Tuesday, February 22, 2011

Mayhem in Madison

If you've been following the national news, then you've probably seen videos of the large teacher and state employee protests in Madison, Wisconsin.

The protesters are challenging the Republicans' and new governor Scott Walker's plan to end state employee unions' ability to engage in collective bargaining.  As I understand it, the Republicans are hoping to cut state employee's pay, health benefits, and pension benefits.  They claim that state employees receive higher compensation than workers in the private sector and that since Wisconsin has a large budget deficit, it can no longer afford generous benefits for state employees.  These claims are probably factual.

The proposed pay and benefit cuts might be justified, and they may make economic sense.  What does this foretell for the future of the American middle class?  How did our nation's economy devolve to this point?  Earlier today I heard a radio interview where a supporter of the new policy said that the problem is that state employees are receiving more compensation than people in the private sector.  I disagree.  I think the root cause of the problem is that our nation's economy and labor markets are depressed and have been trending downward for years resulting in compensation and job security inferior to that of state employees.  In other words, the problem is not that teachers and state employees are paid too much; the problem is labor market conditions that dictate low pay for everyone else.

Unfortunately, the proposed Wisconsin cuts are not the opening shot in a war against the American middle class.  Rather, it's just another salvo in a war that our politicians (on both sides of the aisle) and the wealthy elite have been waging against the lower classes for decades.  Presumably, Wisconsin's budget deficit is the product of a vicious circle of decreasing tax revenue and an increased demand for social welfare services (unemployment compensation, welfare, etc.).  Increased unemployment and underemployment decreases state tax revenues and increases the need for social welfare services.

As I pointed out in my last post, our nation's job markets have been racked by global labor arbitrage.  Over the past several decades our government's economic policies have displaced American workers and depressed their wages by sending millions of jobs (including many knowledge-based jobs) overseas, by importing hundreds of thousands of foreign workers on H-1B and L-1 visas to displace college graduates, and by encouraging millions of poor immigrants to flood into the country, displacing lower class Americans from their jobs and putting downward pressure on their wages.  (Does your nation have unemployment and underemployment problems?  Do millions of people live in poverty?  Solution: import millions more poor people and send jobs overseas.  Brilliant!)

Thus, it was inevitable that Wisconsin and other states would eventually be forced to reduce compensation for teachers and state employees.  Public school teachers and other state employees could enjoy decent pay and generous health and pension benefits for only so long while the rest of the populace became increasingly impoverished.  It's easy to understand how taxpayers could resent state workers' job security, yearly raises, and generous benefits.  (Pension? Who the hell has a pension these days other than government employees and perhaps some unionized auto workers?)

What many people don't realize is that the unions they resent also benefit non-union workers in various ways.  It's regrettable that they are too ignorant to direct their ire at the real causes of our nation's and states' economic problems.  Instead, middle class Republican supporters and union busters are unwittingly cheering on the the demise of solid, secure middle class jobs in the name of fiscal responsibility and free market principles (which they hold in a manner akin to zealous belief in religious dogma).

Welcome to the plight of the American middle class, Wisconsin public school teachers and state workers.


Anonymous said...

How long has it been since a union label was any sign of quality, workmanship, or value for money? About two generations. Nowadays, anything with a union label on it generally means overpriced if not poorly made. This is why government is the last refuge of the union movement. Government is inherently a monopoly and can use the police power of the state to take from you whatever it wants. Your only recourse is a political tax revolt at the polls, which is exactly what happened in Wisconsin. Now the government unions and the Democratic politicians who represent them are trying to defeat the democratic process and they will resort to any illegal or unfair means. Their problem really isn't Gov. Walker, their problem is the Wisconsin voter, whom they are infuriating even worse than they did last year.

Ken said...

Shared this Blog with CCAP, a DC group that promotes awareness of college costs.


Frank the Underemployed Professional said...

Thank you, Ken. I have been aware of the CCAP for some time and I like its work. Richard Vedder is almost a lone voice in academia. When I get the time I am hoping to put up a post lauding one of their recent publications.

Anonymous said...

You have written the truth. In Canada, where I'm from, the results are similar, just slower in coming but coming indeed. It's important to note that unions provided the wage levels, benefits and pensions in the first place to all employees, not just union employees. Now, with most of it being taken away, starting in Wisconsin, all employees now head to the bottom. Just go back about 120 years to see what it was like for workers and what we are now heading towards. We North Americans will become like any third world country, with a few rich upper class folk and a massive lower class fighting tooth and nail for jobs and survival. The thing is, US Americans are eventually going to see this truth, whether it's hidden behind republican doctrine or not, because they will see the fall of the unions and reduction of government and there will be nothing left to rail against, and they will still be unhappy. They will figure out they've been screwed by the system, they will remember what they had and what they have lost. Americans are fighters and I am concerned about eventual uprising against the government and against the upper class, just like in the middle east. It's practically guaranteed it will come and it won't come from the liberals. It will come from the conservatives who have been sold a party line but will find they've been completely hoodwinked. Their anger and actions will know no bounds. My call is this: America, remember what you had in the early 80's. Remember it well. Teach your children what you had. Teach them they must fight for quality education, quality jobs, opportunity for advancement, benefits, holiday/leisure time and good pensions because that's what you once had and you were reasonably content. Don't blame government for everything, put pressure equally on government, business and industry to give you what you once had, union or no union.

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