It’s a growing trend among the anti-organized labor movement and those who worship at the church of small government: fire public school custodians and outsource their jobs to Corporate America. North Kingstown is the latest town to consider this very draconian move but other local municipalities have as well, such as East Greenwich and Portsmouth – both of whom abandoned the effort after community concerns over class warfare.
To those who support such public sector outsourcing, it is a very black and white issue. Governments, they say, are in the business of providing services not jobs and if and when money can be saved for the taxpayer, it should be.
But detractors often see a more nuanced situation, or more complex economic ramifications.
First, the savings aren’t worth the costs. In East Greenwich, for example, firing the custodians would have saved the average property taxpayer about $13 a year. Because NK has not yet agreed to terms with the private company, any savings are still unknown. But compare that to the $11,000 a year pay cut Tom Keenan will take if the School Committee outsources his job. While the deal isn’t done in NK, he is already employed by the private company at a $5 an hour pay cut.
It begs the question: how many taxpayer dollars equal one person’s financial security? The answer, at the very least, is that, morally, we should all be willing to cough up the price of a pizza a year to keep our neighbor solvent. But forget about doing what’s right for a moment, even from an economic perspective the juice just isn’t worth the squeeze.
Secondly, the savings aren’t even real. I don’t know much about GSA, the Tennessee-based company North Kingstown is considering doing business with, but I promise you they are not in business to save taxpayers money. Any school committee that thinks it is going to be easier to negotiate a contract with a faceless big national corporation than with organized janitors is fooling itself. The only difference is the taxpayer dollars will be going to rich people in Tennessee rather than working class people in North Kingstown, where more than half of the school custodians live in town. Any savings that are realized will come directly from the pockets of the 26 custodians.
Those are the economic arguments against outsourcing the daily cleaning and conditioning of our schools. The social arguments against this type of outsourcing are a little harder to quantify. One involves the safety of the students, and there are multiple media accounts of GSA employing sex offenders. (See here, here and here.) This alone should be of great concern to North Kingstown residents.
Then, there are the intangibles. Custodians happy with their jobs will be more likely to look through a dumpster for your kids expensive retainer, and will probably do a better job of cleaning the toilet your kid sits on.
Custodians can also be the most important role model one can have in school. Or at least one was for me.
When I was in elementary school I had a little more energy than some of the other students and every once in a while it landed me in a bit of trouble. One time I brought an Eddie Murphy cassette tape to school and when I brazenly played it at recess (quite possibly my first test of the First Amendment). The school’s legendary principal Jim Foster introduced me to school custodian Bobby Taylor. Well, actually he remanded me to help him clean the school.
It turned into a summer job and Taylor paid me $5 an hour to help him spruce up the school. We became fast friends, and he was one of the first adults I knew personally who worked with his hands for a living – something that can be really inspirational for a hyperactive kid. Taylor, us students assumed, was developmentally disabled; we based this on his severe stutter and the fact that he rode a bike instead of driving a car to work. He may well be somewhat slow in clinical terms, but the Bobby Taylor I knew was every bit as smart as any other adult I happened to know as an 11-year-old in East Greenwich.
I still see Bobby Taylor riding his bike around town, and every time I do I recall that one of the first truly great teachers I ever had wasn’t a teacher at all. He was a school custodian.
“The answer, at the very least, is that, morally, we should all be willing to cough up the price of a pizza a year to keep our neighbor solvent.”
A nice sentiment, but the problem is that there are a lot of neighbors out there, which quickly add up to a lot of pizzas, or in the less theoretical case of the average middle class household, a significantly lower standard of living. Nor do such “magnanimous” policies exist in a utopian vacuum – they can create major distortions in the economy as people attempt to capture government rents rather than producing additional value. To name one example, the SSDI rate (another magnanimous progressive redistribution program) has more than doubled in both absolute and percentage terms since the 1990′s, and the number of recipients has skyrocketed since the economic downturn – mostly for difficult-to-verify “anxiety” and “musculoskeletal” disorders. Progressives can turn a blind eye to what is going on there for their own cognitive convenience, but there are some very serious distortions occurring that will need to be addressed very soon. The moral is that “nice-sounding” redistribution programs make the practical economic concerns more serious, not less, because there is less public pressure for scrutiny.
“Any school committee that thinks it is going to be easier to negotiate a contract with a faceless big national corporation than with organized janitors is fooling itself.”
