Union Workers Turn Against Organized Labor

As organized labor loses leverage in a race-to-the-bottom global market, some workers are becoming so disillusioned by what their unions can, or rather can’t, do for them that they want out. The disaffected include dozens of machinists at Caterpillar Inc.’s plant in Joliet who crossed the picket line during a strike last summer and are planning unfair labor practices complaints against the union.

Organized labor’s slippage is most acute in the manufacturing sector, which has lost 4.7 million jobs and seen membership shrink by almost a third since 2001, according to the Bureau of Labor Statistics. Overall, private-sector union membership stands at just 6.9 percent nationally and 10.6 percent in Illinois. …

Many rank-and-file employees have opposed unions all along, of course. Despite organizing drives, workers have turned down collective bargaining at automobile plants across the South. Legislatures in 23 states have enacted “right-to-work” laws that allow employees to opt out of dues-paying membership at union shops; Indiana joined this camp early this year.Now some workers in union-friendly states are turning on their brethren over strikes.

via Crain’s Chicago Business.

These are good jobs that pay well.  Most people really want to work.  Yet the unions get in they way somtimes… and yes, sometimes it’s the companies that get in the way.  The big difference however is that the company is the one taking the risk.  The shareholder or owner is placing his or her money on the line.  The union is not.

Successful risks should be rewarded.  Bad risks are punished.  That’s how people learn; how the cream rises to the top.

You can take all the money in this country and redistribute it equally to each person.  In ten or fifteen years those who are “rich” will be rich again.  Those who are “poor” today will be poor again.

It’s very much like the story of the talents; Matthew 25:14-30.

One Word for CPS Teachers: Save


Save as much money as you can.

Live well below your means.

The pension time-bomb is coming.

One of the most vexing problems for Chicago and its teachers went virtually unmentioned during the strike: The pension fund is about to hit a wall.

The Chicago Teachers’ Pension Fund has about $10 billion in assets, but is paying out more than $1 billion in benefits a year — much more than it has been taking in. That has forced it to sell investments, worth hundreds of millions of dollars a year, to pay retired teachers. Experts say the fund could collapse within a few years unless something is done.

via NYTimes.com.


“Each day we wait to enact comprehensive pension reform, the problem gets worse,” Quinn said in a statement. “The unfunded liability will grow to more than $92 billion by the end of next fiscal year. Illinois is currently on track to spend more on pensions than education by 2016 and that is unacceptable.
— Pat Quinn

via Des Plaines, IL Patch.

If you think that taxpayers are going to fund your pensions, forget-about it.

If you think you can tax the rich to fund your pensions, forget-about it.

If you think that people are going to move into a community where their property taxes increase by 7% every year in order to fund failing schools, forget-about it.

If you think you’re going to get your COLA every year, forget-about it.

You have two options:  Save every nickel and dime you can, or plan to work until you’re in your 70’s.


Illinois has an unfunded pension liability of at least $83 billion, according to state figures. It had 45 percent of what it needed to pay future retiree obligations as of 2010, the lowest among U.S. states, data compiled by Bloomberg show.  …

Illinois had about $28 billion of general-obligation debt as of May 8, according to bond documents. The state of about 13 million people plans to sell $50 million of debt next month for technology projects, John Sinsheimer, the state’s director of capital markets, said in an interview.

via Businessweek.


Illinois’s backlog of unpaid bills has risen to more than $9 billion because of pension costs and falling federal aid, leaving the state “essentially treading water,” Comptroller Judy Baar Topinka said.

via Bloomberg.

$83B + $28B + $9B = $120,000,000,000 in debt.  The extra $50 million at 0.42% of the total is a rounding error.  It should also be noted that this does not include the City of Chicago (or any other municipality or county debt) which is another $12-16 billion in debt depending on who you ask.

12,869,257 people in the state of Illinois.  Every man, woman, and child owed owes $9,324.54 to the state.  If you live in Chicago you owe another 5,910.34 locally for total of $15,234.89.  (Are you feeling good about your new contract yet?)

I was just looking over the FY2013 Illinois State Budget as prepared by Gov. Quinn.  On Pg 37 we’re told that Debt Service is 5.42% of all outlays.  That’s over $3.3B per year paying principle and interest on money we borrowed.  That’s $3.3B per year we could use to hire police officers, or teachers, or fully fund the pension funds but will instead go to pay for our bad fiscal decisions of the past.

