In a statement about Governor Corbett, Richard Trumka (head of the AFL-CIO) proves that even union bosses have a sense of humor. Trumka accuses the Governor of not spending enough to create jobs in Pennsylvania and upbraided the Governor for his unwillingness to raise taxes. What makes this so funny? Simple. The union movement which Mr. Trumka now heads has done more to destroy jobs in Pennsylvania and it continues to press for policies that will worsen the business climate further.
By pushing for card check, ever higher minimum wages, opposing the elimination of prevailing wage laws, opposing the greatest freedom enhancer of all, making Pennsylvania a right to work state, and supporting nationalized health care, the union leader wittingly or unwittingly is creating a reluctance of companies to invest and grow their businesses.
Unions live in world where economics is about using power to subvert the laws of the free market and competition. But even worse perhaps, in union economic thoughts there is no recognized role for, or respect for, the entrepreneurs who create the products that create the jobs union members feel entitled to. Indeed, much of what unions do-with the help of their handmaidens in government-is to strip away the rights and privileges of property owners and entrepreneurs necessary to carrying out the critical role of generating dynamism and growth in the economy.
In short, the union mentality is one of unbridled selfishness that cares not a whit about its effect on the general welfare as long as the senior members of the union are taken care of. What’s worse is that the laws of the United States and many individual states take a strong position in favor of the unions and against the people who hire the workers. So, reading that Mr. Trumka is offering economic advice to the Governor evokes some hilarity.
“A City of the Second Class that is determined to be in Level III distress based upon the required actuarial valuation reports for a plan year beginning on January 1, 2011, shall transfer all existing benefit plans established by the City to the Pennsylvania Municipal Retirement Board solely for administration…Pension benefits and eligibility requirements shall continue to be subject to collective bargaining”-Act 44 of 2009, Section 902C
In a previous Policy Brief (Volume 9, Number 51) we raised the question of whether Pittsburgh’s legacy costs could force the City to seek relief under Chapter 9 of the U.S. Bankruptcy Code. Under Chapter 9 a judge would oversee a readjustment of debts. Pennsylvania’s Act 47 permits a municipality in financial distress to pursue a Chapter 9 filing if one of the following conditions is present:
The Act 47 coordinator recommends filing
There is imminent action by a creditor that would threaten the ability of the municipality to provide services
A creditor has rejected the Act 47 plan and the rejection cannot be resolved
A condition causing financial distress could be solved by filing
The governing body has failed to adopt an Act 47 plan or carry out the recommendations of the coordinator
Which personnel group has seen its ranks thinned the most under Act 47?
Since Act 47 gives the employer leverage over collective bargaining for new contracts (existing agreements cannot be touched) it is easy to see why public sector unions don’t like the law and, in the case of Pittsburgh, likely helped push the City to petition the state in 2007 to have distressed status lifted. Labor agreements cannot make the overall Plan divert from its stated goal, which is to right the distressed municipality.
The amended Plan shows that overall headcount has fallen 10% since 2004 from 3,657 employees to 3,294 employees. On a per 1,000 person basis that translates into a fall from 11 to 10 employees (based on 323k population in 2004 and 311k population in 2009). The City could still go lower to be in line with better performing cities.
The bargaining groups taking the biggest losses (whether by layoffs or attrition and not filling the positions) were (on a percentage basis) white collar supervisors (-32%), school crossing guards (-25%), and firefighters (-22%). Two categories-non-represented executive and management employees and recreation employees-actually saw their numbers increase during Act 47.
The upcoming months will be critical ones for labor negotiations as contracts for police, fire, blue-collar supervisors, white collar workers, school crossing guards and recreation employees expire at the year’s end. The Act 47 team has made it evident that the City can’t grant better benefits either to current employees or retirees and should not limit its ability to determine the best ways to provide services and active employees have to pay more towards health care. There could be a battle with the firefighters over eliminating overtime from pension benefit calculations and the possibility of new, less expensive pension plans. Contentious times ahead for sure.