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.

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