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*** UPDATED x1 *** Bad times ahead for public sector unions

Wednesday, Jun 27, 2018

* NPR

Government workers have been a relative stronghold in an otherwise shrinking labor movement. More than a third of the public sector workforce is unionized, compared with less than 7 percent in the private sector.

A survey by the AFSCME — the union Janus would have to pay into — found that if agency fees were no longer mandatory, 15 percent of employees would stop paying them while 35 percent would continue to pay. The balance of workers were “on the fence.”

* Also…

Hi Rich:

I just wanted to let you know about our May 2018 study on the Janus decision with Professor Robert Bruno at the University of Illinois at Urbana-Champaign.

Here is an online version of the press release. […]

We find that the ruling could have devastating effects on paychecks and the national economy. Toplines for Illinois specifically are that we expect unionization to fall by 49,000 members, public sector wages to fall by 3.5% on average, and the economy to shrink by $750 million to $2 billion.

Thanks!

Yours,

Frank Manzo IV
Policy Director
Illinois Economic Policy Institute
Midwest Economic Policy Institute

The analysis is here.

*** UPDATE *** Hmm…



- Posted by Rich Miller        

72 Comments
  1. - Reality - Wednesday, Jun 27, 18 @ 9:37 am:

    Looking forward to the non-union “study” to compare with this pro-union “study.


  2. - ZC - Wednesday, Jun 27, 18 @ 9:39 am:

    Yes because all “studies” are equally valid, “Reality.”


  3. - Sprite - Wednesday, Jun 27, 18 @ 9:40 am:

    15% of employees would stop allowing the unions to force them to pay for dues into an organization they don’t believe in. 35% are “on the fence” about whether they will CHOOSE to pay into the Union. #Righttowork


  4. - Fantasy - Wednesday, Jun 27, 18 @ 9:41 am:

    =Looking forward to the non-union “study” to compare with this pro-union “study.=

    So you think wages are going up because the union is weakened?
    Your “reality” must be snark.


  5. - Downstate - Wednesday, Jun 27, 18 @ 9:42 am:

    65% were either on the fence, or won’t pay? That seems very high.

    Unions will have to market themselves to their members, just like charities do, to persuade them that the work they are doing is worth the contribution.


  6. - Fantasy - Wednesday, Jun 27, 18 @ 9:43 am:

    =they don’t believe in.=

    Anti-worker workers just got what they wanted.


  7. - Downstate - Wednesday, Jun 27, 18 @ 9:46 am:

    Just an FYI. There are DC based organizations already poised to contact union members to help them opt out of union dues.

    The impact of this will be felt by the unions in a matter of weeks.


  8. - Demoralized - Wednesday, Jun 27, 18 @ 9:48 am:

    ==There are DC based organizations already poised to contact union members to help them opt out of union dues.==

    They better be doing it after work hours.


  9. - Anonymous - Wednesday, Jun 27, 18 @ 9:49 am:

    Members opting out no longer have to worry about their membership fees being diverted to political groups such as Illinois Working Together.


  10. - Wordslinger - Wednesday, Jun 27, 18 @ 9:49 am:

    Bad time for public sector unions indeed. I don’t know if Trump supporters will ever get tired of all this winning.


  11. - James Knell - Wednesday, Jun 27, 18 @ 9:50 am:

    Even more power to the oligarchs… just awesome. Why should anyone worry?


  12. - Maximus - Wednesday, Jun 27, 18 @ 9:51 am:

    I would expect the government unions have already planned for this outcome and will implement some sort adjustment to their policies and spending since they already have an idea of how this would impact them financially. It cant be THAT much of a surprise that the judges ruled the way they did, right?


  13. - low level - Wednesday, Jun 27, 18 @ 9:52 am:

    Does AFSCME have to continue representing him? If Mark and others go off fair share, thats fine, but then they cannot continue to receive representation at contract time.


  14. - City Zen - Wednesday, Jun 27, 18 @ 9:52 am:

    ==public sector wages to fall by 3.5% on average, and the economy to shrink by $750 million to $2 billion.==

    So if the state reduced wages 3.5% across the board but used that money to increase social services or supplement higher education, does that still shrink the economy? Isn’t that more money to pay down pension debt?


  15. - Bulbous1 - Wednesday, Jun 27, 18 @ 9:52 am:

    Set aside wages for a moment. Right now if you’re union you have support during any discipline proceedings. Without that support you could be out on the street for any cause. Sure, no one plans on getting in trouble…but.


