Public Employees: Myths and Realities

Labor Notes

Mark Brenner

|  December 20, 2010

With all the venom directed at public employees these days, it’s hard to separate the facts from the attacks. Here’s a guide to common claims made about government spending, taxes, and public employees.

The Claim: Government employees are overpaid.

The Facts: The Economic Policy Institute measured state and local public workers against their private sector counterparts with the same age, experience, and education. They found that public workers earn about 11 percent less.

Public workers had better benefits on average, but even when health care and retirement were included, public workers were still 4 percent behind private sector counterparts.

Claims that state and local government workers are overpaid often fail to account for their education and experience. Fifty-four percent have at least a four-year college degree, compared to 35 percent in the private sector.

The Claim: The federal deficit is out of control.

The Facts: It’s true that this year’s budget deficit—projected to be 10.3 percent of U.S. economic activity—is the highest since World War II. Whether it’s a problem depends on your time frame and how we address it.

Short-term government spending was the only thing that kept the economy from cratering in 2008. It staved off a second Great Depression.

With no private sector investment in sight, public spending will be the only engine for job creation in the foreseeable future. Aside from the pain created by high unemployment, no jobs means no recovery for tax collections and therefore a widening deficit.

The deficit is a long-term problem if we do nothing, but before doing something we have to look at spending and revenues. The bulk of federal spending is on the military (22 percent) and health care, including Medicare, Medicaid, and children’s health programs (21 percent).

The obvious place to start trimming is today’s military budget, which is two and a half times what it was 10 years ago. Health care costs are also skyrocketing, because they are driven by for-profit health care. A single-payer system like “Medicare for all” would correct that.

The Claim: Taxes are too high.

The Facts: Depends whose taxes you mean. According to Citizens for Tax Justice, overall taxes in the U.S. are the third lowest among industrialized countries (only Turkey and Mexico are lower). Corporate taxes are also lower than in most other industrial nations.

But there are inequities—and they favor the rich. People at the bottom of the income ladder, the lowest 20 percent, pay almost twice as much of their income in state and local taxes as the top 1 percent. The poor pay 11 percent, the rich just 6 percent.

At the end of World War II corporations paid more than a third of all taxes collected by the federal government. Today they pay only 10 percent. The burden was shifted to individuals, and as taxes on the wealthy were cut over the last 30 years, the liability has been transferred to working people.

The Claim: The private sector is more efficient than government.

The Facts: Advocates claim outsourcing will save money. But after more than two decades of experience, reality isn’t so clear-cut.

Cost overruns combined with the cost of contract monitoring and administration often makes privatization more expensive than in-house services. According to a 2007 survey by the International City/County Management Association, more than one in five local governments had brought previously outsourced services back in house.

In most cases insufficient cost savings were cited as a primary reason. And where contracting out does produce savings, they typically come from lower wages and benefits for workers—not some supposed inherent superiority of business.

The Claim: Government waste, fraud and abuse are rampant.

The Facts: Government-bashers love to talk about overpaid, do-nothing bureaucrats, but if you’re looking for misused tax dollars your best bet is to scour the Chamber of Commerce’s membership list. Defense contracts and construction projects like the “Big Dig” in Boston hold taxpayers hostage with wildly inaccurate, often fraudulent cost estimates.

According to the Project on Government Oversight’s database of federal contractor misconduct, the top five defense contractors have racked up 156 instances of misconduct since 1995, totaling $3.57 billion in fraud and waste.

Victory for Express Scripts Workers!

Great news from Jobs with Justice.  Solidarity across state and national borders is the only way to beat multi-national corporations.

Express Scripts, Inc. reverses decision to close plant; 400 family-supporting, union jobs saved

After a months-long struggle with Express Scripts, Inc., SEIU workers, Missouri Jobs with Justice, St. Louis Area Workers' Rights Board and other activists have forced Express Scripts Inc. (ESI) to reverse their decision to shutter all Bensalem, PA operations-- saving 400 family-supporting, union jobs and providing a substantial severance package to 500 workers facing layoffs at another plant in the city.

"This settlement will keep hundreds of good jobs here in Bensalem, and make sure anyone who gets laid off will be able to provide for their families in this harsh economy," said Linda Chan, a Pharmacy Tech at the Marshall Lane facility, and a member of the SEIU Healthcare bargaining committee.

SEIU members had been engaging in a national campaign to put pressure on ESI to maintain quality jobs in Bensalem when the company announced it would close both the Marshall Lane and Bensalem facilities. In August, 50 ESI workers from Bensalem, PA- facing severe pay and benefits cuts- drove to ESI headquarters in St. Louis to meet with CEO George Paz face-to-face and protestthe cuts, meeting with members of the St. Louis Workers' Rights Board while they were here.

In November, three ESI workers were suspended for reaching out to ESI clients, and SEIU workers contacted St. Louis Workers' Rights Board again. St. Louis WRB agreed to hold an Investigative Hearing on ESI's worker abuse. Instead of agreeing to come to the hearing, Paz reopened negotiations- and a settlement was reached in the late hours the day before the Investigative Hearing was to take place. Paz also agreed to reinstate the suspended workers.

