http://www.nationalaffairs.com
FROM ISSUE NUMBER 5 ~ FALL 2010
When
Chris Christie became New Jersey's governor in January, he wasted no
time in identifying the chief perpetrators of his state's fiscal
catastrophe. Facing a nearly $11 billion budget gap — as well as voters
fed up with the sky-high taxes imposed on them to finance the state
government's profligacy — Christie moved swiftly to take on the unions
representing New Jersey's roughly 400,000 public employees.
On his first day in office, the governor signed an executive order
preventing state-workers' unions from making political contributions —
subjecting them to the same limits that had long applied to
corporations. More recently, he has waged a protracted battle against
state teachers' unions, which are seeking pay increases and free
lifetime health care for their members. Recognizing the burden that such
benefits would place on New Jersey's long-term finances, Christie has
sought instead to impose a one-year wage freeze, to change pension rules
to limit future benefits, and to require that teachers contribute a
tiny fraction of their salaries to cover the costs of their health
insurance — measures that, for private-sector workers, would be mostly
uncontroversial.
The firestorm that these proposals have sparked demonstrates the
political clout of state-workers' unions. Christie's executive order met
with vicious condemnation from union leaders and the politicians
aligned with them; his fight with the public-school teachers prompted
the New Jersey Education Association to spend $6 million (drawn from
members' dues) on anti-Christie attack ads over a two-month period.
Clearly, the lesson for reform-minded politicians has been: Confront
public-sector unions at your peril.
Yet confront them policymakers must. As Christie said about the duel
with the NJEA, "If we don't win this fight, there's no other fight
left." Melodramatic as this may sound, for many states, it is simply
reality. The cost of public-sector pay and benefits (which in many cases
far exceed what comparable workers earn in the private sector),
combined with hundreds of billions of dollars in unfunded pension
liabilities for retired government workers, are weighing down state and
city budgets. And staggering as these burdens seem now, they are
actually poised to grow exponentially in the years ahead. If
policymakers fail to rein in this growth, a fiscal crack-up will be the
inevitable result.
New Jersey has drawn national attention as a case study, but the same
scenario is playing out in state capitals from coast to coast. New
York, Michigan, California, Washington, and many other states also find
themselves heavily indebted, with public-sector unions at the root of
their problems. In exchange, taxpayers in these states are rewarded with
larger and more expensive, yet less effective, government, and with
elected officials who are afraid to cross the politically powerful
unions. As the
Wall Street Journal put it recently, public-sector
unions "may be the single biggest problem...for the U.S. economy and
small-d democratic governance." They may also be the biggest challenge
facing state and local officials — a challenge that, unless economic
conditions dramatically improve, will dominate the politics of the
decade to come.
THE STATE OF THE UNION
Since the middle of the 20
th century, organized labor in
America has undergone two transformations with major implications for
the nation's politics. The first is the dramatic decline in overall
union membership. In 1955, organized labor represented one-third of the
non-agricultural work force; today, it represents just 12.3%. The second
transformation, however, is even more significant: the change in the
composition of the unionized work force.
As private-sector unions have withered, public-sector unions have
grown dramatically. The Bureau of Labor Statistics reports that, in
2009, for the first time ever, more public-sector employees (7.9
million) than private-sector employees (7.4 million) belonged to unions.
Today, unionized workers are more likely to be teachers, librarians,
trash collectors, policemen, or firefighters than they are to be
carpenters, electricians, plumbers, auto workers, or coal miners.
This shift has produced a noticeable change in the demographic
profile of union members; gone is the image of a union man as a beefy
laborer in a hard hat and steel-toed boots. According to data from the
University of Michigan's American National Election Study, in 1952,
about 80% of union members were blue-collar workers, while 20% were
white-collar workers; by the mid-1990s, those classified as white-collar
workers gained majority status. Nor do men dominate unions any longer:
In the 1950s, more than 80% of union members were men, but today there
is near gender parity. Union members also have much more schooling than
they once did. In 1960, more than 35% of union members had not finished
high school and barely 2% had college degrees. Today, almost every union
member has completed high school, and more than 25% have college
degrees. The typical union member no longer lives in a major city center
close to the factory; by the 1990s, union members were more likely to
live in suburban than urban areas. Unions have also become multi-racial:
Nearly a quarter of union members are now non-white. Unions today
represent a vastly different slice of America than they did at the
height of the country's manufacturing prowess.
