Private vs. Public. Not non-union vs. union.

[Update: I altered a paragraph at the bottom that flummoxed some people so grievously that they couldn’t find their way to addressing the actual point of the post.]

My union friends.

My friends-of-union friends.

Those of you who do not wish to be my friend but who are upset about the what’s happening in New Jersey, Wisconsin, and now Ohio, regarding unions and collective bargaining…


Think about something for a moment. Please consider this:

A private company, let’s call it Bob’s Widgets, takes in $5,000,000 in total revenue in a given year. That means the company has a total pool of money of $5,000,000 to pay for supplies, rent, machinery, insurance, taxes, fees, salaries, wages, benefits, and bonuses. After paying for supplies, rent, machinery, insurance, taxes, and fees Bob’s Widgets is down to, let’s say, $1,000,000 for salaries, wages, and benefits. That means before anyone has been paid a red penny, there is a total pool of $1,000,000 to “divvy up” among the president, managers, and unionized employees. When the union bargains with Bob, if the union rep ups the wage and benefits demand above a certain point Bob can tell the union rep, “if you demand that much in wages and benefits, we will be unable to stay in business, and everyone will lose their job.” The union can then either demand that much anyhow, go on strike, and eventually cause Bob to shutter the business (if only long enough to de-certify the union), thus losing everyone their job; or the union can back off its demands, accept that Bob really can’t afford to pay what they are demanding, and be happy with the pay Bob is able and willing to pay. If Bob is a good and decent man, he will be honest in that negotiation. If the union rep is a good and decent man, he will be honest in that negotiation.

But the bottom line is that there is a bottom line: a finite pool of money from which Bob can pay the workers. No more is available, period.

Now let’s step into the realm of the public sector, where union employees work for the government (i.e., for you and me. Ostensibly, anyhow). George is an elected politician for whom all the unionized workers work. George is the employer who sits across the table from the union representative and listens to the rep’s demands. The union rep demands more money in salaries, nicer health insurance with a very small employee contribution, accumulated sick leave with full pay-out upon retirement, and a structured raise system based on seniority and years served rather than merit. George, since he is a government official, doesn’t have to rely upon selling a good or service to raise revenue; he gets revenue from taxes and fees. George really wants to keep the union rep and all of the unionized government employees happy. George really can’t tell the union rep that it is impossible for the government to increase its revenue pool (because all George has to do is raise taxes and increase fees—he is in government, anyhow). Then he’ll have more money to pay for the increased salaries, benefits, and accumulated sick leave pay-outs. Also, since George is an *elected* official, that means he’ll be up for re-election. Now that George really did his part to make life nice for the unionized government workers, the government, public sector unionized workers will be very inclined to do everything they can to get George re-elected so he can and will continue making their life nice and easy.

So lots of money will be raised from the pockets of all people including Bob, the union representative, and all the unionized employees at Bob’s Widgets through higher taxes and new fees. That money will be used to pay the government employees, who in turn will pass a decent portion of it along to George in campaign contributions, thus helping him get re-elected. That way he can can continue scratching the back that scratched his because he scratched theirs.

Do Bob’s employees get a chance to “re-elect” Bob or support his opponent for the presidency of Bob’s Widgets? Um, no.

Can Bob go out and simply order people to buy his widgets under penalty of garnished wages or jail time? Huh-uh.

But Bob and each of his employees, all of them good union men and women, will have to pay higher taxes and fees out of their pocket, along with higher prices on food, clothing, gasoline, movie tickets, cigarettes, whatever it is that George targeted with higher fees and taxes, in order to pay for the posh deal George signed off on for the public sector union workers.

