Saturday, January 28, 2012

Varying Prospects for Economic Growth in Illinois, Indiana and Wisconsin ... Union Power and Right-to-Work Legislation

Now it's really getting interesting. Illinois is in dire straits financially, Wisconsin's government is under siege and Indiana is about to become the first midwestern industrial state to adopt right-to-work legislation.

These are three very big deals and need to be watched carefully. What happens in these states the next few months may tell us a great deal about our fellow Americans and our country's future global competitiveness.

Indiana Moves Closer To Right-to-Work Law says the following:

"The leader of the Indiana House Democrats, Rep. Patrick Bauer, conceded Tuesday that his party faces dwindling options to block passage of what would be the nation's first right-to-work law in a decade, meaning the legislation is likely to be adopted eventually. . . .

The proposed legislation would ban contracts that require all employees to pay union dues, whether or not they are union members. Supporters say a right-to-work law would lure businesses to Indiana. Opponents say it would weaken unions, leading to lower wages and worse working conditions. . . .

Lawmakers on both sides say . . . the bill is almost certain to be adopted. . . .

There are 22 right-to-work states—Oklahoma was the latest to adopt such legislation, in 2001—but most have low unionization rates. Indiana Gov. Mitch Daniels and fellow Republicans in the Indiana legislature have sought to make the Hoosier State the first right-to-work state in the heavily unionized upper Midwest, home to many of the nation's manufacturing jobs. The resulting fight has engulfed the session and drawn thousands of union protesters and the eyes of the nation to the Indiana statehouse."

See also Hoosier Breakthrough for an update.

And here's a related story about unions' attempting to unseat a governor. Big Labor's Wisconsin Vendetta says this:

"They swore revenge for his offenses, and last week Wisconsin Democrats delivered what they say are a million signatures for the recall of Republican Governor Scott Walker. If they do make the ballot and cause a recall vote as early as this spring, they'll have to campaign against reforms that have already saved taxpayers tens of millions of dollars and rescued the state from a budget crisis. Game on.

Since last summer, unions have fired every weapon in their arsenal at Mr. Walker and state senators who voted for his collective-bargaining reforms for government workers. Union members must now contribute a very reasonable 5.8% of salary toward pensions and 12.6% toward health insurance, and unions must collect dues from members, rather than having it done by the government. In their pique, Big Labor waged and lost a bitter fight over the election of a state Supreme Court Justice and spent millions trying to recall Republican state senators. . . . Last year state senator Spencer Coggs called Mr. Walker's plan "legalized slavery" while others predicted disaster for school districts and public services.

It's not turning out that way: The Apocalypse has not arrived for services, and Mr. Walker was able to balance the state budget without new taxes or looming deficits."

The article concludes by telling it like it is:

"The reforms have also let school districts introduce competition to reduce health-care costs. Under the old rules, most school districts bought health insurance through the WEA Trust, a virtual monopoly provider and a creature of the Wisconsin Education Association Council (teachers' union). By freeing districts to consider other insurers, the reforms have saved districts millions of dollars, sometimes without even changing their plan.

The . . . Appleton school district was able to save $3.1 million over the previous year, despite continuing to get insurance through WEA Trust. With other insurance options available, WEA Trust had to cut its prices to keep the business. Based on statewide media reports, . . . estimates (are) that as of September 74 local units of government were saving some $162 million.

In mid-December, Wisconsin taxpayers got evidence of the direct benefits of reform in their latest property tax bills—an average annual increase of 0.3%, the smallest since 1996. Potential Democratic challengers to Mr. Walker. . . will have to explain why the state should punish Mr. Walker for reforms that are helping taxpayers and local governments save money.

The only loser here are government unions that have less control over state and local politics. With the state no longer automatically withdrawing dues for the unions, labor leaders face the prospect of smaller checkbooks to buy politicians and intimidate reformers.

Mr. Walker reduced that influence on behalf of taxpayers, and the only point of the recall is union retribution designed to show other politicians that they don't dare cross that line. If Big Labor can't take out Mr. Walker after so much effort, Wisconsin-style reforms might well spread to other states. The Wisconsin recall fight is the statewide election of the year, with implications for taxpayers nationwide."

And finally, don't forget the stakes for the citizens of Illinois, sitting adjacent to both Indiana and Wisconsin. Please see the posting of January 24 titled "Federalism and Interdependency ... Illinois, Wisconsin and Greece" for an analysis of the many problems facing Illinois. They aren't easy but they must be addressed and solved.

Thus, Indiana is about to break the unions' stranglehold on the industrial midwest. As this occurs, the state will become more attractive to employers and boost its chances for both economic growth and job creation.

Indiana's improved competitive position as a good place to locate companies will have a negative impact on Illinois as a result. Then depending on what the good people of Wisconsin decide to do about their governor's recall, Wisconsin's future economic prospects will either improve or get worse, too.

If Wisconsin voters exercise sound financial judgment, this could bode even worse for the good folks who live in Illinois.

We'll definitely all need to stay tuned throughout 2012. What happens in these three midwestern states will signal clearly what will be going on in the nation as a whole.

Union power, state fiscal responsibility and voter judgment are all in play. To be sure, 2012 isn't just going to be an important presidential election year.

What happens in Illinois, Indiana and Wisconsin will tell us a great deal about the potential future global competitiveness of our heavily unionized industrial midwestern states.

Let's hope the citizens and political leaders of each state do what's right for their future well being and that of their country as well.

But whatever they do, it will speak volumes about the state of the union--The U.S. federal union of independent and interdependent states, that is.

Thanks. Bob.

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