Public Sector Unions – The Other Deep State
When government fails, public-sector unions win. When society fragments, public-sector unions consolidate their power. When citizenship itself becomes less meaningful, and the benefits of American citizenship wither, government unions offer an exclusive solidarity.
Government unions insulate their members from the challenges facing ordinary private citizens. On every major issue of our time; globalization, immigration, climate change, the integrity of our elections, crime and punishment, regulations, government spending, and fiscal reform, the interests and political bias of public-sector unions is inherently in conflict with the public interest. Today, there may be no greater core threat to the freedom and prosperity of the American people.
In the age of talk radio, the Tea Party movement, internet connectivity, and Trump, Americans finally are mobilizing against the uniparty to take back their nation. Yet the threat of public-sector unions typically is a sideshow, when it ought to occupy center stage. They are the greatest menace to American civilization that nobody seems to be talking about. Ask the average American what the difference is between a government union, and a private sector union, and you’re likely to be met with an uncomprehending stare. That’s too bad, because the differences are profound.
While America’s labor movement has always included in its ranks varying percentages of crooks, Communists, and thugs, it derived its mass appeal based on legitimate and often compelling grievances. Most of the benefits American workers take for granted—certainly including overtime pay, sick leave, and safe working conditions—were negotiated by private sector unions.
Over time, private sector unions overreached, negotiating pay and benefits packages that became unsustainable as foreign manufacturers slowly recovered from the devastation of World War II and became competitive. The diminished influence of private sector unions parallels the decline in American manufacturing, a decline only partially caused by insufficient flexibility on the part of union negotiators in a changing world. Properly regulated, private sector unions may still play a vital role in American life.
Differences Between Public and Private Sector Unions
Public-sector unions are a completely different story. If Americans fully understood the differences between public and private sector unions, public-sector unions would probably be illegal.
Public-sector unions do not negotiate with management accountable to shareholders, but instead with politicians whom they help elect and, therefore, are accountable to the unions. Moreover, politicians, unlike corporate executives, typically occupy their offices for shorter periods of time. And politicians, unlike corporate executives, don’t own shares that might be devalued after they leave office due to decisions they made while in office.
Not only are politicians far more accountable to the unions they negotiate with than to the people they serve, but the consequences of giving in to outrageous demands from public-sector unions are much less immediate and personal for the politicians. When a corporate executive gives in to union demands that are unsustainable, the corporation goes out of business. Union negotiators know this, and in the private sector, the possibility of business failure tempers their demands. But the survival of government agencies doesn’t depend on efficiently competing in a market economy where consumers voluntarily choose to purchase their product or service. When government agencies incur expenses that exceed revenues, they raise revenues by increasing taxes. Consumers have no choice but to pay the higher taxes or go to jail.
If electing their own bosses and compelling taxpayers to guarantee revenue sufficient to fulfill their demands weren’t enough, public-sector unions have another advantage denied private sector unions. They operate the machinery of government. Their members run our public schools, our transportation agencies, our public utilities, our administrative bureaucracies including code enforcement and construction permitting, our public safety agencies; everything. This confers countless unique advantages. Depending on the intensity of the issue, the percentage of unionized government employees willing to use their positions as influencers, educators, gatekeepers, and enforcers may vary. But within the permanent bureaucracy of government, it doesn’t take a very large minority of committed operatives to wield decisive power.
Public-sector unions epitomize the establishment. Politicians come and go. But like the deep state, public-sector unions are permanent, embedded in the bureaucracy, running the show.
How Public-Sector Unions Arose
While the rise of public-sector unions paralleled the rise of the private sector labor movement in the United States, it lagged behind by decades. Apart from the postal workers’ unions that emerged in the late 19th century, or the Boston police strike of 1919—which was decisively suppressed by then-Massachusetts Governor Calvin Coolidge—there wasn’t much support for public-sector unions in the early 20th century.
During the 1930s, as private sector unions acquired federal protections via the Wagner Act of 1935, public-sector unions remained unusual apart from the postal workers. Historians disagree about President Franklin D. Roosevelt’s position on public-sector unions, but it is reasonably clear that even if he did support them, he did not think they should have the degree of protection afforded private sector unions. His most quoted remark on the topic was in a 1937 letter to the president of the National Federation of Federal Employees:
All Government employees should realize that the process of collective bargaining, as usually understood, cannot be transplanted into the public service. It has its distinct and insurmountable limitations when applied to public personnel management. The very nature and purposes of Government make it impossible for administrative officials to represent fully or to bind the employer in mutual discussions with Government employee organizations. The employer is the whole people, who speak by means of laws enacted by their representatives in Congress. Accordingly, administrative officials and employees alike are governed and guided, and in many instances restricted, by laws which establish policies, procedures, or rules in personnel matters. Particularly, I want to emphasize my conviction that militant tactics have no place in the functions of any organization of Government employees. Upon employees in the Federal service rests the obligation to serve the whole people, whose interests and welfare require orderliness and continuity in the conduct of Government activities. This obligation is paramount. Since their own services have to do with the functioning of the Government, a strike of public employees manifests nothing less than an intent on their part to prevent or 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.