"This has been a very difficult challenge...by sticking together we saved 400 good jobs for this community and won an excellent severance package for laid off workers that most non-union workers could only dream about," said Rickie Stemley, a Pharmacy Tech at the Marshall Lane facility.

Read more at the Missouri Jobs with Justice website or SEIU'swebsite.

Project Labor Agreements under Attack as Non-Union Contractors Try to Pick Off Public Jobs

Looks like another national movement that started in California may be headed our way.    If there is a way to pay workers less to increase profits, it seems to be headed our way.  Get ready for another fight.  

From Labor Notes  by Jenny Brown, Dec. 13, 2010

Idled by the housing bust, non-union contractors are attacking agreements that building trades unions have used to defend their work for the last two decades.   

Residential and light industrial construction, dominated by non-union firms, is still flat on its back. Construction employment is at a 14-year low, the Department of Labor reported in October. But some publicly funded work is still going ahead, thanks to federal stimulus funds and to state and local spending.Idled by the housing bust, non-union contractors are attacking agreements that building trades unions have used to defend their work for the last two decades.

Now, non-union construction firms, fighting for market share, want to bring their low wages and bad work rules to those taxpayer-funded jobs.

Associated Builders and Contractors, an employer group, is crowing about its latest victory—a November 2 ballot measure that passed by 75.8 percent in San Diego County, California. ABC is vowing a “50-state strategy” to ban Project Labor Agreements.

The ballot strategy may be dangerous for construction union job standards because PLAs, unlike prevailing wage laws, are confusing and opaque to the general public. Prevailing wage laws can be defended by saying that public dollars shouldn’t encourage low-wage work. PLAs can sound more like a backroom deal.

PLAs are negotiated between the employer and unions to set wages and work rules before a large project is bid. In return, unions promise not to strike or engage in other job actions for the duration of the project.

Non-union contractors may bid on the project, but they must pay the wages and benefits outlined in the agreement.

‘FAIR AND OPEN’

The proposition on the San Diego County ballot claimed it would “ensure fair and open competition for county construction contracts.”

What’s a Project Labor Agreement?

PLAs are agreements struck between funders of a building project—public or private—and the building trades unions that are expected to have members working at the site. They’re used for large, complicated projects. Federal guidelines say they should be considered for projects costing more than $25 million.

PLAs started out as a compromise by building trades unions to secure work. Court decisions in the late 1970s and 1980s allowed construction employers to get out of “pre-hire” agreements to hire union workers, so the unions created these project by project agreements. In 1993, the U.S. Supreme Court upheld their legality on public projects.

Generally, a Project Labor Agreement will set wages at or slightly below union scale, but far above what non-union companies will pay. In return for promising not to engage in any job actions during the project, unions get a guarantee of particular pay and work rules. If a subcontractor is non-union, his workers will work union during that project, getting the same wages and benefits and paying union dues.

George W. Bush banned PLAs on federally funded jobs, but Barack Obama reinstated them shortly after he took office.

PLAs decrease inter-trade fights over which union gets what part of the work, because jurisdiction is agreed to in advance.

Careful comparison studies confirm that projects using PLAs don’t cost more, because union workers tend to be more efficient.

But PLAs are double-edged swords. Costs may also be comparable to non-PLA jobs because workers are bound not to take “costly” job actions, the kind that get the goods.

—Jenny Brown

It sounds like some kind of civil rights measure, and that’s how ABC portrayed it in the media. San Diego ABC president Scott Crosby argued that the requirement that employers pay a worker union scale is discrimination against that worker, who is “forced to join a union” for the duration of the job. It’s also discriminatory against the non-union contractor, he said, who could win the bid if he didn’t have to provide higher pay and benefits.

The ballot measure prevents the county from requiring contractors to enter into Project Labor Agreements for construction projects it controls.

This is the third win for the employers group, which won ballot measures in two San Diego County municipalities before convincing the Board of Supervisors to put the measure on a county-wide ballot.

The unions struggled to convince voters of their case. After sinking a half-million dollars trying to defeat the measure in Chula Vista in June, the San Diego Labor Council decided not to spend money to fight the county-wide ban, although it raised a lot of media attention and spoke loudly against its passage.

“When workers are protected… when we give health care to workers, all of us are made better,” Council Secretary-Treasurer Lorena Gonzalez said after the vote. “The contractors are going to continue to fight that because it means less profit for them, and that’s all they care about.”

TAXPAYER REVOLT

Although their goal is to get access to public money, anti-union contractors are using the same “taxpayer revolt” arguments against union construction workers that have been used against teachers and other public employees.

The contractors claim they are watching out for taxpayer dollars and that PLAs drive up costs. One study of schools in Massachusetts claimed that projects governed by PLAs cost 14 to 17 percent more. But projects governed by PLAs are likely to be more complicated, and therefore more expensive. A high school science lab costs more to build per square foot than an elementary school classroom, no matter who is building it.

