A new wave of legislative proposals to cut back public-sector
bargaining rights, eliminate pension rights and cut pay has spawned articles in
nearly every major newspaper in the country. The message in this “news” is that
public-sector unions must accept the same concessions that were forced on
private-sector unions over the last 25 years.
Right-wing demands for layoffs, furloughs, wage cuts and the elimination
of programs serving people’s needs continue. But as terrible as each of those
attacks is, the attempt to slice off a right here or a wage there is not new.
What is new is a much more determined push to go to the center of remaining
union power and gut it.
Those who control the media outlets are cheering this on. Their
“analysis” concludes that pensions and wages of public employees cannot be
afforded and that public-employee unions have become too powerful for the good
of the community.
In Wisconsin, a Republican governor is talking about taking away
collective bargaining rights. In the first two weeks of January, Illinois
Democratic Party leaders pushed hard for bills to severely limit collective
bargaining rights for educational employees and to take away bargaining rights
from thousands of others. In Ohio, the governor is planning to take away the
bargaining rights of thousands of child care and home health care workers. In
Missouri and Minnesota, there are legislative plans to pass anti-union “right
to work” laws, bringing them in line with Mississippi.
In New York City, the mayor has issued a 23-point program that
calls for eliminating seniority in layoffs and making other changes that will
increase favoritism and discrimination. The New York governor wants to impose a
one-year wage freeze on hundreds of thousands of state workers.
Arizona, South Carolina, South Dakota and Utah passed
constitutional amendments making it harder to organize a union.
President Obama has imposed a two-year wage freeze on federal
employees—many of whom are like the Veterans Affairs nursing technicians who
are trying to survive on $28,000 per year and depend on raises. His “Fiscal
Responsibility” Commission has proposed reducing corporate taxes and raising
the age for a worker’s retirement.
Health insurance
Health insurance is constantly under attack. Only 60 percent of
the population is covered by health insurance provided by an employer or
spouse’s employer. And of that 60 percent, a huge number of people have been
forced by their bosses to pay a bigger and bigger percentage of the premium.
Employer-paid health insurance is more common in the public sector, and up
until now, public sector unions have been able to keep the bosses from shifting
the cost of who pays.
If the powers that be can get rid of health insurance for
public-sector workers, or price it so high that no one can afford it, then
others will not expect it at all. Local governments are constantly pushing for
cuts in what is covered as well as raising the rates. In some locales,
employers are even discussing eliminating health insurance and instead giving
workers a lump sum of money, known as a health savings account, to sink or swim
with.
The situation is seriously unhealthy. The state of Illinois stopped
paying the health insurance premiums for over 78,000 employees for the last
three months, triggering collection agency demands on thousands of people who
used the insurance.
Pensions
Public employee pensions are often referred to as “Cadillac” pensions
even though benefits are tiny. Many public higher-education employees do not
get any Social Security and depend totally on a relatively tiny pension from
work. Pensions for other state employees are far from luxurious. In Illinois,
for example, the average state employee pension is under $25,000 per year for
both higher education and regular state rank-and-file employees.
The message that many people get from the news is: Why should
public employees have any guaranteed monthly pension when only 18 percent of
private-sector employees have such plans? This sort of divide-and-conquer
message is the fuel that helps drive the race to the bottom, or more
accurately, the push to send everyone to the bottom.
Last year, the Illinois legislature passed a bill—in just a few
days—that created a two-tier pension system, lowering the amounts to be paid
and increasing the age to retire.
In the first 10 months of 2010, 18 states reduced pension benefits
or increased employee contributions (in 2009, another 11 states took similar
actions; eight did so in 2008). Last November, 95,000 California state
employees were forced to take a 5 percent wage cut, work longer hours and pay
more for a pension. New employees will get lower pensions. Louisiana passed a
constitutional amendment requiring a two-thirds vote of both houses of the
state legislature to approve any increase in pensions for public employees. No
similar vote is needed for tax breaks for the rich and powerful.
Cutting pensions for future Illinois state employees has only
whetted the appetite of big business. Now, they want to cut or if possible,
eliminate the pensions for current employees, replacing them with risky 401k
plans.
Who is behind the demand to gut public unions?
Big business has many organizations pushing its agenda. In
Chicago, one of the most powerful groups is the Civic Committee of the
Commercial Club. They have a large war chest focused on eliminating pensions
for current state employees.
Illinois and nine other states, like New York, Michigan, Kentucky,
Arizona, Hawaii and Alaska, have constitutional protections for public employee
pensions. This protection against any diminishment of a state employee pension
was passed in a more progressive era. It was an era when legislative actions
were shaped in part by the strength of a developing strike wave, an
intensifying anti-war struggle and a strong Black liberation and women’s
liberation struggle.
The Civic Committee would undo those rights. Their campaign
involves not only the usual high-paid lobbyists, but slick videos, too. These
ads on YouTube and on a special website feature people describing their need
for public services and education. The masterful voice on the video says that
they are denied what they need because of a state budget crisis caused by state
employee pensions.
Where the struggle is strongest against the unions, similar front
groups exist. In New York, the so-called “Committee to Save New York” is the
front group for the big banks, real estate giants and businesses. It is pushing
a “business-friendly” agenda.
