The pendulum swung swiftly.
House File 291 was introduced in the Iowa legislature on February 9, was passed by the House and Senate on February 16, and was signed by Governor Terry Branstad the next day.
Despite that speed, this was not some emergency measure. Instead, it was part of a pent-up agenda being unleashed, as Republicans enjoyed – really enjoyed – their first unified control of the legislative and executive branches of state government since 1998.
House File 291 dramatically changes the collective-bargaining framework that had been in place for government-worker unions since 1974 – although it largely exempts unions representing public-safety workers. Roughly 180,000 public-sector workers in Iowa are covered by union contracts, including 27,000 state employees.
Representatives of the United Electrical Workers wrote that the bill was “aimed at destroying public-sector unions and the rights of public employees ... .
“This legislation is designed to render collective bargaining meaningless by making it illegal to negotiate most of the subjects now covered by contracts, and to cripple unions financially by eliminating the dues-checkoff process which union members voluntarily pay to support their union’s activities.”
There is, of course, a flip side to the alarm raised by the United Electrical Workers. Republicans profess that House File 291 is not a war on unions but a long-overdue correction – giving state and local governments tools to protect taxpayers by keeping employee costs in check.
Under the law, only base wages are subject to bargaining – and pay increases are capped. With subjects such as pensions and health insurance no longer part of contract negotiations, governments can better control personnel costs. The law also removes seniority, performance evaluations, staff reductions, and health and safety from the process.
“These necessary reforms to our antiquated 43-year-old public-employee collective-bargaining law bring fairness for Iowa taxpayers and flexibility to public employees,” Branstad said. “This bill also gives local governments, schools, and state government greater freedom in managing their resources with the opportunity to reward good public employees.”
“Finally, Iowa taxpayers have a seat at the table,” added Lieutenant Governor Kim Reynolds, “and local governments are empowered to make decisions in the best interests of their communities and schools.”
Proponents of the law hope it will create results like those claimed by Iowa’s neighbor to the northeast. As the National Review stated last year in lauding Wisconsin Governor Scott Walker’s similar anti-union efforts: “Walker curbed state aid to local governments and, in return, gave local governments the flexibility to control their costs. ... Mayors, school superintendents, and county officials would no longer be forced to accept union agreements. They finally would be able to balance budgets and reform their governments to better serve the people they represent. ...
“Wisconsin taxpayers are seeing a clear benefit ... . To date, they have saved more than $5.24 billion as a result of Act 10, according to a study by the John K. MacIver Institute for Public Policy. This works out to about $2,291 per household in Wisconsin. It includes more than $3.36 billion saved by simply having state employees contribute a reasonable amount to their retirement.”
Both of these perspectives have merit, and both are incomplete. In considering House File 291, it’s important to keep two things in mind.
First, compensation of public employees is in many ways out-of-line with what’s offered in the private sector, and is not sustainable – especially with pension and health-care benefits. It’s a subject that deserves debate.
Second, Republicans rushed through an extreme bill without any effort at bipartisanship. By itself, restricting the scope of collective bargaining might be a reasonable remedy, but to also cap wage increases and hamstring unions undermines claims of noble intentions. Bluntly, this legislation appears designed to provide Republicans with substantial electoral benefits by diminishing the political power of unions.
Full Disclosures
As House File 291 showed – passing with literally no support from Democrats – the attack on unions in Iowa and elsewhere is deeply partisan. If you research the issue, you’ll struggle to find much that’s not substantially colored by the source’s bias. So you might as well know mine.
Undoubtedly, unions were once an essential bulwark against the exploitation of employees, both in terms of compensation and working conditions. They are probably still necessary, as many workers struggle to find jobs that provide reasonable wages, benefits, and employment environments.
It doesn’t bother me that public-sector employees have wage-and-benefit packages that are the envy of workers in the private sector. This is nothing more than the result of unionization being most prevalent in the public sector and of organized labor doing its job.
I allow for the possibility that public-sector workers generally are not over-compensated, but are instead fairly compensated. (I’m married to an employee of the federal government.)
I also allow that a great many people think government employees are overpaid.
I’m somewhat sympathetic to the arguments (if not necessarily the conclusion) of the Hoover Institution’s 2010 article “The Case Against Public-Sector Unions.”
“The idea of eliminating union privileges in the public sector may seem like a radical one,” the authors wrote, before making three main points: “First, public employees are typically protected by civil-service statutes that provide an important measure of job security and protection from arbitrary hiring and firing decisions. ... Second, governments typically face lower borrowing costs and enjoy easier access to sources of direct financing (i.e., taxation) than private-sector employers, which insulates the public sector from the business cycle. ... Third, workers who prefer government employment typically have a variety of options (federal, state, county, city) or possess skill sets that are transferable to the large private service sector. In short, the potential social benefits offered by private-sector unions are not present in the public sector.”