The fact that FDR, a pro-labor Democrat, had a nuanced position on public-sector unions, believing that collective bargaining had “distinct and insurmountable limitations when applied to public personnel management,” ought to be strong evidence that they are problematic. Not quite 20 years later, in 1955, none other than George Meany, founder and long-time president of the AFL-CIO, flatly stated that it was “impossible to bargain collectively with the government,” and that the AFL-CIO did not intend to reach out to workers in that sector.
But where common sense and propriety inhibited some of the most illustrious supporters of organized labor from unionizing the public sector during the first half of the 20th century, circumstances changed during the century’s latter half. Corruption, opportunism, and a chance to achieve decisive power for the Democratic Party gave rise to new laws that enabled unionized government.
The modern era of public sector unionism began in the late 1950s. Starting in Wisconsin in 1958, state and local employees gradually were permitted to organize. Today, there are only four states that explicitly prohibit collective bargaining by public employees, and only 11 additional states place any restrictions on collective bargaining by public employees.
According to the U.S. Bureau of Labor Statistics, 7.2 million employees in the public sector belonged to a union in 2018, compared with 7.6 million workers in the private sector. Union membership among public-sector workers is more than five times higher (33.9 percent) than that of private-sector workers (6.4 percent). After a slow start, public-sector unions now wield far more power than their private-sector counterparts.
How Public-Sector Unions Fought for Clinton in 2016
Everyone knows that in 2016, Donald Trump—and Bernie Sanders, for that matter—were not “establishment” candidates. But what is that? America’s so-called establishment today is a political alliance favoring bigger, more authoritarian government at all levels—local, state, federal and international. It unites transnational corporations, global financial interests, and government unions. It is an alliance that finds its primary support from members of these elites and the professional classes who serve them, and acquires a critical mass of additional popular support by pandering to the carefully nurtured resentments of anyone who is deemed a member of a “protected status group.”
While “protected status groups” now include nearly everyone living everywhere in America, those people living in urban areas are more susceptible to the union-sponsored propaganda of identity politics, because they are more exposed to it.
For over a generation, especially in California’s urban centers, but also in Chicago, Seattle, Miami, New York City, and hundreds of other major American cities, government unions have exercised nearly absolute control over the political process. This extends not only to city councils but also to county boards of supervisors, school boards, and special districts ranging from transit systems to departments of water and power. Most government funding is spent at this local level. Most government jobs are at this local level. And the more local these jurisdictions get, the more likely it is that only the government unions have the money and the will to dominate the elections.
In America’s cities, where the union agenda that controls public education trains Americans to be hypersensitive to any alleged infringements on their “identity,” big government is presented as the guardian of their futures and their freedoms. In America’s cities, where poor education combined with over-regulation has resulted in a paucity of good jobs, welfare and entitlement programs are presented as the government’s answer. And the more poverty and social instability we have in America, the bigger government gets.
Take another look at this map that depicts the absolute vote margins by county in 2016. From viewing this map, it is evident that the split that was exposed on November 8, 2016, was not simply urban versus rural. It was government union-controlled areas versus places relatively free of government union influence.
From the above map, only a few places stand out as decisive factors in Clinton’s popular vote victory—Seattle, Miami, New York City, and most prominently, Los Angeles and Chicago.
In Los Angeles County, Clinton received 1,893,770 votes versus 620,285 for Trump. In Chicago’s Cook County, Clinton received 1,528,582 votes versus 440,213 for Trump. Let that sink in for a moment. If just a few blue counties—not blue states, blue counties—were taken out of the equation, the popular vote would have been a toss-up. The political systems and the public schools in all of these blue counties are controlled, many informed observers would say absolutely, by public-sector unions.
Government Union Agenda vs. the Public Interest
It would be cynical and unfair to suggest that politically savvy members and leaders of public-sector unions are consciously supporting policies that undermine America’s democracy, prosperity, freedoms, and culture. But that’s what’s happening.
