Labor Unions and Their Impact on the Economy - Essay Example

Labor Unions and Their Impact on the Economy Table of Contents 1.0 Introduction 2 2.0 Arguments Favoring the Acts of the Labor Unions 3 2.1 “Wisconsin Governor is Against the Worker’s Rights”- Protest in Madison 3 2.2 Obama’s Support to the Budget Battle 5 2.3 Thousands of Supporters Planned the Labor Unions’ Protest 6 3.0 Arguments against the Acts of the Labor Unions 7 3.1 Effect of the Protest Move on the Protestors 8 3.2 “The Protest of the Teachers is a Resistant to Change”-Wild Teacher Protest 9 3.3 “Bill was Passed” with Majority of Votes 10 4.0 Conclusion 11 References 13 1.0 Introduction The research paper deals with the role and impact of the labor unions in an economy with reference to the political disorder going on in Wisconsin in recent times. For the current FY2011, Wisconsin faced a shortfall in budget by an amount of $137 million along with a prospect of a deficit of $3.6 billion during the upcoming budget for two consecutive years. In view to this, Governor Scott Walker mentioned that for coming out of the situation, he will not raise the taxes but will try out certain other measures. The measures will be presented through the proposed budget and will include the probability of selling the power plants along with the prisons and university campuses. Apart from this, the State agencies have appealed towards a new funding of $1.1 billion for a “cost to continue” budget for the period 2011-2013. Following this, protests came up against a bill that necessitated the state employees for a contribution of an average of 8% more towards their health care and pension costs along with the privilege of collective bargaining. On support of this protest, around 40,000 thousand union protestors filled the capitol of state for tenure of four days (Sunshine Review, “Wisconsin State Budget”). In this research paper, the situation in Wisconsin after such decision of the government and that of the labor unions will be reviewed. Arguments both in favor and against the acts of the labor unions will be presented and a final conclusion either in support or against the scenario will be drawn up. 2.0 Arguments Favoring the Acts of the Labor Unions The state employees are not happy with the proposal of the governor that they would have to make a contribution of 5.8 % of their salary towards schemes of pension along with the payment of 12.6 % of their insurance premiums for health (Sunshine Review, “Wisconsin State Budget”). In this section of the research paper, various arguments in support of the union’s protest will be presented. 2.1 “Wisconsin Governor is Against the Worker’s Rights”- Protest in Madison On February 15, 2011, the public employees, community supporters and union activists in a number of more than 15,000 jammed at the Capitol Square in Madison for protesting the governor’s plan to band the rights of the workers and demolish jobs of middle class community of the society. The governor denied making any changes in his plans and has mentioned that if the bill is not passed by the state legislature, he would compel massive layoffs along with hampering of state services and thus would cost several jobs (Johnson, “Wisconsin: Face-Off Over Labor”). According to a highway worker and member of AFSCME, the attack on the worker’s rights is a part of the budget plan of the governor. The move of the governor has been demonstrated as a way of political business that is interested in taking the rights away from the people. The appeal of a few protestors is such that they are in complete support to the governor’s activities for balancing the budget but not at the sake of the worker’s rights, as evident from the views of a retired Communications Workers of America member. The protestors mentioned that the governor was imparting the bad effects of a budget bill by setting up such a policy that would take away the general rights of the people (American Federation of State, County and Municipal Employees, “Washington State AFSCME Members Stand with Wisconsin Workers”). The president of Wisconsin AFL-CIO, Phil Neuenfeldt stated that the plan of the governor will not only attack the worker’s rights but will also affect the private sector (WNY Labor Today, “More Than 30,000 Union Members Rally In The State Of Wisconsin To Protest Republican Governor’s Plan To Strip Away Workers’ Collective Bargaining Rights/However, Republicans Ignore Protest And Move Pass Controversial Budget Bill”). This statement of the President is supported by the estimate of the Institute for Wisconsin’s Future that states the reduction in the ‘take-home’ pay will result in a decrease in the economic activity of the state by $1.1 billion. It will also reduce the number of private sector jobs by around 9000 (Ivey, “Biz Beat: Walker plan could hit private sector in pocketbook”). 2.2 Obama’s Support to the Budget Battle The protest against the budget bill of the workers received tremendous support from the US President Barack Obama when he thrust himself into the battle along with his political operations. This support of the President will also initiate similar protests in several other state capitals of the country. The political machine of the President operated in coordination with the state and national officials of the union for getting hundreds and thousands of protesters in Madison for the protesting session. The combined efforts of the protestors with the President spread across the country and thus reached Columbus, Ohio where the supporters of labors gathered for a hearing of protest. The protest was against a measure by the governor John Kasich that would take away the bargaining rights of the workers. Similar protests were even anticipated in New Jersey, Pennsylvania and Missouri (Dennis & Wallsten, “Obama Joins Wisconsin’s Budget Battle, Opposing Republican Anti-Union Bill”). Obama termed the move of the Governor regarding the eradication of the worker’s rights to be an “assault” on the workers. The President was of the view that it is important to take a move for the current budgetary imbalances in the State. But at the same time, it must be reviewed that the workers’ rights are not exterminated (Dennis & Wallsten, “Obama Joins Wisconsin’s Budget Battle, Opposing Republican Anti-Union Bill”). 