Wisconsin Withholding Wipeout

There’s little doubt that the ultimate fate of Governor Scott Walker’s budget reforms will be decided in the Wisconsin Supreme Court, but for the time being, its provisions have gone into effect.  One effect of these reforms is that the state will no longer withhold union dues automatically from paychecks.  Employees must now send the dues into the unions themselves.

Those automatic contributions add up to a lot of money, so of course the unions and their Democrat representatives are howling.  How much money are we talking about?  The amount surely varies a lot between positions, but I’ve seen estimates that public school teachers pay an average of seven or eight hundred dollars per year, and the Wisconsin Education Association Council has about 98,000 members.  Clearly, a very large amount of funding is at stake.

How much will the union bosses’ income stream fall, when dues money no longer flows from employee paychecks directly into their coffers?  Writing in the New York Post earlier this month, Rich Lowry laid out the worst-case scenario for Big Labor, based on some previous examples:

“When Indiana Gov. Mitch Daniels ended collective bargaining and the automatic collection of dues in 2005, the number of members paying dues plummeted by roughly 90 percent. In 2007, New York City’s Transit Authority briefly stopped automatically collecting dues for the Transport Workers Union, and dues fell off by more than a third.”

The financial damage to unions will actually be even worse than the amount of dues withheld by defiant, or delinquent, public employees.  The state of Wisconsin has actually been performing an extremely valuable service by collecting these dues automatically and handing the bundled loot over to the union hierarchy.  Private companies pay a great deal of money to maintain Accounts Receivable departments and collections agents.  Imagine the WEAC was a private concern with 98,000 customers.  The amount they would spend on collecting fees from those customers would be a significant line item on their budget.

This will all leave the unions with much less money to slip into Democrat pockets – but again, the damage is even worse than the total amount of campaign dollars lost.  Many union members are not Democrats, and some of them will likely begin demanding more control over how union money is spent, now that the dues don’t magically disappear out of their paychecks.  This will greatly reduce the unions’ ability to make promises to Democrat politicians, in exchange for political services.

Suppose you have two companies with comparable assets.  One of those companies has a ton of money in the bank, while the other has a little money plus a lot of uncollected debt from its Accounts Receivable department.  Which one is a more formidable financial force? 

As of today, the Wisconsin union bosses can’t promise their Democrat operatives that all those campaign millions will be there next year, or the year after that.  If Wisconsin follows the example of Indiana, up to 90% of that money could disappear.  That will make Democrat politicians much less willing to make fools of their voters by fleeing the state when union bosses snap their fingers.

The primary asset of a union is control.  It gains power within the framework of collectivism by controlling the money and behavior of its members.  It builds its membership by controlling access to labor markets, making it difficult to aggressive non-union workers to slip around it and snatch jobs away from union employees.  The end of payroll withholding for union dues just bled a tremendous amount of control away from the union bosses.  That’s why this kind of reform was as important to balancing the Wisconsin state budget as asking union employees to chip in 5.8% of their salaries to fund their pension plans.