Future of Public Sector BargainingFPELRA-Steven Rosenthal

President, The Training Tree, Inc.

Future of Public Sector Bargaining

in Florida

Chaos: 1974-1978

Infancy: 1978-1984

Adolescence: 1984-1992

Adulthood: 1993-2007

Middle Age & the Future

Let’s Look at Historical Data and Ask the Right Questions?

• We must investigate a Possible, Probable or Preferable Future?

• How did we get where we are in 2011?• Why do we seem to be going in a

catastrophic direction?• What will we need to do to change the

course?• Are we strong enough to meet the challenge?

Why Did We Have Unions In The First Place?

A labor union is a group of workers who have organized in order to pursue common work-related goals, such as better wages and benefits, safer worker conditions, and greater job security.Unions were a reaction to the times and how people were treated. “You get the Union you deserve.”

The Basic Structure of Unions Came From A Guild, Trade and Industrial Mentality

• Craft Union – workers that have the same skill or work in the same profession

• Industrial Union – workers who are employed in the same industry regardless of their specific skill or profession

Why did Local and National Unions Emerge?

Local and National Unions were created as a reaction to the times. How were employees being treated?

Local Unions provide services to the members:– Legal Advice

• Collective bargaining Services-Safety and Security

• National Unions provide the high profile and national voice for the labor movement. – Lobbies Congress in support of

labor legislation– Encourages political activism – Support efforts to increase

union membership

Historical Perspective– Employment at will prevalent prior to 1930s

– Employers took advantage of this doctrine to discriminate against workers who attempted to organize or join unions

– Courts supported employers

– The Depression of the 1930s changed the public’s view of unions

–Many key labor laws were enacted during The Depression in support of unions.

Labor Laws in the United States

Norris-LaGuardia Act (1932)– Workers had a legal right to organize– Made it difficult to get injunctions against union activities

National Labor Relations Act– Illegal for employers to discriminate based on union

membership– Established the National Labor Relations Board– Established voting procedure for workers to certify union

as the bargaining agent– Required employers to recognize the union and bargain in

good faith

Labor Laws in the United States

Fair Labor Standards Act– Banned many types of child labor– Established the first federal

minimum wage– Established a standard 40 hour

work week– Required that workers receive

overtime pay

Labor Laws in the United States

• The labor laws enacted in the 1930s resulted in a surge in union membership• After WWII, unions began to take advantage of their new-found strength• In the first six months of 1946, almost 3 million workers went on strike• The strikes created serious disruptions and created a fear of big labor

Work Stoppages in the United States

Managing Labor Unions

Taft-Hartley Act (1947)Declared unfair labor practices by unions illegalAllowed employers to speak against unions during organizing campaignAllowed members to decertify their unionEstablished provisions for emergency strikes

Landrum-Griffin Act (1959)Guaranteed all workers the right to participate in union meetingsEstablished secret ballot election of officersRequired filing of financial statementsProhibited felons from holding union office

Right-to-Work Laws

Union Shop – employers can hire workers who don’t belong to the union but nonunion workers must join the union within a specific amount of time to keep their jobs

Closed Shop – workers must belong to the union before the employer can hire them

Right To Work States

FDR was Right!

In the public sector, said FDR, "the employer is the whole people, who speak by means of laws enacted by their representatives in Congress." Allowing public-employee unions to engage in collective bargaining would mean opening the door to the manipulation of government policy by a privileged private interest.

There was a time when even pro-labor Democrats objected to public-sector unionism. "The process of collective bargaining, as usually understood, cannot be transplanted into the public service," President Franklin D. Roosevelt wrote in 1937 to the head of the National Federation of Federal Employees.

The Tide Turns After WWII

In the ensuing half-century, the public sector in the United States has grown enormously. The number of government employees at all levels surged from about 8.2 million in 1959 to 22.5 million in 2009. Historically, government work paid less than comparable employment in the private economy, but greater job security and good pensions compensated for the lower wages. No longer: now government workers tend to fare better than private-sector workers across the board—not only in job security and pensions but in wages and other benefits as well.

