Bloomberg, February 24, 2011, Thursday

Bloomberg

February 24, 2011, Thursday

Bloomberg

Why We Should Debate Public-Sector Bargaining

When five different statehouses take up similar pieces of contentious legislation at the same time, it suggests either a conspiracy or a crisis. Bills pending in Wisconsin, Ohio, Michigan, Tennessee and Idaho would limit the right of public-sector unions -- teachers, nurses, sanitation workers, firefighters -- to bargain collectively.

Wisconsin’s has come to a vote first. In protest, the state’s Democratic senators moved to Illinois and the state’s union members moved into the capitol. Scott Walker, Wisconsin’s governor and the bill’s chief proponent, went on television to warn against outside agitators.

“We’re not going to be intimidated by people coming in from outside of Wisconsin trying to tell us what to do to balance our budget,” he said.

One of those outsiders was President Barack Obama, who called Walker’s bill “an assault on unions.” Another was Gerald W. McEntee, president of the 1.6 million-member American Federation of State, County and Municipal Employees, who wrote in the Huffington Post on Feb. 16 that “newly elected politicians are working tirelessly to pay back their debt to the corporate CEOs who funded their campaigns.”

It has always been good sport for Republican politicians to lay into public unions, and for union leaders to lay into Republicans. And that’s the shame about the circus in Wisconsin, where all the posturing threatens to obscure a serious issue. America’s taxpayers really do need to reconsider the way they negotiate with their employees. The question is whether restricting collective bargaining is the proper remedy.

Nakedly Political
Wisconsin’s bill doesn’t present the best argument in favor of curbing worker rights; it stuffs a clause on collective bargaining into a larger “budget repair bill” that cuts public-worker benefits and restructures the state’s debt. This presents the end of collective bargaining as a fiscal necessity.

If the state can make up its shortfall, Walker loses his reason to restrict unions. Sure enough, both the unions and the state’s Democrats have agreed to swallow the benefit cuts if Walker drops the collective-bargaining limits. He won’t budge.

Details of the bill look nakedly political. State employers would be prevented from deducting union dues from paychecks. Unions couldn’t require dues and would have to hold annual votes to maintain certification. These are all longstanding demands of anti-union groups, and, as The New York Times and Bloomberg have reported, oil billionaires and conservative activists Charles and David Koch were major supporters of Walker’s campaign. Their organization, Americans for Prosperity, is running television commercials promoting the bill in Wisconsin.

First Responders

The legislation spares local police, state troopers and firefighters, groups that lean Republican. In the past, unions that represent first responders have held fewer negotiating rights, according to Alex Colvin, who teaches collective bargaining and conflict resolution at Cornell University. Colvin can’t think of an industrial-relations rationale to give collective bargaining to police, but not teachers.

If all five state bills were so flawed, it would be easy to reject this idea. Ohio’s legislation, now in committee in Columbus, is a more serious piece of work.

It abolishes collective bargaining without suggesting specific cuts or clawbacks, removing from the discussion the urgency to narrow any immediate deficit. (Ohio’s is projected to be about $8 billion in the next two years.) It avoids some of the provisions on dues and votes that the anti-union crowd favors. It includes police and firefighters. And it doesn’t limit pay measures the way Wisconsin does with its proposal to peg wages to the consumer price index. Shannon Jones, the Republican state senator who wrote the Ohio bill, describes it as a “reset.”

Fettering Chains
Local governments, the second-term senator explains, are fettered with two chains. The terms of collective bargaining -- in particular binding arbitration -- have prevented local politicians from renegotiating contracts in line with revenue. At the same time, antitax movements at the local level have prevented local governments from raising revenue to meet contracts. Cincinnati, part of which lies in Jones’s district, needs to hold a referendum to raise taxes. Its pension fund is more than $1 billion in the hole.

Collective bargaining works as a ratchet: It takes the last contract as a starting point. It can obscure raises through impenetrable tiers and terms, and binding arbitration can tell a local government to raise more revenue even if voters won’t approve a new tax levy. Although real money is at stake -- 85 percent of Ohio’s state budget goes to local governments -- Jones’s bill wouldn’t directly fix any budgets. It proposes to solve a problem of governance.

Opposing Pay Cuts

A USA Today/Gallup poll on Feb. 22 showed that 53 percent of Americans oppose reducing pay or benefits for government workers; 61 percent oppose ending collective-bargaining rights. And 71 percent oppose increasing taxes.

Whether collective-bargaining reform is conspiracy or crisis, American taxpayers have surely conspired to create a different and far more elementary crisis. We love teachers, but we hate taxes; we want to spend more than we are willing to pay. Jones’s bill asks voters to own up to what she calls their “cognitive dissonance.”

America has never resolved how it feels about public-sector unions. Boston’s police department struck in 1919 over 17-hour days and vermin-infested stations. Robbery and destruction followed, as Joseph E. Slater describes in his book, “Public Workers.” Calvin Coolidge, then governor of Massachusetts, called out the state guard and fired the strikers. Coolidge’s response helped make him president, and the chaos tilted the next half-century of negotiations against public unions.

1940s Union Bans
Democrats and Republicans passed laws in the 1940s that banned public-union strikes and even membership in any organization that asserted the right to strike. The success of a public-sector strike depends not on whether it’s legal but on whether it’s tolerable to voters. In the decades that followed, public-sector workers struck, and politicians granted them amnesty. They negotiated, and in many states won a legal right to bargain collectively, in part because it was seen as a safety valve to prevent strikes.

At the same time, unions entered politics, and their ability to elect Democratic mayors and governors created a built-in conflict: Lawmakers were often negotiating with labor leaders who put them in office. By the late 1970s, according to Cornell’s Colvin, they had no clear counterweight. That arrived with Ronald Reagan, not because he fired striking air traffic controllers in 1981 but simply because he won his election. “The alternative to having union support,” says Colvin, “is to run against taxes.”

Globalization, Competition

In the past three decades, globalization has made wages a factor of competition, forcing private unions into a series of concessions and eroding their power. (Union members today make up about 7 percent of the private-sector work force, down from 20 percent in 1980, and about 36 percent of public-sector workers.) In 2011, as a recession and structural shifts expose every one of America’s inefficiencies, it may be time to rethink public unions as well. America’s companies aren’t the only ones competing in a larger market; its governments are, too.

Ohio Senator Joe Schiavoni is the ranking Democrat on the subcommittee considering Jones’s bill. “If there’s something we can fix,” he says, “let’s fix it … but this is destruction.”

Last year, Ohio’s public unions gave back $250 million in concessions. Schiavoni says most local government officials he’s seen testify about the bill have shown frustration with collective bargaining yet don’t want to end it altogether. Schiavoni concedes it creates problems for some communities while saying Jones’s approach is too blunt. He would rather have the Senate focus on creating jobs. Local-government shortfalls, he points out, get worse when the economy gets bad.

So these are the terms of the debate, which is likely to reach Madison-size proportions -- with pizza ordered for protesters by well-wishers in Cairo -- by the time it comes to a final vote in Columbus. Schiavoni’s America says to fix the problem, you fix the economy. Jones’s America says you can’t fix the economy without fixing the problem. Whatever their differences, neither dismisses this as a mere conspiracy.

(Brendan Greeley is a reporter for Bloomberg Businessweek. A version of this column appears in the Feb. 28 issue of the magazine. The opinions expressed are his own.)

To contact the reporter on this story: Brendan Greeley in Washington at bgreeley2@bloomberg.net.

To contact the editor responsible for this story: Eric Pooley in New York at epooley2@bloomberg.net.