Thursday, May 31, 2012

Caterpillar, Wisconsin and the Blessings of Liberty

Yesterday we discussed Caterpillar's Joliet strike and why, at least in my view, it's unfair that we essentially coerce some employees into not working when others, even a majority of union members, vote to continue on strike. Doesn't seem very American to me. Whatever happened to freedom of choice?

Today we'll take a look at what happened in Wisconsin when public sector workers were free to pay or not pay union dues. It's a telling story that we all should heed.

That will also help us to always remember that union members are not the same as employees, and that the interests of unions are frequently at odds with the real interests of their dues paying members. In other words, as free Americans we should always be free from coercion and allowed to exercise our most basic freedoms. That in turn means that the government, union leaders or even a majority of our co-employees won't be able to force us to do things their way.

In a democracy, one thing we must always guard against is the "tyranny of the majority." And especially when we have views and opinions that may be in the minority. In other words, when it comes to individual rights such as free speech, freedom of religion and freedom to work or not work, rule by majority should not apply. We should be left alone to go our own way.

Now let's look at what public sector union members in Wisconsin have to teach about what happens when they're free to exercise their individual rights. It will help explain some very real things about unions and their coercive practices toward their membership.

The Wisconsin employees' tutorial will be instructive for all of us, whether private or public sector employees, or whether employed at all.  It's all about freedom of choice and the blessings of liberty.

Wisconsin Unions See Ranks Drop Ahead of Recall Vote provides the background:

"Public-employee unions in Wisconsin have experienced a dramatic drop in membership—by more than half for the second-biggest union—since a law championed by Republican Gov. Scott Walker sharply curtailed their ability to bargain over wages and working conditions.

Now with Mr. Walker facing a recall vote Tuesday, voters will decide whether his policies in the centrist state should continue—or whether they have gone too far.

The election could mark a pivot point for organized labor.

Mr. Walker's ouster would derail the political career of a rising Republican star and send a warning to other elected officials who are battling unions. But a victory for the governor, who has been leading his Democratic opponent in recent polls, would amount to an endorsement of an effort to curtail public-sector unions, which have been a pillar of strength for organized labor while private-sector membership has dwindled.

That could mean the sharp losses that some Wisconsin public-worker unions have experienced is a harbinger of similar unions' future nationwide, union leaders fear. Failure to oust Mr. Walker and overturn the Wisconsin law "spells doom," said Bryan Kennedy, the American Federation of Teachers' Wisconsin president.

Wisconsin membership in the American Federation of State, County and Municipal Employees—the state's second-largest public-sector union after the National Education Association, which represents teachers—fell to 28,745 in February from 62,818 in March 2011, according to a person who has viewed Afscme's figures. A spokesman for Afscme declined to comment.

Much of that decline came from Afscme Council 24, which represents Wisconsin state workers, whose membership plunged by two-thirds to 7,100 from 22,300 last year.

A provision of the Walker law that eliminated automatic dues collection hurt union membership. When a public-sector contract expires the state now stops collecting dues from the affected workers' paychecks unless they say they want the dues taken out, said Peter Davis, general counsel of the Wisconsin Employment Relations Commission. . . .

In the nearly 15 months since Mr. Walker signed the law, 6,000 of the AFT's Wisconsin 17,000 members quit, the union said. It blamed the drop on the law. . . .

A victory by Mr. Walker "will be a dramatic signal to local and state politicians they can, in the name of fiscal responsibility, tell unions…to come into parity with private-sector workers, especially on benefits," said Michael Lotito, a San Francisco attorney who represents management in labor disputes and has testified on labor issues before Congress. . . .

Unions have spent millions of dollars on TV ads campaigning against Mr. Walker. "Unions are putting a lot on the line and if they win, they win big, but if they lose, they lose even bigger," said Gary Chaison, a professor of industrial relations at Clark University. A loss "will be interpreted as a sign of weakness and a lack of public sympathy."

Organized labor's strength has been declining for 60 years, as unions failed to keep pace with globalization, an increasingly service-oriented economy and more aggressive opposition from employers. Today, just one in eight American workers is a union member compared with more than one in three in the mid-1950s.

But that decline has come almost entirely in the private sector, where only 7% of workers today are union members. Public-sector union membership rates have held steady at around 37% since 1979, and the number of members has increased, thanks to growth in government employment. In 2009, for the first time, there were more union members in government than in companies. . . .

Membership declines could be self-perpetuating, said Mr. Chaison of Clark University. With diminished dues, unions deliver fewer services, making membership less appealing and hampering recruiting. . . .

Meanwhile, collective-bargaining rights for public employees has receded as an issue, with far more people saying in recent polls that job creation is their top priority."

Summing Up

7% of private sector workers today are represented by unions, and 37% of public sector workers are so represented.  Those numbers have changed profoundly in the past several decades. In fact, the 1960s saw the arrival of public sector bargaining and the 1980s witnessed the beginning of a serious decline in the private sector. Pretty much a reversal has occurred between the two sectors.

We've gone in  total from 33% unionized to 12% unionized, but that doesn't tell the real story. The presence of unions in the private sector (companies like Caterpillar) has dropped like a rock, while the public sector's union presence (government workers, including teachers) has exploded.

Of course, global competition is a force in the private sector whereas monopoly rules in the public sector. And companies go broke in the private sector while taxes just go up in the public sector. {Unless they're UAW Motors, of course. Government didn't bail out GM; they bailed out the UAW.}

And expensive and unlimited liability pension plans are being replaced by less expensive and limited liability 401k plans in the private sector.  Meanwhile, taxpayers remain on the hook for underfunded and unlimited liability pension plans in most of the public sector.

Whereas ongoing productivity gains are absolutely essential for survival in the private sector, productivity is often called "mean old austerity" and therefore the enemy in the public sector. Let the taxpayers pay is the public sector's way. At least until now.

In the next post, we'll discuss freedom of choice and why unions are threatened existentially when individual employees have the freedom to choose--- also known as the blessings of liberty.

Stay tuned. Bob.

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