June 15, 2011


According to Jeanne Mejeur, of the National Conference of State Legislatures, 820 bills seeking to restrict or eliminate collective bargaining rights of public workers have been introduced this year in state legislatures.  Joe Nigro, the national general secretary-treasurer of the Sheet Metal Workers International Association has called this a “…a national campaign" against organized labor. 

As the attack continues to broaden beyond the 13 states that have already made major changes to collective bargaining and worker rights (Wisconsin, Ohio, Indiana, New Jersey, Arizona, Idaho, Michigan, New Hampshire, Oklahoma, South Carolina, Tennessee, Utah and Wyoming), a look at the role played by the media in this assault is long overdue.

Speaking specifically to the collective bargaining fight in Wisconsin, but generalizing his comments more broadly to the national media in a post on the website tax.com, Pulitzer Prize winning tax reporter David Cay Johnston wrote that:

“When it comes to improving public understanding of tax policy, nothing has been more troubling than the deeply flawed coverage of the Wisconsin state employees' fight over collective bargaining.   Economic nonsense is being reported as fact in most of the news reports…the product of a breakdown of skepticism among journalists multiplied by their lack of understanding of basic economic principles. Governor Scott Walker says he wants state workers covered by collective bargaining agreements to ‘contribute more’ to their pension and health insurance plans.  Accepting Gov. Walker’s assertions as fact, and failing to check created the impression that somehow the workers are getting something
extra, a gift from taxpayers. They are not. Out of every dollar that funds Wisconsin’s pension and health insurance plans for state workers, 100 cents comes from the state workers. How can that be? Because the ’contributions’ consist of money that employees chose to take as deferred wages - as pensions when they retire - rather than take immediately in cash. The same is true with the health care plan.”

Journalists nationwide continue to fall prey to the same “deeply flawed…lack of understanding of basic economic principles” that Johnston laments and their unwillingness to uncover the real truth about these issues affects public worker rights and negotiations. The fact of the matter is that most public employees pay “100 cents on the dollar” toward their insurance and benefits.   

In collective bargaining, the only relevant number for public accounting purposes is the total
compensation package.  Once that figure is collectively negotiated and arrived upon by labor and management, the individual line items on the accounting sheet such as salary, and insurance are simply irrelevant in terms of the cost impact to taxpayers. Last year (2010), for example, the Des Moines Education Association (the teachers union in Des Moines, Iowa) accepted a total compensation package that was a 1.98% increase over the previous year. In doing so the union was able to maintain fully paid single and family health insurance at the cost of greater wages. It is a tradeoff that members overwhelmingly supported in a yearly negotiations survey.  Why does it matter how the individual line items within that total compensation package are distributed?  How is it relevant to the public discourse? It is completely understandable why the total compensation figure itself should be a subject of debate among taxpayers since they pay the salaries and benefits of public workers and it is the proverbial “bottom line.”  If local newspapers or someone in a community wants to make the argument that those who teach our children are not worthy of a total compensation package like the 1.98% increase arrived at through collective bargaining in Des Moines, for example, where 43.7% of teachers took a virtual wage freeze, they have every right to do so and should feel free to make their case.  But, they should be honest when doing so because calls from politicians and newspapers for educators to “pick up some of the cost” of their health insurance are actually calls for teachers and public employees to take cuts in pay.

Furthermore, the economic inaccuracies reported in the media feed a political (not a fiscal) movement that seeks far more than sustainable state and local budgets. It seeks to attack all things public.  Numerous studies from organizations including the Center on Budget and Policy Priorities, and the Economic Policy Institute have shown that salaries and benefits paid to public employees have contributed very little to state budgetary problems.  A recent study by the Iowa Policy Project concluded that there is “no correlation between state budget shortfalls and union negotiating laws…The thing that's driving budget shortfalls is the impact of the national economy on state revenues,…rather than union agreements.”  The media also ignores study after study showing that public sector wages and benefits continue to lag behind the private sector when levels of educational attainment are controlled for.

