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Fiscal Policy Richard Falknor on 25 Feb 2011 01:07 pm

Public-Employee Unions: Facts, Figures, Some History

New sections addedUnion-Run Health Insurance in Wisconsin; What Are The Differences Between Public-Sector Bargaining and Private-Sector Bargaining? Do Students Do Better With Unionized Teachers?

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[W]hile less than 8 percent of private workers are covered by union contracts, union penetration in the public sector is 40 percent (and about 50 percent in Wisconsin). Government employees are now more than half of all remaining union members, and government unions increasingly dominate what is left of the organized labor movement–along with the politics of states that have granted them the widest array of rights and privileges.  – – E.J. McMahon (Underscoring or bolding within quotations throughout this post are Forum’s.)

Here are several sources for facts, figures, and historical background which we believe will be immediately useful for conservative activists as they engage in discussions on talk shows, with elected officials, and with union voices.

Activists will be best prepared if they read the entire posts from which we have extracted only a sample of useful text.

What Bargaining Rights Do Federal Employees Have?
How Much Do They Pay for Health Insurance?

Christian Schneider (NRO) in his “Why Haven’t Public-Sector Unions Swarmed the White House?” writes

“But, as it happens, Walker is merely asking for the same type of fiscal flexibility Obama enjoys. Federal employees do not have collective-bargaining rights with regard to benefits and wages. They pay into their own retirement plans and contribute much more to their health-insurance premiums. Earlier this year, Obama tried to unilaterally implement a two-year federal wage freeze — without any say from public sector unions. If Walker attempted to give federal employees the same deal he’s trying to give state and local employees, they would all storm the Capitol — in favor of his plan.

My wife is a federal employee. We pay around 30 percent of our health-insurance premium and she pays into a defined-contribution plan (the Thrift Savings Plan), as opposed to a defined-benefit plan, as Wisconsin government employees enjoy. The TSP contributes 1 percent of employee pay, matches additional employee contributions up to 3 percent of their pay, and matches 50 percent of employee contributions up to 5 percent of pay.”

Josh Barro (Public Sector) reveals in his “Obama: Collective Bargaining for Thee, But Not For Me” – –

“Barack Obama weighed in Wednesday on the collective bargaining reforms that Wisconsin Republicans want to enact, and he doesn’t like them. He said ‘some of what I’ve heard coming out of Wisconsin, where you’re just making it harder for public employees to collectively bargain, generally seems like more of an assault on unions.’

The funny thing about this statement is that the scope of collective bargaining for federal employees is sharply limited. They are forbidden to collectively bargain for wages or benefits; instead, raises are determined annually through legislation. Wisconsin unions would actually have slightly more scope for bargaining than this: they could bargain for cost of living adjustments up to CPI, or more if approved in a referendum. So, if the Wisconsin law is an assault, federal employee unions have already been pummeled.”

The Proposed Wisconsin Reforms

Matthew Shaffer (NRO) performs a useful service in his “Wisconsin Myths and Facts: Rent-seeking spin vs. the truth.”

“MYTH: Walker is an extremist taking away collective-bargaining rights.

FACT: He’s taking away the right to collectively bargain on pensions and benefits, but not on wages — though wage increases will be capped at the rate of inflation. This is a very modest and sensible reform. Without it, governors and legislatures can be pressured into making unsustainable commitments that — because these expenditures do not show up immediately in yearly deficits and will balloon only in the future — they will not be held responsible for. Under Walker’s proposals, public-sector unions will maintain their ability to collectively bargain for their members’ quality of life — just not to bargain away their grandchildren’s. Further, limits on collective bargaining in the public sector are not rare in the U.S.: Right now, only 26 states operate on Wisconsin’s current model, with collective-bargaining rights for all public employees.”

Here are some details of governor Scott Walkers “Budget Repair”- –

“Collective bargaining – The bill would make various changes to limit collective bargaining for most public employees to wages.  Total wage increases could not exceed a cap based on the consumer price index (CPI) unless approved by referendum.  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 changes take effect upon the expiration of existing contracts.  Local law enforcement and fire employees, and state troopers and inspectors would be exempt from these changes.”

