Why unions are out of touch with reality

March 1, 2011


The public-sector union showdowns in Wisconsin and Ohio are proceeding as if it was the 1950s. Democrats and liberals call labor oppressed, and want the unions to win; Republicans and conservatives call labor a threat, and want unions broken. That’s the wrong way to think about the entire situation.

Labor unions and collective bargaining are important tools. There are good reasons to form unions. But unions must be reasonable. If the customer is not happy with a union’s performance, or if the cost of doing business becomes too high — whether the customer is the state of Wisconsin or otherwise — then unions must make reasonable compromises.

Collective bargaining is, after all, about negotiation.

Half a century ago, when most members of unions worked in dangerous conditions for low pay in factories or mines, it was fair for labor to demand justice. It is still fair for unions representing the mistreated, such as those who work as hotel maids or clean offices, to demand justice.

But today’s government employees are not mistreated. For today’s government employees to occupy the Wisconsin statehouse and turn red in the face angrily shouting demands shows public-sector unions have become spoiled and out of touch. That needs to change.

In the main, public-sector union members have good deals. They work in safe white-collar circumstances. Civil service rules afford protection against dismissal. Public-sector worker pay is about the same as pay for private-sector workers who have no protection against firing, while public workers’ benefits are better, sometimes much better.

California allows many unionized state employees to retire at 55 with a pension of half their final year’s salary. Ohio allows public-sector union members to “retire,” start drawing pensions, then be rehired for the same jobs. The Columbus Dispatch has reported that in 2009, Ohio paid $741 million in pension benefits to teachers and school administrators who were working full time. They “retired,” qualified for pensions, then went back to their previous jobs. In Wisconsin, public school teachers average nearly $100,000 annually in pay and benefits; private sector workers in Wisconsin average $60,000 in pay and benefits. In all these cases, private-sector workers are taxed so that public-sector workers can have better deals.

If public-sector workers in Wisconsin or any state were having money forcibly removed from their pockets and given to private-sector workers who already had better deals, the public employees would be furious.

Union members matter, but voters matter more. A situation in which customers (taxpayers) are penalized (taxed) so that public employees can have better deals than the public they serve is not reasonable. That’s where the negotiation aspect comes in. Government workers in Wisconsin, Ohio and other states must negotiate contracts that meet the needs of the customer, and that inevitably will mean lower benefits. States have at least $3.2 trillion in unfunded pension promises to union employees: this can’t go on.

Private-sector unions face market competition, which causes them to moderate their positions. Government unions work for a monopoly, so must moderate themselves. In recent decades, public-sector unions have adopted a mindset of demand, demand, demand — assuming politicians will always cave. This labor mindset is obsolete in a era of rapidly rising public debt. Public-sector unions must negotiate in good faith to provide taxpayers with improved terms.

Employers must negotiate in good faith too. In Wisconsin, new Republican Governor Scott Walker has handled the situation poorly. Rather than negotiate for reasonable reductions in public-employee benefits, he went directly to attempting to end collective bargaining, an extreme step that shows Walker is not a thoughtful man, merely a union-buster.

Walker’s anti-union bill also has Trojan horse provisions, including one that would allow the state to sell publicly owned power plants to corporate campaign donors on a no-bid basis. This isn’t reform — it’s corruption. If I were a Wisconsin voter, I’d be advocating public-sector union concessions on the one hand and on the other, signing a recall petition to get rid of Governor Walker.

Louis Brandeis, the leading progressive of the early 20th century, said it was a mistake for labor and management to be out to get each other. Their fortunes, Brandeis maintained, rise and fall together.

That’s the spirit missing from current labor-management disputes. Belonging to a union does not guarantee endless money increases regardless of business conditions; belonging to management does mean issuing ultimatums to workers. Both sides must negotiate toward reasonable outcomes.

Photo: A demonstrator holds a placard near the State Capitol building during protests against the proposed budget cuts from Wisconsin Governor Scott Walker, in Madison February 25, 2011. REUTERS/Darren Hauck


We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/

I couldn’t agree with you more, what you are missing though is that the unions have conceeded on all levels EXCEPT CBA. This is strictly a union busting bill with the corruption attached. Until all that are watching this understand the underlying aspects of whats going on in Wisconsin they need to stop spouting partisan politics. A little education goes a long way.

Posted by packfvr | Report as abusive

isn’t it wonderful that you compare teacher salaries to an overall average salary. Teachers are professionals and should be compared to other professionals’ salary average instead.

