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  • Morning Bell: How Radical Were Wisconsin's Reforms?

    One year ago, the state of Wisconsin adopted sweeping reforms that curbed collective bargaining rights among government workers, brought the state’s pension system into line, and empowered those workers to choose whether or not to pay union dues. A firestorm of opposition erupted among public sector unions. But despite all the rhetoric, the reforms did not spell doomsday for government workers.

    In a new paper, The Heritage Foundation’s Jason Richwine and the American Enterprise Institute’s Andrew Biggs analyzed Wisconsin’s reforms and their impacts on the state’s government workers. They found that even after requiring them to make larger contributions to their pensions and health benefits, Wisconsin government workers are still overpaid when compared to private-sector workers with similar levels of education and experience. Richwine explains:

    • Before the reforms, Wisconsin state workers received health benefits about 2.3 times as valuable and pension benefits about 5.7 times as valuable as what workers in large private firms receive. After the reforms, Wisconsin state workers still receive health benefits nearly twice as valuable and pension benefits more than 4.5 times as valuable.
    • Before the reforms, Wisconsin state employees received total compensation (salary and benefits) about 29 percent higher than comparable private-sector workers. After the reforms, the compensation premium is about 22 percent.
    • In dollar terms, the average Wisconsin state worker after the reforms receives total compensation including benefits equal to $81,637, versus $67,068 for a similarly skilled private worker.

    In short, even after being asked to contribute a modest 5.8 percent of their salaries to their pensions and at least 12.6 percent of their health-care premiums, things are still really good for government workers in Wisconsin.

    Wisconsin faced serious problems before these reforms were enacted. The state was saddled with a $3 billion structural deficit, massive overspending, and the fourth highest tax burden in the country. Like so many other states in the union, Wisconsin’s government workers were enjoying excellent pay and benefits, funded by taxpayers, and disconnected from the realities of the state’s economic woes.

    Those workers paid only 6 percent of their health care premiums and next to nothing for generous pensions. Meanwhile, union-negotiated contracts require layoffs to occur on the basis of seniority, meaning that long-time government employees have iron-clad job  security.

    None of those benefits are free, and they come at a high price to a state’s taxpayers. After modest reforms to help bring the state’s budget back into line were introduced, thousands of protesters stormed the capitol, state senators fled to Illinois in hopes of forcing a legislative stalemate, lawsuits were filed to block the reforms, and liberal organizations and unions from across the country descended on the state.

    None of this opposition should be surprising given what’s at stake for public sector unions. They benefit from a veritable monopoly on labor services provided to government, allowing them to secure unmatched benefits. But as Richwine and Biggs show, even with the reforms, those workers still enjoy excellent pay when compared to their private sector counterparts. But nevertheless, the debate will continue.

    Quick Hits:

    Posted in Economics [slideshow_deploy]

    33 Responses to Morning Bell: How Radical Were Wisconsin's Reforms?

    1. WCFields says:

      That's relatively a low impact it would appear. But, it was my impression the Unions were much more concerned with the potential impact to their dues collection with workers now not required to pay them, automatically through salary deduction or manually by check. Isn't that the same as a free-work state, or whatever it's called?

      • Neil says:

        A "right to work" state means you do not have to belong to a union. In Wisconsin, the changes only involve public employees and not the private sector. It is true the unions feared their automatic spigot of money would be turned off. But, many of us object to a union using the state as their collection agent, especially since a large percentage of this money goes to the Democrat party. We feel the state should not be collecting money for any organization regardless of which political party they support. If someone wants to belong to a union, they can pay their dues on their own.

    2. Mary......WI says:

      As a Wisconsinite all I can say is "GO GOV. WALKER!!!! CONTINUE TO MOVE WI FORWARD!"

      I absolutely thank all the support from across the US to help our Governor. Keep your fingers crossed that this man is re-elected before his original full 4 year term is up. On June 5th everyone will be a "cheesehead" wishing Gov Walker and Lt Gov Kleefisch the best of luck to keep WI moving forward!

    3. toledofan says:

      The sad part of this recall farce is that Walker committed no crime and did exactly what he said he would do during the campaign. The public sector unions haven't kept pace with the times and contiue to think there is an endless amount of money available to get whatever they want. The problem is the money comes from taxes and with unemployment over 8% where do the additional dollars come from? The other part of this is that the unions are pitting neighbor versus neighbor rather than going after some corportation with deep pockets and continue to build the union burearacy in spite of the dwindling funds.