The rise of government-worker unionism has also combined with the
broader transformation of the American economy to produce a sharp
divergence between public- and private-sector employment. In today's
public sector, good pay, generous benefits, and job security make
possible a stable middle-class existence for nearly everyone from
janitors to jailors. In the private economy, meanwhile, cutthroat
competition, increased income inequality, and layoffs squeeze the middle
class. This discrepancy indicates how poorly the middle class has fared
in recent decades in the private economy, which is home to 80% of
American jobs. But it also highlights the increased benefits of
government work, and shines a spotlight on the gains public-sector
unions have secured for their members. Perhaps this success helps
explain why, on average, 39% of state- and local-government employees
belong to unions. (Differences in state and local laws of course mean
that the percentage varies from state to state; New York tops the chart
with roughly 70% of state employees in unions, while many Southern
right-to-work states hover in the single digits.)
The emergence of powerful public-sector unions was by no means
inevitable. Prior to the 1950s, as labor lawyer Ida Klaus remarked in
1965, "the subject of labor relations in public employment could not
have meant less to more people, both in and out of government." To the
extent that people thought about it, most politicians, labor leaders,
economists, and judges opposed collective bargaining in the public
sector. Even President Franklin Roosevelt, a friend of private-sector
unionism, drew a line when it came to government workers: "Meticulous
attention," the president insisted in 1937, "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."
The reason? F.D.R. believed that "[a] strike of public employees
manifests nothing less than an intent on their part to obstruct the
operations of government until their demands are satisfied. Such action
looking toward the paralysis of government by those who have sworn to
support it is unthinkable and intolerable." Roosevelt was hardly alone
in holding these views, even among the champions of organized labor.
Indeed, the first president of the AFL-CIO, George Meany, believed it
was "impossible to bargain collectively with the government."
Courts across the nation also generally held that collective
bargaining by government workers should be forbidden on the legal
grounds of sovereign immunity and unconstitutional delegation of
government powers. In 1943, a New York Supreme Court judge held:
To tolerate or recognize any combination of civil service employees
of the government as a labor organization or union is not only
incompatible with the spirit of democracy, but inconsistent with every
principle upon which our government is founded. Nothing is more
dangerous to public welfare than to admit that hired servants of the
State can dictate to the government the hours, the wages and conditions
under which they will carry on essential services vital to the welfare,
safety, and security of the citizen. To admit as true that government
employees have power to halt or check the functions of government unless
their demands are satisfied, is to transfer to them all legislative,
executive and judicial power. Nothing would be more ridiculous.
The very nature of many public services — such as policing the
streets and putting out fires — gives government a monopoly or near
monopoly; striking public employees could therefore hold the public
hostage. As long-time
New York Times labor reporter A. H. Raskin
wrote in 1968: "The community cannot tolerate the notion that it is
defenseless at the hands of organized workers to whom it has entrusted
responsibility for essential services."
Another common objection to collective bargaining with
public-employee unions was that it would mean taking some of the
decision-making authority over government functions away from the
people's elected representatives and transferring it to union officials,
with whom the public had vested no such authority. In this view,
democracy would be compromised when elected officials began sharing with
union leaders the power to determine government employees' wages,
benefits, and working conditions. Furthermore, collectively bargained
work rules could alter what public servants did day to day in ways not
condoned by either elected officials or the voting public.
Given the forces and arguments aligned against public-sector unions,
what led to their enormous growth? Three conditions prepared the ground
for the legal reforms that facilitated collective bargaining in the
public sector (and the subsequent swelling of the ranks of unionized
government employees).
