LaborPains.org

Here’s the first thing you need to know about Senator Casey’s event on March 22, 2010, introducing the Create Jobs and Save Benefits Act of 2010, is who was in attendance at the announcement:

“Senator Casey was joined at the event in Carlisle by representatives from YRC Transportation, ABF Freight Systems and the International Brotherhood of Teamsters.”

Folks these days know that if you put the phrase “Create Jobs” at the beginning of a piece of legislation, its easier to yell at your opponents about how they opposed a “jobs bill.” There are about one hundred cliches, mores, and epithets that would work  right about now, but I think sticking with the old favorite “You can’t judge a book by it’s cover.”

Borrowing from the Wall Street Journal, the bill would better be entitled “The Union Pension Bailout.” Because that’s what it is. During the health care legislation reform debacle, part of the bill was section 164 that bailed out failing pension funds to the tune of $10 billion USD.  It passed in the final version of the bill relatively unnoticed, giving Jimmy Hoffa a taste of sweet, sweet success.

Ten billion dollars is a drop in the bucket compared to how much money this legislation would cost. From the Wall Street Journal:

“Mr. Casey is claiming his multi-employer-bailout scheme will cost a mere $8 billion, but Moody’s estimated last year that multi-employer plans were $165 billion underfunded.”

“The tab is likely to be much higher given the moral hazard Mr. Casey would create. As Hudson Institute economist Diana Furchtgott-Roth notes, the bill creates “a vicious circle. Once PGBC took over some plans, other employers would want to declare bankruptcy, unload plans on the PGBC, and reorganize under another name. The incentives to do this would be enormous.” [...]

Union chiefs prefer the power that comes with managing huge pension investments—even if they’re failing. They are now counting on Mr. Casey to preserve their power by making taxpayers pick up the tab for years of pension mismanagement. With the union priority of “card check” stalled, word is that the Casey bailout is Big Labor’s consolation prize. Taxpayers should let Congress know they don’t want to pay.”

If Hoffa wins this one, perhaps it will be enough to fend off the attacks from within his own ranks. Vice President Fred Gegare is vying for the number one spot, according to reports, in the upcoming election in 2011. Interestingly enough, the reason Fred Gegare cites for breaking ranks with Hoffa is all about pension funds:

Gegare especially points to the decision to let UPS out of the Central States Pension Fund, saying that move has led to employers “lined up” to get out of the pension fund, with Central States losing two-thirds of its participants. Gegare is the union chair of the Central States Pension Fund. He also alleges that the union is experience financial difficulties because of some Hoffa decisions. “I cannot understand some of your decisions in the last four years regarding some of your expenditure that you were questioned about,” he writes.

Gov. Paterson may have gotten mad in January, but he’s finally laying down the law against labor unions in the state. According to the Wall Street Journal, Governor Paterson is considering going all Schwarzenegger on the State of New York:

“In his most aggressive move yet to slash state labor costs, Gov. David A. Paterson on Tuesday presented lawmakers with a choice of either freezing government operations or imposing a one-day furlough without pay for 100,000 unionized state employees. [...]

For months, the administration has tried to extract about $250 million in labor-reduction costs from the largest public employees unions, the Civil Service Employees Association and the Public Employees Federation. Union leaders have refused to relinquish a scheduled 4% raise that went into effect last month.

The governor said the unions “have given us nothing. Everyone is sacrificing. They are basically telling us they shouldn’t take a cut at all.” The governor said the furlough measure would save the state about $30 million, marking the first time the administration has cut costs this fiscal year, as opposed to deferring them.”

As an FYI for Paterson, the unions haven’t made it easy for Gov. Schwarzenegger. At all. But if the Mayor of San Francisco’s victory isn’t proof that standing your ground “works,” I don’t know what is.

Image courtesy of M. Bob in Tokyo.

Higher public sector unionization means higher public sector debt (speaking of the debt, have you seen our sister organization, the Employment Policies Institute’s Defeat the Debt campaign?). Labor unions generally ignore the connection, or claim its caused by something else, but when public sector employees are draining state coffers, like California’s, into deeper debt, it’s an unavoidable connection.