      • Paul says:

        No, my friend. He campaigned on none of what he did. He was not truthful about his plans. He told many "Big Lies" and played on class issues in this blue collar state. He's a hell of a politician, very good at playing for his base.

    4. none says:

      Bottom line, public employees are not like employees working for a private companies competing with others; as unlike their private counterparts, 100% of their net salaries and benefits are typically involuntary appropriated from their private counterparts under the threat of imprisonment; and thereby public unions in effect represent monopolies with the ability to dictate their demands to the privately employed. Thereby unlike pirate employee unions who if attempting to demand more than their worth, may price themselves out of a job if the company they make demands of can no longer compete. As our government is obliged to help prevent monopolies from forming; instead, most public jobs should be privately contracted, serviced by a some minimum number of companies, in order to try to encourage true competition, and thereby helping increase the quality while reducing the cost of such services to the public.

    5. SeaLevel says:

      After reading this, I am left with more questions than answers…………………

    6. Lloyd Scallan says:

      Most of us realize this is about one thing, Union Power. Unions across this nation understand that if
      Scott Walker can reform union control in Winconsin, any state in the union can do the same, and that scares union bosses to death.

    7. Jaime Calva says:

      Why is it that Unions are non profit entities and do not pay taxes. How does their service of negotiiating benefits differ from that of, say, an accounting firm that provides accounting services. I thought that President Obama wants tax paying fairness. Unions have surplus monies to fund their lobbying endeavors. Why not for taxes?

      • Bob Davidson says:

        How about the dislike for the way the State of Wisconsin has been acting. The states first duty is to its citizens, to protect them not help the unions loot them through mandatory union dues. Which by the way cost all of us more in taxes and products and services we use.

    8. Something GOOD came out of the unions acting so selfishly. American Citizens have seen their true side while we were all hurting all they cared about is their self. NOW America Hates the Unions

    9. Bobbie says:

      They're like spoiled brats that have to get their way by violent intimidation! The reforms aren't radical at all when it's put on the opposing acts who freely fraud tax payers and unethically exist.

    10. ech2os says:

      I'll be pulling the lever for anyone other than BO this fall, but it's ridiculous and dishonest to think and act like the military doesn't have a tremendous amount of fat that could be cut without comprimising our national security. I see no reason for interpreters to make 180k tax free to work for the government OR for officers working stateside to get 80k tax free bonuses to relocate 3 hours from home to do the same job for 12 months. I have personal knowledge that both these things happen. What else is out there like these moves that are buried in 580 billion worth of spending. And no, I'm not a Ron Paul supporter.

      • Guest says:

        Yes, interpreters and officers have ALWAYS been overpaid … as have contractors … in the military. When funding gets cut, however, it is usually the ENLISTED personnel who lose. 2% pay increases? That's not a big chunk of change when your 'base pay' is under $30K … try, less than $600/year for being 'on duty' 24/7, 365 days per year. Would you risk your life, and be ordered to move on a moment's notice, for under $3.50/hr?

      • Texas Conservative says:

        And NOBODY should be able to retire after 20 yrs with a full pension, BUT…….the military in 2011 was 19% of the federal budget, while social security, medicaid, and medicare ate up 43%.

    11. Personally, I wouldn't mind a small premium attached to gub'ment werker compensation … if the dead weight was removable. "Reform" – if it means anything at all – means making it possible to hire and fire public sector employees based on performance rather than seniority. Just thinking ahead – since we all know we need less, not more, bureau-weenies going forward.

    12. Alan Clepper says:

      Surely ,this kind of information is publicized to the Wisconsin voters! Or is it just more preaching to the choir?
      Alan

    13. Pegsie says:

      The oft-touted theme among teachers and professors is that they historically took lower pay in preference for higher benefit packages (health care insurance and pensions). Their claim is that they are underpaid compared to private sector workers. Yours is a rare article that appears to disprove this. Is it that difficult to gather and compare actual data and publish it so as to debunk what appears to be a commonly accepted myth? Teachers and professors are convinced that they are indeed underpaid.

    14. J E Houser says:

      This is another example of governments crucifying the fundamental concept of the original planners of the American system of government. Our original founders recognized and implemented a group of governments as servants of their constituencies. They knew, as demonstrated by history, that growth and advancement was acquired by limited government. Allowing government employees to push for its our advancement at the cost of the citizens is destructive.

