Free Markets, Free People

The problem with public sector unions

Anyone who has followed the financial woes of the states are able to trace much of it back to the explosion of public sector unions and the generous compensation and pension plans they enjoy. Each have become budget busters, with California alone looking at 500 billion in unfunded future payouts.

Mort Zuckerman explores that phenomenon and points to a particularly insidious relationship that exists between those unions such as the SEIU and politicians such as Barack Obama and many Democrats:

The business community and a growing portion of the public now understand the dynamics that discriminate against the private sector. The public sector unions organize voting campaigns for politicians who, on election, repay their benefactors by approving salaries and benefits for the public sector, irrespective of whether they are sustainable. And what is happening with California is happening in slower motion in the rest of the country. It must be one of the reasons the Pew Research Center this year reported that support for labor unions generally has plummeted “amid growing public skepticism about unions’ power and purpose.”

There has been a transformation in the nature of our employment. Labor is no longer dominated by private sector industrial workers who were in large part culturally conservative and economically pro-growth. Over recent decades public sector employment has exploded and public workers have come to dominate the labor movement. These public sector employees have a unique and powerful advantage in contract negotiations. Quite simply it is their capacity to deliver political endorsements and votes for the very people who are theoretically on the other side of the negotiating table. Candidates who want to appear tough on crime will look to cops, sheriffs’ deputies, prison guards, and highway patrol officers for their endorsement.

These unions and the politicians they support are selling out the states and the country for increased personal compensation and pension benefits in return for political office. Whereas public sector jobs were once among the lowest paid, they’ve become some of the highest paid with unsustainable pension plans a key feature. And when budget woes hit a state and any politician has the temerity to suggest cutting those plans or benefits, he or she is roundly shouted down and organized against at the next election.

Play ball with the unions, however, and they’ll organize for you, provide the key endorsements you need and participate in GOTV efforts on election day. This presents a problem which must be addressed and changed:

What we suffer is a ruinously expensive collaboration between elected officials and unionized state and local workers, purchased with taxpayer money. “Scratch my back and I’ll scratch yours.” No wonder the Service Employees International Union has become the nation’s fastest-growing union: It represents government and healthcare workers. Half of its 700,000 California members are government employees. More and more, it wins not on the picket line but at the negotiating table, where it backs up traditional strong-arming with political power. It spends vast amounts of money on initiatives that keep the government growing—and the gravy flowing. Similarly, for the teachers unions—with the result that California and its various municipalities, especially Los Angeles, face budget shortfalls in the hundred of millions of dollars. California can no longer rely on a strong economy to support this munificence. Its unemployment rate runs about several points higher than the national rate and its high-tech companies are choosing to expand elsewhere. Why stay in a state with such higher taxes and a cumbersome regulatory environment?

First pensions must be scaled back in the neighborhood of competative private sector pension plans. This is one of the reasons Greece is in trouble today.  The states can’t afford what they’re presently obligated to pay. Secondly they should go from defined benefit pensions to defined contribution plans like a 401k.  If it is good enough for the private sector, it is good enough for the public sector.  Third -salaries should be competative but not, like in New York, greater than equal private sector jobs. Government jobs are paid by private sector taxpayers.  The job of government isn’t to create government jobs, but to serve those taxpayers.  And I can’t imagine a reason such workers should receive better pay and benefits than those they serve.  Lastly, public sector unions must be reined in politically. Their influence, because of what and who they represent, is outsized and pernicious. 

This problem is perfect GOP fodder.  It is something which needs to be highlighted and fought.  It addresses the outrageous cost of government, the future liability of such compensation and pension plans and the effect of union politics on the taxpayer and the politicians who play along.  And, especially at state levels, they can point to this as some of the results of its continuance:

The lopsided subsidies for pension and health costs are a large part of the fiscal crises at the state and local levels. The subsequent squeeze on education and infrastructure investment is undermining the very programs that have made it possible for our economy to grow—thousands upon thousands of teachers let go, schools closed, mass transit slashed.

Tally ho!



3 Responses to The problem with public sector unions

  • This strikes me as one of those problems that has to play out all the way through, even though it’s far more painful that way.  As was noted, any attempt at getting the situation under control is met with furious resistance, and politicians are going to give in most of the time.  But at the state/city level, budgets have to be balanced.  It’s harder for them to put off the pain the way the federal government can.  I wonder how long it will be before the press is putting a “right winger” face on the public backlash against union abuse.

  • Who will be the first politician to say “The public sector unions need to take a pay cut for the children…think of the children.” That guys wins.