Also note that the differences in Wisconsin are NOT over the need to make concessions, it’s about a governor wanting to destroy collective bargaining and a refusal to do collective bargaining at all. AND with cronies such as Koch Bro’s, the ‘other’ provisions of this bad bill such as essentially having carte blanche to give away power plants as Gov. Walker sees fit as well as the ability for his appointee to make any changes to medicare/medicaid they see fit and a complete failure to be open with the people he supposedly represents. I don’t believe the protesters mistake what is at issue at all.

Posted by rosielaf | Report as abusive

I like you but you write as if the internet isn’t available to fact check you, save your reader some time and add some links as to where you get your facts because in all honesty I don’t trust where you get your information.

Posted by mdstaff | Report as abusive

The humane thing is to get these 50 and 60 year olds back to work like everyone else, while they are still healthy, rather than having them hit a wall in their 80’s and 90’s. Can you imagine being in your 80’s, even 10 years down the road, let alone 20 or 30, when there will be a lot more “retirees” on the dole. The boomers have only just begun to retire. Only just begun.

Posted by threeRivers | Report as abusive

Gregg, out of touch would mean they don’t contribute millions to democrats who they want to collectively bargain with. They are in touch with how to milk the system. To reach a bargain with me, agreement starts after the discussion not before. How hard do you have to negotiate with someone you own?

Gov. Walker has a responsibility to conduct the peoples’ business with due process. Politics aside, he needs to continue the process which should include additional oversight on any sale of public assets. But we the people, in my view, never intended to be so enamored with public services that we bargain away fiscal reality.

Instead of ideals, why not opt for options. Partial 401k funding which may be riskier but packaged with a guaranteed -tho reduced pension, would formulate a safer and fiscally possible future.

Each side should have risk and reward. Everyone will need to adjust expectations. Leadership must represent constituents not just tax payers, big business or pensioners. As a taxpayer, I want the best teacher, cop, fire rescue and street sweeper for my investment. Tenure, experience and value don’t always match.

Tighten pre-retirement screening to keep only the finest for the last haul. Then share the investment with them so their golden years are more secure.

Posted by pHenry | Report as abusive

Yes, because everything true is on the internet. This is an editorial, not a medical study, ergo he doesn’t have to disclose methodology any more than you have to take his comments at face value if they offend your sensibilities that you held before you started reading.

Easterbrook rarely writes anything I can fully concur with, but totally on-target. The entire debate is being poisoned from all directions, and keeping actual progress from being made.

Posted by dzoo35 | Report as abusive

When Unions bargain for better pay, all workers everywhere benefit by keeping pay at a higher rate for everyone, whether you are in a Union or not.

After Senators serve 2 terms, they get a lifetime salary and medical care. Tell me Unions get anywhere close to that

Are they are so afraid that teachers, law enforcement, fire fighters, etc. make too much money? Really? Is it so important not to have a large portion of money, but ALL the money?

Posted by sandybeaches | Report as abusive

Kindly note that ‘unfunded pension obligations’ means “We didn’t put aside the money we were supposed to for their pensions, like we agreed to in the contracts.”
Also, “Fund more of their own pensions” means “Take a pay cut for the exact same benefits as you got before.”
Also, where is this public sector = private sector pay? I have to laugh. If that were true, a lot of private sector people would emigrate to public service, have their cake and eat it, too.
Come on, you’re a journalist. Check your facts and definitions. “Fund more of their own retirement” = Pay cut, nothing more and nothing less. But the union shafting stuff is a knife in the back of the working people.
and, as you pointed out, selling off state assests is corruption, pure and simple.


Posted by REDruin | Report as abusive

“Workers of the world, unite!” © Karl Marx
“Unions are the school of Communism.” © Vladimir Ulyanov (Lenin)
Definition of Communism: “From each according to his ability, to each according to his need” © Karl Marx

As old as these quotes are, they perfectly describe current unions, and especially public employee unions. Inept workers (the ones worth something usually find themselves in the private sector)work to their ability (or rather lack thereof) and are compensated up to their needs, as these needs defined by union bosses. Communism built right in the heart of the most capitalist country in the world.
Stalin put together the whole theory (proved later practically) about the possibility of building Socialism (which is, according to Marxism, just a precursor to Communism) in one single particular country. The unions, without much theorizing, built Communism for some particular union workers. What an irony!

