Private vs Public vs Federal Unions: Weighing in On Wisconsin

by Michael Haberman on March 1, 2011 · 1 comment

If you have read any of my blogs on unions you know I am not a fan at all. They don’t fit with the way I was raised, so I would not belong to one. I also feel they have lived past their usefulness, however, at one time they did have their very valid reason for existing. And today, if a private sector company has a union it is typically because they deserve it. Unions are poor management’s punishment for being so stupid.

But private sector unions are not the big topic of discussion today (or for the last couple of weeks), it is public sector unions, in particular the public sector unions of the State of Wisconsin. The governor of Wisconsin is leading the legislative effort to strip the public sector, or Wisconsin government, unions of the the ability to “bargain” with the government over wages and benefits. He claims that the cost of supporting unions is bankrupting the State of Wisconsin. (Some people, such as Laurie Ruettimann aka The Cynical Girl,  think there are other motives.)

I am not here to discuss motivations or list costs. I am here to discuss differences. Here is the difference between the unions.

  • Private sector unions, which are brought into a workplace for a variety of reasons, negotiate with the owners of the business. The cost of the negotiations, and if the workplace is unionized the costs of dealing with a unionized workforce, reduces the profitability of the company or forces them to increase their prices. The cost of unionization is borne by the company, the employees, and ultimately the consumer of the product or service. It is a voluntary cost for that consumer. They can opt to find another provider if they desire and not bear the cost of that unionization. (Recall what happened to GM?)
  • Public Sector, such as the Wisconsin unions, negotiate wages, benefits and working conditions with the government of the state. The cost of unionization is not borne by the consumer it is borne by the tax payers of the state. There is no “profit” from which this cost is taken, it is taken from the tax coffer. The residents cannot opt out of supporting this other than by moving from the state. There is no other state government they can seek services from. Subsequently what is the proposed solution for this? Raise taxes, as has been proposed by the union representatives. Not exactly a fair and equitable option, in my opinion.
  • Federal Unions do not have the freedoms that other public sector unions have. Unionized Federal employees CANNOT negotiate wages and benefits. They cannot strike. (Some of you may remember what President Reagan did to the air traffic controllers that bucked the law. They were fired and never worked as air traffic controllers again.) They CAN negotiate working conditions. In exchange they have a set pay scale and a generous benefit package along with much more job security than you will find in the private sector. They may not make big money, but they make it longer perhaps, in a more secure environment. As President Obama said (I paraphrase here) “the talented don’t make as much as they might in the private sector and the untalented make more.”

So given these differences it is easy to see an intermediate solution to the “problem” in Wisconsin. Rather than stripping ALL collective bargaining abilities from the state unions the Governor needs to give them the same union rights that Federal union members have. The unions (the business end of it) still gets to collect the dues, and that is utlimately what they are interested in, and the employees still get to pay for a union rep to help them in disciplinary situations and they get some job longevity. The state government can control the cost of labor because the ability to negotiate wages and benefits will be gone, thus making it much more controllable. 

Personally I am bothered by state unions. They have too much potential control of the ballot box through their influence over politicians, either  financially and by swaying voter opinion. This control is over the people who ultimately determine the monies being paid to state employees. In the private sector wouldn’t you like to have control over whether you boss keeps her job in order to influence what she pays you at raise time?? Sweet deal if you can get it, but I have a bit of a problem with it ethically.

It is unlikely the parties will read my post nor heed my advice, but I thought I would offer it. For the rest of you it is important to realize that not all public sector unions are created equal.

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{ 1 comment… read it below or add one }

R. Martin March 2, 2011 at 10:32 am

Excellent piece and could not agree more that the unions have served their time. I refuse to purchase anything that represents a workforce whose benefits are paid at 100%! If anything, unions should consider migrating to China.

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