature and the governor’s office for the first time in memory. Conservative voters drew their line in the sand. As Obama famously said after his election in 2008, “elections have consequences.” Governor Scott Walker certainly took that to heart when he came into office this year. I’m not sure if Governor Walker anticipated the storm he was about to create when he proposed to limit bargaining for most public employees. Anticipated or not, Walker certainly did more to get people talking about unions the last two weeks than anyone I can remember. Who would have thought that a union issue could bring out a hundred thousand people to Madison Wisconsin. In February. (I mentioned it’s still winter in Wisconsin, right?). I think the messaging has been strange. For example, focusing so heavily on the cost of public employee pay and benefits as the justification seems odd, when the bargaining proposal doesn’t even prevent bargaining over those items. Not to mention that unions almost immediately agreed to the pay and benefit concessions Walker sought. Instead I think Governor Walker and the Republicans should focus on what their proposal really does. Limiting bargaining rights on non-economic issues, and giving employees the opportunity to vote each year on whether they wish to remain unionized are very intriguing proposals. They get at the heart of what is wrong with public sector unions (and private sector ones for that matter): their monopoly bargaining power. The problem with unions is not that they negotiate “Cadillac” pay and benefit packages. Actually their pay and benefits aren’t that much better than similarly situated private sector workers. It is somewhat amusing to watch all the union-sponsored “think tanks” and academics jumping all over themselves to prove how bad public sector union members have it. Obviously there are exceptions to this, but over the last decade or so many of these packages have been brought in line (although the legacy costs of some plans are still crippling many municipalities and states). The problem with public sector unions is all the other “stuff” that gets negotiated into these contracts. Politicians are willing to agree to these items in exchange for pay and benefit concessions and they make it nearly impossible to manage or run a government agency with any kind of efficiency. It is virtually impossible to terminate someone who desperately needs it. Vacations, holidays and other “hidden” costs to taxpayers are typically higher. Last year, because of antiquated seniority rules, the teacher of the year in Wisconsin was laid off. Does that make any sense at all? There is also the ethical issue. Unlike in the private sector, where it is illegal for companies and unions to give money to each other, unions contribute a lot of money to politicians who they later bargain with. Coupled with the fact that unions have a monopoly grip over all employees in their bargaining units (even those who do not want to be represented by the union) there are bad incentives built into the public sector bargaining environment that lead to bad deals for taxpayers. One thing is certain. Unions are energized, mobilized and doing everything they can to get the pendulum that swung so violently against them in the mid-term elections last year going back the other direction. Rest assured that Wisconsin is already the battle cry unions are using to energize their base, raise money and (they hope) win back what they lost in November. I can say this about Scott Walker. The guy can stimulate an economy. Think about what he did for the economy of Madison. Over the course of several weeks Madison has seen more than a hundred thousand visitors, most of them from out of state. Business has been booming for hotel rooms, rental cars, restaurants and, of course, pubs. Apparently there will be a lot of construction work to refurbish the capital building after it was used as a campground for 2 weeks. Who knows, Walker might have figured out the answer to the recession.

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