From Boortz.com:

The Cato Institute did a little study on states and their rising debts. Interestingly enough, they discovered something common among states with high per-capita debts.

That something in common would be a high level of unionization of government employees. Yup, the states with the highest per-capita debt also happened to be the states with the largest government union workforces. You can see a handy little chart if you click here, but here are some of the details:

Among states whose government workers are less than 40 percent unionized, median per capita state debt is $2,238.

Among states with between 40 and 60 percent of their government workers in public sector unions, the average debt is $3,609.

Among states with more than 60 percent of the government workforce unionized, the average (median) per capita debt is $6,380.

Image courtesy of Jeff Belmonte.

From the Wall Street Journal:

“According to the U.S. Bureau of Labor Statistics (BLS), from 1998 to 2008 public employee compensation grew by 28.6%, compared with 19.3% for private workers. In the recession year of 2009, with almost no inflation and record budget deficits, more than half the states awarded pay raises to their employees. [...]

“By the way, nearly this entire benefits gap is accounted for by unionized public employees. Nonunion public employees are paid roughly what private workers receive. What if government workers earned the average of what private workers earn? States and localities would save $339 billion a year from their more than $2.1 trillion budgets. These savings are larger than the combined estimated deficits for 2010 and 2011 of every state in America.” [...]

These stark statistics bring to light contracts that are a testament to successful efforts by unions and a relic of a different economy where people did not noticed the discrepancy quite so much. That’s not the case anymore. The Economist shed light on this last month. New York finds itself on the brink.  California too. The Wall Street Journal continues:

“So if your state is broke, this is a major reason. Eventually, governors, state legislators and city council members are going to have to decide whether protecting America’s privileged class of government workers is a higher priority than funding such core functions of government as public safety. Something has to give. It’s time to close the biggest pay gap in America.”

Image courtesy of Maury McCown.

You heard that right. Somehow SEIU President Andy Stern passed the vetting to be nominated for the National Commission on Fiscal Responsiblity and Reform, so-named so that it can be declared a success without actually reducing any deficits.

He has gleefully accepted. From the SEIU release:

“I am honored to have been asked to serve on the National Commission on Fiscal Responsibility and Reform, and thank President Obama for ensuring that the voice of ordinary working Americans will be heard. “I have talked to thousands of our members, many low-wage workers, who have to make hard choices everyday to make ends meet, while never losing sight of their dreams — to provide a more prosperous future for their families.”

The Daily Caller hailed the move as par for the course for the Administration. Hot Air exclaimed that perhaps President Obama was getting tired on Stern and saw the commission as a perhaps opportunity to get him out of Obama’s hair. The Atlantic pointed out he’s not the only SEIU-er on a high level panel; SEIU’s Anna Burger sits on the Middle Class Task Force and the President’s Economic Recovery Board.

The Atlantic continues that “oddly enough” Stern opposed the commission when it was being considered in the Senate.

Maybe the difference is that the Senate commission possibly would have had some teeth.  The labor-laced presidential commission on the deficit is practically guaranteed to have nothing of the sort.  For Stern this means access to his favorite house (The White House) and clout. Stern likely will have little meaningful to say about deficit reduction–unless you count his own experience spending flagrant amounts of other people’s money, all while being millions in debt.

Image courtesy of Squeaky Marmot.

Today the Center for Union Facts expressed puzzlement and disbelief following the Washington Post report that Service Employees International Union (SEIU) President Andy Stern may be nominated to President Obama’s National Commission on Fiscal Responsibility and Reform.

“Putting Andy Stern on a debt reduction commission is the equivalent of putting a tax cheat in charge of the Internal Revenue Service, but crazier things have happened in Washington” said J. Justin Wilson, Managing Director of the Center for Union Facts. “Stern and his unions know a thing or two about government debt, as they do their fair share to contribute to it. The SEIU has single-handedly driven more than a few states to the edge of fiscal insolvency. We can’t let him do the same to the rest of the country.”

