What Happened in Wisconsin?

Scott Walker’s Union Problem

Written by Gabe Horstman

Edited by Sam Feigenbaum

Walker obviously isn't Muburak, but this picture is too cool.

To begin, here’s the bill: http://www.wisgov.state.wi.us/journal_media_detail.asp?prid=5622&locid=177

Everyone seems to agree that their is a huge budget shortfall of somewhere around $258 million in WI. The question then becomes how to deal with it, and Walker came into the Capitol and called a meeting to immediately cut taxes. As Ezra Klein puts it:

“In English: The governor called a special session of the legislature and signed two business tax breaks and a conservative health-care policy experiment that lowers overall tax revenues (among other things). The new legislation was not offset, and it helped turn a surplus into a deficit [see update at end of post]. As Brian Beutler writes, ‘public workers are being asked to pick up the tab for this agenda.’”

Klein goes on to say at the end of his post, that “the $130 million deficit now projected for 2011 isn’t the fault of the tax breaks passed during Walker’s special session, though his special session created about $120 million in deficit spending between 2011 and 2013 — and perhaps more than that, if his policies are extended. That is to say, the deficit spending he created in his special session is about equal to the deficit Wisconsin faces this year, but it’s not technically correct to say that Walker created 2011’s deficit. Rather, he added $120 million to the 2011-2013 deficits, and perhaps more in the years after that.”

It’s ironic that we allow the federal government to engage in deficit spending and don’t allow states to do the same, even in a crisis which calls for it. The point is that he cut taxes and then moved to the budget bill. In Scott’s State of the State address, he didn’t mention his proposal, stating instead that, “Our upcoming budget is built on the premise that we must right size our government. That means reforming public employee benefits — as well as reforming entitlement programs and reforming the state’s relationship with local governments.”  As Klein mentions, there is not a word on his actual proposal, which is to end collective bargaining for benefits. I think it also bears mentioning that Walker publicly notified the National Guard prior to his announcement in fear that the meeker of us who would be affected by his plans would somehow pose a threat to the stability of the state.

In this section, I will outline the contents of the bill. I’ll continue to draw from the policy analysts over at Wonkbook:

“The best way to understand Walker’s proposal is as a multi-part attack on the state’s labor unions. In part one, their ability to bargain benefits for their members is reduced. In part two, their ability to collect dues, and thus spend money organizing members or lobbying the legislature, is undercut. And in part three, workers have to vote the union back into existence every single year. Put it all together and it looks like this: Wisconsin’s unions can’t deliver value to their members, they’re deprived of the resources to change the rules so they can start delivering value to their members again, and because of that, their members eventually give in to employer pressure and shut the union down in one of the annual certification elections.”

Effectually, of course, it only targets unions that didn’t support him in the past election (and not because he mentioned this as a policy he would push):

“In it, Walker proposes that the right to collectively bargain be taken away from most — but not all — state and local workers. Who’s left out? “Local law enforcement and fire employees, and state troopers and inspectors would be exempt from these changes.” As Harold Meyerson notes, these are also the unions that happened to be more supportive of Walker in the last election. Funny, that.

Walker tries to sell the change in collective bargaining as modest: “State and local employees could continue to bargain for base pay, they would not be able to bargain over other compensation measures.” This is a hoax. As will be talked about later, “total wage increases could not exceed a cap based on the consumer price index (CPI) unless approved by referendum.”  In other words, they couldn’t bargain for wages to rise faster than the rate of inflation. That is to say that the venom of this legislation acts as a paralytic to the unions’ ability to bargain for just wages and decent compensation. The proposal doesn’t stop there, though.

“Contracts would be limited to one year and wages would be frozen until the new contract is settled. Collective bargaining units are required to take annual votes to maintain certification as a union. Employers would be prohibited from collecting union dues and members of collective bargaining units would not be required to pay dues.” These rules have nothing to do with pension costs or even bargaining. They’re just about weakening unions: They make it harder for unions to collect dues from members, to negotiate stable contracts or to survive a bad year.”

