BU UEA

by Stefan J. Bell

In spite of the Green Bay Packers’ Super Bowl XLV victory, not all news out of Wisconsin has been jubilant lately. Madison, the state’s capital, has been engulfed in mass protests since February 15^th, as Democrats and Republicans continue to battle over public union workers’ benefits and collective bargaining rights. The debate has become hot and the politics ugly: fourteen democratic state senators fled Wisconsin in an effort to postpone any vote on these issues, and the newly elected Republican governor, Scott Walker, has been duped by a prank caller posing as a prominent campaign donor. The situation has led many political pundits to compare it (rather hyperbolically) to recent protests in the Middle East, but while these demonstrations are nonviolent, public unions have long been the source of fierce economic debate in the US.

The current standoff in Wisconsin comes down to two central issues: public union workers’ benefits, and public union’s collective bargaining rights (Republicans lawmakers have recently conceded the former). Essentially, Governor Walker is attempting to strip public union workers (such as teacher and firefighter unions) of their ability to collude on matters such as wages or healthcare benefits. Though this is not the first time that lawmakers have tried to limit public union powers, the reasons for doing so at this point in time are perhaps more pressing. Wisconsin, like many other states, is currently facing an enormous budget deficit, projected to be at $2.2 billion over the next two years. The reasons for this shortfall are numerous, including persistent high unemployment, weak consumer confidence, and decreased corporate expenditures in the wake of the 2008 financial crisis. But Governor Walker also views public unions as a major component of the state’s budget turmoil. Under the current regulation, Milwaukee public school teachers receive roughly 75 cents in benefits for every dollar they earn in salary. Compare this to the state’s private sector average of roughly 25 cents in benefits on every dollar earned, and it is clear that public school teachers (who represent one of the largest public sector unions in the state) do receive substantially more benefits than their private sector counterparts. Many of these benefits come in the form of pensions and healthcare, which are heavily subsidized by taxpayers: districts contribute on average 38% of teacher’s benefits, while governments pay on average 10% of private sector benefits across the country. To further illustrate the situation, the average Milwaukee public school teacher receives $56,500 in annual pay, but if benefits are included their total compensation tops out at just over $100,000. It is evident that school teachers in Milwaukee are not cheap.

While the previous example only focuses on school teachers, a large portion of public union workers’ benefits tend to be funded by tax payer money. This is a source of conflict in Wisconsin, as many are eager to limit such benefits would free up government funding. While Walker has taken that option off the table, he is still striving to reduce public union workers’ ability to collude on future wages and benefits. It was such collusion that was largely responsible for increasing public sector benefits, a reason why collective bargaining rights are banned in 22 other US states. It is still unclear if Walker will succeed in implementing his policies given public opposition, but given the dire economic circumstances that Wisconsin is facing, it is evident that significant measures must be undertaken, even if that means a revision of public unions. If a political stalemate prevents new policies from being enacted, the consequences will surely be disastrous.

Related Links:

• “Unions vs. the Right to Work.”
• “What’s at Stake in Wisconsin’s Budget Battle.”
• “Report on Wisconsin’s Budget Deficit Contains Hidden Cost.”