Would ANY Public Sector Union Reform Appeal to California’s Democrats?

Edward Ring

Director, Water and Energy Policy

Edward Ring
February 12, 2013

Would ANY Public Sector Union Reform Appeal to California’s Democrats?

“There’s a difference between being liberal and progressive and being a union Democrat.”

San Jose Mayor Chuck Reed, Bloomberg

The most powerful defenders of that broken system, without a question, is the teachers’ union.”

Los Angeles Mayor Antonio Villaraigosa, Sacramento Press

If you wish to challenge the conventional wisdom, that Democrats and liberals march in lockstep with public sector unions, these two quotes from the mayors of two of California’s largest cities would be a good place to start. But whether it is making pensions financially sustainable, strongly advocated by Mayor Reed, or improving public education, strongly advocated by Mayor Villaraigosa, these reform efforts aim at the symptoms, not the underlying cause. Because the biggest cause of California’s financial and educational problems are public sector unions.

California’s Democrats indeed face a dilemma; they may accept literally hundreds of millions in political contributions each year from public sector unions, in return for adhering to their political agenda, or they may challenge these unions, and lose their financial support. And whenever a Democrat does challenge the unions, the unions always have alternative candidates who will toe the line. Why bother?

The reason to bother, however, is compelling. If the political power of public sector unions is not attenuated in some meaningful way, California’s cities and counties will slip into bankruptcy one after another, and California’s schools will continue to deliver educational results far below their potential. Because public sector unions have an agenda that is intrinsically at odds with the public interest – their agenda is more pay and benefits for public workers, more public workers and bigger government, more protections for incompetent or corrupt government employees, and more inflexible work rules that impede efforts to modernize government operations. None of this makes for better government, and it is Democrats who should be especially concerned, since Democrats typically believe in a stronger role for government than Republicans or Libertarians.

Here are three points that Democrats should seriously consider:

(1) Unionized public sector employees now enjoy total compensation that averages more than twice what the average private sector worker makes. No aggregate edge in education or work hazards can justify this disparity. Public employee compensation consumes roughly 75% of California’s state and local government budgets, and is the primary reason for budget deficits. If public employee compensation and benefits are not reduced, it will remain impossible to fund any worthy new government programs. For more on total compensation paid to California’s local government workers, ref. the CPPC compensation studies for San Jose, Anaheim, and Costa Mesa, as well as the UnionWatch article “‘Work in Progress’ Government Employee Pay Tracker Still Grossly Inaccurate.” For a good summary of the pension myths promoted by unions and bankers, read the recent Heritage Foundation study “Nine Fallacies Used to Defend Public-Sector Pensions.”

(2) There are fundamental differences between public sector unions and private sector unions. Private sector unions must negotiate with the knowledge that overly generous concessions may put their employer out of business. Public sector unions, unlike private sector unions, engage in massive political spending to effectively elect their own bosses; when a politician is uncooperative, the unions replace them in the next election. Public sector unions control the government bureaucracy as well as the politicians who pass laws, regulations or local ordinances. Therefore, opponents of public sector unions face retaliation (or rewards in the form of contracts and favorable legislation)  from the government itself – reason enough why sustained corporate opposition to public sector unions is a myth.

(3) Despite a well cultivated perception that the public sector unions fight for the worker against the interests of the Wall Street financial sector, in reality they want the same things: Deficits which accompany more spending on union payrolls require new bonds to be issued at great profit to the issuers, and more pension benefits provide additional compensation to union members, requiring more money for the bankers to manage – at great profit. In California, financial interests issue bonds to cover what is now nearly a trillion dollars in outstanding government debt, and they invest nearly half-a-trillion in public employee pension fund assets.

An excellent summary of the way public sector unions undermine our democracy, as well as a list of potential reforms, can be found on the State Budget Solutions website in a December 5, 2012 article by Bob Williams entitled “Why government employee collective bargaining laws must be reformed now.”

If Democrats are serious about protecting workers, ALL workers including the private sector taxpayer, and if Democrats are serious about protecting the integrity of the democratic process, they might review these proposed reforms. Apparently, as the spectacular failure of Prop. 32 proved, Democrats aren’t ready yet to require unions to simply allow their members to opt-in to making political contributions. But would ANY reform be worth fighting for?

What about financial transparency? Would it be too much to ask public sector unions to adhere to reporting standards on par with those required of publicly traded corporations? Is it too much to even require public disclosure of how many members and agency fee payers belong to a public sector union, or how much they pay in individual dues? All that is required today is the relatively opaque Federal 990 form, filed once per year (ref. CPPC study “Understanding the Financial Disclosure Requirements of Public Sector Unions.”

What about eliminating closed door negotiations, or eliminating the requirement to submit to binding arbitration whenever negotiations reach an impasse? What about regulating the process whereby public sector unions elect their leadership, or enforcing new processes to make it easier for union members to hold their leaders more accountable for how they spend their dues revenue?

Is there anything that Democrats and liberals may feel are appropriate reforms to public sector unions in California? Anything at all?

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