The Big Myth in Wisconsin Gov. Scott Walker's Union-Busting Crusade

The question of fairness and contributing more.

By SHARE

The Battle of Madison, in addition to being about Wisconsin Gov. Scott Walker’s desire to cripple his state’s public sector unions, is also at least ostensibly about budgetary matters. Walker wants to get those nasty teachers and other government workers to foot more of the bill for their retirements, right? Well … wrong actually. And one of the worst kinds of wrong, a factual error so broadly accepted by the journalists covering the story that it distorts everyone’s understanding of it.

[ See photos of the Wisconsin protests.]

That’s the conclusion reached by Tax.com’s David Cay Johnston, who won a Pulitzer Prize for coverage of tax loopholes with the New York Times in 2001. Johnston, in a must-read for anyone who has been following the Wisconsin battle (and the similar showdowns playing out in places like Indiana and Ohio, among others), points out that the notion of asking the workers to pay a “greater share” of their retirement is deeply inaccurate. He writes:

Out of every dollar that funds Wisconsin's pension and health insurance plans for state workers, 100 cents comes from the state workers.

How can that be? Because the "contributions" consist of money that employees chose to take as deferred wages – as pensions when they retire – rather than take immediately in cash. The same is true with the health care plan. If this were not so a serious crime would be taking place, the gift of public funds rather than payment for services.

Thus, state workers are not being asked to simply "contribute more" to Wisconsin' s retirement system (or as the argument goes, "pay their fair share" of retirement costs as do employees in Wisconsin' s private sector who still have pensions and health insurance). They are being asked to accept a cut in their salaries so that the state of Wisconsin can use the money to fill the hole left by tax cuts and reduced audits of corporations in Wisconsin.

He goes on:

The fact is that all of the money going into these plans belongs to the workers because it is part of the compensation of the state workers. The fact is that the state workers negotiate their total compensation, which they then divvy up between cash wages, paid vacations, health insurance and, yes, pensions. Since the Wisconsin government workers collectively bargained for their compensation, all of the compensation they have bargained for is part of their pay and thus only the workers contribute to the pension plan. This is an indisputable fact.

As I said Johnston’s piece is well worth the read and not simply for the outraged citations of journalists and media outlets that have gotten this point wrong. (A list whose full version would no doubt include this author.)