You can demonize the business any way you want, but private companies can be contracted and negotiated with far easier than public employees. Private companies know that customers have other options if they raise their prices too high. Why isn’t Walmart charging everyone outrageous prices if “big national corporations” are so unresponsive to customer concerns?
“concerns over class warfare”
How so? I’m guessing the majority of taxpayers are probably in the same class as custodians… no?
“Any school committee that thinks it is going to be easier to negotiate a contract with a faceless big national corporation than with organized janitors is fooling itself.”
No negotiations. The school committee would have to put it out for competitive bidding.
“One involves the safety of the students, and there are multiple media accounts of GSA employing sex offenders.”
In Rhode Island they would have to pass a background check before they could work in a school.
“The answer, at the very least, is that, morally, we should all be willing to cough up the price of a pizza a year to keep our neighbor solvent.”
Actually, I would have no problem with that but the bottom line is that NK’s elected government has a moral obligation to represent the taxpayer’s best interest. If the taxpayers push back on the idea then it will go the way of EG and Portsmouth.
Don’t let facts get in the way of a good narrative.
“I’m guessing the majority of taxpayers are probably in the same class as custodians… no?”
No. Custodians are working class and at the low end of the working class.
“No negotiations. The school committee would have to put it out for competitive bidding.”
Oh? Who’s the competition? The school committee already voted to work with GSA. Any bidding process is a formality. And, just so you know, a bidding process is a negotiation.
”In Rhode Island they would have to pass a background check before they could work in a school.”
You mean the State will protect us?
“the bottom line is that NK’s elected government has a moral obligation to represent the taxpayer’s best interest”
Which is what? Either you’re saying that the taxpayer’s best interest is the mere bottom line–cost and nothing else–or you’re saying that the taxpayer’s best interest is something more complicated than mere cost, in which case you need to explain what you think that is.
Typical turbo troll response. Bring some facts to the table and maybe I’ll believe you. I don’t know where the custodians fit into the median income of NK and apparently nor do you. As for the background checks, they are done by the local community’s police department. Do you have a problem with that? Lastly, I don’t need to explain the taxpayer’s best interest. If elected officials don’t represent the best interest of NK they will be voted out. There’s nothing complicated about that. Troll on turbo.
DogDiesel: Please feel free to attack ideas but please do not attack others. You asked some questions and he answered them. There’s nothing trollish about that. In fact, he responded in the exact way to your post that you responded to my post. You know what they say about doing unto others as you would have done to you…
That said, i enjoyed and appreciate both your comments. They help to flush out ideas.
Also, I don’t think school committees have a moral obligation to represent the taxpayers best interest (and they definitely don’t have a legal obligation to do so). I think if the powers that were wanted to school committees to feel a moral obligation to the taxpayers best interest, they would have been given taxing authority. I think they weren’t so that they would focus on education, rather than spending.
My apologies. I’ve tired over the course of time reading turbo’s incessant stalking of other’s comments here and may have gotten my fur up. No pun intended.
Bob – I do think DogDiesel was a bit quick with the trolling charge in this instance, but as he pointed out, some context is necessary. Turbo has a long history on this blog of jumping down the throats of free market advocates in order to dissuade us from commenting and to derail any threads in which we post substantive points. When a commenter mechanically disputes every single point one of us makes, even the points on which there shouldn’t be any substantive disagreement, it strongly suggests that the commenter is just looking to start an argument rather than engage in meaningful discussion. This behavior quickly became tiring to all of us. I don’t know if Turbo’s comment in this thread qualifies at that level, but some of his contention points do seem frivolous and mindlessly argumentative, like the “You mean the state will protect us?” comment, which fits his old pattern of mindless harassment.
To our knowledge, you have taken no action whatsoever to stop Turbo from trolling us, which is your right as blog owner, and we respect that. But it is that lack of action that has caused us to adopt our own countermeasure of exposing him as a troll whenever he does start up his old routine. This is from where an overreaction in the opposite direction, such as DogDiesel’s, might stem every now and then. Having said that, I think I speak for everyone when I say that we do not mean to violate the blog rules and will try to meet your request to give all commenters fair treatment.
“ I don’t know where the custodians fit into the median income of NK”
Median household income: $78,000
Median per capita:$40,0000
Custodian salary: $27,000
Roughly, of course.
But it’s more than just the difference in class between custodians and the rest of NK’s population. The real class war appears in the difference between the custodians and the school committee.
