Pennsylvania in California?

There has been a California in Pennsylvania for a long time, as confusing as that is for many who learn of it for the first time. Now we learn that one of Pennsylvania’s worst flaws is having a painful impact in San Francisco. To wit, the Bay area transit workers have gone out on strike, something that Pittsburghers and Philadelphians have seen and are threatened with every contract negotiation.

One is tempted to say, well, Californians, you voted for the people who gave transit unions the right to strike and you keep returning rabid union supporters to office. So when you are stuck in a massive traffic jam trying to get to work or when the old and sick cannot get to their doctor’s appointment or the poor cannot get to the grocery store, just remember who is responsible for this situation. Look in the mirror.

Perhaps a lesson will be learned but past electoral experience in California and Pennsylvania does not offer much hope that any lesson will be taken away from the strike caused hardships. Indeed, the transit strikers are supported by many of the most harshly affected on the grounds that the strikers are part of the downtrodden who are fighting for justice. And that is tied to their inability or unwillingness to see that well paid unionized public employees are a major cause of high taxes and inefficient service delivery.

It is a story being played out all over the country in non-right to work states.

Plum School Board Caves

After a May vote to hold the line on taxes and spending that would have led to 23 staff layoffs, the Plum School Board made a sharp U turn and approved a budget June 26th that raises taxes and uses nearly a million dollars of its reserves in order to save most of the jobs previously slated for elimination. All this with no concessions from the union. Remember the principal causes of the budget crisis are the additional million dollars or so required for teacher pensions and the cost of living increases for teachers.

The board has done what governing bodies have done for years: kick the can down the road. Assuming the pension payment is about the same next year and teacher cost of living increases are about the same, the budget shortfall will be back. Only next year the reserves will be too low to allow another million dollars to be tapped to close the shortfall. Than will mean going to the state for an exception to the allowable tax rate hike or a referendum to ask for permission to boost taxes for a second straight year. Alternatively, but highly unlikely, they might decide it is time to make the staff reductions needed to prevent more tax hikes.

One thing is for sure: as long as they are taking guidance from the union and the students who do not have to pay the bills, the board will keep making bad decisions that will come back to haunt them later. Leaving the May vote in place would have accomplished two important things. It would have dealt fairly with taxpayers and precluded next year’s budget angst. Secondly, it would have sent a strong signal to the union that the board will be very hardnosed at the next round of contract talks.

One thing we have learned in recent years is that school boards operate by and large on the dictates of the teacher unions. This episode proves once gain how powerful the union is and how little taxpayers are considered when spending and taxing decisions are made.

Plum taxpayers (and others across the state) will now begin to learn the reality of the underfunded pension mess as it appears the state is in no mood to make the serious reforms that will reduce the unfunded liabilities.

Measuring Teacher Union Power

Take the fifty states and the District of Columbia and measure the strength of their teachers’ union based on resources, political activity, state policies, and the perceived influence of power. That’s what a recent report by the Thomas Fordham Institute attempts to do. One of the key areas they focus on is collective bargaining: what is the legal treatment in the state? Are strikes legal? And can the union automatically deduct dues and collect agency fees from non-members?

With mandatory collective bargaining, no prohibition on teacher strikes, and permission to withhold and collect dues and fees, the Keystone state gets a ranking of fourth most powerful teachers’ union in the report. It was bested by Hawaii, Oregon, and Montana.

In the top ten strongest states, all have mandatory collective bargaining and all permit automatic dues deductions or agency fee collections. Two states-New York and New Jersey-prohibit teacher strikes and one, Washington, neither permits nor prohibits them.

Now look at the states ranked at the bottom (having the unions with the least amount of power). One state, Oklahoma, permits collective bargaining; in Florida it is mandatory, and in Arizona and Mississippi it is neither permitted nor prohibited. Only Louisiana permits strikes and South Carolina is silent on the issue. States in this group where collective bargaining is prohibited (Texas, Georgia, Virginia, Arkansas, and South Carolina) also prohibit any type of dues deduction or fee collection.

