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Wisconsin a big setback to unions in benefits battles

Democratic challenger and Milwaukee Mayor Tom Barrett sits at a table as he waits for Republican Wisconsin Governor Scott Walker before the
Democratic challenger and Milwaukee Mayor Tom Barrett sits at a table as he waits for Republican Wisconsin Governor Scott Walker before the

By James B. Kelleher

MILWAUKEE (Reuters) - Wisconsin Republican Governor Scott Walker's recall election victory and votes to curb pensions in two California cities are set to embolden political leaders across the United States to take on labor unions.

Walker on Tuesday survived a recall election forced by labor leaders and liberal critics opposed to his bold moves to limit the powers of public sector unions in a Midwestern state that could be a battleground in the November 6 presidential election.

Voters in two of California's biggest cities, San Diego and San Jose, on Tuesday overwhelmingly supported cutting pensions of city government workers to save money.

With many states and cities facing budget problems, it won't only be Republican politicians who are likely to see the results as a catalyst for attempts to curb costly retirement and other benefits for public sector workers. The San Jose mayor pushing the cuts in that city is a Democrat.

"This is a watershed moment, a historic moment," said Gary Chaison, professor of labor relations at Clark University in Worcester, Massachusetts. "They (unions) gambled heavily and they lost heavily. It's a real problem for them," Chaison added.

"I think governors and mayors will look at this and say the unions are fair game now. They seem disadvantaged and weakened. You can smell it," Chaison said.

Union leaders such as AFL-CIO President Richard Trumka and Teamsters General President Jim Hoffa said that Republicans bought the victory in Wisconsin with tens of millions of dollars in spending, overwhelming what the unions contributed.

But CNN exit polling data showed that 88 percent of those surveyed made up their mind in Wisconsin before May, when the deluge of television ads reached a crescendo.

The data also showed that 52 percent of Wisconsin voters approved of restricting the collective bargaining rights of public sector unions, as Walker had done. Even worse for unions, 37 percent of those who said they had a union member in their household voted for Walker, according to CNN data.

This was a wake up call for unions and the Democratic Party, said Marick Masters, a professor of business and director of labor studies at Wayne State University in Detroit. "Both have lost momentum and inspiration. They underestimate the intensity of the feeling against big government and organized labor itself, particularly in the public sector," Masters said.

The Wisconsin result posed difficult questions for President Barack Obama's re-election campaign, which has struggled to match the enthusiasm of his 2008 White House run and has battled to compete financially with the huge sums of money being raised by conservative outside groups.

At the least, the result moved Wisconsin from a relatively safe haven for Obama, who won it by 14 percentage points in 2008, to a competitive tussle with Republican rival Mitt Romney.

Several high-profile Republican state governors including New Jersey's Chris Christie, Louisiana's Bobby Jindal and South Carolina's Nikki Haley campaigned alongside Walker in Wisconsin, and said were thrilled by the outcome.

Haley has sparred with the Obama administration over a National Labor Relations Board finding that Boeing put an aircraft factory in South Carolina to avoid union restrictions in Washington state.

"I have been a union buster and proud of it," Haley told reporters in the South Carolina capital of Columbia on Wednesday. "We are going to make it difficult for unions."

ACROSS PARTY LINES

The outcome on Tuesday was not solely a Republican ideological drive against unions, experts said.

Chuck Reed, the mayor of California's third-largest city San Jose, said a quarter of his city's budget now goes for retirement benefits to union workers. Voters overwhelmingly supported cutting those benefits.

"Pension reform cuts across political lines," Reed said. "It's not a Democrat-Republican issue at all. Most of my city council is Democrat."

States and cities such as San Jose are drowning under the weight of unfunded obligations and benefits pledged to union members.

"Voters are starting to understand the current deals cannot be followed through on," said Tammy Frisby, a research fellow at the conservative Hoover Institution at Stanford University.

Union representation in the U.S. workforce has been in decline for decades to only 11.8 percent of U.S. workers in 2011 from a peak of 28.3 percent in 1954, according to the U.S. Bureau of Labor Statistics.

This masks an explosion of unionized workers in government jobs to nearly 37 percent of all public sector employees, the figures show.

Fifteen states have no restrictions on collective bargaining by public employees, according to the National Conference on State Legislatures. Many more, including Wisconsin, allow collective bargaining by at least some public employees but with either minor or major restrictions.

This contrasts sharply with the private sector, where only 7 percent of workers are now represented by unions, according to latest government figures.

Very few private workplaces offer full pensions for retirement and even the 401(k) plans offered at many workplaces have suffered with the U.S. economy. Voters who have no or limited benefits are less likely to be sympathetic to union members crying foul over reductions in generous benefits paid for by taxpayers.

While Wisconsin went the farthest, 10 states - Idaho, Indiana, Michigan, Nebraska, Nevada, New Hampshire, Ohio, Oklahoma, Tennessee and Wisconsin - passed laws in 2011 alone that restricted the collective bargaining rights of public employees in some way, according to the National Conference on State Legislatures.

(Additional reporting Brendan O'Brien and Nick Carey in Wisconsin, Peter Henderson in San Francisco, and John Whitesides in Washington; Editing by Greg McCune and Will Dunham)

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