More importantly, total expenditures are $61.0B.  That means that if we (a/k/a the State of Illinois) completely stopped operating, fired all the employees, shuttered all the buildings, and spend 100% of the budget on paying off debt we’d be debt free in 2 years.

Oh, I know what you’re going to say… You’re going to tell me all about how the Chicago Teachers’ Pension Fund is not as underwater as the general state fund.  True, but it’s still broke and broken.  And there’s no money to fix it.

Then you’re going to say that this is a right guaranteed by the Illinois Constitution.  Oh ya?  Well where’s the money going to come from?  The rich?  You wish:

When New Jersey governor Chris Christie heard British Prime Minister David Cameron invite France’s wealthy to decamp to England to escape a proposed 75% tax rate, he felt something akin to déjà vu. Every day top executives of Johnson & Johnson (JNJ), Merck (MRK), and other companies commute from their homes in Pennsylvania to offices in Christie’s state, saving roughly two-thirds on their state income tax bill — and costing New Jersey’s treasury $50 million, by one estimate.

via Fortune (a/k/a CNN).

You don’t understand the Laffer Curve.

The study, by the anti-tax group Change Maryland, says that a net 31,000 residents left the state between 2007 and 2010, the tenure of a “millionaire’s tax” pushed through by Gov. Martin O’Malley. The tax, which expired in 2010, in imposed a rate of 6.25 percent on incomes of more than $1 million a year.

The Change Maryland study found that the tax cost Maryland $1.7 billion in lost tax revenues. A county-by-county analysis by Change Maryland also found that the state’s wealthiest counties also had some of the largest population outflows.

via CNBC.

You’re confused how a state and raise taxes and lose revenue.  It happens all the time.  I wrote a piece about cigarette taxes in Cook County; raised taxes, lost revenue.

The more you tax something the less of it you get.

You tax income, you get less income.  You tax babies, you get less babies.

Even the left-loving Bono (of U2 fame) moves his wealth around to avoid taxes.

In Illinois, if we quadrupled the state income tax on those with adjusted gross income over $500k it would take over 13 years just to get current state pension liabilities square.  This would not cover the additional debt of Chicago Teachers, Chicago Police & Fire, or any of the billions and billions of general debt.

So take your 16% raise and start saving.  Save like your life depends on it.  Because it does.

Chicago Teachers Union: It’s About Children Greed

According to the Chicago Tribune key issues separating Chicago Public Schools and the Chicago Teachers Union:

SALARIES AND BENEFITS. The district offered 16 percent increase over four years and “modified step increases that both reward experience and provide better incentives for mid-career teachers.” The union said it’s closer on pay but is still concerned about rising health care costs and other benefits. Teachers sought a substantial raise in the contract’s first year because of the longer day and want to keep raises for experience.

This is insane.  There is no one in the private sector who’s planning on seeing a 16% increase in their income over the next four years.  Plus these people make tons of money already!

A Chicago Public Schools spokesperson said average pay for teachers, without benefits, is $76,000.

via CBS Chicago.

The average family in the city only earns $47,000 a year.  Considering a regular school term of 40 weeks, at 6.25 hours per day…. The way I figure that’s $76,000.00 / (6.25 * 200)  = $60.80 / hour.  Plus they get benefits — excellent benefits.

So what we have is a group of people who on average make over $60/hour — the highest paid teachers in the nation — and are complaining about it.

Next issue:

JOB SECURITY. The union has pushed for a system to recall teachers who have been laid off when new openings occur. This has become important because of rumors the district plans to close up to 100 schools in coming years. The district says teachers displaced by school closings will be eligible for a job at new schools if there is a vacancy — or may elect to take a three-month severance.

I got some news for the CTU:  CPS is dying.   For the second year in a row, CPS is taking the maximum possible increase to property taxes permitted by law.  Further, Chicago is shrinking and here.

There is no job security when you’re product is crappy & overpriced.  People do not want to live in a place where they’re taxed to death to fund under-performing public schools.  At CPS just 15 percent of fourth graders are proficient in reading and only 56 percent of students who enter their freshman year of high school wind up graduating.  If you want job security you need to excel at what you do… not completely suck at it.

