Like most HR folks I’ve been keeping a close eye on Wisconsin’s budget issues and their battles with state employee unions. Here in Michigan, and really every state in America, is facing almost the exact same issue. Public employee unions have done so well in negotiating over the years (or I could say, the state HR folks and our elected politicians have done such a bad job manging to the “business” of running our states), that they’ve bankrupt most states. From a recent article on this issue: “Public Unions: A Bad Deal for the Public“:
“Wisconsin is nearly bankrupt. There is a $137 million shortfall in the fiscal year that ends June 30 and a projected deficit of $3.6 billion for the two years after that.
The deficit cannot be closed without trimming the pay and benefits of public employees. In 2008, these accounted for half of all state and local government spending, according to the federal Bureau of Economic Analysis. If government workers were paid the same as equivalent private sector workers, no state would have a budget deficit, calculated blogger George Noga, a certified public accountant.
Gov. Walker wants public employees in Wisconsin to contribute roughly half as much, proportionately, to their health plans and pensions as do workers in the private sector. The governor also wants to restrict public employee unions to bargaining for wages only, leaving the health and benefit packages and work rules up to elected officials to decide. And he wants the state to stop collecting dues for the unions, and to require them to win recertification elections each year.”
I guess as an HR Pro, I’m looking for someone to blame – so here it is – I blame my Grandparents. You should to – what the heck, their old or dead, they can take the blame. Plus, it’s really their fault – they were the one’s who made us believe – you can work 30 years (sometimes with little or no education) can paid a good enough wage to have a 3 bedroom/2 bath house, a summer cottage on Lake Unionskilledusslowly, then upon retirement at that old age of 50 – the company or public organization you worked for would keep paying you a pension for the next 30 years – or maybe even longer with that great medical insurance they were paying for as well. Damn you Grandma!
So clearly, we are collectively, as a society too stupid, to understand this issue. But I think I can help educate everyone with one simple solution – let’s Unionize everyone – I mean everyone – every single occupation from CEO to the Janitor – every single person will get a great wage, great benefits and full retirement after 30 years. Sounds great doesn’t it! Oh, you know the UAW, et al. are ready to make me President right now (wait a minute – no I’ll answer that call later). One Question, I have – how long until we go bankrupt as a society? What do you think? I’ll give it 13 seconds. We can all enjoy the same pay benefits and pensions as the unions for 13 seconds – hope you liked it!
I know how we got here – I’ve gone though my labor relations courses, I know the history – the issue is that what we faced 50, 60, 70 years ago, is not what we face now. We created a system that is unsustainable, not only in the private sector (hello GM), but also in the public sector (hello Teachers, government workers, guys making $42K a year holding the sign on the highway to “Slow Down”). We’re done. And Damn It Grandma it’s your fault!
Hey Tim –
Quick question – not trying to be a wise guy, just something I think about from time to time… What’s the impact of the global economy on the standard of living expectations you describe… What would happen (with or without unions) if we went all protectionist as a country and just produced for ourselves and the trade partners we could generate at least equal trade with relative to size?
Would the standard of living still be under attack? It’s great that we can get anything we want cheaply at Walmart or BestBuy, but it seems like there’s a back end cost…
KD
if it weren’t the unions, it would be something else. this is capitalism’s evolution and nothing more. 50 years from now, there will be something else f’ing up the economy and state budgets and american hard-fought industry. humans like running to the next shinniest thing and 50 years ago unions were pretty shinny. now they are dull and dusty and out of place. and they certainly don’t fall under “what’s good for the goose is good for the gander.” unions for labor shops…yeah. unions for teachers? come on. thanks for saying it, tim.
Mark,
I agree that state budgets are not going to get solved by just cutting pay and benefits from state workers – but this is one of the major expenses facing both federal and state governments – as with most businesses. The concept of “pensions” is no longer something tax payers can support – private employers moved to 401K’s and self-funded retirement over the past few decades, and public employees need to make the same move.
I can’t agree with you, though, on Unions. I see no need for unions in our current society. If employers break labor laws, are not competitive with pay and benefits – they will not be able to compete in our economy, and this problem only gets worse for employers with the impending demographics of the US workforce. The majority of US workers have been quite successful without Union representation, and I believe will continue to be into the future. I’m not a Union hater (their time and place has gone from our society)- I just don’t see the need for workers to pay a portion of their wages to an organization for their representation, when the majority of US employers want to stay competitive with their pay, their benefits, their environment, etc. I see it as a waste.
Thank you for the comments – you had some very good points in your response. Thanks for engaging the conversation.