More Hypocrisy: University System Faculty Authorize Strike

Unhappy faculty at the 14 institutions of the Pennsylvania State System of Higher Education have taken a strike vote, authorizing a walkout. A walkout will depend on how negotiations go but the vote was overwhelming and faculty members say they are serious.

A professor asked about the potential strike said higher education was under attack and they would make a statement to the nation that the attack is not acceptable. What should happen of course is that anyone with tenure who leaves his/her classes should lose their tenure-at the very least.

Maybe the professor should look around at what is happening to the education system. Graduates are leaving college with massive amounts of debt and a huge percentage cannot find employment in their chosen field. What is the point of turning out millions of graduates whose education cannot be used to launch a career capable of paying off student loans and making up for the foregone earnings during the five or six years they took getting a degree?

And why do universities continue their push to offer degrees in more and more esoteric fields for which the only employment opportunities are with government or non-profit special interest advocacy groups that depend heavily on government dollars? But most importantly, why should faculty be rewarded for their heavy handed politically correct, statist views they try to impart to students? Survey after survey finds graduates in large numbers lack basic knowledge of the nation’s history and how a free economy works. Little wonder so many college graduates lean left politically and support government do-good programs and stringent regulations on the private sector.

College degrees have become increasingly less reliable as a predictor of future success as the quality of education and significance of a diploma have undergone a long and continuous process of being replaced by lack of rigor and focus as colleges have fallen under the seductive pull of the siren song of political correctness and progressivism. While at the same time there has been scant attention paid to the consequences of the deepening lack of basic discipline and abandonment of common sense.

Here’s a suggestion for the faculty so eager for more pay. Go find a job in the real world where you won’t be coddled but will instead get compensated based on the market value of your productivity. Pleading for ever more taxpayer dollars to subsidize higher education in its current form and condition should be an embarrassment rather than the manifestation of a false sense of righteous indignation it actually represents.

There is no ignoring the real world to compare to that exhibited by insulated faculty at state owned colleges. Whose taxes do they want to see raised to get the compensation package they seek? Let them answer that question.

Unionized faculties are anathema to quality education and any logical notion of how a university should be operated. One would have thought that tenure and other privileged status would be enough power vis-à-vis university management. Not so in Pennsylvania.

What Do Union Members Want for Their Children and Grandchildren?

If someone were to ask a rank and file member of a teachers’ union or a transit drivers’ union what they want for their children, what would the typical answer be? It would not be a far stretch to believe they would say something along the lines of, "I would like them to get a good education and have a nice career with opportunities for advancement, to go as far as their abilities and drive will take them, to live and raise their kids in a safe neighborhood with good schools, parks, and recreational facilities." One would hope that all parents, except perhaps a handful constrained by religious beliefs, would want a more prosperous and rewarding life for their children.

How many would want their children to be more successful than themselves? Odds are most would. And being more successful would mean becoming economically and financially better off. Do union members want their children to become professors, doctors, great writers, chemists, engineers? For those who have children who have become well paid engineers or doctors are they proud of those children? Are they proud of children with MBAs who have important positions with major companies? When the children work for banks or brokerage firms are the members happy about the nice homes and luxury cars the children are able to afford? Or do they view them as traitors to their upbringing?

In short, do union members think they are breaking faith with the labor movement if they want a much better life for their kids?

The irony is that in order for there to be an economy strong enough to offer a vast array of great opportunities for everyone’s children, it has to be a free economy with few constraints on its ability to allocate resources efficiently and reward entrepreneurs and risk taking investors. Otherwise, the economy grinds its way into permanent stagnation or worse.