The issue is that Walker seems to think that the answer to the budget shortfall is hidden in the union’s constitutional ability to bargain collectively with their employees. As Klein writes:

“If all Walker was doing was reforming public employee benefits, I’d have little problem with it. There’s too much deferred compensation in public employee packages, and though the blame for that structure lies partially with the government officials and state residents who wanted to pay later for services now, it’s true that situations change and unsustainable commitments require reforms. But that’s not what Walker is doing. He’s attacking the right to bargain collectively — the very foundation of labor unions and of worker power — and using an economic crisis unions didn’t cause, and a budget reversal that Walker himself helped create, to justify it.”

And it’s not as if public employees aren’t hurting. In the Wisconsin budget report I quoted earlier, the state’s fiscal bureau goes on to survey the state of the economy. “Going forward, Global Insight expects private sector payrolls to grow by 2.1 million in 2011, 2.6 million in 2012, and 2.5 million in 2013. Projected cutbacks in the number of public sector employees, however, are expected to partially offset those private sector gains. In 2010, the number of state and local government employees fell by an estimated 208,000 positions. In 2011, those cutbacks are expected to total an additional 150,000 positions.” In other words, private jobs are coming back, but state and local jobs are still being lost. Public-employee unions are on the mat. Walker is trying to make sure they don’t get back up.”

The economic crisis that we’re currently enduring is a direct result of the practices of our financial system as covered by the award-winning PBS Fronline series’ documentary on the financial crisis. Banks like Bear Stearns adhered to risky lending practices that capitalized on bad loans to people and businesses that would later be unable to pay them back. They then packaged those loans, sold them to other banks in the financial industry, and in many cases turned around and hedged money against those loans on the financial market while regulators ignored what they saw, or got in on the action. What resulted in those banks that filled themselves to the gills with these loans, were “toxic assets.” When demand in the housing industry began to crumble, and the foundation of the scam began to weaken, people became worried and began demanding their money from the banks — money that banks couldn’t get at because of their toxic assets and former practices. As you all know, the solution for this problem under President Bush was TARP, which has been continued by Obama. With that money, we taxpayers bailed out those failing banks with billions of dollars, paid out the contracts of their employees, and continue to pay out the bonuses of their CEO’s. You’ll note that teachers’ benefits are nowhere to be found in the equation.

As Klein writes:

“There was no sharp rise in collective bargaining in 2006 and 2007, no major reforms of the country’s labor laws, no dramatic change in how unions organize. And yet, state budgets collapsed. Revenues plummeted. Taxes had to go up, and spending had to go down, all across the country.

Blame the banks. Blame global capital flows. Blame lax regulation of Wall Street. Blame home buyers, or home sellers. But don’t blame the unions. Not for this recession.

Of course, the fact that public-employee pensions didn’t cause a meltdown at Lehman Brothers doesn’t mean they’re not stressing state budgets, and that the pensions they’ve been promised don’t exceed what state budgets seem able to bear. But the buildup of global capital that overheated the American housing sector and got packaged into seemingly riskless financial products that then brought down Wall Street, paralyzing the economy, throwing millions out of work, and destroying the revenues from state income and sales taxes even as state residents needed more social services? The answer to that is not to end collective bargaining for (some) public employees. A plus B plus C does not equal what Gov. Scott Walker is attempting in Wisconsin.”

In summary:

1. Taking away the unions’ right to collectively bargain is a far cry from curing the budget deficit; its revocation is not only unconstitutional, but is unnecessary to fixing the budget

2. The claim that these workers are lazy, or the conservative stigma that this money is a waste, is, and has long been proven, entirely absurd. Teachers (like other civil servants and members of the working class) are undervalued and underpaid enough, without this brazen insult to their livelihood as a result of the corporate elite.