It doesn’t matter all that much what union members and leaders think; the institutional momentum of their organizations have this effect. The primary agenda of a government union, like any organization, is to survive and thrive. For government unions, this means to acquire more members, collect more dues, and acquire more power and influence. The only way this can be accomplished is for government to expand.
This is where government union reform should be a nonpartisan issue. Because even big-government advocates have the expectation that expanded government programs will be effective. But government unions actually become more prosperous and more powerful when government fails—and, for that matter, when society fails. The worse things get, the more calls there are for new government programs to solve them. The bigger the crisis, the greater the opportunity. And at the forefront of these calls for bigger government to solve every problem are the government unions, using all of their considerable power and influence to make the call.
We see this at the local level all the time. Thousands of local tax and bond measures are placed on ballots across the nation every election cycle, as well as between elections, during primary season, and in special elections. Opposing these proposed new taxes and bonds are the usual hardscrabble assortment of local anti-tax activists; typically a handful of volunteers with almost no money. Supporting these new taxes and bonds are public-sector unions, with standing armies of professionals and, for all practical purposes, unlimited funds. Also supporting the new taxes are the private contractors that stand to gain from the increased spending, as well as the government bureaucrats themselves, who use municipal budgets to fund “information outreach” to voters. But for these unions, the victory is sealed when the new taxes and bonds are approved. If the new revenue they collect and spend fails to solve the problem, it doesn’t really matter.
At the state and national level, it is easy to see the influence of government unions corrupts public policy.
Immigration and climate change are core issues where the inherent interests of government unions are in conflict with the public interest. Immigration to the United States in the 21st century should consist of highly skilled and highly educated immigrants, since America already has millions of unskilled residents who need to choose jobs over welfare. But while the American people would benefit by inviting scientists, engineers, and doctors to immigrate and fill advanced positions for which there is a shortage of qualified applicants, it would not benefit government unions.
The more difficulty America has in assimilating newcomers, the more government jobs are created. If immigrants don’t speak English, public schools must hire teachers with foreign language certifications. If they live in poverty, public schools must develop free-meal programs. If these immigrant communities fail to achieve the educational results that make them employable, the government will need more social workers and welfare administrators. If the ongoing poverty breeds higher crime rates, more police, judges, bailiffs, prison guards, and probation officers are the answer. The worse things get, the more government employees and government benefits become necessary.
And, of course, as these communities fail to become prosperous, they are taught by leftist, unionized social studies teachers that it’s not their responsibility, but rather the fault of their white male oppressors, and they’d better vote for Democrats in order to guarantee their reparative handouts. And to enforce “diversity” quotas—unionized government bureaucrats.
With climate change, the conflict between government unions and the public interest is equally stark. Here again, there is also a strong connection between connected government contractors and the public-sector unions. Instead of building subsidized housing, special needs school facilities, and more prisons—which come with marginally assimilable immigrants—these contractors supply solar farms, wind farms, “smart” appliances, and everything else that comes with mandated climate change mitigation. It doesn’t matter if any of these mandates accomplish anything, so long as profits are made. And overseeing it all are the government unions, who hire more code inspectors, environmental consultants, and a byzantine monitoring and enforcement bureaucracy.
While immigration and climate change are core drivers of government union endorsed government expansion, they aren’t the only factors. In every area of policy and spending, government unions benefit when things are harder for ordinary families and small businesses. In all areas, taxes, borrowing, spending, and regulations, the more there is, the more the government unions benefit.
The Financial Power of Public-Sector Unions
One of the primary reasons government union activists exercise influence disproportionate to their numbers is because behind these activists are billions of dollars in annual dues, collected from government payroll departments across the nation.
In California alone, government unions collect and spend nearly $1 billion a year. Nationwide, government union revenues are estimated to total at least $6 billion per year. Apart from private sector unions, no other political special interest enjoys access to a guaranteed, perennial torrent of money of comparable magnitude. This money is not just spent on federal elections; most of it is directed at tens of thousands of state and local election campaigns.
With this perpetual torrent of funding, fueled almost exclusively through membership dues, government unions engage the permanent services of the finest professionals money can buy. While much of their spending is explicitly political, even more is spent on community organizing and “educational” advocacy which is not reportable as political spending. Thousands of lobbyists, political consultants, grassroots organizers, public relations firms, opposition researchers, academic researchers, and other freelancers are on-call to these unions.
