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Illinois Issues: The Social Cost of Rauner v. Labor

Oct 26, 2015
Originally published on October 22, 2015 7:45 am

News Analysis — On September 18, 2012, the year before Bruce Rauner declared his candidacy for governor, he shared his vision for a crisis that could help reshape state government.

“In Illinois there’s been a long-time history of what I would call social service, social justice, a bigger role for government in the safety net than in many other states,” Rauner said at a tax policy conference sponsored by the George W. Bush Institute. “I think we can drive a wedge issue in the Democratic Party on that topic and bring the folks who say, ‘You know what? For our tax dollars, I’d rather help the disadvantaged, the handicapped, the elderly, the children in poverty. I’d rather have my tax dollars going to that than the SEIU or Af-scammy (AFSCME), who are out there for their own interests.’”

Three years later, Rauner says he’s “very unhappy” Illinois is without a budget. But he has followed through with his proposal that “the disadvantaged, the handicapped, the elderly, the children in poverty” be conscripted into his battle against organized labor. Domestic violence shelters are turning away victims. People with mental illness are losing access to treatment. Programs that make it less likely delinquent juveniles will become adult criminals are scaling back or closing.

Rauner has been selective about what parts of government would be funded and which would be left out. While vetoing most of the Democrats’ unbalanced budget plan, he signed an appropriations bill to fund schools, removing the possibility of pressure from thousands of moms and dads with no place to send their kids when schools couldn’t open. He also went to court asking a judge to order state employees get paid, removing the possibility of pressure from state workers forced to work without compensation. Because of his actions, other court orders and existing law, the only major areas of state government going without funding are higher education and social services.

All of this amounts to a selective government shutdown, and it appears to be the early result of Rauner realizing his vision. The plan imagined Democrats could be prodded into turning against unions. But a close examination of all the changes Rauner is demanding for labor in Illinois — and both the practical and political consequences of those changes — shows why Democrats have so far refused to relent, and why they say they never will.

Rauner’s labor agenda

The governor has proposed numerous changes affecting labor in two major areas: through his “Turnaround Agenda” and in his role as head of the state bureaucracy. Many reporters have taken to using the phrase “pro-business, anti-union” to describe the Turnaround Agenda. Contained within the second half of that shorthand is a raft of ideas that would significantly weaken the organizations representing workers across Illinois.

The Turnaround Agenda began life as 44 bullet points (PDF) made public the day the governor gave his first State of the State address. Among the economic proposals directly affecting labor were calls for limits on prevailing wage requirements and the elimination of project-labor agreements, or PLAs, which help contractors with a unionized workforce compete for construction projects against others that would submit a lower bid by paying workers less. Applying an estimate that PLAs add about 18 percent to a project’s cost — a figure put forward by a construction industry trade group that opposes PLAs — Rauner says Illinois spends billions more on school, road and other construction projects than it otherwise might.

He called for letting local governments create right-to-work zones by referendum. That would end the requirement that all employees at a unionized company be made to pay for union services, such as bargaining over wages and handling grievances. The fees apply even if they choose not to join the union.

Other Turnaround ideas sought to give local governments the power to refuse to bargain over things like wages and benefits. In a later pension proposal, Rauner also suggested removing wages, pensions, vacation, fringe benefits and work hours from the list of topics on which state-employee unions are allowed to bargain. And he wants to limit the political participation of government unions in state politics by prohibiting them from making campaign donations.

The Turnaround Agenda also called for requiring unions that contract with the state to have their apprenticeship programs “reflect the demographics of Illinois communities” and “have their membership on public construction projects reflect the diversity in the surrounding area.” Some African-American state legislators have long complained about unions admitting too few black people into training programs.

Beyond the Turnaround Agenda items directly affecting unions, there were others that would be of interest to all workers, including union members, such as changing the rules by which injured workers are compensated, tightening standards for the unemployment insurance system and limiting the amount of money plaintiffs can collect when they win tort lawsuits.

Rauner has made other moves on union issues, such as his executive order prohibiting “fair share” fees for state workers. He attempted to get involved in a lawsuit to outlaw such fees; a federal judge has allowed the case to proceed with three state workers as the lead plaintiffs, but said the governor had no business participating in the case.