  16. - Demoralized - Wednesday, Jun 27, 18 @ 9:53 am:

    ==So if the state reduced wages 3.5% across the board ==

    Yes, we should be advocating for wage reductions. That’s a great plan /s/


  17. - anon324 - Wednesday, Jun 27, 18 @ 9:53 am:

    I’m not sure if either side’s scenario will actually come to pass. Federal government employee unions are already precluded from charging mandatory dues, and they (and their employees) are doing just fine.


  18. - Demoralized - Wednesday, Jun 27, 18 @ 9:53 am:

    ==Does AFSCME have to continue representing him? ==

    Yes, they do.


  19. - Birdseed - Wednesday, Jun 27, 18 @ 9:53 am:

    === - Demoralized - Wednesday, Jun 27, 18 @ 9:48 am:

    ==There are DC based organizations already poised to contact union members to help them opt out of union dues.==

    They better be doing it after work hours. ===

    They could just advertise on Cap Fax. Not really snark.


  20. - Honeybear - Wednesday, Jun 27, 18 @ 9:54 am:

    Nope, it’s renewal time
    The Second Coming of Labor
    Started today.
    I have faith in union


  21. - low level - Wednesday, Jun 27, 18 @ 9:54 am:

    ^ or for grievances. Go hire a labor relations attorney and spend big bucks.


  22. - James Knell - Wednesday, Jun 27, 18 @ 9:54 am:

    Speaking of tilted playing fields, I wonder how “Operation Red Map 2018″ is going? Pretty good with the recent gerrymandering decision, I guess.


  23. - Angry Chicagoan - Wednesday, Jun 27, 18 @ 9:54 am:

    Let’s be under no illusion about what has happened here; the Court has overruled a unanimous decision from as recently as 1977, a decision that included the votes of Scalia and Thomas mentor William Rehnquist and the notoriously labor-skeptical Lewis Powell.

    This is a major, major break from precedent.


  24. - Birdseed - Wednesday, Jun 27, 18 @ 9:55 am:

    === - anon324 - Wednesday, Jun 27, 18 @ 9:53 am:

    I’m not sure if either side’s scenario will actually come to pass. Federal government employee unions are already precluded from charging mandatory dues, and they (and their employees) are doing just fine. ===

    The Federales can print money.


  25. - Present - Wednesday, Jun 27, 18 @ 9:57 am:

    So as a prounion member I will up my PAC contribution. Everyone has a different situation. Now is the time to take action on yours.


  26. - low level - Wednesday, Jun 27, 18 @ 9:59 am:

    Janus and his merry band of conservatives will once again, want something for nothing. So much for accountability. Who are the true “takers”? So called conservatives. So much for all that manning up and accountability stuff!


  27. - Lets Be Adults - Wednesday, Jun 27, 18 @ 9:59 am:

    ==public sector wages to fall by 3.5% on average, and the economy to shrink by $750 million to $2 billion.==

    Economy to shrink? This is bad economics. Public sector wages are a payment from taxpayers to service providers(public sector employees). The money doesn’t disappear, it just stays with the taxpayers.


  28. - anon324 - Wednesday, Jun 27, 18 @ 10:04 am:

    ==The Federales can print money==

    While that is true, it doesn’t really enter into the issue of the power of a union in negotiations.


  29. - Lets be Adults - Wednesday, Jun 27, 18 @ 10:09 am:

    Right- It might(probably) will hurt union membership, but it wont destroy GDP.


  30. - A Parent - Wednesday, Jun 27, 18 @ 10:10 am:

    The Illinois arm of those DC groups contacting workers to drop out of their respective unions is the Illinois Policy Institute. Considering their track record of being good at anything other than preaching to their choir…I’m not that worried.


  31. - Anonymous - Wednesday, Jun 27, 18 @ 10:14 am:

    Demo warning people to do things after work hours while he/she posts during work hours.

    That is rich.


  32. - RETIRED 126 - Wednesday, Jun 27, 18 @ 10:15 am:

    Here in lies the problem with SCOTUS and all Federal judges. Nobody should be appointed to anything for life. The Supreme Court as I was taught is to render an opinion on cases as how they affect the constitution. Congress takes that opinion and forms laws accordingly. Scotus should never be allowed to legislate from the bench.


  33. - A Parent - Wednesday, Jun 27, 18 @ 10:15 am:

    The study doesn’t say the lost wages will shrink the GDP. The study states that less wages in workers pockets translates into less money being injected back into the economy. Pretty simple economics actually.


  34. - low level - Wednesday, Jun 27, 18 @ 10:16 am:

    What do you call it when you take something and dont pay for it? Theft. The SC just legalized theft of services.


