Friday, March 11, 2011

Three Incorrect Assumptions Most Public Unions Made

With the Wisconsin Republicans pulling the trigger on their kill-the-union legislation, now is an appropriate time to analyze three strategic assumptions that have caused public unions and their constituents (we the taxpayers and beneficiaries of their services) major harm. Many of these criticisms apply to regular unions as well, but for today’s post I’ll stick with public unions.

The first and perhaps largest mistake was for public unions to continue to hold to the archaic paradigm that wages should be based on longevity (perhaps adjusted for education). The inherent assumption behind such a compensation basis is that a worker with more experience (or education) provides more value. It is a rough and ready rule of thumb with some validity.

Let’s look at teachers, where the battle lines are most clear. Certainly most teachers with a few years of experience are better educators than those fresh from college with their newly minted teaching certificates. But at some point, longevity is no longer a factor in actual teaching skills. (One could even argue that older teachers may not be as attuned to their students and therefore longevity might even be a negative indicator of performance.) Therefore, something else should be used as the determination of pay, but teachers have steadfastly refused to allow such change. This has been strategic error.

Employers are willing to pay for results, and in nonunionized workplaces job performance appraisals are as commonplace as the water coolers around which goal setting/evaluation processes are discussed. However, through just such (albeit imperfect) processes, promotions are determined, compensation adjustments are made, underperformers are counseled and let go if they don’t improve. Teachers especially, and some other unions, have continued to insist that their jobs cannot be measured—to which I answer, bullroar.
Teachers can always tell you, off the record, which among them are best, which ones are ineffective or have stopped caring. Teachers and students would certainly benefit if teachers learned what areas they could improve and were provided training to become better. Students would benefit if less able teachers were provided the opportunity to find another vocation.

By being intractable in bargaining solutions to evaluation, unions have left themselves open to horror stories of rewarded incompetence. Through the power of such stories, combined with the reality of work “in the real world,” they have lost connection with their nonunion peers who understand the benefits of the process.
The second assumption many public unions made was that their jobs were secure. “Who else could do this work?” Incorrectly answering this question led many unions to be intransigent in developing flexible work solutions.

As public unions have recently been discovering, private corporations are willing to provide personnel to perform almost any government function. [Given the lobbying efforts, that seems to include all elected positions as well, but that is another issue.] Choose any government job and I could surely find a corporation that would contract to take over the task. Cities, counties and states have sold off toll roads, sanitation departments, waterworks, power plants, hospitals, you name it.

Private schools (through charter schools or voucher programs) have chipped away the unilateral right of public schools to provide “free” education. The unions have stomped their feet and decried the changes without trying to provide alternative solutions to the underlying problems. Again, by not actively helping to solve the underlying issues, they have failed to provide what is best for the public and severed yet another tie that once bound them to the taxpayers who fund their employment.

The third major assumption public unions made regarded post-employment benefits. They assumed that if they bargained the benefits, it didn’t matter if governments prefunded them. As state after state, county after county and city after city missed contributions to public pension plans the public employees winked at the accounting fabrications that balanced budgets and said to themselves, “the benefits will be there when I retire.” Many postretirement medical plans were not even nominally funded; benefits were paid on a pay-as-you-go-basis.

The unions did not raise a stink at missed funding. They did not use their bargaining power to require governments to fund their benefits. Private unions had made the same mistake and watched benefits disappear when corporations declared bankruptcy and the unfunded benefit promises were washed away in bankruptcy court. Through that experience they learned: I remember reading a contract the Steel Workers had bargained in the first years of the 21st century that gave up some immediate compensation in order to require the company to make specific levels of contributions to their postretirement pension and healthcare plans.

Not so the public unions. They relied on governments eschewing bankruptcy to protect their unfunded benefits. Instead, we are all seeing that what the legislatures give, the legislatures can take away. Witness the current actions in Wisconsin. Had the public unions raised their collective voices and bargaining power to assure their plans were appropriately funded, they would have performed a major service for themselves (their benefits would not be such a major issue) and the taxpayer (our governments would be less in the financial hole). Rather than relying on “slight-of-hand” accounting maneuvers to balance budgets, unions could have forced governments to realistically address the question of increasing revenue or decreasing expenses many years before the combination of a stock market decline and recession exposed everyone to the deleterious effect of not funding pension and healthcare obligations, as good actuarial practice and generational equity would require.

In short, the public unions blew a golden opportunity to be a major part of solving our collective problems. Now they are cast as the villains in a game of divide and conquer devised by extreme voices who will do anything to succeed in their agenda of smaller government, no matter our collective needs or desires.
In truth, public employees are only one set of victims caused by our collective unwillingness to admit that at all levels of government in these United States we have a serious imbalance between the benefits we wish government to provide and our desire to fund the attendant costs.

It is time for citizens to look in the mirror and realize the enemy is us; time for public unions (those with any power left) to be part of the solution; time for politicians to get serious and lead an honest discussion of the issues.

It’s time, but I have to say I have no hope anyone will do the right things.

~ Jim