Thus, for labor union members who want a better world for their children and grandchildren, their continuing virulent attacks on free enterprise, profits, and freedom of workers to join or not join a union are exactly the wrong message and policy stance. Instead, they are insidious poisons that threaten the ongoing ability of the economy to offer a better world for their children-or anyone else’s. One need only look at Greece, Italy, Spain, and France to see where the animus toward the free economy leads. Economies are organic creatures that, like the goose laying the golden eggs, cannot be strangled and abused if they are to keep producing. The biggest error in the thinking of unions is that the economy will keep going at a high rate of speed no matter what regulations, tax burdens and price distortions are forced upon it.

It is hard to imagine the mixed emotions of died-in-the-wool labor stalwarts when they see their offspring thriving as well paid corporate executives or engineers in the free enterprise, profit driven economy they so despise. But that was always their conundrum. Unions have always been a one generation at a time oriented institution. If it were not for public sector unions and their incestuous relationship with elected officials, total union membership would now be 5 percent or less of the total work force despite the overwhelmingly legal advantages they enjoy. Why? Because they are not focused on building something other than ways to extract as many current member benefits as they can; nor do they care about the longer term future. Watching transit drivers hold the public hostage by threatening to strike or teachers walking out and leaving children in the lurch should be evidence enough of the single mindedness of unions. To recall that unions went on strike at war materiel plants during World War II while their fellow countrymen were being killed or wounded to protect them is profound in its implications about the union sense of entitlement and privilege.

And yet as parents union members almost certainly have parental aspirations for their children’s futures. How do they live with the mental gymnastics required to be good foot soldiers for the cause which, in its full flower, destroys the hopes they have for their children’s and grandchildren’s future? The only way they can is to deny that their demands on their employer are harmful; indeed they will argue that it is helpful to their employers and the economy despite all the pain filled historical evidence to the contrary.

Predictably Wrongheaded Comments at the Labor Parade

What would a Labor Day parade be without a few choice parade attendee comments demonstrating a lack of economic understanding and faulty logic? Gems from this year include the parade’s theme, a steelworker’s opinion and a head scratcher from a school teacher.

According to the head of the Allegheny County Labor Council "the message of this year is bring our jobs home." Presumably, he means bring back the factory jobs that have gone overseas or to states with a better business climate. He cannot mean teacher, transit driver, or firefighter all of whom provide local government services that cannot be supplied from Taiwan or Alabama.

So what does it mean to "bring our jobs home"? How can they be "our" jobs if someone else has them? Were they "our" jobs before they left? Were they the workers’ jobs? Were they the unions’ jobs? How interesting. Who hires the workers and pays them their wages and benefits? If the jobs belonged to the workers or the unions, how were they able to pick up and move? Clearly, to the extent jobs can be owned by someone they are owned by the employer. The labor effort belongs to the worker, but the job must belong to the owner.

And why did the jobs leave in the first place? Some were lost due to productivity improvements or technological changes that eliminated jobs or made fewer workers necessary. Some were lost due to less expensive or higher quality imports that lowered demand for U.S. made product. Some were lost as companies sought better business and labor climate locations for their production facilities.

If the Labor Council wants to see more job growth in the sectors that have seen huge losses over the decades, the first thing they must do is to quit thinking in terms such as "bring our jobs home." To business owners and decision makers, that phrase conveys the notion that the same old adversarial labor-owner attitude persists. After all, in many cases it was labor’s exorbitant and intransigent demands regarding compensation, work rules, time off and grievance procedures that caused a lot of the jobs to move away. Until labor leaders (as well as rank and file) in the private sector realize what intense competition means and learn to deal with it, the odds of "their" jobs returning will remain extremely slim.

Meanwhile, back at the parade, a steelworker offered the opinion that President Obama needs a second term because it takes two terms in order to get anything done. One has to smile at that in light of the hash the President’s policies have made of the economy, the debt that has piled up, the impending tax hikes, the runaway job killing regulatory environment and the loss of business confidence in the President’s economic leadership. And beyond that, it is amusing to consider how the unions excoriated earlier Republican Presidents at election time arguing they did not deserve a second term even when the economy was in far better shape than it is currently.

