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Wednesday, Feb. 16, 2011

Walker’s Renewed War on Workers

Underpaid public employees will get the shaft

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Just as he did as Milwaukee County executive, Scott Walker, now the governor, has chosen to bypass labor negotiations and include major wage and benefits concessions—and a drastic attack on long-standing principles of employee relations—in his budget repair bill.

Typically, the executive honors labor agreements that have been negotiated with unions.

But Walker is not a typical executive.

He’s not negotiating. Instead, Walker said if necessary he would literally call in the National Guard.

As Milwaukee County executive, Walker submitted two budgets that included tens of millions of wage and benefits concessions that had not been negotiated with the unions that represent county employees. Walker’s 2010 budget included $32 million of concessions that were not included in a tentative agreement his own labor negotiator had struck with unions at the time Walker had proposed his budget.

Walker’s 2010 budget was so unfair that an examiner for the Wisconsin Employment Relations Commission declared that Walker had bargained in bad faith.

But that hasn’t deterred Walker from using the same tactic now as governor.

The nonpartisan Legislative Fiscal Bureau (LFB) concluded that the state would end the year with a surplus, so there is no need for a budget repair bill. Walker disputes those numbers, so he has submitted a budget repair bill that would strip collective bargaining rights from most state workers. Walker has excluded employees whose unions endorsed him in the 2010 election.

Typically, changes to bargaining rights would mean a change to state statutes.

Instead, Walker is using his unnecessary budget repair bill to drive a stake through the heart of Wisconsin’s social contract that has maintained stable labor relations with public employee unions for decades. Walker is trying to severely limit the rights of public employees in addition to requesting that they make wage and benefits concessions. But Walker’s demand for public employees to pick up more of their expenses would have a negative effect on the state’s economy by decreasing wages of middle-class workers; weakening their purchasing power at local businesses, putting more than 9,000 private sector jobs in jeopardy; and reducing property taxes statewide by an estimated $46 million, according to a recent study.

What’s in the Works

Although Walker and his fellow Republicans have blithely described the changes as simply asking state workers to pay more for their health care and pensions, the governor’s budget repair bill contains a slew of changes to public employee union rights:

  • Public employee unions would only be able to bargain for wage increases—and those increases could not exceed the consumer price index, unless it was approved by a referendum. Gone are negotiations about health care, seniority, job conditions or health and safety issues.
  • Labor contracts would be limited to one year, which would result in nonstop negotiations between units of government and their unions.
  • Unions would have to vote to be recertified annually.
  • Exemptions are the members of unions that supported Walker in 2010—law enforcement, firefighters and state troopers and inspectors—because, Walker explained, they are critical to public safety. Yet other public sector employees who are critical to public safety—nurses, corrections officers, sewer and water workers, among many others—would be subject to the new rules

    Milwaukee Mayor Tom Barrett has taken issue with the exemption of fire and police employees, since they comprise 65% of the city’s operating budget salaries. Combined with Walker’s promise that his next budget will include large cuts to shared revenue sent to local governments, Barrett is concerned about the impact of Walker’s plans on the city’s budget.

“If we are going to ask our employees to shoulder the impact of the state’s budget deficit, it is only fair to apply it to all of them,” Barrett wrote in a letter to state legislators. “You should not give the Milwaukee police and fire unions a special exception to the changes in the bill, forcing all other employees to bear the burden of the cuts.”

  • University of Wisconsin faculty and academic staff, University of Wisconsin hospitals and clinics employees, home health care workers in the Medicaid program and family child care workers would be stripped of their bargaining rights.

According to the state LFB, these proposals are non-fiscal policy items, which are typically not included in the state budget so that they can be fully debated by the state Legislature in separate legislation.

Are Public Employees Overpaid?

Walker has said that the labor changes are necessary because Wisconsin’s local and state employees haven’t made the same sacrifices during the Great Recession as private sector workers.

Walker glossed over the fact that state employees had eight unpaid furlough days in 2009 and 2010, which saved the state $121 million, and their wages have been flat for years.

He also forgot to mention that when he was Milwaukee County executive, members of the largest county employee union took 26 unpaid furlough days in 2010, or one unpaid day off for every two-week pay period—a 10% pay cut. They’ll have 26 unpaid days off this year, too, as a result of Walker’s final county budget. (The employees at the Shepherd Express, a private sector company, did not have any wage decreases or forced furlough days.)

So is Walker correct when he says that public employees are making more than their counterparts in the private sector?

The short answer is no, according to a new study by the national nonpartisan Economic Policy Institute (EPI), which found that Wisconsin’s state and local employees earn 4.8% less per hour in total compensation than their peers in the private sector. That number jumps to 25% for college-educated employees. EPI found that, on average, Wisconsin’s public employees with a bachelor’s degree earn $61,668 in total compensation; their peers working for private employers earn $82,134 in wages and benefits.

And although Gov. Scott Walker is earning $144,423 as a public sector employee with “some college” education, his pay package is not typical. Public sector employees who attended college but did not earn a diploma earn an average $46,707 in wages and benefits, while those in the private sector earn 7% more, or $50,324, EPI found.

Extra Cost of Cutting Wages: Killing Jobs

Although Walker took office promising to focus on job creation like a laser beam, he has not explained how many jobs this budget bill would create.

In fact, a new study by the Institute for Wisconsin’s Future (IWF) found that cutting public sector employees’ pay to the degree demanded by Walker would be a disaster for the state’s economy. In fact, about $1 billion of public employee wages would be lost each year:

  • State workers would lose $429 million of disposable income
  • Local employees would lose $335 million of disposable income
  • School district employees would lose $230 million of disposable income


“Public sector workers are moderate-income people who spend the vast majority of their income on consumer goods—unlike rich households who save the bulk of their wealth,” wrote Jack Norman, the study’s author.

Since that $1 billion would not be spent—and recirculated—in businesses throughout Wisconsin, the study projected that 9,900 private sector jobs would be lost.

“State leaders cannot make up for the loss in consumer purchasing power by an equivalent amount of tax cuts,” Norman wrote. “That would worsen the deficit and cancel out any savings created by cuts to public sector compensation.”

And what about the ripple effect on local governments? IWF’s Norman calculated that $46 million of property tax revenue would be lost because of the wage cutbacks and depressed economic activity. Dane County would be hit the hardest and lose $14 million in property taxes; Milwaukee County would lose $6 million in property taxes.