2.3 Thousands of Supporters Planned the Labor Unions’ Protest The protest against the governor’s decision had been a planned move by thousands of workers in Wisconsin. The protest that was initiated by around 20,000 protestors has evolved as a planned move by the groups of labor and students. Soon after the governors’ decision, lobbying efforts and three public protests in Madison were already planned by the protestors. These protest activities were planned to take place in a single week along with at least one campaign against the governor’s Republican and associated allies (Knutsen, “Wisconsin Labor, Student Groups Organize Protests against Walker's Public Union Plans”). On 14th February, the first action was planned to be initiated and named “Governor Walker, Don’t Break my Heart”. The activists planned to deliver more than a thousand cards to Walker’s office pleading the governor’s administration not to inflict the budget cuts planned. A number of demonstrations were planned for 15th and 16th of February in which anybody opposing Walker’s program was invited to join the series of lobbying efforts and rallies. For 15th and 16th of February, it was planned that organizers would meet in the Masonic Temple in Wisconsin at 10 am for briefing to the participants the planned activities for the day. It was even planned to provide basic training to the participants on the process of face-to-face lobbying the legislators (Knutsen, “Wisconsin Labor, Student Groups Organize Protests against Walker's Public Union Plans”). The Liberty Tree Foundation and the Center for Media and Democracy will aim towards promoting a campaign against the budget plan of the Governor. The head of the Liberty Tree Foundation, Manski, has mentioned that the governor’s personnel have no understanding of the law of labor. According to Manski, the governor’s move was aimed towards eliminating the unions of the public sector (Knutsen, “Wisconsin Labor, Student Groups Organize Protests against Walker's Public Union Plans”). 3.0 Arguments against the Acts of the Labor Unions This section of the paper will focus on the ill-effects of the protests that the labor unions at present are placing against the Governor’s decision regarding the labor rights. It has been mentioned by the Wisconsin’s Republic Party that the plan of Walker will help in saving $30 million during the coming three months and $300 million during the period of coming two years. This way the present budget deficit of the state that stands at $3.6 billion will be mitigated. The governor himself claimed that through this plan, Wisconsin will be able to save an amount of $165 million by June, 2011 and this will be done by restructuring of existing debt (Tini, “Do You Support Wisconsin Gov. Scott Walker's Decision to Threaten Public Workers with National Guard?”). With regard to these views of the governor’s decision, arguments against the moves of the labor unions will be discussed. 3.1 Effect of the Protest Move on the Protestors The protests that the union labors are initiating at present against the governor’s decision seems to be more for the worker’s own interest and not for the benefits of their children. The unionized employees in the field of education or the teachers have left their places of work or the schools for protesting. This situation, as a result has left thousands of students without classes. This condition of the economy has come up against a move of the governor who is trying to tackle the financial condition of the state that bears a deficit of around $4 billion (The Heritage Foundation, “With Governor Walker’s Proposal, Wisconsin Once Again Leads the Nation in Education Reform”). The proposal of Walker would limit power of collective bargaining of the workers and would reform benefit plans of the employees. However, this will be for the first time in Wisconsin that state employees would be contributing to the benefits of the economy as a whole. The proposal of the governor will not prohibit unions to represent workers. It would prevent the seeking of pay increase by the unions above the ones pegged in the Consumer Price Index as long as the public referendum approves it. Since many years, the unions have kept benefiting from the pay checks of the teachers but have mostly stood as an obstacle in the way of the children’s interests (The Heritage Foundation, “With Governor Walker’s Proposal, Wisconsin Once Again Leads the Nation in Education Reform”). 