The first was the weakening of party machines at the state and
(especially) local levels. In many of America's large cities, the
responsibility for filling government jobs fell to the party machines;
turnover in government employment was therefore high, connected as it
was to election results. In New York during the 1930s and '40s, for
instance, the average tenure of a cop or garbage collector was five
years. Another effect of the machines' influence over government hiring
was political: People in patronage jobs inevitably devoted a portion of
their nominal working hours to party affairs. Because government
employment under the machine system was both relatively brief and
partisan in nature, a culture of professionalism was never really able
to take hold.
Reformers' chief weapon in the war against the machines was the
enactment of civil-service laws. Such laws sought to deprive ward bosses
of control over patronage, which was their lifeblood. Civic groups, the
press, and public-employees' associations believed that greater
professionalization of the government work force would draw in talent,
increase efficiency, and reduce corruption. In the 1950s, according to
historian Leo Kramer, the leadership of the American Federation of
State, County, and Municipal Employees (AFSCME) "saw itself as part of a
great movement to reform government," one of whose principal aims was
"the extension of the merit system to all nonpolicy determining
positions in all government jurisdictions."
By the end of the 1950s, reformers had put the old machines on the
defensive. And professionalization had had its intended effect: In their
1963 book
City Politics,
Edward Banfield and James Q. Wilson found that, by 1961, 52% of cities
with populations over 500,000 had placed nearly all government employees
under civil-service protections.
One important consequence of civil-service reform was that, with the
end of election-based turnover — and with protections against undue
political interference in hiring and firing — public employees gained
nearly lifetime job security. This gave workers a long-term interest in
their jobs and increased their capacity to express themselves
collectively, thereby helping to make the unionization of public
employees possible.
The second precondition for public-sector unionization was economic
and demographic change. In the post-war period, the number of government
jobs grew rapidly: Between 1950 and 1976, state- and local-government
employment increased from 9.1% to 15.3% of the non-agricultural work
force (an increase from roughly 4 million workers to about 12 million). A
large part of this spike was the result of increased demand for
government services caused by the Baby Boom. Huge numbers of young
people meant a greater need for workers in schools in particular; the
number of Americans working as teachers, principals, and administrators
thus increased dramatically. It is hardly surprising, then, that some of
the first public employees to unionize (and some of the most militant)
were teachers. In the 1970s in New York state alone, there were, on
average, 20 teacher strikes a year.
Finally, the third precondition was the solidification of the
alliance between organized labor and the Democratic Party. Franklin
Roosevelt's signing of the Wagner Act (which protected the rights of
private-sector workers to organize and bargain collectively) in 1935
fully bonded labor to the Democrats; their partnership was reinforced
during the fight over the Taft-Hartley Act of 1947, which was a
Republican initiative to rein in union power. By mid-century, Democrats
began to rely on labor unions for both funding and on-the-ground
campaign organizing. In the 1950s and '60s, according to political
scientist J. David Greenstone, "labor functioned as the most important
nation-wide electoral organization for the Democratic Party." As a
political tag team, both Democrats and labor had an incentive to broaden
the base of the labor movement — and they came to see public-sector
workers as the most promising new hunting ground, especially as
private-sector union membership began to decline.
Democrats began to mobilize this new constituency in the late 1950s.
In 1958, New York City mayor Robert Wagner, Jr., issued Executive Order
49, known as "the little Wagner Act." It gave city employees bargaining
rights, and provided their unions with exclusive representation (meaning
that the unions alone were legally authorized to speak for city
workers, regardless of whether those workers belonged to the unions or
supported them). And in 1962, President John Kennedy issued Executive
Order 10988, reaffirming the right of federal workers to organize and
codifying their right to bargain collectively.
From the mid-1960s through the early '70s, states and cities followed
with a plethora of laws providing public-employee unions with
collective-bargaining rights. In many cases, the consequences were
almost immediate. In New York state, one year after the passage of the
so-called Taylor Law in 1967, 360,000 state- and local-government
employees became unionized; the
New York Times described the law
as having an "almost revolutionary effect." Other states and cities
experienced similar expansions in the number of public-sector union
members. For example, in 1968, California passed the Meyers-Milias-Brown
Act — a law granting local-government workers bargaining rights — and
then extended those rights to teachers a few years later; in the 1970s
and '80s, both membership in public-sector unions and the number of
strikes in California skyrocketed. Nationwide, by 1970, the AFSCME had
negotiated more than 1,000 collective-bargaining agreements, nearly
twice the number in place in 1964. And by 1972, nearly half of the
states had public-employee collective-bargaining laws in place at either
the state or local level.
