News Center

March 4th, 2009

Unmasking the Big Union Agenda

For several weeks, we’ve been deluged with stories from the Main Stream Media about the “union agenda.” The Big Unions make a lot of claims about how their agenda will help hard working Iowans. While coverage has usually included comments from Iowa’s employers, the stories are often slanted to the union’s side.

Let’s try to shed some light on the agenda, outside of the MSM’s filter.

The Union Agenda consists of four legislative priorities, and we’ll rank them in priority of importance to the Unions. We’ll even use their terminology:

1. Prevailing Wage
2. Choice of Medical Care
3. Open Scope Bargaining
4. Fair Share

Let’s take a look at the first two agenda items. We think those two are the most likely to continue to garner legislative attention, as #3, Open Scope Bargaining, was vetoed by a Democratic Governor last year, and #4, Fair Share, has little or no chance of ever passing as it is a direct affront to the freedom of Iowa’s workers.

First, some background data: Unions in Iowa represent 10.6% of all Iowa workers, according to the US Department of Labor. We’ve all heard stories about declining union membership over the past decades, and this figure really brings it home. Only 1 in 10 Iowa workers are members of a union…so, of the 1.437 million working Iowans, only approximately 153,000 belong to a union. And the upside membership of unions in Iowa is only about 187,000…meaning there are approximately 34,000 Iowans who work at an employer who has a bargaining unit present, but they have declined membership in the union.

Of these union members, approximately 40% (61,000) are state employees. That’s why AFSCME and SEIU have become the loudest voices in pro-labor movement. Yet they are also the same employees who presently get annual pay raises (between 2% and 4.5% for the next year), better health care, better retirement privileges, and more paid and family time off than an Iowa employee who works for a private employer.

So, against that backdrop, let’s look at Agenda Items #1 and #2.

#1 Prevailing Wage: This issue has already seen a considerable amount of legislative activity this year. House File 333 was debated for some 97 hours in the Iowa House, and was the subject of one of the most bizarre legislative stunts seen in the past 30 years. Proponents of the bill tried at the outset to narrow the bill’s scope by applying it only to “public projects.” They said that it would prevent shoddy work on public projects, prevent Iowa construction companies from hiring illegal workers, and prevent Iowa employers from skirting paying employees benefits. To the outside observer, they were never able to show clear examples of any of these claims: no public projects seem to be crumbling before our eyes, nor do Iowa construction companies treat their employees unfairly

Opponents indicated it would dramatically increase the costs of public projects, force local and state governments to scale back their building plans, and put small Iowa contractors at a competitive disadvantage to large out-of-state contractors.

In other words, it would have the exact opposite impact that the bill’s proponents argued…rather than raise wages and increase employment it would have likely cost wages and jobs.

As we saw draw out over the course of four days last week, the Prevailing Wage bill lost by a vote of 49-49, with five Democrats voting against the Union Agenda. While this bill seems to be on legislative life support with a “motion to reconsider” hanging on it, it is unlikely that the bill will see passage as a stand-alone issue. Rather, it is more likely to be rolled into the minutiae of Governor Culver’s $700 million bonding / infrastructure / state stimulus bill.

Buried deep in the bowels of that bill, and with many legislative pet projects tied to it, the provisions of the prevailing wage bill will be much harder to attack. But regardless of how the Big Unions make the sausage that will be the Governor’s “stimulus bill,” the recipe still seems to be bad for Iowa taxpayers.

#2 Choice of Medical Care: With the untimely death of Agenda Item #1, this issue will now take front and center in the Legislature. On the face of the bill, it seems very simple: injured workers should get to direct their own medical care if they are injured on the job. They should get to choose their doctor and not be referred to a doctor or specialist chosen by their employer.

What makes this issue not so simple is this: to make this legislative change will amount to standing Iowa’s workers’ compensation system on its head and will unravel a system that has been the model of the nation since 1913.

Again, let’s review the data. Iowa employers pay for the workers’ compensation system. They purchase insurance from specialized insurance carriers that write specific policies to pay for work-related injuries. If an employee is injured on the job, the insurance kicks in to pay lost wages, medical bills, and rehabilitation costs…all in an effort to lessen the blow of being injured (wage protection) and get him/her back to work both quickly and healthy (medical / rehabilitation).

Iowa’s system is one of the models in the United States, and especially in the Midwest. The benefits paid to injured Iowa workers rank 3rd highest in the nation, and 1st in the Midwest, according to the US Department of Labor and the Iowa Workforce Development offices.

Because the system is so well managed, Iowa employers rank 41st in terms of the premiums they pay. In other words, the efficient Iowa system allows employers to pay lower premiums to cover the cost of care for their workers, while also paying some of the highest benefits in the nation to the workers if they’re injured.

And it is critical to note that this “brand” of health care coverage, workers’ compensation, is completely paid for by the employer. There is no employee co-pay or employee deductible required. You show up to work, and you’re covered. It is provided by the employer at no cost to the employee.

Employers have a keen stake in the issue of workers’ compensation, and it has nothing to do with premium costs. Their #1 business asset is their people. If their employees are sick, injured, or unhealthy, they’re not productive. If employees aren’t productive, the employer suffers because he/she can’t get goods to market. No goods to market, no business…it’s Economics 101. Thus, it’s in the employer and employee’s best interest to get an injured employee healthy and back to work.

Given this mutual interest, employers in Iowa negotiate with doctors who are specialists in workplace injuries. The employer informs them of the normal practices and workload of a given job, what typical and non-typical injuries they’ve seen, and they establish a rapport to streamline the treatment of the injured employee, and the payment for that treatment. This negotiation and cooperation allows injured employees to see some of the best specialists in the state and keeps the cost of treatment efficient. The money saved can thus be used for increased benefits, rather than litigation and paperwork.

What the Big Unions propose is this: that an employee, injured on the job, should be able to seek treatment from his/her family doctor, or the doctor of his/her choosing. Rather than be part of the system that isn’t broken, working exceptionally well, and offering them higher benefits than almost anyone in the country…they should be allowed to seek their own non-specialist’s diagnosis.

Just as was seen with the Prevailing Wage bill, there are huge costs associated with this bill. Iowa’s schools pay some of the highest workers’ compensation rates, as do Iowa’s municipalities. Turning the current system on its head will immediately impact these entities, at a time when schools and local governments are cutting every budget line item imaginable.

The care given to an injured employee will also suffer. Rather than being immediately referred to a specialist, the employee will go to his/her doctor, who will likely refer them to a specialist. In the process, the employee’s injury remains unattended for longer, there are increased costs, paperwork, and haggling over more charges.

And finally, the employee’s pocketbook will suffer. If the costs associated with providing workers’ compensation go up, something has to give. Employers will be forced to reduce wages, or worse yet, make even more radical changes in other benefits, such as retirement funds or health care (outside of workers’ compensation). In the end, neither of these is good for those the Big Unions say they want to help…an injured Iowa employee.

In the end, one has to look at Big Union Agenda Items #1 and #2 and wonder…whom are they trying to benefit? The unmistakable truth is that the costs associated with these legislative priorities will hurt the very people they claim to be representing.

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The Iowa Republican

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