By shivas irons redux  | February 21, 2011 | 12:05
Would someone please note that Unions make the lion's share of their $ from negotiating "benefits", not salaries... or collection of dues.
This is why the decoupling of the Salaries and Benefits so important to Unions in Wisconsin. And why the Union's have countered the way they have. They'll give up Salary and Jobs for Teachers in a second, but they will fight to death for Benefit negotiation position.
In another life as an executive in CA, I used to do administration for a few Teamster "Health and Welfare" benefit packages. Do your research, but you'll find I'm correct about motivation of Unions. I also believe that the amount of money kept by Unions will be very interesting to both your readers, and the tax payers of the US of A.
The way it works is rather basic. The Unions negotiate with the "Employer" regarding how much money per member/per month they will need to support the benefit options required in Union contract. In the case of WI, the Unions negotiate with each of the 77 counties Then they negotiate the terms of benefits with "providers"/Ins Co's, etc. The Unions make the lion's share of their money off of what is called the "breakage" created by Employees choosing between plan options, and charging for the administration of the programs.
Let me explain with an example: A Union begins by negotiating with the Employer/State. They'll claim their buying leverage will afford Employer significant savings. They'll end up with a 3-tiered cost structure which allows the Union a profit even with the highest benefit option available as Union already has a very good idea about what Providers will be charging. But it gets even more lucrative for Unions at this point.
Let's say high-end Blue Cross PPO coverage costs $400 for the Family tier. What a Union will do is require $425 from Employer, plus a loaded in admin fee, as a charge for all Families in the employer group. So far, so fair? But, the Union will also offer a few other plans for Employees to choose from. The Union will also have developed relationships with a few cheaper HMO plans, and lesser PPO benefit structure plans that charge, as an example, $325 and $375, respectively.
At an Open House Employees will choose what fits their needs and the Union is in line for the "breakage". The left over breakage is then, to my experience, placed in a fund where only the Union has the checkbook. Cars, Vacations and Condo's, oh my. The Union also makes a "commission" off of things like Pre Legal, Dental and Term Life.
As another profit source, the Union also leans on the Administrator for favors I'd rather not list, but usually involving idiocy like buying thousands of dollars of "raffle tickets" and leasing cars for the Union's Business Agents, not entirely above board.
Of course I am relating my experience, and what little I know of others who also did Union administration. I'd expect any simple research by an actual reporter would open up a Pandora's box of Slush in the Badger State.