The Special Privileges And Exemptions of Public Sector Unions

In the recent election of November 2012, California ballot Proposition 32 was defeated by voters 54% to 46%. One of the provisions in Prop. 32 would have required public sector unions to ask their members for political contributions on an “opt-in” basis. Currently, public sector unions in California collect hundreds of millions of dollars of political funds each year via an “opt-out” system where unionized government workers have to go through a tedious process of requesting the union stop taking political contributions automatically out of their paycheck. No other political organization in the United States is permitted to raise funds this way.

Incredibly, the campaign against Prop. 32’s reforms successfully tagged it the “special exemptions act,” claiming that the “millionaires and billionaires” who supported Prop. 32 had written language into the reform that exempted themselves from its reforms. Never mind the fact that you can’t exempt yourself from a rule that prevents you from doing something you’ve never done.

In October 2012, in response, UnionWatch published an editorial entitled “The Exempt Class: Unionized Government Workers,” which included a list prepared by Pepperdine University economics professor Gary Galles of the ways unions enjoy special exemptions are denied all other political and business entities:

  • “Unions have been exempted from antitrust laws.
  • Unions are exempt from prosecution for any acts by members or officers in the course of strikes,
  • Unions are exempted from lower wage competition for government contracts by the Davis-Bacon Act’s “prevailing wage” requirements, generally interpreted to be higher, union wages.
  • Labor law imposes “exclusive representation,” in which a union that wins a certification election is given monopoly authority to bargain for every worker.
  • Nonunion employers can be forced to hire paid union organizers as ordinary employees, even though their main goal is to undermine the employer’s nonunion status.
  • Mass picketing of a strike target is allowed not just by those workers striking but by large numbers of others not directly involved, to intimidate targets and those who would work for or do business with them.”

Another good summary of the special privileges enjoyed by all unions is available from the National Right to Work Foundation in their report “Big Labors Top Ten Special Privileges.” The details are worth reading; here is the list:

  • Exemption from prosecution for union violence.
  • Exemption from anti-monopoly laws.
  • Power to force employees to accept unwanted union representation.
  • Power to collect forced union dues.
  • Unlimited, undisclosed electioneering.
  • Ability to strong-arm employers into negotiations.
  • Right to trespass on an employer’s private property.
  • Ability of strikers to keep jobs despite refusing to work.
  • Union-only cartels on construction projects.
  • Government funding of forced unionism.

A chilling expose of how unions benefit from their federal exemption from prosecution for union violence can be found in a study issued in 2012 by the U.S. Chamber of Commerce entitled “Sabotage, Stalking & Stealth Exemptions: Special State Laws for Labor Unions.” For more on how California’s union-friendly courts are making it even easier for unions to trespass on private property, read “California Labor Unions Allowed More Freedom By State Supreme Court,” where the California Supreme Court recently reaffirmed that the state’s labor laws assuring union members the right to picket on privately owned walkways fronting store entrances are not unconstitutional.

Unions also enjoy a double-standard when it comes to establishing unions. In most cases, for example, a workplace can be unionized by a majority vote of those workers who actually cast ballots – even if only a fraction of the active workers actually vote. By contrast, a workplace can only be de-unionized by a majority of ALL workers covered by the collective bargaining agreement. Similarly, recent National Labor Relations Board regulations require employers to provide union organizers the names and contact information – including home addresses – of all their employees, even if they aren’t yet unionized. But unions are NOT required to provide lists of their members to anyone who wishes to organize a vote to de-unionize a workplace.

While one might expect regulations governing union activity to be stricter in the case of public sector unions, in reality the opposite is true. As explored in the California Public Policy Center study “Understanding the Financial Disclosure Requirements of Public Sector Unions,” public sector unions have minimal public disclosure requirements. Publicly traded corporations and even private sector unions are required to publicly report detailed information regarding their operations. But public sector unions only have to file a Federal 990 form once per year, a document that provides little more than their revenue, expenses, and some basic balance sheet data. And it used to be that members of public sector unions could gain access to more information by request, but as reported by the Washington Examiner last week, even that right is being taken away by new NLRB rulings (ref. “Obama’s labor board bails out big unions again“).

