This column by ACRU General Counsel and Senior Fellow for the Carleson Center for Public Policy (CCPP) Peter Ferrara was published April 26, 2012 on Forbes.com.
Our Founding Fathers carefully eliminated in American law every special legal privilege of the old aristocracies of Europe. They strongly favored instead equality under the law, later enshrined in the Constitution’s Equal Protection Clause, which means not equality of result, but that everyone plays by the same rules.
A recall election for Wisconsin Governor Scott Walker is scheduled for June 5. But on the ballot that day will effectively be whether we should establish in law after all these years a new aristocracy in America, not subject to the democratic will of the people like everyone else, with special legal privileges, including the right to plunder the taxpayers with virtual impunity. That new aristocracy is state and local government public employee unions.
Nationwide, these public employee unions plunder taxpayers for pay for state and local government workers that is on average 45% more than the taxpayers paying those salaries make in the private sector. The bill to taxpayers for each of these workers includes an average hourly wage of $26.25, plus another $13.56 in hourly costs for benefits, for total hourly costs of $39.81, or $80,000 per year on average. This is true in Wisconsin as well. Indeed, the Manhattan Institute’s E.J. McMahon reports that for public school teachers in Milwaukee, the annual cost of family health coverage is $26,844, for which the teachers were paying nothing.
State and local government workers today are not exploited in sweat shop conditions for poverty wages as the workers in union lore of old. Today it is taxpayers who are the ones being exploited.
Governor Walker offended the public employee union gods now seeking his recall with his state budget reforms enacted early last year. Walker came into office facing another state budget deficit of $3.6 billion. Historically, Wisconsin like many other states would raise state taxes to counter these recurring deficits, on top of annual stiff property tax increases to fund skyrocketing school and other local government costs. But those continual tax increases were imposing greater and greater costs on state economies in terms of lost economic growth, jobs and wages.
Walker, based on his experience serving as County Executive for Milwaukee County for 8 years, and in the state legislature for 8 years before that, focused on cutting the growth in state and local government spending instead. That spending restraint included requiring state and local government workers to contribute to their own benefits more like private sector workers. After all the yelling and screaming in Wisconsin, in the end these workers were only required to contribute 5.8% of their salaries towards their pensions, matched by their government employers (taxpayers), and 12.6% of the costs of their health insurance, with the other 87% paid by taxpayers. This compares to private sector workers paying on average 21% of the cost of their company health insurance, with most private sector workers having no pension.
The state budget reforms also made payment of union dues voluntary for government workers, empowering these workers to each decide for themselves if they wanted to be full dues paying members of the public employee unions. That is a potential savings for families of $1,000 a year for each government worker in the family. This forces the public unions to focus on serving their members and convincing each one that their services are worth the dues, just like every other private sector institution in American society.
The budget reforms also limited collective bargaining to negotiations over salary, but not over benefits or working conditions and rules. This gave counties, cities, and school boards the flexibility to make management changes to reduce costs, without laying off workers and reducing services to the public, and to increase efficiency in serving the public.
A chief example of how this flexibility has been used is for these local governments to open their employee health insurance to competitive bidding. Previously, the unions demanded that public employers use the union’s own sponsored insurance entity as their insurer, without market bidding. But since Walker’s reforms removed benefits from collective bargaining, government employers were freed to turn to competitive bidding on the open market, where many have found their coverage at substantially reduced costs. For school districts so far, the savings from this competitive bidding alone have amounted to $211.47 per student. Statewide that would add up to nearly $200 million in savings.
The state has also used this flexibility to halt fraudulent sick leave abuses that unions used to inflate overtime expenses. Workers had called in sick for their own shifts, and then worked the next shift on overtime pay. School districts have also been freed to pay teachers based on performance and not just seniority, and to keep better performing teachers over longer term time servers who long ago have given up caring about their job performance.