Why do these big business employers care about the rights and pay
of public-sector workers? They care because the public-sector employers are
usually the largest employers. When public-sector unions are able to bargain
for better wages and rights, they create some pressure on private-sector
employers to provide the same.
The public sector is the most organized sector with the strongest
contracts. By going after them, big business is going after the heart of what
is left of the labor movement.
Budget crisis and bankruptcy
Steel companies like Bethlehem Steel, along with nearly every
major airline, auto giants like GM and many others, have used bankruptcy as a
means to break union contracts, get rid of thousands of workers and stop paying
pension and health benefits.
Bankruptcy in the public sector is less useful to the ruling
class, though it has been used, and the threat of it has been used more often.
Only half of the states have laws allowing bankruptcy for public bodies. Georgia
and Iowa ban municipal bankruptcy.
One of the differences lies in the fact that states have the
ability to raise funds by taxing and are thus unable to make the same case for
bankruptcy as private employers. But a more fundamental reason is that if
states were to declare bankruptcy, the bondholders— the banks and financial
institutions—would suffer big losses. The municipal bond market has about $3
trillion of outstanding debt. Losses of any significant percentage of that $3 trillion would shake the
foundations of the capitalist system.
So they are torn over what tactics to use. They see the value of
potentially breaking contracts. The threat of doing that has forced unions to
make big concessions—most notably in 1974 when public unions turned over
pension money and made other concessions in one of the most severe economic
crises. But they fear going over the edge in the largest cases.
So they focus more often on using the legislative battering ram to
destroy public unions. There are important exceptions. Defaults and
bankruptcies have taken place. For example, Orange County, Calif., declared
bankruptcy on Dec. 6, 1994, when it lost $1.6 billion on a derivative scheme.
Thousands were laid off and basic services were cut. Today, Hamtramck, Mich.,
is on the verge of bankruptcy, as is Central Falls, R.I., and potentially
Harrisburg, Pa., to name a few.
The possibility of default, though, does have its fans in the ruling
class. Across the country, profits are being made on financial bets that
speculate on the probability of a state’s default. These bets on default, also
known as credit default swaps, are so prevalent that the states of California
and Illinois are in the process of trying to rein them in.
Fiscal crisis and the system
Most states and countless counties, cities, water districts, park
boards and educational systems are in a budget crisis. They do not have enough
money to pay for the services that need to be delivered. They are pressed to
find the money to pay for pensions and health care.
They have been surviving on a system of taxing workers and poor
people. The crisis has laid off 8 million workers, mostly in the private
sector, but also including a large number of public employees. A recent Wall
Street Journal report showed that of those who were able to find a job between
2007 and 2009, 36 percent got jobs paying at least 20 percent less than the one
they lost. Studies have shown that this loss lasts for decades and does not
count the millions who cannot find another full-time job.
Fewer workers and lower pay leads to less money being collected in
taxes, which leads to less money for services—and ultimately more layoffs in
the public sector.
But that is only part of the story. Shaping that scenario is the
context of the federal war budget, which has an impact on funding for state
programs. Pressing on all sides is the system that works for the corporations
that fatten from profits, expand production and squeeze the last drop they can
from exploitation, then lay off en masse when the rate of profit shifts. They
take their profits; we take layoffs, poverty and misery.
About 50 million people, 15 percent of all U.S. households, went
through part or all of 2009 without enough to eat. Of those, 33 percent of the
adults, along with 1 million children, went without food on a regular basis. On
the other hand, there is a recovery in profits and wealth for a few.
None of the public-employee-bashing media call for higher taxes
for corporations and the rich. None call for simple reforms like state taxing
of financial transactions of the super wealthy—a tax on trading of futures and
options. None call for common-sense solutions like exempting workers and poor from
taxes, eliminating the military budget and converting resources to social
needs. Such ideas are portrayed as “impossible.”
None, of course, raise the need for a revolutionary overturn of
the system.
A global view
Public workers in France, Portugal, Spain, Greece, the Czech
Republic, Ireland and many other countries are faced with the same demands to
cut pensions, lay off thousands, cut programs and more. This is the program of
the capitalist class and its institutions like the IMF. It is exactly the same
program as the one being implemented in the United States.
The worst abuses are of course against the most oppressed people
and the most oppressed nations. In Malawi, a pension bill proposed raising the
retirement age five to 10 years above the average life expectancy.
Illinois just raised the retirement age for state employees to the
highest in the country. But if they could get away with it, they would do what
is being proposed in Malawi. At the moment, about the only thing standing in
the way of such plans are the public-sector unions and the rest of the
organized labor movement.
China however, offers a different example. They are raising money
to pay for more social services by increasing taxes, but not on the workers.
They have increased taxes (or in this case, dividends) that state corporations
must pay the state—increasing the rate from 10 to 15 percent of post-tax
profits. In addition the minimum wage in Beijing was just raised by 21 percent
on Jan. 1. That’s on top of a raise of 20 percent in June 2010. They are on the
verge of passing a law requiring companies to bargain with elected union
negotiating teams whenever 25 percent of the workers sign a petition asking for
a wage increase.
Workers in countries around the world have been demonstrating in
massive numbers, saying no to cutbacks and layoffs. They know a better world is
possible. As the crisis deepens in the United States, the fight will intensify
here, as well.