If you study money in politics, you soon realize there is a rough parity between major political donors who contribute to causes and candidates on the Right versus those who contribute to the Left. But the election of Donald Trump in 2016 revealed the so-called Right to be nearly as bad as the Left, as libertarians and NeverTrump Republicans abandoned their base. This abandonment was especially obvious among donors, whose only apparent unifying political theme was lower taxes for wealthy people. Trump and his supporters exposed the libertarian and NeverTrump Right for being just as committed as the establishment Left was to importing workers to drive down wages and exporting jobs to increase corporate profits. As a result, donations to Republicans, while remaining roughly at parity with donations to Democrats, were for the most part not supporting an America First agenda.
An illustration of how this schism within the American Right, and especially among big libertarian donors, persisted into the 2018 midterms is exemplified by their withdrawal of key financial support for pro-Trump candidates. And here’s where the union money becomes decisive. Into the political conflict between Left and Right, between Democrat and Republican, into a battle for financial supremacy already skewed, because half the Republican donors are now exposed as being more committed to a uniparty establishment than to Republican voters, ride the unions. And almost all of the union money goes to Democrats.
The lack of parity in political power and political advocacy becomes further lopsided when accounting for the role of nonprofits and government bureaucracies. Much has been made of the educational nonprofits supposedly beholden to right-wing donors. Their collective spending is indeed impressive, led by heavyweights like the Heritage Foundation, along with well-known stalwarts such as the Cato Institute, the Reason Foundation, and several others at the national level along with a growing number of state focused organizations such as the many member organizations of the State Policy Network.
But contrary to the wailing of the establishment media and left-wing pundits, the influence of these organizations is overstated.
First, many of them must adhere to orthodox libertarian principles in order to keep their donors. This makes them useless on immigration and trade, which are two of the defining issues of our time.
Second, because arrayed against these organizations is the entire rest of the nonprofit universe, which while mostly self-declared as nonpartisan, is in reality a part of that great mass of establishment organizations that have reached a consensus on open borders, “free” trade, and climate change activism consistent with the big government coalition: corporations, government unions, and the financial sector.
To provide one example, the combined budget of just a partial list of the major U.S.-based environmentalist nonprofits and foundations totaled over $4 billion per year as of 2018.
The Financial and Cultural Consequences of Unionized Government
Spokespersons for government employee unions perpetuate a myth of staggering absurdity and tragic consequences—that they are protecting hard-working Americans from wealthy corporations and wealthy individuals.
The reality is that government employee unions are focused on one thing: expanding government employee pay, benefits, and privileges. This requires expanding government, and that priority comes in front of everything else, including the cost to society at large. In states where government unions have taken control, such as California, expansive environmentalist regulations have made prices for housing and utilities the highest in the nation. In California, America’s poster child for union control, excessive compensation packages for unionized government workers have resulted in chronic deficits and accumulating state and local government debt that by some measures already exceeds $1.5 trillion. High taxes and over-regulation have made California consistently rank as the most inhospitable place in the nation to run a small business.
Exactly how does any of this protect the poor from the wealthy?
It doesn’t, of course. But the deeper story is how government employee unions are not only failing to “protect” the aspiring multitudes in California, or anywhere else in America, but are in fact enabling the wealthy special interests they claim to protect us from. The most entrenched and massive corporate entities are not harmed by excessive regulations, because they can afford to comply. An obvious example would be calls to increase the minimum wage– a movement almost exclusively restricted to states with powerful public-sector unions. Large corporate entities like McDonald’s will simply automate a few positions, tinker with the menu and recipes, incrementally raise prices, and go forward. Large corporations can hire attorneys and lobbyists, they have access to capital, and when the smaller players go out of business they gain market share. They benefit from over-regulation, but the consumer and workers suffer.
Less obvious but far more consequential is how the financial sector also benefits from an overbuilt, financially irresponsible, unionized government. When excessive rates of pay and benefits consume government budgets, financial institutions step up to extend debt. Bond underwriters collect billions each year in fees to issue new debt and refinance existing debt. When excessively generous pension plans are granted to unionized government employees, pension funds pour hundreds of billions into Wall Street investment firms, earning additional billions in fees. As for “carbon emissions auctions,” also rolling out inexorably in blue states, as that ramps up, virtually every BTU of fossil fuel energy consumed will put a commission into the hands of a financial intermediary. Trillions are on the table.
Unionized government hides behind environmentalism to justify increasing pay and benefits over-investment in infrastructure—which after all is environmentally incorrect. As the cost-of-living inevitably rises through artificial constraints on the supply of land and energy, the unionized government workers negotiate even higher pay and benefits to compensate, and the corporate monopolies that control existing supplies of land and energy get more revenue and profit. And of course the resultant asset bubble is healthy both for pension funds and wealthy investors, even as low and middle-class private-sector workers are priced out of owning homes—or even automobiles—and struggle to make ends meet.