Union-Run Health Insurance in Wisconsin

Katrina Trinko in her “Wis. Teachers’ High Health-Care Costs Helping Fill Union Friends’ Pockets” (NRO) says how – –

“In Wisconsin, about 64 percent of school districts carry health insurance offered by WEA Trust, an organization created by and still very closely affiliated with the Wisconsin Education Association, Inc. (WEAC), according to a 2010 report by the Education Action Group Foundation and the MacIver Institute.

Collective bargaining has helped the WEA Trust grow. Gov. Scott Walker’s office has said that making it such that no district is required to buy insurance through the WEA Trust could reduce health-care costs by $68 million a year, noting that ‘many school districts participate in WEA Trust because WEAC collectively bargains to get as many school districts across the state to participate in this union-run health insurance plan as possible.’

Coverage offered by the WEA Trust is generous. ‘WEA Trust offers what is commonly known as the ‘Cadillac’ of school employee health coverage,’ the Education Action Group Foundation report states. ‘It earned that moniker for two very good reasons — the health coverage is very thorough, and the cost to local school districts is very high.'”

Do Students Do Better With Unionized Teachers?

Iowahawk reports in “Longhorns 17, Badgers 1”– –

“To recap: white students in Texas perform better than white students in Wisconsin, black students in Texas perform better than black students in Wisconsin, Hispanic students in Texas perform better than Hispanic students in Wisconsin. In 18 separate ethnicity-controlled comparisons, the only one where Wisconsin students performed better than their peers in Texas was 4th grade science for Hispanic students (statistically insignificant), and this was reversed by 8th grade. Further, Texas students exceeded the national average for their ethnic cohort in all 18 comparisons; Wisconsinites were below the national average in 8, above average in 8.

Perhaps the most striking thing in these numbers is the within-state gap between white and minority students. Not only did white Texas students outperform white Wisconsin students, the gap between white students and minority students in Texas was much less than the gap between white and minority students in Wisconsin. In other words, students are better off in Texas schools than in Wisconsin schools – especially minority students.

Conclusion: instead of chanting slogans in Madison, maybe it’s time for Wisconsin teachers to take refresher lessons from their non-union counterparts in the Lone Star State.”

What Are the Differences Between
Public-Sector Bargaining and Private-Sector Bargaining?

NRO’s Peter Kirsanow lists some key differences in his “Why Public-Employee-Bargaining Laws Must Be Reformed” – –

“The battles over public-employee collective bargaining won’t end in Wisconsin, Ohio, and Indiana. The collective-bargaining statutes in most states are, at best, anachronistic, and in need of serious reform. Almost all are based on a flawed assumption: that public-sector bargaining is virtually the same as private-sector bargaining.

But Governor Walker knows that any concessions on public-employee benefits are merely a short-term fix — if they’re even a fix at all. That’s because the very structure of Wisconsin’s public-employee-bargaining laws — like those of many other states across the country — will almost inexorably reproduce the situation Wisconsin faces today.

The reason for this is that most states’ public-sector-bargaining laws are based on a private-sector model. Yet many of the concerns that drive private-sector bargaining are wholly absent from public-sector bargaining. A few examples:”

The Bigger Picture

Steven Malanga explains in “The Showdown Over Public Union Power: At last, politicians and voters are fighting back against the most potent lobby for government spending and ever-higher taxes. ” (Wall Street Journal) – –

“Government workers have taken to the streets in Madison, Wis., to battle a series of reforms proposed by Gov. Scott Walker that include allowing workers to opt out of paying dues to unions. Everywhere that this ‘opt out’ idea has been proposed, unions have battled it vigorously because the money they collect from dues is at the heart of their power. Unions use that money not only to run their daily operations but to wage political campaigns in state capitals and city halls. Indeed, public-sector unions especially have become the nation’s most aggressive advocates for higher taxes and spending. They sponsor tax-raising ballot initiatives and pay for advertising and lobbying campaigns to pressure politicians into voting for them. And they mount multimillion dollar campaigns to defeat efforts by governors and taxpayer groups to roll back taxes.” . . . .”Unlike businesses and industry groups that are also big givers but tend to split their donations between the parties, some 95% of government workers’ donations has gone to the Democratic Party, whose members are far more likely to favor raising taxes and boosting spending than are members of the Republican Party.”