“ I don’t need to explain the taxpayer’s best interest.”
Sure you do. What you think the taxpayer’s best interest is, is literally the only thing at issue here (pace Bob).
The only question is: what is best for the town? Saving a little money in the school budget at the expense of the quality of custodial services, the local economy, and the social fabric of the community? Is that the best thing for NK?
“If elected officials don’t represent the best interest of NK they will be voted out.”
You assume that voters never make mistakes, that it is impossible for voters ever to re-elect officials who have not represented the best interests of the voters.
In other words, you’re simply shrugging away the issue, rather than offering your own judgement. How courageous.
To put it another way, you are saying that it is pointless to make any comment whatsoever on this news, which is rather an odd thing to say in the comments section of a news blog.
I know you are only responding to his comment, but I don’t see how the median per capita income of North Kingston is relevant to custodial salaries, especially since many or most of the custodians won’t be living in North Kingston. I certainly don’t live where I work. To pose the question differently: why should Bill Gate’s lawnmowers earn more than other lawnmowers performing substantially the same work? Seems rather arbitrary. According to the census data I see online, median per capita income in Rhode Island is right around the custodial salary you mention, so if we’re examining the salaries for how typical they are of middle-class Rhode Island workerrs, they do seem to be around the middle.
“I don’t see how the median per capita income of North Kingston is relevant to custodial salaries”
You have not read the thread.
“since many or most of the custodians won’t be living in North Kingston”
You haven’t read Bob’s post.
“median per capita income in Rhode Island is right around the custodial salary you mention”
Why is median income for RI relevant, when median income for NK is not?
“The only question is: what is best for the town? Saving a little money in the school budget at the expense of the quality of custodial services, the local economy, and the social fabric of the community? Is that the best thing for NK?”
Is it? Isn’t what’s best for NK also in the best interest of the taxpayer? Aren’t they a representative government? Can you demonstrate a loss of quality custodial services, a loss to the local economy, or a loss to the social fabric of the community? Two can play the question game.
“Can you demonstrate a loss of quality custodial services, a loss to the local economy, or a loss to the social fabric of the community?”
There’s a good accounting of these issues available at an article on RI Future. The title of the article is ‘Why in-house custodians matter to residents’.
Here’s a link: http://www.rifuture.org//in-house-school-custodians-matter-to-residents.html#comment-3016
“There’s a good accounting of these issues available at an article on RI Future.”
Accounting? Where are the facts man? Where are the facts?
You asked for the facts on income in NK; I gave you these facts; then you said, “where are the facts?”
You may want to consider the possibility that you don’t actually care about the facts.
Nonetheless:
More than half the town’s school custodians live in town. Cutting their salaries means reducing the town’s income.
There’s no sure savings in outsourcing.
GSA has history of hiring sex offenders.
The custodians are working class, and they earn a wage below NK’s median.
What is it that you dispute? What is it that you need?
“GSA has history of hiring sex offenders.”
This argument has been beaten to death. It’s blatant fear-mongering on the part of the unions. I’ve seen THREE reported cases against GCA related to sex offenses. They have over 16,000 employees. That works out to an average of .01% — that’s 1/100 of 1 percent.
Should we say: “EPS custodians have a history of bombing schools!!!!”?
After all, over 3% of EPS custodians have a history of threatening to murder our children by blowing them up.
According to other posters, your alleged facts on custodian pay are wrong. As for anything else to back up your narrative, as they say in Rhode Island, “You got nothing.”
“According to other posters, your alleged facts on custodian pay are wrong.”
I provided custodial pay in NK. If the school custodians make more, good for them.
“as they say in Rhode Island”
They???
People are always talking about what the custodians are giving up but never seem to talk about the hard numbers. Let’s try to extrapolate some facts (please correct me if I’m wrong):
– Tom Keenan is getting a $5/hour pay cut.
– It’s been reported the new hires at GCA will be earning $14/hour
So, from he above we can tell that Tom Keenan was earning $19/hour.
Now, let’s look at the national pay range for custodial janitor work. According to payscale.com the range is $8.10/hr (for cheaper parts of the country) up to $16.11/hr (for the most expensive parts of the country).
This means that Tom Keenan was earning nearly $3.00 more per hour than even the highest range of the payscale. Combine that with the fantastic benefits that he was getting from the town and you can start to see why many people think the union’s are creating VERY overcompensated employees.
