Despite opposition within its own GOP ranks, and several national polls showing that the public supports collective bargaining, Republicans in Wisconsin, Ohio, and a growing number of other states around the country are determined to strip the rights of public employees under the guise of balancing state budgets.
“We’re staying focused on reducing the cost of government and making Ohio competitive, and the first place to start is with our own budgets,” said Ohio Sen. Shannon Jones, the Republican sponsor of SB5, which eliminates public employee collective bargaining.
But trying to blame public employee salaries and pensions for budget shortfalls is a red herring. Republican-controlled legislatures around the country, from New Hampshire to Arizona to Florida, are attacking collective bargaining by scapegoating public employees for budget problems.
The Real Cause of State Budget Deficits
“You can tell it’s not collective bargaining that is causing these deficits because some of the worst state budget problems are in the small handful of states that prohibit public sector collective bargaining, states like Texas and North Carolina,” says Joseph Slater, a University of Toledo law professor, labor historian, and author of Public Workers: Government Employee Unions, the Law and the State.
As to the real causes, Slater points to the economic good times, when many states passed tax cuts, often for those in the upper income brackets, on the theory that it would lead to economic growth and not hurt state revenues. It didn’t work out as they’d hoped, and after the big economic collapse of 2008, states experienced huge budget shortfalls as unemployment decreased revenues, and investments lost money.
The Real Cause of Pension Underfunding
“It’s important to remember that the vast majority of states don’t allow unions to bargain over public pension benefits,” says Slater. It’s also telling that states with some of the worst pension problems have virtually no public unions.
So what did happen to public pensions?
The economic downturn, combined with the stock market crash of 2008, hit pension fund portfolios hard—reducing the value of some funds by 30 percent or more. A few years ago, many public pension plans were in the black, but after 2008, everyone took major losses, including corporate pension plans, which lost $900 billion of their equity holdings.
Also, when the stock market was producing double digit returns and housing prices were soaring, state governments made optimistic assumptions to figure out how much money to put into the pension plans – they made assumptions about how much state residents and pension plans would earn in the booming stock market, how much property values would increase, and how tax revenues would grow. Those rosy assumptions led some politicians to put less money into pensions and divert the funds to their pet projects.
Eliminating Collective Bargaining Does Not Save Money
When states try to reduce public salaries and pensions by eliminating collective bargaining, they take an economic hit in the long term. The lower the wages of public employees, the less discretionary income they have to spend in the local economy. The higher the wages, the higher the reinvestment into the economy. And research shows that most public employees stay – and spend – within the state after retirement.
Also, more and more studies are showing that public sector workers generally don’t make more money than private sector workers when you compare similar workers with similar jobs.
So then the debate shifts to questions of efficiency, says Slater.
“If you take away collective bargaining, you take away worker voice and give management unilateral authority, and there’s no evidence that’s efficient,” he says. “There’s also no evidence that public agencies that bar collective bargaining produce a better product.”
Collective bargaining allows teachers and other public employees a voice with which to share ideas about how to best do their jobs. Slater says that research shows that workers having a real voice can improve communication and increase trust and stability in the work force — qualities states need when facing difficult times.
Revoking Collective Bargaining Doesn’t Solve Problems, It Creates Them
Before states formally authorized collective bargaining, Slater says public-sector unions and employers met and came to informal agreements. Bargaining helped produce efficiencies and fairness because workers had input.
“In fact, there were many more strikes by public workers in Ohio before the bargaining law was passed than after,” Slater says. “This is because the law provides effective ways to resolve differences short of strikes. In this light, it’s not surprising that the demonstrations in Wisconsin aren’t over money, they are over taking away voice.”
Eliminating collective bargaining also shrinks the talent pool. Better employees are attracted by more rights and better conditions.
“Proposals in which workers would get less money and have fewer rights make jobs less attractive,” Slater says. “That’s something Republicans claim to understand about executive compensation but don’t seem to understand about teachers, police officers, or firefighters.”
Privatization Is More Expensive Than Collective Bargaining
The same political forces who are trying to weaken unions are also pushing for privatization. But privatization has a long history of problems, from political corruption in choosing contractors, to eliminating responsiveness to the public being served, to increasing fees for services.
“It sounds like a magic bullet – get some private company to do this instead,” says Slater. “But it can wind up costing the public more money than just doing the job in house.”
It’s all about politics and putting a new face on old-fashioned union busting. Collective bargaining is not the cause of problems in public-sector budgets.
“True fiscal leadership,” said National Education Association President Dennis Van Roekel, “requires creative solutions grounded in the most important needs of the community. So faced with crippling budget deficits, fiscally responsible governors should focus on reforms that create jobs and a long-term agenda for moving their states forward.”