The Data Shows The Disparity

Nationwide, according to BLS data for 2009, state and local government employees were paid an average wage of $26.01 per hour, which was 34 percent higher than the average private-sector wage of $19.39 per hour. Even more lopsided was the public-sector advantage in fringe benefits, such as health and life insurance, paid vacations and sick leave, and—above all—retirement income: state and local governments provided their workers with benefits valued, on average, at $13.65 per hour, a 70 percent premium over the average benefits package in the private sector.

The Disparity Widens

In addition to being more expensive, the benefits that come with government jobs are provided to more employees. Life insurance, for example, was offered to 80 percent of employees working for the government but to just 59 percent of workers in the private sector. Traditional defined-benefit pension plans were available to 84 percent of government workers—but to only 21 percent of private employees.

The Public Sector Abuse Is Everywhere

In July 2009, The Boston Globe interviewed Scott Lang, the mayor of New Bedford, Mass., and a rarity -- especially among Democrats -- in his willingness to call urgently for rolling back public pensions and health benefits.

He says current pension and health insurance systems for city employees have to go, period. If not, they will destroy the city and its ability to maintain the services people expect like public safety. . . .

"It's absolute insanity. They're unsustainable," he says about pensions. "There isn't the money to pay for an unfunded liability like that. All the revenues will be eaten up by past-due promises."

The Creation of Pension Pathology

The excesses in government pensions have drawn mounting scrutiny in recent years. Every day there are a dozen or more fresh links at the invaluable website PensionTsunami.com, which aggregates the latest press coverage of the "multiple pension crises that are about to drown America's taxpayers." Even traditionally liberal, government-friendly publications -- the Boston Globe, the New York Times, the Washington Post -- have devoted considerable attention to the exploding costs of public pension plans and the many techniques state workers can use to "spike" their retirement payout.

It Just Keeps Skyrocketing!

1. Unsustainable Pensions2. Escalating Health Care

3. Liberal Disability

4. Additional Benefits

5. Vacation, PTO, Sick Leave Payouts

6. Shorter Careers and Double and Triple Dippers

The Fundamental Flaws-No.1

But public-sector unions face no such constraint. The government agencies they bargain with don't have to make a profit or retain customer loyalty; they can't go out of business or relocate to another state.

First, unlike their counterparts in the private sector, government unions are largely free from market discipline. Unions operating in the private economy know that there are limits to the demands they can make of an employer; private firms have to earn a profit to stay alive, and competition swiftly punishes those that fail to control cost and quality.

The Fundamental Flaws-No.2

Government services tend to be legal monopolies, a strike by any public employee inflicts pain on the public at large. The union seeks to pressure management by making conditions so miserable that voters will pressure public officials to end the crisis by acceding to the union's demands.

A second advantage lies in the difference between public- and private-sector strikes. In business, a strike (or the threat of a strike) is an economic weapon that takes a toll on both sides: management suffers the loss of business, and labor must absorb the loss of wages.

The Fundamental Flaws-No.3

• Labor and management frequently both stand to benefit from higher wages and more munificent retirement income. One group will eventually get if the other group is given it.

• Limited “real incentive to curtail or end” the benefit.

In public-sector collective bargaining, the fox is watching the hen house-In fact the Fox is in charge of the hen house.

The Problem Mounts With Political Lobbying-Just one Union Snapshot

SEIU spent $67 million to elect Barack Obama and other Democrats in 2008. In the first nine months following Obama's inauguration, union president Andrew Stern visited the White House 22 times—more than any other visitor. Several top SEIU officials were appointed to posts in the new administration, including Patrick Gaspard, who became the White House political director, and Craig Becker, who was named to the National Labor Relations Board. "SEIU is on the field, it's in the White House, it's in the administration," gloated Stern

The Federal Government is Even More Generous With Your Dollars.

The government advantage at the federal level is even more alarming. Total federal civilian compensation in 2008 averaged $119,982—more than twice the $59,908 in wages and benefits earned by the average private-sector employee. Federal employees in 1960 averaged $1.24 for every $1 earned by an American in the private sector. By 1980, that $1.24 had grown to $1.51; in 2000 it was up to $1.66. Now it is $2—and climbing.