Rauner has also made what the American Federation of State, County and Municipal Employees characterizes as “unreasonable” demands in contract negotiations. AFSCME recently issued a bulletin to its members saying the administration wants workers to give up longevity pay raises, known as step increases, and instead compete for one-time bonuses. It also says Rauner wants unions to give up any say in decisions about privatizing state functions. In a prepared statement, the administration countered that it has only proposed freezing step increases until state finances improve. It also says it promised bonuses would be paid to 25 percent of all state employees every year, and that union members would have the opportunity to undercut outside companies when privatization is being considered. “AFSCME has made clear that it does not want its exceptional employees paid more for their hard work and outstanding performance,” the administration said.

‘Not my priority at all’

Rauner has set aside many of his Turnaround priorities during negotiations on this year’s budget. Right-to-work zones, for example, are no longer among Rauner’s immediate demands. But AFSCME spokesman Anders Lindall says Rauner is still pushing plenty of ideas to which labor objects: “It has been a moving target, but stripping the rights of public sector workers has seemed to always be at the heart of that ever-shifting list.”

Michael Carrigan, the head of the Illinois AFL-CIO, echoes and broadens that critique. “From our camp, it’s a full-blown, full-throttle attack on labor and working people, whether they’re union or not,” Carrigan says. “It just seems like everything that he wants to come to Springfield and fix is at the cost of people who work for a living.”

Rauner, however, insists the charge that he has it in for labor is “baloney.” “I’m not anti-union. My grandfather was a union guy; a lot of my friends are union guys and there’s a lot of union members who voted for me,” Rauner said earlier this year. He’s also been careful to focus most of his rhetoric at “government union bosses.” At least, that’s the phrase he used during the Republican primary campaign and again after he won the governorship. In the run-up to the general election, on the other hand, Rauner was careful to mostly avoid union talk. “Pushing any specific labor regulation is not my priority at all,” he told Illinois Radio Network less than a month before voters went to the polls. Four months later, he unveiled the Turnaround Agenda.

Back in 2012, when Rauner was not yet a candidate, he was less careful in his choice of words, painting all government union members — not just union leadership — with the same broad brush. “It’s their pensions. It’s their pay. It’s their outrageous healthcare costs, and what doesn’t get much play is their work rules,” Rauner said at the Bush Institute conference. “Another topic that has yet to really get (attention): there are restrictions on who can work in government, what their background has to be. We can’t hire good people into government, because they have to have worked their way up in the Af-scammy system. It’s preposterous.”

The Rauner administration did not respond to a request for comment for this story.

State Rep. David Harris, a Republican from Arlington Heights, says while the Turnaround Agenda certainly includes changes that “perhaps some unions don’t like,” he doesn’t agree with characterizations of the proposals as “anti-union.” He says state labor laws are due for a change. “What has happened over the years is that the pendulum has tilted toward the labor side of the scales, away from management.” Harris concedes that there are aspects of the governor’s agenda that “maybe go a little bit too far on the management side, but I personally believe there is a middle ground.”

Implementing the Turnaround Agenda would have significant practical and political effects. Rauner says his changes are all about making Illinois more competitive — that is, more friendly toward businesses. During a speech promoting his agenda earlier this year, Rauner cited figures from the Fraser Institute, a conservative Canadian think tank, to suggest that by implementing right-to-work laws, Illinois could see a 1.8 percent jump in economic output and a 1 percent increase in employment. That would amount to billions of dollars in gross state product and tens of thousands of jobs.

The unions counter that, without workers collectively bargaining with employers, such jobs would come with significantly lower salaries. “The real victim here is not any one union, but all working people,” says Lindall, the AFSCME spokesman. “These are policies that will drive down the wages and strip the rights of all working people, and some of them would have the byproduct of defunding the union that are the advocates for — and voice of — working people. But the real victim is all working families in our state.”

