College Athletes may Regret Unionization

Recently a Federal Judge ruled that college athletes have a right to unionize, that they may form a union and engage in collective bargaining to ensure good wages and salaries.  Those who promote the unionization of student athletes use the traditional language of exploitation.  They have portrayed collegiate scholarship programs in language identical to that used against big corporations: that the universities are exploiting the workers -- student athletes -- to make themselves wealthy.

There are two more issues that these potential union employees should consider.  First they must fully understand the unique and privileged position they have enjoyed as student athletes with regard to the U.S. Tax Code, and secondly, they must consider the consequences of giving up these privileges in exchange for the dubious and uncertain advantages of unionization.

The argument presented to the Federal Judge was that the students of Northwestern U. are de facto employees, and as such, they should have the right to unionize.  The judge agreed. 

Athletes who are recruited to play in sports such as football and basketball receive what are called “full rides.”  They do not have to pay the university’s standard tuition costs, or room and board.  Student athletes who achieve this high level of tuition support have already enjoy a status most students cannot comprehend.  Since their high school days, if not before, they have been pampered, idolized, and had many perks handed to them. 

In college they are recruited by top universities such as Northwestern U. and find themselves frequently placed on national TV sports programs.  Their performances on courts and football fields are watched by millions.  What their pampered status has not given them is a full understanding of the financial environment in which working Americans find themselves.  The have not experienced the financial burden of employment.

Northwestern U. student athletes initiated the lawsuit and their financial situation provides a good example of what these athletes have to face in the near future.  Should the student athletes at NU become employees, they will face the prospect of having to pay taxes on their incomes.  Currently they enjoy a unique and privileged tax status: while their free college tuition is technically income they do not pay income taxes on it.  They are not only receiving a free ride on tuition but a free ride on the taxes. 

Should they have to pay taxes here’s a thumbnail sketch of how their finances will change.  At NU the tuition is about $65,000 per year.  If the student athletes receive this as pay, then they will have to pay Federal income tax, state income tax, local income taxes, and payroll taxes; which include social security and Medicare.  These are taxes paid by other residents of Evanston, Illinois where Northwestern U. is located. 

These amounts are not trivial and will add up to approximately one third of the value of the scholarship, roughly $22,000 per year.  Then they will also no longer receive free health care.  Currently most universities with big football programs also have medical schools and it is economical for them to provide free health care to their student athletes.  In the near future NU athletes may have to pay for their own ObamaCare health premiums.  But given that President Obama is fond of college basketball their union may receive an exemption from participating in ObamaCare. 

And since they are members of a union they will have to pay union dues.  This will bring the cost of being an employee to roughly $26K to $28K a year.

That money, whatever the amount, will have to be paid out of the student athletes’ own pockets.  So they will either have to take out student loans or ask their families to pay for those education expenses.  Asking their university for a scholarship to help defray the cost may put them in an awkward, if not no longer legal, position. 

In four years that student loan debt could amount to approximately $100,000. This is four times what the average college student must pay in student loan debt.  These loans are often taken out of twenty years.  So while those few who enter the NBA, NHL, MLB, NFL and other professional sports organizations can easily pay this debt the vast majority of student athletes will have to endure twenty years of debt. 

So those student athletes who are being talked into forming a union and becoming employees will have to pay about $100,000 apiece for the privilege of living in the real world, as the rest of us must do already; those of us who were not born with the genetics to make us nationally-ranked athletes.   

And these unionization rules will also be applied to those who are not in the high dollar sports, sports such as track, soccer, volleyball, etc.  These sports, which do not earn tens of millions of dollars in TV rights, are subsidized by the big dollar, big TV sports of football and basketball.  Furthermore, if student athletes become employees those alumni who now donate millions of dollars per year to help the less advantaged receive a free education through scholarships may reconsider their commitment, once they know the students are no longer there just to receive a quality education.

Twenty years from now, as the Northwestern U. athletes come close to the day when their student loans will finally be paid off, some may ask themselves, “what were we thinking?” 

The union leaders who profited from their use of the big dollar exploitation rhetoric will have plush offices, take frequent free trips to universities around the nation where they stay at the best hotels and receive free meals, and attend annual conferences at four-star Hawaiian resorts where they will sit in hot tubs holding glasses of wine paid for by the student loan debt of the student athletes they scammed. 

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