Unions are Key to Economic Revival

Wisconsin was one of the most financially stable states in the country for many years. What did we have then that worked so well? The key characteristics of our state were: a broad and resilient middle class; a consistent investment in good schools, safe streets and technological innovation; and many home grown businesses. 

One of the tools that helped create a strong middle class was organized labor. Unions were a vehicle for the employed people to get a fair share of the economic pie through decent wages, safe working conditions, mechanisms for dealing with problems in the workplace and access to health insurance and retirement pensions that kept people in the middle class after retirement. 

Since the 1980’s, there has been a concerted effort to weaken the labor unions. Wisconsin Governor Scott Walker and many new legislators backed by right wing groups are putting this effort at the top of their agenda. Walker and other candidates ran their campaigns with a focus on jobs and economic growth. Is this a plan that will rebuild Wisconsin’s economic stability? 

Objective evidence would suggest it is a lose-lose strategy. Comparing Wisconsin with states where leaders have enacted anti-union laws (such as the so-called ‘Right to Work’ statute,) it is clear that the crush-union rules are not the path to prosperity. 

Wages are a critical groundwork for a strong middle class. Jobs that pay decent salaries ensure that families can be active consumers. This activity generates more jobs to meet the market demands. In addition, households with decent incomes contribute more tax dollars to pay for the schools, roads and other systems that support the economy and create ripple effects in the private sector for equipment and supplies for ongoing operations. 

Median wages in 20 of the 22 Right to Work (RTW) states are lower than the median weekly wages in Wisconsin which were $722 in 2009. This is $256 more a month for the Wisconsin household. Annual median income in Wisconsin is $4,900 higher a year than the average median income in RTW states which adds a significant amount of purchasing power to support Wisconsin businesses. 

In RTW states, 28% of jobs pay poverty wages compared to 20% of jobs in Wisconsin. Employees who earn poverty level wages cannot buy homes, cars or appliances. They pay no income tax and many require state assistance to meet their families’ basic needs. Low wages hurt both the worker and the state’s economy as a whole. 

In RTW states, families and children are at a greater risk -- one in five families and one in four children live in poverty. In Arizona, Texas, Tennessee, Alabama and Mississippi, more than one in three children is impoverished. In Wisconsin, the overall poverty rate is 14% and child poverty is at 19.6% (less than one in five.) 

Families in RTW states also face medical emergencies with less protection. Almost twice the number of families in RTW states are uninsured than those in Wisconsin. Less than one in ten Wisconsin families lack health insurance while more than one in five families have no coverage in Florida, Texas, Nevada and Georgia. Twice as many children are also unprotected in RTW states compared to Wisconsin. 

This health insurance gap is especially frightening in RTW states because residents in those states are twice as likely to be hurt or killed on the job as Wisconsin workers. 

For injured workers in RTW states, the average maximum weekly benefit is only $587, 21% lower than the Wisconsin workers’ comp payment of $722. 

State investments in future growth are often measured by education spending. RTW states spend less on their children’s education, about $9,000 a year compared to $11,000 in Wisconsin. You get what you pay for – Wisconsin students are more proficient in math and reading by over 5 percentage points in both. 

Low wages, greater poverty, more medical risks and less effective schools – is this the recipe for economic success? Common sense would suggest not. 

Trying to destroy labor organizations which have worked for decades to expand the middle class is not a winning strategy for Wisconsin. It is a shallow vision of short term uptics for employers but long term loss as the consumer base is decimated. Wisconsin needs smart children, skilled workers and an ongoing flow of revenue between citizens, business and government. 

Since our future is up to us and our leaders, it is important to avoid slogans, think carefully about the consequences of our political actions and protect the communities we love and the organizations that keep them healthy. Labor unions have been a boon to Wisconsin. They need to remain tools in efforts to grow the state economy. 

This piece is courtesy of the Institute for Wisconsin's Future. Find out more at www.wisconsinsfuture.org