  35. - Frank Manzo IV - Wednesday, Jun 27, 18 @ 10:17 am:

    Thanks for posting, Rich. We think our methodology is sound (see report) and expect our forecasts to be on par.

    To clarify for those questioning our economic impact findings, here’s what we wrote in the report:

    “There are two primary reasons why a post-Janus drop in public sector wages and salaries will have consequences for state economies. State and local government bodies typically provide middle-class salaries for occupations such as teachers, child care workers, counselors, social workers, corrections officers, police officers, firefighters, bus drivers, and office clerks and receptionists. Pay cuts for middle-class workers tend to have detrimental effects on local consumer demand (Dynan et al., 2004). … In addition, the drop in annual incomes would make public sector careers less attractive for talented jobseekers. The lower lifetime earnings associated with public sector employment opportunities would reduce the likelihood of college-educated and highly-skilled individuals deciding to become teachers, protective services professionals, and counselors. Over time, this ‘brain drain’ could reduce the quality of public services and public infrastructure, hurting the economy.”


  36. - Chris Widger - Wednesday, Jun 27, 18 @ 10:18 am:

    ==Does AFSCME have to continue representing him? If Mark and others go off fair share, thats fine, but then they cannot continue to receive representation at contract time.==

    The union wants to be representing people like Janus. There was a very competent Salon article on this earlier this month–it’s tempting to focus on the free-rider problem, but the divide-and-conquer problem is just as real. Open shops undermine solidarity by pitting workers who pay their “fair share” to support the union against those who don’t. The moment unions turn inward and represent a smaller number of workers rather than seeking to expand their base, unions just become another individualized service rather than a vehicle for broad class struggle. It’s a hard problem, but kicking Janus to the curb just accelerates the goals that anti-union folks have.


  37. - Frank Manzo IV - Wednesday, Jun 27, 18 @ 10:18 am:

    @A Parent: “The study doesn’t say the lost wages will shrink the GDP. The study states that less wages in workers pockets translates into less money being injected back into the economy. Pretty simple economics actually.”

    You did a better job of describing our study than I did ha.


  38. - Jibba - Wednesday, Jun 27, 18 @ 10:21 am:

    Precedent is only important when it conforms to you opinions.


  39. - City Zen - Wednesday, Jun 27, 18 @ 10:21 am:

    ==The study states that less wages in workers pockets translates into less money being injected back into the economy.==

    Wouldn’t the same reasoning apply to tax increases?


  40. - A Parent - Wednesday, Jun 27, 18 @ 10:22 am:

    Happy to help Frank.


  41. - Anonymous - Wednesday, Jun 27, 18 @ 10:27 am:

    So the next battleground will be whether unions will still be required to represent nonmembers, but this is the thin end of the wedge. If employers give nonunion members the same deal as the union members get, then Union numbers will dwindle to near zero. Clearly the plan all along, getting rid of political opponents. Vote accordingly in the fall.


  42. - A Parent - Wednesday, Jun 27, 18 @ 10:28 am:

    ==Wouldn’t the same reasoning apply to tax increases?==

    Well considering that tax cuts don’t necessarily rejuvenate consumer spending I’m not sure you can draw that conclusion regarding tax increases.


  43. - LC Illini - Wednesday, Jun 27, 18 @ 10:30 am:

    Easy solution. Now public sectors unions will have to demonstrate why paying to be a member is worthwhile. Just like anything else.


  44. - Ole General - Wednesday, Jun 27, 18 @ 10:31 am:

    On the update: So Moody’s agrees with Gov. Rauner that the public unions have undermined the fiscal health of Illinois. Do I have that right?


  45. - Anonymous - Wednesday, Jun 27, 18 @ 10:31 am:

    A Parent, you may want to brush up on econ if that is truly what you believe.


  46. - Person 8 - Wednesday, Jun 27, 18 @ 10:34 am:

    “Now public sectors unions will have to demonstrate”

    That’s like getting cable for free for a year, and thinking how great of a service it is. Then when they ask for you to start paying for their service you claim…naw….but keep giving me this awesome service for free.


  47. - A Parent - Wednesday, Jun 27, 18 @ 10:38 am:

    Anonymous 10:31 If you actually think economics is as simple as “cut taxes good, raise taxes bad” you’re the one in need of the economics lesson.


  48. - City Zen - Wednesday, Jun 27, 18 @ 10:39 am:

    ==Well considering that tax cuts don’t necessarily rejuvenate consumer spending==

    $500 in increased taxes is $500 I cannot spend elsewhere. Worse, it’s $500 I cannot save. While saving doesn’t help the economy today, it certainly helps it tomorrow.


