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Who Really Stands to Win in the Union Fights?

Wednesday, May 11, 2011

Putting the contretemps in Wisconsin and other states in context.

The recent battles in Wisconsin and other states over the rights of public employee unions resemble another epic union confrontation from the recent past that occurred in another Midwestern community also thought to be a union stalwart: Peoria, Illinois.

In the mid-1990s, the United Auto Workers (UAW) battled against Caterpillar, Inc. and suffered what was categorized at the time as a massive defeat. But it’s worth revisiting the episode because what seemed at the time a defeat for union workers ultimately led to higher employment and better compensation for most of Caterpillar’s workers and ultimately proved a boon for the entire community as well.

Given time, the same thing will also likely prove true in Wisconsin.

Caterpillar Battles the UAW

In the early 1990s, a series of fierce battles occurred between the UAW and Caterpillar over the principle of pattern bargaining (which held that every union contract in an industry should be more or less identical to the others). The battles resulted in a protracted strike, followed by a few months of an unsteady truce, and then another strike, at which point Caterpillar locked out workers and set out to keep factories running without them.

From the union perspective the strike proved a resounding failure: Retirees and engineers, supplemented with replacement workers who crossed the picket line, ran the factories just fine, and actually managed to improve productivity—and profits—during the time they were on the assembly line. After 18 months of being off the job, the union agreed to the company’s proposed contract and returned to work. The contract included a two-tier wage system with lower wages for new employees and gave the company the ability to set work rules, which included the ability to contract out certain jobs within the plant to outside companies.

Not a lot of people I know in Wisconsin feel sorry for state employees: their perception is that they are better compensated, have more job security, retire earlier, and have jobs that require less effort and come with less stress than most people.

A key to Caterpillar’s ability to hold out against the strikers is that the citizenry failed to rush to the unions’ side, which caught the UAW off guard—particularly the number of people willing to take their jobs. Other union workers across the country formed picket lines and sent messages of support, and the national press was largely favorable to the plight of the UAW. The national UAW, fearful of the challenge to pattern bargaining, tripled the normal weekly strike pay to $300. But the typical Peorian found it difficult to muster much sympathy for the striking workers.

One reason for the tepid community support was that the average Central Illinoisan did not earn anything near the salary and benefits of the Caterpillar workers. My friends living in my hometown of Peoria at the time were far from lazy and had some college or post-high-school training. Many were working multiple jobs and approaching their 30th birthday yet did not make enough money to start a family. They had little empathy for less-skilled workers going on strike and making two or three times their salaries.

The simmering resentment towards high-paid union workers was not unique to Peoria, I discovered.

The Wisconsin Public Employees Union

A few months after the strike in Peoria ended, I finished graduate school and took a job as a professor at a state university in Wisconsin, where I quickly made the acquaintance of the public employees’ union. It wasn’t enjoyable.

Early in my academic career, I felt the “publish or perish” pressure, exacerbated by a college committee that recommended my dismissal for failing to publish my first year on campus. With no family and few friends in town, I redoubled my efforts and began spending my days and nights in the office, writing academic papers.

For the unions, the strike was a resounding failure: Retirees and engineers, supplemented with replacement workers who crossed the picket line, ran the factories just fine, and actually managed to improve productivity—and profits.

As a result I ate most meals in my office, which meant I generated a lot more garbage than my colleagues, all of whom had families and tenure and better things to do at night than write research papers. They were fine with our janitor’s practice of emptying the garbage every week or so, while I was not—especially since he was tasked with doing this daily. One day I asked if he could clean my office a bit more regularly, to which he responded by distributing a memo suggesting that faculty avoid disposing of malodorous items—such as orange rinds, banana peels, or apple cores—in our garbage can.

Not satisfied with being told not to put garbage in my garbage, I asked the janitor’s supervisor to intervene. No dice, I was told; the union filed a complaint against me on his behalf (the specifics of which were not provided to me) which the college disposed of by relieving him of having to clean my office. The only rub—from my perspective—was that it did not assign anyone else to clean my office. For the rest of my tenure, I emptied my garbage and vacuumed my floor.

While we professors were not unionized, just about everyone else on campus was. Professors did benefit from some union victories—for example, I made no contribution to my pension or health insurance during my academic career, one thing that is addressed by the legislation recently signed by Governor Scott Walker.

However, our non-union salaries lagged those of most of the other state employees: While I did make more than my indolent janitor, his overtime pay made it a close race, something he loved to point out to anyone sitting near him when I happened to be within earshot at the local bar we both frequented. My first research assistant graduated to a job teaching at a nearby high school for more money than I made, and the prison guard, state cop, and public defender on my recreation league basketball team all out-earned me.

A key to Caterpillar’s ability to hold out against the strikers is that the citizenry failed to rush to the side of the unions, which caught the UAW off guard.

I am not trying to elicit sympathy for my low salary at the time—I made a typical salary for a new economics professor—but to illustrate that the public employees’ unions achieved a standard of living for their members that was the envy of a good portion of my friends and neighbors.

At the same time, Wisconsin was (and remains) a high-tax state and it was unclear to me whether the government services were worth their cost. During my first year in Wisconsin, I had my car realigned three times due to the wretched quality of the city streets, and after a heavy rain my part of town smelled literally like excrement, owing to an outdated sewage treatment plant. And in one of the most humiliating episodes of my life, my arrival to town coincided with a neighborhood crime wave, to which the police responded by making me suspect number one (and asking my neighbors to help with surveillance) until the culprit was caught red-handed, months later and only after breaking into several houses on my block.

I eventually received tenure, which I resigned to take a job in Washington, D.C. Before departing, I had been warned by about the high taxes and dysfunctional government in the District, but the city has been a pleasant surprise in both regards. Perhaps Wisconsin set a low bar for me.

Lessons Learned

Wisconsin taught me that citizens will put up with high taxes if they get services at least somewhat commensurate with the taxes they pay, which has not been the case in Wisconsin for quite some time.

Not a lot of people I know in Wisconsin feel sorry for state employees: their perception is that they are better compensated, have more job security, retire earlier, and have jobs that require less effort and come with less stress than most people. The most amusing manifestation of the elevated financial status of government employees was how more than one of my bachelor friends would use “I work for the state” as a pickup line—even a few of them who, in fact, did not.

The special status of state government workers in Wisconsin has been true for a while now, but the phlegmatic people of Wisconsin tolerated it as long as no additional sacrifices were asked of them in the form of higher taxes or lower services. The Great Recession made that no longer possible.

Ike Brannon is director of economic studies at the American Action Forum.

FURTHER READING: Michael Rosen reveals “The Real Problem with Government Employee Unions,” Alex Pollock offers “Municipal Debt Crises: Some Historical Perspective,” and Andrew Biggs discusses “The Protected Class?” Karlyn Bowman and Andrew Rugg research “Public Opinions on Taxes: 1937 to Today,” Biggs examines “Impediments to Job Creation,” and Jonah Goldberg says “Public Unions Must Go.”

Image by Rob Green/Bergman Group.

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