The rumor that Stern will sit on the budget panel should not come as a surprise, given his long history of thwarting states’ attempts to balance their budgets. Stern’s SEIU, and other unions that represent state employees, have blocked many attempts to renegotiate state employees salaries and benefits.

For instance, as California struggles to avoid bankruptcy and close a $20 billion dollar budget deficit, unions including the SEIU have fought tooth and nail against any effort by legislators to save money. California also faces $100 billion in unfunded pension liabilities in the next five years, but unions have vowed to reject any attempt to fix the pension crisis—and therefore any effort to address the state’s financial meltdown.

Equally entangled in their own budget crisis of unions’ making, New York State is working to close a $7.4 billion dollar deficit.  Last month, Governor Paterson stated that the public sector unions were “thumb[ing] their nose at the public’s face.”

“Stern’s self-serving brand of ‘deficit reduction’ would likely increase taxes on everyone to pay for the pensions and wages of a few—without regard for our nation’s fiscal future,” Wilson continued.

Watching Governor Paterson try to fix New York State’s budget deficit is painful. Under extreme financial burdens, Paterson arrived in office with his hands already tied by financial guarantees. As he proposes ways to close the $7.5 billion budget gap, Paterson is becoming increasingly upset with public sector unions. The Rochester Democrat and Chronicle Reports:

“[Paterson] was less understanding toward public employee unions. “Some people act as if they’re not supposed to take any sacrifice at all,” he said.  “There are those who are so self-absorbed … that they thumb their nose at the public’s face.” A representative from one of the state’s largest unions said when Paterson addresses the growing number of temporary employees in the state work force, it will talk about other issues. “The governor loses more and more credibility with us every day,” said Stephen Madarasz, director of communications for CSEA [Local 1000 AFSCME]“

Hopefully Gov. Paterson isn’t doing his job based on his “credibility” with unions.  But the New York Times editorial reports that his relationship with the state’s unions is, unsurprisingly, complicated:

Mr. Paterson — who is eager to be re-elected — apparently made a deal with state workers’ unions that if they would agree to a less-costly pension plan for new employees, he would not let anyone go until next year. The new pension plan was needed, but Mayor Bloomberg is right that it is unfair for city workers to bear the burden now for Governor Paterson’s deal.

New York City is also billions of dollars in the hole–and Mayor Bloomberg is furious to say the least.  Maybe he should take a long, heard look at the public sector unions. They are worth getting upset over.

Furloughs have been proposed for state workers in California in order to close the budget gap, but unions like the SEIU is adamant that furloughs do not actually save money.  Workers have to make up undone work with overtime; they are completely ineffective, and then there is lost productivity, and…..the list continues.  Let me repeat, the SEIU is adamant that furloughs don’t work….in California.  Iowa is apparently a different case all together, where the local SEIU proposed furloughs to save money. From the Daily Nonpareil:

“Superintendent Martha Bruckner already has met with representatives of the three unions representing district employees – the Council Bluffs Education Association, the Service Employees International Union and the Communications Workers of America. The SEIU proposed the furloughs to save jobs. If the district asked its employees to take five unpaid days off, the SEIU will agree. Dwain Pedersen, co-president of CBEA teachers’ union, said the CBEA will not agree. The CWA said it is open to discussion.”

“Most of the district’s administrators have agreed to the furloughs. If everyone agreed, Bruckner estimated the district could save about $1.3 million, and $1 million of that would be from CBEA employees. While unpaid furloughs and a wage freeze for 2010-11 still would not stop layoffs, “If we don’t get agreement on furloughs and wage freezes, there will be more cuts,” Bruckner said.”

In California, whether the SEIU is willing to face the music or not, their options are the same as Iowa’s: furloughs or layoffs (and paycuts). It’s funny, Michigan and Chicago implemented and accepted furloughs to close budget gaps. In Massachusetts, the SEIU was the first to approve furloughs. But in California, apparantly furloughs are ineffective?

Image courtesy of Kables.