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Tough Year for Unions

Jun 18, 2012

In 2010 Republican Scott Walker was elected governor of Wisconsin by a margin of about six percent. His party also won control of both houses of the state legislature, which allowed Governor Walker to reduce the power of public sector unions over state and municipal budgets. Most public union members saw their contributions to their pensions go from 1% to 5.8% of their salaries. Their share of their healthcare plans went from 6% to 12.6%. More radically, the Republicans restricted most public unions from collective bargaining over salaries and ended mandatory collection of union dues from public workers.

The result was a fire storm of protest that attracted the attention of the entire nation. It also resulted in a recall election. A million people signed a petition for the governor’s recall, about twice what was necessary. After a bruising Democratic primary and tens of millions spent by both sides, Walker defeated Milwaukee mayor Tom Barrett a second time, by about seven percent. It wasn’t a recall, it was a replay.

It has been a difficult year for public sector unions. If the bitter defeat in Wisconsin were not enough, the cities of San Diego and San Jose in union-friendly California both passed initiatives cutting the growth of public pensions. Meanwhile in New York, Democratic Governor Andrew Cuomo is also taking on the public unions.

There are two problems that have put public unions in a sudden disadvantage. The first is a national and indeed worldwide fiscal crisis. Wisconsin was facing a large deficit when he took office. His reforms helped to close that deficit without laying off workers or raising taxes. San Diego and San Jose have both steadily cut their public workforces over the last decade. San Jose has several brand new libraries and a police station sitting empty because they can’t afford to hire anyone to work there. What is happening is that the growth of retirement costs is squeezing out all other municipal spending.

The other problem is political. Public unions see it as their mission to win guaranteed benefits for their membership. As long as the national economy was enjoying healthy growth, it was easy for state and city governments to give their employees generous contracts and make lavish promises of future benefits. It was one easy way for mayors and city councils, governors and state legislatures, to build large, well-organized and well-funded constituencies.

When the economy pooped out in 2007 and didn’t just pop right back, it became rather clear to a lot of tax payers a large portion of their tax money was no longer under their control. Services and infrastructure decayed and jobs were cut as pension costs inexorably rose. Those costs were due to contracts that are legally binding and therefore not subject to ordinary legislative discretion.

It is a good thing to want to provide security and prosperity for our public and private workers. It is a very bad thing to create fiscal systems that cannot adjust to changing realities. 


Dr. Ken Blanchard is a professor of Political Science at Northern State University and writes for the Aberdeen American News and the blog South Dakota Politics.


11:55 am - Mon, June 18 2012
Bernie said:
Ken, you raise good points and we hopefully all agree that the pensions have to make fiscal sense and they don't in some states (and private companies). But you can't just blame the unions for that, who negotiated the pensions???? You have to expect the unions to ask for all they can get, but management and elected officials had to agree to some of these ridiculous policies, and that's where the failure was ... they obviously didn't do their homework and figure it that it was unsustainable.
There's plenty of blame to go around.
12:36 pm - Mon, June 18 2012
dave tunge said:
Or should there be any blame to go around? Unions or government entities have no crystal ball. Had the economy boomed instead of busted there would be no issue, would there?
The economy did go in the tank and therefore corrections needed to be made......just as private sectors do with salary caps/cuts and layoffs.
Doesn't the problem reside in the fact that one side or the other was not gonna be happy? I applaud Walker for making a tough decision in tough times.
01:37 pm - Mon, June 18 2012
Bernie said:
Seems Walker's mistake was to make a political issue out of it instead of working together with union leaders to bring some common sense solutions as other governors have been able to do. He made it a war, seemingly for political purposes, and blamed the unions and as you also noted, there were plenty of reasons why the problem arose.
09:51 pm - Wed, June 20 2012
Bernie: was it really a mistake for Walker to make it a war? After all, he won. Big. The unions insist that they were ready to offer concessions. Okay. But they wanted to hang on to the power to veto any reform. That's what Walker decided to challenge and that is what this was about. Who controls the tax payer's money: the courts, or the taxpayers through their elected representatives? It looks like the real blow against the unions wasn't the end of collective bargaining, but the end of compulsory dues. Public union membership suffered a precipitous drop after workers had a choice. Maybe that is important.

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