Fred Seigel gives us his historical perspective in “How Public Unions Took Taxpayers Hostage” (Wall Street Journal) – –

“Liberals were once skeptical of public-sector unionism. In the 1930s, New York Mayor Fiorello LaGuardia warned against it as an infringement on democratic freedoms that threatened the ability of government to represent the broad needs of the citizenry. And in a 1937 letter to the head of an organization of federal workers, FDR noted that ‘a strike of public employees manifests nothing less than an intent on their part to prevent or obstruct the operations of Government until their demands are satisfied. Such action, looking toward the paralysis of Government by those who have sworn to support it, is unthinkable and intolerable.'” . . . .  “The first to seize on the political potential of government workers was New York City Mayor Robert F. Wagner. The mayor’s father, a prominent New Deal senator, had authored the landmark 1935 Wagner Act, which imposed on private employers the legal duty to bargain collectively with the properly elected union representatives of their employees. Mayor Wagner, prodded by Jerry Wurf of the American Federation of State, County and Municipal Employees (Afscme), gave city workers the right to bargain collectively in 1958. Running for re-election in 1961, Mayor Wagner was opposed by the old-line party bosses of all five boroughs. He turned to a new force, the public-sector unions, as his political machine. His re-election resonated at the Kennedy White House, which had won office by only the narrowest of margins in 1960.”

Getting Real Numbers on State and Local Pension Liabilities

The Pew Center on the States‘ now-one-year-old report gives us state-by-state detail on “The Trillion Dollar Gap” – –

“A $1 trillion gap. That is what exists between the $3.35 trillion in pension, health care and other retirement benefits states have promised their current and retired workers as of fiscal year 2008 and the $2.35 trillion they have on hand to pay for them, according to a new report by the Pew Center on the States. In fact, this figure likely underestimates the bill coming due for states’ public sector retirement benefit obligations: Because most states assess their retirement plans on June 30, our calculation does not fully reflect severe investment declines in pension funds in the second half of 2008 before the modest recovery in 2009. While recent investment losses can account for a portion of the growing funding gap, many states fell behind on their payments to cover the cost of promised benefits even before the Great Recession. Our analysis found that many states shortchanged their pension plans in both good times and bad, and only a handful have set aside any meaningful funding for retiree health care and other non-pension benefits.”

But this year Josh Barro (Manhattan Institute) also recommends  “UNMASKING HIDDEN COSTS: Best Practices For Public Pension Transparency” – –

“The underfunding of public pensions, and the threat this poses to the fiscal solvency of cities and states, has emerged as an urgent policy concern. But pension accounting rules are so convoluted that many lawmakers are themselves in the dark about the true costs of the unsustainable pension promises they’ve made. This report recommends five steps that public pension plans could take that would disclose their finances more fully. This would clarify the magnitude of states’ total accrued liabilities and their annual impact on budgets. Making this information available is the first step in helping states adopt policies that would save taxpayers money in the long run.”

And don’t forget unfunded state and local health costs:  Cato’s Chris Edwards and Jagadeesh Gokhale in 2006 wrote (Wall Street Journal) that – –

“State and local governments are amassing huge obligations in the form of unfunded retirement benefits for their workers. Aside from underfunded pension plans, governments have also run up large obligations from their retiree health plans. While a new Governmental Accounting Standards Board [GASB] rule will kick in next year and reveal exactly how large this problem is, we estimate that retiree health benefits are a $1.4 trillion fiscal time bomb.The new GASB regulations will require accrual accounting of state and local retiree health benefits, thus revealing to taxpayers the true costs of the large bureaucracies that they fund. We reviewed unfunded health costs across 16 states and 11 local governments that have made actuarial estimates, and found an average accrued liability per covered worker of $135,000. Multiplying that by the number of covered state and local employees in the country yields a total unfunded obligation of $1.4 trillion — twice the reported underfunding in state and local pension plans at $700 billion.”

The Edwards-Gokhale formal but succinct 2006 Cato study “Unfunded State and Local Health Costs: $1.4 Trillion” has a useful table (page 2) of “unfunded retiree health costs” not only including some major states but some larger local jurisdictions:  Alexandria, Va; Fairfax County, Virginia; Montgomery County, Maryland; Duluth, Minnesota; Oakland County, Michigan; Fort Worth, Texas; San Diego, California; and, of course, New York City.

We’ll likely be adding more sources and updates to this post.

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