COMPARING THE IMPACT: Public Sector Labor Reform in Wisconsin and Indiana

By Josh Barro, Manhattan Institute

Executive Summary

Indiana abolished collective bargaining for state employees six years ago. According to the most recent data, Indiana has succeeded in limiting cutbacks in public employment, while not raising state taxes. The Indiana experience also contrasts with that of another Wisconsin neighbor, Illinois, which, although it also limited public employment cutbacks, did so only after a significant state tax increase. By contrast, Wisconsin enacted a sharp reduction in aid to municipalities that was effective immediately and led to significant layoffs and other reductions in headcount.Indiana’s experience with reform of collective bargaining rules for government employees suggests that similar changes adopted by the administration of Wisconsin Governor Scott Walker, although uneven in their impact to date, hold the potential to control costs and limit public sector workforce layoffs over time.

Over the next few years, as municipalities are able to take advantage of the bargaining reforms, they will, like Indiana, be better able to afford to retain and hire employees.

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