3.2 “The Protest of the Teachers is a Resistant to Change”-Wild Teacher Protest If the protesting move of the union workers in America is reviewed, two sides of the coin come up. One side depicts the goodness that Americans have come and stood together for their common belief, but the other side of the same coin shows the way the Americans has changed. The teachers are not protesting for safeguarding their rights, instead they are protesting because they do not want things to get changed. In other words, they do not want anybody to indulge with their pay. This means they are failing to realize the necessities of their state that, at present, is demanding sacrifice from either side. From the violent protest, it is clear that the teachers want to make sure that they are not the one to make the sacrifice (The Economic Collapse, “Are the Wild Teacher Protests in Wisconsin a Prelude to the Economic Riots that are coming to America?”). It seems that the protestors do not want to realize the situation in the United States at present where the local and state governments are facing unparalleled crunches of budget. In the state, the expenses are at their highs and tax revenues at their lows. The debt of local and state government is standing at an all time high of 22 % of the GDP of the US. Apart from this, many governments are wavering at the edge of insolvency (The Economic Collapse, “Are the Wild Teacher Protests in Wisconsin a Prelude to the Economic Riots that are coming to America?”). 3.3 “Bill was Passed” with Majority of Votes Apart from the protest of the huge mass, the governor’s plan of budget repair got through the Legislature. According to a spokesman of the Senate Majority Leader, Scott Fitzgerald, the Republicans had the sufficient support for getting the bill through the Senate. Republicans could even spare two votes and get the bill passed with vote from 14 Democrats in the Senate. In the Assembly, a much larger 57-38 majority are enjoyed by the Republicans and with this number, they did not face any difficulty in passing the bill. The majority of votes were received in favor of the Republicans because there were still a number of people who believed that the State’s interest was more important than that of the individual workers (Stein & Marley, “Thousands Come to Capitol for Hearing to Protest Proposal”). 4.0 Conclusion The objective of the research paper now turns up to the selection of a particular side of the coin. From the discussion related to areas of both the sides, whether to support the protest of the labor unions or not, a clear conclusion can be drawn up. The legislation of Walker will bring an end to the unions’ rights of collective bargaining. This is the process by which the unions can seek pay rise beyond inflation on behalf of the employees from their employers. However, still after the passing of the bill they can enjoy the pay rise if it is approved by voters in a special referendum. Another consequence of the legislation would be that the unions will be kept apart from their privilege of collecting dues from members. On the other hand, as a result of the legislation, the budget imbalances can well be mitigated in the coming two years. The other fair consequence of the legislation would be that the state employees would get a chance of contributing towards the well being of the State’s financial status. Thus, it seems that support to the labor unions’ protest move does not do much good to the employees’ interests whereas support to the legislation upholds the state’s interests. Hence, it is advantageous if the proposed plan of Scott Walker, the Governor, gets passed by the Legislature. The present scenario in Wisconsin shows the basis of supporting the legislation of passing the bill as the Wisconsin’s assembly ultimately passed the controversial bill on the 26th of February, 2011. After this move, the state’s governor, Scott Walker was of the view that “draconian measures” were required immediately for the state for closing its shortfall in the budget. Putting an end to some of the rights of union had been measured as the only alternative to job cuts in the state. The governor of Wisconsin mentioned in a press conference that the state needed to avoid layoffs for the sake of doing well for the workers (Sky News, 2011). References American Federation of State, County and Municipal Employees. “Washington State AFSCME Members Stand with Wisconsin Workers”. February 21, 2011. Category, 2011. Dennis, Brady. & Wallsten, Peter. “Obama Joins Wisconsin’s Budget Battle, Opposing Republican Anti-Union Bill”. February 21, 2011. The Washington Post, 2011. Ivey, Mike. “Biz Beat: Walker Plan Could Hit Private Sector in Pocketbook”. February 21, 2011. The Capital Times, 2011. Johnson, Dave. “Wisconsin: Face-Off over Labor”. February 21, 2011. Campaign for America’s Fortune, 2011. Knutsen, Kristian. “Wisconsin Labor, Student Groups Organize Protests against Walker's Public Union Plans”. February 21, 2011. The Daily Page, 2011. Sky News. “’Union-Busting' bill passed in Wisconsin”. March 28, 2011. Business News, 2011. Sunshine Review. “Wisconsin State Budget”. February 21, 2011. Index.php, 2011. Stein, Jason. & Marley, Patrick. “Thousands Come to Capitol for Hearing to Protest Proposal”. February 21, 2011. News, 2011. The Economic Collapse. “Are the Wild Teacher Protests in Wisconsin a Prelude to the Economic Riots that are coming to America?” February 21, 2011. Archives, 2011. The Heritage Foundation. “With Governor Walker’s Proposal, Wisconsin Once Again Leads the Nation in Education Reform”. February 21, 2011. The Foundry, 2011. Tini, Mar. “Do You Support Wisconsin Gov. Scott Walker's Decision To Threaten Public Workers With National Guard?” February 21, 2011. United-States, 2011. WNY Labor Today. “More Than 30,000 Union Members Rally in the State of Wisconsin To Protest Republican Governor’s Plan to Strip Away Workers’ Collective Bargaining Rights/However, Republicans Ignore Protest and Move Pass Controversial Budget Bill”. February 21, 2011. News, 2011. Read More