Wisconsin, Indiana, and other States–Unions and Budget Fun

I tell you, I have had a great time chatting with lots of friends about the joys of the Wisconsin and Indiana issues and how they relate to the rest of the US and the state of unions and public employees.

Let me level-set for a minute.

  • Unions have had a huge impact on our lives as workers, today. In the past, unions helped many industries get their crap straight when it came to abusing employees by not providing safe work conditions, forcing long hours on them, and paying next to nothing. Unions helped change the behavior of many businesses in many industries.
  • In recent years, unions have become pretty damned powerful. The threat of strikes and work slow down and sick-outs have strangled many businesses. With the threat of being closed down by unions or paying what would be considered pretty high wages for the work being performed, businesses had to pay the the high wages. I contend that this has been the cause of many job losses as our businesses and even entire industries in the US have become very non-competitive in the world market. The auto unions, for example, almost killed the industry.
  • I am OK with unions, in general, so long as they are truly looking to help workers avoid being oppressed by businesses. I cheer them on. However, there comes a point when enough is enough and unions need to help businesses survive and thrive.

OK, level setting is done.

Now, for more of my opinions that many of my friends don’t like. Smile

Unions and public sector employment should not go hand in hand in my opinion. Unions in the private sector are used as a way of combining the interests of employees against the interests of company’s owners. Unions are used to fight for as much as they can get from the owner of companies and provide protection against unfair treatment. Government employees are protected against unfairness by civil service laws. Unions in the public sector are far different in that they are pitting the employees’ interests against the interests of taxpayers and voters – the people that they serve. This to me is just inappropriate. Government employees have tons of protection through their civil service rules and they have jobs that many people in the private sector envy and would love to have. For a government employee, one that has chosen to serve the good of the community, to take action against that community by participating in strikes, work slowdowns, and sick-outs just doesn’t make sense to me. Are we, the taxpayers/voters treating them unfairly? I just don’t see it being an issue. Now if wages were so low that people walked away from their jobs and the government had trouble attracting good workers, I am sure that wages would have to be increased to retain and attract good employees. This isn’t happening in the world where I live. Is it happening where you live? Are there so many great jobs out there that government employees should not have to tighten their belts like the rest of us?

OK, now to Wisconsin. Summing up the issue here isn’t simple, but I think there are many people that feel that the Governor is trying to bust the union because he is anti-union. There are other people that think the Governor is trying to bust the union because the budget is out of whack and they need to cut costs and the union is not willing to give enough concessions. There are some in the middle. Those that cheer on the unions state that they are trying to help protect the freedom of choice of all of those abused government workers. I don’t see any abused government employees out there, but maybe I am just blind.

Indiana is another matter. In this case, Indiana is trying to require non-union members to pay union fees to work in companies that are unionized. I don’t hear anyone screaming about protecting the freedom of choice of non-union members in this case. This is about shoving unions down the throats of people that want nothing to do with them. Now, if people were rallying around the freedoms for workers to choose in this case as well as the freedoms for workers to choose in the WI case, that would make sense. However, the same people that are rallying for the rights to choose unions are also rallying for the ability to force non-members to pay fees to unions against their will. That seems to be a bit hypocritical to me.

In both Wisconsin and Indiana, they democratic legislators have abandoned their posts and run away outside of their states. They are all hiding. The reason is that they don’t want bills to pass that would harm the unions. Yes, it appears to be legal, but their behavior sure does smell from where I sit. As a voter, I expect my legislators to show up and do their jobs.

So, what is the big deal about Wisconsin and Indiana? It comes down to issues with state budgets and money woes. In case everyone forgot, we have a real economic crisis going on here. Everyone is tightening their belts. In this case, government employees need to tighten theirs as well. In WI, they want government employees to contribute towards their own retirement vs the government paying for all retirement costs. They also want government employees to kick in a small percentage of the costs of their healthcare. That seems fair and reasonable to me.

What I find funny are two things that keep getting thrown around:

  1. The Government has provided tax incentives to many businesses. The costs of those incentives outweigh the costs that they are trying to reduce.
  2. Teachers are wonderful and should be hugged all day long and they should never have to deal with money issues like the rest of us in the world. OK, maybe my sarcasm was showing there.
  3. It is about the freedom of choice for the employees of WI.

I can do simple math. However, I am not hearing any numbers being thrown out that can be used for a complete equation. Yes, WI provided incentives to local businesses. In case everyone forgot, businesses pay taxes in other ways.

  • They buy products and pay sales taxes.
  • They buy equipment and pay property taxes.
  • They provide jobs and pay payroll taxes.
  • Their employees are employed and don’t have to collect benefits from the government.
  • Their employees pay employment taxes.
  • Their employees pay sales taxes when they buy things with their income.
  • Their employees pay property taxes on the houses that don’t need to be foreclosed and cars that don’t need to be repossessed.
  • And so on and so on…

The question is whether the amount of incentives is outweighed by the benefits provide by the jobs and the business activities. I am willing to bet that the amount received in revenues by retaining and attracting jobs is way more than the cost of the tax incentives. If you add all of the tax revenues produced through the jobs and tax payments of the businesses through their business activities and all of the taxes paid by those people and then compare those revenues to the cost of the incentives, I am pretty sure that there is a large net gain for the State. The new tax revenues (or the prevention of the lost revenues if the businesses left)  are way more than just the amount of the tax incentives. Let’s also remember that people that have jobs don’t have to collect unemployment and other benefits and people that have jobs don’t have to declare bankruptcy or have their homes foreclosed. The costs of unemployment are pretty high, and the foreclosures drive down the property values of all of the homes in the area.

Back to simple math. If a state must reduce its expenditures, it makes perfect sense that some of those reductions will come from government employee pay and benefits. Education seems to be the hot button that the union is really pushing, because teachers can do no wrong and are all angels. The average amount of expenditures for a state include about 30-40% spent on education. It is a HUGE pile of money. I have seen (and you can research it) that we spend between $9,000-11,000 per student per year for education. That is the third highest amount per student in the world only behind Switzerland and Norway. It is way more than Japan spends by a HUGE margin. Now, despite the expenditures and whether education is improved, the issue is that with such a large amount of the budget spent on education, any budget adjustments realistically should include cuts in education spending. The issue, again, is the hot button of teacher pay. Education is way more than teachers in the classroom when it comes to the costs. Remember, there are all of those administrators that work in school districts that haven’t been in a classroom for ages. I don’t believe we need so many people at the top. Reductions in education expenditures does not have to impact teacher pay. Again, it is a common sense thing in my opinion.

I also would like to point out that all of those cute Facebook memes about teachers seemed to all pop up right when the crap hit the fan in WI. Hmmm, I wonder if the unions might have something to do with that. <G>

Don’t get me wrong, I think the world of teachers, but I also realize that there are lots of wonderful people in the world that do wonderful things, and they are all having to tighten their belts, too. Firemen, policemen, nurses, doctors, and the list goes on and on of great people performing very important and wonderful jobs. Everyone is tightening their belts. However, again, it doesn’t have to be teacher pay. There are lots of ways to reduce the costs of education.

It’s the economy, stupid. Smile

I promise, I won’t say another word about this topic. But I will feel free to link to this post for at least the next week.

UPDATE – a friend sent me this link for the WI teachers and how much they make. http://usataxpayer.org/htm/witeachers.asp?ncid=75711 Personally, I don’t think they make enough, but I do believe that they have way too many administrators making way too much money. Our education dollars should be more focused on the teachers in the classrooms.

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