MISH'S
Global Economic
Trend Analysis

Recent Posts

Taxpayer Friendly Sites

Alphabetical Links

Tuesday, January 04, 2011 11:47 AM


Cash-Strapped States Seek Laws To Curb Labor Union Power


In a growing, justified wave of public-union resentment, at least 10 states seek to make major changes in labor law. Radical proposals come from newly elected governors in Wisconsin and Ohio.

I heartily endorse Strained States Turning to Laws to Curb Labor Unions

Faced with growing budget deficits and restive taxpayers, elected officials from Maine to Alabama, Ohio to Arizona, are pushing new legislation to limit the power of labor unions, particularly those representing government workers, in collective bargaining and politics.

On Wednesday, for example, New York’s new Democratic governor, Andrew M. Cuomo, is expected to call for a one-year salary freeze for state workers, a move that would save $200 million to $400 million and challenge labor’s traditional clout in Albany.

But in some cases — mostly in states with Republican governors and Republican statehouse majorities — officials are seeking more far-reaching, structural changes that would weaken the bargaining power and political influence of unions, including private sector ones.

For example, Republican lawmakers in Indiana, Maine, Missouri and seven other states plan to introduce legislation that would bar private sector unions from forcing workers they represent to pay dues or fees, reducing the flow of funds into union treasuries. In Ohio, the new Republican governor, following the precedent of many other states, wants to ban strikes by public school teachers.

Some new governors, most notably Scott Walker of Wisconsin, are even threatening to take away government workers’ right to form unions and bargain contracts.

“We can no longer live in a society where the public employees are the haves and taxpayers who foot the bills are the have-nots,” Mr. Walker, a Republican, said in a speech. “The bottom line is that we are going to look at every legal means we have to try to put that balance more on the side of taxpayers.”

But it is not only Republicans who are seeking to rein in unions. In addition to Mr. Cuomo, California’s new Democratic governor, Jerry Brown, is promising to review the benefits received by government workers in his state, which faces a more than $20 billion budget shortfall over the next 18 months.

“We will also have to look at our system of pensions and how to ensure that they are transparent and actuarially sound and fair — fair to the workers and fair to the taxpayers,” Mr. Brown said in his inaugural speech on Monday.

Of all the new governors, John Kasich, Republican of Ohio, appears to be planning the most comprehensive assault against unions. He is proposing to take away the right of 14,000 state-financed child care and home care workers to unionize. He also wants to ban strikes by teachers, much the way some states bar strikes by the police and firefighters.

“If they want to strike, they should be fired,” Mr. Kasich said in a speech. “They’ve got good jobs, they’ve got high pay, they get good benefits, a great retirement. What are they striking for?”

Mr. Kasich also wants to eliminate a requirement that the state pay union-scale wages to construction workers on public contracts, even if the contractors are nonunion. In addition, he would like to ban the use of binding arbitration to settle disputes between the state and unions representing government employees.

Union leaders particularly dread the spread of right-to-work laws, which prevail in 22 states, almost all in the South or West. Under such laws, unions and employers cannot require workers to join a union or pay any dues or fees to unions to represent them.

Unions complain that such laws allow workers in unionized workplaces to reap the benefits of collective bargaining without paying for it.

“They’re throwing the kitchen sink at us,” said Randi Weingarten, president of the American Federation of Teachers. “We’re seeing people use the budget crisis to make every attempt to roll back workers’ voices and any ability of workers to join collectively in any way whatsoever.”
In Praise of Throwing the Kitchen Sink

I salute governor John Kasich of Ohio and especially Scott Walker in Wisconsin. Walker wants to eliminate the ability of unions to negotiate including decertification.

Please see Wisconsin Governor-Elect Proposes Abolishing State Employee Unions for details.

From Hardball in Wisconsin; Massive Defeat for Unions in Lame-Duck Session
Nationally, we need to kill collective bargaining for all public unions, scrap Davis-Bacon and all prevailing wage laws, mandate Right-to-Work laws, and do something to cleanup untenable public union pension promises, not just going forward, but existing benefits as well.

To do the latter, I propose taxing public union pension benefits above $120,000 at 90%, returning the excess to the pension plans until the plans are fully funded using a reasonable rate of return estimate of the long-term T-Bill rate. That rate is currently 4.25%.
Day of Reckoning Arrives

To fully appreciate the problem, please see 60 Minutes: Day of Reckoning Arrives; Chris Christie "It's Not an Income Problem, It's a Benefits Problem"; Six Common Sense Solutions

It is a statement of fact that public unions in cooperation with corrupt politicians have bankrupted numerous states and nearly every major city in the country. The worst states are those where the unions have been the most in bed with politicians: California, Illinois, New York, New Jersey. None of them are right-to-work states.

Fortunately for New Jersey, governor Chris Christie is turning thing around.

Six Common Sense Solutions

  • Scrap Davis-Bacon and all prevailing wage laws.
  • Scrap collective bargaining for public union workers entirely.
  • Implement national right-to-work laws.
  • Outsource every public sector job possible including police and fire departments to the lowest cost private sector provider.
  • Kill defined benefit pension plans for all new hires and for all public employees that do remain in the system.
  • Tax public union retiree benefits over a certain amount.

Every states should be a right-to-work state. Better yet, the goal should be complete elimination of public union in the country.

Addendum:

The question keeps coming up: "Don't we need to fix problems with executive pay and fraud at banks at the same time?"

Of course not. It would be like saying one should not organize a save the whales campaign unless there was a simultaneous effort to send a man to mars.

Boom-bust cycles are caused by the Fed and Congressional spending. The solution is elimination of the Fed.

City and state bankruptcies are caused by the unions buying votes of corrupt politicians resulting in untenable wage and benefit packages of public unions. Something needs to be done now about pension promises that cannot be met.

Attempts to address both together as one issue is not workable because the problems are not closely related. Banks and the unions would both lobbying against the bill at the same time.

Moreover, executive pay, however outrageous, does not come out of taxpayer pockets. Union benefits do.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List


Copyright 2009 Mike Shedlock. All Rights Reserved.
View My Stats