Will Big Labor Score a Pyrrhic Victory Over Wisconsin’s Private Sector?

Restoration of Teacher and Other Government Union Bosses’ Forced-Union-Dues Privileges Would Quash Business Employment Growth, Undermine Public Institutions

This month, top officials of the National Education Association (NEA), the American Federation of State, County and Municipal Employees (AFSCME/AFL-CIO), and other government unions hoped to take a major step in their ongoing campaign to overturn the public-sector Right to Work law approved by the Wisconsin Legislature and signed by GOP Gov. Scott Walker early this year.

Wisconsin’s Act 10, commonly referred to as the Budget Repair Act of 2011, took effect in late June after withstanding a Big Labor-inspired state court challenge. A second legal bid to invalidate Act 10, filed by Badger State affiliates of the NEA, AFSCME and other government unions, is now pending in federal court.

Act 10 represents a comprehensive effort to rein in long-term, unsustainable spending growth by the state of Wisconsin and its localities. Key provisions abolish all forced union dues and fees for teachers and many other public employees and limit the scope of union monopoly bargaining in most government agencies.

From the beginning, forced-unionism apologists have publicly claimed Act 10 is unnecessary to put Wisconsin’s budget in order. But the evidence is clear both that government spending has excessively burdened Wisconsin’s private-sector employees and businesses and that restoring public servants’ Right to Work without being fired for refusal to pay dues or fees to an unwanted union will go a long way toward correcting the problem.

From 2000 to 2010, total taxpayer costs for compensation of Wisconsin state and local employees grew by an inflation-adjusted 9.2%, to a total of $19.83 billion last year. By 2010, state and local government compensation swallowed up the equivalent of nearly 17% of all private-sector wages, salaries, bonuses and benefits in Wisconsin. And over the past decade Badger State government employee compensation grew more than two-and-a-half times as fast as private-sector employee compensation, in percentage terms.

This happened even as the markets for several key public employee services were shrinking. From 1999 to 2009, for example, the number of K-12 school-aged Wisconsinites (that is, 5-17 year-olds) declined by nearly 7%, and the school-aged share of the state’s total population shrank by nearly 14%.

Private-sector compensation growth in Wisconsin could be realigned with government compensation growth over time by accelerating the former, decelerating the latter, or some combination thereof. And there is strong empirical evidence that protecting the Right to Work of public-sector employees spurs faster private-sector economic growth.

As of 2010, 29 states either had Right to Work laws on the books banning all forced union dues, or at least had no statute explicitly authorizing public-sector forced unionism. Over the past decade, private-sector business outlays for employee compensation in these 29 states increased by an average of 10.1% in real terms. That’s nearly triple Wisconsin’s private-sector compensation growth, and 10 times the average for the 21 states with public-sector forced-unionism statutes. Nine of the bottom 11 states for private-sector compensation growth have public-sector forced-unionism laws.

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