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COMMENTARY: Closing union cash-flow has national implications

By   /   August 22, 2011  /   No Comments

By Scott St. Clair

Less than two months after Gov. Scott Walker closed the payroll dues deduction pipeline, state employee unions face some ugly financial realities after all sides in Wisconsin's state Senate recall elections spent a total of $40 million.

It may be the last hurrah for government-employee unions in Wisconsin as they raid their piggy banks and slash overhead — including wholesale firing of staff — because budget-repair bill labor reforms let government workers decide whether to pay dues.

That has national implications as other states move to break the forced, self-feeding cycle of compulsory government funding.

Intended by Walker to help close a $3.6 billion budget deficit, the new law bans mandatory membership and forbids deduction of union dues from state workers’ paychecks. Unions face annual recertification votes.

Instead of government deducting — called dues check-off by labor relations professionals — and sending one check to the union every month, unions must collect dues from each member as existing union contracts expire. And now they must convince workers they are worth it.

Nothing terrifies a union more than the loss of mandatory membership — the union shop — and dues check-off. For unions, the only non-negotiable “must haves” are those two.

A case in point is the Wisconsin Education Association Council representing 98,000 teachers and education support personnel. WEAC fired 40 percent of its staff — 42 employees — a couple weeks after the new law took effect on June 29 claiming that its membership decreased because of retirements and limited hiring of new teachers by school districts. Union officials said the cuts weren’t related to drops in membership that might come as a result of Walker’s reforms.

But according to the Wisconsin Association of School boards, 150 of the state’s 427 school districts were without union contracts when the law took effect. That makes more than one-third of WEAC’s membership free agents no longer forced to belong to the union and pay dues that are, in some districts, as much as $1,000 per year.

The math is ugly. In 2008, WEAC received almost $24.5 million in membership dues and other revenue, according to federal tax filings. 

WEAC also controls the WEA Trust, a pricey health insurance company that many school districts were forced by contract to use for employee benefits. Since the beginning of the year, the trust has lost 17 percent of its subscribers as more districts are free to shop the market for a better deal without having to get the union’s permission.

Lavish receipts resulted in lavish spending. In 2008 WEAC’s payroll was top-heavy with seven six-figure salaries totaling over $1.3 million. Executive Director Dan Burkhalter, at $242,807, up from $162,034 the previous year, almost qualifies for a high-earner income tax hike should the Bush-era tax cuts expire.

WEAC spent $2.5 million on 12,364 hours (17 hours per day) of lobbying during the 2009-2010 session of the Wisconsin Legislature. That was twice as much as any other lobbying effort and three times more than Wisconsin Manufacturers and Commerce spent.

In 2010, direct campaign contributions to mostly Democratic candidates — 97 percent of the candidates to whom contributions were made — totaled almost $150,000. Another $62,500 was to several political party campaign committees. The big dollars, however, were spent on independent expenditures. WEAC pumped $1.6 million, the fourth highest independent expenditure in the state that year, into four state Senate races, only one of which they won.

For the 2011 recall election, WEAC spent $500,000.

The nearly $40 million spent on the recall elections, where just over 450,000 votes were cast, comes out to about $89 per vote. Of that, $5 million was local union money. Some in Wisconsin are talking about a recall effort against Walker, but that will require 500,000 signatures to make the ballot, which can’t, by Wisconsin law, happen until at least January 2012.  

In 2010, nearly 2.16 million votes were cast in the Wisconsin race for governor. Multiply that by $89 per vote. In the maelstrom of 2012 presidential politics, where unions will spend heavily, and with a Wisconsin U.S. Senate race, is it realistic to expect a credible labor-promoted effort against Walker?

WEAC isn’t alone. Government-sector unions across Wisconsin are cutting staff and trimming expenses.

It goes deeper. Wisconsin is the 16th most unionized state in the country with 355,000 workers, 14.2 percent of total employed, belonging to unions. Of these, nearly half, more than 175,000, are government workers. Nationally, there are more government workers in unions than private-sector workers. Annually, the private-sector numbers decline, while the government-sector numbers go up.

Kick the props — the union shop and dues check-off — from government-sector unions and you kick the props from more than half of what’s left of the American labor movement that represents a scant 11.9 percent of American workers in total. In Wisconsin the props are gone, and the movement is listing worse than the Titanic.

Ohio will vote in November on a package of labor reforms that are similar to Wisconsin’s. And New Hampshire’s Legislature passed a right-to-work law (banning the union shop) only to have it vetoed by the governor. Many other states have similar proposals in play.

Soon more workers will have the right to decide whether to join a union and face compulsory deduction of dues from their pay.

That will shut off the automatic millions of dollars flowing to union leaders’ pockets and campaign war chests.

Scott St. Clair is a freelance journalist who occasionally contributes to Watchdog.org and other Franklin Center journalism sites. In a former life, he was a labor relations professional who worked both sides of the table. He can be reached at [email protected]