Finally-and the cake taker-came from a local teacher who said, "Every child should have the right to learn the same-not the best education their parents can pay for." Here some speculation as to meaning is called for. Surely, it cannot mean that if a parent can afford a high quality education for a child that child should learn the same as everyone else. More likely, the teacher means that public education is needed to ensure that all children have an opportunity to attend school. But like most public school teachers, this teacher believes that government provided education must be a government monopoly run education. Consider students in the Pittsburgh school district where spending is well in excess of $20,000 per pupil. If the taxpayers could switch $12,000 per year to parents so they could choose their child’s school and educational opportunity, does anyone doubt the parents could afford and find a much better education than the average student in the Pittsburgh schools is receiving?

So, the unjustified assumption underlying the teacher’s comment is that because the taxpayers subsidize education, the schools must be a public monopoly. That of course is not the only option. But in the union dominated public school system that is the mindset. Teachers are the most important element in the education equation, not the students. And certainly the taxpayers get no consideration at all as witnessed by the demands teachers continue to make and the strike threats even when the economy and taxpayers are struggling.

Paraphrasing the teacher’s comment, "We need to make more money so parents cannot possibly afford to pay for a good education for their children and only taxpayers can be squeezed for that much money."

Has Business Executive Optimism Faded?

In the Lincoln Institute’s Spring 2012 Keystone Business Climate Survey, executives/managers were asked about the current business conditions facing firms in the Commonwealth.  They were also asked to compare the current climate to six months ago as well as about their expectations for the next six months.  Survey responses reveal a distinct lack of enthusiasm about the current state of the economy or the prospects for the near future. 

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A Big Year for PAT

Tomorrow is the first day of the 2011-12 fiscal year for the Commonwealth, virtually all of the state’s school districts, and for special purpose agencies like the Port Authority. The operating budget for PAT is $322 million, with a gap between revenue and expenses covered by the final piece of the flex money Governor Rendell found and was approved by SPC as well as budgetary reserves. The employee headcount for PAT is 2,495, which is unchanged from the end of the 2010-11 fiscal year.

Obviously PAT is waiting with anticipation for the results of the Governor’s transportation task force, which is to deliver its recommendations on how to fund all of the state’s transportation needs in a month. Already increases in registration and licensing fees have been floated as a real possibility, but it is unclear if the revenues from those sources will be tied to a particular use. PAT’s budget presentation opines that "unless statewide transportation funding crisis resolved satisfactorily over the next 14 months, massive unfunded deficits will be projected in FY13".

Unfortunately as we have pointed out on many occasions there are numerous cost-side drivers behind PAT’s funding problems. First and foremost is the cost of labor, which is front and center in the next year as the authority is entering the final year of its four-year contract with the Amalgamated Transit Union. This year workers get a 3% raise (non union workers’ wages are frozen), and there is projected to be a jump in pension contributions from PAT ($20 million to $33 million) and healthcare expense for active and retirees are still around $70 million. It is also important to look at the ratio of retirees to actives at the agency: in 2002 there was 0.71 retirees to every 1 active; now there are 1.13 retirees to every 1 active. If PAT and, by extension, County officials, feel the 2008 contract did "good" things then the 2012 contract is going to have to be even "better".

And last, but certainly not least, let us not forget that spring of 2012 will mark the commencement of service via the North Shore Connector. If the timeline holds as well as cost projections did, look for the first trips to occur well after the anticipated launch of service.

Union Members are a Minority of the Workforce in Pennsylvania

At only 15 percent of all employees, union members make up a small fraction of Pennsylvania’s workforce. Yet somehow they exercise enormous and far out of proportion influence on elected officials and public policy. For example, they are successful in stifling efforts to repeal the prevailing wage law that adds hundreds of millions of dollars to government funded construction work in the state each year. They have a complete stranglehold on the public sector, including education and large transit systems, so that meaningful reforms and cost cutting are repelled or met with fierce resistance. In the process they have succeeded in making Pennsylvania less attractive as a place to do business and inhibited efficient service delivery by government agencies.



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