Collective-bargaining laws gave government workers powerful
incentives to join unions. Between 1960 and 1980, the portion of
full-time unionized public employees jumped from 10% to 36% of the
public-sector work force. The AFSCME grew from 99,000 members in 1955 to
just under 1 million members in 1980. Over the same period, the
American Federation of Teachers grew from 40,000 to more than half a
million members. Today, its membership stands at more than 1.5 million —
which makes the AFT larger than the largest exclusively private-sector
union, the United Food and Commercial Workers (1.3 million members). But
even the AFT is dwarfed by the largest labor union in the United
States: the National Education Association, which claims 3.2 million
members.
Organized labor in America thus increasingly consists of government
employees, and government employees increasingly belong to unions. This
shift has clearly reshaped the country's labor movement. Far more
important to most Americans, though, is the way it has transformed the
relationships between public employees, the governments they work for,
and the public they serve — often with less than salutary results.
THE PUBLIC-SECTOR DIFFERENCE
When it comes to advancing their interests, public-sector unions have
significant advantages over traditional unions. For one thing, using
the political process, they can exert far greater influence over their
members' employers — that is, government — than private-sector unions
can. Through their extensive political activity, these
government-workers' unions help elect the very politicians who will act
as "management" in their contract negotiations — in effect handpicking
those who will sit across the bargaining table from them, in a way that
workers in a private corporation (like, say, American Airlines or the
Washington Post Company) cannot. Such power led Victor Gotbaum, the
leader of District Council 37 of the AFSCME in New York City, to brag in
1975: "We have the ability, in a sense, to elect our own boss."
Since public-sector unions began to develop in earnest, their
importance in political campaigns has grown by leaps and bounds.
Starting from almost nothing in the 1960s, government-workers' unions
now far exceed private-sector unions in political contributions.
According to the Center for Responsive Politics, from 1989 to 2004, the
AFSCME was the biggest spender in America, giving nearly $40 million to
candidates in federal elections (98.5% of it to Democrats). It is
important to stress that this was spending on
federal elections; the union represents mostly
state and local
workers. But given the magnitude of federal contributions to state
budgets, the AFSCME is heavily involved in electioneering to shape
Washington's spending in ways that protect public workers and the supply
of government services. And so over that 15-year period, the AFSCME was
willing and able to outspend any other organization in the country.
The political influence of public-sector unions is probably greatest,
however, in low-turnout elections to school boards and state and local
offices, and in votes to decide ballot initiatives and referenda. For
example, two of the top five biggest spenders in Wisconsin's 2003 and
2004 state elections were the Wisconsin Education Association Council
and the AFSCME-affiliated Wisconsin PEOPLE Conference. Only the state
Republican Party and two other political action committees — those
belonging to the National Association of Realtors and SBC / Ameritech —
spent more. The same is true in state after state, as unions work to
exert control over the very governments that employs their members.
This political dimension of public-sector unionism also changes the
substantive priorities and demands of the unions themselves. Although
private-sector unions in the United States have engaged in leftist
"social activism," they have mostly concentrated their efforts on
securing the best wages, benefits, pensions, and working conditions for
their members: "pure and simple unionism," as longtime American
Federation of Labor president Samuel Gompers used to call it. Rarely do
they demand more hiring, since — given the constant private-sector
imperative to keep operating costs minimal — increasing the number of a
company's employees can limit wage and benefit increases for the workers
already on the company's payroll.
By contrast, as economist Richard Freeman has written, "public sector unions can be viewed as
using their political power to raise demand for public services,
as well as using their bargaining power to fight for higher wages." The
millions spent by public-employee unions on ballot measures in states
like California and Oregon, for instance, almost always support the
options that would lead to higher taxes and more government spending.