There is an undeniable logic to that argument, particularly as it relates to union members. For example, the governor says Illinois taxpayers are spending billions more than they should on construction because of project-labor agreements, which are a form of minimum-wage requirement. Logically, those billions went to pay the wages of Illinois carpenters, plumbers, electricians and bulldozer drivers. Change that system, and those men and women would see less money in every paycheck.

But how much would weakening unions hurt all working families in our state? Labor leaders are fond of noting that their forebears were responsible for on-the-job perks we now take for granted, such as weekends and overtime pay. Labor also still delivers for its members. In his book What Unions No Longer Do, University of Washington sociologist Jake Rosenfeld writes that the “union wage premium” — the salary increase a worker gets by joining a union, controlling for other factors — remains substantial in the private sector, with a 22 percent salary bump over similar nonunion workers. The premium also still exists for public-sector union members, who earn about 14 percent more than nonunion counterparts.

On the other hand, unions no longer set standards for the broader workforce the way they once did. Rosenfeld’s statistical analysis shows unions’ ability to influence pay for nonunion workers has declined precipitously since the 1980s. “Given decades of membership declines, this diminishment likely reflects in part the declining threat unions pose to nonunion employers,” Rosenfeld writes. “With little organizing to speak of, the typical nonunion employer today has little incentive to match union wage standards.”

The politics of labor

Besides the practical effects for workers, implementation of Rauner’s labor agenda would also have significant political effect in Illinois. As the administration detailed in a separate document the day it revealed the Turnaround Agenda, SEIU and AFSCME have given millions of dollars to Democratic gubernatorial candidates. The report failed to mention that AFSCME is actually a bipartisan contributor — it was among the unions that spent hundreds of thousands of dollars in a last-minute effort trying to help then-state Sen. Kirk Dillard defeat Rauner in last year’s Republican primary. Notwithstanding the exceptions, labor is much more closely aligned with the Democratic Party, both in Illinois and across the country.

Robert Bruno, a professor of labor relations at the University of Illinois Urbana-Champaign, says when Republicans get elected to state government posts, they see unions — particularly government unions — as a continual source of opposition. “So if you weaken organized labor, you weaken the Democratic Party,” Bruno says. “It raises the question: In the public sector, is the target the actual union? Or is the target the Democratic Party?” Restrict membership numbers, cut funding and limit political participation, and unions are forced to cede the political battleground to constituency groups that are more closely aligned with Republicans. “It becomes part of a bigger strategy to do serious damage to the Democratic Party,” Bruno says.

In going after labor, past polls suggest Rauner should have broad support among Republicans and conservatives. Rosenfeld, in What Unions No Longer Do, reports there’s a partisan gap on the labor question of more than 50 percentage points. “In 2011, for example, only a quarter of Republicans expressed support for organized labor, versus nearly 80 percent of Democrats,” Rosenfeld writes. “Why do right-wing Americans oppose unions? Similar to many American employers ... conservatives often believe unions interfere with the working of the free market, and therefore are bad for the economy. For others, the very notion of a union challenges the values of individualism and self-reliance.”

Rauner, however, says his labor agenda “is not a partisan issue, it’s a good government issue.” At an appearance in Decatur last week, he discussed other topics, like selling the Thompson Center in Chicago and changes he wants for state pension plans. But he says labor is the core issue: “Are we going to be willing to modify how we handle collective bargaining inside government in Illinois or not? Are we going to take that on?” Rauner cited Democrats’ objections that his proposals to weaken union rights are “extreme” and violate their core beliefs. “Then I remind them … the Democrats in the General Assembly have already taken things out of collective bargaining for the city of Chicago,” including class size, the length of the school day and the outsourcing of services.

Rep. Christian Mitchell, a Democrat from Chicago, was not yet in the General Assembly when that legislation passed in 2011. But two years later, he did vote in favor of a pension overhaul that eventually earned him a primary challenge from a labor-backed candidate. Thus, it stands to reason that, from Rauner’s perspective, Mitchell is a Democrat who ought to be more supportive of the governor’s agenda. Particularly when, as Rauner laid out in 2012, the choice is between social services and “Af-scammy.”

