Are Wisconsin's Public Employee Laws a Panacea for the Nation?

Gov. Scott Walker says they are. But there are a lot of problems with one-size-fits-all policies.
by | August 7, 2013
 

Should Wisconsin's laws governing its public employees and their unions be a model for the nation? The state's governor, Scott Walker, says they should. But where you stand on Walker's controversial policies has a lot to do with where you sit, especially given the vast differences in state and local government political climates.

Many of Walker's 2011 reforms, such as those increasing the percentage of salary most Wisconsin state employees contribute toward their pensions from next to nothing to 5.8 percent and doubling the employee share of health-insurance premiums to higher than 12 percent, are more widely applicable. And removing benefits as a topic for collective bargaining was a wise move in an era of massive unfunded pension liabilities and municipal bankruptcies. Other provisions, such as limiting collectively bargained pay raises to the rise in the cost of living and requiring unions to recertify each year, are draconian.

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Walker credits the reforms for turning a $3 billion deficit at the time he took office into a $75 million surplus, as well as for Wisconsin having a fully funded pension fund and the largest rainy day fund balance in its history. He also claims that labor savings have allowed the state to invest in tax relief, public education, workforce development and mental health initiatives.

It's impossible to know what role Walker's labor reforms played in Wisconsin's improved fortunes, but we do know this: One size doesn't fit all when it comes to state government policies.

For example, nearly half the states have right-to-work laws, which prohibit requiring workers to either join unions or pay dues or other fees to a union. In those states, mostly in the South and West, public employee unions aren't very powerful, and little would change under a Wisconsin-like regime.

On the other end of the spectrum, Massachusetts would benefit from a good dose of Walkerism. According to a recent report from the state's Office of Campaign and Political Finance, 18 of the 20 political action committees that gave the most to candidates for state and county offices during the last campaign cycle were labor organizations, up from 17 of 20 for the previous cycle. The reality is that Massachusetts elected officials who negotiate public-employee labor contracts are often bargaining with their biggest benefactors.

Yet even in Massachusetts, the specifics are different. Bay State employees make substantial contributions to health-insurance and pension costs, but unions flex their muscle in other ways.

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More than 80 percent of construction workers in the state don't belong to a union. But a common perk for organized labor in Massachusetts is "project labor agreements" (PLAs), which require unions to be the "sole and exclusive" source of all job-site labor (disclosure: an open-shop construction trade association is a client of mine). After it was announced that a PLA would be in effect for a recent large bridge reconstruction, the project attracted just three bidders. The winner came in at $292 million - $77 million over the project's $215 million budget before a shovel even went into the ground. No wonder 13 states have banned the use of these agreements on state-funded projects.

But the jewel in Massachusetts unions' crown is the nation's most restrictive anti-privatization law. Under the law, state managers must overcome virtually insurmountable obstacles before contracting out any service being delivered by state employees. As a result, few privatizations have even been attempted during the two decades the law has been in effect. State employees enjoy a virtual monopoly, with the extra costs covered by state taxpayers.

Given their political and demographic diversity, the states are ill-suited for one-size-fits-all policymaking for their public workforces. While there are signs that Scott Walker's reforms have benefited Wisconsin, he would be unwise -- particularly if he harbors presidential ambitions -- to assume that those policies would have the same impact everywhere.

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