Wisconsin Governor Scott Walker has precipitated a huge political brawl in Wisconsin by filing a bill that would force Wisconsin employees to shoulder more of their own health care and pension obligations, as well as stripping away a huge swarth of collective bargaining rights from most public sector unions. The unions are in the streets, taking the battle to the Governor and the Republican Legislature, while absent Democratic Senators prevent a quorum and block action on the Republican bill.
This political battle has taken on implications beyond Wisconsin, with national labor and Democratic Party resources being thrown into the fight. On the Republican side Governor Walker is receiving support from a broad spectrum of national Republicans, including the Republican Governors Association and Speaker John Boehner.
On the wage and benefit side the Governor is asking employees to shoulder more of the costs of their health care and pensions. From the New York Times:
Mr. Walker would require state employees to contribute 5.8 percent of their pay to their pensions, where most now pay far less, and require state employees to pay at least 12.6 percent of health care premiums (most pay about 6 percent now). The average salary for a Wisconsin state worker is $48,348, according to a recent report by the liberal-leaning Economic Policy Institute in Washington.
Leaving aside the collective bargaining issues it appears to me that the financial requests of the Governor are in line. The employee contributions in both of these areas are ridiculously low in Wisconsin, and with a looming $3.6 billion dollar deficit for the next two year cycle these adjustments are both necessary and justified. Why do I think that. The numbers, which many choose to ignore or cherry pick, tell the story. These are from the Governor’s website dealing with a ten year run of health care numbers.
In 2001 taxpayers contributed $423 million dollars to state employee health insurance premiums, while in 2011 taxpayers contributed more than $1 billion dollars. In 2011, state employees paid $64 million toward their health insurance, or about 5.6% of the total cost. (ETF Health Care Analysis)
·From 2001 to 2010 taxpayers spent more than $8 billion dollars on state employee health care coverage—over the same period of time state employees contributed about $398 million. (ETF Health Care Analysis)
$1 billion for taxpayers against $64 million for employees is not in the ballpark. And it appears that at this point even Wisconsin’s unions agree. Based on the reports I have seen they are willing to accept the changes put forward by the Governor in terms of increased employee contributions. Even Washington Post writer Ezra Klein agrees that the financial adjustments are beyond argument:
If all Walker was doing was reforming public employee benefits, I’d have little problem with it. There’s too much deferred compensation in public employee packages, and though the blame for that structure lies partially with the government officials and state residents who wanted to pay later for services now, it’s true that situations change and unsustainable commitments require reforms.
The problem lies in the attack on collective bargaining rights.
The Governor can rightly be faulted on several fronts here. The first one that comes to mind is the exemption his legislation gives to police and fire. The fact that those unions were more supportive of his candidacy for governor makes the exemptions even more suspect than they would be under normal circumstances. The Governor, in my opinion, has vastly overreached on this issue. His strategy has been turned upside down, with his original thought that the wide acceptance of the increased financial burden on employees would allow him to change fundamental collective bargaining rights is now in real doubt. And he has allowed the unions to change the focus, from the financial to the right to bargain collectively. It is now a death match politically, with labor facing the potential of being overrun in several different states. If the Governor is successful it will be as important of an event as Reagan’s breaking of the Air Traffic Controllers strike.
On collective bargaining, as mentioned, I believe the Governor is wrong. But even there labor has continued to make missteps nationally, and has seen even liberal states, like Massachusetts, prepared to limit the collective bargaining rights of public sector unions. Why is that? For one labor, in the face of the worst economy in decades, has refused, in many cases, to consider common sense measures that would help their members as much as management. In Massachusetts the Legislature acted, by edict, to force MBTA employees into the GIC and to modify collectively bargained retiree health care rights, as well as retirement rights. They seem poised to do the same on municipal health care. And it absolutely did not have to happen that way, but labor simply was so out of step with reality that even a pro-labor legislature was forced to act. It is time for labor to realize that no matter what has been negotiated numbers like the ones cited above for ten year health care spending in Wisconsin are not sustainable, and that raising taxes to the extent necessary to support pension and health care obligations, as currently exist, is not possible. My last word on this is that once again health care costs are ripping the country apart, state by state. The one thing that responsible management and labor should agree on is that without real health care cost containment we are all going to be out of business, and real soon.