- ISIL creates all-female brigade to terrorize women into following Sharia law
- ISTOOK: Obama wants to be impeached
- Obama to Latin leaders: Help with border
- Military bans troops from Baptist church event honoring ‘God’s Rescue Squad’
- ‘Pocket drones’: U.S. Army developing tiny surveillance tools for the next big war
- Belgian cafe posts sign: Dogs allowed, but Jews stay out
- Gen. Dempsey: Pentagon studying Russian readiness plans not viewed ‘for 20 years’
- John McCain: Botched, two-hour execution of murderer is ‘torture’
- House GOP ready to move border bill
- Bomb squad called after live WWII artillery washes on Cape Cod beach
Unions at crossroads in states’ budget wars
Public employees are taking big hits
Question of the Day
Public employee unions, the last bastion of an American labor movement in decline, are facing the fight of their lives this year as strapped state and local governments seek to permanently downsize their pensions, pay, benefits and bargaining rights.
Powerful unions such as the National Education Association (NEA) and the American Federation of State, County and Municipal Employees (AFSCME) have been bruised in battles with Republican governors and legislators in Ohio, Wisconsin, Indiana and other states that are grappling with record budget shortfalls and fighting to stave off insolvency.
Even where state governments are controlled by Democrats, public employees such as teachers, firefighters, police and janitors are facing unprecedented layoffs, furloughs and cutbacks as a result of hemorrhaging revenues and burgeoning demand for services caused by the Great Recession.
After Republicans took control of state governments in fall elections, Democrats from the Oval Office on down came to the defense of unions, which have been among the party’s most ardent and generous backers for decades.
Even with powerful political figures such as President Obama in labor’s corner, analysts expect the sheer size of record budget gaps at all levels of government to force unions this year to produce even more major concessions. They point to the significant curbs in labor costs accepted by Detroit’s autoworkers in 2009 in the wake of the industry’s bankruptcy and national financial crisis.
“A lot can be learned from the auto industry in the last three years. For the survival of GM and Chrysler, the unions had to change a lot of the formulas for retirement. They had to do it because the cost of benefits is way too high,” said George Walper, president of the Spectrum investment group.
A different environment
Like the auto industry, state and local governments negotiated generous retirement formulas and health care benefits for employees in decades past, when such perks seemed less costly and the U.S. economy and industries were not facing stiff global competition for jobs, he said.
“It’s a different environment today,” and governments that depend for their revenues on taxing private-sector industries and employees are finding that, just like businesses, they can no longer afford overly generous benefits, he said.
General Motors Co., Chrysler LLC and other top American corporations have been forced to downsize and reform or face bankruptcy in recent years, while state, local and federal governments were able to postpone their reckoning by going deeper into debt.
Generous aid in Mr. Obama’s $821 billion stimulus bill in 2009 provided money for education, infrastructure and energy projects, allowing states and cities to postpone major cutbacks, layoffs and reforms.
But this year, the federal aid is disappearing, states and cities are reaching the limits of their capacity to borrow at favorable rates, and the delayed effects of dramatic drops in revenues from sales, property and other taxes are being felt with full force. The result: showdowns in state government over budgets and spending from coast to coast.
Nicole Gelinas of the Manhattan Institute said the stimulus and record state and local debt issuance of more than $3 trillion in recent years only papered over overspending problems and postponed the inevitable trade-offs.
“States are spending too much money on their work forces,” she said. As “disastrous” as the bailouts of GM and Chrysler were, “at least the auto companies and unions had to acknowledge that their labor costs were outdated and unaffordable.”
© Copyright 2014 The Washington Times, LLC. Click here for reprint permission.
About the Author
- Energy Department eyes regional gas reserves for emergency use
- Economists see signs of another market bubble
- Crude oil will head north of the border to Canada
- S&P: Boeing to suffer if Ex-Im Bank killed
- U.S. job gains, unemployment dip push markets into record territory
Latest Blog Entries
TWT Video Picks
By Mark Davis
The nation founders, the Lone Star State thrives
- Rahm Emanuel: Send illegal immigrant shelter kids to Chicago
- 'Pocket drones': U.S. Army developing tiny spies for the next big war
- Tactical advantage: Russian military shows off impressive new gear
- CURL: Obama, staffers not even pretending any more
- Pentagon running out of time to find mass of missing weapons in Afghanistan
- Family of Marine killed in Afghanistan pushes back against cover-up
- NAPOLITANO: What if our democracy is a fraud?
- Military bans troops from Baptist church event honoring 'God's Rescue Squad'
- WEST: Those who would rather join the jihadi army than their own nation's army
- Obama orders Pentagon advisers to Ukraine
Obama's biggest White House 'fails'
Celebrities turned politicians
Athletes turned actors
20 gadgets that changed the world
Fighting in Iraq