State Worker Backlash Spreads Across the Country
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The Fiscal Times
February 20, 2011

The public employee backlash against Wisconsin Republican Gov. Scott Walker’s plan to help balance the state’s budget by imposing higher health care and pension co-pays is spreading across the nation as newly-elected conservative governors seek to roll back benefits granted during better economic times.

A crowd of 3,500 demonstrators converged on the Ohio statehouse Friday to protest legislation introduced by Republican Gov. John Kasich that would limit collective bargaining rights for public employees. Teachers in Indiana, Idaho and Tennessee are planning similar actions, according to National Education Association officials in Washington.

“Where those attacks are occurring you can expect our members to be in the streets protesting,” added Steven Kreisberg, collective bargaining director for the American Federation of State, County and Municipal Employees. “What Governor Walker is learning and what Governor Kasich will soon learn is you can either sit down and we can talk about this and resolve our disagreements across the bargaining table or we can resolve our disagreements in the street.”

The benefits battle is most acute in states where conservative governors, some newly elected with Tea Party support, have sought to focus public anger over continuing hard times on public employee benefits, which are often more generous than those afforded workers in the private sector.

In Wisconsin, Governor Scott Walker’s proposal would disallow collective bargaining for most government benefits, but not for wages. Meanwhile, future wages would be capped at the federal Consumer Price Index, unless a voter referendum determined otherwise. As far as the bill’s particulars, union members are asked to contribute 5.8 percent of their salaries toward their pensions and 12.6 percent toward health insurance premiums. As a point of comparison, the Bureau of Labor Statistics reports an average health-care contribution of 20 percent for private industry employees, and the Employee Benefits Research Institute calculates the average employee contribution from take-home pay for retirement at 7.9 percent in 2009.

“What we're asking for is…still below what most people are paying,” Walker said in television interview on Friday. “Again, what we're asking -- we're not degrading public employees,” he added.

Union officials complain these governors are bypassing collective bargaining agreements to impose the cuts, and argue that many state and local government workers have sacrificed wage increases in recent years to keep health care co-insurance payments low and to maintain defined benefit pension plans, which have been largely replaced in the private sector by defined contribution 401(k) plans. Though union members continue to protest vigorously in Wisconsin, union membership has been on and continues to steadily decline. In fact for the first time in history, government workers accounted for the majority of all union members. 

State Health Benefits

State2009 Employee Share of
Health Care Premiums
New York19%
North Carolina54.4%
Sources: National Conference on State Legislatures

The growing controversy pits new conservative governors including Walker and Kasich against the last remaining bastion of organized labor in the U.S. in a battle with huge implications for their states’ financial futures and the balance of power in the collective bargaining process.  Undermining public sector unions and their benefits has been a central plank of conservative groups for the past 30 years, led by Americans for Tax Reform, a Washington-based advocacy group headed by Grover Norquist. A decade ago, he told National Public Radio that his goal for government was “to reduce it to the size where I can drag it into the bathroom and drown it in the bathtub.”

“Governors like Walker, Kasich and Christie are taking on the power of public employee unions to bring their compensation in line with economic reality,” said Josh Culling, state affairs manager for ATR. “Defined benefit pension plans are not affordable.”

The widening war over benefits is the latest phase in the ongoing crisis in state and municipal finance, where shortfalls in income and sales tax collections due to lingering effects of the recession have left 44 states projecting an estimated shortfall of $125 billion for the coming fiscal year. Unlike the federal government, states are constitutionally required to balance their budgets every year.

spent 25 years as a foreign correspondent, economics writer and investigative business reporter for the Chicago Tribune and other publications. He is the author of the 2004 book, The $800 Million Pill: The Truth Behind the Cost of New Drugs.