Monday, June 22, 2015

Government Against Itself ... The Illinois Example

The importance and ramifications of collective bargaining, aka unions, in the public sector have replaced that of the private sector in many areas of America. It's a case of government being against itself.

{The new book "Government Against Itself" by Daniel DiSalvo is worthwhile reading for those interested in achieving a better reality about the fiasco.}

The public taxpayer paid employees of schools, fire stations and police departments are often represented by unions. In fact, close to 40% of public employees are now so represented by unions compared to less than 10% in the private sector. {It used to be just the opposite. Accordingly,The situation has completely reversed over the past few decades.}

As you know, private sector companies can go broke and out of business if the costs, prices and values associated with operating those businesses aren't supported by free-to-choose customers. In other words, customers rule in the private marketplace. Government doesn't have a market or free-to-choose customers which it has to satisfy in the public arena.

There are two pieces of government being represented in the uncompetitive unionized government sector --- the employees and the taxpayers. But which government is the one that is in charge? Is it the one that represents and bargains on behalf of the taxpayers or the one that represents the unionized employees?

Sadly, the taxpayers are left unrepresented in most cases and government employees bargain with one another. In other words, government bargains with itself. For a current example, let's look at Illinois today.

Rigging Contract Rules in Illinois is subtitled 'Democrats pass a bill that applies only to the current reform Governor:

"The state reform story of the year is in Illinois, where new Governor Bruce Rauner is trying to fix the broken fisc. To appreciate what he’s up against, consider how the American Federation of State, County and Municipal Employees (Afscme) is rigging contract negotiations.

The union’s contract with the state expires June 30. Democrats in the state legislature have passed a bill stipulating that if Mr. Rauner and the union can’t agree on a new contract after 60 days, the negotiations would go to binding arbitration. In what is the definition of political cynicism, the bill would change the rules for four years only, expiring along with Mr. Rauner’s term. The assumption is that a Democratic successor would give the union whatever it wants.

Unions and employers are expected to bargain in good faith. . . . But according to Afscme Illinois, the elected Governor must be boxed in with the threat of an arbitrator making the final contract decision. The union can’t abide that Mr. Rauner has proposed such shocking ideas as creating a 40-hour work week (overtime currently begins after 37.5 hours), freezing wages and raising health-insurance premiums for state workers.

Since 2000, Illinois public employees have seen their compensation grow handsomely. According to the Illinois Policy Institute, state workers won 27 pay raises in the decade before 2014. Between 2000 and 2013 average public employee compensation (adjusted for inflation) grew 32% to $82,314 from $62,423. Inflation-adjusted private compensation for the same period grew 14% to $65,064 from $57,086.

Afscme knows that binding arbitration can tip the scales in its favor. The arrangement encourages unions to inflate their demands because if arbitration gives them half of their ask, they still come out ahead. The system also forces government to accept terms dictated by arbitrators who aren’t accountable to taxpayers.

New York police and fire unions have used binding arbitration for decades. In 2013 the Empire Center reviewed 136 arbitration awards filed with the New York state Public Employment Relations Board from 2003 through 2012. The center found that only four had included a pay freeze in any given year. Changes in health insurance were rare.

The union bill was pushed by Democratic House Speaker Mike Madigan, whose daughter is gearing up to run for Governor against Mr. Rauner in 2018. Mr. Rauner has 60 days to veto the bill.

Meantime, Illinois voters can see again the Democrat-public union connection that has laid their state low."

Summing Up

The taxpayers are taking it on the chin again in Illinois.

And the new Governor is being sidelined by his political opponents in the state legislature.

Arbitration sounds good, but the reality is that taxpayers didn't elect the arbitrators. They elected a Governor to change things and give Illinois a future.

Unfortunately, they also elected a set of politicians who depend on union support for their jobs and political future. 

The unions are winning. The taxpayers are losing.

That's my take.

Thanks. Bob.

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