It is crucial to perceive the irony. Government unions empower the worst elements of the capitalist system they persistently demonize. The crony capitalists and speculative financial interests benefit from an overbuilt, over-regulating, state and local government populated with overpaid unionized workers. Those virtuous capitalists who want to compete without subsidies are successfully lumped together with these robber barons, discrediting their support for reform. Those small business owners who want to grow their enterprises are harassed and marginalized.
If government employee unions were illegal, the most powerful political force in California, New York, Illinois, Massachusetts, and a host of other smaller blue states would cease to exist. But losing these government unions wouldn’t “turn government over to the corporations and billionaires.” Quite the opposite. It would take away the ability of those corporations and billionaires to collude with local and state government unions who currently control the lawmakers. It would force them instead to compete with each other, lowering the cost of living for everyone. It would restore balance to our debate over environmental policy, energy policy, and infrastructure investment.
Wherever government unions become as powerful as they have become in California, their domain increasingly becomes a feudal state, where the anointed and compliant corporations build monopolies, government workers lead privileged lives, the rich get richer, the middle class diminishes, and the poor become dependent on government. Nobody who is serious about reversing California’s decline into feudalism—or America’s potential decline—can ignore the fundamental enabling role unionized government is playing.
It is important to emphasize that the most ominous consequence of unionized government is its complicity in the asset bubbles that, if abruptly deflated, threaten to plunge the United States, if not the world, into a liquidity crisis. Government unions in the United States control the directorships managing trillions of dollars of public employee pension funds. These pension funds are the biggest single player in the U.S. equity markets. They are also major investors in real estate and bonds. One may argue all day as to just how inflated all these asset classes have become, but regardless of your stance on the question, one thing is indisputable: public employee pension funds are dangerously underfunded despite the fact that there has been a bull market in stocks, bonds, and real estate for over a decade. They will use all their influence to keep the bubbles inflated—and that includes ongoing support for extreme environmentalist regulations to create artificial scarcity of everything—houses, energy, water, food, commodities—buoying their prices which boosts profits, as well as mass immigration to create unmanageable demand for homes, also buoying prices and investor profits. The insatiable need for perpetually increasing asset values constitutes an identity of interests between public-sector unions, multinational corporations, and international investors and speculators that is as obscure as it is inviolable.
Government Union Abuses That Provoke Bipartisan Opposition
“Bipartisan” isn’t what it used to be. Now that America’s political establishment has been exposed as supporting with bipartisan unity, regardless of party, the policies of importing welfare recipients, exporting jobs, fighting endless wars, and micro-managing all forms of energy production under the pretext of saving the planet, the term “bipartisan” doesn’t evoke quite the same transcendent connotations it once did. With that noted, it remains true that with respect to public-sector unions, establishment Democrats are worse than establishment Republicans. When it comes to fighting the influence of public-sector unions, most Republicans lack the courage of their convictions, whereas most Democrats have no convictions at all.
Two exemplary issues, however, have the potential to bring Republicans and Democrats together in opposition to public-sector unions. Those issues are public education and pensions. These issues are not only capable of fostering productive, bipartisan reform efforts, but that eventuality is almost inevitable because the status-quo is not sustainable.
Public Education: In blue states, union control over public education is almost unassailable despite strong opposition. California’s failing school districts face insolvency caused by a combination of administrative bloat and out-of-control costs for pensions and retirement health benefits. The academic achievement of California’s schools is hard to measure objectively. California’s average SAT score, 1076, places it in 34th place among states. According to a study sponsored by U.S. News and World Report, California’s K-12 system of public education was ranked 26th among states.
But this average performance obscures a bigger problem in California’s union controlled public schools. Union work rules are causing the schools in the most vulnerable communities to get the worst teachers. In 2012 a coalition of mostly Democrats filed a lawsuit, Vergara v. California, attempting to change these rules. Claiming that education was a civil right, they tried via litigation to revise three union work rules; tenure (a job for life) after only two years, dismissal rules (almost impossible to fire an incompetent teacher), and layoff rules (seniority over merit).
The impact of these three rules was, and is, a relentless migration of the worst teachers into the worst performing schools, since they can’t be fired, but they can be transferred. View the closing argumentsof the plaintiffs for a compelling description of how these three union work rules are destroying California’s public schools. In 2016, after a favorable district court ruling, the appellate court ruled againstthe plaintiffs, and California’s Supreme Court refused to hear an appeal. The schools harmed the most by these corrupt union rules are those in the burgeoning low income immigrant neighborhoods of Los Angeles, where literally hundreds of thousands of children are denied a quality education.
