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While becoming more and more powerful, public sector unions are losing favor with taxpayers, Daniel DiSalvo, author of “Government Against Itself: Public Union Power and Its Consequences,” said during a forum hosted by The Illinois Policy Institute Tuesday in Chicago.
The event’s format was that of a two-way conversational discussion that took place between DiSalvo and Paul Kersey, director of labor policy at the Illinois Policy Institute, about the role of public-sector unions in politics today. Daniel DiSalvo is Assistant Professor of Political Science in the Colin Powell School at The City College of New York-CUNY and a senior fellow at the Manhattan Institute’s Center for State and Local Leadership.
Although Americans have long supported public unions because they associate them with the merits of the working class, recently taxpayers have begun to see reality with polls showing that barely half of Americans approve of unions, while an overwhelming majority approve of Right-to-Work laws.
Emily Rose, Vice President of Development, introduced Paul Kersey and Daniel DiSalvo. Mr. Kersey directed a series of questions to DiSalvo for his response, all of which were relevant to DiSalvo’s book, “Government Against Itself: Public Union Power and its Consequences.”
The book is about a broken system whose financial consequences have reached the point of being unsustainable. The broken system referenced pertains to unions representing government workers in contrast to those found in the private sphere.
No longer the underdog, public-sector unions since 2009 have totaled more members than the membership in traditional private-sector unions. This imbalance came about when in 1962 President John F. Kennedy signed Executive Order 10988 permitting collective bargaining for federal employees. Around the same time state and city workers, teachers and firemen were starting to unionize.
Fifty years ago, on January 17, 1962, Federal employees first obtained the right to engage in collective bargaining through labor organizations when President John F. Kennedy issued Executive Order 10988, “Employee-Management Cooperation in the Federal Sector.” Executive Order 10988 issued as result of the findings of the Task Force on Employee-Management Relations in the Federal Service, which was created by a memorandum issued to all executive department and agency heads by President Kennedy on June 22, 1961. In this memorandum the President noted that, “The participation of employees in the formation and implementation of employee policy and procedures affecting them contributes to the effective conduct of public business,” and that this participation should be extended to representatives of employees and employee organizations.
Public-sector government employment now accounts to 17% of total U.S. employment. Those employed are mostly found in state and local governments, with teacher having the most members, about 41% of the total public membership. The cost of public sector union employees (teachers) eats up two-thirds of the government’s (school district’s) operational budget. Public sector workers actually fight for benefits whose provision will hurt the public.
What is the nature of pubic unions versus private unions?
- In public sector unions, pre-existing job protection exists through civil laws that provide protections from arbitrary firing, transfers, and disciplinary actions that private sector workers usually lack.
- Government can access new revenue through taxation, while private workers are fully exposed to the business cycle.
- Public sector unions can vote for the politicians who sit across from them at the bargaining table. This gives politicians (or their delegates) an incentive to give unions concessions instead of bargaining hard, like private-sector unions do.
- Public sector unions contribute billions to candidates on every level, almost always to candidates from one party. At one point or other, these are the very candidates who will be “negotiating” contracts with these public sector unions, a definite conflict of interest. In some states public unions have become so powerful, that there is no opposition. They can also exert greater influence on their members that private sector unions, through political lobbying.
- In the private sector the argument is over how to divvy up the profits: How much to owners, how much to management, how much to labor, and how much spent to improve products? If labor gets too greedy, that drives up the cost of whatever they’re making until customers start buying less. Profits then decrease, raises decrease or stop altogether, and jobs start going away. Labor either wises up of the company goes down. The public sector can’t go out of business no matter how much union members manage to squeeze out of it. Union members have no incentive to settle for less, and the costs get passed along to the taxpayer. In many cases management benefits from higher settlements.
- Workers in the private sector struggle with stagnant wages, disappearing benefits, and rising retirement ages, while unionized public employees retire in their fifties, many with over $100,000 a year in pension and healthcare benefits.
Consequences of union inequality and imbalance
After work health and pension liabilities are a major source of bankruptcy of the governments that negotiated them. Retirement pension benefits are increasingly crowding out discretionary spending.
As such, public sector unions threaten the integrity of our democratic process by increasing a disparity in the standard of living between public and private sector workers, by decreasing efficiency in state and local services, and by reducing the number of necessary services that government can provide. Public sector workers actually fight for benefits whose provision will hurt the public. Because public sector unions are rich, taken together they spend hundreds of millions of dollars annually lobbying governments on behalf of their members.
Liberal Democrats face a bigger political downside when public pension become unsustainable, as they represent the party of bigger government or what government can do for you. What happens when public sector unions produce a government that costs you ever more and does for you ever less? If the Democrats cannot fix government, voters eventually conclude that they might as well elect Republicans to deal with the mess, as happened in Wisconsin with the success of Governor Walker.
The burden of public sector pensions alone is frightening, especially in states like Illinois, California and New York. Illinois not only exempts public sector union pensions from adjustment to meet changed economic circumstances, but also increases such pensions by 3% every year.
As long as the employer (the government) owns the pension liabilities of its employees, the hazard of potential bankruptcy will hover over the taxpayers. Given the political coalition that supports the public union status quo, it will be hard to reform public sector unions.
FDR was correct when he said there should be NO unions of tax paid employees (government unions), for the employees would be bargaining with themselves as they are also the tax payers who would pay them:
“The process of collective bargaining, as usually understood, cannot be transplanted into the public service,” Roosevelt wrote in 1937 to the National Federation of Federal Employees. Yes, public workers may demand fair treatment, wrote Roosevelt. But, he wrote, “I want to emphasize my conviction that militant tactics have no place” in the public sector. “A strike of public employees manifests nothing less than an intent on their part to prevent or obstruct the operations of Government.”
When Daniel DiSalvo was asked what Governor Bruce Radner should first tackle, DiSalvo indicated that the Governor should think about pension reform before anything else. But at the same time, DiSalvo admitted that Illinois and Chicago are still a long way off from adopting any reform measures.