Why Should a Corporation Care About State Worker Collective Bargaining

By Steve Arthur, Vice President

The recent high profile fight over collective bargaining rights, pay and benefits for public employees in Wisconsin is interesting to those who follow politics and government funding issues, but why should corporate executives be concerned about that fight? The obvious answer is that if public employee pay and benefits are increased, taxes will have to go up to pay for that compensation.

If it were just about pay and benefit levels that might be true, but the unions see the collective bargaining issue as critical to their future, so they will drag anyone and everyone into this fight to try to preserve their right to bargain on working conditions as well. Even companies who have not been politically active may find themselves pulled into this fight.

For example, The Wall Street Journal’s Best of the Web blog recently described how several Wisconsin public unions threatened Wisconsin companies with boycotts if they did not publicly oppose Governor Walker’s efforts to curtail collective bargaining (http://on.wsj.com/h1i4Ae). Rather than urging a boycott to express dissatisfaction with a company position, the unions threatened a boycott if the company didn’t support the union position.

Public unions are also stepping up their rhetoric against corporations. For example, to promote a national day of protest for collective bargaining on April 4, the American Federation of State, County and Municipal Workers (AFSCME) is calling those legislators who have supported public sector pension and benefit reforms “corporate-bought politicians” on the AFSCME website. This is part of a strategy of trying to shift the focus away from the issue of pay and benefits for public employees and toward corporations and linking them to Wall Street and the recession.

As a result, some companies have decided it might be easier to simply stay on the political sidelines, hoping to keep out of the political crosshairs of unions or other activist groups. However, that could be a mistake, and not in the best interests of the company or its shareholders. Economics (and other social science) students will remember the Prisoners’ Dilemma, and a variation of it is applicable here. If only one company decides not to participate in politics, they will benefit from other companies participating. However, if many companies all make that same decision, they will cede the political field to those who do not have their best interests at heart and then all companies will suffer from the resulting public policies.

A much better strategy is to continue, or even increase, a company’s political activity and have a proactive corporate communications strategy ready to defend the corporation’s political contributions as in the best interests of the public, the company’s employees and its shareholders.

It is very possible that we are just at the beginning of a multi-year struggle over the future of the size and scope of government. Companies should decide now which side of that fight they want to be on, because it is much easier to make a thoughtful decision about corporate political strategy when the spotlight is elsewhere. But the spotlight is likely to shine regardless of the choice a company makes. Unions are making the argument that the public policy choice is between teachers/police pay versus corporate tax breaks. So companies need to decide whether to support candidates that will fight for a good business climate to create private sector jobs, or stay out of the fight and see their taxes increase and potentially have to lay off workers. The public sector unions are making sure this is the choice. If corporations stay silent, it will be a very one-sided fight.

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