RIGL 16-2-9.1 (11) Recognize that the first and greatest concern must the educational welfare of the students attending the public school.
Educational welfare is a broad term, but having clean, safe, and functioning facilities is part of that umbrella. However, given the need to prioritize scarce resources, where should the marginal dollar go after funding the minimum standard in this area to support the overall educational objectives? For example, the cafeteria fund, which is supposed to as an enterprise fund break-even, has routinely lost hundreds of thousands of dollars each year in NK — resources that have to be made up by taking from the general educational fund. NK is the only district that does not “outsource” cafeteria operations — so is the marginal value of providing higher pay (and really the cost driver is health benefits) to mainly part-time local workers worth the opportunity cost of what NK could spend with an extra $200K a year (or return to some members of the community in the form of lower taxes or other town services)?
So it is a bit naive to state a SC should focus “on education, rather than spending” because RIGL code of basic management for SC states that policy making and resource allocation decisions are the focus for SC.
The ‘negotiations’ with the ESP union has dragged out over a much longer time period than the process of building the RFP, getting bids, and selecting a vendor. How much of the delay is the fault of the union or the SC? I’m not privy to the backstory, but it is telling that when the day of the vote to outsource came, the union came in with a last minute offer with substantially more cost savings, even beyond the arbitrator’s recommendations. Where was the union leadership concern over its members’ “financial security” when it became increasingly clear 6 months ago that cost savings needed to be made and the RFP went out? You have to know when to hold and when to fold if you are going to play high stakes poker.
“so is the marginal value of providing higher pay (and really the cost driver is health benefits) to mainly part-time local workers worth the opportunity cost of what NK could spend with an extra $200K a year”
Yes. I would rather see those employees have health benefits than…well…what exactly is it you want to spend the money on?
the students, education. not peripheral maintenance. that can be outsourced to a specialist.
“the students, education”
That’s a vague, meaningless statement.
What exactly is it that students need and that can be paid for only by cutting health benefits for adults–that is, for people who actually contribute to society?
“ not peripheral maintenance”
????
Well said Phil, Not only was he making 19 dollars an hour (3 dollars higher than the highest national average for that job , but he and all the other custodians were paying 4% co-pay for their healthcare. This is no longer sustainable. The SC listened to their offers and made counter-offers which actually saved their jobs with the schools department. But the ESP and NEA leadership chose to walk away for the table, calling the offers “insulting”.
18 months of unrealistic offers, delays and general feet-dragging by the ESP led to this. By law the budget had to be balanced by 6-30. At the last SC meeting on 6/26, the union had yet another offer. It was reviewed and declined. Their union leadership took a chance and took the “hard line’ approach and frankly it backfired.
It is not the school committees job to provide above average salary and benefits for its employees It is the SC’s job to utilize the tax dollars allotted in a concise, efficient manner so as to give their student body the best education it possible can.
@turbo, the School committee already cut 1.6 million in classes w/teachers, transportation, sports and the arts. That is what I meant by students and education.
Peripheral maintenance = janitorial services. Schools need to concentrate on their core competency, which is education. All other functions like janitor, food service, buildings and grounds maintenance, transportation and even H.R should be outsourced to companies that specialize.
“the School committee already cut 1.6 million in classes w/teachers, transportation, sports and the arts”
So? They shouldn’t have made those cuts, either.
“Peripheral maintenance = janitorial services”
I don’t think it does. But the point I was responding to was about cafeteria workers, not custodians.
“should be outsourced to companies that specialize”
Why? These services are already provided by people who specialize in them. There’s no need for a firm. The extra layer of bureaucracy just soaks up resources and moves them out of state, for one thing, and, for another, lowering the wages of the custodians reduces the number of people in town making a decent living.
If the report about Keenan’s income is true, and he is representative, then NK is reducing its number of middle-income earners.
It is always bad to reduce the number of middle-income earners. Always.
@turbo, …sc should not have made the 1.6 million in cuts? By law they have to balance the budget. So that comment shows your ignorance on the process.
The janitors & food service purchasing power cannot compete with the large firms that specialize. Your comment about the school already has specialization in these areas prove you don’t grasp the basic economic concept of buying power.
Extra layer of bureaucracy? it called outsourcing.
Finally, Its not about reducing middle income earners, it’s about paying people fair market value for their skill set.
I am not going to respond to insults. These comments are inappropriate:
“ that comment shows your ignorance on the process.”
