The status of Illinois labor can be read between the lines of a single piece of legislation advancing through the Democrat-controlled General Assembly. Pushed this spring by Service Employees International Union, House Bill 4241 would protect janitors and security guards from being fired for three months after a private firm buys or assumes management of an office building or commercial property.
“It’s a horrible bill,” says Sen. Kay Wojcik, the ranking Republican on the Labor and Commerce Committee. It’s no surprise that she and other members of her party are seeking to shield the business community from another state mandate. But some Democrats, too, have been critical of the proposal because it doesn’t apply to publicly owned buildings. “Why is there a double standard?” asked Sen. Martin Sandoval, a Chicago Demo-crat. “Why are we going to impose this on the private sector when the government itself doesn’t want [it]?”
The reality, of course, is that the cash-strapped state isn’t any more interested than the private sector is in shouldering potentially costly labor requirements. Nevertheless, by promoting labor-friendly proposals aimed at the private sector, Gov. Rod Blagojevich — the first Democrat to win the state’s top executive post in a quarter century — has managed to stay true to his pro-labor campaign rhetoric.
He has, for example, signed into law a minimum wage increase and several other measures aimed at improving the lives of working people, arguably at the expense of a business community that was already smarting from an economic downturn. Yet, in light of the state’s own bleak budget, he has been less kind to public employees.
“As an employer he hasn’t lived up to his expectations,” says Henry Bayer, executive director of the American Federation of State, County and Municipal Employees Council 31, which represents some 37,000 state workers.
In the 2002 governor’s contest, AFSCME was one of many unions to endorse Blagojevich, a candidate who promised not to “balance the budget on the backs of working men and women.”
“We regret the fact that he has not lived up to his campaign promises,” Bayer says. “Frankly, many of our members feel that they have been betrayed. On one hand he told them he was going to stop doing what Gov. [George] Ryan was doing, and he has turned around and tried to do the same things. Gov. Ryan closed [state] facilities. He’s trying to close facilities. Gov. Ryan wanted us to take a pay cut. He’s trying to impose a pay cut on us. Those are not things that a governor who’s friendly to working people
would do.”
In fact, this stinging assessment is leveled at a governor who, in his first 17 months on the job, has bucked the business community and President George W. Bush at the behest of workers. But critics say those labor-friendly efforts were easy because they cost the state little.
When President Bush planned to rewrite federal overtime regulations this spring, for instance, Blagojevich signed legislation blocking the proposed changes, saying they would have eliminated overtime pay for 375,000 Illinoisans. And, thanks to legislation the governor signed last summer,
Illinois is one of a dozen states that ensures workers an hourly wage higher than the $5.15 federal minimum. The rate rose 35 cents to $5.50 in January and moves to $6.50 next year. Further, the Equal Pay Act Blagojevich signed on Mother’s Day 2003 is intended to end gender-based wage disparity in Illinois, a state where women were paid 71 cents for every dollar a man earned last year.
The second-year governor also signed legislation expanding the state’s prevailing wage law, which determines employee wages for contractors working on state construction projects.
And he signed legislation that forces businesses to return grant money and other state handouts if they fail to deliver on promises to create new jobs with the funds. Yet another measure signed by Blagojevich prevents employers from signing contracts with day labor agencies when their workers go on strike. Caterpillar Inc., the Peoria-based heavy equipment manufacturer, successfully challenged that legislation in court.
Of course, these are the kind of pro-labor measures Democrats traditionally support. “It’s the power of the majority party and it’s the philosophy,” says Wojcik, the Schaumburg Republican on the Senate labor panel. “They’re pro-union. You always hear Rod Blagojevich talking about the working families, and when you have a pro-union attitude, you’re going to have a lot of union bills going through.”
That wasn’t the case less than a decade ago when Wojcik was a representative and her party controlled the Executive Mansion, the state Senate and, through a two-year stint, the Illinois House. Among the business-friendly moves during the GOP reign was a repeal of the Structural Work Act. More commonly known as the “scaffolding act,” it had allowed injured construction workers to receive benefits beyond what they were eligible for under workers’ compensation.
Whatever its actual impact, debate over that
provision has gained symbolic stature. Given the number of labor-friendly initiatives that are whizzing through the legislature now, Wojcik says, she’s watching for the scaffolding act to reappear. “I call it the Rip Van Winkle syndrome,” she says. “[The Democrats have] been sleeping for 10 years and now they’ve re-awoken.”