“I think it’s a false choice,” Mitchell says. “Look, I’m the grandson of a union steelworker. The only reason why I’m here in this position of being a state representative is because of that great job that my grandfather had.” He says there would not be an African-American middle class in Chicago, had there not been teachers, firefighters, cops and laborers who were able to get good union jobs. Mitchell says part of the reason so many people now rely on social services is tied to the decline of unions and the resulting lower wages and standard of living. “The governor, through his policies on prevailing wage or right to work, seeks to lower that standard of living even further,” Mitchell says. “We’re not going to sell out the middle class and an institution that’s been important to the middle class in order to have the governor do something he says he wants to do anyway, which is be compassionate.”

Mitchell also says his vote in favor of the 2013 pension overhaul is not comparable to what Rauner is asking of legislators. The pension vote was meant to preserve the state’s retirement system, he says, while Rauner’s labor agenda presents an existential threat. “This is a question of: Will unions continue to exist in the state of Illinois? And do you or do you not think that’s a good thing?”

Another House Democrat — Rep. Greg Harris of Chicago, the chairman of the human services budget committee — says capitulating to Rauner now raises the question of “who gets in the cross-hairs next year?” Harris says there are areas in which the governor and Democrats might find common ground. But in the meantime, “I think it’s just tragic … he wants to use the most vulnerable people as pawns.”

House Speaker Michael Madigan has made similar points for months. “I’ve stated all year that I will work with the governor cooperatively and professionally,” Madigan said earlier this month in a prepared statement. “But we will not devastate Illinois’ middle class and struggling families by furthering an agenda aimed at driving down their wages and their standard of living.” The speaker omits the fact that unions are a key source of financial and on-the-ground support for Democrats. The Democratic Party of Illinois, of which Madigan is chairman, would stand to lose a great deal if Rauner’s agenda were to be enacted and unions were barred from political participation. And as Mitchell learned in fighting off a primary challenge, crossing labor can lead to significant headaches for Democrats.

The ‘wedge issue’

Lately, Rauner’s statements on the budget have taken on a ring of contrition. While dedicating a new facility at the U of I Urbana campus this month, Rauner said he was “very unhappy” Illinois did not yet have a budget. “We’re going through some financial difficulties right now,” Rauner said. “I apologize for that.”

Rauner did not mention that “some financial difficulties” happen to reflect a strategy he outlined years earlier and seems to have carefully engineered. Since winning the election, the governor has rarely taken ownership of the political strategy of squeezing human services. But he has hinted at it. “Crisis creates opportunity. Crisis creates leverage to change,” Rauner told the Chicago Tribune editorial board in April. “We’ve got to use that leverage of the crisis to force structural change.”

Rauner continues campaigning for his policies in every corner of Illinois. He even held a series of meetings with representatives of social service organizations back in August. Andrea Durbin, director of the Illinois Collaboration on Youth, was at one of those meetings with three other advocates, Rauner and gubernatorial aide Linda Lingle, the former governor of Hawaii. She says it took place in the governor’s office on the second floor of the Capitol building, and began with Rauner sharing his perspective on the state budget crisis and human services.

“He seemed to strongly support — at least in the panel that I was present for — the services that we are engaged in,” Durbin says. The Collaboration represents organizations that seek to reduce young people’s involvement in the child welfare and juvenile justice systems. The idea is that by intervening while they’re young, the state is less likely to have to be involved with individuals when they’re older. Durbin says Rauner did not discuss the Turnaround Agenda and did not ask those present to endorse his platform.

At the time of the August meetings, money from the previous fiscal year was still going to providers. Now that well has run dry. Durbin describes a counseling center absorbing the workload of a similar group that closed in late summer, and now is itself laying off staff because of tight budgets. In Winnebago County, dozens of youths were turned out from Redeploy Illinois, a program that seeks to keep juveniles who’ve gotten into trouble from developing into an adult life of crime. “We’re seeing the domino effect. And it’s not like in a rural community you’ve got millions of human service providers to choose from,” Durbin says. “If a program shuts down, there isn’t someone else nearby to pick it up.”

She says human service agencies feel like they’re being held “hostage.”

“We do feel like we’re pawns in a game that’s not about us,” Durbin says. “Let’s be clear: the fight that’s out there is not about human services.”

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