While almost everyone agrees that state pension funds have enough money to pay current retirees, taxpayers and investors in the $2.9 trillion municipal bond market are increasingly nervous about how they will cover future costs.
Once again, we see the real detriment of collective bargaining and social labor policies.
It's not necessarily a productivity issue or a benefits issue (although you could make some very convincing arguments that non union workers are more productive and at lower wages/benefits).
No. The real drawback to collective bargaining and legacy costs for pools of employees is the severe decrease in agility.
A company or entity sets it's policies nearly in stone with respect to bargaining agreements or pension benefits and when the market changes, the policies exhibit an extraordinary amount of inertia.
Essentially, for government unions and "groups" receiving pensions and such, when the tax revenues decline, it's politically untenable to reduce benefits.
The result is a smooth, more averaged line with respect to benefits, while the revenues/expenditures follow a more volitile and rough path. The taxpayer ends up covering the underwater portion and the employer ends up in debt trying to honor agreements that were almost certainly negotiated during the "best" revenue periods.
In essence, the union becomes a self defeating virus. It constantly renegotiates during good times, and resists renogatiation during bad times....knowing that wages and benefits is largely a "ratchet" concept. It's very difficult to cut pay and benefits (or even positions).
Take a look at the United State Postal Service and you'll see an almost textbook case study in why unions are company/government killers. The market changes abruptly (first class mail is no longer popular in the electronic age), and the result is that the company must make changes in order to stay competitive/solvent. However, the agreement is tantamount to a "contract" and not easily broken (without placing the company nearly in intensive care or out for the count).
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One must also ask themselves why the Federal arm of the government severely limits collective bargaining and why the Democrats at the Federal level absolutely encourage it at the state level.
Why does Obama support unions and yet he freezes Federal government pay and wages?
Why? Power. The politicians realize that unleashing collective bargaining is to relenquish power to the unions. The Democrats at the Federal level know that unions at the state level is good, because they can still capitalize on campaign contributions and vote gathering, but still separated by a compartment wall. In essence, they do not have to negotiate with them, they simply support them from above and collect the benefits in $ and votes.
Collective bargaining is little more than legalized extorition. They get you pregnant, and once you're in a position where you're stuck with them, then they stick it to you.
I'm very in favor of employee owned companies. There's absolutely NOTHING wrong with a group of employees banding together to start their own venture. But coercing a company to acquiesce to employee benefits and wages is not only reprehensible, it's counter productive in the long term.
It's literally a business killer.
There are some VERY successful employee owned companies.
If a business partners with a vendor/supplier and has a successful venture.....they both form an agreement, (purchase order, contract, etc) for the vendor to supply materials at a certain price.
After a successful stint, the vendor/supplier realizes that it is in a leveraged position. The client(business) is heavily dependent upon the vendor at this point, there are efficiencies that have been developed, relationships established, warranties, etc, etc, etc.
The vendor decides to make a business decision and increase his price (and margins), anticipating that the business will have to suffer greatly in order to decline and seek other suppliers.
Because the contract/agreement is expired, the business is now free to say no and seek other partners. (even though it will create a certain amount of business pain to do so).
There's nothing wrong with this scenario.
NOW, compare that to a union/collective bargaining arrangement. Unfortunately, for the business that commits to a CBA (collective bargaining agreement), NOW the business is stuck. Because even the business decides to not continue or renew the CBA....the union has mountains of legal obstacles that it can employ to force the business to renew....delays, suits, arbitration, mediation, etc, etc, etc.
Essentially, the current law in many states makes signing up with a union a forever deal.
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Under Obama, there's been an ENTIRELY pro union assault on the current laws.
The current law requires that 50% of a group of similarly employed workers vote to have a union formation. THEN, there's a campaigning period where the Union and the Employer get to present their reasons as to why they should elect to form or not form a union.
Obama and the union extortionists, would seek to eliminate this campaign period. They want for there to be a 50% vote and that's it, union formed.
So imagine if you'd built a company from the ground, worked half your life to establish your business and make it successful.
Now, in comes in a slimy Union rep whispering in workers ears about how they can unite and negotiate better pay and benefits from you.
Under the current law, you don't even have the option of simply saying "no." You HAVE to go through the entire process, and you STILL don't have the option to decline if the workers elect to form a union. It's not even like you can burn the whole business to the ground and bust it up. The union can sue you.
Unions don't care about the long term health of a company. They care about the long term health of their EMPLOYEES.
So ask yourself....why wouldn't there be a push to start employee owned companies? Because the fact is that it's not a tenable strategy. If a group of workers had the necessary skills, resources, connections, relationships, to start their own business they would. AND it's much easier to band together and extort money from someone who's already DONE all that work.
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