Government Unions and the Bankrupting of America

Daniel DiSalvo

• Publisher: Encounter Books
• Year: 2011
• ISBN:
  9781594035913
• Topic: Politics & International Relations
• Subtopic: Labour & Industrial Relations
• Index: Politics & International Relations

Government-workers unions have been political juggernauts in the U.S. since the unseen collective-bargaining-rights revolution of the 1960s and ’70s. These unions are different and more powerful than those that battle owners and managers in the private sector. To advance their interests, unions in the public sector have created cartels with their political allies, mostly in the Democratic Party, to the exclusion of the taxpaying public.In this Broadside, Daniel DiSalvo shows us how this government takeover happened and tells us what can be done to protect the public interest. The fiscal consequences have already proven dire and threaten the long-term power and prestige of the United States on the world stage.

THE GREAT RECESSION has exposed to public scrutiny the generous pay and benefits that many government employees receive. At a time when many states (to say nothing of that superstate, the federal government) are staggering under unprecedented debt, the Shangri-la of public-sector, government unions has aroused widespread criticism as well as the envy of average workers in the private sector. In February 2011, the newly elected Republican governor of Wisconsin, Scott Walker, gave voice to those resentments, saying, “We can no longer live in a society where the public employees are the haves and the taxpayers who foot the bill are the have-nots.” Addressing the issue of fiscal continence as well as the issue of fairness, Walker sparked a national debate over the legitimacy and desirability of a unionized government workforce. His proposal called for the state’s public employees to pay a bit more of their pension and health care costs (still less than the national average for government workers and far less than the private-sector average); it rolled back collective-bargaining rights for most government workers; and it took the state out of the business of collecting union dues. Walker’s proposals elicited a heated response from public employees and their Democratic allies. Some 60,000 protesters descended on the state Capitol in Madison, and teachers effectively went on strike for a couple days by calling in sick in large numbers. Democratic state senators fled to Illinois to prevent a vote on the measure. Even President Obama accused Walker of launching an “assault on unions.” Nevertheless, after three weeks of fruitless negotiations with absentee Democrats, Walker and his Republican colleagues in the Legislature forged ahead and enacted significant changes to Wisconsin’s public labor laws.

The steps taken by Wisconsin’s Republican leaders have quickly been seconded in Ohio, where the state’s governor, John Kasich, and the state Legislature are, as of this writing, close to passing similar measures. The legislative battles playing out in the Midwest follow on the heels of actions taken by New Jersey’s hard-charging governor, Chris Christie, who improbably became a national celebrity through his battles with his state’s public-employee unions. Christie targeted for reform the burdens that public workers’ health and pension benefits place on the Garden State’s long-term finances. He dared to propose measures that just yesterday were considered “impossible” or “political suicide.” The teachers unions reacted with fury, spending millions on attack ads in 2010 to block Christie’s proposals. Yet in cooperation with a state Legislature controlled by Democrats, Christie has changed pension rules, instituted a 2 percent property-tax cap, and required teachers to make small contributions to their health insurance plans. He is now seeking to reform the teacher tenure system.

Other states — such as Nevada, Michigan, New York, California, and Pennsylvania — are also revisiting the status and role of unionized government workers in their politics. The reason for this wave of concern is that in the past half-century, unions representing public servants have become political powerhouses. In recent campaigns and elections, they have provided large sums of money to candidates, almost all of it to Democrats, at all levels of government. They make huge independent expenditures on campaign ads, again almost always for Democratic candidates. In addition, they provide the foot soldiers for voter registration and get-out-the-vote drives. “We’re the big dog,” says Larry Scanlon, the political director of the American Federation of State, County, and Municipal Employees (AFSCME), the largest union of government workers in the country. AFSCME’s website brags that candidates “all across the country, at every level of government” have learned to “pay attention to AFSCME’s political muscle.” And the union has used that formidable muscle to elect allies and secure generous pay and substantial benefits for their members at significant cost to taxpayers.

In the past half-century, unions representing public servants have become political powerhouses.

The main reason for the unions’ success is that the political process affords public-sector unions much more influence over their members’ employers — that is, the government — than private-sector unions could ever dream of. Government unions help elect politicians who then act as “management” in negotiations over pay, benefits, and work rules. “We elect our bosses, so we’ve got to elect politicians who support us,” AFSCME’s website flatly states. The result is a cycle that is hard to break. Unions extract dues from their members and funnel them into politicians’ campaign war chests, then those same politicians agree to generous contracts for public workers — which in turn leads to more union dues, more campaign spending, and so on. It is a cycle that has dominated the politics of some of America’s states with dire consequences.

