Thursday, May 24, 2012

Do You Want to Know a Secret

What is the point of Government Unions?

After watching the coverage of the fight for a recall election of Governor Scott Walker in Wisconsin and seeing various ballot issues raised trying to address rising government employee costs in Ohio, Indiana, and California among others, clearly the question of the scope of government unions has come to the forefront and has become a very polarizing issue.   Four things specifically bother me about government unions:

1)  A union's most significant function is to secure above market wages and benefits for their members.  I think this statement may offend people that are part of these unions, because it may feel like I am suggesting they are overpaid.  And while I would never make that statement about an individual, as a group, I am saying they are overpaid.  Think about it, how useful is a union of it does NOT negotiate wages and benefits higher than the market would bare?  If employees are able to get better compensation on their own, then the unions would be completely ineffective and thus cease to exist.  Further, anytime a service is priced above market, we create a surplus and thus have more teachers than positions inflating unemployment.

2) We have an enormous conflict of interests in government unions.  These unions are EXTREMELY ACTIVE in politics and elections, which means they are working very hard to pick the politicians with whom they will then turn around negotiate.  Wow, do you think if my boss knew I could get him fired, I would get a big fat raise every year?  Of course I would.  Which leads to...

3) Rigidity of union benefits.  Over the last 4 years, the United States has gone through an extremely tough downturn.  Private sector wages across the board have stagnated or gone down.  401Ks have been ravaged by the stock market.  In other words the market spoke and adjusted the economics of private citizens.  So, of course teachers salaries and pensions would have felt the same devastation, right?  No, of course not because for many their defined benefit plan are not subject to the market, even though all of the collected taxes (property, income, sales) were massively reduced by the downturn.  Share in the prosperity, but be insulated from decline.  Thats great for union members but the taxpayers feel the effects of burgeoning deficits and debt.     

4) Unions minimize the effect of incentives to improve quality through collectively bargaining for everyone. I am a firm believer in rewarding strong performance over time served.  We are decoupling pay from performance, which in turn lowers performance and effectiveness.

So, believing that government unions raise unemployment, increase state debt burden, and reduce the potential quality of services, what should we do about them?  I would love to hear your thoughts...

No comments:

Post a Comment