The California Teachers Association, for example, spent $57 million in
2005 to defeat referenda that would have reduced union power and checked
government growth. And the political influence of such massive spending
is of course only amplified by the get-out-the-vote efforts of the
unions and their members. This power of government-workers' unions to
increase (and then sustain) levels of employment through the political
process helps explain why, for instance, the city of Buffalo, New York,
had the same number of public workers in 2006 as it did in 1950 —
despite having lost half of its population (and thus a significant
amount of the demand for public services).
For a case study in how public-sector unions manipulate both supply
and demand, consider the example of the California Correctional Peace
Officers Association. Throughout the 1980s and '90s, the CCPOA lobbied
the state government to increase California's prison facilities — since
more prisons would obviously mean more jobs for corrections officers.
And between 1980 and 2000, the Golden State constructed 22 new prisons
for adults (before 1980, California had only 12 such facilities). The
CCPOA also pushed for the 1994 "three strikes" sentencing law, which
imposed stiff penalties on repeat offenders. The prison population
exploded — and, as intended, the new prisoners required more guards. The
CCPOA has been no less successful in increasing members' compensation:
In 2006, the average union member made $70,000 a year, and more than
$100,000 with overtime. Corrections officers can also retire with 90% of
their salaries as early as age 50. Today, an amazing 11% of the state
budget — more than what is spent on higher education — goes to the penal
system.
[Correction appended] Governor
Arnold Schwarzenegger now proposes privatizing portions of the prison
system to escape the unions' grip — though his proposal has so far met
with predictable (union supported) political opposition.
A further important advantage that public-sector unions have over
their private-sector counterparts is their relative freedom from market
forces. In the private sector, the wage demands of union workers cannot
exceed a certain threshold: If they do, they can render their employers
uncompetitive, threatening workers' long-term job security. In the
public sector, though, government is the monopoly provider of many
services, eliminating any market pressures that might keep unions'
demands in check. Moreover, unlike in the private sector, contract
negotiations in the public sector are usually not highly adversarial;
most government-agency mangers have little personal stake in such
negotiations. Unlike executives accountable to shareholders and
corporate boards, government managers generally get paid the same — and
have the same likelihood of keeping their jobs — regardless of whether
their operations are run efficiently. They therefore rarely play
hardball with unions like business owners and managers do; there is
little history of "union busting" in government.
Additionally, the rise and fall of businesses in the private sector
means that unions must constantly engage in organizing efforts, reaching
out to employees of newly created companies. In government agencies, on
the other hand, once a union organizes workers, they usually remain
organized — because the government doesn't go out of business.
Public-employee unions can thus maintain membership levels with much
less effort than can private-sector unions.
Finally, public-sector unions enjoy a privileged position in relation
not only to their private-sector counterparts but also to other
interest groups. Public-sector unions have automatic access to
politicians through the collective-bargaining process, while other
interest groups must fight for such entrée. Government unions can also
more easily mobilize their members for electoral participation than
other interest groups can — since they are able to apply pressure at the
workplace and, in many cases, can even arrange for time off and other
benefits to make members' political activism easier. Furthermore, most
interest groups must devote a great deal of time and effort to
fundraising; public-sector unions, on the other hand, enjoy a steady,
reliable revenue stream, as union dues are deducted directly from
members' paychecks (often by government, which drastically reduces the
unions' administrative costs).
Taken together, the intrinsic advantages that public-sector unions
enjoy over private-sector advocacy groups (including private-sector
unions) have given organized government laborers enormous power over
government at the local, state, and federal levels; to shape public
finances and fiscal policy; and to influence the very spirit of our
democracy. The results, unfortunately, have not always been pretty.
A UNIONIZED GOVERNMENT
The effects of public-sector unionism can be grouped under three
broad headings. The first centers on compensation, which includes wages,
pensions, health care, and other benefits easily valued in monetary
terms — the core issues at stake in collective-bargaining negotiations.
The second involves the amount of government employment, or the size of
government, as reflected in the number of workers and in public budgets.