Walker’s collective bargaining reforms have added up to over $1 billion in documented savings for state and local governments in Wisconsin in the first year alone. That enabled the entire state deficit to be eliminated without yet another tax increase, and without layoffs of teachers and other government workers, except in three school districts that have continued to resist implementing the reforms. The reforms have also resulted in the smallest property tax increase in 15 years, and the first decline in local school tax assessments in 6 years. In short, Walker’s reforms are working.
The right of collective bargaining for private sector workers is not at issue in Wisconsin, though President Obama and the Democrats want to confuse the public on precisely that question. Under current law, there are plenty of market and legal checks on private sector unions to keep them from abusing the public. The ultimate limit if they push too far is that their company will be driven out of business. Though that does happen sometimes, that is only when management fails to do its job in resisting excessive union demands. Otherwise, within current market and legal checks, private sector unions actually perform a helpful market function in ensuring that employers keep up with market wages and working conditions as expeditiously as possible.
Not so for government unions, which are two words that together spell oppression. Federal, state or even local governments cannot be driven out of business. They gain their revenue forcibly through taxes. As a result, there is no market limit to how much such unions can pirate from the public.
Indeed, public sector unions choose their own employers, by voting for the governing policymakers for each political entity — county boards, school boards, legislators, Governors, etc. This creates an inherent conflict of interest, as a politician can be negotiating regarding the pay and benefits for his own political supporters at public expense. That can lead to oppressive political corruption, where there is no political limit as well as no market limit to the plunder of the public by government unions.
Moreover, local governments couldn’t resist union demands because intransigent unions could just force them into arbitration, which was rigged to favor union demands. School districts, towns, cities and counties could find themselves on track for bankruptcy because of an arbitrator’s ruling, which just followed arbitration precedents, even though it left the district or local government with no economic means to recover.
Government employees work for democratically elected officials representing the will of the people, not greedy miscreants exploiting them for personal profit. This is another reason why there is no legitimate role for government unions, and there should be no collective bargaining rights for government bureaucrats. The democratically elected Congress or state legislature cannot sit down and bargain with government employee unions as equals. Government employees are subject to the democratically expressed will of the people like everyone else. They are not and should not be treated like aristocrats with special legal privileges, exempt from democratic governance. If government workers feel their pay and working conditions are inadequate or oppressive, they can join the democratic process to elect new representatives like everyone else. Private sector workers, by contrast, cannot elect new employers.
Such fundamental, unworkable problems with government unions used to be commonly understood, which is why even an ultimate liberal like Franklin Roosevelt would not recognize such unions. And that is why strikes by government workers have been commonly prohibited in American history as well. These workers are providing essential public services, and they should not be allowed to deprive the public of those services. But today this common understanding of the past has been lost in too many jurisdictions. As a result, we find exactly oppression of the public in some local or even state jurisdictions.
These are the reasons that federal employees have no legally recognized collective bargaining rights at all. Governor Walker’s reforms would still provide for more collective bargaining for Wisconsin government workers than allowed those so badly oppressed federal workers, whose wages are set by an act of Congress rather than by collective bargaining
And these are the reasons that Governor Walker’s reforms are just, as well as practically effective in keeping state spending, taxes and deficits under control. They should be retained because they are working, spectacularly.
The June 5 Walker recall vote in Wisconsin represents a critical turning point for the entire nation. If the public employee unions prevail in recalling Walker because he dared to challenge their legal privileges and political power, these unions will be entrenched nationwide as the new American aristocracy, which the common serfs are doomed to serve and pay.
That is why the June 4 recall of Governor Walker presents a special Paul Revere moment for all those who favor traditional American freedom and prosperity. Walker faces the might of the national public employee union machine, as well as the national Obama political machine, which sees the public employee unions as the core of its political base. If the American Dream is to remain available to working people, and not just bureaucrat aristocrats, then Scott Walker must survive the recall, and his reforms must remain intact. That means patriots across America must respond to this Paul Revere moment with maximum possible support for the Walker campaign, which can be found on the Internet. Or what was won at Lexington and Concord 237 years ago will be lost in Madison this year.