Reports from the Economic Front

a blog by Marty Hart-Landsberg

A New American Labor Movement?


The times are definitely getting interesting and increasingly hopeful.  Many people are even starting to make comparisons between the struggles in Egypt and those in Wisconsin, Ohio, and Indiana. 

Egyptian workers are offering their support to U.S. workers.   Some Egyptians are even sending pizza’s to those demonstrating in Madison.    By the way, if you want to do the same, you can call Ian’s Pizza at 608-257-9248. It has shut down its regular operations and is only doing protest deliveries.  It reports orders from 45 states and 12 countries. 

Representative Paul Ryan, in a revealing comment on Wisconsin events, said “It’s like Cairo has moved to Madison.”  Gives you a good sense how those on the right view popular movements for democracy.

The events in Wisconsin were triggered by Republican Governor Scott Walker, who hoped his bill to strip all Wisconsin public sector workers of their union rights would launch a broader rightwing offensive against public sector unions everywhere, much as Ronald Reagan’s 1981 attack on PATCO (the air-traffic controllers union) was the opening salvo in a major (and successful) offensive against unions in general.

Walker sought to hide the true meaning of his effort by arguing that he was only working to balance the budget.  The Wisconsin state budget is in fact out of balance; the state faces a deficit of some $3.6 billion over the next two years.  But Walker is not only proposing that public sector workers greatly increase their contributions for health care and pensions, he is also proposing changes that would end the ability of the unions to collect dues and engage in collective bargaining over non-wage issues.  Moreover, the amount the State would collect from his proposed budgetary changes amount to no more than $300 million over the next two years, nowhere near what is needed to close the deficit.  Significantly, Wisconsin public sector workers have even communicated their willingness to accept the higher health care and pension costs if the Governor would drop his attempt to destroy their unions—and the Governor has refused.

Missing from the discussion of the budget deficit are the following points made by Joshua Holland in his article, “12 Things You Need to Know About the Uprising in Wisconsin“: 

At the beginning of this year, the state was on course to end 2011 with a budget surplus of $120 million. As Ezra Klein explained, newly elected GOP Governor Scott Walker then ” signed two business tax breaks and a conservative health-care policy experiment that lowers overall tax revenues (among other things). The new legislation was not offset, and it turned a surplus into a deficit.” Walker then used the deficit he’d created as the justification for assaulting his state’s public employees.

Wisconsin’s public workers have already “made sacrifices to help balance the budget, through 16 unpaid furlough days and no pay increases the past two years,” according to the Associated Press.

There are already 13 states that restrict public workers’ bargaining rights and it hasn’t helped their bottom lines.  As Ed Kilgore notes, “eight non-collective-bargaining states face larger budget shortfalls than either Wisconsin or Ohio,” and ” three of the 13 non-collective bargaining states are among the eleven states facing budget shortfalls at or above 20%.”
Health-care costs, rather than workers’ greed, are what has driven up the price of employees’ benefits. But generally speaking, those public sector health-care costs have grown at a slower clip than in the private sector.
Last year, more working people belonged to a union in the public sector (7.9 million) than in the private (7.4 million), despite the fact that corporate America employs five times the number of wage-earners.  37 percent of government workers belong to a union, compared with just 7 percent of private-sector employees.
Whether in the public or private sector, union workers earn, on average, 20 percent more than their non-unionized counterparts. They also have richer retirement and health benefits — the “union compensation premium” rises to almost 30 percent when you include those bennies. That workers can still negotiate from a position of strength somewhere in the U.S. is simply unacceptable to the right, and that’s what this is about.

Public sector workers have, on average, more experience and higher levels of education than their counterparts in the private sector (they are twice as likely to have a college degree). When you adjust for those factors, they make, on average, 4 percent less than their private-sector counterparts. Like any group of workers with a high union density, they have better benefits, on average. But even including those benefits, state and local employees still make less in total compensation than they would doing the same work in the private sector.

Of course, the main cause of state budget deficits is the economic crisis, which drove down tax revenues at the same time it caused an increase in the demand for services.   But it is precisely the causes of the economic crisis—the policies of deregulation, liberalization, and privatization—that those in power don’t want to discuss.  

In reality, the anti-union policy proposals of governments in Wisconsin and the other states have very little to do with budget issues–they are driven by the quest for power—the power to promote a vision of the economy.  Right now corporate forces have power and they are eagerly using it to pursue changes that will further strengthen their ability to generate profits at the public expense.  Weakening unions, especially public sector unions, is clearly a key part of their strategy.  That is why shortly after Walker proposed his legislation, governors and legislatures in other states quickly followed with similar bills

The New York Times captures the moment this way:

To gaze upon the world of American corporations is to see a sunny place of terrific profits and princely bonuses. American businesses reported that third-quarter profits in 2010 rose at an annual rate of $1.659 trillion, the steepest annual surge since officials began tracking such matters 60 years ago. It was the seventh consecutive quarter in which corporate profits climbed.

Staring at such balance sheets, you might almost forget that much of the nation lives under slate-gray fiscal skies, a place of 9.4 percent unemployment and record levels of foreclosures and indebtedness.

And as John Stewart correctly notes—the corporations want to permanently remake the American economy and they are pressing their advantage to force U.S. workers into doing the work for them

One can only hope that what is happening in Wisconsin is the start of a new American labor movement.  We desperately need one, and better now than latter.

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