3. Cuts need to be made, and those cuts need to be negotiated WITH the Unions, as they have in past crises.

The Unions have signaled that they will accept cuts to their benefits and salaries in negotiations, but, according to Klein, “Walker is proposing to sharply curtail their right to bargain collectively. A cyclical downturn that isn’t their fault, plus an unexpected reversal in Wisconsin’s budget picture that wasn’t their doing, is being used to permanently end their ability to sit across the table from their employer and negotiate what their health insurance should look like.”

This is silly, and no one expected that Walker would have the gall to simply avoid negotiation or try to revoke the rights of teachers and other public employees — prison guards in northern Wisconsin and nurses among the other groups that are most vocal. Consulting with teachers is a procedural process that Walker has to follow while he makes cuts, and tries to fix the budget shortfall in Wisconsin — a shortfall made larger by Walker’s policies. This stems from our first amendment rights to freedom of speech and assembly, upheld by the constitution, and interpreted as allowing employees to negotiate together due to the unbalanced relationship between single workers and their employers. On their own, the logic follows, their voices are but a pin drop, while bargaining as a unit makes their arguments better heard. It’s not particularly confusing logic, and most of us learn it in high school. Walker spoke of waste and fraud in government during the election — where is that waste and fraud? Was he talking about the salaries and benefits of teachers, nurses, and prison guards in Wisconsin? If so, I think he would have received a few less votes. I would urge you, as I was urged by Klein, to actually read the contents of Walker’s State of the State address (linked below): “If you read Walker’s State of the State address, you can watch him hide the ball on what he’s doing. ’Our upcoming budget is built on the premise that we must right size our government,’ he said. ’That means reforming public employee benefits — as well as reforming entitlement programs and reforming the state’s relationship with local governments.’ Not a word on his actual proposal, which is to end collective bargaining for benefits.” If he wants concessions, he needs to negotiate.

The second issue seems to be a misconception commonly held by proponents of this bill that state employees are somehow lazier, less sacrificing, and less productive than those employed in the private sector. As a student, member of the public sector, and friend to many others working in those jobs, let it suffice to say that I find these type of remarks to be astonishingly naive. Take the plight of our teachers, for example, who I am personally connected to via my mother who teaches elementary school in Minnesota’s public school system: teachers have graduated from Universities (many, like my mother, hold masters degrees) and are certified to teach in their prospective states, they contribute to their retirement and health savings accounts, and they also pay their taxes like ordinary Americans — so in a sense, they are contributing more to their own benefits than one might first suggest. Like other public employees, they work hard and often outside of their schools as well contributing to their communities and accepting our country’s children and educating them for the future, and they should be valued for the services that they provide. The cost of their pay and of public school isn’t market demand, and if the public at large really thinks that teachers are somehow slacking off or avoiding sacrifice, it would be less hypocritical if they stopped sending their children to school. Someone like my mother (who has taught for 7-8 years in her current district, and has 15+ years of experience teaching in general) likely makes around 60-65K (before taxes of course) which, the unions argue, boils down to about $25 an hour — probably around the amount that my more wealthy friends pay their cleaning lady, and less than my friends who are just graduating with bachelors degrees and entering into the private sector. Teachers work just as hard and they provide services that we all know are important, yet I would argue that their salaries don’t reflect their levels of education, their experience, or their value. Their benefits are fantastic (they’re also taxed), and teachers like my mother are the first to acknowledge that they could sustain cuts. In times of crisis, we all have to tighten our belts, and the unions have publicly signaled that they’re willing to negotiate.

By all means make cuts. Root out the waste and fraud that you spoke of during elections, and fix the budget deficit, but don’t take away their right to negotiate at the table. For as Klein writes:

“That’s how you keep a crisis from going to waste: You take a complicated problem that requires the apparent need for bold action and use it to achieve a longtime ideological objective. In this case, permanently weakening public-employee unions, a group much-loathed by Republicans in general and by the Republican legislators who have to battle them in elections in particular. And note that not all public-employee unions are covered by Walker’s proposal: the more conservative public-safety unions — notably police and firefighters, many of whom endorsed Walker — are exempt.”

Way to go Scott. The elections can’t come soon enough.

Posted in: Opinion