A New “Grand Bargain” for Public Sector Workers Boston Bar Association Harvard University Law School May 2, 2009 Barry Bluestone Dean, School of Social Science, Urban Affairs, and Public Policy

Massachusetts State & Local Government in Trouble Facing a continuing budget crisis

Mass FY2009 Revenue Through April 9, 2009, year-over-year total state tax revenues are down $1.1 billion (-7.4%) over 2008 revenues FY 2009 Massachusetts deficit will total close to $3.5 billion relative to original state budget FY2010 deficit is projected now to be close to $4 billion Draconian cuts in state services Large cuts in local aid

But current deficits are only the tip of the iceberg The cost of state government services is spiraling out of control Given the rising cost of debt service, public employee pensions, and Medicaid, the Commonwealth is facing a massive long-term “Structural Deficit” that will destroy public services

Price of State & Local Services rising twice as fast as overall prices

Debt Service, Public Pensions, and Medicaid will devour most of the Mass State Budget

Why are Public Sector Workers in Massachusetts in Trouble State and local governments will need to find a way to reduce costs by reining in public services, privatizing them, or raising public service productivity and efficiency

New Collective Bargaining Environment Municipal officials have no choice but to demand relief from public service workers or cities and towns will go bankrupt As the public begins to recognize how well public sector workers are doing relative to other workers, and how bad the national and state economies are doing, they will increasingly side with municipal officials and against public sector unions Some may cheer the demise of public sector unions, but unions have played a critical role in the past in driving social progress

Union Efforts have … Raised wages of low wage workers Given workers a voice in their own fate Most importantly, been a force for social progress on health care, combating poverty, raising productivity, insuring product quality Their demise is not good for society

Trends in Union Membership

1955: 35% 2008: 13.7%

Lessons from the UAW UAW was not long ago the strongest union in the U.S. with over 1.5 million members Union failed to recognize changes in international auto industry, failed to push for improvements in auto quality and performance, and improvement in industry productivity Today, the UAW has less than one-third as many members (465,000) and the domestic auto industry is holding on by a thread with massive worker layoffs

Lessons for Public Sector Unions Public sector unions must make a better case to consumers … those who pay the taxes for services Public sector unions must help find ways to improve productivity and reduce the costs of public services It is time for a “grand new bargain” where unions play a greater role in improving “price”, quality, and innovation in return for greater job security and public respect

Goals of New Grand Bargain Union joins in efforts to boost … Productivity/Efficiency Quality of Services Innovation in Offering Services Union to be a partner in serving the needs of the Commonwealth Union plays a serious role in helping shape social policy … balancing the interests of their members with the interests of the public Increased Union Membership

A New Grand Bargain Reductions in Work Rules and Job Classifications Public Sector Pension Reform Universal buy-in on Group Health Insurance Advocate for School Reform Wage Freeze during times of grave economic crisis Keep public services public