Beyond those arguments, private companies negotiating with unions have to put their long-term livelihoods above all else when considering the costs of wages and benefits. Governments, on the other hand, are playing with your tax dollars. (And legislatures have often deferred employee costs through pension benefits that they don’t or can’t adequately fund – meaning that they’re often playing with your future tax dollars.)
With that out of the way, let’s explore why Iowa Republicans are conducting this war on public-sector unions.
“A Bomb Was Dropped”
As Walker’s measures did in Wisconsin, House File 291 – if it withstands legal challenge by the state’s two largest public-sector unions – would radically alter the balance of power between unions and government. It operates on three fronts: making it more difficult for public-sector unions to exist; making it more difficult for those that do exist to survive; and severely limiting the scope of collective bargaining after all that.
The bill was pushed through with urgency. Writing in Dissent, Colin Gordon compared the legislation to what happened in the Badger State: “The battle in Wisconsin unfolded over months after Walker took office in 2011. In Iowa it was more like a bomb was dropped; three weeks into the legislative session, the damage was done.”
He called House File 291 “a gutting of public-sector collective bargaining ... . As in most states, Iowa’s public-sector bargaining law was a bipartisan bargain struck in the early 1970s, which raised pay and labor standards for public workers (especially teachers) in exchange for an effective no-strike pledge. The new public-employee relations code outdoes even Wisconsin in dismantling this bargain. Bargaining is now limited to ‘base wages,’ with annual increases limited to 3 percent or the rate of inflation, whichever is lower. All other contract details – health care, pensions, working conditions – are off the table. Public-sector unions must win a re-certification vote before each new contract (every two to three years). To twist that knife, the law requires the union to win a majority of workers in the bargaining unit (not just those voting) and it requires the union to pay for the election. And unions are now barred from collecting dues through payroll deduction, a practice that was already voluntary.”
In Wisconsin, the effect of Act 10 and other anti-union measures supported by Walker is clear enough on a union-busting level: According to the Bureau of Labor Statistics, union membership in Wisconsin dropped from 339,000 in 2011 to 219,000 last year – a drop of more than a third.
Union membership nationwide dropped less than 2 percent during the same period. Wisconsin by itself was responsible for well over half of the country’s change in union membership over the past five years.
And that, union supporters argue, is a key reason Iowa Republicans shoved House File 291 through the legislature.
The blog BleedingHeartland.com explained: “It comes down to money and power. Public-sector unions are major financial supporters of the Iowa Democratic Party, and thousands of union members volunteer to help elect Democratic candidates for the Iowa House and Senate. ...
“Losing automatic payroll deduction will surely cause some attrition in membership. Many more workers may question why they should keep paying dues to a union that can no longer bargain for anything meaningful, especially after receiving what amounts to a pay cut once the state forces them to pay thousands of dollars more each year for health insurance.
“While collecting less in dues, AFSCME and ISEA [the state’s two largest public-sector unions] will have to spend money conducting certification elections. In the worst-case scenario, one or both unions could become de-certified. Assuming they survive the certification process, both unions will likely be forced to cut staff and will have less money to spend on volunteer recruitment for phone-banking and canvassing on behalf of endorsed candidates.”
Pitting Us Against Them
On the surface, attacking unions in this fashion would seem to be bad politics for Republicans.
A 2014 survey by Gallup asked: “Do you approve or disapprove of labor unions?” Fifty-three percent approved, and 38 percent disapproved.
But you don’t need to scratch too deeply to see it differently.
For one thing, the approval/disapproval splits based on party affiliation are as one would expect: 77/19 among Democrats, 47/40 among independents, and 32/57 among Republicans.
For another, support for unions has eroded – both since the middle of the 20th Century and over the past two decades. The overall support is substantially lower than in the late 1950s (with a 75/14 split) and even a late-’90s peak (65/28).
And when one considers another factor, anti-union legislation makes a lot more sense.
First, understand that the Gallup question is broad and to a large extent abstract. To “approve or disapprove of labor unions” is different from approving or disapproving of the effects of labor unions. A person could support the idea of labor unions, for example, without supporting the effect that labor unions have on goods and services. (Higher wages and benefits secured by unions, of course, raise prices – or, in the case of public-sector unions, taxes.)
Second, the question ignores trends in union membership. As Daniel Disalvo wrote in National Affairs in 2010: “Since the middle of the 20th Century, organized labor in America has undergone two transformations with major implications for the nation’s politics. The first is the dramatic decline in overall union membership. In 1955, organized labor represented one-third of the non-agricultural workforce; today, it represents just 12.3 percent. The second transformation, however, is even more significant: the change in the composition of the unionized work force.
“As private-sector unions have withered, public-sector unions have grown dramatically. The Bureau of Labor Statistics reports that, in 2009, for the first time ever, more public-sector employees (7.9 million) than private-sector employees (7.4 million) belonged to unions. Today, unionized workers are more likely to be teachers, librarians, trash collectors, policemen, or firefighters than they are to be carpenters, electricians, plumbers, auto workers, or coal miners.”
