Collective Bargaining Reform 2.0

Staff Writer
Columbus CEO

Amid widespread opposition from Ohio’s public workers, Issue 2, the statewide referendum on Senate Bill 5, was defeated 61 percent to 39 percent in November’s election. The bill reduced collective bargaining power, banned public-worker strikes, placed caps on paid personal days and holidays, devalued seniority, required public workers to pay at least 15 percent of their health-care costs, established a performance-based pay system and eliminated binding arbitration and fair-share fees.

SB 5, signed by Gov. John Kasich in March 2011, would have become effective in July if not for the We Are Ohio referendum, which turned in a record 1.3 million valid petition signatures and ultimately prevailed at the ballot box. Kasich conceded defeat, saying: “Let me be clear, there is no bailout coming. There’s no bailout because, frankly, there is no money.”

Which begs the question, will Ohioans see some provisions of SB 5 again in 2012? “I would suspect so. I think everyone is aware that there were portions of that legislation that the public was very supportive [of],” says Andrew Doehrel, president and CEO of the Ohio Chamber, which backed Issue 2. He points specifically to merit-based pay for teachers and requiring public workers to pay 15 percent of their health-care costs.

“I think the governor has to come back with a Plan B. I don’t know what it will look like, but I would guess that portions would [be seen again],” says Roy Lewicki, professor of management and human resources at the Ohio State University’s Fisher College of Business.

Supporters of SB 5 contended that the bill would help steer government resources toward economic growth and help ease tax burdens on Ohio businesses. “You have to keep in mind that a business is a taxpayer in this state. When the costs of government go up, businesses end up paying those costs as well,” Doehrel says. “If you’re going to drive up costs, you will discourage businesses from staying or coming to Ohio.”

“It got repealed, but the problem still exists. Much like the business community, during the recession and [as they] continue to do, they tightened their belts. Local government will have to do the same,” says Michael Hartley, vice president of government relations for the Columbus Chamber. “Local government can’t sustain the spending level. Senate Bill 5 gave them the tools to where they can sustain the budget and costs. You can correlate that to the potential for tax increases to pay for spending.”

Lewicki, on the other hand, sees the ramifications on the business community as negligible. “It’s been trumpeted as having a major effect. I don’t think anyone has made a good argument for that relationship. The strength of the labor movement in Ohio—at least some people have claimed—has been pushing business into right-to-work states. Overall, that has tended to be true. I don’t think this particular bill is going to dramatically affect that. I haven’t heard a case made that business development will not be as successful here,” he says. “Anyone with enough clout as a business will be able to negotiate with the state to get enough tax breaks.”

Might the fallout from SB 5 have an impact on the private sector? Lewicki doubts it. “The union movement is on the decline, anyway,” he says. “I think that individual companies have been negotiating and renegotiating packages with unionized workers over workers’ rights and benefits with where the alternative is to either move the company or ship work offshore. That movement has already been occurring.”

According to annual research from Georgia State University and Trinity University, unionization rates are much higher in the public vs. private sector. Public-sector unionization throughout the United States was 36.2 percent of all wage and salary workers in 2010. In Ohio and the Columbus area, rates were 43.1 percent and 43 percent, respectively. Private-sector unionization stood at 6.9 percent in 2010, compared with 8.4 percent in Ohio and 5.2 percent in Columbus.

“Most unionization in the region is public sector. There is this perception that Ohio is a highly-unionized state. It’s slightly above average, but not all that much,” says Bill LaFayette, owner of Regionomics. “To the extent that perceptions drive actions, it’s up to the people who try to attract business to town to refute those perceptions. You can do that with hard data.”

Reprinted from the January 2012 issue of Columbus C.E.O. Copyright © Columbus C.E.O.