With the tacit, unquestioning approval of the media, many Governors have proceeded with attacks on public worker rights in the name of deficit reduction.  In states such as Iowa and Indiana that have been quicker to recover from the Great Recession, the entire notion of “budget shortfalls” appear to have been concocted by Governor’s to serve their own political purposes that often include busting unions and doling out corporate welfare.  Indiana’s legislature passed draconian restrictions on worker rights and collective bargaining despite a $1.4 billion budget surplus while handing out $80 million in corporate tax cuts.  Iowa’s legislature debated significant restrictions on collective bargaining in the name of reducing budget deficits despite a $950 million budget surplus, large chunks of which the Governor  decided to give away to out of state corporations who rarely reinvest such windfalls in the state in the form of jobs. The Iowa Fiscal Partnership noted that “Three-quarters of the corporate income tax is paid by multistate businesses…that are not domiciled in Iowa but sell goods and services at a profit in Iowa. Iowa’s corporate income tax actually ranks 40th among states in the amount of revenue it collects as a percent of private GDP. Corporations that pay Iowa’s income tax do so because they make a profit from sales to Iowans, even if their production facilities and employment are not located in the state. Reducing the corporate income tax rate does not provide a benefit to small, Iowa businesses unless they have very high profits.”

These Governors have very clearly placed their economic cards on the table: they are betting that tax giveaways to large out of state corporations will better grow the economy than investments in children and public education systems.  In Iowa, for example, the Governor has proposed $300 million in corporate tax cuts and zero percent allowable growth for Iowa’s schools?  This is a losing bet that will bust school systems all across the state.  “A review of… hundreds of survey, econometric, and representative firm studies” by the Economic Policy Institute “that have evaluated the effects of state and local tax cuts and incentives makes clear that these strategies are unlikely to stimulate economic activity and create jobs in a cost-effective manner” especially when compared to  expanding “the quantity and quality of public services.”  Even conservative economists like Alan Viard of the American Enterprise Institute are alarmed by the high stakes wager on corporate tax cuts: "I am just struck by the constant refrain about corporate tax cuts," he said in a Reuters story. "States are more eager to get businesses now when their economies are weak; on the other hand the revenue loss is troubling if they do it now."

At the local level, many of the people who frame this issue as a matter of teachers and other public employees needing to "pick up some of the cost of health insurance" do so with full knowledge of the reality that the total compensation package is the only relevant figure. This frame serves as a public negotiating tactic that seeks to drive a wedge between teachers and the general public that is unfair, unjust, inaccurate and counterproductive if the goal is to attract and retain excellent teachers and maintain excellent schools. These frames are usually accepted without question by the media.  As one enlightened school superintendent wrote: “While taking pot shots at public employees seems to be lawmakers' and journalists' sport du jour, the real problem is not that the benefits public employees have long earned and enjoyed with little or no objection are suddenly undeserved. The real problem is that the cost of what used to be an easily affordable and reasonable benefit has escalated in recent years at disproportionate rates. Instead of breeding resentment of teachers and other public employees, perhaps an exposé of out-of-control health care costs and legislative stinginess in the face of overflowing state coffers should be offered. And where do corporate tax breaks at the expense of funding for education fit into this scenario?”

On the national scene, some of the people who frame this issue in this way are now defending multi-million dollar bonuses for Wall Street CEO's and bankers who plunged our country into the worst economic downturn since the Great Depression.  What is their argument? These bonuses, they say, are necessary to retain and attract the best and the brightest on Wall Street.  Apparently benefit packages only retain and attract when they are in the multi-million dollar range and go to Wall Street CEO’s, bankers, and hedge fund managers living in gated communities and driving Ferraris. When it comes to public school teachers living in middle class neighborhoods, driving ’97 La Sabres, who collectively bargain $12,000 health insurance benefits for themselves and their families; or Education Support Professionals who, in many cases, earn wages below the poverty line and can afford to stay in the field only because of the benefits package, it’s time to ante up. 

Warren Buffett once said that “The smarter the journalists are, the better off society is…People read the press to inform themselves-and the better the teacher, the better the student body.”  When it comes to coverage of state tax and spending issues as well as the impact of collective bargaining rights on state budgets, our journalists are failing.  As David Cay Johnston concluded: “Not every news report gets it wrong, but the narrative of the journalistic herd has now been set and is slowly hardening into a concrete falsehood that will distort public understanding of the issue for years to come unless journalists en masse correct their mistakes." From the Associated Press and The New York Times to Wisconsin's biggest newspaper, and every broadcast report I have heard, reporters again and again and again have written as fact what is nonsense. Compared to tax, this economic issue that reporters have been mishandling is simple. But if journalists cannot grasp the economics of this issue, then how can we hope to have an intelligent debate about tax policy?”  Since journalists appear to be uninterested in correcting their mistakes, it falls upon all public employees to work tirelessly to inform their communities, through all means necessary, exactly how collective bargaining works, how public employees pay “100 cents on the dollar” toward their insurance and benefits and why our hard-fought collective bargaining rights are essential to a thriving middle-class in America.

Dave O’Connor
Des Moines, IA Middle School social studies teacher

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