  49. - VanillaMan - Wednesday, Jun 27, 18 @ 10:41 am:

    None of this is a surprise.
    The only people who will be surprised will be those who believe this will save Rauner and his supporters from electoral extinction later this year.

    Nothing unites worker quite like a boss as bad as Bruce Rauner.

    I bet he thinks this is a game changer. It won’t change anything for him.


  50. - Ahoy! - Wednesday, Jun 27, 18 @ 10:45 am:

    This study that was cited used some broad brush data from other studies that used broad brush data. I’m not going to argue weather it’s wrong or right but I believe their methodology and data analysis was off. First, they used a lot of averages for median income which is going to have flaws off the bat (are you better off making $19 in Chicago or $17 in Columbus Indiana? I don’t know and but i believe more data would need to be collected for it).

    Also in one study, they use median incomes for IL, MN & Ohio for the non-RTW states and then median incomes IN, WI & MI for the RTW states for 2010 - 2016. Are tech jobs in Chicago skewing median wage growth upwards and did Detroit bring the RTW states median wage growth down?

    I just think the methodology in the studies utilized is poor and lacking sufficient data. The studies could still be right, but it would be more of an accident and not because they went through a good data collection process.


  51. - Sue - Wednesday, Jun 27, 18 @ 10:47 am:

    On the other hand- union members can decide to reward themselves with raises amounting to 500 on the low side to thousands for a high priced school teacher


  52. - Lets be Adults - Wednesday, Jun 27, 18 @ 10:50 am:

    - A Parent - Wednesday, Jun 27, 18 @ 10:15 am:

    The study doesn’t say the lost wages will shrink the GDP. The study states that less wages in workers pockets translates into less money being injected back into the economy. Pretty simple economics actually.
    ——————————–
    Transmitting cash from private citizens to Public sector employees is a zero sum. There is not less money in the economy. This does not increase economic activity. It changes who spends it. Your economic theory is valid if it is predicated on consumption vs savings. However as a macroeconomic public choice, Consumption is not > or better than Savings


  53. - City Zen - Wednesday, Jun 27, 18 @ 11:02 am:

    I think we can all agree on one thing: Moody’s can cram it.

    These guys couldn’t see the impending massive financial market collapse yet can foresee positive changes by a small sector of the population not paying an even smaller percentage of their wages towards dues.


  54. - Anonymous - Wednesday, Jun 27, 18 @ 11:27 am:

    A Parent, I’ve taken plenty of econ classes and I’ve had a business for nearly 40 years.

    Money is better in the hands of consumers than in the hands of government and/or union chiefs. It just is.

    When the state raised income taxes from 3% to 5%, a person making $50K had $1000 taken from them that couldn’t be used to buy a lawn mower, couldn’t spend at restaurants, couldn’t go on a long weekend somewhere in IL.


  55. - Oswego Willy - Wednesday, Jun 27, 18 @ 11:30 am:

    ===When the state raised income taxes from 3% to 5%, a person making $50K had $1000 taken from them that couldn’t be used to buy…===

    Bruce Rauner signed a budget certifying and validating that 32% tax increase.

    You voting for Bruce in November, lol


  56. - Anonymous - Wednesday, Jun 27, 18 @ 11:34 am:

    Willy, that is called a straw man, maybe you know that or don’t know it. However, it has no relevance to the point I was making.

    Keep up.


  57. - Oswego Willy - Wednesday, Jun 27, 18 @ 11:37 am:

    ===that is called a straw man, maybe you know that or don’t know it.===

    Rauner’s signature is his signature, making the budget passed.

    ===However, it has no relevance to the point I was making.===

    What IS that point… take that out… you’re standing on your porch screaming at clouds without it.


  58. - Anonymous - Wednesday, Jun 27, 18 @ 11:39 am:

    How is this going to make union wages fall


  59. - Ike - Wednesday, Jun 27, 18 @ 11:40 am:

    Anon - Bruce signed the budget with the tax increase and will be spending every penny of it. He put his name on paper to keep the tax increase. How is this a straw man?


  60. - Frank Manzo IV - Wednesday, Jun 27, 18 @ 11:41 am:

    @Ahoy!

    For this study we looked at average wages of public sector workers. We controlled for occupation (i.e., school principals aren’t unionized while teachers have higher rates of unionization… so Janus will only affect the latter) and we utilized private sector workers as a comparison group.