Eventually the government no longer is of, for, and by the people, but the people must, under penalty of jail time, support that government and all its works and deeds…

See: what is happening in state houses in Wisconsin, Ohio, and New Jersey is not an anti-union action. It is uprooting a corrupt, self-perpetuating system that treats all private sector citizens as piggy banks: to be cracked open as the need arises. It never should have been allowed to happen in the first place. FDR was opposed to the idea of public sector unions collectively bargaining. FDR! Governors Daniels, Christie, Walker, and Kasich are making this first step in fixing the mess that is the public deficit.

It is not pretty, and some promises made by politicians long since out of office will be broken—but they were promises made in bad faith: the politicians who made them had no idea what the future economic realities would hold and thus had no standing to promise future generations’ revenues. But even at that, they also knew they would not be around when the bills came due, so it would be someone else’s problem if it all blew up. Well, with the economy in the tank, the baby boomer generation about to retire en masse, and the simple reality of economics, these promises simply cannot be honored.

The chickens from decades of cozy dealings between politicians and public sector unions are coming home to roost. An economy can only handle so much taxation and fees before imploding.

Public sector unions and private sector unions are the same in name only. Public sector unions have an advantage in collective bargaining that is simply impossible for private sector unions, and then the public sector workers get to pocket the money taxed away from the private sector union guys and gals.

I hope that is sufficiently clear.

Now, if you’ve lost your chill it’s for one of two reasons: you didn’t think of it this way before and you’re ticked off that this has been happening for so long, that it imperils the economy, and that people are defending this dastardly arrangement; or you have been a beneficiary of this arrangement, don’t like that it has been exposed, and resent that the people think it is corrupt and should go away.

If it’s the former, good for you. Do what you can to help bring fiscal sanity to your state and local government by supporting those making tough calls on budget cuts including, but not limited to, efforts like I discuss above. Attend rallies (peacefully, of course), call your elected officials and voice your concern, write letters to the editor and talk with your friends who may also have incorrect notions about what is really happening. Hopefully our politicians will stand their ground and government will be reined in.

If it’s the latter, well, it’s time for a new way of thinking. Support fiscal sanity and the common good rather than your own pocket book for a while. Stay in your present public-sector job, but agitate for deals that are in the best interests of the common good, respecting that the tax payers pay your salary. Or, perhaps to broaden your perspective, get a job in the private sector. Even better, take a risk and start a business (perhaps an educational institution) so you can directly, actively create real wealth-generating jobs for multiple people. You’d be amazed how much good that can do.



  • Douglas Brown

    Highly flawed article. The author leaves out 80% of the facts including, most importantly, is that Bob’s Widgets’s shareholders and CEO demand improved profit margins each quarter. When you can’t cut the cost of producing widgets any further and you are right that you can’t force people to buy the widgets, how can you continue improving? Well, go after the workers. If the politicians take away the requirement of fair wages, that helps the CEOs continue making improved bonuses year after year. In public service this amounts to politicians being able to fund pet projects. With these extreme senate bills no one’s taxes are going to go down. The money will just go to whatever CEO helped the elected official get into power. Or it’ll be used for high speed rails or whatever that politician wants. In the meantime, fire departments and police departments get weaker and less safe. Schools decline. And the middle class deteriorates.

  • Katherine

    It seems very clear to me that Tom know little, if anything, about collective bargaining, particularly by public sector unions. Workers are concerned about bargaining rights because most provisions in the union contract have nothing to do directly with wages. The Grievance procedure, where a worker can contest a wrongful action such as sexual harrassment by a superior, is a major part of collective bargaining. The Union has negotiated for employee’s ability to take religious leave, win workplace health and safety protections, adopt alternative work schedules, be able to receive hardship transfers, carry over sick leave and receive notice prior to a lay-off. Wisconsin State employees’ retirement is financed by a Trust Fund, accuring payments when they are earned. Retirees are not paid a pension out of general revenue.

    • Tom Crowe

      Odd… All of those things are also features of employment for pretty much everyone I know who works (and quite a few who pull a paycheck whether or not they actually *work* while at work), whether or not they are in a union (except the pulling of a paycheck without actually *working* while at work: that feature is fairly exclusive of union shops with collective bargaining). Somehow non-union employment arrangements manage to establish very favorable working conditions and benefits structures without the assistance of collective bargaining.