The consequences of laws that provide unique advantages to unions, public sector unions in particular, ought to be evident to anyone regardless of their political ideology. And attempting to reform unions does not mean that monopolistic corporations or poorly regulated financial interests should get a pass. One of the biggest misconceptions held by many American voters – relentlessly reinforced by union propaganda – is that if you want to reform unions, you must be a tool of corporate interests. The truth is more subtle. Monopolies tend to collude. One of the biggest, dirtiest secrets of our time is the collusion between public sector unions and the most parasitical elements of America’s financial sector. When public sector unions “negotiate” unsustainable pay and benefits, governments suffer spending deficits that must be papered over with hundreds of billions in debt underwritten on dubious terms by Wall Street financial firms. When unions “negotiate” unsustainable pension benefits, taxpayer money is shoveled into Wall Street pension investment firms by the hundreds of billions each year – and when they fail to hit their targets, taxes go up even more.

The “special exemptions” stigma that unions have repeatedly succeeded in applying to union reformers is in fact the core reason that unions themselves enjoy unwarranted power today, especially in the public sector. They have used their special exemptions and privileges to essentially exempt their members from the challenging economic times that ordinary American workers face. And the sheer scale of the economic advantages they have negotiated for their members make it impossible to extend such benefits to all workers. The special exemptions that empower public sector unions menace America’s long-term economic health, undermine the interests of America’s broader private sector working class, and discredit the democratic institutions that make America a great nation.

California Public Sector Union Revenue Exceeds $1.0 Billion Per Year

In today’s Sacramento Bee an article by Jon Ortiz entitled “What California state workers pay in union dues and fees” provided current data on the revenue of unions organizing state workers. It only takes a minor exercise in extrapolation to use this data to estimate the annual revenue of unions organizing all government workers in California, state and local.

The raw data is drawn from the state controllers payroll office and can be downloaded here:
120913 Dues and Fair Share Counts by BU.xlsx

According to this data, in December of 2011 there were 255,078 state employees represented by unions. They paid a total of $16,472,031 in dues that month, which means that over the 12 month period ending in December they paid a total of $197,644,377 in dues. This equates to an average annual union dues assessment of $775 per worker.

If you apply this amount to the reported number of government union members in California’s state and local government agencies, you can estimate the total revenue flowing each year into California’s public sector union treasuries. It is very difficult to get a good estimate of public sector union membership in California, since at the local level there are literally thousands of independent payroll departments which may or may not disclose this information, and other compiled data is scattered among several oversight agencies which themselves are not required to disclose membership data. The California Public Policy Center explores this in depth in their study “Understanding the Financial Disclosure Requirements of Public Sector Unions.” In that article are links to several public sector union “990” forms, turned in annually to the IRS, which are the sole financial reporting documents easily accessed by members of the public. These documents provide only summary level financial data, and nothing on membership or dues.

While the raw data on local public sector union membership is therefore virtually inaccessible, summary information available from the U.S. Census bureau is compiled on the website, an online database, updated annually, that tracks union membership, constructed by Barry Hirsch (Andrew Young School of Policy Studies, Georgia State University) and David Macpherson (Department of Economics, Trinity University). Using data from the U.S. Census Bureau and the Bureau of Labor Statistics, they have compiled a variety of interesting data, including “Union Membership, Coverage, Density, and Employment by State and Sector, 1983-2011.” By clicking on the 2011 link provided under this section on the left column of their home page, a table comes up showing union membership by state, with a separate column for public sector union membership. According to this table, there are 1,407,504 dues paying members of public sector unions in California.

Assuming this figure is accurate, estimating total annual dues revenue for California’s public sector unions is relatively straightforward. Multiplying 1,407,504 by $775 equals $1,090,699,318, or not quite $1.1 billion. California’s public sector unions are collecting, and presumably spending, over a billion dollars a year. Since the payroll data provided by the state controller does not include K-12 teachers, nor local police and firefighters, professions where the annual dues are almost always over $1,000 per year, this estimate of $1.0 billion is probably low.

Once one has estimated the total financial resources available to California’s government worker unions each year, the prevailing question then becomes how much of it is used for politics? But it is important to emphasize that when you are talking about unions of government workers, there is a strong argument that all of it is used to exercise political influence. Because if unions aren’t using their funds to contribute directly to politicians, or fund independent expenditure campaigns, or hire lobbyists, they are still spending it to pursue their agenda, through negotiation, litigation, and education. And the entire agenda of government worker unions is explicitly political because it invariably concerns how to manage government agencies – how many people to hire, how much to pay them, their working conditions, and what jobs they may and may not perform.

Unlike corporations, which have narrow agendas that typically compete with each other, which largely cancels out the impact of their political spending, government unions pursue their agenda with monolithic, unchallenged abandon.

In California, the dismal results of $1.0 billion per year of highly focused public sector union spending should be plain for all to see, regardless of their political allegiances.