A Tale of Two Unions
It is not the best of times for unionized workers in America. However, while some workers have become resigned to new post-recession economic realities, others seem to be living in a dream world of rigid and righteous entitlement. And not surprisingly, it seems to break down by sector — private and public.
A case in point – Harley-Davidson workers in Wisconsin and school teachers in California. The Wisconsin motorcycle company and its blue-collar workers, most of whom belong to the United Steelworkers, worked out a contract which reflects the realities of the economic world we live in. According to Louis Uchitelle, writing in the New York Times,
Harley-Davidson actually has two very similar new contracts, one with the Machinists, who represent workers at an assembly plant in York, Pa.; the other with the Steelworkers at an engine-and-transmission factory in Greater Milwaukee. The York agreement, ratified last year and now in effect, has shrunk the core work force there by more than half, to nearly 800 full-timers, while adding 300 “casual” employees, who are union members without benefits.
The Milwaukee agreement, recently ratified, will shrink the full-time payroll to 900 from 1,250 today and more than 1,600 before the recession. Up to 250 “casuals,” as in York, will be used to handle surges in demand for Harley bikes. While hourly pay under the current contract averages $31 an hour, that drops to $25 for the second tier, which becomes the only tier once all the veterans have left or retired. Casuals, in contrast, get $18.50 an hour.
The new Milwaukee contract kicks in when the current agreement expires on March 31, 2012. The union balked at negotiating so far in advance, Mr. Masik (union leader)said, but conceded after the company insisted it would otherwise use the intervening months to prepare to move operations elsewhere, perhaps Kansas City. To guarantee support, Harley also incorporated into the contract $12,000 bonuses for its steelworkers, including those laid off.
Harley’s president said the recession left no choice but to reorganize. Motorcycle sales are down 40 percent from their peak in 2006, Mr. Levatich (Harley CEO) said. Cutting the core staff allows Harley to slow the line during the winter months of lean demand and add “casuals” when demand picks up in the spring and summer.
“What we are doing is not mean-spirited,” Mr. Levatich insisted. “We have to retool if we want to survive. We should have started doing this, in small steps, 20 years ago.”
The bottom line is that the union realized if they didn’t accept the company’s terms they would have priced their wokers out of a job. This is always a reality for private sector unions – if they ask too much, the company they work for might move elsewhere, or like GM, go bankrupt.
Contrast that with public sector unions which don’t quite operate with the same set of realities. La Habra, a small city in nearly insolvent California, is facing a teacher’s strike. Though the date hasn’t been decided on, the La Habra Education Association voted last week to walk out. The union has refused to accept the cash-strapped district’s last best offer, which according to the Orange County Register stipulates that,
Reductions to teachers include a 2 percent salary cut retroactive from Nov. 1, two non-paid furlough days in the 2010-11 school year and two additional days in 2011-12. Teachers will also be required to pay more for some health benefits beginning July 1. The cuts were through 2011-12 school year.
The district made concessions by offering scheduled pay increases — called step and column raises — retroactive from 2009-10 and through 2011-12, and contributing more for some health benefits.
In teasing apart these numbers, we get this – a 2 % pay cut and two furlough days in 2010-2011 which is tantamount to a 1% pay cut, though teachers will not have to work on the furlough days. Same deal in 2011-2012. Hence we are talking about a 3% pay cut this year and a 4% pay cut next year. Also, the health benefit contribution would add more to the union’s concession. But much of this is mitigated by the retroactive pay raises and the district’s willingness to contribute to some health benefits. Hence, several of the takeaways are counteracted by the givebacks.
That the teachers’ union considers these cuts to be “extreme” and willing to strike over them defies rational thought. Unlike Harley-Davidson, the school district cannot counter by threatening to move to another state – the district is a government entity and thus not subject to market forces
Thus we have the La Habra teachers’ union living in a public employee dream world that operates outside the realm of market forces; as a monopoly, they are not ruled by the constraints of supply and demand. Taxes can always be raised to give the unions what they want. That is, till the taxpayers finally get sick of being hosed and revolt.
In fact, it would seem that as of Election Day the revolt has begun – with voters, nationwide, letting it be known that they were fed up with profligate spending and pointing fingers at the public employee unions. Even in California, where voters opted for the status quo on a state level, quite a few municipalities took it upon themselves to fight for pension reform.
At the annual Republican Governors Association meeting last week in San Diego, the mood was sour when the subject of public employee unions came up.
“Frankly,” said Minnesota Gov. Tim Pawlenty, “the public employee unions would stick a shiv in all of us if they could.”
The biggest laugh of the Thursday morning session came when New Jersey Gov. Chris Christie made a joke out of a union’s opposition to his proposal to require teachers to pay a portion of their health insurance costs.
“You laugh,” Christie said. “That’s the crap I have to listen to in New Jersey.”
And among the lines most quoted and paraphrased among the governors was the comment in September from Scott Walker, now governor-elect of Wisconsin, regarding the need to trim the salaries and benefits of public employees: “We cannot and should not maintain a system where public employees are the haves and the taxpayers footing the bill are the have-nots.”
Conceivably, even in California, taxpayer resentment over unrealistic public employee union demands will eventually lead to a badly needed dose of reality for the flatulent and self-important public employee unions. In time, these unions and their employees will hopefully learn what the Harley-Davidson workers already know – that there is a finite amount of money to go around and that the people who pay your salary will put up with only so much.
About the author: Larry Sand is the president of the non-profit California Teachers Empowerment Network – a non-partisan,non-political group dedicated to providing teachers with reliable and balanced information about professional affiliations and positions on educational issues.