Tim
There is a logical fallacy in the premise of this article, i.e., “The deficit (in Wisconsin) cannot be closed with trimming the pay and benefits of public employees” (and, by extension, all public employees, municipal, state and federal). The Governor in Wisconsin conveniently forgets the $173 million in tax cuts for businesses he signed into law in January. Yes, we need to trim spending and, yes, public employees need to share in that pain. But we will not balance our public books solely on the backs of public employees. We need additional revenue, and businesses and wealthy individuals need to be prepared to contribute to that effort. As for those who question the viability of unions, contemplate that over the weekend–which you would not have, had it not been for unions. And, while you’re at it, ask yourselves if businesses would have voluntarily agreed to minimum wages, eight-hour work days, child labor laws, and worker safety had they not been forced to by collective bargaining. If you are honest, you will have to admit that unions have a place in labor markets, namely to counterbalance the power of the employers. Without them, the system goes koyannisqatsi (look it up at your local public library staffed by unionized librarians). Oh, BTW, I am not a union member…
Living in Wisconsin, I’ll say your beginning frame is faulty. Gov. Walker gave away nearly $137 million in tax breaks prompting the “need” for a budget repair bill. If the state was truly broke, can it afford to turn away revenue? Walker also turned away nearly $800 million from the Federal Government for a high speed rail project that would have created thousands of jobs, spending for ancillary businesses, and generated revenue for the state.
Even ignoring that, let’s talk total compensation. Workers/unions have a choice in how they want to receive their total compensation. Do I want more salary, vacation, health care, tuition reimbursement, pensions?
In an era of instant gratification, many workers do a poor job of planning for retirement. They take more in salary, and in significant numbers, rarely match the pension offerings of their employers. However, the public sector workers in Wisconsin were different. In their total compensation package, they chose less salary, in exchange for better health care and pensions. They do not receive health care and pensions for “free;” they already make significant contributions to their health care and pensions by sacrificing current income. And, as a result, Walker is showing them to be suckers by acting prudently.
Of course, I just wrote that forgetting HRU has government contracts. Sorry about that. It wasn’t intended to be a smear, but there is definitely cost in that and I suspect the one’s I’m familiar with from having lived in NSA’s back yard for a while are more cash intense than yours.
Justin,
I think you need to compare their benefits/compensation to that of others working for larger employers. I don’t know of too many large employers who don’t offer a match of some degree on 401K’s. With pensions, to have a situation where the folks in Wisconsin chose have more of their earned wages go to their pension versus their check, it’s them contributing. I do think benefits need to fall more in line with the private sector. We’ve seen our more recently hired state workers move to a 401K plan. That’s a good thing.
If taxpayers really want to get mad about the wages their tax dollars pay, they’d take a look at the income of government contractors who exist solely on government contracts. Talk about eye popping. They don’t technically work for the government, so we think it’s different.
Remember when Reagan “shrunk the government?” Know what happened then? The number of people working under the roofs of our government buildings didn’t change, just their classification. Many became contractors and were much more expensive. There are plenty of defense contractors who get paid huge salaries and reward fees (completion bonuses). It’s nuts.
Look at how much government contractors get paid to go to Iraq & Afghanistan compared to our own military personnel’s compensation.
Sometimes you have to rip off the band aid so the wound can heal. Wisconsin is trying to rip the band aid off all at once. MI will , as usual, try to slowly, painfully tear if off over as long as possible. Union’s served a purpose, but as most bureaucracies go, they no longer serve their members. They now are in self preservation mode. It is time for them to shrink as many companies and governments are having to do, they cannot be immune from cuts and concessions. Their role from the past is almost all federally regulated these days (workplace safety-OSHA, Minimum wage laws, child labor laws, FMLA, etc). I’m not saying they need to go away totally but they need to tune in to reality. Private sector people are paying 25-50% of their healthcare costs these days (or more), private sector folks fund nearly 100% of their retirement plans, this is how the real world is operating. Unions need to join the rest of us in the real world because the money is not there anymore in the public sector to sustain the old days.
I haven’t been able to sort out how I truly feel about unions. When are they relevant? It’s a hard question with a lot of things to consider. There are two things I feel pretty comfortable with at the moment, however. One, with cuts agreed to, the collective bargaining debate didn’t HAVE to happen now, in this manner. It’s been a huge distraction from balancing budgets and the unemployed who, hello, are now dealing with soaring gas & grocery prices.
Second, if we magically find a way to rid government of the expense of unions, it’s not going to mean a darn thing for the middle class and below. Any money gained isn’t going to stay with those populations. It’s going to wick right up the ladder. In an economy like this one, with so many Americans ‘subsidized’, it’s hard to comprehend how the directional arrow for cash flow in our country still points up. And it points up in a big bad way. The rich are hoarding. Big Business is hoarding. The stimulus worked for them and they’ve yet to decide to share the recovery with Americans and small-medium sized companies.
So, I’m hesitant to say unions need to go. Are they serving the purpose they claim? Not sure. But I’m suspicious it still might be better for the lower and middle class as a whole to have them slowing some of the cash that’s racing to the top of our economic ladder.