Minnesota Governor Confronts Unions
Tim Pawlenty is the latest governor to take on unions, public sector unions in particular, as evidenced by his Wall Street Journal commentary of December 13th entitled “Government Unions vs. Taxpayers.”
While it is important to note that Republicans are only somewhat immune to the agenda of public sector unions, the fact that Republicans took over both houses in Minnesota on November 2nd can only be encouraging to Governor Pawlenty. According to Ballotpedia, Minnesota’s State Assembly has transitioned from a 87-47 Democratic majority to a 72-62 Republican majority. Similarly, Minnesota’s State Senate has transitioned from a 46-21 Democratic majority to a 37-30 Republican majority.
Pawlenty’s Dec. 13th WSJ commentary made many of the usual points – public sector unions are NOT the same as private sector unions, and public sector unions are now where the majority of union members come from. He also points out that federal employees receive, on average, $123K in annual pay and benefits, “twice the average of the private sector.” But Pawlenty has a lot of insights that merit particular attention. For example, he writes:
“How did this happen? Very quietly. The rise of government unions has been like a silent coup, an inside job engineered by self-interested politicians and fueled by campaign contributions. Public employee unions contribute mightily to the campaigns of liberal politicians ($91 million in the midterm elections alone) who vote to increase government pay and workers. As more government employees join the unions and pay dues, the union bosses pour ever more money and energy into liberal campaigns. The result is that certain states are now approaching default.”
How true this is. Very quietly. Public sector unions point to “contracts” they have “negotiated” that guarantee their compensation packages. The only thing these compensation packages guarantee is that their pension funds will distort our investment markets with desperately aggressive hedge fund portfolios, and our public institutions will be decimated as we struggle like slaves to keep our public sector bureaucrats living the lives to which they have become accustomed.
While public sector unions, whose only agenda is bigger government and bloated compensation for government workers – no matter what the cost – took control of our state and local governments, nobody was paying attention. After all, why shouldn’t the gallant public servants, represented by their “associations,” get cost of living increases? Why shouldn’t they get pensions and other benefits, so “firefighters and teachers can afford to live in the communities they serve.” Never mind the fact that during the investment bubble that Wall Street and the public sector pension funds blew up, NOBODY could afford homes. Never mind that these pensions are literally 3-4 times (or more) better than social security. Never mind that corporations had other priorities, and all citizens ever saw to guide their voting behavior were propaganda campaigns overwhelmingly financed by public sector union dues; never mind that there was never a check on the rise of public sector union power. As Pawlenty puts it:
“Over the last eight years in Minnesota, we have taken decisive action to prevent our problems from becoming a state crisis. Public employee unions fought us virtually every step of the way. Mass transit employees, for example, went on strike for 44 days in 2005—because we refused to grant them lifetime health-care benefits after working just 15 years. It was a tough fight, but in the end Minnesota taxpayers won. We reworked benefits for new hires. We required existing employees to contribute more to their pensions. We reformed our public employee health plan and froze wages. We proved that even in deep-blue Minnesota, taxpayers can take on big government and big labor, and win.”
This last point is crucial – Pawlenty was able to roll back some of the unsustainable compensation and benefits paid to public employees in Minnesota during a period when both of houses in their state legislature were controlled by Democrats. Public sector union reform is truly a nonpartisan issue, because Pawlenty proved that when the financial facts are presented to financially literate lawmakers, they do the right thing despite their political affiliation. It does make one wonder what happened in California: Were there no financial facts presented, or were the lawmakers financially illiterate?
Pawlenty concludes his commentary with some very useful policy advice:
“First, we need to bring public employee compensation back in line with the private sector and reduce the overall size of the federal civilian work force. Mr. Obama’s proposal to freeze federal pay is a step in the right direction, but it falls well short of shrinking government and eliminating the pay premium enjoyed by federal employees.
Second, get the numbers right. Government should start using the same established accounting standards that private businesses are required to use, so we can accurately assess unfunded liabilities.
Third, we need to end defined-benefit retirement plans for government employees. Defined-benefit systems have created a financial albatross for taxpayers. The private sector dropped them years ago in favor of the clarity and predictability of defined-contribution models such as 401(k) plans. This change alone can save taxpayers trillions of dollars.”
There is a fourth reform that is essential to reforming the public sector. The massive political spending of public sector unions must be heavily regulated. Public sector unions should not be able to compel any government employee to join their unions, or to pay them any fees whatsoever if they choose to not join. And public sector unions should not be able to use any amount of their member’s dues for political activity of any kind (broadly defined) unless the member agrees to this. Opportunities for public sector union members to opt-out of union membership or political contributing via their dues should be easily available and exercisable at any time, and their membership should be formally renewed by secret written request once per year. Finally, government payroll departments should never participate in collecting public sector union dues, if any portion of those dues are used for political activity.
Such reforms would not diminish the rights of public sector unions in any way. But they would go a long way towards making them engage in political activity while subject to the same constraints that govern the behavior of all other political participants.