For better or for worse, these kids are America’s future. But who wins when society fails? The government unions win. As demographically ascendant low-income immigrant subcultures are permanently handicapped because their children got indoctrinated instead of educated, taxpayers will have to hire more unionized public servants to redistribute wealth and preserve the peace.
The good news? Increasing numbers of Americans of all ethnicities and ideologies are realizing the impact of union controlled schools is denying future opportunities to a generation of children. The battle over charter schools, home schooling, and union work rules in traditional public schools is far from over.
Public Employee Pensions: With pensions, reform is even more inevitable, because financial reality will compel reform. According to Pew Research, in 2016 state and local government pensions plans disclosed assets of just $2.6 trillion to cover total pension liabilities of $4 trillion. This understates the problem. These pension plans assume they can earn, on average, 7.5 percent per year on their invested assets, yet, as discussed, despite nearly a decade of a bull market in stocks, bonds, and real estate, these pension plans are less than 70 percent funded.
Pension finance isn’t as complicated as the experts would have you believe. What “pension liabilities” refers to is how much money would have to be invested, today, for these pension plans to earn enough interest over time to eventually pay all of the future pension benefits that have been earned so far. Think of pension assets as a growing tree, nourished by the water and sun of investment earnings, supplemented by the fertilizer of regular taxpayer contributions, and pruned each year by the payments going to retirees. If this tree is less than 70 percent of the size it needs to be, then it’s going to get pruned faster than it can grow. Eventually, there won’t be any cuttings to provide pensions to retirees.
For clarity, take the metaphor one step further. What if this undersized tree had been enjoying a decade of abundant water and sunshine—the generous investment returns of the bull market—but suddenly that changes, as it always has and always will? What if this undersized pension asset tree now has to endure years of drought and cloudy weather, stunting its growth at the same time as the pension payment pruning for retirees continue at the same pace?
This is what America’s public employee pension funds are already confronting. The tree is too small, and in response more and more fertilizer—payments by taxpayers—have to be applied to keep it alive. This data compiled by the California Policy Center explains what’s coming:
“A city that pays 10% of their total revenues into the pension funds, and there are plenty of them, at an ROI of 7.5% and an honest repayment plan for the unfunded liability, should be paying 17% of their revenues into the pension systems. At a ROI of 6.5%, these cities would pay 24% of their revenue to pensions. At 5.5%, 32%.” To restate—according to this analysis, at a 5.5 percent annual return for the pension funds, 32 percent of total tax revenue would have to go straight into the coffers of the pension funds, just to keep them solvent.”
These are staggering conclusions. Only a few years ago, opponents of pension reform disparaged reformers by repeatedly asserting that pension costs only consumed 3 percent of total operating expenses. Now those costs have tripled and quadrupled, and there is no end in sight.
The looming pension crisis is already uniting fiscal conservatives, who want smaller, financially sustainable government, and conscientious liberals, who want to protect their cherished government programs from being eliminated in order to pay the pension funds. And as out-of-control pension costs become a problem too big to ignore, it casts a spotlight on the entire question of overcompensation for unionized government employees. Government employees, on average, retire 10 years sooner and enjoy annual retirement benefits two to five times greater than private sector workers. In California, on average, they make twice as much in pay and benefits during the years they work, and veteran employees are eligible for as many as 58 paid days off per year, not including sick leave.
A harrowing example of just how skewed political discourse has become can be found in the government union campaign against California’s Proposition 6, placed on the November 2018 ballot by tax reformers. The proposition was struck down by voters, who were barraged with union-funded flyers and television ads featuring a rugged firefighter, in uniform, explaining how public safety would be jeopardized if voters approved Prop. 6. But nobody told the rest of the story, how this firefighter, as readily verified by publicly available online data, made $327,491 in 2017. That’s only a bit unusual. The average firefighter in a California city in 2015 made $200,000 in pay and benefits. It would be interesting to compile more recent data. The number certainly has not fallen.
Teachers and firefighters are our heroes. They are our role models. But the best among them are unrecognized, because the worst among them are not only nearly immune to being fired, but make exactly as much money as the best. The only thing that matters is seniority. It is likely that the finest teachers are underpaid. But overall, and especially with respect to the cost of retirement benefits, unionized public employees are overpaid, and the cost is becoming too much to bear.
