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Affluent Christian Investor | September 21, 2017

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One Of America’s Worst Blunders: Allowing Public Workers To Unionize

American Union Bank

This country has made a lot of terrible financial blunders. Easily among the top ten would be the decision to allow public employees to form unions and engage in collective bargaining. Only a little more than 50 years old, that mistake has done prodigious harm to us both economically and politically – and the worst is yet to come.

In the summer of 2015, the former mayor of San Jose, California, Chuck Reed, launched a ballot initiative. Several California cities have already gone bankrupt and more are teetering on the brink, causing Reed to take a step that’s meant to stop the fiscal bleeding that results from the state’s excessively generous pension system.

Key provisions in the measure would require local governments to obtain voter approval if they want to continue giving new employees defined-benefit pensions after 2019 and to require voter approval for increases in existing pensions. Further, the initiative is designed to prevent the state’s gigantic public employee pension system, CalPERS, from undermining its impact, something it has been known to do.

It’s important to note that Mr. Reed is a Democrat. As mayor, he struggled with the budgetary troubles caused by the tremendous and growing cost of public pensions.

And it’s also important that CalPERS is working behind the scenes to block Reed’s initiative. A union-friendly member of the State Assembly requested a legal opinion about the effects the initiative would have if it passed from CalPERS, which duly produced an alarmist “analysis.” The Wall Street Journal opined in August that this “appears to be a test-run for the political attacks unions are likely to wage should Mr. Reed’s initiative qualify for the ballot.”

California is drowning in red ink, but the public sector unions worked hard to attach themselves like lampreys to the treasury and will use every bit of their great political power to remain there.

All of that is pertinent to Daniel Di Salvo’s illuminating book Government Against Itself.

DiSalvo, an assistant professor of political science at the City University of New York, has written a scrupulously fair account of the effects of public unionism nationwide. He comes from a family with deep union roots and is represented by the CUNY faculty union – facts that add to his credibility. Having looked at a great deal of evidence, he concludes that public unionism results in “government that spends more but does less.”

DiSalvo reminds us that for a long time, there was bipartisan consensus against allowing government employees to form unions and bargain collectively. President Franklin D. Roosevelt dismissed the idea of government employees unionizing, as did long-time AFL-CIO president George Meany.

Some Democrats, however, presciently sensed political advantage in allowing, or even encouraging public employees to unionize. In 1959, Wisconsin became the first state to approve of such unions. In January 1962, President Kennedy signed Executive Order 10988, which gave federal workers the right to form unions, although not always to engage in collective bargaining.

Ever since, public sector unionism has been growing apace, while private sector unions have steadily shrunk. Damage business efficiency and both the stockholders and workers will suffer, but there is no natural check on the inefficiencies of government.

Quickly, a symbiotic relationship developed. Democratic (overwhelmingly) politicians would help the unions get what they wanted – higher wages and benefits, greater job protection, better working conditions – and in turn, the unions would give those politicians their full support. Once that relationship started, the unions learned how to exploit it to the utmost, not only squeezing government budgets tighter and tighter, but also taking over public policy making to a large extent.

Among the author’s most memorable examples is the way the California Correctional Peace Officers Association (CCPOA) has become the 800-pound gorilla of state politics. Not only are the “correctional peace officers” remarkably well compensated (including large pensions) for rather low-skill work, but the union’s lobbying has driven up the demand for prison guards by pushing through the “three-strikes” law that puts more people behind bars by taking away judicial discretion in sentencing.

That illustrates one of DiSalvo’s recurring themes, namely how public unionization ensures that policy decisions will increasingly be made to suit the interests of the union rather than those of the citizenry at large.

CCPOA also shows how unionization interferes with standards and discipline. After it was discovered that some of the “correctional peace officers” had organized “Gladiator Days” where they enjoyed the spectacle of fights among the inmates, the union’s stonewalling made it extraordinarily difficult to fire those responsible.

Teacher unions are another powerhouse created by public unionism. DiSalvo writes, “Many features of school organization are designed to protect teachers rather than to deliver the best possible education for students.” For example, collective bargaining contracts usually require that teachers be paid according to a rigid salary schedule based on seniority.

That rigidity prevents public school administrators from compensating teachers based on their performance and thus improving incentives. But from the standpoint of the union, improving incentives and performance is not desirable. Its interests are best served by maintaining the sense of solidarity, and competition among its members would erode that sense. Despite all the rhetoric union leaders lavish on their dedication to academic excellence, they readily sacrifice it to their own good.

And, as with the prison guards, teacher unions make it extremely hard to fire a teacher even where “good cause” cannot be doubted. DiSalvo points to statistics showing that doctors and lawyers are more than ten times as likely to lose their licenses to practice as a teacher covered by a union contract is to be fired for performance-related reasons.

Arguably, the most serious effect of public unionism is its impact on pension costs.

Politicians tend to think in short run terms, so a promise of immediate union campaign support in exchange for the politician’s commitment to back pension increases is hard to resist. The future budgetary trouble that will eventuate will probably befall later officeholders, but even if the politician who takes the deal is still in office, he can count on union help in deflecting the blame.

That explains why, in states where public unions are strong, workers can often retire early and make nearly as much as they did when they were working. Sometimes they can even make more, by taking advantage of easily gamed rules about claimed job-related disabilities.

The cost of pension “generosity” is now hitting hard, particularly in the states where the Democrat/union alliance dominates. DiSalvo points to the rift that has opened between those Democrats who don’t want pension costs to gobble up many dollars they would rather put towards their priority uses, and those who won’t risk antagonizing their union backers under any circumstances. The battle between Reed and union-loyal Democrats in the legislature is a sign of sign of more internecine warfare to come.

Looking at the sweep of history, we have gone from a bad situation in early America where the spoils system of patronage gave the people high cost, inefficient public services to the fairly good system of largely non-partisan civil service, and now back to a new sort of spoils system controlled by the public employee unions.

DiSalvo makes a strong case that it is time for the pendulum to swing back — and that seems to be starting. He points to several hopeful trends.

First, there is the push-back from liberal Democrats who see how badly city and state budgets are being distorted by the hegemony of the public unions.

Second, the unions have been defeated in some pitched battles against reform-minded Republicans (most notably Wisconsin governor Scott Walker) where they threw everything they had into protecting their cushy status quo.

Third, the legal landscape for public unions is becoming more hostile. DiSalvo discusses two recent cases (Knox v. SEIU and Harris v. Quinn) where the Supreme Court curtailed the power of public unions and suggested a willingness to go further. After the book was written, the Court granted certiorari in a case (Friedrichs v. California Teachers Association) that could prevent the unions from using dues money to fund political activism.

Undoing the economic and political damage caused by public sector unionism will be fought hard at every step. The nasty tactics employed by the unions in Wisconsin — occupying the capitol building, threatening legislators, having their allies in the legislature leave the state in an effort to prevent a vote – will probably be repeated over and over. DiSalvo is under no illusions about the difficulty of recovering ground that has been lost to the public unions.

Government Against Itself is an excellent analysis of the political economy of public employee unions. It will probably make Professor DiSalvo persona non grata among many of his faculty colleagues, but that is the price of speaking truth to power.

 

Originally posted on Forbes.com.

 

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