” you don’t grasp the basic economic concept of buying power.”
You have already lost the argument by resorting to insult, but I am going to respond to your points one last time and then give you the opportunity to respond in a civil manner.
“By law they have to balance the budget.”
Cut administrators’ pay. The administrators make an average of $130,000 a year, and they actually played a role in creating the budget problems.
”The janitors & food service purchasing power cannot compete with the large firms that specialize.”
They already are competing with them. You have to show that NK’s school custodians and food service workers provide the same quality as GCA for a higher price. You have not shown this.
“Extra layer of bureaucracy?”
Yes.
“ it called outsourcing.”
Yes. How does this refute the point that the town will have to deal with the bureaucracy of a firm located in Tennessee?
Also, pro-tip: when you want to insult someone in writing, you really need to dot all your ‘i’s, so to speak.
“Its not about reducing middle income earners”
Indeed, it is. That is one of the effects this move will have, and so it is about that.
(Again, refer to the pro-tip above. This is a discussion about education, you know)
“it’s about paying people fair market value for their skill set”
They are already being paid fair market value for their skill set. You must admit this, because, either the price of everything in the U.S. is already at fair market value or the price of everything in the U.S. may or may not be at fair market value.
If the situation is the latter, then you will have to show that the proper price for their skill set is lower than what they were receiving, which you cannot do.
@ turbo, this link serves as data to support that their pay rate while employed by the NKSD is in fact above market rate. http://www.payscale.com/research/US/Job=Custodian_Janitor/Hourly_Rate Administrators contracts did not expire and were not in the process of negotiation. The ESP union contract was in negotiation for over a year and therefore in play. The town will be cutting one check to a out-of-state company instead of 26 individual checks….An unintended consequence of the good kind. Please explain how that is an “added layer of bureaucracy”? It streamlined the towns payroll by 25 checks. The more you babble the more you prove you do not understand the basic principles of supply and demand, or you choose to ignore it. PS i got your civility hanging you pompous hole.
“PS i got your civility hanging you pompous hole. ”
This is not entirely comprehensible, but is surely an attempt at an insult. I will not engage with you any further after this comment.
“this link serves as data to support that their pay rate while employed by the NKSD is in fact above market rate”
No. That link shows that other wages for custodians are below the market rate.
In a market that allows firms to operate–especially firms backed by government charters–you find a number of distorting effects, with wage suppression being among the most prominent.
Unions provide what is called a counter-vailing force to the market distortions caused by firms, and so when you want to find the fair market price for a particular kind of labor, you must start by looking at markets that have strong unions.
“Administrators contracts did not expire and were not in the process of negotiation.”
So? Since when does government care about the sanctity of contracts?
One could say that governments care as much about contracts as you do about the proper use of the apostrophe.
“Please explain how that is an “added layer of bureaucracy”?”
If you think that dealing with a contractor is as simple as cutting a check or that dealing with a group located in Tennessee is as easy as dealing with one in Rhode Island, well, actually, I hope you do think that and continue to espouse your belief as loudly and widely as possible. It would do a lot for the side supporting the custodians.
“The more you babble the more you prove you do not understand the basic principles of supply and demand”
The basic principles of supply and demand, as touted by standard economics, do not in fact work. There’s a long-standing phenomenon that shows this. I think I’ll leave it to you to look it up. Hint: it’s most commonly referred to by the three initials of the economists who discovered it, and the last initial belongs to the most famous of the three.
Good luck!
@phil neem, the N.E. Independent today has an article describing Tom Keenans salary/benefits. He was making $21.00 an hour, with 4% healthcare co-pay and 10 weeks paid sick time.
They are already being paid fair market value for their skill set. You must admit this, because, either the price of everything in the U.S. is already at fair market value or the price of everything in the U.S. may or may not be at fair market value.
You should review your economics 101. For labor markets to be perfectly competitive and achieve an equilibrium (fair market) price, multiple conditions such as many firms (buyers of labor), perfect information about wages and job conditions, other firms offering identical jobs (demand), and many workers with same skills (supply). The union distorts the fair market wage because the contract puts limits on these conditions — for example, if 100 custodians showed up in NK wanting to sell their labor for $2/hr less, the district could not hire them at that price. So, the closest experiment in this case is to fire all the workers and see if they will work at lower wages. In this case, given the report that almost 80% of the workers will sign on with the new company at lower wages, it seems that the contract wages/compensation package were higher than what the market dictates. In this case, some of the “surplus” was going to the workers — good for them if they (or the union) could extract that given the lack of competition.