The principal function of unions is to represent their members’ interests. Therefore, those in the public sector have interpreted the reform proposals of Christie, Walker, and Kasich as a serious threat. Defenders of public-employee unions, like former Secretary of Labor Robert Reich, have charged that humble public workers are being targeted as “scapegoats” for the Great Recession. They argue that most government employees live modest lives and aren’t paid better than workers in the private sector. Criticizing public servants, they say, only serves to divert attention from the corporate executives who perpetrated today’s economic crisis. The unions help sustain a professional public service and preserve a segment of the hard-pressed middle class that would otherwise be thrust into a cruel race to the bottom. The arguments of the unions and their defenders have some merit. But ultimately, they are unpersuasive.

Attention to government unions has revealed two pressing problems: First, the unions exercise considerable political clout in a partially acknowledged symbiosis with the Democratic Party, and second, the economic consequences of that alliance are fiscally unsustainable promises and inflexible government. These two interrelated problems were present before the financial crisis, but when it took the economic tide out, the strain on government finances and taxpayer wallets was readily apparent. In the wake of the Great Recession, it has become clear across the country that the road to genuine reform runs straight through these unions. How to deal with them and their Democratic allies presents state and local officials with a huge challenge that is likely to occupy them for years. But deal with them they must: Business as usual with public-sector unions has produced staggering government obligations. The stakes in these battles are high. They involve the long-term fiscal health of the nation, the balance of power between the nation’s two political parties, and the government’s efficiency and effectiveness. Ultimately, insofar as the fiscal health of the country is at stake, we are confronted with a threat to the power and prestige of the United States on the world stage.

THE TAKEOFF

The story of the American labor movement is a tale rich with the organizing struggles of miners, ladies’ garment workers, and autoworkers. Today, however, the conventional wisdom is that organized labor in America has been enfeebled. The inability of President Barack Obama and large Democratic majorities in the IIIth Congress to pass labor’s highest legislative priority, the Employee Free Choice Act (often called “check card”), is supposedly indicative of unions’ political impotence. In 1955, organized labor represented one-third of the nonagricultural workforce. Today, it represents only 12.3 percent — and only 6.9 percent of private-sector workers. While there is much to be said for the “union decline” thesis, most observers have greatly underestimated labor’s political power because they have overlooked public-employee unions. In spite of declining private-sector union membership, the unique attributes of government unions have helped maintain labor’s power in American politics. In 2009, a major barrier was breached. For the first time, more government employees (7.6 million) than private-sector employees (7.1 million) belonged to unions. And this was despite the fact that 83 percent of workers labor in the private economy, while 17 percent are in the public sector.

The stakes in these battles are high. They involve the long-term fiscal health of the nation, the balance of power between the nation’s two political parties, and the government’s efficiency and effectiveness.

Before 1960, few government workers were union members. Party machines or civil service rules determined who worked for the government and what they did. Many states even had laws on the books that forbade government workers from joining unions. Even in places where joining a union was legal, union rights were highly restricted. Over the course of the 1960s and early 1970s, however, there was a largely unnoticed “rights revolution.” Public-employee unions won the right to organize and bargain collectively — a legally enforced process that determines binding contractual agreements for the terms and conditions of employment — with various units of government. Today, all but 12 states have collective bargaining for at least some public servants (usually those in the protective services, such as police and firefighters), and in only five states is public-sector collective bargaining completely proscribed. The growth of public-employee unions surged. By 1980, 36 percent of public employees belonged to unions — a figure that has remained roughly stable ever since. Yet disparities in state and local laws mean that the percentage varies widely from state to state. New York is at the top of the heap with 69 percent of its state employees in unions, while many Southern states have membership rates below 10 percent.

That powerful government unions exist at all is a striking political development. The prevailing attitude among policymakers across the political spectrum was downright hostile well into the 1950. President Franklin D. Roosevelt, one of labor’s best friends, wrote in 1937 that “meticulous attention should be paid to the special relations and obligations of public servants to the public itself and to the Government. . . . The process of collective bargaining, as usually understood, cannot be transplanted into the public service.” Other champions of organized labor thought the same way. The first president of the AFL-CIO, George Meany, believed it was “impossible to bargain collectively with the government.” Meany and Roosevelt’s reasoning was that the elected representatives of the people would be forced to share their governing authority with unelected union officials whom voters could not hold accountable. The integrity of democratic self-government would thus be compromised.

