Private equity near-billionaire Bruce Rauner made no bones about his plans for Illinois as he ran for governor: unions, especially public employee unions, were the cause of most of the state’s problems. And when he took over, he would follow the lead shown in recent years by other Midwestern Republican governors, such as Mitch Daniels in Indiana and Scott Walker in Wisconsin, who decimated public sector labor rights and unions.
Now that Rauner has taken office, he is staying consistent in his attack on public workers but including more private sector workers as his target. His first “state of the state” address, delivered yesterday to a legislature with both houses controlled by Democrats, was strongly anti-union and catered to conservative business groups.
Public workers are still Rauner’s main nemesis; after all, they are paid more than private workers (in large part reflecting their higher average skill and education). Then again, it’s hard to blame them for all of what Rauner sees as the state’s competitive failings, since Illinois has the fourth lowest number of state employees per capita in the country.
Yet aren’t their pensions too generous, creating this huge deficit dragging down the state’s credit rating, as Rauner argues? Or are the state’s “precarious” finances a result of political leaders of both parties refusing to set aside needed funds for pensions they had approved, according to a new report on the state from Moody’s Analytics?
Rauner views Illinois private sector workers as a problem, too. He stated that their employers have to pay too much in workers compensation, ostensibly for all of the injuries that the businesses inflict on them. And then these ungrateful workers have the nerve to get themselves unemployed and thus raise their former employers’ unemployment insurance tax.
They also make too much, especially construction workers who are paid the prevailing wage on public projects (which helps to prevent government from driving down local wage rates) or work under project labor agreements (which typically assure smooth, on-time completion of work).
Rauner has several answers to the problem of workers getting paid too much: First, let communities enact “employee empowerment zones,” otherwise known as local right-to-work laws (a new strategy of the anti-union right of dubious legality). These laws will — as the Governor has said often in recent days — allow workers to keep more of their money by pocketing their union dues. If enough other workers follow suit, workers in these zones are more likely to empower their bosses than themselves by weakening or eliminating their main lever of influence, their union.
The zones are not likely to empower the economy overall either, the Moody Analytics report concludes; since right-to-work laws reduce union membership and shift the balance of power from workers to business, “they tend to erode wages and lead to a more uneven distribution of the gains of economic growth.” Over the long run, any advantage for business in lower costs is undermined by diminishing incomes of workers — who, of course, are also consumers.
In any case, Moody’s concludes, business costs in Illinois are “only marginally higher than they are nationally,” less than in some neighboring states and compensated by “a business climate [that] outshines its regional rivals.”
It is odd that, after promoting policies aimed at reducing workers’ wages, Rauner also raised an alarm about declining real median household income. But he is not insensitive to the plight of lesser folk. Indeed, he seized the initiative and proposed raising the minimum wage to $10 an hour — over seven years, thus guaranteeing continued real decline in income for the least well paid. And he does all this in the name of creating more jobs. But even that is doubtful as an outcome of his policies, and if more jobs did result, most are likely to be bad jobs, getting worse year by year.
If Rauner has his way, workers will also have less of a voice in politics. He proposes prohibiting all public employee unions from making political contributions and restricting state and other public unions to the standards of federal employee unions, who can negotiate over very few, non-monetary issues.
The powerful, often conservative Speaker of the House and leader of the Democratic legislators, Mike Madigan, refused to say any of Rauner’s proposals would be dead on arrival in the State House, but union leaders reacted more sharply. State AFL-CIO president Michael Carrigan said that Rauner “plans to govern like the ultra-wealthy CEO that he is — by taking care of the few at the expense of the many…Instead of seeking solutions that empower all the working families of Illinois to fuel the economy, his proposal will destabilize middle class economic security.”
“The solutions Governor Rauner offered fail to address the real problems that exist, instead serving only to weaken the middle class,” said Roberta Lynch, executive director of AFSCME Council 31, one of the largest public sector unions. “Any effort to drive down middle-class wages — for workers in the public sector or the private sector — would fly in the face of the governor’s pledge today to ‘create a booming economy while increasing incomes for workers.’”
Service Employees (SEIU) Healthcare Illinois Indiana criticized the governor for not even mentioning a $300 million budget shortfall for childcare assistance, and the Chicago Teachers Union faulted him for proposing to lift the cap on charter schools in the state — especially since the cap had not been met and recent studies have highlighted the failings of charters in the state.
This is only the beginning. AFSCME state worker contracts expire this summer, and Rauner seems anxious to force a strike. It is hard to say whether the battle in Illinois will play out as it has in its neighboring states — Wisconsin, Michigan, Ohio and Indiana — or take a completely different form. But in the legislature, nearly every Rauner proposal will pose threats to the interests of workers and unions.
If labor unions do not educate and prepare their members and allies for a major fight, they will not be able to claim they weren’t forewarned. The governor’s notions promise empowerment to workers, but they offer something more like entombment instead.
David Moberg, a senior editor of In These Times, has been on the staff of the magazine since it began publishing in 1976. Before joining In These Times, he completed his work for a Ph.D. in anthropology at the University of Chicago and worked for Newsweek. He has received fellowships from the John D. and Catherine T. MacArthur Foundation and the Nation Institute for research on the new global economy.