Additional studies which took these factors into account found that PLAs didn’t drive up costs. Experts say the work is more efficient and jurisdictional fights don’t hold up construction.

Still, the claim appears plausible to many since wages are certainly higher than they would be if bottom-feeding non-union contractors got the work.

ABC has also attacked PLAs by creating stories to feed to the press. The AFL-CIO Building and Construction Trades Department alerted local leaders to one such case November 10.

According to the AFL-CIO, the contractors group paid for an audit that found alleged violations of labor law by union contractors involved in a PLA for the Los Angeles school district. Then the group promoted the audit as an impartial revelation of wrongdoing. The department warned union officers to watch out for similar tactics in their areas.

GREATER NEEDS

Anti-PLA efforts are a pain in the side for construction trade unions. But preserving PLAs will not fix the main issues, said David Minasian, a union carpenter in Worcester, Massachusetts.

His local feels most intensely the incredible rate of construction worker unemployment, 17.3 percent nationwide and 25 percent in his local. “We need reauthorization of unemployment benefits and we need a big round of infrastructure spending,” he said.

The Laborers union echoes that sentiment, pointing to the crying need for public construction dollars and pushing for a surface transportation bill that’s been stalled in Congress.

To gin up support, Laborers billboards in Pennsylvania warn drivers about the condition of the bridge they’re about to cross, with alarming pictures of crumbling concrete. According to the union, 5,646 bridges in Pennsylvania are “structurally deficient.”

Under the new Congress, the bill faces an uphill battle.

Non-union construction contractors are joining the taxpayer revolt at their own peril. If the anti-tax furor gains ground and publicly funded projects dry up, there won’t be much work for anyone anytime soon.

In Iowa, Lockout Continues for Roquette America Workers

By Akito Yoshikane 

Working In These Times, Dec. 8, 2010

More than 240 union workers for Roquette America in southeastern Iowa have been locked out of their jobs since September after they rejected a concession-heavy contract that they say undermines their collective bargaining agreement.

The two sides are at a stalemate over wages and benefits at the company’s corn milling facility located in Keokuk, a small city of about 11,000 that borders Illinois and Missouri. The company has since hired replacement workers; some of the long-time union employees are now relying onunemployment benefits as negotiations continue to stall amid accusations ofunion busting.

Roquette America, a subsidiary of Roquette Frères in France, produces corn starches, syrups and starch derivatives. The employees are represented byLocal 48G of the Bakery and Confectionery Workers International Union of America, an AFL-CIO affiliate.

Negotiations for a new contract began in August and formal talks began in mid-September. The union says the conflict arose when Roquette hired outside parties and brought more than 130 proposals that essentially “gutted” the collective bargaining agreement.

The two major points of contention are changes to the health insurance and use of temporary workers. According to the labor group, Roquette wants more management rights, including the ability implement seniority-based layoffs. For the current employees, Roquette wants to freeze wages, change retirement benefits and increase worker contributions to healthcare. The company also wants authority to hire temporary workers without benefits. That suggests a proposal for a two-tier employee model, a trend that is growing across the country

Local 48 G rejected the proposals in late September, leading to the lockout as the company brought in more than 60 replacement workers. The two sides have met 18 times in recent months and a federal mediator has been involved in negotiations.

The company has said that the industry has become more competitive compared to four years ago when the last contract was signed. Roquette America president and CEO Dominique Taret explained the reasons for why the company is asking for concessions.

“Uncertain economic conditions, increasing regional and international competition, changing market demands and more strict governmental regulations require businesses to adapt quickly and perform better in order to be competitive,” he wrote in a statement.

In a second open letter to the community last Friday, Taret focused on six core goals to improve their facilities. He writes:

The Company’s contract proposal focuses on six core goals to improve plant operations; achieve greater workforce stability; improve competency development; enhance job performance and accountability; increase workforce flexibility; and compensation system stability.  These labor proposals attempt to balance the needs of our employees and protect their interests while seeking changes that will allow us to accomplish these six critical goals.

It’s unclear whether Roquette is profiting, but the global company has received local funding. The company announced in June plans to for a $27 million remodeling project, receiving $2.5 million in tax benefits. The union estimates Roquette has received $4.5 million from the city and state.

While the company plans to modernize the facility, the concessions come at a hard time for the local community. Keokuk, located in Lee County, is part of an area that has one the highest unemployment rates in Iowa. Since negotiations began in August, the jobless figure increased from 10.7 percent to 10.9 in October, according to Iowa Workforce Development. Lee County is currently the only county in Iowa with jobless figures in the double digits.

The local mayor has not taken sides but has urged an end to the lockout. Meanwhile the French union representing Roquette employees in France sent a letter of support. And solidarity marches with local labor groups have continued in Keokuk.

Both sides have continued to express a desire to reach an agreement. Three more bargaining sessions are reportedly scheduled in the coming weeks.