It’s pretty basic economics: When an organization grows too large to live within its means, it has to either a.) contract to a sustainable level, or b.) find new sources of revenue. Consider, for example, school districts: They have massively expanded the number of teachers in recent years — despite increases of only 22% in enrollment between 1990 and 2007, the number of teachers has risen 44% — and given their employees incredibly rich benefits (the average health care plan for a teacher costs Milwaukee $23,000, for example). And this doesn’t even begin to take into account pension plans and other retirement benefits.
In other words, school districts have promised too much money to too many people. They — and we, the citizens who fund them — simply don’t have the money to sustain this kind of largesse. So the school districts should shrink, right?
Wrong! Just as unions were being forced to think about making some minor concessions — like, say, giving up the Viagra in their health care plans — the federal government came along and bailed them out. Instead of having needed layoffs or reductions in benefits, the feds pumped billions of dollars into the system. The result?
In some cases, unions have prevented state and local governments from making needed cuts in their budgets. For example, earlier this year the Milwaukee School Board announced that it was laying off 428 teachers due to budget shortfalls. The average Milwaukee teacher receives only $56,000 per year in salary, but also gets a generous $40,000 in benefits, including a health care plan that costs $26,000 per family, compared to $14,500 for private employees. The school board sought to cut costs and to keep the teachers by implementing cuts in benefits. A proposed health care plan would have instituted co-pays expected to yield $47.2 million in savings, more than enough to save every teacher’s job. The union refused to bargain, instead opting for layoffs.
Why opt for layoffs when you know that your cronies on Capitol Hill and in the White House will just bail you out and keep the money flowing? Why make concessions when the feds will step in any time you run into a little bit of trouble? It’s impossible to bargain with unions when they have the unlimited backing of the federal government and legislators in their pocked who don’t care a whit about running up the national deficit.