Posted by anonym0us | Report as abusive

Teachers should be compared with professionals. Agreed, but with which professionals? Engineers and doctors and lawyers? No, they don’t have the same level of education and demands placed on them. I agree that teachers are worthy of respect, but they are not doing work equivalent of many professional fields.

Posted by rhv | Report as abusive

You can always tell a socialist, you just can’t tell them anything!

Posted by DrJJJJ | Report as abusive

Calculate the legacy cost of most public jobs and you’ll be frightened-if you’re intellectually honest that is!! Ex: Fed grave diggers make more than manyif not most private sector engineers when you calculate legacy costs! Wages/benefits are on a downward spiral for all of us-make the mental adjustment!

Posted by DrJJJJ | Report as abusive

Aye, which professionals? Doctors and lawyers make lousy teachers, and there are far fewer of them…nor is the need for them as high. Most of those Wisconsin Teachers probably have a Masters, many will have a Masters +30, which is the equivalent of those doctors and lawyers, along with CE requirements. But even the best paid teachers never equal the income of the best paid doctors and lawyers.
Acadamia is a different world. If it functioned by the hour like docters and lawyers do, only the wealthy would be able to afford an education for their kids.

ANd “legacy costs’ is a misnomer. Pension costs are from money set aside during a worker’s working years, and then doled back out to them. There’s is no more legacy then with a 401k plan. The difference is the Pensioner gets his with a guarantee if he stays at his job, and the 401k gets to play and lose money in the 7 jobs they’ll have over the course of their career.


Posted by REDruin | Report as abusive

The article obviously speaks for itself. Could anything be spelled out more concisely, read that “simply”, for the masses to understand better why the issue in Wisconson will only be settled one way. Did any of the commenters bother to actually read the article? If labor is out of touch with reality, then it must be adjusted to be in touch with reality. Anybody with a high school education can understand that!

Posted by dareipro | Report as abusive

I agree that Walker should be recalled. He is not what we need to solve the problems we are facing. I also think that we are going after the wrong people in trying to take away union’s bargaining power. Let’s look at what got us here in the first place, the Wall Street orchestrated bust of 2008. It artificially inflated home prices, got 80% of traditional home loans into the subprime market so that they could benefit, and then played big casino games with securities built on top of it all. Take the money from them, and leave public employees alone.

Posted by lhathaway | Report as abusive

While it is certainly seems true that many pensions in this country make too-high payouts far too-early, there are enough inaccuracies in Mr. Easterbrook’s writing here to cast doubts on the rest of his major points. It would be wise for the Reuters’ editors to do some fact checking before posting rumors and hearsay as information. The figure of $100K is not only misleading – it’s turns out to be fabrication that doesn’t match the reality of teachers’ pay in Wisconsin.

“Of the 425 public school districts in Wisconsin, only one had a salary and benefits package in 2010 that exceeded $100,000; the Nicolet Unified School District average total compensation was $103,315. And only 21 school districts – fewer than 5 percent of the total – paid average total compensation that topped $89,000.”

The above is FactCheck.org, but I found it here:

http://record-eagle.com/opinion/x1422725 587/Fact-Check-Wisconsins-baffling-battl e-over-its-budget

While editorialists may not need to present the methodology behind their columns, they will certainly suffer poorer readership by presenting dogma as if it were truth.
If the argument is a good one, there’s no need to resort to hyperbole to make a case. Present the facts, posit the argument, and then draw a conclusion for all to see. Distortion is not required – especially for armchair governors. One just might find that being calmly rational will prove more winning than by engaging in foxy-histrionics.

Posted by hyperlux | Report as abusive

“America is not broke. Not by a long shot. The country is awash in wealth and cash. It’s just that it’s not in your hands. It has been transferred, in the greatest heist in history, from the workers and consumers to the banks
and the portfolios of the uber-rich … The only thing that’s broke is the moral compass of the rulers. And we aim to fix that compass and
steer the ship ourselves from now on.” – Michael Moore
in Madison, Wisconsin on March 5, 2011

Posted by burgerbritches | Report as abusive

Michael Moore is right. Easterbrook is a closet tea partier.

Posted by Blackorpheus | Report as abusive

Maybe the private sector you refer to, would be better paid if they were unionized.