These two issues, quality schools and financially sustainable pensions, represent the wedge that could eventually roll back, if not break the power of public-sector unions. Everyone cares about public schools, because their success or failure governs our children’s future. Everyone cares about public employee pensions, or will care, because if they aren’t reformed, they will bankrupt our cities, counties and states. The primary reason public schools are underperforming, and the primary reason public-sector pensions are not reformed, is because public-sector unions fight reform at every turn.
But all their power cannot deceive voters forever. Change is coming.
In June 2018, in the landmark case of Janus v. AFSCME, the U.S. Supreme Court ruled that public sector employees cannot be compelled to pay anything to unions as a condition of employment, not even the so-called agency fees. In the months leading up to this case, public-sector unions made Janusout to be a catastrophe in the making, fueled by “dark money” and poised to destroy the labor movement.
In the months prior to the Janus decision, the mainstream press played up the panic. The Economist reported that “Unions are confronted with an existential threat.” The Atlantic went with “Is This the End of Public-Sector Unions in America?” Even the Wall Street Journal was caught up in the drama, publishing a report with the ominous title “Supreme Court to Decide Fate of public-sector unions.”
Maybe some union officials actually thought an unfavorable Janus ruling would destroy their organizations, but more likely, they saw it as an opportunity to rally their base and consolidate their power.
The Janus ruling has come and gone, but public-sector unions are as powerful as ever. In ultra-blue states such as California, they still exercise nearly absolute control over the state legislature, along with the city councils and county boards of supervisors in nearly every major city and county. Their control over school boards is also almost absolute.
This pattern repeats itself across the United States, especially in ultra-blue states. For example, following the 2018 midterms, fourteen states had democratic “trifectas,” where Democrats controlled both houses of the state legislature, plus the governorship. These would include the powerhouse states of California, New York, New Jersey, Massachusetts, and Illinois, along with Washington, Oregon, Nevada, Colorado, New Mexico, Maine, Rhode Island, Connecticut, and Delaware. These states have one overwhelming political variable working in their favor—the politics of their major urban centers are dominated by public-sector unions.
It has been long enough since the Janus decision to assess the initial impact. As of July 2018, unions could no longer collect “agency fees” from workers who didn’t want full membership. Comparing monthly payroll deductions from early 2018 to those from late 2018, one analysis indicated the unions were not very successful in converting these agency fee payers to full members. It is likely that the impact on public-sector unions based on losing their agency fee payers may have caused their revenue to decline by between five and ten percent. That’s a lot of money. Or is it?
In almost any other context, reducing the annual revenue of a network of political players by somewhere between $300 and $600 million per year would be a catastrophe for the organizations involved. But these are public-sector unions, which still have well over $5 billion per year to work with. Losing most of their agency-fee payers clearly had a permanent and significant impact on union revenues, but for them, and only them, it might be most accurately described as a one-time loss of manageable proportions.
The bigger impact that the Janusruling might have regards what is going to happen to their rates of full membership. It is now possible for public-sector union members to quit their unions. But will they? And if they want to, will the unions be forced to make that an easier process?
Some of the tactics the unions have adopted to make the process of quitting more difficult are being challenged in court. These cases would include Uradnik v. IFO, which would take away a public-sector union’s right to exclusive representation, or Few v. UTLA, which would nullify many steps the unions have taken to thwart the Janusruling. How those cases play out, and whether or not public-sector unions can remain accountable enough to their members to keep them in voluntarily, remains to be seen.
Public-Sector Unions and America’s Future
With America’s electorate split almost evenly between Republicans and Democrats, between liberals and conservatives, between socialists and capitalists, between Right and Left—however you want to express those polarities, it doesn’t take much to alter the equilibrium. But wherever you identify powerful forces shifting the balance, you find the public-sector unions are the puppeteer.
Should America import millions of highly skilled immigrants whose children will excel in public schools no matter what? Of course not. Private success requires no public money.
Should America reform its financial house of cards before a liquidity crisis crashes the global economy? No. Because pension solvency requires asset bubbles.
Should public-private partnerships fund new infrastructure so private investors can competitively develop new cities on America’s vast reserves of open land? Not a chance. Artificial scarcity keeps property tax revenues up, and helps prop up the real estate asset bubble.
Should incompetent bureaucrats and teachers be fired? No, because the union protects them.
To understand how intractable this problem has become, it’s worthwhile not only to identify the differences between public and private sector unions, but also the differing philosophies that guides them. To be sure, these structural differences are profound: unlike private-sector unions, public-sector unions elect their own bosses, are funded through coercive taxes instead of competitively earned profits, are rewarded by inefficiency and failure which they use as justification to expand government, and operate the machinery of government, which allows them unique powers to harass their opponents.
