America is powerful economically because of our strong work ethic and high productivity. Historically, the private-sector union movement has led to many positive developments.
However, collective bargaining for public-sector unions caused unintended consequences.
When private-sector unions gained collective bargaining privileges, even Franklin Delano Roosevelt believed it unwise to extend that to public-sector unions. Indiana granted collective bargaining privileges to public employees in 1980. In 2005, Gov. Mitch Daniels abolished it, stating: (Collective bargaining reform) helped us in a thousand ways. Fort Wayne passed a collective bargaining ordinance in 1974.
Public-sector union collective bargaining differs because 1. government unions are free from market discipline and 2. public-sector labor unions can reward politicians who give them what they want. Political contributions by public unions have dramatically increased to usher friendly politicians into office and essentially elect their own bosses.
In the private sector, the necessity to compete and make a profit has led to a marked decrease in unions with their productivity-killing rules and above-market wages. Total union membership in the U.S. has fallen from about 35 percent in 1955 to about 11 percent in 2013. While membership in private-sector unions has plummeted to 6.7 percent in 2013, it has skyrocketed in the public sector to 35.5 percent.
Public union membership has grown because they have been very successful in securing above-market wages and benefits. In 2013, the Bureau of Labor Statistics reports the median weekly earnings of local government workers belonging to unions was $1,003, which is 32 percent higher than local government non-union workers. A study by the Bureau of Labor Statistics found that public-sector workers in local government are paid 10 percent to 19 percent higher than those with same occupation and skill levels in the private sector.
Detroit’s bankruptcy illustrates the effects of public-sector unions. A perfect storm developed under total Democratic Party control; politicians received large union contributions and rewarded unions with ever-increasing wages and benefits. A Forbes magazine article stated, Unions are based on the lie that it is possible for any employer to pay above-market wages forever without going bankrupt. The only way an organization can sustain an above-market cost structure is by charging above-market prices or by offering substandard products. Permissive politicians in the past combined with union resistance to reform created a death spiral in Detroit and many California cities.
The city attorney spends significant time in negotiations that must be done separately for each of the nine city unions. City division managers spent $43,783 of their time on union matters with negotiations and grievances. Fort Wayne spent $89,473 on legal fees to outside law firms on union negotiations last year.
We examined several apples to apples positions, comparing union city employees with their nonunion county counterparts. The city employees are paid more; in many instances the difference is 20 percent in wages alone.
During an exhaustive financial analysis last year, City Council became aware of outmoded benefits and work rules in our union contracts. Spouses of employees with their own employer health insurance could enroll in the city’s more generous plan, a benefit nearly extinct in the private sector. Sick time rules were overly generous. We changed these and saved millions of dollars.
Here are the top 10 unproductive elements in city contracts.
1. Full-time salaries with benefits paid to union presidents of the police and fire unions to do union work total about $200,000. Other unions paid $11,917 to do union work the past nine months.
2. Birthday pay: Extra day’s pay.
3. Perfect attendance pay: Show up for work for four months for extra day’s pay.
4. Longevity pay
5. Service bonus – extra day’s pay for each year’s work.
6. Most senior versus most qualified employees given promotions or job openings.
7. Compulsory union membership for professional engineers deters recruiting; many don’t want to join union.
8. Sleep time paid for working a certain number of hours.
9. Bizarre grievances, including one filed against a botanical conservatory supervisor for doing union work by picking a weed.
10. Rigid work rules.
Can anyone argue that these are sensible employee policies in 2014?
Fort Wayne has had good overall bipartisan fiscal management. However, we need to act now or Detroit may become Fort Wayne’s future.
Fort Wayne collective bargaining ordinances tilt the bargaining advantage in the unions’ favor. Proposed legislation to repeal the collective bargaining ordinances will be introduced to City Council on Tuesday. Public-sector unions would still exist and be able to negotiate with the city but would not have the extra privileges they have now. City employees consistently perform at a high level in difficult jobs. Whether or not City Council makes changes to collective bargaining privileges has nothing to do with that fact.
Collective bargaining costs hundreds of thousands of wasted dollars for the taxpayer each year. Every dollar must come from higher taxes or is not available for city services.
The city needs more flexibility to get services done at market rate so Fort Wayne citizens will have the maximum quality of life at the most reasonable cost.