For government unions to emerge, two things had to happen. The first was the destruction of the party machines at the state and local levels. Machine control of government work increased turnover in public employment by hitching it to election results. Patronage appointees rarely developed a culture of professionalism. Reformers sought to take patronage away from party bosses and ward healers and reduce the politicization of government work by enacting civil-service laws. By the end of the 1950s, reformers had largely succeeded. The most important consequence of civil-service reform was that public employees gained nearly lifetime job security, which enhanced their collective action incentives. These laws also lifted the floor of worker protections on which union-negotiated contracts built.

The second precondition was the solidification of the alliance between the Democratic Party and organized labor. Roosevelt’s signing of the Wagner Act in 1935 married labor to the Democrats. Private-sector union membership surged. By midcentury, Democrats began to rely heavily on labor unions for both campaign financing and grassroots organizing. Therefore, both Democrats and labor had a strong incentive to increase the size of the labor movement. Government workers were the new recruits, especially as private-sector union membership declined.

To give government workers the incentive to join unions, a series of measures granting them collective-bargaining rights were passed. In 1958, New York City Mayor Robert Wagner Jr. issued Executive Order 49, known as “the little Wagner Act.” In 1959, Wisconsin passed the first statewide collective-bargaining law for public employees. And in 1962, President John F. Kennedy issued Executive Order 10988, which reaffirmed the right of federal workers to organize and codified some workers’ rights to bargain collectively. Over the next decade, other states and cities passed a host of laws providing public-employee unions with collective-bargaining rights. Consequently, as private-sector unions withered in the 1970s, government-union membership took off.

The growth of government workers inside the labor movement’s ranks produced a noticeable change in the demographic profile of union members. In the 1950s, the typical union member was a high school-educated white male who lived in a major city. Today, white-collar workers are a majority of union members, and gender parity has almost been achieved. A quarter of union members have college degrees, most live in the suburbs, and unions have become multiracial. The sort of jobs union members do has also drastically changed. Union members today are more likely to be teachers, police officers, or firefighters than they are to be electricians, iron workers, or coal miners. In sum, unions today represent a very different segment of the workforce than they did when America was the world’s leading manufacturer.

In spite of declining private sector union membership, the unique attributes of government unions have helped maintain labor’s power in American politics.

The shift in the makeup of the labor movement has had an impact on public perceptions of it. In the 1950s, many families had at least one member who was in a union. Today, few Americans know anyone who belongs to a private-sector union. In 2009, just 48 percent of Americans approved of labor unions — the lowest percentage Gallup has recorded since 1937. Gallup reported that while two-thirds of the public believed unions were good for their members, 51 percent believed they were bad for the economy in general. And 62 percent said they felt that unions “mostly hurt” workers who were not members. These perceptions pose significant problems for the Democratic Party, which for much of the 20th century was the home of working-class voters and which today is deeply dependent on union campaign support. Consequently, while it is clearly not in the short-term interests of many Democratic incumbents, it might actually be in the party’s long-term interests to distance itself from the public unions. They could then more easily claim to represent the interests of most workers, not just government ones.

THE GOVERNMENT-UNION ADVANTAGE

Once up and running, government unions became some of the most powerful interest groups in America, and their importance in political campaigns has grown by leaps and bounds. Government-workers unions now far exceed private-sector unions in political contributions. The money unions spend on politicking originates from citizens who pay taxes, which in turn pay public employees’ salaries, a portion of which is deducted from their paychecks by the government in the form of union dues. The unions then use that revenue to fund, almost exclusively, the Democratic Party. Under the current arrangements, taxpayers thus partially subsidize a demand for bigger government and higher taxes. For example, from 1989 to 2004, according to the Center for Responsive Politics, the AFSCME was the biggest spender in America on direct donations to candidates (almost all of it to Democrats). Interestingly, this was spending on federal elections by a union federation that represents mostly state and local workers. What explains this behavior is the huge number of federal dollars that go into state budgets. The AFSCME’s aim is to shape federal spending in ways that are favorable to public workers.

For federal races in the 2010 elections, public-employee unions paid out more than $200 million in “independent expenditures,” almost all of it to defeat Republican candidates. The AFSCME alone spent more than $90 million, and it was the biggest donor to the Democrats’ efforts to win (or hold) gubernatorial and state Legislature seats. The union’s president, Gerald McEntee, proudly said, “We’re spending big. And we’re damn happy it’s big.” Indeed, the AFSCME was the biggest campaign spender in 2010. Other spenders in the top 10 were the teachers unions (American Federation of Teachers and the National Education Assoc...

Table of contents

• COVER
• The Takeoff
• Copyright