Although the number of union workers is roughly equal in the private and public sectors, the rates of unionization are not. The Bureau of Labor Statistics reported that in 2016, “Public-sector workers had a union membership rate (34.4 percent) more than five times higher than that of private-sector workers (6.4 percent).”
Disalvo summarized: “The rise of government-worker unionism has also combined with the broader transformation of the American economy to produce a sharp divergence between public- and private-sector employment. In today’s public sector, good pay, generous benefits, and job security make possible a stable middle-class existence for nearly everyone from janitors to jailers. In the private economy, meanwhile, cutthroat competition, increased income inequality, and layoffs squeeze the middle class.”
That discrepancy provides a wedge, allowing for a war on unions that’s not necessarily a war on workers. Because labor unions represent such a relatively high percentage of government employees – what Citizens Against Government Waste calls a “privileged class” – legislatures can attack government labor unions in the name of the common worker. It’s ostensibly a fight to level the playing field, bringing the government worker down to the level of everybody else to protect taxpayers.
Gaps in Compensation
You can find lots of seemingly definitive analysis comparing private- and public-sector pay. Most will claim that government employees are compensated better than workers in the private sector, and some will claim the opposite. For the most part, these are cherry-picked analyses meant to confirm a conclusion.
For an unbiased view of things, the nonpartisan Congressional Budget Office concluded in 2012 that “overall, the federal government paid 16 percent more in total compensation than it would have if average compensation had been comparable with that in the private sector, after accounting for certain observable characteristics of workers.” Federal-government workers without a bachelor’s degree earn higher wages than their private-sector counterparts, the study said, and total compensation for federal workers was higher up through employees with master’s degrees. In other words, except for workers with more than a master’s degree, federal-government work is a pretty sweet deal when total compensation is considered.
Although that study didn’t compare union workers against non-union workers and didn’t include state- and local-government employees, the findings are consistent with similar studies looking at differences in public- and private-sector compensation.
This shouldn’t be surprising. Given the unionization rates in government compared to the private sector, it’s common sense that public-sector workers have better compensation packages, no matter the body of government. That’s what unions do.
The problem comes with differences in benefits.
As the private sector has shifted away from defined-benefit pension plans, for example, the public sector has not – at least not quickly. As I noted in a 2012 article, “84 percent of local- and state-government employees had access to a defined-benefit retirement plan” in 2011, while only 13 of the Fortune 100 companies offered a defined-benefit plan.
Health insurance is another area where public-sector benefits are much more generous than in the private sector. According to an Iowa Legislative Services Agency evaluation, for example, in 2016 the state picked up 95.4 percent of employee-health-insurance costs.
And governments can’t afford those benefits at current taxation and spending levels. For one segment of Iowa employment contracts from Fiscal Years 2005 through 2015, state outlays for health-insurance premiums increased 64.6 percent, with those state contributions growing from 11.7 percent of salary and benefits in 2005 to 15.1 percent in 2015.
On the pension front, according to the Pew Charitable Trusts, states in 2014 had nearly a trillion dollars in unfunded pension liability, with a funding ratio of less than 75 percent. Illinois had more than $111 billion in pension debt (with a funding ratio of 41.3 percent), while Iowa had more than $4 billion in pension debt (with a funding ratio of 87.4 percent).
This reflects short-term legislative thinking, because employee pensions are a bill not yet due – a benefit whose cost can be (and too often has been) kicked down the road for future legislators to deal with. (Illinois’ pension benefits – guaranteed by the state constitution once given – were never going to be adequately funded without massive tax increases.)
The Nuclear Option
These are very real problems demanding serious, measured, bipartisan discussion. They merit soul-searching by elected officials and unions alike. They deserve more consideration than Iowa Republicans gave them in February, when they rammed through legislation that smells like political opportunism.
Public-sector unions absolutely should have a role in addressing the stress that their members place on taxpayers and government budgets. As Michele Masterfano wrote in 2013 at the reliably liberal HuffingtonPost.com, “Union leaders ... need to understand business more – the financials, the trends, how to evaluate the viability of a business or state/city/municipality they work for. ... Union members and their leadership also have to come to the table with reasonable requests, particularly in trying economic times. Negotiating to a win-win is much more reasonable than assuming it is a zero-sum game that must be won at all costs.”
It’s certainly possible that unions wouldn’t play nice – that they’d be unwilling to make concessions substantial enough to provide governments with greater budgetary flexibility while bringing compensation packages closer to what’s available in the private sector. But they should have been given the opportunity through more-modest reforms of the state’s collective-bargaining process.
Instead, Republicans chose the unilateral nuclear option of House File 291 – trying to kill public-sector unions.
