Sunday, March 06, 2011

Understanding The Difference Between Collective Bargaining Rights For Private Versus Public Employees

As state and local governments grapple with balancing budgets since they cannot simply print up more money like the federal government every time they need more money to spend, the increasing debate over the collective bargaining rights of public employees has taken center stage. While more than 2 million federal employees lack collective bargaining rights under federal law, many state and local government employees have collective bargaining rights, particularly public school teachers. Those who defend full collective bargaining rights of public employees fail to recognize an important distinction that exists between public and private sector employment. Fellow blogger Fred McCarthy does an excellent job of explaining the key difference and why the taxpayers should support efforts to constrain the rights of public employees to collectively bargain:

Business A is unionized and produces revenues. A bargaining session between labor and management is designed primarily to determine what constitutes a reasonable share of those revenues for each group. To the extent that they are sharing a fixed amount, the bargaining is adversarial. What one gains, the other loses.

For public employees bargaining is between union leadership and elected officials. Both sides have every incentive to be generous. The employee gets more - salary and/or benefits. The politician gets the support of the union political arm at the next election. The inclusion of benefits is a plus for the politician since payment for these extras is a "can kicked down the road," well beyond the prospective career of the office holder. And of course the beauty of it all is that they’re dealing with someone else’s money. The taxpayer is never adequately represented at the table at all!
Fred hits the nail on the head with his observation that the taxpayers are never adequately represented at the table during public employee bargaining sessions. Increasingly, we're not even adequately represented in our elected legislative bodies at the state and local level as an increasing number of these elected officials hold public sector jobs as well, sometimes voting on their government employer's budget. Local city councils are filled with police, firefighter and other government employees who have a completely different perspective on government spending and taxation than those of us who work in the private sector.

There is a big exception in the private sector where the loser in these negotiations is the taxpayers as opposed to the employer or employees. I'm talking, of course, about professional sports teams whose businesses are heavily subsidized by the taxpayers. The Star's Bob Kravitz bemoans the greed of the NFL owners in the current union negotiations with the players. He seems to believe it is only the owners who benefit from the taxpayers' generosity:

It must be a tough gig, being an NFL owner.

The franchise you bought is worth exponentially more now than when you purchased it.

You're guaranteed millions of dollars in television revenues, the vast majority of a team's dollars coming from that shared pot of TV bucks.

You're virtually guaranteed a sellout every game, whether your team is any good or not.

The contracts you give to your players aren't guaranteed -- except for the initial signing bonus -- meaning you can cut a player tomorrow and either set him free or re-sign him for vastly fewer dollars.

And when you ask your workers to take a pay cut -- right now, they want the players to swallow a 12-15 percent loss of income -- you don't even have to show your financial books to prove that you're (cough, cough) losing money and need help from labor . . .

It's fashionable to say, "A pox on both their houses. Millionaires versus billionaires. I'm not rooting for anybody in this labor war."


I'm rooting for the players, and with absolutely no hesitation.

The union isn't asking for much of anything in these negotiations. They're not asking for a single dollar more than they made off the last collective bargaining agreement. People need to remember, this won't be a strike, it'll be a lockout. The players want to play, and if they can negotiate some more jobs for their union and get better health benefits for former players, that's great.

But it comes down to this: The owners want a bigger piece of the huge revenue pie. They want it because so many of them have to pay debt service on their new stadiums, most of which were built with taxpayer dollars and bring each owner millions of additional dollars in revenue.
As far as I'm concerned, both sides are too greedy. In a real world, neither the team owners nor their players would be making anything approaching their current haul if the sporting industry paid the tab to build these sports palaces instead of the public. The least they could do is pay property taxes on the stadiums that are built by taxpayers when all of the revenues the facility generates are kept by the owner and all of the expenses of maintaining the facilities are paid by the taxpayers as is the case with Colts' owner Jim Irsay. Kravitz is right that team owners should be required to release audited financial statements, not for the benefit of the players in labor negotiations, but for the benefit of the taxpayers who are subsidizing their sport so heavily. The team owners may be making too much money from their sport but so are the players. If there is a fairer deal to be negotiated in these talks, it is a fairer deal for the taxpayers, particularly those of us who could care less whether they play or sit on their asses and can't begin to afford to shell out the money it takes to attend the games held in the facilities built and maintained with our tax dollars.


Pete Boggs said...

It's elective vs. defective.

Downtown Indy said...

Let's check something. Who has a 'right' to collective bargaining?

I thought that was merely something hammered out and agreed to between parties in contractual language. Period.