What the Wisconsin Recall Election Means to Montana

Yesterday, Governor Scott Walker retained his office in a recall election that started back in February of 2011. Wisconsin, like many other states, was deeply mired in debt due to pension plans and benefit packages that were negotiated by public service unions during more prosperous times. It’s somewhat ironic that Wisconsin was the first state to offer collective bargaining to public service workers beginning in 1959. In the 1960’s union membership in the public sector was 31.9% compared to public sector union workers at 10.8%.

By 2010, the numbers reversed. For the first time in history, public union membership passed private sector union membership. Public workers were at 36.2% while private sector union membership shrank to 6.9%. Unlike their private sector counterparts, public service employee salaries and benefits come from tax collections, while private sector payroll comes from sales and production of goods and services that people buy, or decide not to buy. As public employee union membership increased collective bargaining naturally followed.

Thanks to stricter employment laws, both public and private union membership has seen a marked reduction over the years. Total membership for both public and private unions in 2010 fell to 11.4% of the workforce.

Wisconsin Employee Benefits Package

Why were Wisconsin union employees so upset? Why pack the Wisconsin State House with demonstrators and signs and Michael Moore chanting about the terrible unfairness?

Under Wisconsin’s state pension plan, the employer is required to contribute 6.8% and the employee 6.2%. Seems fair so far. It would be, except that in 1996, a collective bargaining agreement stipulated that the district would pay both the employer and employee portions, — or the full 13%.

In addition to that, at least one district also contributes an additional 4.2%, on top of the 13% already paid. This extra little payment covers an additional teachers pension. That’s a pretty sweet deal.

Other Benefits to Wisconsin Union Members

Again, under the collective bargaining agreement, the school district also picks up the entire employee premium for medical and vision along with half the cost of dental. Whose healthcare do they use? WEA-Trust, owned by, you guessed it, the teacher’s union. It was also discovered that WEA-Trust overcharged the districts to the tune of $2 million dollars — per district. They might want to rethink their name. Not sure I’d trust them with much.

To put all this in perspective, Wisconsin districts healthcare premiums came to a total of 38.8% of union worker wages. For private sector workers the average contribution is 10.7% of wages.

What Does This Mean to Montana?

There is no question that unions played a great role in the building of our nation. They are responsible for many of the employee protection laws that keep our workplace safe and our wages livable. The question becomes, are they still necessary? In the private workplace, in some cases, I would say, yes.

However the public sector unions are another case. As a private sector employee, there might be a need for protection from a dishonest or unscrupulous business owner. But in the public sector, the people are the owners, in essence, employees in the public sector are their own bosses so where is the need for protection? Unlike private sector employees, public sector workers have the power to vote out their bosses if they feel they are treated unfairly or unethically. A company can go out of business; government doesn’t have the same luxury.

Private sector workers are paid based on the profits of the company. The goal of any company should be to grow and produce more income that will provide the dollars for raises and other benefits.

In the public sector, the only way to pay employees more is by raising tax revenues on the citizenry. If the people vote for additional mill levies, or a sales tax, then more power to them. But would you like to be New York? They have a state tax, county tax, city tax, property tax, school tax and sales tax just to name a few. How many of us could afford those kinds of taxes in Montana? New York and California have unaffordable pension and benefit packages they can’t hope to ever pay for. Cities and states, for the most part, have to balance the budget. It’s a constitutional requirement in most states, including Montana.

Every state that borders Montana is a “right-to-work” state. Which means, that in those states, you can’t be forced to join a union as a condition of employment. I am hoping that the vote in Wisconsin might help convince our legislators that making Montana a right-to-work state would be an advantage to workers, owners and those who might consider starting a business here.

Some Final Thoughts

With our sparse population, having our state controlled by public unions would not be a good idea. We don’t have the population to generate enough tax revenues to support benefit packages as the one’s described above.

Montana taxpayers want their public employees to receive a fair wage and a safe and healthy workplace, but not at the expense of unmanageable and unsustainable debt. Unlike our federal government, Montana must live within its means. That means more businesses; producing good paying jobs and more taxpayers is the answer — not unions.