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Unions Versus the Poor

eye on the news

Unions Versus the Poor

As Wisconsin government workers protest, Governor Walker spends more on the needy and sick. May 1, 2012

When Wisconsin governor Scott Walker introduced his plan to scale back the collective bargaining power of public unions last year, liberals around the state ran to their thesauruses. They accused Walker of “attacking,” “assaulting,” and “assailing” the public and called him a “dictator” and a “despot,” trying to cast him as a sort of governmental Nosferatu sucking public services away from those who needed them. United Wisconsin, the group responsible for organizing an attempt to recall Walker from office, accused the governor of “balancing the budget on the backs of the people.” The numbers, however, tell exactly the opposite story: the governor is allocating more money to those who need the most help.

Walker’s budget called for state and local government employees to begin paying into their own pension accounts; most had paid nothing until then. Walker also raised the amount that government employees would pay toward their health insurance to 12.6 percent of their premiums—almost half of what the private sector pays. Walker anticipated that these changes would save the state about $1.2 billion. Consequently, in the very same budget, he increased state funding for Medicaid by $1.2 billion to ensure, he said, that “the neediest, the poorest of the poor, seniors, needy families and children are the ones taken care of.” Had Walker not reformed government employees’ pension and health benefits, he could never have increased funding for the poor and the sick by that sum.

To get an idea of how constructive Walker’s reforms have been, consider the counterexample of Illinois, which has taken a decidedly different approach to managing employee-benefit and Medicaid costs. In early 2011, Governor Pat Quinn raised state taxes by $7 billion. Yet payments for Illinois’ lavish government-employee pensions sucked up two-thirds of the revenue increase, according to City Journal senior editor Steven Malanga. The consequence is that the state now has a $9 billion deficit, despite the big tax hike. Consequently, Quinn has proposed a plan to reduce Medicaid eligibility and coverage and drop the rates that it pays to physicians. The state currently has an unpaid backlog of $1.9 billion owed to Medicaid service providers.

The Illinois model, then, is clearly not one to emulate. Could Walker have found another solution? Sure: he could have found the Medicaid money simply by firing state workers. Unions scoff when Walker’s budget is described as a jobs plan, but requiring state and local workers to pay a little more for their benefits prevented the layoffs of tens of thousands of employees. The state workers sitting at their desks today won’t credit Walker for saving their jobs, but you can bet that they would blame him if they were sitting at home working on their résumés.

It bears repeating: in a budget that nearly closed a $3.6 billion deficit and didn’t raise taxes, Walker’s government-employee reforms allowed him to spend $1.2 billion more to help Wisconsin’s poor and ill. The unions believe that it would be more charitable to leave that money resting comfortably in their pension accounts. A poor child needing a new wheelchair would probably disagree.

Up Next
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Public-sector unions find a candidate to run against Scott Walker. Christian Schneider February 14, 2012

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