The third involves the productivity and efficiency of government
services. Insofar as unions negotiate detailed work rules, they share
the power to shape the day-to-day responsibilities of public servants —
which influences what government does, and how well it does it.
These are complex matters that are hard for social scientists to
measure, and on which scholars disagree. Nevertheless, the evidence
supports a few broad conclusions.
Most economists agree that public-sector unions' political power
leads to more government spending. And recently, Chris Edwards of the
Cato Institute documented
how government unionism has abetted
growth in public-sector compensation. Generally speaking, the public
sector pays more than the private sector for jobs at the low end of the
labor market, while the private sector pays more for jobs at the high
end. For janitors and secretaries, for instance, the public sector
offers an appreciably better deal than the private economy: According to
the Bureau of Labor Statistics, the average annual salary for the
roughly 330,000 office clerks who work in government was almost $27,000
in 2005, while the 2.7 million in the private sector received an average
pay of just under $23,000. Nationwide, among the 108,000 janitors who
work in government, the average salary was $23,700; the average salary
of the 2 million janitors working in the private sector, meanwhile, was
$19,800.
For workers with advanced degrees, however, the public-sector pay
scale is likely to be slightly below the private-sector benchmark.
Private-sector economists, for instance, earn an average of $99,000 a
year, compared to the $69,000 earned by their government colleagues. And
accountants in the corporate world earn average annual salaries of
$52,000, compared to $48,000 for their public-sector counterparts.
Not as easily captured is the comparable worth of those government
workers who lack counterparts in the private sector, such as policemen,
firefighters, and corrections officers. But that very monopoly status
has given the union representatives of these workers enormous leverage,
which they have converted into major gains. For example, in New York
state, county police officers were paid an average salary of $121,000 a
year in 2006. In that same year, according to the
Boston Globe,
225 of the 2,338 Massachusetts State Police officers made more than the
$140,535 annual salary earned by the state's governor. Four state
troopers received more than $200,000, and 123 others were paid more than
$150,000. While people whose jobs entail greater risk of life and limb
certainly deserve higher pay, union power has clearly added a
substantial premium.
When all jobs are considered, state and local public-sector workers
today earn, on average, $14 more per hour in total compensation (wages
and benefits) than their private-sector counterparts. The
New York Times has reported that public-sector wages and benefits over the past decade have grown
twice
as fast as those in the private sector. These aggregate pay
differentials stem partly from the fact that government work tends to be
more white-collar, and that public employees tend to be better educated
and more experienced, and to live in urban areas. Another factor is the
hollowing out of the middle of the income distribution in the private
sector. But union influence still plays a major role.
When unions have not been able to secure increases in wages and salaries, they have turned their attention to benefits.
USA Today
journalist Dennis Cauchon notes that, since 2002, for every $1-an-hour
pay increase, public employees have gotten $1.17 in new benefits;
private-sector workers, meanwhile, have received just 58 cents in added
benefits. Of special interest to the unions has been health care: Across
the nation, 86% of state- and local-government workers have access to
employer-provided health insurance, while only 45% of private-sector
workers do. In many cases, these plans involve meager contributions from
employees, or none at all — in New Jersey, for instance, 88% of
public-school teachers pay nothing toward their insurance premiums.
The unions' other cherished benefit is public-employee pensions. In
California, for example, state workers often retire at 55 years of age
with pensions that exceed what they were paid during most of their
working years. In New York City, firefighters and police officers may
retire after 20 years of service at half pay — which means that, at a
time when life expectancy is nearly 80 years, New York City is paying
benefits to 10,000 retired cops who are less than 50 years old. Those
benefits quickly add up: In 2006, the annual pension benefit for a new
retiree averaged just under $73,000 (and the full amount is exempt from
state and local taxes).
How, one might ask, were policymakers ever convinced to agree to such
generous terms? As it turns out, many lawmakers found that increasing
pensions was very good politics. They placated unions with future
pension commitments, and then turned around, borrowed the money
appropriated for the pensions, and spent it paying for public services
in the here and now. Politicians liked this scheme because they could
satisfy the unions, provide generous public services without raising
taxes to pay for them, and even sometimes get around balanced-budget
requirements.