But these structural differences need to be viewed in the context of the ideological differences between unionized workers in the public and private sectors. These ideological differences are not absolute, but they are nonetheless very real and impact the political agenda of public-sector unions versus private sector unions. There are at least three areas of ideological differences:
Authoritarian vs. Market Driven: Workers for the government exercise political power, whereas workers in the private sector exercise economic power. A private sector union can cause a company to go out of business, an economic threat, whereas a public sector union can cause their manager—the elected politician—to lose their next election, a political threat. This basic difference makes if far more likely that private sector union workers will have a better appreciation of the limits of their power, since if their demands have a sufficiently adverse economic effect on the company they’re negotiating with, that company will go out of business and they will lose their jobs.
Another related manifestation of the authoritarian core ideology among government workers is the simple fact that the government compels people to pay taxes and provides only one option for services, whereas corporations must persuade consumers to voluntarily purchase their products if they want to stay in business. Private-sector union members understand this difference quite well, because they live with the consequences if their company fails in the market.
Environmentalist Restriction vs. Economic Development: Workers in the private sector benefit from major construction projects and resource development. These projects create new jobs, and they yield broad societal benefits in the form of more competitive choices available for basic resources; energy, water, transportation, and housing.
When more development occurs, this increases supply and lowers prices. Development creates jobs and lowers the cost of living. Private sector union members understand this, but public sector union members have an inherent conflict of interest. This is because public sector workers benefit when roadblocks are placed in the way of development. An extended process of permitting and review, labyrinthine regulations impacting every possible aspect of development, creates jobs in the public sector.
The harder the public sector can make it to build things, the more fees they will collect and the more government jobs they will create. Ironically, the public-sector unions have an identity of interests with the most powerful monopolistic corporations on earth in this regard, because they both benefit from barriers to competitive development. Private sector union members just want to see more jobs and a lower cost of living, which development ensures.
Internationalist vs. Nationalist: This area of ideological differences between public and private sector unions is perhaps the least mentioned, and the most subject to overlap and ambiguity. But identifying this difference is crucial to understanding the differing agendas of public- and private-sector unions.
For example, the ideological agenda of the unions controlling public education in the United States are dramatically out of touch with the values of a great many Americans. In states where public education is controlled by powerful teachers unions, classroom materials and textbooks routinely demonize the role of the United States and Western Civilization in current affairs and world history. Their emphasis is to mainstream the marginalized, at the expense of teaching the overwhelmingly positive role played by democracy and capitalism in creating freedom and wealth. Another critical example is how job losses to foreign manufacturers affect members of these respective unions; it has an immediate, deeply negative impact on members of private-sector unions, but is something that has no effect on a public-sector worker.
Members of public-sector unions who consider themselves in favor of free markets and resource development, and harbor pro-American patriotic sentiments, would do well to examine carefully how the leaders of government employee unions have powerful incentives to promote policies in direct opposition to these values. And that is where there might be hope.
The precarious equilibrium between Right and Left in America is maintained not only by virtue of powerful public-sector unions pushing as hard as they can in favor of the Left; public employees themselves constitute a critical swing vote in America’s electorate. Including federal workers, there are nearly 20 million government employees in America, and nearly all of them vote. If you include households with government workers in them, you likely could double that number. These Americans have a tough choice to make: Will they vote for more government, because more government will create more career opportunities for themselves and their loved ones, or will they only ask themselves what political choices will offer the most benefit to all Americans?
Public employees, like all Americans, are awakening to the propaganda that passes as mainstream journalism. Despite rampant suppression of the truth, they can see what has happened to Europe thanks to mass immigration. Despite endless rhetoric coming from the press and public institutions, they realize that campus radicalism and identity politics are a nihilistic dead end. Despite nightly “news” that spends more time on celebrity gossip than global events, they can see the where socialism leads in the devastated nation of Venezuela. They’re even realizing that climate change activism is a cover for globalist rationing and wealth redistribution. They see the hypocrisy.
Public-sector unions are the brokers and enablers of corporate power. As politicians come and go, and business interests rise and fall, they are the continuity, decade after decade. In every city and state where they’ve been allowed, they are the deep state. They are globalist instead of nationalist, authoritarian instead of pluralistic, they favor rationing and regulation over competitive development. They want to make everything harder, scarcer, more expensive. They prefer cultural disintegration and chaos to unity because it empowers them when things get bad. In a just world, public-sector unions would be outlawed. Until then, their agenda and their impact must be exposed for all to see.
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Edward Ring is a co-founder of the California Policy Center and served as its first president. This article originally appeared on the website American Greatness.