And they’ve gotten the attention of the state’s business community. “I don’t sense a lot of sensitivity on the part of the administration to the cost-of-doing-business component of the equation,” says Doug Whitley, president and CEO of the Illinois Chamber of Commerce.
Business representatives, too, can point to promise in the new governor’s campaign. After all, while union endorsements fueled grass-roots support for Blagojevich’s candidacy, business groups put up a lot of the cash. They funneled $12.2 million to his campaign, nearly three times the $4.2 million labor groups anted up.
Overall, Blagojevich raised $26
million, including $176,000 from A. Finkl & Sons, the Chicago steel plant where the candidate kicked off his campaign and later declared victory.
Blagojevich’s late father, a Serbian immigrant, worked in the steel plant, a fact his son mentioned at many campaign stops.
On the stump, Blagojevich wooed employers and working people by promising not to raise the state income tax or sales taxes. But after a deficit pegged at $5 billion last year and a shortfall of about $2 billion this year, some early supporters in both camps are beginning to wish Blagojevich would recant.
Business groups stop short of endorsing a general tax increase, but say they’ve shouldered an unfair amount of the budget burden.
Last year, the administration hiked hundreds of fees totaling $420 million and eliminated about $365 million in corporate tax breaks. The state
chamber is legally challenging one of the fees, along with the administration’s practice of diverting dollars from those hikes into the state’s main checkbook. The business community argues these moves have raised the cost of doing business as much as the minimum wage increase and other pro-labor measures.
“We have just really, I think, poisoned the well here,” says state Treasurer Judy Baar Topinka, chair of the state Republican Party and a frequent administration critic. She says she’s not surprised Blagojevich has been willing to sign labor-friendly legislation that increases costs for the private sector. “It’s always easier when someone else is paying for it,” Topinka says. “Any damn fool can do that.”
Business interests contend the governor has stunted job growth. They cite several examples. Printing giant R.R. Donnelley & Sons recently informed Blagojevich the company was holding back on expansion plans at several of its Illinois plants because last year the state lifted a sales tax break on graphic arts equipment, including multimillion dollar printing presses. The move was supposed to bring the state $4 million a year in sales taxes. By mid-May, the House had approved a measure that would reinstate the tax break.
The trucking industry also has been unhappy with Blagojevich’s budget moves, arguing this spring that a 36 percent hike in licensing fees was driving truckers out of Illinois.
Interstate commercial truck registrations declined by 17,000 for 2005, a 10 percent drop the industry blames on the fee hike imposed to help balance Blagojevich’s first budget. The move was expected to bring in $92 million, but truckers warned it would give them a reason to move out of state.
Republicans expressed similar concerns during the debate over the measure allowing Illinois to opt out
of the proposed federal overtime overhaul. They warned it will push businesses out of the state. One GOP lawmaker lumped the bill in with a number of administration-backed policies, charging “the state has gone to hell in a handbasket because of these decisions.”
Critics argue the governor has been more than willing to burden business, whether for his own benefit or in the name of labor. But he hasn’t been willing, they argue, to shoulder the same responsibilities on the state’s dime, taking a hard-line stance on salaries and benefits for government employees.
“We have to make sure that what’s a fair deal for state employees must be weighed against the interests of the people they serve,” Blagojevich said during his February budget address.
“I’m pro-labor. I always have been. My father was a steelworker. My mother worked as a ticket agent for the Chicago Transit Authority. Both were members of labor unions.
“But that doesn’t mean we don’t evaluate the situation facing our state fairly and honestly,” the governor
continued. “This isn’t a negotiation between a private corporation and its union. The money on the table doesn’t belong to us and it doesn’t belong to the unions.
“It belongs to the people.” The American Federation of State, County and Municipal Employees represents a majority of state workers. Bayer, the union’s top official, says the governor dug in early on. In February, during state employee contract negotiations, Blagojevich issued a budget proposal that included no money to provide salary increases for thousands of state workers whose labor contract expires this month. The plan also showed the state saving $60 million by forcing union employees to begin picking up a greater share of their pension costs, according to a staff analysis by House Democrats.