Unfortunately, the hit pension funds took recently in the stock
market has exposed the massive underfunding that results from states'
and municipalities' not paying for the public services they consume. In
Illinois, for example, public-sector unions have helped create a
situation in which the state's pension funds report a liability of more
than $100 billion, at least 50% of it unfunded. Yet many analysts
believe the figure is much higher; without a steep economic recovery,
the Prairie State is looking at insolvency. Indeed, Northwestern
University finance professor Joshua Rauh puts the date of collapse at
2018; he also predicts that six other states — Connecticut, Indiana, New
Jersey, Hawaii, Louisiana, and Oklahoma — will see their pension funds
dry up before the end of fiscal year 2020. What's more, according to the
Pew Center on the States, 18 states face long-term pension liabilities
in excess of $10 billion. In the case of California, like that of
Illinois, the unfunded pension liability exceeds $50 billion. In fact,
Pew estimates that, when retiree health-care costs are added to pension
obligations, the unfunded liabilities of the states total an astounding
$1 trillion.
The skyrocketing costs of public employees' pensions now present a
huge challenge to state and local governments. If allowed to persist,
such massive obligations will inevitably force a fundamental re-ordering
of government priorities. After all, if government must spend more on
pensions, it cannot spend more on schools, roads, and relief for the
poor — in other words, the basic functions people expect their
governments to perform. But because many states' pension commitments are
constitutionally guaranteed, there is no easy way out of this financial
sink hole. Recent court decisions indicate that pension obligations
will have to be fulfilled even if governments declare bankruptcy —
because while federal law allows bankruptcy judges to change pension and
health-care packages in the private sector, it forbids such changes in
public employees' agreements.
Yet as skilled as the unions may be in drawing on taxpayer dollars,
many observers argue that their greater influence is felt in the quality
of the government services taxpayers receive in return. In his book
The Warping of Government Work,
Harvard public-policy scholar John Donahue explains how public-employee
unions have reduced government efficiency and responsiveness. With poor
prospects in the ultra-competitive private sector, government work is
increasingly desirable for those with limited skills; at the opposite
end of the spectrum, the wage compression imposed by unions and
civil-service rules makes government employment less attractive to those
whose abilities are in high demand. Consequently, there is a "brain
drain" at the top end of the government work force, as many of the
country's most talented people opt for jobs in the private sector where
they can be richly rewarded for their skills (and avoid the intricate
work rules, and glacial advancement through big bureaucracies, that are
part and parcel of government work).
Thus, as New York University professor Paul Light argues, government
employment "caters more to the security-craver than the risk-taker." And
because government employs more of the former and fewer of the latter,
it is less flexible, less responsive, and less innovative. It is also
more expensive: Northeastern University economist Barry Bluestone has
shown that, between 2000 and 2008, the price of state and local public
services has increased by 41% nationally, compared with 27% for private
services.
Finally, insofar as government collective-bargaining agreements touch
on a wide range of economic decisions, public-sector unions have
extraordinary influence over government policies. In the classic model
of democratic accountability, citizens vote in competitive elections for
candidates offering distinct policy agendas; once in office, the
winners implement their programs through public agencies. But when
public-employee unions bargain collectively with the government, elected
officials partially cede control of public agencies to unelected labor
leaders. Many policy choices are then settled in the course of
negotiations between office holders and unions, rather than originating
with the people's duly elected representatives. Over the long term,
these negotiated work rules can drive public policy in directions that
neither elected officials nor voters desire. And once enacted, these
policies can prove very hard to reverse, even through elections: A new
mayor or governor — no matter how hard-charging a reformer — will often
find his hands tied by the iron-clad agreements unions managed to
extract from his predecessors.
Stanford University political scientist Terry Moe has made exactly
this argument with respect to the education sector. "Teachers unions
have more influence on the public schools than any other group in
American society," Moe argues. "Their massive memberships and awesome
resources give them unrivaled power in the politics of education,
allowing them to affect which policies are imposed on the schools by
government — and to block reforms they don't like." One need only look
at the debates over charter-school caps or merit-pay proposals to see
Moe's point.
