This post originally appeared at https://www.badgerinstitute.org/act-10-labor-reforms-had-far-reaching-benefits-for-wisconsin-taxpayers-students/

A Dane County judge on Monday struck down dozens of sections of the 2011 labor reforms dubbed Act 10, 13 years after the law was passed by a Republican legislative majority and signed by then-Gov. Scott Walker.

The reforms limited most unions in Wisconsin’s state and local government sectors to bargaining over wages, taking work rules, the design of benefits plans and other topics off the table. The law also required public-sector unions to regularly seek recertification from workers they purported to bargain for, required them to collect dues rather than having the money taken from employees’ paychecks by government employers, and required public sector employees to contribute toward their health benefits as most private-sector workers do.

The law had several far-reaching consequences, as the Badger Institute has reported.

On employee benefits, the law led to the eventual demise of an insurer owned by the Wisconsin Education Association Council, the WEA Trust. Before Act 10, about two-thirds of Wisconsin school districts were buying group health coverage from WEA Trust. In the first year after, the insurer lost about a third of its business, and by 2022, the insurer left the health coverage market. Districts reported massive savings — Kenosha Unified in 2019 saved at least $13 million by switching to a more competitive insurer.

The law also permitted school districts to switch away from paying teachers strictly on their seniority and post-graduate degrees. Some districts took the opportunity to institute flexible pay, offering more money to better teachers. By 2023, a Yale labor economist found that the pay reforms enabled districts to attract and retain better teachers.

“Act 10 led some teachers to leave the public school system altogether,” wrote economist Barbara Biasi. “Teachers who left flexible-pay districts were far less effective than those who left seniority-pay districts,” meaning Act 10 let districts drop weak teachers and keep strong ones. What’s more, she found that in flexible-pay districts, “the effectiveness of teachers who did not move or leave also increased immediately after the reform … suggesting that teachers in flexible-pay districts increased their effort.”

Or, as Walker told the Badger Institute on the reform’s 10-year anniversary, Act 10 made teaching a meritocracy again: “They can put the best and the brightest in the classrooms and keep them there.”

By the best estimate, the Act 10 reforms saved Wisconsin taxpayers between $18 billion and $31 billion since 2012, according to the MacIver Institute, by requiring public sector employees to contribute half the cost of their pension contributions and by making some contribution for health insurance premiums, as private sector workers usually do. Previously, they contributed nothing. As it is now, their share is about half the average private-sector worker’s contribution toward health coverage.

The savings are visible in the just-released brief from the Wisconsin Policy Forum reporting that state and local taxes in Wisconsin consume 9.9% of personal income, a new milestone for frugality. The figure follows a long drop in the tax burden from the 11.2% taken in 2011. That figure, in turn, was almost unchanged from 2002.

More broadly, Act 10 opened new possibilities for reforming local government. “Act 10 was really the epitome of that reform thinking, getting government back in the hands of the people,” Washington County Executive Josh Schoemann told the Wisconsin Institute for Law & Liberty.  “All of a sudden, there was this cultural shift and logical shift in how government was going to work moving forward.”

Any use or reproduction of Badger Institute articles or photographs requires prior written permission. To request permission to post articles on a website or print copies for distribution, contact Badger Institute President Mike Nichols at mike@badgerinstitute.org or 262-389-8239.

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