Posted by neeros | Report as abusive

Thank you for elaborating a little bit on the sale of public utilities, this situation needs to be monitored carefully. Are there any checks and balances in place if/when these sales occur? Is Walker setting Wisconsin up for the next energy crisis? See Enron and the fabricated energy crisis of 2001.

It is after all politicians who brought public employee unions to power in 1958 and years following when they realized it was a great way to get votes. That they cannot bargain with a level head for fear of alienating voters is a sham. Fear of voters wrath seems to be the only motivation for a politician to do anything, meaning they do nothing most of the time. The funding of these pensions is largely misrepresented in our media, some good comments regarding pensions. These are a way to buy wholesale, making it cheaper for the employee and the employer than a 401k. Payments deferred by the state in the early part of the last decade are one reason some state pensions plans are in trouble. Is it the fault of the employee if the state did not take the money given to them by the state employee and pay into the pension for which it was allocated?

Change is not a bad thing, if politicians did not have the backbone to negotiate for reasonable contracts restructuring them seems to make some sense. Of course that was agreed to but obviously not the ultimate goal of the Governing puppets. The ultimate goal was to strip any remaining power from the last large interest that stands up for the rights of the middle class. Crushing the unions using immoral and likely illegal tactics is not the solution. Putting the financial crisis on the backs of the working class while doing little to promote job growth is not the solution. Ask what a good corporate tax break is, perhaps many states would do well to look at Ohio’s Third Frontier Program as a model. http://evanhurrle.blogspot.com/

Posted by ebones101 | Report as abusive

I have followed municipal employment behavior for the last 16 years, the major cost is in the salaries, perks, and larding up of the administrators.

To wit: Sarasota FL, schools a few years back hired a “test coordinator”, this position to monitor the state’s mandatory tests and do something to improve the scores of arguably the best school district in the state. Salary $127,000 plus office space, admin assistant, car, pension etc. Position is not unionized, can’t be performance evaluated, probably totally useless. They used to keep four principals around the home office in case they were needed, salary of what? And the fringies?

Ever go around county/state admin offices on friday? Where were all the people on 9/11?

Posted by mole | Report as abusive

There were no across the board pay raises and no COLA wage adjustments in the last union contracts Minnesota negotiated with its government employees. Furthermore, the COLA for pensions was capped through a previously negotiated trigger that activated when pension funds became stressed due to corporate greed on Wall Street.

Those contracts expire this summer and the next government employee contract will certainly continue to reflect Minnesota’s increasingly desperate financial situation.

The author of this article is correct in postulating that necessary adjustments can be and should be accomplished through negotiation.

In Minnesota, it has been and it will be.

I suspect that Governor Walker in next door Wisconsin has national ambitions and sees that former Minnesota Governor Pawlenty’s presidential candidacy is hampered by the problem of being virtually unknown outside his own state.

Walker is trying to remove that impediment to his future aspirations right now at whatever cost the people of Wisconsin need to bear.

Posted by breezinthru | Report as abusive

Billionaire Koch divides and conquers Middle Class.

BumperSticker: Koch addict Walker hates Middle Class!

New Drink: Mix Koch and Walker- a White Collar SweatShop

Bottoms Up. You’re Next!

Posted by lossofgravity | Report as abusive

Ok I’d like to say something about not comparing teachers with doctors and Lawyers and engineers.

First not all states require Lawyers to have degrees. In California they only have to go to a cram school for a few months. (Plus I don’t see why people who bulls**t their way through everything are so enviable.)

Second not comparing teachers with engineers? really? Many Engineers only have Bachelors degrees, many have Masters degrees, and some have Doctorates.

On the other hand many Teachers only have Bachelors degrees, many have Masters degrees, and some have Doctorates.

Wow, they are so different. While I agree that some Engineers have to make sure structures are sound, electronics are designed flawlessly, etc. Who is teaching the Engineers of tomorrow? Also which ones have to deal with as many as 50 unruly brats.

I think people would feel differently about Teachers if they didn’t get paid by their tax money. Alas that’s all the sheep in this country think about my pocket book today and not the intellect of people tomorrow.

Doctors however are doctors and yes they are not really comparable to anyone.

BTW I’m not a teacher, but i do think outside my own skin.

Posted by ookami | Report as abusive

[…] latest defeat of Unions shows just how out of touch they are with reality. “Labor unions and collective bargaining are important tools. There are good reasons to form […]

Posted by Union Busting Wisconsin Style | cosmoscon | Report as abusive