Unions vs. Taxpayers
Organized labor has become by far the most powerful political
force in government.
By Steve Malanga
The Wall Street Journal
Thursday, May 14, 2009
Across the private
sector, workers are swallowing hard as their employers freeze
salaries, cancel bonuses, and institute longer work days.
America's employees can see for themselves how steeply business
has fallen off, which is why many are accepting cost-saving
measures with equanimity -- especially compared to workers in
France, where riots and plant takeovers have become regular
But then there is the
public sector, where the mood seems very European these days. In New Jersey, which faces a $3.3 billion budget deficit,
angry state workers have demonstrated in
and taken Gov. Jon Corzine to court over his plan to require
unpaid furloughs for public employees. In
New York, public-sector unions have hit
the airwaves with caustic ads denouncing Gov. David Paterson's
promise to lay off state workers if they continue refusing to
forgo wage hikes as part of an effort to close a $17.7 billion
deficit. In Los Angeles County, where the schools face a budget
deficit of nearly $600 million, school employees have balked at
a salary freeze and vowed to oppose any layoffs that the board
of education says it will have to pursue if workers don't agree
Call it a tale of two economies. Private-sector workers --
unionized and nonunion alike -- can largely see that without
compromises they may be forced to join unemployment lines. Not
so in the public sector.
Government unions used their influence this winter in Washington to ensure that a healthy chunk of
the federal stimulus package was sent to states and cities to
preserve public jobs. Now they are fighting tenacious and
largely successful local battles to safeguard salaries and
benefits. Their gains, of course, can only come at the expense
of taxpayers, which is one reason why states and cities are
approving tens of billions of dollars in tax increases.
It's not as if we haven't seen this coming. When the movement
among public-sector workers to unionize began gathering momentum
in the 1950s, some critics, including private-sector labor
leaders such as George Meany, observed that government is a
monopoly not subject to the discipline of the marketplace.
Allowing these workers -- many already protected by
civil-service law -- to organize and bargain collectively might
ultimately give them the power to hold politicians and taxpayers
It wasn't long before such fears were realized. By the
mid-1960s, dozens of cities across
were wracked by teachers' strikes that closed school systems.
Groups like New York City's transit workers walked off the job in 1966,
bringing business in Gotham to
a near halt. The United Federation of Teachers led an illegal
strike which closed down
New York City
schools in 1968.
Widespread ire against strikes by public workers produced
legislation in many states outlawing them. That prompted
government workers to retreat from the picket lines into the
halls of government. In Washington, they organized political action
committees, set up sophisticated lobbying efforts, and used
their muscle to help elect sympathetic public officials.
Today, public-sector unions sit atop lists of organizations that
devote the most money to lobbying and campaign contributions.
a local think tank, the Commonwealth Foundation, counted the
resources of the state's teachers union a few years ago. It had
11 regional offices, 275 employees and $66 million in annual
dues. In Connecticut, representatives of the teachers
union camped outside the legislators' doors in 2005 to keep tabs
on school reformers who were calling on these officials to
expand school choice.
And in California,
unions spent more than $50 million in 2005 to defeat a series of
ballot proposals that would have capped growth in the state's
budget. Now the state's teachers union is putting its clout
behind a ballot initiative, to be voted on next week, that would
restore more than $9 billion in educational spending cut from
the state's budget.
The results of such efforts are evident in the rich rewards that
public-sector employees now enjoy. A study in 2005 by the
nonpartisan Employee Benefit Research Institute estimated that
the average public-sector worker earned 46% more in salary and
benefits than comparable private-sector workers. The gap has
only continued to grow. For example, state and local worker pay
and benefits rose 3.1% in the last year, compared to 1.9% in the
private sector, according to the Bureau of Labor Statistics
But the real power of the public sector is showing through in
this economic crisis. Some five million private-sector workers
have lost their jobs in the last year alone, and their
unemployment rate is above 9% according to the BLS. By contrast,
public-sector employment has grown in virtually every month of
the recession, and the jobless rate for government workers is a
mere 2.8%. For anyone who thinks such low unemployment numbers
are good news, remember that the bulging public sector must be
paid for with revenues that most governments don't currently
have. This is one reason for a spate of state and local tax
increases, such as $5 billion in tax increases
state passed in April, and $12 billion in tax increases California's legislature agreed to in
February that will only become law if voters pass a series of
ballot initiatives next week.
The next lesson we are likely to learn is that voter revolts
against new taxes are no longer effective because of the might
that these public- sector groups now wield. The tax-cut uprising
of the late 1970s began in California with Proposition 13 capping
property taxes. It then spread to more than a dozen states
before it became a national movement that helped elect Ronald
Reagan. The next tax revolt, during the recession of the early
1990s, helped sink officials like New Jersey Gov. James Florio
and produced ballot propositions in places like Colorado that capped spending or made tax
increases more difficult.
Now powerful and savvy, public unions have moved effectively to
quash antitax movements. In
New Jersey, public unions derailed a
taxpayer revolt in 2005 by using their legislative clout to
water down a bill that would have created a state constitutional
convention to enact property-tax reform. Meanwhile, under
pressure from unions, state legislatures in places like
have been tightening rules and requirements for passing voter
initiatives and referenda -- blunting a favorite tool of antitax
In states like Iowa
where public unionization rates are still low government workers
have had to accept concessions. But allies of the unions in Washington are working to rectify that
situation with union-friendly legislation like the card check
bill, which will make organizing much easier.
In the private sector such efforts will still be subject to the
demands of the marketplace. Employers who are too generous with
pay and benefits will be punished. In the public sector,
however, more union members means more voters. And more voters
means more dollars for political campaigns to elect sympathetic
politicians who will enact higher taxes to foot the bill for the
upward arc of government spending on workers. That will be the
pattern for the indefinite future unless taxpayers find a way to
roll back the enormous power public workers have acquired.
Mr. Malanga is a senior fellow at the Manhattan Institute.