The State of the Unions: Achievements, Problems, and Challenges

• Most union workers earn 10% - 20% more than nonunion workers.

• In 2008, 91% of Union workers had health insurance, compared to 58% of nonunion workers.

• 57% of union members had paid personal leave days compared to 38% of nonunion workers.

Unions and Compensation

Unions and Job Security

• Grievance procedures give workers represented by unions more protection against arbitrary dismissal than nonunion workers.

• Procedures in CBA’s make it harder and longer to try to dismiss a union employee.

• Over these stressful economic times employees have seen attempts to cut back benefits and have seen reductions in force-Answer-A Union Couldn’t Hurt-look at the statistics.

The Disparity Continues to Widen

In 2009, 12.3 percent of the total U.S. work force was unionized, a drop from nearly a third during the mid and late Fifties. Among private-sector employees, only 7.2 percent belonged to a union last year; in the public sector, the figure was 37.4 percent. In absolute numbers, public sector employees have more members than their private sector counterparts - 7.9 million vs. 7.4 million. Indeed, even though the unemployment rate in 2009 rose to around 10 percent, total government employment grew by 16,000 to reach a record-high 22.5 million.

The Disparity Continues to Widen

Another way of looking at this: the public sector topped 7.9 million, or 37.4 percent of all federal, state, and local government jobs. The share of government workers belonging to labor unions, in other words, is more than five times the unionized share of the private sector. Union membership in private industry peaked at 35.7 percent in 1953 and has dwindled ever since. In the public sector, unions surpassed that level years ago and show no sign of weakening.

The Disparity Continues to Widen

In addition to being more expensive, the benefits that come with government jobs are provided to more employees. Life insurance, for example, was offered to 80 percent of employees working for the government but to just 59 percent of workers in the private sector. Traditional defined-benefit pension plans were available to 84 percent of government workers—but to only 21 percent of private employees.

Fear From Proposed Federal Legislation

Second, the incidence of strikes and work slowdowns may increase. States enacting public sector laws have experienceda 400 percent increase in job action activity, notes the Springfield, Va.-based National Right to Work Committee.

First, the law will trigger an explosion of state and local collective bargaining units. Creating these entities would require hundreds of millions, if not billions, of taxpayer dollars to negotiate contracts.

The Future Begins Now!

In Florida we will see the jockeying for political position to see the ebb and flow of the Public Sector union game!

PUBLIC-SECTOR UNIONS are here to stay and will fight to avoid giving any benefits back, and with their immense political clout, they will not be easily defeated. But neither will it be easy to ignore the widening deficits created by union benefits and salaries. We will watch the political pandering to the public sector union block and see Americans working in the private sector, whose standard of living is being eroded by higher taxes and fees and a shaky economy become more disheartened.

Florida’s Public Sector

In Florida we will see some cities limiting any hiring of full time employees (only PT) –leasing employees will finally “catch on” and unions will try to legislatively force employees to be hired with benefits.

• Revisiting the Impasse Process and eliminating the “Endless Bargaining” scenarios that exist. An ugly fight!

• Assaulting the political theater for “binding arbitration.”

• Tiered benefit contract provisions as benefits and provisions -“sunset.”

• Revenue enhancements scrutinized by the public as inappropriate and “unconstitutional.”

Nationally A Rocky Road

• A Struggle of Political Influence

• Reinventing Models For Systems That Can’t Be Sustained ( Health Care, Pay Plans & Job Descriptions, Portable Benefit Construction, and Pensions)

• Creating Shared Responsibility for “Sustainability.”

The Future For FPELRA

Uniting all public sector employers to lobby heavily against specific issues supported by labor unions at the state and national level.-the fight is revisited.

Renewed Political Focus-Back to the Activity of the 1970’s and Early 1980’s

More Specialty Training-Pensions, Benefits, Health Care

Using Technology To Keep Current Information Flowing To Management

More Training On-Line and Inter-Active.