      • Katherine

        Hard research does not support your assertion. Take, for example, Wal-Mart.

  • Cindy

    I love how you block my comments when I specifically address the tax cuts, and when I attempt to explain myself. Do you do this because it makes you look like you are winning the arguement of opinion or something? Again, seems like something a partisan hack would do. The same thing you said about me. Whatever. What else would I expect around here. I usually don’t even comment, but figured you needed to have some perspective. You dont want it though.

    • Tom Crowe

      Cindy, as I checked the system, I haven’t seen a single comment of yours that didn’t get approved. Please, explain yourself and the tax cuts issue again. I’m asking for perspective. Can you return the favor by dropping the ad hominem lines? If you really find this place so repulsive you can take your wisdom elsewhere, but you seem to want to provide perspective, so please do so. I only block/delete comments that are offensive, and it takes a lot to offend me.

  • Lane

    The only problem is that when the economy is booming, and Bob’s Widgets pull in $10 million, the workers get more pay, while the public sector workers gets the same salary because people won’t vote on raising taxes just because they make more money.

    So, while the private sector workers (union or not) have the privilege of earning more during an economic upswing, the public sector workers do not. Its only when the economy is failing that people are concerned with public sector workers getting what is “fair.”

    • Tom Crowe

      Lane, two things: 1) Your concern is shown to be unfounded by the very deals we are presently seeing targeted. The promises were made, and public sector salaries soared to their present levels, while there were economic boons. So the public sector unions did enjoy increases in wages while the economy was good. The present grievances are two-fold: first, that pensions, full pay-out of sick days, no drop in pay after retirement, and the level of benefits were never sustainable as the baby boomers neared retirement age, even if the economy stayed at boom; and second, that while the economy has tanked, and while so many people in the private sector are losing their jobs entirely, the public sector employees (who ostensibly work for us) have seen no similar dive in employment levels or benefits. That also means the smaller number of people who do continue in private-sector employment have to pay more in taxes to support the pay and benefits for public sector employees, since the demand for money to pay them has not diminished in proportion to the tax base. In short, fewer workers must support the same number of public sector salaries. That is unsustainable when everyone is hurting. ———- 2) No one is forcing those people to seek public sector employment or to stay in it. If a person who works in government values a higher salary more than staying in government service the market poses no barrier to them leaving public service and getting a higher-paying job in the private sector. Staying in public service at a time when a higher salary is available elsewhere is then a choice.

      • Robert

        Public sector salaries have soared, really? The last analysis I read said that, even if you count summer break as vacation (somewhat specious, considering no one hires teachers for any meaningful employment over summer – I know, I tried to get work for some of the chemistry teachers I knew), they are UNDERpaid compared to their corporate, private sector counterparts to the tune of 8%. The teachers union said they would change their health care contribution rules to help out the state. They have repeatedly given wage concessions when the state has been under hard times. So, I am confused. How does this constitute a corrupt system where wages are unfairly paid? I have no doubt there are public sector workers who are grossly overpaid (I lived in Chicago for many years, and personally knew some city employees whose salaries I envied greatly, especially for the work they did), but the teachers seem to be a rather poor target for the argument. I know they are likely the largest dollar figure to go after, but we aren’t talking about people driving BMW’s to work and living the high life.

    • Tom Crowe

      And, Lane, like other commenters, you failed entirely to address the corruption of the system in which public unions shovel money into the campaign coffers of the politicians who support meeting the public unions’ demands. More than anything else, that corruption is immoral and disserves the tax-paying, voting public.

    • Joe

      Lane. As Tom points out, the public sector does see wages increase. Walker’s proposal allows wages to be negotiated based on the Consumer Price Index (and above with a voter referendum).



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