This normally low-key state-level dust-up in Wisconsin has blasted into national coverage, not least because of the drama unfolding over wayward state Senators avoiding a quorum and the fact that it most likely represents a microcosm of things to come for pretty much every other state in the next year or so. At issue is a bill before the state legislature that would reform how public sector unions negotiate for their contracts--in this case, it requires some contributions to health care and pensions to come out-of-pocket for workers, and also strips collective bargaining for everything except actual wages. This last part is the one generating the most outrage, since it drastically reduces the long-term power of the unions in Wisconsin. What does this mean for everyone else?
The problem is: I don't know. I have a problem with public sector collective bargains, which is why they were largely outlawed in America until the 1950's. (I don't have a problem with private sector unions--as long as both sides voluntarily come to an agreement, I don't see how this is a problem for capitalists. But that's another discussion for another day.) The theory was that, in the private sector, both sides pushed against each other until there was a mutual agreement. The owners had an incentive to keep wages low, and labor had an incentive to keep wages high; the result was usually something reasonable.
In the public sector, however, there really isn't much of an incentive to keep wages low--if a purse-busting generous wage and benefit package gets passed, who cares? The bureaucrats who get to agree--including arbitrators and the like--suffer no consequences. And school boards? Losing an unpaid minor office doesn't seem like much of an incentive to play hardball with a well-funded and highly vocal organization such as, say, AFSCME.
[I'm aware that there are plenty of nuances in all of this, specifically for things like postal workers and first responders who aren't allowed to strike. Usually, however, these are taken care of in separate negotiations that often have special circumstances in their implementation, so I know very little about them.]
What is the solution? I have no idea. Contracts have to be negotiated somehow, and unlike private contracts, there's no way to threaten moving services elsewhere--basically, trash piles up and kids stay home and watch cartoons. But the way things work can't for very much longer. I'm not sure if I agree 100% with how the Wisconsin governor is handling it, but many budgets have gotten to the point where something has to be done, and no matter what public employees are going to be worse off since they've gotten the sweetest deals for decades. Perhaps they can look to nearby Detroit to see what happens when you load up on the short-term awesome contracts that can't be sustained for the long term.