If the new compensation was too low, the custodians could go find jobs elsewhere at higher rates. Given in this economy there does not seem to be many opportunities (either firms not hiring or too many workers willing to do custodial work), then the power shifts back and some of that surplus now goes back to either the new employer and the community.
If you really want a great experiment, take the amount of money the NKSD will pay the new company and instead, offer it to the ESP union. Let the ESP union set the wages, benefits, etc. and the number of workers — let them have all the power as long as the service remains at the same standard and any $$ amount needed over the fixed contract price has to be borne by the ESP Union. You still think the wage would be 21/hr with 4% co-pay?
You should review your Coase, ‘Econprof’.
“The union distorts the fair market wage”
No. Unions respond to the distortions created by firms, which themselves exist to account for transaction costs that necessarily occur because markets are not perfect.
It’s really great that you went to all of this trouble to work out an example that has no weight, but it was all for nothing, because you have no grasp of one of the most important economists of the 20th (and, I guess 21st) century.
Keep tryin’, kiddo.
It’s not really the union that is creating the distortion – it’s the fact that government employee compensation isn’t subject to the traditional market forces that keep compensation in check in private markets, combined with Rhode Island’s “closed shop” union rules that granted them an artificial monopoly over the labor supply and encouraged vicious cycles of quid-pro-quo politician-labor campaign contributions and compensation rewards.
Unions don’t present the same problems in right-to-work states because they compete on a level playing field with non-union employees and must succeed on their merits. Workers in these states are free to withdraw membership dues when their unions lose their way and threaten to destroy the very workplaces in which they operate.
The idea that you think keeping “compensation in check” is an advantage of so-called “traditional market forces” perfectly captures everything that is wrong and perverse about free market fundamentalists.
It’s not that markets are so wonderful… it’s that the alternatives are all so much worse. Tying compensation to market forces will never be perfectly fair or efficient, but leaving it to the political process can only in practice result in a spoils system with far worse abuses and inefficiences. Absent government subsidies and bailouts, firms that throw merit to the wind or overcompensate their employees in a market will eventually be outcompeted by more efficient firms. Public employees bargaining through a “closed shop” union and the politicians who reward them in exchange for campaign contributions and votes have no such checks on their behavior.
“leaving it to the political process ”
–is exactly what happens every time the government issues a corporate charter.
“Absent government subsidies and bailouts”
Like corporate charters and a standard currency?
“Public employees bargaining through a “closed shop” union and the politicians who reward them in exchange for campaign contributions”
–are no different from the private firms that operate in exactly the same way. You can’t seriously imagine that so many private firms give so many politicians so much money for no reason at all?
“It’s not that markets are so wonderful”
For you, I think it is, but that’s beside the point. The real point is that, in a second-best world, unions are essential to the task of balancing the market-distorting power of the firm.
In the real world, you cannot even begin to approach fairness in a market without unions that manipulate government to at least the extent that firms do.
What progressives frequently miss in these dynamics is that not all special interests are equivalent. Some public-private or public-public reward loops are inherently more dangerous than others. How dangerous it is will depend on many factors: how homogeneous its interests are, how many votes it carries, how much money it carries, how easy its demands are to meet, and its relative power to other special interests.
So in the banking industry, for example, we have astronomical amounts of money held by a limited number of major firms who all have similar lobbying interests: bail us out, subsidize us, regulate smaller firms out of existence, and let us get away with what would otherwise amount to fraud. There is no significant opposition to any of this, so the Federal Reserve and SEC are captured relatively easily and the people who serve in these agencies often come from banking and go back to it afterward for huge compensation packages – perverse incentives.
But this is not true of the vast majority of U.S. businesses, which have wildly diverging regulatory interests from each other. As Milton Friedman used to correctly point out, it is not true that “business” is a friend of free markets. Any given business wants more regulations and stronger regulations that favor their industry and firm at the expense of other industries and firms, and their competition wants exactly the same thing. I deal with businesses lobbying government regulators every day in my job, and I’ve never once seen a business begging the government for pure deregulation – this is a myth. Almost always, they are asking for new and stronger regulations that require customers to buy their products or prohibit customers from buying the competitor’s. They are not organized and aligned in their interests and thus don’t carry such an inherent risk of regulatory capture.