    For the other Midwest “right-to-work” study you alluded to, we controlled for both industry and occupation. So the problem of high-paying tech jobs is accounted for. We also controlled for urban status in both studies, which is highly correlated with the cost-of-living, which speaks to the $19 vs. $17 question you have.

    I can help clarify further, but our methodology actually takes great care to address your initial concerns.


  61. - Frank Manzo IV - Wednesday, Jun 27, 18 @ 11:44 am:

    Fitch Ratings has a slightly different outlook than Moody’s (from May): “A pending U.S. Supreme Court decision in a case involving mandatory union agency fees among public sector employees won’t have much impact on credit ratings if the court rules against the required fees, Fitch Ratings said Thursday.” https://www.bondbuyer.com/news/what-impact-will-the-supreme-courts-ruling-in-the-janus-case-have


  62. - Anonymous - Wednesday, Jun 27, 18 @ 12:14 pm:

    Willy, my example was from 2011, you know when Rauner was making millions in the private sector.

    Trump got the tax cuts passed and look at the number of companies who rewarded their employees. Unemployment is at the lowest level in 18 years.

    I’m sure you get all that, right?


  63. - DuPage - Wednesday, Jun 27, 18 @ 12:15 pm:

    @- Frank Manzo IV - Wednesday, Jun 27, 18 @ 10:17 am:

    To clarify for those questioning our economic impact findings, here’s what we wrote in the report:

    === … In addition, the drop in annual incomes would make public sector careers less attractive for talented jobseekers. The lower lifetime earnings associated with public sector employment opportunities would reduce the likelihood of college-educated and highly-skilled individuals deciding to become teachers, protective services professionals, and counselors. Over time, this ‘brain drain’ could reduce the quality of public services and public infrastructure, hurting the economy.”===

    Add the lower earnings in with the “Tier 2″ Illinois pensions and it would be hard to get anyone to make a career out of teaching or any other public employment in Illinois. We already have teacher shortages, this will make it worse.


  64. - NeveroddoreveN - Wednesday, Jun 27, 18 @ 12:18 pm:

    State employees, brace yourself for another John Terranova video


  65. - Anonymous - Wednesday, Jun 27, 18 @ 12:36 pm:

    DuPage, will Tier 2 pensions still be better than social security?


  66. - Nick Name - Wednesday, Jun 27, 18 @ 12:37 pm:

    ===State employees, brace yourself for another John Terranova video===

    And file a grievance too.


  67. - Benfolds5 - Wednesday, Jun 27, 18 @ 1:05 pm:

    seems like a win for the taxpayers here. When I started teaching in the late 90″s at mid $20’s friends in the tech boom were making 3 times that. I had great benefits, tenure, and a career with a future. A few years back during the rough patch of the economy, we were unfazed. So were state workers. If this is an opportunity to even the playing field in the private sector, so be it. The biggest issue is folks that get these great benefits and jobs, don’t really look at who REALLY pays your check. It ain’t your union… It’s taxpayers…


  68. - Lester Holt’s Mustache - Wednesday, Jun 27, 18 @ 1:50 pm:

    ==State employees, brace yourself for another John Terranova video==

    I’d expect more than just that. What will the legal ramifications be once Rauners staff give the phone numbers of state employees to the IPI and other groups so that they can call state workers and try to convince them to stop paying dues?

    And before you say “they can’t do that”, that didn’t stop the tribune from illegally obtaining blago trial tapes and giving them to Betsy ankey for the campaign.


  69. - LeadinginDecatur - Wednesday, Jun 27, 18 @ 6:05 pm:

    BF5..”level the playing field” back to when you were teaching and your buddies in the private sector made three times your teaching salary? Do I have you right?


  70. - RNUG - Wednesday, Jun 27, 18 @ 11:22 pm:

    == DuPage, will Tier 2 pensions still be better than social security? ==

    The Tier 2 pensions as currently structured (because of caps) have a well known risk of running afoul of the IRS Safe Harbor rules.

    Translation: for non-coordinated state employees (pension only, no SS) the Tier 2 pension may well end up paying less than Social Security at some point in the future


  71. - Arthur Andersen - Wednesday, Jun 27, 18 @ 11:40 pm:

    RNUG, up late too, I see. Agree on Tier 2/SS and wonder what the cost of the State fix will be when (not if imho) the IRS calls our bluff on the Safe Harbor violation. Doing nothing and having the plans lose their tax-qualified status would be catastrophic.


  72. - Rabid - Thursday, Jun 28, 18 @ 8:17 am:

    Moody thinks short term pain long term gain


Sorry, comments for this post are now closed.


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