Public-sector unions thus distort the labor market, weaken public
finances, and diminish the responsiveness of government and the quality
of public services. Many of the concerns that initially led policymakers
to oppose collective bargaining by government employees have, over the
years, been vindicated.
As a result, it is difficult for defenders of public-sector unions
today to make a convincing case that such unions benefit the public at
large. Their argument has basically been reduced to three assertions.
One is that most public employees live modest lives, and so criticizing
efforts to improve their lot distracts attention from wealthy CEOs and
Wall Street bankers who are the real culprits behind today's economic
woes. Another is that the unions defend the dignity of public service,
thereby preserving a middle class that would otherwise be plunged —
through conservatives' efforts to privatize such work — into the vicious
race to the bottom that now plagues the private sector. Finally,
government-workers' unions help advance leftist politics by keeping the
labor movement hobbling along.
To be sure, there is some merit to each of these arguments, though
none is especially convincing. But even if these claims were completely
true and obvious, they would not offer sufficient reason to put up with
the other, manifestly negative consequences of public-sector unionism.
GOVERNING IN THE REAL WORLD
"At some point," New Jersey governor Chris Christie said in a
February speech to his state's mayors, "there has to be parity between
what is happening in the real world and what is happening in the
public-sector world."
Achieving such parity will not be easy, as some early attempts to
curtail the power of public-sector unions have shown. Some state and
local officials (like California governor Arnold Schwarzenegger) have
sought to appeal directly to the people through referenda, only to be
thwarted by the unions' electoral clout. Others have pursued stop-gap
measures like wage freezes and furloughs of public employees, which
inevitably draw some public backlash. There have even been calls for
some cities to follow the example of Vallejo, California, and declare
bankruptcy so that they can renegotiate employment contracts with the
unions.
A few places are attempting more serious long-term solutions. As the
Wall Street Journal
reported in June, public-employee unions in Vermont, Iowa, Minnesota,
and Wyoming have recently agreed to modest reductions in pension
benefits — though none of the cuts is large enough to bring the finances
of that state's pension funds fully into balance. In the Garden State,
Governor Christie succeeded in getting the state legislature to approve a
2% annual growth cap on property taxes in order to limit local spending
— thereby indirectly curtailing the power of teachers' unions to demand
more public dollars. Yet even well-designed tax caps can unleash
unpleasant consequences, including more crowded classrooms, layoffs of
state workers, and increases in pension debt. Few politicians will want
to suffer those consequences, and the unions will fiercely oppose all
policies that even hint at reform.
All of these efforts are, of course, attempts to deal only with the
symptoms of the looming state fiscal crisis — not with its underlying
causes. To address those causes, policymakers may even need to re-open
the question of whether government workers should enjoy the privilege of
collective bargaining.
After all, even without collective bargaining, government workers
would still benefit from far-reaching protections under existing
civil-service statutes — more protections than most private-sector
workers enjoy. And they would retain their full rights as citizens to
petition the government for changes in policy. Public-sector workers'
ability to unionize is hardly sacrosanct; it is by no means a
fundamental civil or constitutional right. It has been permitted by most
states and localities for only about half a century, and, so far, it is
not clear that this experiment has served the public interest.
It is true that ending government workers' ability to organize is
politically inconceivable today in the states where it exists. But if
states' and cities' fiscal ills grow painful enough, the unthinkable
could someday become political necessity. For all Americans — including
public-sector employees — it would of course be better if the situation
did not reach that point of catastrophe. We can all hope that a robust
economic revival will take the pressure off of states and cities and
give policymakers more room to maneuver. If such a rapid recovery is not
forthcoming, though, the most appealing solution will be for everyone
to re-enter the real world — if only public officials and public-sector
unions can be sensible enough to try.
*Correction Appended: The text
originally stated that California's penal system received more funds
than its public education system. It in fact receives more funds than
the state's higher education system. (Return to text)
Daniel DiSalvo is an assistant professor of political science at the City College of New York.
