One of the first topics I want to broach is the ongoing protests in Madison, Wisconsin by public sector unions objecting to a portion of the budget favored by Governor Scott Walker which strips them of the right to collectively bargain on issues of benefits and hiring practices. In the meantime, the state’s Democratic senators have absconded across the border to Rockford, Illinois to avoid apprehension by state troopers in order to break quorum and block the bill.
It is worth describing the background to this crisis before I give my opinion on the matter. Wisconsin is in bad shape fiscally and economically. It’s budget deficit rivals that of California on a per capita basis. In last November’s election, the state went from Democratic control of the governorship, the assembly, and the senate to Republican control of all three institutions.
Wisconsin was a state that pioneered the establishment of public sector unions in 1959. Part of the reason that this budget fight has gotten national attention is because of the possible political effects outside the state of Wisconsin. Wisconsin was the first state to allow collective bargaining among public employees as referenced above. Since then, many states have followed Wisconsin’s example leading to a map of public sector collective bargaining laws that cuts along regional and cultural lines:
As Wisconsin lies at the core of public sector collective bargaining rights, both historically and culturally, a Republican victory on this issue would send shock waves through the nation and would encourage other states to use similar measures to balance their ailing budgets and prevent municipal default.
The power of public workers
Will Wilkinson argued before the protests began that public sector unions lack the sort of theoretical rationale that applies to private sector in a Democracy in America article for The Economist and reiterated his point more recently in The Daily. His argument is best summed up by this section from his Democracy in America article:
The thing is, public-sector unions don’t work like this. They aren’t bargaining against capitalists for a fair cut of the cooperative surplus. They’re bargaining against everybody who pays taxes and/or benefits from government spending. The question of distribution in democratic politics isn’t about splitting up jointly-produced profits. It’s about interest groups fighting to grab a bigger share of government revenue while sticking competing groups with the tax bill. Because of the sheer size and relatively uniform interests of the group, public employees constitute a politically powerful bloc with or without unions.
One of the major difference between the public sector and the private sector is their main sources of income. For the most part, the private sector is funded by the voluntary exchange of money for goods and services. The payrolls of private companies are limited by a company’s ability to sell products for more money than the cost of the raw materials. On the other hand, the public sector is dependent upon funds acquired by taxing the transactions of third parties. In effect, the contraction of the private sector resulting from the recent recession necessarily cuts into the funds available to the public sector regardless of performance or necessity.
There is another major difference between the workings of the public sector and the private sector. Private sector corporations consist of shareholders, managers, and workers and in the case of a surplus, collective bargaining power allows workers to reach a balance of organization against the managers, who are naturally organized by the layout of the company. In the public sector, politicians are chosen through elections where
The dependent nature of the public sector puts the interests of public sector employees in competition with those of the states taxpayers and those of the beneficiaries of state services. While public sector workers have the same number of per capita votes available in elections as members of the general population, because of their organizational strength, uniform interests, and proximity to the workings of government, they have an outsized influence on the politicians that set the rules for negotiation as well as those who actually partake in the negotiations
Effects of union power
One question worth asking through all of this is how important collective bargaining power really is. Statistics on the matter give a partial picture and Adam Ozmiak of Modeled Behavior has some calculations of public sector union wage premiums based upon historical data:
The regression coefficients on page 8 of the report show that the union wage premium is between 15% to 16%, while the public sector wage discount is around 11%, meaning unionized public sector employees are paid 4% to 5% wage premium.
While this isn’t an earth-shattering amount, it does represent a significant transfer of funding to workers. Furthermore, it is worth taking into account that public sector workers are paid out of funds taken from third party transactions rather than from voluntary exchanges. This means both that the amount of funds available are not directly tied to the work of public sector employees and that zero sum interactions dominate the apportionment of funds. Greater funds toward worker salaries, benefits, and pensions means less funds available for other services and/or a greater amount of funds extracted from unrelated transactions.
Excesses of rhetoric
One of the more alienating factors in the unions’ argument against the Walker budget is the willingness of members of the movement and their supporters to resort to hyperbole. I have seen pro-union rhetoricians trot out the much overused Martin Niemöller quote:
First they came for the communists, and I didn’t speak out because I wasn’t a communist.
Then they came for the trade unionists, and I didn’t speak out because I wasn’t a trade unionist.
Then they came for the Jews, and I didn’t speak out because I wasn’t a Jew.
Then they came for me, and there was no one left to speak out for me.
Sometimes the equation of political opponents to Nazis wasn’t so subtle. One protester carried this sign proclaiming Scott Walker to be a hybrid of Hitler and the recently deposed Hosni Mubarak:
These sort of analogies are offensively off-base. Scott Walker won his seat as governor with a majority vote whereas Hitler’s Nationalsozialistische Deutsche Arbeiterpartei never managed to achieve more than 37.4% of the vote. Furthermore, Hitler’s attack on (private) trade unions involved the ransacking of their offices by stormtroopers, not the curtailing of rights that didn’t exist before 1959.
Further is the comparison between union protests in Wisconsin and the street protests in Arab nations is absurd. In countries like Tunisia and Egypt, the people have lived under repressive dictatorships for decades with little recourse for public expression, much less public accountability for their governments. In Wisconsin, unions are protesting to protect the status quo against the actions of the recently popularly elected government. While they have the right to assembly, this is not a long powerless block of people throwing off the shackles of decades, it’s a politically powerful faction that is trying to hold onto its power to influence the cut of the budgetary pie that it receives.
Now, to be fair, this kind of extreme rhetoric represents a small fraction of the overall argument. However, delusions of oppression run strong among the most vehement activists. While unions do have the right to peaceably assemble and make their case to the state’s politicians, it should be noted that they are taking part in rent-seeking behavior and that their main opponents were elected to majorities in both houses of the Wisconsin State Legislature in free and fair elections.