Public unions are the most troubling special interest in nearly all categories. Their demands, which amount to higher compensation and increased job security 9 times out of 10, are very simple to meet because it is in the direct control of the politicians they lobby. There is no competition by law, so their interests are perfectly aligned under the “closed shop” rules that exist in non-right-to-work states, and any dissenters within the bargaining unit get no say. They carry massive numbers of votes – more than a business organization could ever realistically deliver, and they operate in a preexisting ground-level organizational structure that can be readily adapted for campaigning. This is why when we pull up Rhode Island campaign finance reports, we see nearly all of the state’s unions donating a huge amount of money to the same candidates in unison, but we don’t see businesses A, B, and C across the state all throwing their support behind the same politicians. And even when they do organize in some fashion through a chamber of commerce or trade organization, their interests are still so inherently divergent in most areas and difficult to meet that they don’t pose nearly the same risk of capturing the process as unions do.
“Their demands, which amount to higher compensation and increased job security 9 times out of 10″
You can’t support that proportion, especially not in a historical account, but that is beside the point.
Your real problem is that, in your view, “higher compensation and increased job security” are negatives. Unmitigated, unalloyed, and unexamined negatives.
Your position is simply not serious.
There is no indication whatsoever that American wages or job security are in any way too high or too firm. In fact, exactly the opposite holds true: wages are far too low across the board, especially when compared with growth in wealth and productivity over the past thirty years or so. The same goes for job security.
You are criticizing unions precisely because they provide an essential corrective to long-term trends that are terribly bad for people.
I don’t know why you are so relentlessly focused on political power (well, yes, I do), but, again, the use of political power by unions is a corrective to the distortions already created in the marketplace by the mere existence of firms.
You are fixated on the battle between unions and firms at the level of political power. You need to get past this fixation. First of all, there is no evidence whatsoever, especially on the broad American level that government works in favor of unions over firms. Just putting the idea into writing is making me chuckle.
Second, the site of the initial problem is the markets, not the government. The market does not consist of a collective of individuals contracting with each other. It consists of firms contracting with individuals, a situation that gives firms the advantage.
That is the cause of wage suppression and job insecurity, and, yes, those two things are most certainly bad.
“You are fixated on the battle between unions and firms at the level of political power.”
You misunderstand my argument – I have no issue with the interplay between unions and private firms in a right-to-work environment. I am making a very specific point – that special interests vary in whether there is an inherent risks of regulatory capture, and public unions in particular pose a unique set of problems because of the homogeneity of their interests, their “closed shop” monopoly status, their insulation from market forces, their built-in ground-level organizational structures, their large number of deliverable votes, and the direct control that politicians have over their compensation. I am emphatically not anti-union – I simply want them to compete with non-union employees on an equal basis, and I don’t want them being afforded special privileges through regulatory capture, which they accomplished very successfully in Rhode Island during the 1980′s and 1990′s, leading to severe financial problems in the state today. I don’t want businesses being afforded special privileges or capturing the process either – which is a mistaken caricature of the libertarian position – but for the reasons I described, except in certain industries, businesses aren’t as much of an inherent risk as public unions are.
“ I simply want them to compete with non-union employees on an equal basis”
Meaning you want them to behave like firms.
I get that you don’t like the way unions operate. Too bad. They operate in the way that they do precisely because that way is the only way to counter the advantages firms have in the market.
You’re making the same mistake that “EconProf” made above: you’re saying that unions should compete with firms in a space that favors firms. That’s never going to work.
“ leading to severe financial problems in the state today”
Rhode Island’s problems are due to the national economic downturn, which is the direct result of the application of neoclassical economic principles in national economic policy, and to the mismanagement of the State’s finances by elected officials.
By implying that unions are at fault, you’re saying that the trouble with pensions is the source of all the State’s problems, which is absurd on the face of it and also places the blame again on elected officials who mismanaged pension funds.
It’s trivial to get a return on a glob of money the size of the various pension funds that would cover all of their pension obligations–or, at least, it should be for any competent financial manager. But elected officials raided and mismanaged the funds. They are at fault, not the easily fulfillable union contracts.
What is going on here is n different than any other municipallity in this country – they need to cut costs. Itis NOT necessary to havein-house janators cleaning the buildings. This is nothing morethan union protectionism. How about the taxpayers? Have we forgotten them? This has nothing to do with education! Get over it.