    15. Jeanne Stotler says:

      There was a time when Unions were doing good, protectng workers from working overtime, no breaks and low wages, we now have laws underthe Labor Dept. stating the Number of hours etc. etc. so now Unions have become arms of the Liberal, communistic Dems., they collect dues and spend it at will, this statred in the '60's and has gotten worse. Now is the time to shut dow the unions, reinforce Labor Laws so they include everyone, big or small companies, so sweat shops cannot appear again. I am a ormer Union wife and believe me, when I asked for help in getting my late husbands retirement, I was not so nicely told, I was not the unions care as I di't elong to Unon, Hubby did.

    16. Bob Davidson says:

      The situation in Wisconsin is just plain disgusting and still is. What makes a state government worker worth so much more than a private sector worker? These kinds of things must be ended and prevented from happening again in the future. I worked my entire life outside of union influence and the me culture. Individual states need to Amend into their state's constitution to prevent this type of inequity after all the states are the citizens first line of protection and they're to protect their citizens, not loot them.

    17. Basia says:

      God bless Gov Walker! He is a rare bird in government these days. Honest, hardworking, practical and most courageous. We Wisconsinites have really seen the true colors of the government union crowd. They are like parasites living off the host taxpayers always sucking more blood out of us for their own greedy demands. Kudos to Gov Walker for trying to save the host taxpayers from the parasite unions. We taxpayers have been somewhat freed from these parasites that would have eventually have killed the host in the end.
      We need more Gov Walkers in government! He is a true leader who is to be commended with the highest honor.

    18. Jack says:

      Not so sure Walker is doing us any favors. Bear with me here; monopolistic unions wiped out the domestic textile industry and severely crippled steel, shipping and autos. That was very bad for the country, but we have the chance that they will finally do us some good and bankrupt governments at all levels here and in Europe. Then they will finally be exposed for the screw the public thugs that they are, but they will force scaling back government overreach, leaving us all much more free and prosperous!

    19. Blair Franconia, NH says:

      Not very.

    20. Wayne Peterkin says:

      This is a very good article and true. However, I wish it had also mentioned the very real benefits to the state's deficit and budget position that has resulted from these reforms and others under the current state leadership. The strange thing is that they are trying to recall a governor who did nothing except keep his campaign promises! He was elected to do what he did, he did it, and now is facing a recall. Should Scott Walker lose, the public employee unions will run amok nationwide as no future government will dare oppose them for fear of facing similar retribution.

    21. When the state of Vermont needed help us Trans workers volunteered to a 3% cut and step freeze for two years. That is about up and we start at where we where 2 years ago.

    22. Michele Betz says:

      On Wisconsin! Go Governor Walker. I was born in WI, no longer live there as I was relocated as a child to Michigan, yet I am still a 'cheesehead'. Progressive ideas were born in WI and will die in WI. The nation will be better for it.

    23. Ruth says:

      A vote against Walker is a vote for socialism

    24. Hope Walker walks away with this recall and tell the union leaders to go and get a real job. :]

    25. Ron W. Smith says:

      The "problem" of unions has been bothering some on the political Right for decades. In Wisconsin, they found and seized another opportunity to bring the union movement–what's left of it–down. The right collectively to bargain was dragged into what should only have been the seeking of ways, times being tough, to cut salaries and benefits of those in the public sector. Simple argument, simple solution, though, made impossible by overreach. Leave out the collective bargaining issue, sit everyone on both sides down to make the budget balance since the budget was the issue.
      Some in the Republican Party will settle for nothing less than eliminating unions. That's their real aim. Big mistake since it looks like a nostalgia for slavery. If they were honest and trying to do what's best for wage earners everywhere, they'd make unions unnecessary. End of problem with unions, no? They're not honest, though, for they want workers voiceless, compliant, underrewarded and overworked–the real reason for making the comparison between public sector and private sector compensation.

    26. Larry N Stouffer says:

      The union mantra is "What do I get, what do I get, what do I get???" My response is "What do you give???" The answer is "What you give is not even close to what you get." Call it a union, call it a club… whatever it is it does not deserve a monopoly! America should be a Right to Work nation where unions don't control the companies they work for! They are destructive organizations. And they are the dictionary definition of the term, "biting the hand that feeds them." They must go — or at least lose their monopoly position. Americans should all have a right to work and not to have to join and maintain a club to do so.

    27. nan says:

      In one town in Massachusetts, all municipal employees pay from 7% – 11.5% toward their pension and 50% toward their healthcare. Those Wisconsin Union spoiled brats should thank their lucky stars they have it so good. Who do they think they are to expect the taxpayers to foot most of the entire bill to the taxpayers.

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