The union struggle

March 4, 2011
A protester supports Wisconsin's state workers. Governor Scott Walker is threatening to lay off  workers if the standoff over his budget bill, which would gut collective bargaining rights, doesn't end. Some rights reserved by mdfriendofhillary

Labor unions, wrote Pope John Paul II in his encyclical Laborem Exercens, are "an indispensable element in social life . . . indeed a mouthpiece for the struggle for social justice." Having seen how Poland's workers fared under capitalism and communism, John Paul knew firsthand that neither the market nor the state can be counted on to automatically deliver justice for workers.

Labor unions in the U.S. played a huge role in improving workers' salaries, benefits and working conditions and thereby in helping to build a strong middle class. Since the 1940s, however, unions have fallen on hard times. In the face of global economic competition and increased corporate resistance to unions (and some laws that support that resistance), the number of unionized workers in the private sector has fallen from 33 percent to 7 percent.

The current economic crisis has prompted state officials in Wisconsin, Ohio and elsewhere to try to further undermine the power of unions in the one arena in which they remain relatively strong—among public employees. In Wisconsin, for example, Governor Scott Walker, citing the state's budget problems, has pressed for passage of a bill that would not only require state workers to contribute more toward their pensions and heath care but would strip them of the right to negotiate benefits and working conditions. The unions have accepted the need for increased contributions but have defied the effort to take away the right to collective bargaining, since to allow that step would be to accept the dismantling of the unions.

Whatever one thinks about public employee unions, it's inaccurate to blame them for the fiscal crisis in the states and misguided to use the crisis as the occasion to dismantle them. Budget woes are afflicting states that don't deal with public employee unions as well as those that do. And it was not public unions that caused the wild speculation on housing prices, the Wall Street meltdown, the recession, the double-digit unemployment and the subsequent drop in tax revenues.

It's true that some states have offered government employees generous retirement benefits while deferring the funding of those benefits to another day. That is a budget liability that has to be addressed either through an increase in taxes or a decrease in benefits. But historically there has been a logical reason to offer good benefits to government workers—their benefits package helps compensate for their low pay relative to comparable jobs in the private sector. And according to a report by the Economic Policy Institute, even with their good benefits, Wisconsin's state workers get less in total compensation than private-sector workers with a comparable education. The attack on public unions could deliver a virtual knockout blow to the union movement, and that would be a blow to all workers. For all their flaws, unions are still an indispensable element in social life, and the voice of workers is a vital counterweight to the voice of corporate and managerial power.


Government Unions and Private Sector Unions

Government unions are not the equivalent of private sector unions. I am a member of a private sector union. My union and company bargain things like wages and benefits and other work related issues. The company has a need to make a profit and give a return to the investors. They also need to be competitive in the market, be profitable and maintain jobs. The free market is competitive and business needs to keep their pricing right and their quality high and customers happy. If they don’t, their customers go somewhere else and give their money to businesses who can give them what they are looking for.
Contrast the private sector with the public sector… Government employee unions give money to politicians who enact legislation that can benefit, grow and perpetuate those unions. If the politicians don’t dance to the union tune, someone else gets the political contributions. The taxpayers have no direct say in the matter and are on the hook for the costs of the pay and benefit of government sector unions. In California we have about 500 Billion dollars in funds that we are short for the government employee pension benefits.

Government employees do not have to be competitive. If I don’t have the money for a private school for my kids, I am compelled to send my kids to the government run school. And if I have the money to send my kids to a private school, I still must pay taxes to support the government run school that my kids don’t attend. I get no tax relief. And it can be argued that private schools get a better result with their students than government run schools, but at a lower cost.

Please do not compare public and private sector unions. They are not the same. One relies solely on tax payer dollars, and the other must rely on private business transactions and maintain competitiveness to stay in business.

Public employee unions

I think that there is an element of truth in what “anonymous” says. When Democrats win, the public employee unions are frequently negotiating with politicians they supported in the election. That is an issue we should be concerned about. Of course, when Republicans win, the bankers and the oil companies are frequently negotiating over financial and environmental regulations with politicians they supported in the election. (See BP, oil well disaster.) However, public employee negotiations over wages and benefits are constrained by the available resources, and Democrats have proved no more willing than Republicans to raise taxes (although less inclined to cut them). It seems to me that that constraint has assured that negotiations are more honest than “anonymous” would suggest. There is no such constraint on eliminating “unnecessary” regulation.

It is the case, at least in Wisconsin, that public employees enjoy much better health insurance than private sector employees, and it may be the case that many private companies would find it difficult to improve the insurance they provide because of competitive constraints. There is, of course, a logically (although clearly not politically) simple fix to this problem. It is called a single payer healthcare system. I do not understand why more businesses have not pushed for such a system. I guess it is easier to send the jobs to Canada than to lobby for change in this country.

