The Exempt Class: Unionized Government Workers

“All animals are equal, but some animals are more equal than others”

George Orwell, Animal Farm

Public sector unions, who have now raised over $50 million to defeat California’s Prop. 32, have called it the “Special Exemptions Act,” because it supposedly was deliberately written to exempt billionaires and certain business interests from its provisions. The irony is appalling. Because public sector unions are exempt from a host of regulations that all other businesses and political actors have to follow. And because public sector employees are exempt from the challenging economic realities of our time.

There is an October 10th guest editorial in the Orange County Register called “Yes, stop the special exemptions,” written by Pepperdine University economics professor Gary Galles that does as good a job of any to debunk union misinformation. Galles writes:

“Proposition 32 creates no special exemptions to put a stop to. The initiative would ban corporate and union contributions to candidates and their committees, contractor donations to politicians, who award contracts, and deductions from employee’s wages for politics, without annual written permission. Unions and their allies claim it creates a special exemption for corporations, because the ban on direct contributions doesn’t restrict businesses’ ability to fund independent campaigns. But such donations are constitutionally protected forms of speech, which cannot be restricted, so the “special exemption” is failing to ban what cannot be banned.”

But Galles goes further, exposing the irony of a political campaign by unions claiming that their opponents are the ones who seek to benefit from exemptions. Here are excerpts from Galle’s summary of how 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.”

In the case of public sector unions, another exemption they receive is an almost complete absence of public disclosure requirements. As exposed in the California Public Policy Center study “Understanding the Financial Disclosure Requirements of Public Sector Unions,” government worker unions are exempt from the requirements to file detailed public disclosures of their financial activity and operations that are required of all public corporations and even private sector unions.This makes it far easier for them to obfuscate their dominant role in elections, especially at the local and state levels, where two-thirds of all tax revenues are spent.

More generally, it is the public sector workers, represented by public sector unions, who constitute an entire exempt class in American society. They are exempt from the challenging economic realities of our time. Having endured decades of lavishly funded, relentlessly applied, highly sophisticated union propaganda, one can hardly blame the average public employee for thinking they are underpaid, overworked, and under-appreciated. One can forgive them for accepting the comforting lie that all it takes for them to continue to enjoy the pay and benefits to which they have become accustomed is for rich people to pay their “fair share.” But facing the truth can only be delayed by propaganda, never denied.

It would be wonderful if every worker in the United States could, on average, earn annual base pay of $70,000 per year (ref. U.S. Census Bureau – California State Payroll 2010, and U.S. Census Bureau – California Local Government Payroll 2010) and retire by age 60 to enjoy pensions that average well over $60,000 per year (ref. CalPERS Annual Financial Report FYE 6-30-2011, page 153, and CalSTRS Annual Financial Report FYE 6-30-2010, page 149). But the implacable truth is this: There is only enough wealth to be expropriated from rich people to elevate a small segment of the population to this vaunted “middle class” status. Setting aside for a moment the devastating collateral consequences, even if you raised the tax burden on the “millionaires and billionaires” by 100% or more, you would still only generate enough revenue to keep paying public employees their current levels of pay and benefits, which are literally twice as much on average as what private sector workers earn. You could never collect enough money to guarantee such largesse to every American worker.

There is a recent historical example of how a big government elite crippled a national economy in order to expropriate wealth for themselves. They were the nomenklatura, those communist party members living in the Soviet bloc, and they maintained their relative prosperity by enslaving and impoverishing an entire nation in the name of equality. An important distinction in America today is the alliance between government worker unions and Wall Street’s financial speculators. At the same time as government unions use their political power to harass and demonize productive businesses, they work together with the most parasitical forces within the capitalist sphere, pension bankers who are gambling with the economic future of the world in their doomed effort to achieve a fraudulently optimistic 7.5% return on investment. And as the returns fall short, these unions serve as foot soldiers for Wall Street, using their political power to raise taxes to cover the difference.

Government workers are indeed the exempt class. While they incessantly spew rich bashing rhetoric, they partner with the most undeserving rich in the world, the Wall Street financial speculators, to provide themselves retirement benefits that are laughingly impossible for all workers to ever come close to achieving.

As George Orwell vividly described in the closing passages of Animal Farm:

“The animals notice that the faces of the pigs have begun changing. During a poker match, an argument breaks out between Napoleon and Mr Pilkington, and the animals realise that the faces of the pigs look like the faces of humans, and no one can tell the difference between them.”