Last year, nonunion employees who worked in agencies under the governor began making the so-called pension pickup, which cost workers roughly
4 percent of their salaries. AFSCME has been strongly opposed to the move because the state agreed in 1991 to shoulder that pension cost in lieu of a pay increase.
That isn’t the only change Blagojevich wants to make in pension policies for public employees and retirees. In light of an unstable budget, he wants to reduce the state’s pension payments by $215 million in each of the next four years, arguing the money was freed up last year when the state sold $10 billion in pension bonds at a cheaper interest rate than expected.
Blagojevich also wants to avoid paying $312 million that state actuaries say is needed to cover a spike in pension costs that occurred after 11,000 state workers took early retirement in 2002. The actuaries say the early retirement program offered to state employees during Gov. George Ryan’s administration will cost $382 million in each of the next nine years. Blagojevich’s budget for the fiscal year beginning in July originally set aside $70 million, which would have covered original cost estimates.
While AFSCME pushed to hold the line on pension benefits and bargained annual cost of living increases, the administration began looking to cut costs in health care coverage.
The Department of Central Management Services put its employee health care contracts up for bid. After the bids were submitted, Health Alliance, a company that has served central Illinois for 23 years, didn’t make the cut. Counting state workers, university employees, retirees and their families, the company currently provides health care for 90,000 downstate enrollees. After a week of protests, the administration backed down, allowing Health Alliance to resubmit its bid and, in the meantime, temporarily extended the company’s contract.
State employees also are concerned about further workforce reductions. Blagojevich exacerbated the tension in late May by suggesting the state could plug a $300 million budget hole by cutting 5,000 jobs. That threat aside, state government already is operating at a level not seen in three decades. Fewer than 60,000 employees are estimated to work in agencies under the governor’s control, a drop of 10,000 since early retirement was offered two years ago.
Blagojevich wants to cut 376 positions in the Department of Corrections, an agency where AFSCME is well represented. And he wants to save $44 million by closing a correctional center for youths in suburban St. Charles and a prison in downstate Vandalia, moves Bayer considers another affront to union workers. The Vandalia Correctional Center employs 457 people, while Illinois Youth Center in St. Charles provides 317 jobs. Union rules allow workers to move to other facilities in a system based on seniority, so the closings wouldn’t eliminate every job.
But Bayer says closing the Vandalia prison would run afoul of a 2002 pledge candidate Blagojevich made to AFSCME workers. “In fact,” he says, “that’s one, among many places, where he had made a commitment, and it’s on the record that he went there and said, ‘I’m not going to balance the budget on the backs of correctional employees.’”
In searching for a way to balance
the budget, Blagojevich has settled on a number of controversial solutions beyond the hard-line stance on the AFSCME contract. But Bayer and other union leaders say they tried to warn Blagojevich the state doesn’t have sufficient revenues.
“We did our best to get him to not say, ‘I will not raise taxes during my term in office,’” says Margaret
Blackshere, president of the Illinois AFL-CIO. “I still keep telling him: ‘Stop saying that.’”
AFSCME blames the budget for a number of Blagojevich’s unfilled promises. The governor reopened Sheridan Correctional Center but has not made good on promises to open a pair of prison work camps. Nor has he opened Zeller Mental Health Center in Peoria or the Lincoln Developmental Center, both of which would employ unionized workers. Lincoln Developmental Center was allotted funds for refurbishing, amid discussions to reopen the facility.
“You always have to work within the constraints of the budget. Every governor has done that, and, if past governors had done a better job of that, we probably wouldn’t be in the financial mess that we’re in,” says Sen. Carol Ronen, the Chicago Democrat who chairs the Senate labor panel. “I think what he’s shown, given the fiscal constraints, that he’s tried very hard to balance the budget, but not do it on the backs of working families.”
After a legislative committee hearing in which two union proposals advanced to the full Senate, Tom Balanoff, president of Service Employees
International Union Local 1 in Chicago, was asked to assess the Blagojevich Administration.
“The disappointment for us is that the budget is in such shape that there’s not money there to do the things that need to be done. That’s a real disappointment,” says Balanoff, a force behind the measure offering janitors and security guards — at
least in the private sector — some job protection when buildings undergo management changes.
After a short pause, Balanoff offers a summary statement. “It’s been good for labor,” he says. “It’s been good for working people.” But, then, that depends on who they work for.
Illinois Issues, June 2004
