Will Wisconsin’s merit pay for public employees change the system?

April 9, 2013

In a wildly contentious move in 2011, the Wisconsin legislature voted to end union rights for public workers. Those union rights established pay rates and employment conditions via collective bargaining agreements for most government workers. The new law also ended the deduction for union dues from employee salaries. The Wisconsin State Journal reports how merit raises have replaced automatic annual pay raises:

In the first round of pay increases for Wisconsin state employees since union contracts were invalidated, supervisors delivered an average 6.52 percent boost to 2,757 workers, roughly one in 14 of those eligible.

The payout — totaling $8.2 million — is very different from union-era raises, which were much smaller on a percentage basis but cost tens of millions more because they were distributed to most non-academic employees.

Another difference from the old contractual pay system is that more than half of the merit awards were one-time lump sum payments that didn’t become part the workers’ base salaries.

Within certain constraints, supervisors were allowed to propose extra pay for valued employees who did superior work, were seeking other employment, or were underpaid compared to others in similar circumstances.

Wisconsin’s approach varies from the usual way that governments interact with state employees. The system of union-negotiated pay and benefit levels has existed across America for decades. Public unions are the remaining strongholds that uphold collective bargaining for employees. The BLS reports:

Public-sector workers had a union membership rate (35.9 percent) more than five times higher than that of private-sector workers (6.6 percent). (See table 3)

Unionization has placed another layer of bureaucracy in the already rigid institution of government. Civil service laws already exist to protect the rights of public workers. Wisconsin’s elimination of union representation makes government more closely resemble private employment. The Wisconsin State Journal again:

Under civil service law, state employees are able to appeal major issues such as termination, demotion or disputes over pay classifications to the commission, which acts as an impartial third party, Davis said.

Walker said Thursday those protections are adequate.

‘The bottom line is that’s the protection that workers have that’s the most important in the state of Wisconsin,’ Walker said. ‘It was there long before collective bargaining, it’ll be there long after.’

But if Walker’s budget repair bill passes, thousands of unionized state employees would lose their contractual rights to go to a neutral arbitrator with disputes about matters such as overtime and vacation scheduling, work rules and lower-level discipline such as reprimands. Those would be decided by a manager, Davis said.

It’s unclear to me why public workers need special contractual rights that private employees do not. Public employees are already a “permanent and self-conscious class or caste” as Murray Rothbard refers to them in his Bureaucracy and the Civil Service in the United States:

[W]ith the advent of Civil Service reform, the once temporary set of bureaucrats are now converted into a permanent and self-conscious class or caste, set aside from, and in fundamental opposition to, the mass of the citizenry. Until the coming of the Civil Service laws, Barber notes, the bureaucrats had ‘held their positions temporarily, until a change of party at election threw them back to earn what living they could … as ordinary citizens.’

Before reform, in short, the job holders ‘had not been a class – merely a group of people temporarily doing the same kind of work.’ But the Civil Service law ‘gave them a life-tenure of their jobs – welded them into a class.’ When the class of bureaucrats began to get unpopular with the public, adds Barber, they ‘very quietly began organizing ‘publicity bureaus’, that is, propaganda bureaus, to ‘educate the public’ into believing in the divine wisdom and beneficence of the government (as represented by themselves) in managing everything and everybody.’ In other words, ‘the bureaucrats are given a strong incentive to organize and form a powerful bureaucratic lobby.’[22]

Public unions have been a “powerful bureaucratic lobby,” from San Bernardino, California to Yonkers, New York. Do the privileged rights of unionized public workers inhibit government services from being delivered more efficiently? Wisconsin is a small laboratory for these questions. Can merit pay and less rigid work rules shrink government and keep taxes from increasing? Stay tuned.

No comments so far

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/