Next Issue:

TEACHER EVALUATIONS. The union wants to lower how much student performance contributes to evaluations. CPS has said the new evaluation system, created in collaboration with teachers, was negotiated and settled in March under state law.

I happen to know a few people who are tight with a couple of principals in the CPS system.  The first things they will tell you is that it is impossible to get rid of a bad teacher.  Everyone knows this.  So to improve schools CPS and CTU sat down and came up with a system to evaluate teachers back in March.  Now, CTU has decided that it doesn’t like the system it already agreed to.

Not only is the Teachers’ Union is specifically fighting to keep bad teachers in the classroom but it breaking a promise it already made.

– – –

The only possible explanation for all this is that CTU cares very very little about education.  There is no talk about reducing class sizes, getting new blackboards, reimbursement for further education, or improving safety in the schools.  Nope.  It’s all about money & clout.  Money & clout.  Protecting their own at all costs.

CTU is nothing but a bunch of bullies.  Rahm should treat them as such.

Illinois’ Pensions are the Worst

A new report being issued today — see the bottom of this post — from the Pew Center on the States says that Illinois once again ranks 50th of the 50 states in assets relative to liabilities.

But while Illinois’ absolute position did not sink — a mathematical impossibility — its relative position did erode, as the shortfall in terms of dollars here worsened faster than it did on average in other, better-positioned states.  …

Illinois “is on an unsustainable course,” said David Draine, the chief author of the report by the Washington, D.C.-based public policy and research group.  …

According to the report, Illinois as of the end of fiscal 2010, the latest year for which national figures are available, ranked dead last of the 50 states, having on hand only 45 percent of the assets needed to pay $139 billion in accrued pension liabilities.

The report concerns the state’s five retirement funds, covering state workers, teachers who work outside of Chicago, professors in the University of Illinois system, judges and members of the General Assembly.

The total unfunded liability as of the end of fiscal 2010 — that was June 30, 2010 — was $75.73 billion, somewhat less than the current $83 billion figure cited earlier this year by the Legislature’s economic watchdog unit.

via Crain’s Chicago Business.

Public sector unions need to understand the reality.  Retirees are in serious danger of not getting paid what they are owed.  Default is becoming a more and more real possibility.

Heck!  These numbers don’t even include the Chicago Teacher’s Union.  So the situation is even worse.

Labor Unions and Politics

On March 10 there was this story in the LA Times I meant to write about:

Labor unions rethinking their role in politics
As top union leaders gather in Florida on Tuesday to determine labor’s political strategy this year, the influential AFL-CIO appears poised to endorse President Obama’s reelection — despite some lingering dissatisfaction with his record.

But the way in which unions back him and other Democrats this year is likely to take a very different form than in past campaigns.

Concluding they need to be more independent of the Democratic Party, many unions are increasingly financing their own efforts instead of writing large checks to candidates and the party.

via Los Angeles Times.

I was simply thinking how labor unions don’t really help working people and how laughable it is that “they need to be more independent of the Democratic Party.”  They are dying and it is the Democratic Party who’s keep the life support machines plugged-in.

Then, three days later, March 13:

Leaders of the influential AFL-CIO  labor federation announced Tuesday it voted “proudly and enthusiastically” to endorse President Obama’s reelection effort.  …

The vote, among the AFL-CIO’s 57 member executive council, was unanimous.

Labor leaders had in the past been vocal about dissatisfaction with the Obama White House on a host of issues, from Obama’s compromise in extending the George W. Bush tax cuts to perceived shortcomings in the administration’s stimulus and healthcare reform packages.

But AFL-CIO President Richard Trumka said he had been heartened the administration’s renewed push on jobs and combating inequality, a pivot that occurred around Labor Day last year.

via Los Angeles Times.

How embarrassing it must be to have to endorse and carry water for a guy who really hasn’t helped you one bit.  On a unanimous vote the union agrees that the AFL-CIO and the Democratic party are in a symbiotic relationship; each would die without the other.

These stories actually appear out of order.  The endorsement story should be first — describe how Obama has not done everything the unions have wanted and yet they have no where else to turn.  Then, as a result of their lack of options politically, the union(s) will seek other ways to engage in outreach and influence besides giving directly to candidates.  Well of course they will… they have no other choice.