The pension system in Wisconsin is also much better than that enjoyed by many private sector workers and is also in good financial condition because of the wisdom and care shown by both Republican and Democratic administrations over the years. The system is better, not because it costs more, but because it is designed better and more honestly funded than many other public and private systems. The fact that the Wisconsin system is essentially fully funded (unlike systems in most other states) is that the government (again under both parties) has been honest in determining the funds necessary to put into the system. Also, the design of the system takes into account the vagaries of the stock and bond markets. Pensions go up when the markets go up and down when they go down. (For example, my pension went down by more than 22% after the stock market collapse. Although it has increased since then, it is still not back up to prerecession levels.)

If you have followed the excitement in Wisconsin, you know that the unions have agreed to have the employees pickup half the pension contributions (5.8% of salary). That actually puts the system back to where it was when I first moved here. It is true that the unions negotiated the State pickup of the full cost of the pensions, but the pickup was in lieu of salary increases that would have been more than justified by the high inflation rates in the 70s. At the time, there were significant tax savings obtained by doing it this way, although now tax laws have changed, and I believe that the pension payments will be “pretax”, that is employees will not have to pay tax on the amount of their income that goes for the pension contribution. The pension payments should be seen as a significant cut in public employee salaries. Maybe this cut is fair given what has happened with incomes of private sector workers, but it is not a correction to some sort of out-of-control benefit package.

I am convinced that public employee unions are not the problem. (Full disclosure: I have opposed faculty unions for reasons that do not apply to other public employees.) The problem is the dishonesty and short-sightedness of politicians (traditionally, Wisconsin has been much better off in this regard than most states, e.g., Illinois) and our collective failure to appropriately address issues of health care and retirement income for everyone. These are financially challenging times, and difficult decisions need to be made, but destruction of unions that have for decades been part of the solution, not the problem, should not be part of our response.

A retired University of Wisconsin professor

Private vs. public accountability

The argument that private businesses are kept accountable because of their need to "keep their pricing right and their quality high and customers happy" has rarely been true in my experience for many years now. Quality continues to decline, especially with outsourcing, and customer service (also outsourced in many cases) is deplorable. Perhaps if more private employees unionized, we could keep those jobs at home. The issue is not public vs. private unions, but why not both? They're a necessary balance to the immense power of corporations today.

A Wisconsinite (who has never belonged to any union).

Re: Wisconsinite comment

I posted the original "Anonymous" comment. (By the way, my name is Ed.)

Your observation of lowering quality is partially an effect of consumers wanting more for their dollars. They get more but what they lose are better skilled, higher paid employees. Lower paid employees usually have a less developed skill set and are not going to work as well or effectively as a better trained/higher skill set employee. You can't always have both low prices and high quality. You give and take and it's hard to avoid a trade off of quality, satisfaction and price. Companies are profit driven and they will strive to attain and maintain their profit level. That means keeping costs and revenues in line.

I have been with my present employer for ten years. We are a union shop. Guess what? We are facing lay-offs right now. The fact that we are a union shop will not save jobs. It will just impact who gets let go of first and who gets to turn the lights out when they are the last one out the door.

Having union labor increases the cost of doing business. Higher costs = less money available for payroll or other investments. There is no need to balance against the "immense power of corporations". You need not work for them nor do you need to patronize their business if you don't like how they treat their employees, the product they produce or the service that they provide.

I am a realist/pragmatist. I'm by no means anti-union. Unions have brought about great changes in how businesses are run here in the USA (and that goes for the good and not-so-good). However, I am inclined to think that times, they are a changin'. They are limited in their benefit. In my opinion, they are sometimes working against the long-term success of their membership. (i.e. GM/Chrysler bailout. Union obligations made these companies uncompetitive. Their foreign owned competitors like Toyota have not been having these issues.)

I prefer that the free market be allowed to work things out. It's a little more messy but I believe that it's more natural, kind of like a butterfly freeing itself from a cocoon. If you help it out, it may die. Part of it's strength comes from escaping. Let businesses and their employees work those things out and let the consumer decide.

Letter from Jim Metcalf

The editorial “The union struggle” (March 22) stimulated these thoughts: 1) Owners have unions, too. They call them corporations. 2) Should not those in the business of providing labor to the industries of our nation have the same right as owners of machinery to band together and improve their efforts through common action and collective bargaining? 3) Many in labor and service who do belong to a union still benefit from the efforts of the union to increase wages and benefits, as well as to improve working conditions and social conditions. 4) At a time when we hear so much talk about shared sacrifices, it is worth noting that a simple Google search of gross domestic product reveals that in 2010 the U.S. had the highest GDP in its history.

Jim Metcalf

Jenison, Mich.