Bloomberg, January 20, 2011, Thursday

Bloomberg

January 20, 2011, Thursday

Bloomberg

Public-Worker Unions Battle U.S. Governors Over Benefits in Change of Role

To Scott Walker, Wisconsin’s newly elected Republican governor, public employees are the haves and taxpayers the have-nots. Halfway across the U.S., Jerry Brown, California’s Democratic governor, wants unpaid days off for some state workers to cut labor costs.

Facing attacks from deficit-slashing officials on both ends of the political spectrum, government employees are fighting back. In Ohio, hundreds held a candlelight vigil in Cincinnati Jan. 14 to protest Republican Governor John Kasich’splan to bar state health and child-care workers from joining labor groups. Nationally, the American Federation of State, County and Municipal Employees plans rallies, phone banks and lobbying at about a dozen legislatures to counter what unions call an assault on recession-weary working people.

“The stakes have never been higher,” said Gerald McEntee, president of the Washington-based federation, which has 1.6 million members. “We’ll be running ground operations, hitting the airwaves and taking on the forces allied against us.”

States closed $130 billion of budget gaps this fiscal year, according to the Center on Budget and Policy Priorities, a Washington research group. The belt-tightening has made a target of unions, pushing them from their traditional role of defending against reductions to one that tries to shape how they’re made.

“They know they’re in for a difficult time,” said Richard Hurd, who teaches industrial and labor relations at Cornell University in Ithaca, New York. “Public-sector unions will have to make compromises.”

Shifting Blame

Advertising campaigns like Afscme’s “Stop the Lies: Public Service Workers Under Attack,” are trying to shift blame for state budget deficits to corporations and Wall Street. Afscme points out that its average member earns less than $45,000 a year and that average pensions are about $19,000 annually.

“The crisis the state is facing isn’t the fault of workers,” said Pierrette Talley, secretary-treasurer of the Ohio AFL-CIO in Columbus. “Workers didn’t shift jobs overseas. They didn’t gamble with our economy to bring it to near- collapse. And certainly they haven’t gotten the kind of bonuses and profits that corporations and CEOs have got.”

State and local governments pay $40.10 an hour in wages and benefits versus $27.88 for private-sector employees, according to the Bureau of Labor Statistics. Public employees make more because they have more education, union officials say.

When comparing employees with the same education, private- sector workers earned $2,001 more per year than public workers, according to a paper in September by Jeffrey Keefe, who teaches labor relations at Rutgers University in New Jersey.

Spared From Job Cuts

Public workers have been spared the job cuts that decimated the private labor force. From December 2007 through December 2010, 7.1 million company employees lost jobs compared with 215,000 state and local workers, according to the labor bureau. While local-government positions fell 259,000 in the period, state employment rose by 44,000, the data show.

As union membership at companies declined to a record low of 7.2 percent of the workforce in 2009, it increased among government workers to 37.4 percent, according to the bureau. Union members made up 12.3 percent of the workforce that year.

The increased unionization of public employees parallels a 63.5 percent increase in state and local spending from 2000 to 2009, according to the Bureau of Economic Analysis.

Now, facing $140 billion of deficits in the coming fiscal year, according to the budget and policy center, governors are taking aim at labor costs, seeking wage cuts, health-care caps, higher retirement ages and more from employees toward benefits.

Pension Rollback

In New Jersey, with a projected $54 billion gap between assets in its pension and payments promised retirees, Republican Governor Chris Christie wants to roll back a 9 percent benefits increase enacted in 2001 and raise the retirement age to 65 from 62.

“Benefits are too rich and contributions are too small,” Christie said in his Jan. 11 State of the State speech. “The system is on a path to bankruptcy.”

Christie, 48, has also clashed with teachers. He’s sought to cap school-superintendent pay and wants salaries and tenure linked to student performance. The governor’s chiding of a teacher about union unwillingness to accept a one-year pay freeze became a popular Internet video.

In New York, Democratic Governor Andrew Cuomo, 53, with a $10 billion projected budget gap, has called for a one-year state-wage freeze and is mobilizing business for a media campaign supporting his agenda. California’s Brown, 72, confronting a $25.4 billion deficit over the next 18 months, wants to cut employment costs by as much as 10 percent in part with the unpaid days off.

Bargaining Rights

The strongest challenges to unions come from newly elected Republicans such as Wisconsin’s Walker, 43, and Ohio’s Kasich, 58. They were part of a November election wave that now puts their party in control of 25 legislatures and 29 governorships. In addition to proposals to cut wages and benefits, both are seeking to curb workers’ collective-bargaining rights.

“The scope of these attacks is unprecedented,” said Naomi Walker, the Washington-based director of state-government relations at the AFL-CIO, the nation’s largest union organization.

While labor unions haven’t said they will withhold campaign money from Democratic candidates who have been traditional allies, actions such as those of Brown and Cuomo could temper the enthusiasm of union voters, Walker said.

“These things will certainly impact whether working families get involved in their political campaigns,” she said.

Unions should use teachers, firefighters and active-duty police as spokesmen so there is “a sympathetic face attached to the issue,” said Chris Lehane, a California-based Democratic strategist who worked on the 2000 Al Gore presidential campaign.

Public Good

Labor must also make clear it’s willing to accept cuts for the greater public good, she said, and that any concessions reflect joint sacrifices, with business paying its share.

Some labor officials are signaling they’re willing to do just that. In Illinois, where lawmakers raised income taxes 67 percent this month to help close a $13 billion deficit, the public-employees union last year agreed to defer pay increases and suggested ways to save money on everything from health care to the parole system, said Anders Lindall, a spokesman for Afscme Council 31.

Those and other initiatives will spare as much as $400 million of expenses, while guaranteeing no firings, he said.

The American Federation of Teachers supports capping annual pension benefits at $100,000, eliminating “spiking” pay in the latter years of employment to boost pensions, and prohibiting teachers who retire and go back to work from collecting pensions while they’re active employees, said John Abraham, director of the AFT’s member-benefits department.

Teachers will also likely have to agree to higher pension contributions and alter benefits, he said.

“Everybody’s got to do their part,” Abraham said. “We’re willing to take a haircut, but just saying that teachers need to do something isn’t going to solve the funding problem.”

To contact the reporters on this story: Martin Braun in New York at mbraun6@bloomberg.net; Holly Rosenkrantz in Washington, at hrosenkrantz@bloomberg.net.

To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net