Issue 2 & the Attack on Ohio's Middle Class

Ohio’s government employee unions think that Issue 2 is outrageous. They feel that it represents an extreme view, that it denies them their rights, and mostly, that it puts Ohio’s middle class at risk. 

These are serious charges, and they certainly merit closer scrutiny. So before deciding how I felt about Issue 2, I did a couple of things. 

First I researched public records to help understand the status quo. 

Then I read the bill. 

There’s a lot of history behind Issue 2, and the bill is 300 mind-numbing pages long. It addresses much more than we can discuss here. So instead, I’d like to focus on those parts of the bill that seem to concern people the most, and then explain what I think.

For instance, union officials claim that Issue 2 is extreme and out of the norm because Issue 2 allows unions to bargain collectively only on matters related to wages, hours of work and other terms and conditions of employment. (They can no longer bargain on things like the number & order of employee layoffs, class sizes, job outsourcing or equipment, other than equipment related to life safety.)

However, according to the US Government’s Congressional Research Service only 23 other states currently have laws that allow unrestricted collective bargaining for government workers. Another 14 states allow only limited collective bargaining for government employees. And 12 states expressly do not allow any level of collective bargaining in the public sector. So if Issue 2 makes Ohio extreme and out of step, then so are more than half the states in the nation. As for consensus about what’s  “the norm,” it’s interesting to note that private sector unions once objected to public employee unions. The AFL-CIO’s official statement on public unions was once “in terms of accepted collective bargaining procedures, government workers have no right beyond the authority to petition Congress – a right available to every citizen.”

Union officials also claim that Issue 2 denies public sector workers their rights. In particular they cite the provision barring public sector workers from striking. But in Ohio, police and fire fighters are already prohibited from striking. In neighboring states like West Virginia, where there is also a strong union presence, all public employees have been prohibited from striking for quite some time. And for more than 30 years, federal law has barred a variety of US government employees from striking. In none of these instances has the result been a shortage of qualified individuals willing to work in government. Time and again anti-strike contract clauses have been upheld in the courts, because they are not a violation of anyone’s civil rights. Teachers and other municipal workers have said that they are just as crucial to our society as police and fire fighters. If that’s the case, then it’s reasonable to expect them to adhere to the same collective bargaining rules.   

Then there is the matter of Ohio’s middle class.

Union officials claim that Issue 2 is an attack on the middle class, that it puts citizens at risk, and that it will lower our standard of living.

But in Ohio, public sector union members make up only 6.5% of the roughly 5.5 million workers in Ohio. Unless the other 93.5% of Ohioans is made up entirely of either the very rich or the very poor, I don’t think that government union workers have an exclusive claim on middle class status.

Which leads me to what I think matters most.

Somewhere in this debate about Issue 2 we need to understand that ultimately it is Ohio’s middle class taxpayers who foot the bill for government workers’ compensation packages. And while I think it safe to say that the vast majority of citizens want to see teachers, police, fire fighters and other city, county and state workers make a good living, they don’t want to write a blank check. What’s more, they can’t. The money just isn’t there. Voters are already facing higher costs for food, fuel, utilities and other basic necessities. Many voters have themselves had to deal with pay cuts, layoffs and furloughs. They’re not in the mood to pay more for government. (Consider how difficult it is to pass a school levy or approve a bond to build a fire station.)

Nationwide, city and state governments are in financial crisis. It’s important to realize that employee compensation makes up to 80% of a government entity’s operating costs. Estimates of the un-funded pension liability for Ohio’s public unions range from $20 billion to more than $100 billion, (the lower estimates assume that pension funds will earn 8% annually on current investments). Voters may say no to Issue 2, but that doesn’t mean that they’re going to say yes to higher property taxes, a higher state income tax or more sales taxes to bail out somebody else’s retirement fund. And, if Issue 2 fails, they’re not going to want to layoff paramedics, shut senior centers, cut recreation programs, reduce snow plowing or eliminate rubbish collection to meet the future demands of government workers’ unions.

The current system of compensating government employees in Ohio is no longer sustainable. It got this way because unions have had a monopoly on large segments of government work, and almost a free hand spending taxpayer dollars. Probably the most important thing that Issue 2 does is to take the resolution of contract negotiations and disputes out of the hands of third party hired arbitrators, and place that responsibility in the hands of elected officials who answer to voters. It also requires, for the first time, that contract negotiations will have to take into consideration the finances of the local community, and if officials want to make a deal that will require more funds than a city or school system has, without passing another levy, then the voters will have to approve that contract.

These are good things for taxpayers, and they're not necessarily bad things for public sector workers. If Issue 2 passes, communities like Brecksville and Broadview Heights are still going to want good employees, and competition amongst those communities will make them pay good wages and provide good benefits in order to attract and retain talented, dedicated workers. If they don't, those employees will vote with their feet. As many school systems and cities have already learned, payroll costs that cannot be supported by tax revenues actually cause layoffs and cutbacks in services. The best way to keep police, fire fighters and teachers working is to make certain that communities can afford to hire them. In places like Wisconsin, where government worker compensation programs have already been adjusted to align with tax revenues, government jobs are actually being added.  

Issue 2 is a serious attempt to keep government debt from driving us all over a cliff. If Issue 2 fails, unions may feel that they won the battle, but they may have also lost the war. In fact they may find that what they really did was kill the goose that laid the golden egg.

Let’s hope that doesn’t happen.